The Dormant Commerce Clause

Dean Milk Co. v. City of Madison

340 U.S. 349 (1951) · Westlaw

Madison, Wisconsin made it unlawful to sell milk in the city unless it had been pasteurized at an approved plant within five miles of the central square. A separate provision barred milk from farms more than twenty-five miles out. Dean Milk, an Illinois corporation, gathered milk from Illinois and Wisconsin farms and pasteurized it at two Illinois plants, seventy and sixty-five miles away. It was denied a license. The Wisconsin Supreme Court sustained both provisions.

Start with what the case is not. The ordinance was geographically drawn and applied with perfect evenhandedness to Wisconsin milk from outside the five-mile ring. The Court says so in footnote 4, at 354: “It is immaterial that Wisconsin milk from outside the Madison area is subjected to the same proscription as that moving in interstate commerce.” Search the opinion for “on its face” or “facially” and you will find neither. This is a practical-effect case decided twenty-six years before Hunt gave that idea a name.

The holding, at 353: “Upon these facts we find it necessary to determine only the issue raised under the Commerce Clause, for we agree with appellant that the ordinance imposes an undue burden on interstate commerce.” And at 354, the sentence students should memorize: “In thus erecting an economic barrier protecting a major local industry against competition from without the State, Madison plainly discriminates against interstate commerce.”

The test the case exists for, at 354: a city may not do this “even in the exercise of its unquestioned power to protect the health and safety of its people, if reasonable nondiscriminatory alternatives, adequate to conserve legitimate local interests, are available.” The framing sentence follows immediately: “Our issue then is whether the discrimination inherent in the Madison ordinance can be justified in view of the character of the local interests and the available methods of protecting them.” The Court then supplies two alternatives of its own devising — inspection of distant plants with the cost charged to the importer, and reliance on U.S. Public Health Service ratings.

And the reason the health label does not end the inquiry, at 354, which Hunt will quote back twenty-six years later: “A different view, that the ordinance is valid simply because it professes to be a health measure, would mean that the Commerce Clause of itself imposes no limitations on state action other than those laid down by the Due Process Clause, save for the rare instance where a state artlessly discloses an avowed purpose to discriminate against interstate goods.”

Justice Black, dissenting with Douglas and Minton, attacks all three steps. At 357: “I disagree with the Court’s premises, reasoning, and judgment.” His first point is that nothing in the record shows Dean could not build a plant inside the ring — “Dean’s personal preference to pasteurize in Illinois, not the ordinance, keeps Dean’s milk out of Madison.” His second is that both state courts found the ordinance enacted in good faith. His third is the one that has lasted, at 358: “No case is cited, and I have found none, in which a bona fide health law was struck down on the ground that some other method of safeguarding health would be as good as, or better than, the one the Court was called on to review.” And he notes that the Court is reaching its alternatives by judicial notice rather than by findings — at 360, he “would not invalidate it without giving the parties a chance to present evidence and get findings on the ultimate issues the Court thinks crucial.”

He also lands a same-Term jab worth keeping, at 358: “I find it difficult to explain why the Court uses the ‘reasonable alternative’ concept to protect trade when today it refuses to apply the same principle to protect freedom of speech. Feiner v. New York, 340 U. S. 315.”

Commonly believed, not in the opinion. First, the words “strict scrutiny” appear nowhere — nor does “scrutiny,” “per se,” “least restrictive,” “compelling,” “narrowly tailored,” or “dormant.” Not one of them, in the whole case. The operative vocabulary of 1951 is “undue burden,” “economic barrier,” “discriminates,” and “reasonable nondiscriminatory alternatives.” The tiered structure you will learn in this module was built onto this sentence later. Second, the Court did not strike down “the Madison ordinance.” It reversed as to the five-mile pasteurization provision and, as to the twenty-five-mile source limitation, wrote at 356–57: “we vacate the judgment below and remand for further proceedings not inconsistent with the principles announced in this opinion.” The Wisconsin court had treated that question as academic. Third, the Court declined to reach the Fourteenth Amendment claim entirely.

Three questions. First, if the ordinance burdens out-of-area Wisconsin milk exactly as it burdens Illinois milk, in what sense does it “discriminate against interstate commerce”? Footnote 4 says the equal treatment is “immaterial” — but why? Formulate the answer in terms of what the Commerce Clause protects, and then ask whether Exxon (later in this module) is consistent with it. Second, Black’s objection is that the Court invented the alternatives itself, without evidence, on a record in which two state courts found good faith. Compare Maine v. Taylor, where the alternatives question was resolved on findings after an evidentiary hearing and the State won. Is the difference between these two cases doctrine, or is it the record? Third, this is a city ordinance, and the five-mile ring excludes most of Wisconsin. Does the dormant Commerce Clause do different work against a municipality than against a State — and if the answer is no, what is left of local police power over food safety?

A reporter note: no numerical vote is printed, and in 1951 the Reporter printed no line-up paragraph at all. All the U.S. Reports tell you is that Clark, J., delivered the opinion of the Court, and that Black, J., dissented “with whom MR. JUSTICE DOUGLAS and MR. JUSTICE MINTON concur.” There is no “took no part” notation. Six and three is arithmetic you perform on the Court’s composition.

Hunt v. Washington State Apple Advertising Commission

432 U.S. 333 (1977) · Westlaw

Washington grows most of the country’s apples, and since 1937 has run a state grading system stricter than the federal USDA grades. North Carolina then required every closed container of apples shipped into the State to display the applicable USDA grade “or the marking ‘unclassified,’ ‘not graded’ or ‘grade not determined’” — and nothing else. On its face the statute said nothing about Washington. In practice it wiped out a forty-year investment, forced Washington shippers either to obliterate their grades or to run separate packing lines for one State, and reduced Washington’s superior grades to their inferior federal equivalents. A three-judge court held it unconstitutional. The Supreme Court affirmed.

The move the case exists for, at 350: “As the District Court correctly found, the challenged statute has the practical effect of not only burdening interstate sales of Washington apples, but also discriminating against them. This discrimination takes various forms.” Note that the phrase “practical effect” appears exactly once in the opinion. It has carried the whole facially-neutral branch of the doctrine ever since.

The three forms the discrimination takes are worth separating, because each is a different theory. (1) Cost. Washington growers must repack or relabel for North Carolina; North Carolina growers, who use USDA grades already, bear nothing. (2) Stripping. At 351 the Court describes the statute as removing the competitive advantage Washington “has earned for itself through its expensive inspection and grading system.” (3) Leveling. At 352: “Such ‘downgrading’ offers the North Carolina apple industry the very sort of protection against competing out-of-state products that the Commerce Clause was designed to prohibit.”

The burden-shift, at 353, and this is the sentence to quote: “When discrimination against commerce of the type we have found is demonstrated, the burden falls on the State to justify it both in terms of the local benefits flowing from the statute and the unavailability of nondiscriminatory alternatives adequate to preserve the local interests at stake.” It is built directly on Dean Milk, 340 U.S. at 354, which the Court cites there and quotes at 350.

North Carolina fails on both halves. On local benefit, at 353: “the challenged statute does remarkably little to further that laudable goal at least with respect to Washington apples and grades,” because — at 354 — “[s]ince Washington grades are in all cases equal or superior to their USDA counterparts, they could only ‘deceive’ or ‘confuse’ a consumer to his benefit.” On alternatives, at 354: “it appears that nondiscriminatory alternatives to the outright ban of Washington State grades are readily available,” and the Court names one — permit state grades so long as the USDA grade also appears.

Note the Court’s care about motive. At 352 it observes that the Commission “suggests that its discriminatory impact on interstate commerce was not an unintended byproduct,” and recites the evidence: the statute was enacted after a Washington shipper’s request, on the petition of the North Carolina apple industry, with no consumer complaints in the record. Then, at 352–53, it steps away from the inference: “we need not ascribe an economic protection motive to the North Carolina Legislature to resolve this case; we conclude that the challenged statute cannot stand insofar as it prohibits the display of Washington State grades even if enacted for the declared purpose of protecting consumers from deception and fraud in the marketplace.” Effect is sufficient. Purpose is not necessary.

Commonly believed, not in the opinion. First — and this is the one to correct in your notes — Hunt does not contain the phrase “virtually per se rule of invalidity.” Zero occurrences. Neither does “per se,” “strict scrutiny,” “scrutiny,” “protectionism,” or “dormant.” The phrase everyone attaches to Hunt comes from City of Philadelphia v. New Jersey, decided June 23, 1978 — a year and three days after Hunt. A casebook that hangs it on Hunt is reading later doctrine backward. Second, Hunt does not impose a “least discriminatory means” test and never uses those words. The burden is stated in terms of “the unavailability of nondiscriminatory alternatives adequate to preserve the local interests at stake” — adequacy, not minimality. The Court identifies a workable alternative; it never asks whether that alternative is the least restrictive one available. Third, the holding is narrow: the statute “cannot stand insofar as it prohibits the display of Washington State grades.” The rest of the labeling statute is untouched.

Three questions. First, hold Hunt against Exxon (order 8 in this module). In Hunt, a neutral rule that raised one State’s producers’ costs and erased their competitive edge is discrimination. In Exxon, a neutral rule that shifted retail business from out-of-state refiners to in-state independents is not. What distinguishes them — the presence of an interstate market effect as against harm to particular interstate firms? Say precisely why that line is principled, and then say why it is not. Second, the “stripping” theory is the most interesting and the least examined: Washington had built a valuable reputational asset with its own money, and North Carolina destroyed the asset without touching a single Washington apple. Is that a Commerce Clause injury, or a takings-flavored injury the Court dressed in Commerce Clause language? Third, if effect alone suffices, what stops every generally applicable state standard that happens to be weaker than some other State’s from being unconstitutional?

A reporter note: no numerical vote is printed. The line-up at 335 reads that “BURGER, C. J., delivered the opinion of the Court, in which all Members joined except REHNQUIST, J., who took no part in the consideration or decision of the case.” There are no separate opinions at all — no concurrence, no dissent. Eight and zero is arithmetic; the reporter says only that everyone who sat, joined.

Maine v. Taylor

477 U.S. 131 (1986) · Westlaw

Maine flatly barred the importation of live baitfish. Taylor, a Maine bait dealer, had 158,000 live golden shiners shipped in from outside the State and was indicted under the federal Lacey Act, which makes it a federal crime to transport fish in violation of state law. He moved to dismiss on the ground that the Maine statute violated the Commerce Clause. The District Court held an evidentiary hearing and upheld the statute; Taylor pleaded guilty conditionally; the First Circuit set the conviction aside. Maine — intervening under 28 U.S.C. § 2403(b) after the United States abandoned its own appeal — took it up. The Supreme Court reversed, and the guilty plea was automatically reinstated.

This is the case everyone cites for the proposition that a facially discriminatory law can survive. Read it for what it actually turns on, which is the standard of review.

The test, stated at 138: “once a state law is shown to discriminate against interstate commerce ‘either on its face or in practical effect,’ the burden falls on the State to demonstrate both that the statute ‘serves a legitimate local purpose,’ and that this purpose could not be served as well by available nondiscriminatory means.” That is Hughes v. Oklahoma, 441 U.S. at 336. Restated at 140 as the operative holding standard, with the two elements again.

Both elements were resolved as findings of fact after a hearing. The District Court found substantial scientific uncertainty about parasites and about the effect of nonnative species on Maine’s fisheries, and found that no accepted procedure existed for sampling and inspecting live baitfish. The whole of the Supreme Court’s opinion is a defense of those findings against appellate second-guessing. At 140: “The District Court found after an evidentiary hearing that both parts of the Hughes test were satisfied, but the Court of Appeals disagreed. We conclude that the Court of Appeals erred in setting aside the findings of the District Court.”

And the passage that does the work, at 144–45: “Although the proffered justification for any local discrimination against interstate commerce must be subjected to ‘the strictest scrutiny,’ Hughes v. Oklahoma, 441 U. S., at 337, the empirical component of that scrutiny, like any other form of factfinding, ”is the basic responsibility of district courts, rather than appellate courts.”” Then, at 145: “no broader review is authorized here simply because this is a constitutional case, or because the factual findings at issue may determine the outcome of the case.” Strictest scrutiny, reviewed for clear error. Sit with that sentence; it is the whole case.

At 146 the Court converts the alternatives question into a question of fact: “the more specific question whether scientifically accepted techniques exist for the sampling and inspection of live baitfish is one of fact, and the District Court’s finding that such techniques have not been devised cannot be characterized as clearly erroneous. Indeed, the record probably could not support a contrary finding.” At 147 it refuses to count a hypothetical: “the ‘abstract possibility’ of developing acceptable testing procedures, particularly when there is no assurance as to their effectiveness,” is not an “[a]vailabl[e] … nondiscriminatory alternativ[e],” Hunt, 432 U.S. at 353. And the principle, same page: “A State must make reasonable efforts to avoid restraining the free flow of commerce across its borders, but it is not required to develop new and unproven means of protection at an uncertain cost.”

Finally, at 148: “Maine has a legitimate interest in guarding against imperfectly understood environmental risks, despite the possibility that they may ultimately prove to be negligible.” And the closing frame, at 151: “The Commerce Clause significantly limits the ability of States and localities to regulate or otherwise burden the flow of interstate commerce, but it does not elevate free trade above all other values.”

Justice Stevens, dissenting alone, thinks the Court inverted the burden. At 152: “There is something fishy about this case. Maine is the only State in the Union that blatantly discriminates against out-of-state baitfish by flatly prohibiting their importation.” Then the objection: “It seems clear, however, that the presumption should run the other way. Since the State engages in obvious discrimination against out-of-state commerce, it should be put to its proof. Ambiguity about dangers and alternatives should actually defeat, rather than sustain, the discriminatory measure.” And at 153: “the invocation of environmental protection or public health has never been thought to confer some kind of special dispensation from the general principle of nondiscrimination in interstate commerce.”

Commonly believed, not in the opinion. First, the phrase “strict scrutiny” does not appear. “Strictest scrutiny” appears once, at 144, and it is a quotation from Hughes. So do “compelling,” “narrowly tailored,” “least restrictive” and “least discriminatory” — zero occurrences each. The Court’s own label for what it applies is “the strict requirements of Hughes v. Oklahoma.” Second, the Court never describes itself as the rare survivor. The word “survive” appears zero times. “The only modern case to satisfy strict scrutiny” is a commentators’ gloss with no textual basis — and it is the commentators, not the Court, who made this case famous.

Two questions. First, if the standard is “strictest scrutiny” but the empirical premises are reviewed for clear error, how much work is the standard doing? Stevens’s answer is: almost none, because the State wins every case in which the science is uncertain — and the science is usually uncertain. Answer him. Second, reverse the record: suppose the District Court had found against Maine on the same evidence. On this opinion’s reasoning, would that finding also have been unreviewable? If yes, then the constitutional rule varies by district judge. If no, the clear-error framing is not doing what the Court says it is doing.

A reporter note: no numerical vote is printed. The line-up at 132: “BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C. J., and BRENNAN, WHITE, MARSHALL, POWELL, REHNQUIST, and O’CONNOR, JJ., joined. STEVENS, J., filed a dissenting opinion.” No “took no part” notation. Eight and one is arithmetic.

West Lynn Creamery, Inc. v. Healy

512 U.S. 186 (1994) · Westlaw

Massachusetts dairy farmers were losing ground to lower-cost producers in other States. The Commonwealth responded with a pricing order that did two things: it imposed a “premium payment” on every dealer for all milk sold to Massachusetts retailers, wherever the milk was produced, and it paid the entire fund out to Massachusetts dairy farmers. Roughly two-thirds of the milk taxed came from out of State. West Lynn, a dealer, stopped paying and was ordered to comply. The Supreme Judicial Court of Massachusetts held the order valid, reasoning that it “does not discriminate on its face, is evenhanded in its application, and only incidentally burdens interstate commerce.” The Supreme Court reversed.

The holding, at 188: “The question presented is whether the pricing order unconstitutionally discriminates against interstate commerce. We hold that it does.”

Justice Stevens’s organizing move is the tariff analogy. At 193: “The paradigmatic example of a law discriminating against interstate commerce is the protective tariff or customs duty.” And the reason tariffs are the paradigm: such a law “violates the principle of the unitary national market by handicapping out-of-state competitors, thus artificially encouraging in-state production even when the same goods could be produced at lower cost in other States.” Then, at 194: “The ‘premium payments’ are effectively a tax which makes milk produced out of State more expensive. Although the tax also applies to milk produced in Massachusetts, its effect on Massachusetts producers is entirely (indeed more than) offset by the subsidy provided exclusively to Massachusetts dairy farmers. Like an ordinary tariff, the tax is thus effectively imposed only on out-of-state products.”

The combination principle. Massachusetts argued that a nondiscriminatory tax is lawful and a local subsidy is lawful, so the two together must be lawful. At 199–200: “respondent errs in assuming that the constitutionality of the pricing order follows logically from the constitutionality of its component parts. By conjoining a tax and a subsidy, Massachusetts has created a program more dangerous to interstate commerce than either part alone.” And at 201: “It is the entire program — not just the contributions to the fund or the distributions from that fund — that simultaneously burdens interstate commerce and discriminates in favor of local producers.”

The political-process rationale, which is Stevens’s distinctive contribution and the target of both separate opinions. At 200: nondiscriminatory taxes are generally upheld in part because ”‘[t]he existence of major in-state interests adversely affected … is a powerful safeguard against legislative abuse.’” But “when a nondiscriminatory tax is coupled with a subsidy to one of the groups hurt by the tax, a State’s political processes can no longer be relied upon to prevent legislative abuse, because one of the in-state interests which would otherwise lobby against the tax has been mollified by the subsidy.” Here, at 200–01, “one of the most powerful of these groups, Massachusetts dairy farmers, instead of exerting their influence against the tax, were in fact its primary supporters.”

Justice Scalia, concurring in the judgment with Justice Thomas, agrees with the result and rejects the reasoning root and branch. At 207: “I do not agree with the reasons assigned by the Court, which seem to me, as explained in Part I, a broad expansion of current law.” His charge, same page: the Court “seems to have canvassed the entire corpus of negative-Commerce-Clause opinions, culled out every free-market snippet of reasoning, and melded them into the sweeping principle that the Constitution is violated by any state law or regulation that ‘artificially encourag[es] in-state production.’” On that principle, at 208, “a state subsidy would clearly be invalid” — and at 209, so would a garden-variety state law, “without the need to ‘balance’ the importance of the state interests thereby pursued, see Pike v. Bruce Church, Inc.”

He would decide on stare decisis grounds alone. At 210: “I will, on stare decisis grounds, enforce a self-executing ‘negative’ Commerce Clause in two situations: (1) against a state law that facially discriminates against interstate commerce, and (2) against a state law that is indistinguishable from a type of law previously held unconstitutional by this Court.” He then sets out four devices — a facially discriminatory tax; a neutral tax with an in-state exemption or credit; a neutral tax whose segregated proceeds are rebated to in-state members (this case); and a subsidy from general revenues — and draws the line before the fourth. At 211: “I would therefore allow a State to subsidize its domestic industry so long as it does so from nondiscriminatory taxes that go into the State’s general revenue fund.”

Chief Justice Rehnquist, dissenting with Justice Blackmun. At 214: “The tax is evenhanded on its face, i. e., it affects all dealers regardless of the point of origin of the milk.” At 215, the objection that has aged best: “nothing in the dormant Commerce Clause suggests that the fate of state regulation should turn upon the particular lawful manner in which the state subsidy is enacted or promulgated. Analysis of interest group participation in the political process may serve many useful purposes, but serving as a basis for interpreting the dormant Commerce Clause is not one of them.” And at 216: “No decided case supports the Court’s conclusion that the negative Commerce Clause prohibits the State from using money that it has lawfully obtained through a neutral tax on milk dealers and distributing it as a subsidy to dairy farmers.” He compares the Court’s move to United States v. Butler and closes, at 217, that the Court has imposed “a policy which bodes ill for the values of federalism.”

Commonly believed, not in the opinion. First, West Lynn does not hold subsidies unconstitutional. Footnote 15, at 199: “We have never squarely confronted the constitutionality of subsidies, and we need not do so now.” And in the body: “A pure subsidy funded out of general revenue ordinarily imposes no burden on interstate commerce, but merely assists local business.” Both separate opinions read the reservation as a reservation. Second, there is no Pike balancing in the opinion of the Court, and no tiered scrutiny. “Pike” appears once in the whole case — in Scalia’s concurrence, complaining that the Court dispensed with balancing. “Strict scrutiny,” “virtually per se,” “clearly excessive,” “nondiscriminatory alternative”: zero occurrences each. The Court disposes of the local-benefits argument not by weighing it but by holding it illegitimate in kind, at 205: “Preservation of local industry by protecting it from the rigors of interstate competition is the hallmark of the economic protectionism that the Commerce Clause prohibits.” Third, the majority never calls the order “facially neutral” in its own voice — that characterization comes from the court below, from Scalia, and from Rehnquist.

Three questions. First, the political-process rationale is the most cited thing in this opinion and only five Justices signed it; Scalia, Thomas, Rehnquist and Blackmun all reject it. What is it worth as precedent? And is it even a Commerce Clause argument, or a representation-reinforcement argument borrowed from a different part of constitutional law? Second, take Scalia’s challenge seriously: if a tax-plus-earmarked-rebate is unconstitutional but a tax-into-general-revenue-plus-appropriation is not, and both produce identical economic effects, what is the constitutional difference? He answers candidly at 212 — it is “a clear, rational line at the limits of our extant negative-Commerce-Clause jurisprudence,” not a principled one. Is candor enough? Third, Rehnquist’s point about “the particular lawful manner in which the state subsidy is enacted” is a drafting objection: Massachusetts loses because of how it wrote the statute. Draft the statute that achieves the same result and survives.

A reporter note: no numerical vote is printed, and two different numbers are correct. The judgment was 7–2. The opinion of the Court commanded five — Stevens, with O’Connor, Kennedy, Souter and Ginsburg. Scalia and Thomas concurred in the judgment only, and expressly refused the reasoning. Saying “7–2” describes the result and hides the case.

Tennessee Wine and Spirits Retailers Association v. Thomas

588 U.S. 504 (2019) · Westlaw

Tennessee required anyone applying for a license to run a liquor store to have lived in the State for the previous two years. Two applicants did not qualify: a company owned by Maryland residents (the Total Wine chain), and a store owned by a couple who had only recently moved to Tennessee. When the State’s regulators were ready to license them anyway, the trade association of in-state liquor retailers threatened to sue. The Court held the requirement unconstitutional, seven to two. The case is assigned for two things: the Court’s defense of the dormant Commerce Clause itself, and the rule for alcohol, where the Constitution contains an express grant of state power.

First, the doctrine defended. The opinion answers critics of the dormant Commerce Clause directly. It concedes that “some Members of the Court have authored vigorous and thoughtful critiques of this interpretation.” 139 S. Ct. at 2460 (Part II–A). And it answers them: “But the proposition that the Commerce Clause by its own force restricts state protectionism is deeply rooted in our case law. And without the dormant Commerce Clause, we would be left with a constitutional scheme that those who framed and ratified the Constitution would surely find surprising.” Ibid. The reason, in the Court’s telling, is the Articles of Confederation. “[R]emoving state trade barriers was a principal reason for the adoption of the Constitution,” and no other clause could do the work. The Import-Export Clause was long ago held to apply only to foreign trade, and the Privileges and Immunities Clause does not protect corporations. Id. at 2460–61. This is the passage to read if someone tells you the dormant Commerce Clause has no textual home. The Court’s answer is not text. It is history, precedent and structure.

Second, the Twenty-first Amendment. Section 2 provides: “The transportation or importation into any State, Territory, or possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.” Tennessee argued that § 2 put its liquor-licensing rules beyond Commerce Clause review altogether. The Court rejected that argument after a long review of the history of alcohol regulation (Parts III and IV). Section 2 gives States “leeway” to choose “the alcohol-related public health and safety measures that its citizens find desirable.” It is not “a license to impose all manner of protectionist restrictions.”

The rule, in Part V: a court asks “whether the challenged requirement can be justified as a public health or safety measure or on some other legitimate nonprotectionist ground.” Then: “Where the predominant effect of a law is protectionism, not the protection of public health or safety, it is not shielded by § 2.” 139 S. Ct. at 2474.

Applied. The two-year requirement “expressly discriminates against nonresidents and has at best a highly attenuated relationship to public health or safety.” The State offered no evidence, and the Court knocked down each justification with a nondiscriminatory alternative:

• The State wanted retailers who could be sued in its courts. It could require them to appoint an agent for service of process.
• It wanted to investigate applicants. It could run background checks, which it already did.
• It wanted to supervise stores. The stores are in Tennessee and can be inspected there.
• It wanted retailers who know their customers. The rule requires residence in the State, not in the neighborhood, so a store owner across the border in Bristol, Virginia, would be excluded while one 500 miles away in Memphis would qualify.

The conclusion: “the predominant effect of the 2-year residency requirement is simply to protect the Association’s members from out-of-state competition.” The Court therefore held that the provision “violates the Commerce Clause and is not saved by the Twenty-first Amendment.”

The fight over Granholm v. Heald (2005). Granholm struck down state laws that let in-state wineries ship directly to consumers while barring out-of-state wineries. It spoke throughout of products and producers. Justice Gorsuch, dissenting with Justice Thomas, read that as the line: § 2 bars discrimination against out-of-state liquor, but leaves States free to decide who may sell liquor inside their borders, including residents only. The majority read Granholm’s language as a description of that case’s facts, not a limit on the rule.

The dissent’s best question, at 139 S. Ct. at 2484 (Gorsuch, J., dissenting): “What are lower courts supposed to make of this? How much public health and safety benefit must there be to overcome this Court’s worries about protectionism ‘predominat[ing]’?” Hold on to it for Pike and National Pork Producers, which ask the same question about balancing without the Twenty-first Amendment.

Where this sits in the module.

• City of Philadelphia v. New Jersey: a law that discriminates on its face is “virtually per se” invalid.
• Tennessee Wine: § 2 changes the inquiry for alcohol, from near-automatic invalidity to a search for a genuine health or safety justification. The result here is the same.
• Maine v. Taylor is the rare facially discriminatory law that survived: a State with no alternative, protecting its fish from out-of-state parasites. Compare the evidence Maine offered with what Tennessee offered.

Two questions. First, the Court says a residency rule for all retail businesses “could not be sustained.” Why not? Work it through Philadelphia and then through the Privileges and Immunities Clause, and notice that the corporation in this case could not have used the second. Second, if “predominant effect” is the test, who bears the burden of proving what the effect is, and with what kind of evidence? The State here offered none. What should a State have in the record before it defends a law like this one?

A note on the reporter. No numerical vote is printed. The opinion is Justice Alito’s for the Court, joined by the Chief Justice and Justices Ginsburg, Breyer, Sotomayor, Kagan and Kavanaugh. Justice Gorsuch dissents, joined by Justice Thomas. Pins are to the Supreme Court Reporter, because internal U.S. Reports pagination for volume 588 was not available when this note was prepared. The full reading remains on the course website.

Exxon Corp. v. Governor of Maryland

437 U.S. 117 (1978) · Westlaw

After a 1973 survey suggested that gasoline stations operated by producers and refiners had received preferential treatment during the shortage, Maryland barred any producer or refiner from operating a retail service station in the State, and required that any temporary price reduction be extended uniformly to all stations it supplied. Maryland has no oil producers and no refiners. Every drop of gasoline sold in the State arrives in interstate commerce. Seven major oil companies challenged the divestiture provisions. The Maryland Court of Appeals upheld them; the Supreme Court affirmed.

The case is the counterweight to Hunt, and the sentence it exists for is at 127–128: “As indicated by the Court in Hughes, the Clause protects the interstate market, not particular interstate firms, from prohibitive or burdensome regulations.” Note two things about it. The Court says “the Clause,” and it attributes the proposition to Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 806 — this is not offered as a new formulation.

Why there is no discrimination. At 125: “Plainly, the Maryland statute does not discriminate against interstate goods, nor does it favor local producers and refiners. Since Maryland’s entire gasoline supply flows in interstate commerce and since there are no local producers or refiners, such claims of disparate treatment between interstate and local commerce would be meritless.” And the general proposition, at 126: “The fact that the burden of a state regulation falls on some interstate companies does not, by itself, establish a claim of discrimination against interstate commerce.”

Why there is no cognizable burden. The plaintiffs’ best argument was that the law shifts retail business from refiner-operated stations to independents. The Court answers it three ways. First, at 126: “While the refiners will no longer enjoy their same status in the Maryland market, in-state independent dealers will have no competitive advantage over out-of-state dealers.” Second, at 127: “Some refiners may choose to withdraw entirely from the Maryland market, but there is no reason to assume that their share of the entire supply will not be promptly replaced by other interstate refiners. The source of the consumers’ supply may switch from company-operated stations to independent dealers, but interstate commerce is not subjected to an impermissible burden simply because an otherwise valid regulation causes some business to shift from one interstate supplier to another.” Third, in footnote 16 at 126–127, it distinguishes Hunt and Dean Milk as cases where local goods gained market share, and concludes that the Maryland statute “has no impact on the relative proportions of local and out-of-state goods sold in Maryland.”

Justice Blackmun, concurring in part and dissenting in part, alone, would have held the divestiture provisions discriminatory in practical effect on the numbers: more than 99% of the protected class of stations was locally operated, and 95% of the excluded class were out-of-state firms. At 137–138: “No facial inequality exists; §§ (b) and (c) preclude all refiners and producers from marketing gasoline at the retail level. But given the structure of the retail gasoline market in Maryland, the effect of §§ (b) and (c) is to exclude a class of predominantly out-of-state gasoline retailers while providing protection from competition to a class of nonintegrated retailers that is overwhelmingly composed of local businessmen.” He would then have shifted the burden under Hunt and Dean Milk, at 141. And his charge against the majority, at 147: “To accept the argument of the Court, that is, that discrimination must be universal to offend the Commerce Clause, naively will foster protectionist discrimination against interstate commerce.”

Commonly believed, not in the opinion. Pike v. Bruce Church is never cited in Exxon — not once, in any opinion. Neither is “clearly excessive.” The word “balance” appears once, in an antitrust passage at 133 that has nothing to do with the Commerce Clause. So the case that is taught as the leading example of a facially neutral law surviving the burden inquiry does not perform that inquiry. It holds that the asserted burden is not a Commerce Clause burden at all, which is a different thing. Nor does the phrase “market participant” appear anywhere — this is a market-regulation case.

Three questions. First, put Exxon next to Hunt, decided one year earlier. In Hunt, a neutral labeling rule that raised Washington growers’ costs and erased their earned competitive edge was discrimination in practical effect. Here, a neutral rule that removes seven interstate firms from a retail market is not. State the distinction in one sentence, and then test it against Blackmun’s numbers. Is the answer that in Hunt the beneficiaries were local producers while here the beneficiaries are local retailers selling out-of-state goods — and if so, why does the Commerce Clause care about the first and not the second? Second, “the Clause protects the interstate market, not particular interstate firms” is elegant and it is doing enormous work. Who, if not firms, has standing to complain of a burden on the market? Third, note what makes this case easy for the Court: Maryland had no refiners to favor. Redraft the statute for a State that does have them, and ask at what point the analysis changes.

A reporter note: no numerical vote is printed. The line-up at 118–119: “STEVENS, J., delivered the opinion of the Court, in which BURGER, C. J., and BRENNAN, STEWART, WHITE, MARSHALL, and REHNQUIST, JJ., joined. BLACKMUN, J., filed an opinion concurring in part and dissenting in part. POWELL, J., took no part in the consideration or decision of the cases.” Justice Powell did not dissent — he did not sit. Seven, one and one is arithmetic. Note also that CourtListener’s date field for this cluster reads October 2, 1978; the Reporter says decided June 14, 1978.

Minnesota v. Clover Leaf Creamery Co.

449 U.S. 456 (1981) · Westlaw

Minnesota banned the retail sale of milk in plastic nonreturnable containers while continuing to allow paperboard nonreturnable cartons. The stated purposes were solid-waste reduction, energy conservation and resource conservation. The state trial court, after an extensive evidentiary hearing, found the Act’s “actual basis was to promote the economic interests of certain segments of the local dairy and pulpwood industries at the expense of the economic interests of other segments of the dairy industry and the plastics industry” — Minnesota has pulpwood; it has no plastic-resin industry. The Minnesota Supreme Court struck the Act down on equal protection grounds and did not reach the Commerce Clause. The Supreme Court reversed.

Read this case for two things: what it does with Pike, and what it does with a trial court’s finding of protectionist purpose.

The two-tier structure, stated at 471: “If a state law purporting to promote environmental purposes is in reality ‘simple economic protectionism,’ we have applied a ‘virtually per se rule of invalidity.’ Philadelphia v. New Jersey, 437 U. S. 617, 624 (1978). Even if a statute regulates ‘evenhandedly,’ and imposes only ‘incidental’ burdens on interstate commerce, the courts must nevertheless strike it down if ‘the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.’ Pike v. Bruce Church, Inc., 397 U. S. 137, 142 (1970).” The Court then places the Act on the second tier, at 471–472, because it “‘regulates evenhandedly’ by prohibiting all milk retailers from selling their products in plastic, nonreturnable milk containers, without regard to whether the milk, the containers, or the sellers are from outside the State.”

The application, at 472: “Since the statute does not discriminate between interstate and intrastate commerce, the controlling question is whether the incidental burden imposed on interstate commerce by the Minnesota Act is ‘clearly excessive in relation to the putative local benefits.’ Pike v. Bruce Church, Inc., supra, at 142. We conclude that it is not.” The burden is “relatively minor” because “[m]ilk products may continue to move freely across the Minnesota border,” and because most dairies already package in more than one container type. And there is no alternatives problem, at 473: “we find that no approach with ‘a lesser impact on interstate activities’ is available.”

Three supports the Court adds, all at 473 and all worth noting. First, “there is no reason to suspect that the gainers will be Minnesota firms, or the losers out-of-state firms,” and in fact “two of the three dairies, the sole milk retailer, and the sole milk container producer challenging the statute in this litigation are Minnesota firms.” Second, footnote 17: “The existence of major in-state interests adversely affected by the Act is a powerful safeguard against legislative abuse.” Keep that footnote; Justice Stevens builds the whole of West Lynn Creamery on it thirteen years later. Third, even conceding that the out-of-state plastics industry bears more of the burden than the Minnesota pulpwood industry, that burden is not “clearly excessive.”

Now the hard part: the finding of protectionist purpose. The Court does not hold it clearly erroneous. It disposes of it twice by cross-reference. In footnote 7 at 463, in the equal protection discussion: “We accept the contrary holding of the Minnesota Supreme Court that the articulated purpose of the Act is its actual purpose.” Then in footnote 15 at 471, in the Commerce Clause discussion: “We have already considered and rejected this argument in the equal protection context, see n. 7, supra, and do so in this context as well.” The governing principle, at 470: “it is not the function of the courts to substitute their evaluation of legislative facts for that of the legislature.” A trial court’s express finding of protectionism is displaced by a state supreme court’s acceptance of the avowed purpose, and then carried into the Commerce Clause by footnote.

Justice Powell, concurring in part and dissenting in part, attacks exactly that. He joins the equal protection holding but, at 475, “would not, however, reach the Commerce Clause issue, but would remand it for consideration by the Supreme Court of Minnesota,” because “the trial court’s findings normally would require us to conclude that the Minnesota Legislature was engaging in such discrimination, as they were not rejected by the Minnesota Supreme Court” — that court “was merely assuming that the statute was intended to promote its stated purposes” (476). His conclusion, at 476–477: “The Court’s decision today, holding that Chapter 268 does not violate the Commerce Clause, is flatly contrary to the only relevant specific findings of fact.”

Justice Stevens, dissenting alone, does not reach the Commerce Clause at all. His objection is structural: the Court has announced a rule of federal constitutional law governing the division of labor between a state legislature and its own state courts. At 479: “what is the source — if indeed there be one — of this Court’s power to make the majestic announcement that it is not the function of a state court to substitute its evaluation of legislative facts for that of a state legislature?” And at 481: “The functions that a state court shall perform within the structure of state government are unquestionably matters of state law.”

Commonly believed, not in the opinion. The standard complaint that Clover Leaf “does not really apply Pike” is wrong on the text — Pike is cited four times, at 471, 472 and 473, and the “clearly excessive” formula is quoted and applied. What is true is subtler: the Court never uses the word “balancing,” and the local benefits it weighs are the ones it has just accepted, as a matter of deference, from the equal protection analysis. The balance is won at the purpose stage, not the weighing stage.

Three questions. First, if a court may not substitute its evaluation of legislative facts for the legislature’s, and a state supreme court’s acceptance of the avowed purpose forecloses a trial court’s contrary finding, what is left of Hunt’s practical-effect inquiry? Second, Powell’s point is narrow and hard to answer: the Court decided a Commerce Clause question on a record containing an unrebutted finding of protectionism, without any state high-court view. Should it have remanded? Third, footnote 17’s political-safeguards idea — that in-state losers protect out-of-state losers — is intuitive and rests on nothing in the record. West Lynn later treats its absence as dispositive. Is it an empirical claim or an article of faith?

A reporter note: no numerical vote is printed. Brennan, J., delivered the opinion of the Court, joined by Burger, C. J., and Stewart, White, Marshall and Blackmun, JJ.; Powell, J., concurred in part and dissented in part; Stevens, J., dissented; and Rehnquist, J., took no part in the consideration or decision of the case. Part III — the Commerce Clause holding — had six votes.

Bibb v. Navajo Freight Lines, Inc.

359 U.S. 520 (1959) · Westlaw

Illinois required every truck and trailer operating on its highways to be equipped with contour rear-fender mudguards. Arkansas required straight mudflaps. Forty-five other States permitted the straight flap; Illinois alone required the contour. A truck crossing from Arkansas into Illinois had to have its mudguards changed. The District Court found the change took two to four hours of welding labor, was dangerous with flammable cargo, and would cost the plaintiff carriers millions. It also found the contour flap “possesses no advantages” in safety and “creates hazards previously unknown to those using the highways.” The Supreme Court affirmed the injunction.

Begin with footnote 3, at 523: “No contention is here made that the statute discriminates against interstate commerce, and it is clear that its provisions apply alike to vehicles in intrastate as well as in interstate commerce.” This is not a discrimination case, and the Court says so on the second page. Every occurrence of “discriminat-” in the opinion is there to disclaim discrimination as a ground. Whatever strikes down the Illinois law is something else.

The presumption the Court has to overcome, at 524: “These safety measures carry a strong presumption of validity when challenged in court. If there are alternative ways of solving a problem, we do not sit to determine which of them is best suited to achieve a valid state objective. Policy decisions are for the state legislature, absent federal entry into the field.” And the standard, quoted from Southern Pacific Co. v. Arizona, 325 U.S. 761, 775–776: the Court must uphold the statute unless “the total effect of the law as a safety measure in reducing accidents and casualties is so slight or problematical as not to outweigh the national interest in keeping interstate commerce free from interferences which seriously impede it.”

What did not decide the case. Two things, both said expressly at 526. Cost: “If we had here only a question whether the cost of adjusting an interstate operation to these new local safety regulations prescribed by Illinois unduly burdened interstate commerce, we would have to sustain the law under the authority of the Sproles, Barnwell, and Maurer cases.” And safety: “The same result would obtain if we had to resolve the much discussed issues of safety presented in this case.” The Court recites the District Court’s safety findings and then declines to rest on them.

What did decide it is interstate incompatibility. At 526: “We were not faced there with the question whether one State could prescribe standards for interstate carriers that would conflict with the standards of another State, making it necessary, say, for an interstate carrier to shift its cargo to differently designed vehicles once another state line was reached.” At 527: “Vehicles equipped to meet the standards of the Illinois statute would not comply with Arkansas standards, and vice versa. Thus if a trailer is to be operated in both States, mudguards would have to be interchanged, causing a significant delay.” And the disruption of “interlining” — the industry practice of passing a loaded trailer from one carrier to another at terminals — which the Illinois rule would cripple.

The holding, at 529: “This is one of those cases — few in number — where local safety measures that are nondiscriminatory place an unconstitutional burden on interstate commerce. This conclusion is especially underlined by the deleterious effect which the Illinois law will have on the ‘interline’ operation of interstate motor carriers.” And, same page, the Cooley-flavored move: the conflict with Arkansas “suggests that this regulation of mudguards is not one of those matters ‘admitting of diversity of treatment, according to the special requirements of local conditions.’”

The closing frame, at 530: “We deal not with absolutes but with questions of degree.” And the qualification that keeps the case from being a rule about innovation: “Such a new safety device — out of line with the requirements of the other States — may be so compelling that the innovating State need not be the one to give way. But the present showing — balanced against the clear burden on commerce — is far too inconclusive to make this mudguard meet that test.”

Justice Harlan, joined by Justice Stewart, concurs — and rests on precisely the ground the Court said it need not reach. His entire opinion is one paragraph at 530: given the District Court’s findings that the contour flap “possesses no advantages” and “indeed creates certain safety hazards,” “this heavy burden cannot be justified on the theory that the Illinois statute is a necessary, appropriate, or helpful local safety measure. Accordingly, I concur in the judgment of the Court.” Two Justices would decide this as a case about bad safety findings; seven would not.

Commonly believed, not in the opinion. Bibb is routinely said to apply “the Pike balancing test.” It cannot — Pike v. Bruce Church was decided eleven years later, in 1970. What Bibb applies is the Southern Pacific standard, which it cites four times and quotes for the governing formula at 524. The word “balanced” appears once, at 530, as a participle rather than a named test; “balancing” never appears. And the case does not rest on discrimination, which footnote 3 disclaims.

Three questions. First, if cost alone would not have sufficed and the safety evidence would not have sufficed, then what struck the statute down is that Illinois was out of step — forty-five States one way, Illinois the other. Is being an outlier a constitutional defect? Push on it: the first State to require seat belts was also an outlier. Second, the Court says conflicting standards are what matter, but the actual conflict was with Arkansas alone. Would the case have come out the same way if Arkansas had merely permitted straight flaps rather than requiring them? Third, hold Bibb against Clover Leaf. Both involve neutral state laws with real out-of-state costs; the mudguard law falls and the container ban stands. What separates them — the magnitude of the burden, the strength of the local benefit, or the fact that one interferes with a national transportation network while the other stops at the state line?

A reporter note: no numerical vote is printed, and none is derivable from the reporter. All the U.S. Reports tell you is that MR. JUSTICE DOUGLAS delivered the opinion of the Court and that “MR. JUSTICE HARLAN, whom MR. JUSTICE STEWART joins, concurring” wrote separately. The remaining six Justices are unattributed and there is no “took no part” notation. Do not quote a tally to the reporter. And note: there is no Frankfurter opinion in this case — a persistent secondary-source error.

Western & Southern Life Insurance Co. v. State Board of Equalization of California

451 U.S. 648 (1981) · Westlaw

California imposed a “retaliatory” tax on out-of-state insurers: if the insurer’s home State would tax a California insurer more heavily than California taxes domestic insurers, California charged the difference. The avowed purpose was to pressure other States into lowering their taxes on California companies. Western & Southern, an Ohio insurer, challenged the tax under the Commerce Clause and the Equal Protection Clause. The California Court of Appeal upheld it. The Supreme Court affirmed.

This is the congressional-authorization case, and the holding is jurisdictional in flavor: the Commerce Clause simply does not reach here.

The principle, at 652–653: “Our decisions do not, however, limit the authority of Congress to regulate commerce among the several States as it sees fit. In the exercise of this plenary authority, Congress may ‘confe[r] upon the States an ability to restrict the flow of interstate commerce that they would not otherwise enjoy.’ … If Congress ordains that the States may freely regulate an aspect of interstate commerce, any action taken by a State within the scope of the congressional authorization is rendered invulnerable to Commerce Clause challenge.”

The application. At 653: “Congress removed all Commerce Clause limitations on the authority of the States to regulate and tax the business of insurance when it passed the McCarran-Ferguson Act.” The Court reads the statute and finds no carve-out: “The unequivocal language of the Act suggests no exceptions,” and “We find no such limitation in the language or history of the Act.” Then, at 655: “We must therefore reject Western & Southern’s Commerce Clause challenge to the California retaliatory tax: the McCarran-Ferguson Act removes entirely any Commerce Clause restriction upon California’s power to tax the insurance business.” And at 656: “Only the Equal Protection Clause remains as a possible ground for invalidation of the California tax.”

Note the structure. The Court does not uphold the tax against a Commerce Clause challenge; it holds the Clause inapplicable, and then decides the case on rational-basis equal protection, which the tax survives at 674.

Commonly believed, not in the opinion — and this one matters. Western & Southern announces no clarity requirement. The phrases “clear statement,” “unmistakably clear,” “expressly stated,” “clearly expressed” and “unambiguous” appear zero times. The test the opinion actually supplies is one of scope, not clarity: state action “within the scope of the congressional authorization” is immune. The “unmistakably clear” formulation that casebooks pair with this case comes from South-Central Timber, 467 U.S. at 91 — three years later. Read the two together and you will see a doctrine tightening: here the Court reads a broad statute broadly; there it refuses to infer authorization from a parallel federal policy. Neither is “dormant” in its own vocabulary — that word appears zero times here as well.

Justice Stevens, dissenting with Justice Blackmun, does not reach the Commerce Clause. He attacks the tax’s avowed purpose under the Equal Protection Clause. At 674: “The practice of holding hostages to coerce another sovereign to change its policies is not new; nor, in my opinion, is it legitimate.” At 675: “In my opinion that coercive motivation is not an acceptable justification for California’s discriminatory treatment of nonresidents.” And the line worth keeping, at 676–677: “the retaliatory increment is in the nature of a monetary penalty imposed on foreign citizens to apply pressure to their sovereign. Analytically, pressure of that kind is comparable to ransom.”

Three questions. First, the authorization exception is usually described as narrow. Is it? Congress here removed an entire industry from the Clause, and the Court found the removal “unequivocal” from a statute that says nothing about interstate discrimination in terms. Compare what the Court demands of Congress in South-Central Timber. What changed between 1981 and 1984 — the doctrine, or the statutes? Second, if Congress may authorize what the Clause would otherwise forbid, then the dormant Commerce Clause is a default rule rather than a constitutional prohibition. Say why that is right, and then ask what work the Clause is doing that an ordinary preemption analysis would not do. Third, take Stevens seriously on the underlying tax. A retaliatory tax is a State using private out-of-state firms as hostages to coerce another State’s legislature. If that is permissible because Congress said insurance is the States’ business, is there any limit — could California have simply barred Ohio insurers outright?

A reporter note: no numerical vote is printed. The line-up at 649: “BRENNAN, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, WHITE, MARSHALL, POWELL, and REHNQUIST, JJ., joined. STEVENS, J., filed a dissenting opinion, in which BLACKMUN, J., joined.” No “took no part” notation. Seven and two is arithmetic. Note the posture: this came up on appeal, not certiorari.

Reeves, Inc. v. Stake

447 U.S. 429 (1980) · Westlaw

South Dakota built a cement plant in 1919 and ran it for sixty years, selling to buyers in South Dakota and neighboring States. In 1978, facing a shortage, the State Cement Commission announced it would “supply all South Dakota customers first and then, if any surplus exists, to fill orders from other customers.” Reeves, a Wyoming ready-mix concrete firm that had bought 95% of its cement from the South Dakota plant for twenty years, was cut off and lost most of its business. The Eighth Circuit upheld the policy. The Supreme Court affirmed, 5–4.

The question, at 430: “whether, consistent with the Commerce Clause, … the State of South Dakota, in a time of shortage, may confine the sale of the cement it produces solely to its residents.”

The distinction the case is taught for, at 436–437: “The basic distinction drawn in Alexandria Scrap between States as market participants and States as market regulators makes good sense and sound law. As that case explains, the Commerce Clause responds principally to state taxes and regulatory measures impeding free private trade in the national marketplace. … There is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market.”

The sovereignty rationale, at 438–439, rests on three supports: the role of each State “as guardian and trustee for its people”; “the long recognized right of trader or manufacturer, engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal”; and the practical point that “the competing considerations in cases involving state proprietary action often will be subtle, complex, politically charged, and difficult to assess under traditional Commerce Clause analysis.”

On Alexandria Scrap. Maryland there had paid a bounty for the destruction of abandoned Maryland cars, with documentation requirements that fell more heavily on out-of-state processors. At 436 the Court recalls that “[h]aving characterized Maryland as a market participant, rather than as a market regulator, the Court found no reason to ‘believe the Commerce Clause was intended to require independent justification for [the State’s] action.’” And here, at 440: “South Dakota, as a seller of cement, unquestionably fits the ‘market participant’ label more comfortably than a State acting to subsidize local scrap processors. Thus, the general rule of Alexandria Scrap plainly applies here.” Footnote 7 collapses the dissent’s proposed two-step reading into “a single inquiry: whether the challenged ‘program constituted direct state participation in the market.’”

Three limits the Court builds in, each of which matters later. At 443: “Cement is not a natural resource, like coal, timber, wild game, or minerals.” Footnote 17, at 444: “Nor has South Dakota cut off access to its own cement altogether, for the policy does not bar resale of South Dakota cement to out-of-state purchasers.” And footnote 9, at 438: “We have no occasion to explore the limits imposed on state proprietary actions by the ‘foreign commerce’ Clause.” Keep all three. South-Central Timber will hold that Alaska loses precisely because all three are present there and absent here.

Justice Powell, dissenting with Brennan, White and Stevens, would draw the line at what the State is doing rather than at whether it owns the goods. At 447: “This policy represents precisely the kind of economic protectionism that the Commerce Clause was intended to prevent.” At 449: “If a public enterprise undertakes an ‘integral operatio[n] in areas of traditional governmental functions,’ the Commerce Clause is not directly relevant. But when a State itself becomes a participant in the private market for other purposes, the Constitution forbids actions that would impede the flow of interstate commerce” (450). And the sharpest point, same page: “precisely because South Dakota is a State, it cannot be presumed to behave like an enterprise ‘engaged in an entirely private business.’” At 452 he distinguishes Alexandria Scrap: “Unlike the market subsidies at issue in Alexandria Scrap, the marketing policy of the South Dakota Cement Commission has cut off interstate trade.”

Commonly believed, not in the opinion. Reeves never uses the phrase “market participant doctrine” — and the word “doctrine” appears zero times in the entire case, majority and dissent alike. What the Court says is “the general rule of Alexandria Scrap” and “the Alexandria Scrap exemption.” The Court’s own label “market-participant doctrine” first appears in South-Central Timber, where it occurs ten times. “Dormant” also appears zero times.

Three questions. First, Powell’s premise is that a State is never merely a trader, because its decisions are political. The majority’s premise is that a State may spend its own money as it likes. Both are true. Which should control, and why? Second, the rule turns on ownership: South Dakota owns the cement, so it may prefer its residents; if it had merely subsidized a private plant on the same condition, West Lynn Creamery suggests a different answer. Is ownership a principled line or a formal one? Third, note what the Court does with the shortage. It treats “a time of shortage” as the occasion for the policy, not as a justification requiring scrutiny — because no scrutiny applies. Would the case be harder if South Dakota had adopted the preference in a time of glut, purely to favor local builders?

A reporter note: no numerical vote is printed. The line-up at 430: “BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C. J., and STEWART, MARSHALL, and REHNQUIST, JJ., joined. POWELL, J., filed a dissenting opinion, in which BRENNAN, WHITE, and STEVENS, JJ., joined.” No “took no part” notation. Five and four is arithmetic — and this doctrine rests on one vote.

White v. Massachusetts Council of Construction Employers, Inc.

460 U.S. 204 (1983) · Westlaw

The Mayor of Boston ordered that all construction projects funded in whole or in part by city funds, or by funds the city administers, be performed by a workforce at least half of whom are bona fide Boston residents. Note what that does: it does not choose the city’s trading partners. It tells private contractors whom to hire. The Supreme Judicial Court of Massachusetts held the order invalid under the Commerce Clause. The Supreme Court reversed.

Two independent grounds, keyed to whose money it is. The holding, at 214–215: “Insofar as the city expended only its own funds in entering into construction contracts for public projects, it was a market participant and entitled to be treated as such under the rule of Hughes v. Alexandria Scrap Corp. … Insofar as the Mayor’s executive order was applied to projects funded in part with funds obtained from the federal programs described above, the order was affirmatively sanctioned by the pertinent regulations of those programs.” The second ground is a congressional-authorization holding, and it was effectively unanimous — Justices Blackmun and White agreed with it.

The rule restated, at 208: “Alexandria Scrap and Reeves, therefore, stand for the proposition that when a state or local government enters the market as a participant it is not subject to the restraints of the Commerce Clause. As we said in Reeves, in this kind of case there is ‘a single inquiry: whether the challenged “program constituted direct state participation in the market.”’ We reaffirm that principle now.”

The step the case actually takes. Respondents argued that the order does not regulate the city’s own dealings; it reaches employment relationships between private contractors and private workers. At 210 the Court answers: “Even if this conclusion is factually correct, it is not relevant to the inquiry of whether the city is participating in the marketplace when it provides city funds for building construction. If the city is a market participant, then the Commerce Clause establishes no barrier to conditions such as these which the city demands for its participation.”

The controlling limit is in a footnote — footnote 7, at 211. This is the sentence later courts fight over, and it is worth quoting at length: “We agree with JUSTICE BLACKMUN that there are some limits on a state or local government’s ability to impose restrictions that reach beyond the immediate parties with which the government transacts business. … We find it unnecessary in this case to define those limits with precision, except to say that we think the Commerce Clause does not require the city to stop at the boundary of formal privity of contract. In this case, the Mayor’s executive order covers a discrete, identifiable class of economic activity in which the city is a major participant. Everyone affected by the order is, in a substantial if informal sense, ‘working for the city.’ Wherever the limits of the market participation exception may lie, we conclude that the executive order in this case falls well within the scope of Alexandria Scrap and Reeves.”

That footnote is where the doctrine’s reach was set. South-Central Timber cites “460 U. S., at 211, n. 7” three separate times, and United Building & Constr. Trades Council v. Mayor of Camden, 465 U.S. 208, 219 (1984), reads the “working for the city” idea as “crucial” to the analysis.

Justice Blackmun, concurring in part and dissenting in part, joined by Justice White, accepts the federal-funds holding — at 215, “Congress unquestionably has the power to authorize state or local discrimination against interstate commerce that otherwise would violate the dormant aspect of the Commerce Clause” — and rejects the rest. At 216: “I do not agree, however, with the Court’s holding that the executive order is immune from Commerce Clause scrutiny insofar as it applies to city activities undertaken without specific congressional authorization.” His reason, at 216–217: “Neither Reeves nor Alexandria Scrap, however, went beyond ensuring that the States enjoy ‘the long recognized right of trader or manufacturer, engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal.’ Boston’s executive order goes much further” (217). The order “directly restricts the ability of private employers to hire nonresidents.”

Commonly believed, not in the opinion. White does not decide whether the mandate reaches wholly private downstream contracts, and footnote 7 says so in terms: “We find it unnecessary in this case to define those limits with precision.” The phrase “natural incidents,” which casebooks sometimes attribute to this case, does not appear. Neither does the word “doctrine,” anywhere in the opinion. Everything the case holds about downstream reach it holds by locating this order inside the boundary, not by drawing the boundary.

Three questions. First, “everyone affected by the order is, in a substantial if informal sense, ‘working for the city.’” Test that. A subcontractor’s supplier’s driver is not working for the city in any sense a payroll clerk would recognize. Where in the chain does the phrase stop being true, and does the Constitution care? Second, Blackmun’s line is between choosing your trading partners and dictating your partners’ conduct toward third parties. It is clean, and the Court rejects it. Is the Court’s answer — that the inquiry is only whether the city is participating, so conditions of participation are never separately examined — sustainable after South-Central Timber? Third, note the doctrinal oddity: a city preferring its own residents in hiring survives the Commerce Clause here, and the very same order was held subject to the Privileges and Immunities Clause the next Term in Camden. Why should one clause exempt proprietary action and the other not?

A reporter note: no numerical vote is printed. The line-up at 205: “REHNQUIST, J., delivered the opinion of the Court, in which BURGER, C. J., and BRENNAN, MARSHALL, POWELL, STEVENS, and O’CONNOR, JJ., joined. BLACKMUN, J., filed an opinion concurring in part and dissenting in part, in which WHITE, J., joined.” No “took no part” notation. Seven and two by arithmetic — but only on the market-participant ground; the federal-funds ground drew no disagreement at all. (Counsel note for the curious: Laurence H. Tribe argued for the petitioners.)

South-Central Timber Development, Inc. v. Wunnicke

467 U.S. 82 (1984) · Westlaw

Alaska sold timber from state lands on the condition that the buyer partially process it inside Alaska before shipping it out. South-Central Timber, an Alaska firm that bought timber and shipped it to Japan unprocessed, sued. The Ninth Circuit held the requirement authorized by Congress, reasoning from a long-standing federal policy requiring primary manufacture of timber taken from federal lands. The Supreme Court reversed.

Read the attribution line before anything else, because this case is two cases. At 83–84: “JUSTICE WHITE announced the judgment of the Court and delivered the opinion of the Court with respect to Parts I and II, and an opinion with respect to Parts III and IV, in which JUSTICE BRENNAN, JUSTICE BLACKMUN, and JUSTICE STEVENS joined.”

Parts I and II — the opinion of the Court, six votes (White, Brennan, Blackmun, Stevens, plus Powell and Burger, who joined those Parts only). Parts III and IV — a four-Justice plurality. And Parts III and IV are the famous ones. Justice Marshall took no part.

The actual holding of the Court, in Part II, is about congressional authorization. At 91: “There is no talismanic significance to the phrase ‘expressly stated,’ however; it merely states one way of meeting the requirement that for a state regulation to be removed from the reach of the dormant Commerce Clause, congressional intent must be unmistakably clear.” And at 92: “A rule requiring a clear expression of approval by Congress ensures that there is, in fact, such a collective decision.” Applied, at 92–93: “The fact that the state policy in this case appears to be consistent with federal policy … is an insufficient indicium of congressional intent. Congress acted only with respect to federal lands; we cannot infer from that fact that it intended to authorize a similar policy with respect to state lands.”

Set that against Western & Southern. There, a statute silent about interstate discrimination “unequivocal[ly]” removed the Clause from an entire industry. Here, a parallel federal policy on federal land will not do. The tightening is the doctrine.

Now the plurality, Parts III and IV. The framing, at 93: “if a State is acting as a market participant, rather than as a market regulator, the dormant Commerce Clause places no limitation on its activities. … The precise contours of the market-participant doctrine have yet to be established, however, the doctrine having been applied in only three cases of this Court to date.”

Reeves is distinguished on all three of the limits Reeves built in, at 96: “In this case, all three of the elements that were not present in Reeves — foreign commerce, a natural resource, and restrictions on resale — are present.”

The limit, at 97, and this is the sentence everyone quotes: “The limit of the market-participant doctrine must be that it allows a State to impose burdens on commerce within the market in which it is a participant, but allows it to go no further. The State may not impose conditions, whether by statute, regulation, or contract, that have a substantial regulatory effect outside of that particular market.” Same page: “the doctrine is not carte blanche to impose any conditions that the State has the economic power to dictate, and does not validate any requirement merely because the State imposes it upon someone with whom it is in contractual privity.”

Why downstream conditions are different, at 99: “Instead of merely choosing its own trading partners, the State is attempting to govern the private, separate economic relationships of its trading partners; that is, it restricts the post-purchase activity of the purchaser, rather than merely the purchasing activity.” Conclusion, same page: “the State may not avail itself of the market-participant doctrine to immunize its downstream regulation of the timber-processing market in which it is not a participant.”

Justice Rehnquist, dissenting with Justice O’Connor, would affirm. At 101–102: “the line of distinction drawn in the plurality opinion between the State as market participant and the State as market regulator is both artificial and unconvincing.” At 102: “The plurality draws this line ‘simply as a matter of intuition,’ ante, at 98, but then seeks to bolster its intuition through a series of remarks more appropriate to antitrust law than to the Commerce Clause.” His reductive point, at 103: “Alaska is merely paying the buyer of the timber indirectly, by means of a reduced price, to hire Alaska residents to process the timber” — which is Boston’s hiring preference in White with an extra step. And his footnote answers the plurality’s “downstream” rationale: “this is not a ‘reason’ at all, but merely a restatement of the conclusion. The line between participation and regulation is what we are trying to determine.”

Justice Powell, joined by Chief Justice Burger, is why Parts III and IV are a plurality. His entire opinion, at 101: “I join Parts I and II of JUSTICE WHITE’s opinion. I would remand the case to the Court of Appeals to allow that court to consider whether Alaska was acting as a ‘market participant’ and whether Alaska’s primary-manufacture requirement substantially burdened interstate commerce under the holding of Pike v. Bruce Church, Inc.” Justice Brennan, concurring alone, goes the other way: “In my view, JUSTICE WHITE’s treatment of the market-participant doctrine and the response of JUSTICE REHNQUIST point up the inherent weakness of the doctrine.”

Commonly believed, not in the opinion. First, the downstream limit is not a holding of the Court — it is four votes of eight participating Justices. The word “plurality” appears seven times in the case, every one of them in Rehnquist’s dissent. Second, the plurality does not say the doctrine is “not a license to regulate the private market”; that phrase appears nowhere. Its formulation is “not carte blanche.” Third, the Court did not hold Alaska’s requirement unconstitutional. The words “unconstitutional” and “violates the Commerce Clause” appear zero times in the entire case. The judgment is reversal and remand; the Court’s own holding is only that Congress had not authorized the requirement.

Three questions. First, given that the limit has four votes, what is a lower court supposed to do with it? Note that United Haulers in 2007 cites this case only in a footnote, for the narrow proposition that it invalidated an in-state processing requirement. Second, Rehnquist’s challenge is unanswered on its own terms: if Alaska may sell timber only to processors located in Alaska (choosing its trading partners), why may it not sell to anyone on condition of in-state processing (the same result, one step downstream)? The plurality’s answer is “substantial regulatory effect outside that market.” Is that a test or a label? Third, trace one thread across the four exceptions cases in this module. Western & Southern takes a broad statute broadly; this case demands that congressional intent be “unmistakably clear.” Reeves exempts a State selling its own cement; White extends the exemption to conditions on private hiring; this case says the exemption stops at the edge of the market. In both lines, the exception grows and then is pulled back. Ask who is doing the pulling, and on what authority.

A reporter note: no numerical vote is printed. The reporter gives the attribution quoted above, then: Brennan, J., concurring; Powell, J., with the Chief Justice, concurring in part and concurring in the judgment; Rehnquist, J., with O’Connor, J., dissenting; and “JUSTICE MARSHALL took no part in the decision of this case.” Six and two on Parts I–II; four on Parts III–IV. Derive the arithmetic yourself, and label which Part you are citing.