United States Court of Appeals

For the First Circuit

No. 00-1040

GRANT'S DAIRY — MAINE, LLC,

Plaintiff, Appellant,

v.

COMMISSIONER OF MAINE DEPARTMENT OF AGRICULTURE, FOOD

 & RURAL RESOURCES, ET AL.,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MAINE

[Hon. Morton A. Brody, U.S. District Judge]

Before

 Selya, Circuit Judge,

Coffin, Senior Circuit Judge,

and Stahl, Circuit Judge.

John H. Vetne, with whom Judith H. Mizner was on brief, for

appellant.

Lucinda E. White, Assistant Attorney General, with whom

Andrew Ketterer, Maine Attorney General, and William R. Stokes,

Assistant Attorney General, were on brief, for appellees.
1"Handlers" and "producers" are defined terms. See 7 C.F.R.

§§ 1000.9, 1001.12. The definitions are unremarkable.

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November 13, 2000

SELYA, Circuit Judge. Federally regulated milk dealers

("handlers") are required by federal law to pay a minimum price

for all the raw milk that they purchase from dairy farmers

("producers").1 In addition, the State of Maine sets a minimum

price that in-state handlers must pay to in-state producers with

respect to milk produced, processed, and sold in Maine ("Maine

milk"). Plaintiff-appellant Grant's Dairy — Maine, LLC

("Grant"), a fully federally regulated handler based in northern

Maine, brought suit against several state plenipotentiaries,

including the Commissioner of the Maine Department of

Agriculture, Food, and Rural Resources and the members of the

Maine Milk Commission ("the Commission"), arguing that, as

applied, Maine's additional level of price regulation violated

the United States Constitution. In an unpublished opinion, the

district court rejected Grant's constitutional claims. Grant

pursues its Supremacy Clause and Commerce Clause challenges in

this venue. Discerning no constitutional infirmity, we affirm

the lower court's entry of summary judgment.

I. BACKGROUND
2As of January 1, 2000, the Secretary reduced the number of

federal order milk marketing areas from thirty-one to eleven.

See 64 Fed. Reg. 47,898 (1999), as amended by 64 Fed. Reg.

70,868 (1999). The parties have stipulated that recent changes

to the federal milk pricing system, including this change, have

no bearing on the litigation at hand.

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To place Grant's antipathy to Maine's imposition of a

minimum milk price in context, we provide a brief overview of

applicable federal and state regulation and then trace the

interaction of the two schemes.

A. Federal Regulation.

More than six decades ago, the Agricultural Marketing

Agreement Act of 1937 ("AMAA"), now codified, as amended, at 7

U.S.C. §§ 601-626, authorized the Secretary of Agriculture (the

Secretary) to set minimum prices for milk. Id. § 608c(1) & (2).

To this end, the Secretary divided the country into regions,

each of which is known as a federal order milk marketing area.2

7 C.F.R. §§ 1001-1135. In each area, a milk marketing order

sets minimum prices that handlers must pay producers. The

Northeast Marketing Area includes five New England states

(Connecticut, Massachusetts, New Hampshire, Rhode Island, and

Vermont), Delaware, New Jersey, the District of Columbia, and

portions of Maryland, New York, Pennsylvania, and Virginia. 7

C.F.R. § 1001.2. Maine is not part of this, or any other,
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federal order milk marketing area. See 64 Fed. Reg. 16,056

(1999).

Although Maine is not within a federal order area,

certain aspects of the federal paradigm are pertinent to an

understanding of the present problem. First, the federal system

takes account of the fact that the value of milk varies

according to use. See West Lynn Creamery, Inc. v. Healy, 512

U.S. 186, 189 n.1 (1994). Before federal regulation came upon

the scene, producers vied to sell their milk for processing as

fluid milk (the use that fetched the highest price). Lansing

Dairy, Inc. v. Espy, 39 F.3d 1339, 1343 (6th Cir. 1994). The

federal order system obviated the need for such cutthroat

competition. Under it, raw milk is classified into four use

categories: Class I (fluid milk); Class II (soft dairy

products, e.g., yogurt and cottage cheese); Class III

(spreadable and hard cheese); and Class IV (butter and powdered

milk). 7 C.F.R. § 1000.40. Each class of milk commands a

different price. Id. § 1000.50. Though handlers pay for raw

milk based on the uses to which they put it, id. §§ 1001.60,

1001.71, producers ultimately receive a uniform "blend" price

based on the percentage of milk used in each class throughout

the marketing area, id. §§ 1001.72-1001.73. The purpose of this

pooling mechanism is to ensure that all producers selling milk
3The Maine statute uses the term "dealer" instead of

"handler," Me. Rev. Stat. Ann. tit. 7, § 2951(4), but, for

simplicity's sake, we use the latter term throughout this

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into a particular federal order area receive a uniform minimum

price for their milk regardless of the milk's end use. See 7

U.S.C. § 608c(5)(B)(ii); see also West Lynn, 512 U.S. at 189 n.1

(discussing computation of blend price).

Another important aspect of the federal order system

relates to geography. The minimum price is subject to an

adjustment based on the location of the handler's plant. See 7

C.F.R. § 1000.52 (table of price differentials arranged by

county). These location adjustments recognize the fact that

handlers holding milk near areas of high consumption have a more

valuable commodity than handlers holding milk out in the

boondocks (who must underwrite the cost of transporting their

milk to population centers). Lansing Dairy, 39 F.3d at 1344-45.

Thus, for example, in the Northeast Marketing Area, handlers

near Boston pay more for raw milk than handlers in outlying

rural communities.

B. Maine Regulation.

Under the Maine Milk Commission Act, Me. Rev. Stat.

Ann. tit. 7, §§ 2951-2963, the Commission is authorized to set

minimum prices anent Maine milk. Id. § 2954(1). The minimum

price that Maine handlers3 must pay to Maine producers for milk
opinion.

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sold within Maine usually is comparable to the prevailing

federal price in southern New England, plus any premium the

Commission decides is appropriate to reflect the added cost of

producing Maine milk. Id. § 2954(2)(A). The minimum price that

the Commission sets is uniform throughout the state, without any

location adjustments. Maine handlers make payments at (or

above) the Maine minimum directly to the producers with whom

they deal. Id. § 2954-A(1).

Maine producers sell milk not only into the Maine

market, but also into the federal order area. Because an

inordinately high percentage of milk that stays in Maine is used

as Class I drinking milk, Maine producers selling into the Maine

market historically received higher prices for their milk than

Maine producers selling into the federal order area. To

counteract this phenomenon, the Maine legislature in 1983 passed

the Maine Milk Pool Act, Me. Rev. Stat. Ann. tit. 7, §§ 3151-

3156. This law requires that all Maine producers ultimately

receive the same blend price (based on overall usage in the

federal market). Id. § 3151. Maine handlers who have a higher

Class I utilization than the federal average pay that difference

into the Maine Milk Pool. Id. § 3153(2). The funds in the
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Maine Milk Pool are distributed among all Maine producers, thus

equalizing the prices received for Maine milk. Id. § 3153(4).

C. The Federal/State Interface.

The case at bar arises from the interaction of these

two regulatory systems. A handler that sells a stipulated

percentage of its milk into the Northeast Marketing Area — the

figure, once ten percent, is now twenty-five percent — becomes

a fully federally regulated handler, even if it is located

outside the area. 7 C.F.R. § 1001.7(a). Being fully federally

regulated means that a handler must pay no less than the federal

minimum price on all the milk that it receives at its plant and

must contribute to the federal pool that equalizes the price

paid to producers for milk put to divergent uses. Id. §§

1001.71, 1001.73.

In 1990, H.P. Hood, one of the first Maine handlers to

become fully federally regulated, simultaneously stopped making

payments into the Maine Milk Pool and started making payments

into the federal pool. Maine brought suit in a state court to

compel Hood to continue paying into the Maine Milk Pool. In an

unpublished rescript dated September 16, 1991, a state superior

court judge ruled that the Maine Milk Pool Act did not apply to

fully federally regulated Maine handlers. From then on,

federally regulated handlers in Maine turned a cold shoulder to
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the Maine Milk Pool. Hood, however, continued to comply with

Maine's minimum price requirement.

Grant is a Maine corporation that owns and operates a

fluid milk bottling plant in Bangor, Maine. In 1997, Grant for

the first time began selling enough milk into the Northeast

Marketing Area to become fully federally regulated. When that

occurred, Grant informed the Commission that it did not consider

itself bound to pay its Maine producers the Maine minimum price,

but would pay them instead the federal minimum (location

adjusted to Bangor). The Commission disagreed, maintaining that

Grant, notwithstanding its federally regulated status, was

obligated to pay the Maine minimum. In a preemptive strike,

Grant brought suit in Maine's federal district court challenging

the authority of state officials to enforce the Maine minimum in

these circumstances.

The district court, in an interlocutory order, found

it "reasonably clear" that Maine's statute did not authorize the

Commission to require a fully federally regulated handler to

honor Maine's minimum pricing. Grant's Dairy, Inc. v.

McLaughlin, 20 F. Supp. 2d 112, 116-18 (D. Me. 1998). Within

months, however, the Maine legislature passed "An Act to Clarify

the Authority of the Maine Milk Commission," Me. Rev. Stat. Ann.

tit. 7, § 2954(9) ("the Clarification Act"). This legislation
4The Clarification Act provides in pertinent part:

[M]inimum wholesale prices paid by dealers to

producers for their milk that is sold in this State

are subject to the minimum producer prices established

by the Maine Milk Commission, regardless of whether

the dealer is subject to federal milk pricing

regulation in addition to state milk pricing

regulation.

Me. Rev. Stat. Ann. tit. 7, § 2954(9) (footnote omitted).

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cleared away the mist and made it plain that Maine intended to

require its fully federally regulated handlers to pay the Maine

minimum price to Maine producers for milk destined to be sold

within the state.4 With the meaning of the Maine Milk Commission

Act clarified, the district court, ruling on cross-motions for

summary judgment, determined that Maine's system passed

constitutional muster. This appeal ensued.

II. ANALYSIS

In simplified form, Grant's principal contentions are

that Maine's statutory scheme (1) contravenes the Supremacy

Clause because its state-wide uniform milk price neutralizes the

effect of the federal location adjustments, and (2) offends the

dormant Commerce Clause because it discriminates against

interstate commerce. As a subset of the latter argument, Grant

says that, at the very least, there are genuine issues of

material fact relating to whether the benefits of the
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legislation justify its burdens. After delineating the standard

of review, we turn to these points.

A. Standard of Review.

A district court may order summary judgment "if the

pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that

the moving party is entitled to a judgment as a matter of law."

Fed. R. Civ. P. 56(c). The inner workings of the summary

judgment model are familiar:

Once a properly documented motion has

engaged the gears of Rule 56, the party to

whom the motion is directed can shut down

the machinery only by showing that a

trialworthy issue exists. As to issues on

which the summary judgment target bears the

ultimate burden of proof, she cannot rely on

an absence of competent evidence, but must

affirmatively point to specific facts that

demonstrate the existence of an authentic

dispute. Not every factual dispute is

sufficient to thwart summary judgment; the

contested fact must be "material" and the

dispute over it must be "genuine." In this

regard, "material" means that a contested

fact has the potential to change the outcome

of the suit under the governing law if the

dispute over it is resolved favorably to the

nonmovant. By like token, "genuine" means

that the evidence about the fact is such

that a reasonable jury could resolve the

point in favor of the nonmoving party . . .

.
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McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir.

1995) (citations and some internal quotation marks omitted).

Where, as here, summary judgment has been granted, the court of

appeals reviews the matter de novo, regarding the record and all

reasonable inferences therefrom in the light most hospitable to

the party who lost below. Houlton Citizens' Coalition v. Town

of Houlton, 175 F.3d 178, 184 (1st Cir. 1999); Garside v. Osco

Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990).

B. The Supremacy Clause.

Grant maintains that, as applied to it, Maine's

statutory scheme is preempted under the Supremacy Clause. See

U.S. Const. art. VI, cl. 2 (declaring that federal law "shall be

the supreme Law of the Land . . . any Thing in the Constitution

or Laws of any State to the Contrary notwithstanding").

Congressional intent is the touchstone of preemption analysis.

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992);

English v. General Elec. Co., 496 U.S. 72, 78-79 (1990).

Moreover, in undertaking such analyses courts "start with the

assumption that the historic police powers of the States [are]

not to be superseded by . . . Federal Act unless that [is] the

clear and manifest purpose of Congress." Rice v. Santa Fe

Elevator Corp., 331 U.S. 218, 230 (1947).
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Federal law may preempt state law either expressly or

by implication. Express preemption occurs only when a federal

statute explicitly confirms Congress's intention to preempt

state law and defines the extent of that preclusion. English,

496 U.S. at 78-79. Implied preemption can occur in one of two

ways: field preemption or conflict preemption. Massachusetts

Ass'n of HMOs v. Ruthardt, 194 F.3d 176, 179 (1st Cir. 1999).

Field preemption occurs when a federal regulatory scheme is so

pervasive as to warrant an inference that Congress did not

intend the states to supplement it. Gade v. National Solid

Wastes Mgmt. Ass'n, 505 U.S. 88, 98 (1992). Conflict preemption

takes place either when compliance with both state and federal

regulations is impossible or when state law interposes an

obstacle to the achievement of Congress's discernible

objectives. Id.

In this appeal, Grant does not maintain that Congress

preempted the field of milk pricing regulations or that

simultaneous compliance with both the federal and state milk

pricing schemes is infeasible. Instead Grant argues that, while

the AMAA allows complementary state regulation of milk prices,

the Maine Milk Commission Act, as clarified, frustrates

Congress's core objectives. This frustration occurs, Grant

tells us, because Maine's uniform state-wide price neutralizes
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the carefully calibrated federal system of location adjustments.

After all, the federal scheme recognizes that raw milk has

different values at different locations and strives to equalize

producer revenue and promote handler equity by means of location

adjustments. In Grant's view, when Maine forces a federally

regulated handler to pay a flat, state-wide minimum price in

excess of the location-adjusted federal price, it impairs the

accomplishment of these federal objectives.

The theoretical underpinnings of this argument are

impeccable. The "obstacle to accomplishment" branch of implied

preemption doctrine came into clear focus in Hines v.

Davidowitz, 312 U.S. 52 (1941), in which the Court stated that

inquiries into preemption are designed, inter alia, to determine

whether "under the circumstances of [the] particular case,

[state] law stands as an obstacle to the accomplishment and

execution of the full purposes and objectives of Congress." Id.

at 67. The Hines Court emphasized the contextual nature of such

questions. See id. at 68. We take that cue and, recognizing

the salience of context, undertake a search for the objectives

that underlie the federal location adjustment system.

We start by considering the generic objectives of

federal milk price regulation. The AMAA makes clear that

achieving price parity for producers, 7 U.S.C. § 602(1), and
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ensuring the orderly supply of agricultural commodities (thereby

promoting the mutual interests of producers and consumers), id.

§ 602(4), are among the relevant goals of the legislation. The

statutory mandate that the Secretary adjust milk prices to

"reflect [economic] factors, insure a sufficient quantity of

pure and wholesome milk to meet current needs and further to

assure a level of farm income adequate to maintain productive

capacity sufficient to meet anticipated future needs," id. §

608c(18), also must be factored into the mix. We therefore

agree with the Court of Appeals for the District of Columbia

Circuit that the objectives of federal milk price regulation,

generally, are "to guarantee producers parity prices, to protect

the health and purses of consumers, to establish and safeguard

orderly marketing conditions, and to assure to each area of the

country a sufficient quantity of pure and wholesome milk."

Schepps Dairy, Inc. v. Bergland, 628 F.2d 11, 19 (D.C. Cir.

1979) (internal citations and quotation marks omitted).

We next move from the general to the specific.

Gleaning information about the policies behind the federal

location adjustment regime requires us to canvass statements by

the United States Department of Agriculture (USDA) germane to

that issue. According to the USDA, location adjustments are

appropriate because "milk value varies by location." 64 Fed.
-15-

Reg. 16,117 (1999). As Justice Harlan explained: "Delivery to

a plant located nearby the consumer market is, of course,

advantageous to the handler and the producer is compensated for

this service. . . . Conversely, depositing milk at handlers'

plants in outlying districts results in a negative adjustment."

Zuber v. Allen, 396 U.S. 168, 178 n.11 (1969). While the USDA

later identified handler equity with regard to raw product costs

as a goal of its matrix of location adjustments, see 64 Fed.

Reg. 16,109 (1999), the main thrust of the adjustments is to

ease the movement of raw milk from areas in which the supply is

plentiful to areas in which the supply is short. See Lansing

Dairy, 39 F.3d at 1344.

Having catalogued the relevant federal objectives, we

next inquire whether Maine's non-location-adjusted minimum price

clearly conflicts with those objectives. E.g., English, 496

U.S. at 79 (stating that preemption is not to be implied absent

a clear conflict); Rice v. Norman Williams Co., 458 U.S. 654,

659 (1982) (requiring an irreconcilable conflict as a condition

precedent for preemption, not just a hypothetical or potential

conflict). Maine's pricing scheme conflicts with neither the

AMAA's overarching purposes (namely, achieving parity in

producer prices and ensuring an orderly supply of commodities)

nor the goals of federal milk price regulation (namely,
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achieving price equality for producers, safeguarding orderly

market conditions, and assuring a sufficient milk supply). The

Maine minimum promotes price equality for Maine dairy farmers

without in any way detracting from the orderliness of the

market. Furthermore, it contributes to the promotion of an

adequate supply of milk by assuring Maine producers of a steady,

predictable income stream (which in turn encourages production).

In arguing that Maine's uniform minimum price

frustrates federal objectives, Grant emphasizes that the state

system requires it to pay its Maine producers the same price

paid by its Maine-based competitors to the south (who are

situated closer to the more densely populated urban areas), with

no adjustment for its incrementally higher transportation costs.

If the federal system alone were in place, Grant's thesis runs,

it would pay producers less than handlers do in southern Maine,

thereby offsetting its greater transportation costs. Thus, one

effect of the Maine minimum price is to make Grant's sales in

southern Maine less profitable than those of its competitors.

We understand Grant's consternation and, to some

extent, we sympathize with it. But federal location adjustments

were not designed to compensate handlers with perfect fairness.

In Schepps Dairy, the court rejected a handler's claim that

certain federal location adjustments were invalid because they
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did not fully cover actual transportation costs. 628 F.2d at

19. The court found that requiring federal location adjustments

to reflect exact transportation costs would not be feasible and

would countervail the plain meaning of the AMAA. Id. at 18-19.

The same principle applies here: although the Maine minimum

does not take into account handlers' differing transportation

costs, that failure alone does not bring the state scheme into

clear conflict with the federal regime — a regime that does not

require location adjustments to mirror actual transportation

costs.

Nor is Grant's case enhanced by its repeated reference

to 7 U.S.C. § 608c(5)(A). That proviso calls for uniform prices

"as to all handlers, subject only to adjustments for (1) volume,

market, and production differentials customarily applied by the

handlers subject to such order, (2) the grade or quality of the

milk purchased, and (3) the locations at which delivery of such

milk, or any such classification thereof, is made to such

handlers." Id. This is not a statement of policy, but merely

a limitation on the adjustments that the USDA may apply to the

minimum prices that handlers are required to pay. See Zuber,

396 U.S. at 183 (describing congressional intent to confine the

boundaries of the Secretary's delegated discretion). In all

events, the language of this statute ("subject to adjustments")
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has been interpreted authoritatively to mean that such

adjustments are precatory, not obligatory. Schepps Dairy, 628

F.2d at 18-19. That eliminates any potential Supremacy Clause

problem: since location adjustments are permissive under the

federal policy, there is no direct conflict between that policy

and Maine's uniform minimum price.

In an effort to resurrect this facet of its claim,

Grant posits that, whether or not location adjustments are

mandatory, federal policy favors equitable prices for handlers

(as opposed to strictly uniform prices). This argument misses

the mark. To the extent that federal location adjustments

reflect a policy of equalizing raw product costs to handlers,

that policy serves the goal of enabling handlers to compete for

available milk supplies on an equitable basis. 64 Fed. Reg.

16,109-10 (1999). But Grant has presented no evidence that

Maine's minimum price regulation disables it from competing for

milk supplies. In fact, Grant told the court below that if it

were to pay the Maine minimum, its producers would net the

highest profits in the state, given their low transportation

costs. This would make Grant, in effect, a preferred purchaser

and ensure its supply of raw milk. Consequently, as applied to

Grant, the Maine minimum does not clash with the perceived

federal goal.
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Three other particulars bolster our conclusion that no

significant conflict exists between Maine's uniform minimum

price and its federal counterpart. First, the Supreme Court

noted in its most recent milk regulation case that "[t]he

federal order does not prohibit the payment of prices higher

than the established [federal] minima." West Lynn, 512 U.S. at

189 n.1. This is at least some indication that prices higher

than the federal minima are not fundamentally incompatible with

the objectives of the federal regulatory scheme.

Second, there is circumstantial evidence that the

Secretary regards Maine's regime as consistent with the policies

of the AMAA. When the federal order system was restructured,

see supra note 2, Maine could have been added as part of the

Northeast Marketing Area. In declining to do so, the Secretary

reasoned:

Maine has been and continues to be

excluded from Federal order regulation . . .

because of its geographic separation from

other areas, its long history of successful

milk marketing regulation, and the limited

impact of its pricing system on other

regulated areas.

There appears to be little reason to

add the State of Maine to the consolidated

Northeast order area. Maine handlers with

significant distribution in the Federal

order areas can be and are pooled under

Federal orders, limiting the extent of any

competitive advantage. Inclusion of Maineregulated handlers in the consolidated

marketing area would have little effect on
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handlers' costs of Class I milk (or might

reduce them), and would reduce returns to a

few producers. When not pooled under

Federal orders, Maine handlers are subject

to minimum prices paid for milk, and

producers are assured minimum prices in

payment for milk. There is no compelling

reason to extend Federal order regulation to

encompass this State-regulated marketing

area.

64 Fed. Reg. 16,056 (1999). We think that this very recent

decision is important in two ways. For one thing, it implies

federal approval of Maine's non-location-adjusted method of

pricing Maine milk and demonstrates the Secretary's sense of

satisfaction that Maine's in-state regulation is an appropriate

response to its unique geographic situation. For another thing,

the decision suggests a belief on the Secretary's part that

Maine's uniform minimum price does not interfere with the

movement of milk in the Northeast Marketing Area.

Finally, the great weight of authority holds that state

regulation of milk prices is not preempted by the extant federal

regime. E.g., Crane v. Commissioner of Dep't of Agric., Food &

Rural Res., 602 F. Supp. 280, 293 (D. Me. 1985); Schwegmann

Bros. Giant Super Mkts. v. Louisiana Milk Comm'n, 365 F. Supp.

1144, 1156-57 (M.D. La. 1973), aff'd, 416 U.S. 922 (1974);

United Dairy Farmers Coop. Ass'n v. Milk Control Comm'n, 335 F.

Supp. 1008, 1014-15 (M.D. Pa. 1971), aff'd, 404 U.S. 930 (1971);

Medo-Bel Creamery, Inc. v. Oregon, 673 P.2d 537, 544 (Or. Ct.
-21-

App. 1983). Against this phalanx, Grant offers us only one case

in which a state milk regulation was held to be preempted by

federal law. That case, Pearce v. Freeman, 238 F. Supp. 947

(E.D. La. 1965), is readily distinguishable.

Pearce dealt with a situation in which Louisiana had

mandated that handlers pay producers a blend price determined by

each individual handler's actual milk usage. Id. at 949-50. In

contrast, federal regulations required handlers to pay producers

a blend price based on market-wide averages of handler milk

usage. Id. at 950-51. Finding the two systems entirely

incompatible — a handler could not adhere to one without

disobeying the other — the Pearce court ruled that the federal

scheme trumped the state regulation. Id. at 955. Since Grant

can comply with both the applicable federal and state

regulations, Pearce lends no support to its Supremacy Clause

claim. See id. at 950 (observing, in dictum, that Louisiana's

minimum prices, which were higher than federal minimum prices,

"caused no difficulty as both were minimum rather than maximum

prices").

To say more on the Supremacy Clause challenge would be

supererogatory. Preemption is strong medicine, not casually to

be dispensed. Ruthardt, 194 F.3d at 178-79. Although Grant

chants the conventional "obstacle to accomplishment" mantra, it
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does not point to the kind of clear conflict that would warrant

such a finding, or even to a genuine issue of material fact

concerning that point. We therefore conclude that the lower

court correctly rejected Grant's Supremacy Clause challenge.

C. The Commerce Clause.

The Constitution cedes to Congress the power "[t]o

regulate Commerce . . . among the several States." U.S. Const.

art. I, § 8, cl. 3. This power includes a negative aspect,

known as the dormant Commerce Clause, "that prevents state and

local governments from impeding the free flow of goods from one

state to another." Houlton, 175 F.3d at 184. The dormant

Commerce Clause prohibits protectionist state regulation

designed to benefit in-state economic interests by burdening

out-of-state competitors. Fulton Corp. v. Faulkner, 516 U.S.

325, 330 (1996); New Energy Co. v. Limbach, 486 U.S. 269, 273-74

(1988).

The Supreme Court most recently addressed the question

of whether state milk price regulation violated the dormant

Commerce Clause in West Lynn Creamery, Inc. v. Healy, 512 U.S.

186 (1994). We construct our analytic framework based on the

blueprint provided by Justice Stevens's majority opinion,

"eschew[ing] formalism for a sensitive, case-by-case analysis of
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purposes and effects." Id. at 201. Using this flexible

approach, we must determine whether the challenged state

statute, as a practical matter, discriminates against interstate

commerce. Id. The question, then, is simply this: Does the

Maine Milk Commission Act treat in-state and out-of-state

economic interests differently in ways that help the former and

hamper the latter?

Rather than letting the cream rise to the top, Grant

presents us with a bewildering array of reasons why the Maine

law ostensibly violates the dormant Commerce Clause. To

facilitate discussion, we divide these reasons into four groups.

1. Direct Regulation of Interstate Commerce. Grant

first contends that, even without a showing of "burden," Maine's

minimum pricing scheme transgresses the dormant Commerce Clause

because it directly regulates interstate commerce. Grant

grounds this contention in the Supreme Court's observation that

"[w]hen a state statute directly regulates or discriminates

against interstate commerce . . . we have generally struck down

the statue without further inquiry." Brown-Forman Distillers

Corp. v. New York State Liquor Auth., 476 U.S. 573, 579 (1986).

But this reference to direct regulation as a basis for

invalidation has not been repeated in subsequent Supreme Court

opinions, e.g., Fulton, 516 U.S. at 330-31; Oregon Waste Sys.,
-24-

Inc. v. Department of Envtl. Quality, 511 U.S. 93, 98-99 (1994),

and it does not fit into the West Lynn framework. See West

Lynn, 512 U.S. at 201 (directing inquiring courts to look for

discriminatory "purposes and effects"). Given that the BrownForman Court itself conceded that "the critical consideration

[in a dormant Commerce Clause analysis] is the overall effect of

the statute on both local and interstate activity," 476 U.S. at

579, we rebuff Grant's attempt to forge a new mode of analysis.

In all events, even were we to give credence to the

Brown-Forman dictum, Grant's "direct regulation" claim fails to

raise a genuine issue of material fact sufficient to undermine

the lower court's entry of summary judgment. Extrapolating from

the fact that the Secretary has declared that all milk acquired,

processed, and sold by fully federally regulated handlers is in

the current of interstate commerce, 64 Fed. Reg. 47,899 (1999),

Grant claims that any state oversight of a fully federally

regulated handler's milk (including regulation of milk that

never leaves the state in which it is produced) is invalid. To

shore up this extreme proposition, Grant cites two cases,

namely, United States v. Wrightwood Dairy Co., 315 U.S. 110

(1942), and Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935).

Neither case lends support.
-25-

Wrightwood Dairy held that the Commerce Clause gives

Congress the authority to regulate purely intrastate

transactions as long as those transactions affect interstate

commerce. 315 U.S. at 125. Nothing in the Court's opinion

intimates that a State may not regulate in areas that touch upon

interstate commerce. So, too, Baldwin — a case that arose

following New York's passage of a law that prohibited the instate sale of milk produced beyond its borders unless the outof-state dairy farmers were paid the minimum prices established

by New York for its own producers. 294 U.S. at 519. In

striking down the law, the Court analogized the situation to the

placement of a tariff or duty on out-of-state milk as it entered

New York. Id. at 521-22. Baldwin stands for the proposition

that a state law which burdens interstate commerce is invalid.

It does not stand for the markedly different proposition that

federal and state regulations can never apply to the same

product.

That ends this aspect of the matter. The bare fact

that all of Grant's milk is federally regulated is simply not

enough to render concurrent state regulation of some of its milk

unconstitutional. Cf. 7 U.S.C. § 610(i) (recognizing the

coexistence of federal and state regulation of agriculture and

agricultural products).
5To illustrate, assume that a handler bought all its milk in

Maine and then sold 100 units in Maine, with the Maine price set

at $1.00 and the federal price set at 80¢. The ensuing

-26-

In a variation on this theme, Grant seems to assert

that Maine has violated the dormant Commerce Clause by

regulating the milk that Grant sells across state lines. This

assertion depends upon the validity of Grant's allegations that

Maine credits federally required payments on both in-state and

out-of-state milk when it calculates a fully federally regulated

handler's state obligation. By so doing, Grant says, the State

enforces the federal minimum on its out-of-state sales. Even

though this enforcement admittedly has no discriminatory effect

— after all, the price Maine credits is identical to the federal

requirement — Grant insists that the practice abridges the

dormant Commerce Clause.

The most glaring problem with this line of reasoning

is that it misrepresents Maine's method of calculating a fully

federally regulated handler's state obligation. The record

reveals that Maine bases its calculations on the amount of milk

a fully federally regulated handler sells within the state,

multiplying in-state sales by the Maine minimum. In-state sales

are then multiplied by the federal minimum, and the second

number is subtracted from the first. The difference is the

amount the handler owes Maine producers.5 For aught that
calculation would run as follows: $100 of in-state sales at the

Maine minimum, minus $80 that would have been paid on in-state

sales at the federal minimum but for the overriding Maine

minimum, leaving $20 owed to the handler's Maine producers (to

be shared pro rata among them).

6We hasten to add that even if Maine used a figure derived

from a fully federally regulated handler's out-of-state sales at

the federal minimum in some of its calculations, merely

acknowledging that federal obligation is not the same as

enforcing it.

-27-

appears, Grant's assertion that Maine credits a handler's outof-state sales in computing the handler's state obligation is

constructed out of whole cloth.6

2. Discrimination Against Interstate Commerce. The

courts have invalidated state statutes that overtly discriminate

against interstate commerce with a regularity that borders on

the monotonous. E.g., Oregon Waste, 511 U.S. at 108; New

Energy, 486 U.S. at 280. Grant attempts to demonstrate three

times over that Maine's minimum pricing trips this wire.

Initially, Grant attacks Maine's method of computing

its state obligation, arguing that the method results in a

higher assessment against Grant than against handlers that make

only in-state sales. This argument draws its essence from the

Commission's letter to Grant, dated April 10, 1998, pegging

Grant's obligation to Maine producers for January 1998 at

$20,409.71. Grant asseverates that this figure was calculated

by reference to Grant's overall sales, rather than by reference
7Maine apparently assigned a value of $1,371,510 to Grant's

total purchases of 93,280.22 hundredweights of milk. It added

a premium of 25¢ per hundredweight to Grant's net sales (gross

sales minus milk purchased from other handlers) of 87,940.38

hundredweights. The total premium added, therefore, was

$21,985, and the total of the assigned value plus the premium

was $1,393,495. Maine then seems to have given Grant a credit

of $1,373,085 ($14.72 per hundredweight) to arrive at the amount

of the underpayment.

-28-

to its in-state sales, and that the resulting assessment is

higher than it would have been had Maine based its calculation

solely on Grant's in-state sales.7

Taking Grant's factual predicate as true, its claim

nonetheless founders. The January 1998 bill was not paid as

presented, and the Commission has confessed error in the

methodology used to calculate it. Moreover, the Commission

asserts, without contradiction, that the faulty methodology has

been discarded and that fully federally regulated handlers'

obligations now are calculated using a formula that involves

multiplying Maine Class I sales by Maine Class I minimum prices,

less the product of Maine Class I sales and the applicable

federal order minimum price. Grant has neither adduced evidence

to disprove these facts nor explained how the Commission's

revised formula burdens interstate commerce. That puts the cork

in the bottle: Grant cannot prevail prospectively based on an

outdated mistake, since corrected.
-29-

Grant's second theory of a burden on interstate

commerce concerns the alleged impact of the Maine minimum on its

ability to compete in certain metropolitan areas. This argument

derives primarily from geography. Because Maine's minimum

pricing does not take into account a handler's transportation

costs, Grant is at a competitive disadvantage relative to

handlers located in southern Maine with respect to intrastate

sales in Maine's more populous urban areas (e.g., Portland).

Grant claims that this disadvantage ultimately burdens

interstate commerce because it impedes Grant's effectiveness in

selling milk into border areas (e.g., Portsmouth, N.H.) where

the federal minimum price applies.

This claim of lessened distribution efficiency

contemplates, at most, a roundabout kind of burden on interstate

commerce, arising as a side effect of what Grant reasonably

perceives as a burden imposed by Maine law on intrastate

commerce. To substantiate it, Grant must show a "differential

treatment of in-state and out-of-state economic interests that

benefits the former and burdens the latter." Oregon Waste, 511

U.S. at 99. Virtually by definition, such a showing demands a

comparison between two classifications. Bacchus Imports, Ltd.

v. Dias, 468 U.S. 263, 273 (1984). Accordingly, Grant must show

that handlers subject to both federal and state regulation (as
-30-

is Grant) are disadvantaged in their endeavors to compete beyond

Maine's borders relative to handlers who are subject only to

state regulation.

Grant's effort to establish this set of facts fails.

Both types of handlers must pay the Maine minimum price on Maine

milk. Moreover, to the extent that the uniform state-wide price

means that transportation costs to distant markets will erode

profits, both groups are equally disadvantaged. The only

difference is that the handlers who are subject only to state

oversight sell less of their milk (under twenty-five percent)

into the federal order area. In short, Maine's minimum price

treats in-state and out-of-state economic interests

evenhandedly.

This scenario is a far cry from West Lynn, the

precedent to which Grant repeatedly alludes. There,

Massachusetts imposed a tax on all milk sold to in-state

retailers (regardless of whether that milk was produced in or

out of state) and then distributed the proceeds exclusively to

Massachusetts producers. West Lynn, 512 U.S. at 188. Because

Massachusetts producers got money back, the tax effectively

applied to out-of-state producers only, and had the effect of

allowing Massachusetts producers, despite their higher initial
-31-

costs, to sell at prices below those charged by out-of-state

producers. Id. at 194-95.

To be sure, Maine's statutory scheme makes an instate/out-of-state distinction — out-of-state handlers, unlike

in-state handlers, do not have to pay the Maine minima.

Nevertheless, this distinction is irrelevant for Commerce Clause

purposes because it does not advantage Maine handlers at the

expense of out-of-state handlers. Quite the contrary: it is

Maine handlers (whether fully federally regulated or not) and,

by extension, Maine consumers, who shoulder a burden for the

benefit of Maine producers. Stripped of rhetorical flourishes,

Grant's argument is nothing more than a lament that the Maine

minimum burdens it relative to fully federally regulated

handlers located in southern Maine. This lament should be

addressed to the Maine legislature, not to the federal courts.

The dormant Commerce Clause does not protect intrastate

competition, but, rather, safeguards interstate markets from

discriminatory regulation. Exxon Corp. v. Governor of Maryland,

437 U.S. 117, 127-28 (1978).

Grant's final "discriminatory effect" theorem posits

that the Maine minimum encourages producers to ship to the

nearest market within Maine, thus discouraging them from selling

across state lines. Grant adds that the Maine minimum similarly
-32-

discourages producers from selling to handlers engaged in

substantial interstate distribution because the more milk the

handler sells out of state, the lower the revenue to the

producer. On these bases, Grant hypothesizes that Maine's

statutory scheme impermissibly keeps milk from leaving the

state.

The Commerce Clause looks askance at state resourcehoarding. E.g., Chemical Waste Mgmt., Inc. v. Hunt, 504 U.S.

334, 339-41 (1992); Hughes v. Oklahoma, 441 U.S. 322, 338

(1979). Thus, Grant's point, taken in the abstract, possesses

an aura of plausibility. As applied here, however, the

resource-hoarding theory simply does not fit.

In the first place, the suggestion of resource hoarding

contradicts Grant's admission to the district court that, with

the Maine minimum in place, Grant finds it more profitable to

sell milk out of state than in most in-state markets. As this

admission demonstrates (and as the district court explicitly

found), the Maine minimum appears to encourage, rather than

discourage, interstate commerce. In the second place, Grant's

argument about producers' incentives to sell to handlers with

the smallest percentage of interstate distribution is woven out

of the gossamer strands of speculation and surmise, unsupported

by even the slimmest evidentiary thread. Grant has not shown
-33-

that it has difficulty buying milk or that it is losing

producers to handlers who do not sell into interstate markets.

If more were needed — and we doubt that it is —

precedent strongly suggests that Grant's argument is without

merit. Courts routinely have confirmed that state minimum milk

prices (all of which presumably have the effect of insuring an

in-state milk supply) do not offend the Commerce Clause. E.g.,

Highland Farms Dairy, Inc. v. Agnew, 300 U.S. 608, 614-16 (1937)

(rejecting Commerce Clause challenge to Virginia statute setting

minimum prices for milk within state); Marigold Foods, Inc. v.

Redalen, 809 F. Supp. 714, 722 (D. Minn. 1992) (asserting in

Commerce Clause context that "Minnesota has a right to set

minimum prices for milk produced and sold by dairy farmers

located within its borders"); Barber Pure Milk Co. v. Alabama

State Milk Control Bd., 156 So. 2d 351, 355 (Ala. 1963)

(upholding state minimum milk price against Commerce Clause

challenge); School Dist. v. Pennsylvania Milk Mktg. Bd., 683

A.2d 972, 976 (Pa. Commw. Ct. 1996) (concluding that in-state

minimum milk price did not violate Commerce Clause).

In the seminal case on this subject, the Supreme Court

ruled that a Pennsylvania statute which set the price

Pennsylvania handlers paid Pennsylvania producers for all milk

(even milk ultimately shipped to other states) did not
-34-

transgress the Commerce Clause. Milk Control Bd. v. Eisenberg

Farm Prods., 306 U.S. 346, 349-51 (1939). The Court concluded

that the minimum price did not create a barrier to interstate

commerce because the state did not "essay to regulate or to

restrain the shipment of the respondent's milk into New York or

to regulate its sale or the price at which respondent may sell

it in New York." Id. at 352. The case before us fits

comfortably within this mold: Maine imposes no restriction on

the sale of milk out of state and does not attempt to regulate

the price at which Maine-produced milk is sold in other venues.

See Maine Milk Comm'n v. Cumberland Farms N., 205 A.2d 146, 154

(Me. 1964) (finding that Maine's milk price regulation does not

offend the Commerce Clause because it "does not attempt to

control the price paid for milk purchased outside of Maine, or

the sales price outside this state of milk produced here").

The cases Grant cites in connection with its resourcehoarding claim are inapposite. Those cases concern situations

in which a state either has blocked out-of-staters' access to an

in-state resource, e.g., Philadelphia v. New Jersey, 437 U.S.

617, 628 (1978), or has taken an affirmative step to prevent the

export of a state resource, e.g., H.P. Hood & Sons v. DuMond,

336 U.S. 525, 528-29 (1949). The Maine Milk Commission Act
-35-

contains no such vice. It neither erects barriers to access nor

inhibits exports.

3. Discriminatory Purpose. It is a commonsense

proposition that the purpose of a statute is relevant to a

Commerce Clause analysis. See West Lynn, 512 U.S. at 194; see

also Chemical Waste, 504 U.S. at 344 n.6 (explaining that a

finding of impermissible economic protectionism may be made on

the basis of a discerned discriminatory purpose). Grant

attempts to invoke this proposition, suggesting that Maine's

statutory scheme is invalid because it was designed with a

discriminatory purpose. It relies on four pieces of evidence.

The first is a statement mined from the State's brief in an

earlier case to the effect that allowing Maine handlers to

decide on a monthly basis whether they will be federally

regulated or state regulated would create "economic chaos in the

State's dairy industry." The second consists of a comment made

at oral argument in the same case that the State perceived a

handler becoming federally regulated as being "potentially

disruptive to the State's dairy industry." The third is a

newspaper article in which the Commissioner (a defendant here)

is quoted as saying that Grant's decision to become fully

federally regulated and its refusal to pay the Maine minimum

"shakes the entire system." The fourth is a statement by a
-36-

state functionary calling the Clarification Act "essential to

the stability of an industry undergoing considerable change."

Grant's suggestion that we draw an inference of

protectionist intent from this meager collection of statements

— the first two of which were made in the context of Maine Milk

Pool litigation, not in the context of minimum pricing —

elevates hope above reason. We hold this view notwithstanding

that the summary judgment praxis requires us to evaluate the

evidence in the light most favorable to Grant. See Houlton, 175

F.3d at 184. Despite the generosity of this standard,

"conclusory allegations, improbable inferences, and unsupported

speculation" are entitled to no weight. Medina-Munoz v. R.J.

Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990).

That principle applies here: on their face, the cited

statements seem to be innocuous expressions of concern anent the

stability of the Maine dairy industry in the face of significant

change. Fairly read, they are consistent with the stated

purposes of Maine's minimum price law, which is aimed at

"insuring . . . an adequate supply of pure and wholesome milk to

the inhabitants of this State," Me. Rev. Stat. Ann. tit. 7, §

2954(2), and at stabilizing prices to producers, see id., §

2954(9). Interpreting the statements in a more sinister fashion

would require a leap of faith that we are unwilling to
-37-

undertake. The bottom line, then, is that Grant has not

presented competent evidence to substantiate its conclusory

allegation of discriminatory purpose. See Cadle Co. v. Hayes,

116 F.3d 957, 960, 962 (1st Cir. 1997) (stating and applying

principle that a party having the burden of proof must present

evidence that is "significantly probative," not merely

colorable, to thwart summary judgment).

4. Incidental Effects. Grant tries to pull one last

rabbit from the hat. Shifting away from arguments based on

discriminatory purpose and effect, it contends that even if

Maine's regulations only indirectly burden interstate commerce,

there is a genuine issue of material fact as to whether those

burdens outweigh the benefit conferred by the Maine Milk

Commission Act. This contention, which calls for an application

of what has come to be known as the Pike balancing test, see

Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970); see also

Houlton, 175 F.3d at 185, stands on uncertain legal terrain.

The case-by-case approach described in West Lynn focuses on an

"analysis of purposes and effects." 512 U.S. at 201. In

earlier cases, however, the Court addressed dormant Commerce

Clause questions in a somewhat different way, asking, inter

alia, whether the challenged law "regulates evenhandedly with

only 'incidental' effects on interstate commerce . . ." Oregon
-38-

Waste, 511 U.S. at 99. The answer to this question determined

the level of scrutiny to be applied. Id. It is unclear whether

the Court intended the West Lynn approach to supplant, or merely

to complement, the analytic structure typified by Oregon Waste.

We need not resolve this enigma today. Instead, we

address the Pike balancing test on the merits. In doing so, we

begin with a recitation of the test itself. "Where [a] statute

regulates evenhandedly to effectuate a legitimate local public

interest, and its effects on interstate commerce are only

incidental, it will be upheld unless the burden imposed on such

commerce is clearly excessive in relation to the putative local

benefits." Pike, 397 U.S. at 142.

Grant has canvassed the possible burden on interstate

commerce created by the Maine statute in meticulous detail.

Despite the valiant efforts of capable counsel, Grant has

identified only two conceivable vulnerabilities: (1) the

alleged distribution inefficiency created in some dual-state

metropolitan areas as a result of Grant's inability to sell milk

profitably in southern Maine; and (2) the alleged tendency of

the Maine minimum price to discourage milk from leaving the

state. These possibilities need not detain us. As our earlier

comments make clear, both of them are unsubstantiated. In

short, Grant's slim showing of an imagined burden does not
-39-

suffice to trigger Pike balancing. Moreover, even were we to

give Grant the benefit of the doubt on that issue, the modest

burdens that it describes obviously are outweighed by the

benefits Maine seeks to secure by imposing minimum prices —

benefits that include ensuring an adequate in-state supply of

milk at reasonable prices and maintaining market stability. See

Me. Rev. Stat. Ann. tit. 7, § 2954(2) & (9). Hence, the

district court did not err when it granted summary judgment for

the defendants on this point.

III. CONCLUSION

We need go no further. Grant's various Supremacy

Clause and Commerce Clause claims are factually unsubstantiated,

legally impuissant, or both. Consequently, the judgment below

must be

Affirmed.