H. P. HOOD & SONS, INC. v. DU MOND, COMMISSIONER OF AGRICULTURE AND MARKETS
No. 92
SUPREME COURT OF THE UNITED STATES
Argued December 13-14, 1948. Decided April 4, 1949.
336 U.S. 525
MR. JUSTICE JACKSON delivered the opinion of the Court.
This case concerns the power of the State of New York to deny additional facilities to acquire and ship milk in interstate commerce where the grounds of denial are that such limitation upon interstate business will protect and advance local economic interests.
H. P. Hood & Sons, Inc., a Massachusetts corporation, has long distributed milk and its products to inhabitants of Boston. That city obtains about 90% of its fluid milk from states other than Massachusetts. Dairies located in New York State since about 1900 have been among the sources of Boston‘s supply, their contribution having varied but during the last ten years approximating 8%. The area in which Hood has been denied an additional license to make interstate purchases has been developed as a part of the Boston milkshed from which both the Hood Company and a competitor have shipped to Boston.
The state courts have held and it is conceded here that Hood‘s entire business in New York, present and proposed, is interstate commerce. This Hood has conducted for some time by means of three receiving depots, where it takes raw milk from farmers. The milk is not processed in New York but is weighed, tested and, if necessary, cooled and on the same day shipped as fluid milk to Boston. These existing plants have been operated under license from the State and are not in question here as the State has licensed Hood to continue them. The controversy concerns a proposed additional plant for the same kind of operation at Greenwich, New York.1
Upon the hearing pursuant to the statute, milk dealers competing with Hood as buyers in the area opposed licensing the proposed Greenwich plant. They complained that Hood, by reason of conditions under which it sold in Boston, had competitive advantages under applicable federal milk orders, Boston health regulations, and OPA ceiling prices. There was also evidence of a temporary shortage of supply in the Troy, New York, market during the fall and winter of 1945-46. The Commissioner was urged not to allow Hood to compete for additional supplies of milk or to take on producers then delivering to other dealers.
The Commissioner found that Hood, if licensed at Greenwich, would permit its present suppliers, at their option, to deliver at the new plant rather than the old ones and for a substantial number this would mean shorter hauls and savings in delivery costs. The new plant also would attract twenty to thirty producers, some of whose milk Hood anticipates will or may be diverted from other buyers. Other large milk distributors have plants within the general area and dealers serving Troy obtain milk in the locality. He found that Troy was inadequately supplied during the preceding short season.
In denying the application for expanded facilities, the Commissioner states his grounds as follows:
“If applicant is permitted to equip and operate another milk plant in this territory, and to take on producers now delivering to plants other than those which it operates, it will tend to reduce the volume of milk received at the plants which lose those pro-
ducers, and will tend to increase the cost of handling milk in those plants. “If applicant takes producers now delivering milk to local markets such as Troy, it will have a tendency to deprive such markets of a supply needed during the short season.
“There is no evidence that any producer is without a market for his milk. There is no evidence that any producers not now delivering milk to applicant would receive any higher price, were they to deliver their milk to applicant‘s proposed plant.
“The issuance of a license to applicant which would permit it to operate an additional plant, would tend to a destructive competition in a market already adequately served, and would not be in the public interest.”4
Denial of the license was sustained by the Court of Appeals5 over constitutional objections duly urged under the Commerce Clause6 and, because of the importance of the questions involved, we brought the case here by certiorari.7
Production and distribution of milk are so intimately related to public health and welfare that the need for regulation to protect those interests has long been recognized and is, from a constitutional standpoint, hardly controversial. Also, the economy of the industry is so eccentric that economic controls have been found at once necessary and difficult. These have evolved detailed, intricate and comprehensive regulations, including price-fixing. They have been much litigated but were generally sustained by this Court as within the powers of
Pennsylvania enacted a law including provisions to protect producers which were very similar to those of this New York Act. A concern which operated a receiving plant in Pennsylvania from which it shipped milk to the New York City market challenged the Act upon grounds thus defined by this Court: “The respondent contends that the act, if construed to require it to obtain a license, to file a bond for the protection of producers, and to pay the farmers the prices prescribed by the Board, unconstitutionally regulates and burdens interstate commerce.” Milk Board v. Eisenberg Co., 306 U.S. 346, 350. This Court, specifically limiting its judgment to the Act‘s provisions with respect to license, bond and regulation of prices to be paid to producers, id. at 352, considered their effect on interstate commerce “incidental and not forbidden by the Constitution, in the absence of regulation by Congress.” Id. at 353.
The present controversy begins where the Eisenberg decision left off. New York‘s regulations, designed to assure producers a fair price and a responsible purchaser, and consumers a sanitary and modernly equipped handler, are not challenged here but have been complied with. It is only additional restrictions, imposed for the avowed purpose and with the practical effect of curtailing
Our decision in a milk litigation most relevant to the present controversy deals with the converse of the present situation. Baldwin v. Seelig, 294 U.S. 511. In that case, New York placed conditions and limitations on the local sale of milk imported from Vermont designed in practical effect to exclude it, while here its order proposes to limit the local facilities for purchase of additional milk so as to withhold milk from export. The State agreed then, as now, that the Commerce Clause prohibits it from directly curtailing movement of milk into or out of the State. But in the earlier case, it contended that the same result could be accomplished by controlling delivery, bottling and sale after arrival, while here it says it can do so by curtailing facilities for its purchase and receipt before it is shipped out. In neither case is the measure supported by health or safety considerations but solely by protection of local economic interests, such as supply for local consumption and limitation of competition. This Court unanimously rejected the State‘s contention in the Seelig case and held that the Commerce Clause, even in the absence of congressional action, prohibits such regulations for such ends.
The opinion was by Mr. Justice Cardozo, experienced in the milk problems of New York and favorably disposed toward the efforts of the State to control the industry. Hegeman Farms Corp. v. Baldwin, 293 U. S. 163; Borden‘s Co. v. Baldwin, 293 U. S. 194, concurrence at 213; Mayflower Farms v. Ten Eyck, 297 U. S. 266, dissent at 274. It recognized, as do we, broad power in the State to pro-
The Constitution, said Mr. Justice Cardozo for the unanimous Court, “was framed upon the theory that the peoples of the several states must sink or swim together, and that in the long run prosperity and salvation are in union and not division.”10 He reiterated that the economic objective, as distinguished from any health, safety and fair-dealing purpose of the regulation, was the root of its invalidity. The action of the State would “neutralize the economic consequences of free trade among the states.”11 “Such a power, if exerted, will set a barrier to traffic between one state and another as effective as if customs duties, equal to the price differential, had been laid upon the thing transported.”12 “If New York, in order to promote the economic welfare of her farmers, may guard them against competition with the cheaper prices of Vermont, the door has been opened to rivalries and reprisals that were meant to be averted by subjecting commerce between the states to the power of the nation.”13 And again, “Neither the power to tax nor the police power may be used by the state of destination with the aim and effect of establishing an economic barrier against competition with the products of another state or the labor of its residents. Restrictions so contrived are an unreasonable clog upon the mobility of commerce. They set up what is equivalent to a rampart of customs duties designed to neutralize advantages belonging to the
This distinction between the power of the State to shelter its people from menaces to their health or safety and from fraud, even when those dangers emanate from interstate commerce, and its lack of power to retard, burden or constrict the flow of such commerce for their economic advantage, is one deeply rooted in both our history and our law.
When victory relieved the Colonies from the pressure for solidarity that war had exerted, a drift toward anarchy and commercial warfare between states began. “... each State would legislate according to its estimate of its own interests, the importance of its own products, and the local advantages or disadvantages of its position in a political or commercial view.” This came “to threaten at once the peace and safety of the Union.” Story, The Constitution, §§ 259, 260. See Fiske, The Critical Period of American History, 144; Warren, The Making of the Constitution, 567. The sole purpose for which Virginia initiated the movement which ultimately produced the Constitution was “to take into consideration the trade of the United States; to examine the relative situations and trade of the said States; to consider how far a uniform system in their commercial regulations may be necessary to their common interest and their permanent harmony” and for that purpose the General Assembly of Virginia in January of 1786 named commissioners and proposed their meeting with those from other states. Documents, Formation of the Union, H. R. Doc. No. 398, 12 H. Docs., 69th Cong., 1st Sess., p. 38.
The desire of the Forefathers to federalize regulation of foreign and interstate commerce stands in sharp contrast to their jealous preservation of the state‘s power over its
The necessity of centralized regulation of commerce among the states was so obvious and so fully recognized that the few words of the Commerce Clause were little illuminated by debate. But the significance of the clause was not lost and its effect was immediate and salutary. We are told by so responsible an authority as Mr. Jefferson‘s first appointee to this Court that “there was not a State in the Union, in which there did not, at that time, exist a variety of commercial regulations; concerning which it is too much to suppose, that the whole ground covered by those regulations was immediately assumed by actual legislation, under the authority of the Union. But where was the existing statute on this subject, that a State attempted to execute? or by what State was it ever thought necessary to repeal those statutes? By common consent, those laws dropped lifeless from their statute books, for want of the sustaining power, that had been relinquished to Congress.” Gibbons v. Ogden, 9 Wheat. 1, concurring opinion at 226.
The Commerce Clause is one of the most prolific sources of national power and an equally prolific source of conflict with legislation of the state. While the Constitution vests in Congress the power to regulate commerce among
Baldwin v. Seelig, 294 U.S. 511, is an explicit, impressive, recent and unanimous condemnation by this Court of economic restraints on interstate commerce for local economic advantage, but it does not stand alone. This Court consistently has rebuffed attempts of states to advance their own commercial interests by curtailing the movement of articles of commerce, either into or out of the state, while generally supporting their right to impose even burdensome regulations in the interest of local health and safety. As most states serve their own interests best by sending their produce to market, the cases in which this Court has been obliged to deal with prohibitions or limitations by states upon exports of articles of commerce are not numerous. However, in a leading case, Oklahoma v. Kansas Natural Gas Co., 221 U. S. 229, the Court denied constitutional validity to a statute by which Oklahoma, by regulation of gas companies and pipe lines, sought to restrict the export of natural gas. The Court held that when a state recognizes an article to be a subject of commerce, it cannot prohibit it from being a subject of interstate commerce; that the right to engage in interstate commerce is not the gift of a state, and that a state cannot regulate or restrain it.
Later West Virginia, by act of the Legislature, undertook regulation of pipe-line companies intended to keep within West Virginia all natural gas there produced that might be required for local needs. This Court held that the State could not accord to its own consumers a pre-
In Foster Packing Co. v. Haydel, 278 U.S. 1, the Court cited these two cases as authority for the proposition that “A State is without power to prevent privately owned articles of trade from being shipped and sold in interstate commerce on the ground that they are required to satisfy local demands or because they are needed by the people of the State.” 278 U.S. 1, 10. The Court also pointed out that “the purpose [of the statute there involved] is not to retain the shrimp for the use of the people of Louisiana; it is to favor the canning of the meat and the manufacture of bran in Louisiana ....” Id., at 13. Thus in the Foster case, and in the companion case Johnson v. Haydel, 278 U.S. 16, although the articles sought to be regulated were shrimp and oysters, which under ordinary conditions might not be considered subjects of commerce, the Court invalidated state enactments attempting to promote local interests at the expense of interstate commerce.
In Parker v. Brown, 317 U.S. 341, California‘s restrictions on sales of raisins within the State to those who were there processing and packing them were attacked as invalid because approximately 95% of the crop would find its way into interstate commerce after processing and packing. However, the Court said: “... no case has
The most recent case of this kind, Toomer v. Witsell, 334 U.S. 385, involved, among other things, a South Carolina requirement that the owners of shrimp boats fishing off its shores dock at a South Carolina port and unload, pack and stamp their catch with a tax stamp before shipping or transporting it to another state. It was considered that the effect of this section of the statute was to divert to South Carolina employment and business which might otherwise go to other states, and the Court pointed out that “the necessary tendency of the statute is to impose an artificial rigidity on the economic pattern of the industry.” 334 U.S. 385, 403-404. It was held that the Commerce Clause was violated by such a provision.
This principle that our economic unit is the Nation, which alone has the gamut of powers necessary to control of the economy, including the vital power of erecting
The material success that has come to inhabitants of the states which make up this federal free trade unit has been the most impressive in the history of commerce, but the established interdependence of the states only emphasizes the necessity of protecting interstate movement of goods against local burdens and repressions. We need only consider the consequences if each of the few states that produce copper, lead, high-grade iron ore,
Our system, fostered by the Commerce Clause, is that every farmer and every craftsman shall be encouraged to produce by the certainty that he will have free access to every market in the Nation, that no home embargoes will withhold his exports, and no foreign state will by customs duties or regulations exclude them. Likewise, every consumer may look to the free competition from every producing area in the Nation to protect him from exploitation by any. Such was the vision of the Founders; such has been the doctrine of this Court which has given it reality.
The State, however, insists that denial of the license for a new plant does not restrict or obstruct interstate commerce, because petitioner has been licensed at its other plants without condition or limitation as to the quantities it may purchase. Hence, it is said, all that has been denied petitioner is a local convenience — that of being able to buy and receive at Greenwich quantities of milk it is free to buy at Eagle Bridge and Salem. It suggests that, by increased efficiency or enlarged capacity at its other plants, petitioner might sufficiently increase its supply through those facilities.
But the argument also asks us to assume that the Commissioner‘s order will not operate in the way he found that it would as a reason for making it. He found that petitioner, at its new plant, would divert milk from the plants of some other large handlers in the vicinity, which plants “can handle more milk.” This competition he did not approve. He also found it would tend to deprive local markets of needed supplies during the short season. In the face of affirmative findings that the proposed plant would increase petitioner‘s supply, we can hardly be asked to assume that denial of the license will not deny petitioner access to such added supplies. While the state power is applied in this case to limit expansion by a handler of milk who already has been allowed some purchasing facilities, the argument for doing so, if sustained, would be equally effective to exclude an entirely new foreign handler from coming into the State to purchase.
The State, however, contends that such restraint or obstruction as its order imposes on interstate commerce does not violate the Commerce Clause because the State regulation coincides with, supplements and is part of the federal regulatory scheme. This contention that Congress has taken possession of “the field” but shared it with
Congress, as a part of its Agricultural Marketing Agreement Act,15 authorizes the Secretary of Agriculture to issue orders regulating the handling of several agricultural products, including milk, when they are within the reach of its commerce power. As to milk, it sets up,
New York State, in its present and antecedent statutes, has authorized its state authorities to confer with federal officials on milk control problems17 and a series of conferences and joint hearings have been held. The two authorities formalized their collaboration in 1938 by signing a “Memorandum of the Principles of Cooperation to be Observed in the Formulation and Administration of Complementary Orders for Milk for Marketing Areas Located Within the State of New York to be Issued Concurrently by the Secretary of Agriculture and the Commissioner of Agriculture and Markets.”
The Congressional regulation contemplates and permits a wide latitude in which the State may exercise its police power over the local facilities for handling milk. We assume, though it is not necessary to decide, that the Federal Act does not preclude a state from placing restrictions and obstructions in the way of interstate commerce for the ends and purposes always held permissible under the Commerce Clause. But here the challenge is only to a denial of facilities for interstate commerce upon the sole and specific grounds that it will subject others to competition and take supplies needed locally, an end, as we have shown, always held to be precluded by the Commerce Clause. We have no doubt that Congress in the national interest could prohibit or curtail shipments of milk in interstate commerce, unless and until local demands are met. Nor do we know of any reason why Congress may not, if it deems it in the national interest, authorize the states to place similar restraints on movement of articles of commerce. And the provisions looking to state cooperation may be sufficient to warrant the state in imposing regulations approved by the federal au-
When it is considered that the Federal Act was passed expressly to overcome “disruption of the orderly exchange of commodities in interstate commerce” and conditions found to “burden and obstruct the normal channels of interstate commerce,”
Moreover, we can hardly assume that the challenged provisions of this order advance the federal scheme of regulation because Congress forbids inclusion of such a policy in a federal milk order. Section 8c (5) (G) of the Act provides:
“No marketing agreement or order applicable to milk and its products in any marketing area shall prohibit or in any manner limit, in the case of the products of milk, the marketing in that area of any milk or product thereof produced in any production area in the United States.”20
While there may be difference of opinion as to whether this authorizes the Federal Order to limit, so long as it does not prohibit, interstate shipment of milk, see Bailey Farm Dairy Co. v. Anderson, 157 F. 2d 87, 96; Bailey Farm Dairy Co. v. Jones, 61 F. Supp. 209, 221 — a question upon which we express no opinion — it is clear
The only federal restriction of handlers’ purchases from new producers, found in
These sections and reports indicate that it is the deliberate policy of the Congress to prevent federal officers from placing barriers in the way of the interstate flow of milk. While a statutory prohibition against federal
Since the statute as applied violates the Commerce Clause and is not authorized by federal legislation pursuant to that Clause, it cannot stand. The judgment is reversed and the cause remanded for proceedings not inconsistent with this opinion.
It is so ordered.
MR. JUSTICE BLACK, dissenting.
In this case the Court sets up a new constitutional formula for invalidation of state laws regulating local phases of interstate commerce. I believe the New York law is invulnerable to constitutional attack under constitutional rules which the majority of this Court have long accepted. The new formula subjects state regulations of local business activities to greater constitutional hazards than they have ever had to meet before. The consequences of the new formula, as I understand it, will not merely leave a large area of local business activities free from state regulation. All local activities that fall within the scope of this new formula will be free from any regulatory control whatever. For it is inconceivable that Congress could pass uniform national legislation capable of adjustment and application to all the local phases of interstate activities that take place in
First. New York has a comprehensive set of regulations to control the production, distribution and sale of milk. Their over-all purposes are two: (1) to promote health by maintaining an adequate supply and an orderly distribution of uncontaminated milk; (2) to promote the general welfare by saving farmer milk-producers from impoverishment and insolvency. The state legislature concluded that achievement of these goals demanded elimination of destructive competition among milk dealers. The legislature believed that while cutthroat competition among purchaser dealers temporarily raises the price of farmers’ milk, the end result of the practice in New York had been economic distress for the farmers. After destructive dealer competition had driven financially weak dealers from the contest, the more opulent survivors had pushed producers’ prices far below production costs. Nebbia v. New York, 291 U. S. 502, 515-516 (1934), gives a graphic description of the plight of these farmers prior to the enactment of these regulations and makes clear that the chief incentive for the regulations was the promotion of health and the general welfare by financial rehabilitation of the farmers. And despite due-process objections, the Nebbia case sustained the state‘s constitutional power to apply its law to New York dealers in order to promote the health, economic stability and general welfare of the state‘s people.
That part of the regulatory plan challenged here bars issuance of licenses for additional milk-handling plants if new plants would “tend to destructive competition in a market already adequately served” or would be con-
Second. Petitioner, a milk dealer, has two plants in New York. It buys milk, cools it, and ships it to Boston. It applied to the commissioner for a license to operate a third plant in the same local market area. After evidence the commissioner found that petitioner‘s two plants plus the others in the vicinity were adequate outlets for all the milk produced in that vicinity; some of the dealers in the area had plant capacities already in excess of the available supply. Petitioner was one of these. From this the commissioner found that more plants would bring about the kind of destructive competition against which the law was aimed. That finding is not challenged. Nor is it charged that the order was prompted by desire to prevent New York milk from going to Boston.
There was a finding that the destructive competition incident to the operation of a new plant probably would
Had a dealer supplying New York customers applied for a license to operate a new plant, the commissioner would have been compelled under the Act to protect petitioner‘s plants supplying Boston consumers in the same manner that this order would have protected New York consumers. In protecting inter- or intra-state dealers from destructive competition which would endanger the milk farmers’ price structure or the continued supply of healthful milk to the customers of existing dealers, the commissioner would be faithful to the Act‘s avowed pur-
The language of this state Act is not discriminatory, the legislative history shows it was not so intended, and the commissioner has not administered it with a hostile eye. The Act must stand or fall on this basis notwithstanding the overtones of the Court‘s opinion. If petitioner and other interstate milk dealers are to be placed above and beyond this law, it must be done solely on this Court‘s new constitutional formula which bars a state from protecting itself against local destructive competitive practices so far as they are indulged in by dealers who ship their milk into other states.
Third. The number of plants petitioner can have in the New York market is of concern to petitioner, to New York, and to the nation. Petitioner‘s business interest, however, under the Nebbia rule must be subordinated to the public interest. New York‘s concern derives from its interest in the health and well-being of its people deemed by the legislature of New York to be threatened by competitive trade practices of dealers who buy and sell milk produced in the state. That its concern is great is manifested by the state law, its background, its purposes, and its administration. The national concern, reflected in the commerce clause, flows from federal solicitude for
Reconciliation of state and federal interests in regulation of commerce always has been a perplexing problem. The claims of neither can be ignored if due regard be accorded the welfare of state and nation. For in the long run the welfare of each is dependent upon the welfare of both. Injury to commercial activities in the states is bound to produce an injurious reaction on interstate commerce, and vice versa. The many local activities which are parts of interstate transactions have given rise to much confusion. The basic problem has always been whether the state or federal government has power to regulate such local activities, whether the power of either is exclusive or concurrent, whether the state has power to regulate until Congress exercises its supreme power, and the extent to which and the circumstances under which this Court should invalidate state regulations in the absence of an exercise of congressional power. This last question is the one here involved.
Fourth. Gibbons v. Ogden, 9 Wheat. 1 (1824), decided in 1824, held invalid a New York statute regulating commerce which conflicted with an Act of Congress. The Court there left undecided the question strongly urged that the commerce clause of itself forbade New York to regulate commerce. In 1847 this undecided question was discussed by Chief Justice Taney.1 His view was that the commerce clause of itself did no more than grant power to Congress to regulate commerce among the states; that until Congress acted states could regulate the commerce; and that this Court was without power to strike down state regulations unless they conflicted with a valid federal law. This the Chief Justice thought
In 1852 this Court rejected in part the Taney interpretation of the commerce clause. Cooley v. Board of Wardens, 12 How. 299 (1852). The opinion there stated that the commerce clause per se forbade states to regulate commerce under some circumstances but left them free to do so under other circumstances. The dividing line was not precisely drawn, but the Court outlined broad principles to guide future determinations of the side of the line on which commercial transactions would be held to fall. In doing so, it apparently took into consideration Mr. Chief Justice Taney‘s 1847 belief that absolute prohibition of all state regulation of commerce would create an area immune from any regulation at all. For in the Cooley case the Court held at p. 319 that the commerce clause per se only prohibited state regulation of local interstate commerce activities which “are in their nature national, or admit only of one uniform system.” It was also held at p. 320 that the commerce clause left states free to regulate interstate commerce activities where diverse conditions incident to different customs, habits and trade practices, could best be treated and regulated by different regulations “drawn from local knowledge and
Fifth. The basic principles of the Cooley rule have been entangled and sometimes obscured with much language. In the main, however, those principles have been the asserted grounds for determination of all commerce cases decided by this Court from 1852 until today. Pertinent quotations from some of these cases appear in MR. JUSTICE FRANKFURTER‘S dissenting opinion and he refers to others. Many of the cases have used the words “restraints,” “obstructions,” “in commerce,” “on commerce,” “burdens,” “direct burdens,” “undue burdens,” “unreasonable burdens,” “unfair burdens,” “incidental burdens,” etc., but such words have almost always been used, as the opinions reveal, to aid in application of the Cooley balance-of-interests rule.3
There have been some sporadic deviations from the Cooley principle as illustrated by Di Santo v. Pennsylvania, 273 U. S. 34 (1927). The powerful dissents of Mr. Justice Brandeis and Mr. Justice Stone, concurred in by Mr.
In this Court, challenges to the Cooley rule on the ground that the rule was an ineffective protector of interstate commerce from state regulations have been confined to dissents and concurring opinions.4 Duckworth v. Arkansas, 314 U. S. 390, 400-401 (1941); Bob-Lo Excursion Co. v. Michigan, 333 U. S. 28, 37-38, 41, 42, 45 (1948); Independent Warehouses v. Scheele, 331 U. S. 70, 85, 95 (1947). In the Duckworth case by application of the Cooley rule the majority of this Court sustained a state regulation of interstate transportation. A concurring opinion expressed the view that the Court‘s opinion written by Chief Justice Stone, rooted as it was in the Cooley principle, “let commerce struggle for Congressional action to
The philosophy of this Duckworth concurring opinion which the Court rejected, can alone support the holding and opinion today. That philosophy commends itself to many thoughtful people. Some people believe in this philosophy because of fear that judicial toleration of any state regulations of local phases of commerce will bring about what they call “Balkanization” of trade in the United States—trade barriers so high between the states that the stream of interstate commerce cannot flow over them.5 Other people believe in this philosophy because of an instinctive hostility to any governmental regulation of “free enterprise“; this group prefers a laissez faire economy.6 To them the spectre of “Bureaucracy” is more frightening than “Balkanization.”7
The Cooley balancing-of-interests principle which the Court accepted and applied in the Duckworth case is today supplanted by the philosophy of the Duckworth concurring opinion which though presented in the Duckworth case gained no adherents.8 For the New York statute is killed by a mere automatic application of a new mechanistic formula. The Court appraises nothing, unless its stretching of the old commerce clause interpretation results from a reappraisal of the power and duty
Sixth. The Court strongly relies on Baldwin v. Seelig, 294 U. S. 511 (1935). The crucial facts of that case were these. New York law fixed a minimum price for milk bought by New York dealers from New York farmers. Vermont‘s legislative policy left Vermont farmers and milk dealers free to fix milk prices by bargaining. Seelig, a New York dealer, sold milk in New York which had been bought from Vermont farmers at prices below that fixed for New York farmers by New York law. New York law forbade sale of Seelig‘s milk in New York because the Vermont farmers had not received the New York fixed price for their milk. New York‘s object was to save its farmers from competition with Vermont milk. And the Court saw the New York law as a discriminatory “barrier to
Even though the Court regarded the Baldwin v. Seelig law as discriminatory, other considerations were added to weight the scales on the side of invalidation. Its impact on Vermont economy and Vermont legislative power was weighed. To whatever extent it is desirable to reform the economic standards of Vermont, “the legislature of Vermont and not that of New York must supply the fitting remedy.” Baldwin v. Seelig, supra, at 524. This is a due process concept.9 In emphasizing the due process objectionable phase of New York‘s law, the Court was well within the Cooley philosophy.10 Furthermore under the Cooley rule, aside from due process, a state‘s regulation that immediately bears upon nothing but activities wholly within its boundaries is far less vulnerable than one which casts burdens on activities within the boundaries of another state.11
Seventh. Milk Board v. Eisenberg Co., 306 U. S. 346 (1939), would control this case but for the Court‘s limiting that case to its precise facts. That law required a state license of all persons who handled or purchased milk within the commonwealth for sale within or without the commonwealth. It required all dealers, interstate and intrastate, to keep records and to make bonds. Dealers who sold their products within or without the state were required to pay state-fixed prices. The state granted or denied licenses on the Act‘s enumerated terms and suspended
The Eisenberg case thus sustained the power of a state to require licenses from interstate dealers and to impose conditions on their interstate commerce transactions in order to effectuate legitimate state policies. And the conditions Pennsylvania imposed were burdensome, as this Court recognized. They erected obstacles which were bound to limit the number of interstate dealers. The limited number of interstate dealers who could get and hold state licenses were compelled to incur expenses that added to the costs of state-fixed milk prices they were required to pay as a condition precedent to the state‘s allowing them to buy and ship out any milk at all. Pennsylvania imposed these burdens on interstate commerce to promote health and to protect its farmers from the consequences of destructive competition among dealers. This New York law was designed to promote health and to protect New York farmers from destructive competition in New York.
It requires more than invocation of the spectre of “Balkanization” and eulogy of the Constitution‘s framers to prove that there is a gnat‘s heel difference in the burdens imposed on commerce by the two laws. It cannot even be said that one regulation was “on commerce” and one was not (whatever “on commerce” means), for both affected the capacity of dealers to buy milk for interstate sales. There is this difference. The handicap
There has certainly been no proof here that New York is wrong in believing that its law will rehabilitate farmers, induce more of them to get and stay in the milk business, and thus provide a greater New York production of better milk available for sale both in and out of New York. Should this result follow, interstate commerce will not be burdened, it will be helped. And it seems to me that here as in the Eisenberg case, this Court should not pit its legal judgment against a legislative judgment that is in harmony with the views of persons who have devoted their lives to a practical study of the milk problem.
Eighth. I think that Congress and its authorized federal agency have knowingly acquiesced in, if they have not actually encouraged and approved, enactment and enforcement of the New York law here held invalid. The New York law authorizes its administrator to act in cooperation with federal milk-control authorities and after consultation to make such supplementary orders as might be helpful in accomplishing the joint state-federal program. So also,
In the foregoing provisions Congress manifested its purpose to subject the milk industry to two cooperating authorities: (1) state legislatures and their selected administrative authorities, and (2) the Secretary of Agriculture. Congress did far more than direct a formal, polite cooperation between New York and the Secretary of Agriculture. Recognizing the compelling necessity for a state-federal integrated regulatory system for the milk industry, Congress was careful to leave the door open for the Secretary of Agriculture and state authorities working together to formulate mutually complementary orders in the field. These complementary state-federal laws and orders were to be aimed at precisely the same evils believed to have been generated by chaotic competitive conditions in the milk industry. The objective of both laws was to help impoverished farmers. 48 Stat. 31,
This record does not reveal the extent to which there was state-federal cooperation in connection with enactment and enforcement of the New York law here involved. Absence of a full showing of such cooperation is doubtless due to the failure of the petitioner to raise any commerce questions in the hearing before the New York Commissioner. This in itself should be enough to cause this Court, at the very least, to follow MR. JUSTICE FRANKFURTER‘S suggestion and remand the case. This would afford the state opportunity to develop the facts concerning federal and state cooperation. New York‘s law should not be condemned on the basis of abstract rhetoric about the “fathers” and the commerce clause. Surely a state is still entitled to present its side of a constitutional controversy, though perhaps today‘s new rule makes it an exercise in futility.
From the foregoing, it seems to me that the Court now steps in where Congress wanted it to stay out. The Court puts itself in the position of guardian of interstate trade in the milk industry. Congress, with full constitutional power to do so, selected the Secretary of Agriculture to do this job. Maybe this Court would be a better guardian, but it may be doubted that authority for the Court
The sole immediate result of today‘s holding is that petitioner will be allowed to operate a new milk plant in New York. This consequence standing alone is of no great importance. But there are other consequences of importance. It is always a serious thing for this Court to strike down a statewide law. It is more serious when the state law falls under a new rule which will inescapably narrow the area in which states can regulate and control local business practices found inimical to the public welfare. The gravity of striking down state regulations is immeasurably increased when it results as here in leaving a no-man‘s land immune from any effective regulation whatever. It is dangerous to assume that the aggressive cupidity of some need never be checked by government in the interest of all.
The judicially directed march of the due process philosophy as an emancipator of business from regulation appeared arrested a few years ago. That appearance was illusory. That philosophy continues its march. The due process clause and commerce clause have been used like Siamese twins in a never-ending stream of challenges to government regulation. See for example, Pacific Tel. Co. v. Tax Comm‘n, 297 U. S. 403, 420 (1936). The reach of one twin may appear to be longer than that of the other, but either can easily be turned to remedy this apparent handicap.
The basic question here is not the greatness of the commerce clause concept, but whether all local phases of interstate business are to be judicially immunized from state laws against destructive competitive business practices such as those prohibited by New York‘s law. Of course, there remains the bare possibility Congress might attempt to federalize all such local business activities in the forty-eight states. While I have doubt about the wisdom of this New York law, I do not conceive it to be the function of this Court to revise that state‘s eco-
I would leave New York‘s law alone.
MR. JUSTICE MURPHY joins in this opinion.
MR. JUSTICE FRANKFURTER, with whom MR. JUSTICE RUTLEDGE joins, dissenting.
If the Court‘s opinion has meaning beyond deciding this case in isolation, its effect is to hold that no matter how important to the internal economy of a State may be the prevention of destructive competition, and no matter how unimportant the interstate commerce affected, a State cannot as a means of preventing such competition deny an applicant access to a market within the State if that applicant happens to intend the out-of-state shipment of the product that he buys. I feel constrained to dissent because I cannot agree in treating what is essentially a problem of striking a balance between competing interests as an exercise in absolutes. Nor does it seem to me that such a problem should be disposed of on a record from which we cannot tell what weights to put in which side of the scales.
In the interest of clarity, the controlling facts in this case may thus be fairly summarized.
Hood, the petitioner, is a Massachusetts corporation engaged in supplying the Boston market with fluid milk. In New York State, on the border of Vermont and Massachusetts, it operates two milk-receiving plants to which milk is delivered by local producers and whence it is shipped to Boston without processing. These two plants—at Eagle Bridge and Salem—are quite close together. On January 30, 1946, Hood applied to the Com-
The Commissioner of Agriculture and Markets denied Hood‘s application for extension of its license. In so doing, it rested its decision upon the following “conclusions“:
“If applicant is permitted to equip and operate another milk plant in this territory, and to take on producers now delivering to plants other than those which it operates, it will tend to reduce the volume of milk received at the plants which lose those producers, and will tend to increase the cost of handling milk in those plants.
“If applicant takes producers now delivering milk to local markets such as Troy, it will have a tendency to deprive such markets of a supply needed during the short season. . . .
“The issuance of a license to applicant which would permit it to operate an additional plant, would tend to a destructive competition in a market already adequately served, and would not be in the public interest.”
Hood instituted proceedings in the Supreme Court of New York to review the order which were transferred without hearing to the Appellate Division. The Appellate Division sustained the Commissioner‘s action in a
Some of the principles relevant to decision of this case are settled beyond dispute. One of these is that the prevention of destructive competition is a permissible exercise of the police power. Nebbia v. New York, 291 U. S. 502; United States v. Rock Royal Co-operative, 307 U. S. 533; Sunshine Coal Co. v. Adkins, 310 U. S. 381, 395. Another is that a State is not barred from licensing an activity merely because it is interstate commerce.1 Even more basic is the principle that as to matters which do not demand that regulation be uniformly present or uniformly absent, see Cooley v. Board of Wardens, 12 How. 299, the State may impose its own requirements “even though they materially interfere with interstate commerce.” South Carolina State Highway Dept. v. Barnwell Bros., 303 U. S. 177, 188. And only recently, be it noted, this Court has characterized the buying of milk
Behind the distinction between “substantial” and “incidental” burdens upon interstate commerce is a recognition that, in the absence of federal regulation, it is sometimes—of course not always—of greater importance that local interests be protected than that interstate commerce be not touched.
“When Congress has not exerted its power under the Commerce Clause, and state regulation of matters of local concern is so related to interstate commerce that it also operates as a regulation of that commerce, the reconciliation of the power thus granted with that reserved to the state is to be attained by the accommodation of the competing demands of the state and national interests involved.” Parker v. Brown, 317 U. S. 341, 362.
“But the Commerce Clause does not cut the States off from all legislative relation to foreign and interstate commerce. South Carolina Highway Dept. v. Barnwell Bros., 303 U. S. 177; Western Live Stock v. Bureau, 303 U. S. 250. Such commerce interpenetrates the States, and no undisputed generality about the freedom of commerce from state encroachment can delimit in advance the interacting areas of state and national power when Congress has not by legislation foreclosed state action. The incidence of the particular state enactment must determine whether it has transgressed the power left to the States to protect their special state interests although it is related to a phase of a more extensive commercial process.” Union Brokerage Co. v. Jensen, 322 U. S. 202, 209-10.
“. . . in the necessary accommodation between local needs and the overriding requirement of freedom for
the national commerce, the incidence of a particular type of State action may throw the balance in support of the local need because interference with the national interest is remote or unsubstantial. A police regulation of local aspects of interstate commerce is a power often essential to a State in safeguarding vital local interests. At least until Congress chooses to enact a nation-wide rule, the power will not be denied to the State.” Freeman v. Hewit, 329 U. S. 249, 253.
See also Southern R. Co. v. King, 217 U. S. 524, 533; Illinois Natural Gas Co. v. Central Illinois Pub. Serv. Co., 314 U. S. 498, 506.2
As I see the central issue, therefore, it is whether the difference in degree between denying access to a market for failure to comply with sanitary or book-keeping regulations and denying it for the sake of preventing destructive competition from disrupting the market is great enough to justify a difference in result. But for that difference in degree, the judgment below would fully rest on the Eisenberg case. If, on the other hand, petitioner‘s competitors were like itself engaged in interstate com-
This case falls somewhere between these most nearly decisive authorities. It is closer to the Buck and Bush cases than to the Eisenberg case in that the denial of a license to enter a market because the market is “adequately served” imposes a disqualification beyond the power of the applicant to remove. In that respect the effect upon the free flow of commerce is more enduring than is the case where all that is required is compliance with a local regulation. The State‘s interest in restricting competition, moreover, is less obvious than its interest in preserving health or insuring probity in business dealings. Yet the commerce involved in the Buck and Bush cases—the operation of busses between Seattle, Washington, and Portland, Oregon—was exclusively interstate. Here, however, it does not appear that any of Hood‘s competitors sent milk out of the State, and, in fact, only about 8% of New York‘s entire production of milk is sent out.3 In this respect the case resembles the Eisenberg case, in which it appeared that only slightly more than 10% of the milk produced in Pennsylvania was exported. 306 U. S. at 350. In upholding the State‘s licensing power in that case, the Court remarked that this percentage was “only a small fraction of the milk produced by farmers in Pennsylvania” and concluded that as a consequence “the effect of the law on interstate commerce is incidental.” Id. at 353. But comparison could be carried further and still the similarities and dissimilarities of the facts in the record before us to the
It is argued, however, that New York can have no interest in the restriction of competition great enough to warrant shutting its doors to one who would buy its products for shipment to another State. This must mean that the protection of health and the promotion of fair dealing are of a different order, somehow, than the prevention of destructive competition. But the fixing of prices was a main object of the regulation upheld in the Eisenberg case, and it is obvious that one of the most effective ways of maintaining a price structure is to control competition.4 The milk industry is peculiarly subject to internecine warfare, as this Court recognized in sustaining against due-process attack the precursor of New York‘s present milk-control law. Nebbia v. New York, 291 U. S. 502. A picture of ruthless and wasteful competition was painted in that case as in each of the other cases in which the Court has upheld the regulation of the milk industry. United States v. Rock Royal Co-operative, 307 U. S. 533; H. P. Hood & Sons v. United States, 307 U. S. 588; United States v. Wrightwood Dairy Co., 315 U. S. 110. And,
As matters now stand, however, it is impossible to say whether or not the restriction of competition among dealers in milk does in fact contribute to their economic well-being and, through them, to that of the entire industry. And if we assume that some contribution is made, we cannot guess how much. Why, when the State has fixed a minimum price for producers, does it take steps to keep competing dealers from increasing the price by bidding against each other for the existing supply? Is it concerned with protecting consumers from excessive prices? Or is it concerned with seeing that marginal dealers, forced by competition to pay more and charge less, are not driven either to cut corners in the maintenance of their plants or to close them down entirely? Might these consequences follow from operation at less than capacity? What proportion of capacity is necessary to enable the marginal dealer to stay in business? Could Hood‘s potential competitors in the Greenwich area maintain efficient and sanitary standards of operation on a lower margin of profit? How would their closing down affect producers? Would the competition of Hood affect dealers other than those in that area? How many of those dealers are also engaged in interstate commerce? How much of a strain would be put on the price structure maintained by the State by a holding that it cannot regulate
We should, I submit, have answers at least to some of these questions before we can say either how seriously interstate commerce is burdened by New York‘s licensing power or how necessary to New York is that power. The testimony of the dealers with whom Hood seeks to compete is too inexplicit to supply the answers. Since the needed information is neither accessible to judicial notice nor within its proper scope, I believe we should seek further light by remanding the case to the courts of the State. It is a course we have frequently taken upon records no more unsatisfactory than this one. Compare Chastleton Corp. v. Sinclair, 264 U. S. 543; Hammond v. Schappi Bus Line, 275 U. S. 164; Borden‘s Farm Products Co. v. Baldwin, 293 U. S. 194; Polk Co. v. Glover, 305 U. S. 5; Gibbs v. Buck, 307 U. S. 66; Mayo v. Canning Co., 309 U. S. 310—all cases remanded to avoid constitutional adjudication without adequate knowledge of the relevant facts.
Nor should we now dispose of the case upon the claim that New York cannot discriminate against interstate commerce by keeping its milk for absorption by “local markets such as Troy.” In support of this claim reliance is placed on Oklahoma v. Kansas Natural Gas Co., 221 U. S. 229, and Pennsylvania v. West Virginia, 262 U. S. 553, and there is much force in the argument that if a State cannot keep for its own use a natural resource like gas, as it can keep its wild game, Geer v. Connecticut, 161 U. S. 519; see New York ex rel. Silz v. Hesterberg, 211 U. S. 31, 41, then a fortiori it cannot prefer its own inhabitants in the consumption of a product that would not have come into existence but for its commercial value. But compare Heisler v. Thomas Colliery Co., 260 U. S. 245; Oliver Iron Mining Co. v. Lord, 262 U. S. 172. It is only as to this aspect of the case, at any rate, that I can see the relevance of Baldwin v. Seelig, 294 U. S. 511, as dealing with what is characterized as “the converse of the present situation.” Support is also sought in Foster-Fountain Packing Co. v. Haydel, 278 U. S. 1, and Toomer v. Witsell, 334 U. S. 385, but in these cases what the State had done was to halt for the benefit of local processors a product already moving in interstate commerce without entirely withholding the product from interstate commerce.
Broadly stated, the question is whether a State can withhold from interstate commerce a product derived from local raw materials upon a determination by an administrative agency that there is a local need for it. For me it has not been put to rest by Pennsylvania v. West Virginia, supra. More narrowly, the question is whether the State can prefer the consumers of one community to consumers in other States as well as to consumers in other parts of its own territory. It is arguable, moreover, that the Commissioner was actuated not by preference for New York consumers, but by the aim of stabilizing the supply of all the local markets, including Boston as well as Troy, served by the New York milkshed. It may also be that he had in mind the potentially harmful competitive effect of efforts by dealers supplying the Troy market to repair, by attracting new producers, the aggravation of Troy‘s shortage which would result from the diversion to Boston of part of Troy‘s supply. These too are matters as to which more light would be needed if it were now necessary to decide the question.
In the view I take of the issue of destructive competition, however, this question need not now be decided. It is impossible to say from a reading of the opinions below that the Commissioner‘s finding that extension of Hood‘s license would tend to destructive competition
My conclusion, accordingly, is that the case should be remanded to the Supreme Court of Albany County for action consistent with the views I have stated.