Document: 447 U.S. 429 100 S.Ct. 2271 65 L.Ed.2d 244 REEVES, INC., Petitioner,v.William STAKE et al. No. 79-677. Argued April 16, 1980. Decided June 19, Syllabus For more than 50 years, South Dakota has operated a cement plant that produced for both state residents and out-of-state buyers. In 1978, because of shortage, the State Cement Commission announced policy to confine sale by State. This forced petitioner ready-mix concrete distributor, one buyers, cut its production severely. Petitioner then brought suit in Federal District Court, challenging policy. The court granted injunctive relief on ground violated Commerce Clause. Court Appeals reversed had simply acted proprietary capacity. Held : Dakota's resident-preference program does not violate Pp. 434-447. (a) "Nothing purposes animating Clause prohibits State, absence congressional action, from participating market exercising right favor own citizens over others." Hughes v. Alexandria Scrap Corp., 426 794, 810, 96 2488, 2498, 49 220. 434-436. (b) responds principally taxes regulatory measures impeding free private trade national marketplace, there is no indication constitutional plan limit ability States themselves operate freely market. Restraint this area also counseled considerations sovereignty, each State's role as guardian trustee people, recognized trader exercise discretion parties with whom he will deal. Moreover, activities often are burdened same restrictions participants. And, case illustrates, competing cases involving action be subtle, complex, politically charged, difficult assess under traditional analysis. Given these factors, adjustment interests context is, rule, better suited Congress Court. 436-439. (c) arguments invalidating program—that having long exploited interstate cement, should permitted withdraw it when shortage arises; solely nongovernmental objective protectionism; hoarding may have undesirable consequences; places suppliers at competitive advantage market; if acted, forces would generated an appropriate level supply prices all buyers region—are weak best. Whatever residual force inheres them offset countervailing fairness. To invalidate discourage similar projects rob intended benefit foresight, risk, industry. 440-447. 603 F.2d 736, 8 Cir., affirmed. Dennis M. Kirven, Buffalo, Wyo., petitioner. William J. Janklow, Pierre, S. D., respondents. Mr. Justice BLACKMUN delivered opinion 1 issue whether, consistent Clause, U. Const., Art. I, § 8, cl. 3, Dakota, time produces residents. 2 * 1919, undertook plans build plant. project, product prevailing Progressive political movement, was initiated response recent regional shortages "interfered delayed public enterprises," were "threatening people state." Eakin Comm'n, 44 S.D. 268, 272, 183 N.W. 651, 652 (1921).1 1920, anticipated "[t]hat ready entire output within Report 9 (1920). plant, however, located Rapid City, soon Dakotans could use. Over less nine nearby purchased App. 26. Between 1970 1977, some 40% plant's went outside 3 list included Reeves, Inc. Reeves concrete2 distributor organized Wyoming law facilities Gillette, Sheridan, Wyo. Id., 15. From beginning operations 1958, until about 95% 15 22. purchases $1,172,000. 17. turn, supplied three northwestern counties half their needs. 20 years relationship between amicable, uninterrupted, mutually profitable. 4 As 1978 construction season approached, difficulties slowed production. Meanwhile, booming industry spurred demand regionally nationally. 13. found itself unable meet orders. Faced type "serious shortage" inspired construction, "reaffirmed supplying customers first honor contract commitments, remaining volume allocated come, served basis." Ibid.3 5 which pre-existing long-term contract, hit hard quickly development. On 30, informed continue fill Reeves' orders, July 5, turned away truck. 17-18. Unable find another supplier, id., 21, 76% mid-July. 20. 6 against Commission, preferring seeking relief. 3-10. After conducting hearing receiving briefs affidavits, substantial material fact permanently enjoined Commission's practice. reasoned "hoarding" inimical envisioned 27-30. 7 United Eighth Circuit reversed. Kelley, 586 1230, 1232 (1978). It concluded "simply capacity," 220 (1976). sought certiorari. petition, vacated judgment, remanded further consideration light Oklahoma, 441 322, 99 1727, 60 250 (1979). 939, 2155, 1041 remand, distinguished case.4 Again relying Scrap, abided previous holding. 736 We petition certiorari consider once again impact activity. 444 1031, 700, 62 666 (1980).5 II A. concerned Maryland designed remove abandoned automobiles roadways junkyards. encourage recycling, "bounty" offered every Maryland-titled junk car converted into scrap. Processors eligible collect subsidies. legislation, initially enacted 1969, required processor bounty present documentation evidencing ownership wrecked car. requirement did apply "hulks," inoperable eight old. 1974, statute amended extend requirements hulks, comprised large majority cars being processed. Departing prior practice, new imposed exacting in-state processors. By making remunerative transfer vehicles Maryland, reform triggered "precipitate decline number bounty-eligible hulks appellee's [Virginia] sources." U.S., 801, S.Ct., 2494. Indeed, "[t]he practical effect substantially withdrawn altogether availability bounties unlicensed licensed non-Maryland processors." 803, n. 13, 2495; see 819, 2502 (dissenting opinion). Invoking three-judge struck down legislation. 391 F.Supp. 46 (Md.1975). observed amendment "substantial burdens upon flow commerce," 62, discriminatory least disruptive means achieving articulated objective. 63. See generally Pike Bruce Church, Inc., 397 137, 142, 90 844, 847, 25 174 (1970).6 10 persuasiveness lower court's analysis inherent deemed applicable. Court's view, involve "the kind concerned." 805, 2495. Unlike voiding laws inhibiting trade, "Maryland prohibit or regulate conditions occur. Instead, entered bid up price," 806, 2496, "as purchaser, effect, potential article restricted "its businesses State." 808, 2497.7 11 Having characterized participant, rather regulator, reason "believe require independent justification [the State's] action." 809, 2497. couched holding unmistakably broad terms. 2498 (footnote omitted).8 B 12 basic distinction drawn participants regulators makes good sense sound law. explains, marketplace. 807-808, 2496-2497, citing H. P. Hood & Sons DuMond, 336 525, 539, 69 657, 665, 93 L.Ed. 865 (1949) (referring "home embargoes," "customs duties," "regulations" excluding imports). There L. Tribe, American Constitutional Law (1978) ("the commerce clause directed, historical matter, only taxing actions taken states sovereign capacity"). precedents comport distinction.9 13 sovereignty,10 " 'as people,' Heim McCall, 239 175, 191, 36 78, 83, 206 (1915), quoting Atkin Kansas, 191 207, 222-223, 24 124, 127-128, 48 148 (1903),11 manufacturer, engaged entirely business, his deal." Colgate Co., 300, 307, 39 465, 468, 63 992 (1919).12 be, are, participants.13 Evenhandedness suggests that, acting proprietors, similarly share existing freedoms federal constraints, including limits ex rel. Collins Senatobia Blank Book Stationery 115 Miss. 254, 260, 76 So. 258, 260 (1917); Tribune Printing Binding Co. Barnes, N.D. 591, 597, 75 904, 906 (1898). Finally, wisely recognizes task III 14 seller unquestionably fits "market participant" label comfortably subsidize local scrap Thus, general rule plainly applies here.14 argues, exemption marketplace participation necessarily admits exceptions. While conceding possibility, we perceive sufficient depart rule. finding violation, emphasized "that . made election become part system." 28. gist reasoning, repeated here, turn deserves another. market, arises. argument persuasive. somewhat self-serving say "exploited" An equally fair characterization neighboring benefited foresight Viewed light, surprising rejected 1974 legislation challenged invalid been processed five years. must conclude "this chronology distinguish case, purposes, [cement] domestic [buyers] start." 2497.15 16 Our rejection petitioner's market-exploitation theory fundamentally refocuses reverse void "residents only" even enforced very days. Such holding, interfere significantly structure relations exclusively citizens. threaten future fashioning effective creative programs solving problems distributing government largesse. 1,supra. A healthy regard federalism renders us reluctant risk results. 17 "To stay experimentation things social economic grave responsibility. Denial experiment fraught serious consequences Nation. happy incidents system single courageous may, choose, serve laboratory; try novel experiments without rest country." New Ice Liebmann, 285 262, 311, 52 371, 386, 747 (1932) (Brandeis, J., dissenting). 18 Undaunted considerations, advances four reversal: 19 First, protests preference "non-governmental objectiv[e]" protectionism. Brief 25. Therefore, per se invalid. Philadelphia Jersey, 437 617, 624, 98 2531, 2535, 57 475 "protectionism" little help context. refusal sell other "protectionist" benefits those who fund treasury created serve. Petitioner's apparently characterize rules restricting enjoyment educational institutions, energy state-run police fire protection, agricultural improvement business development programs. policies, while perhaps loose sense, reflect essential patently unobjectionable purpose government—to State.16 21 Second, echoes warning: 22 "If union, allowed hoard commodities resources use only, drastic situation might evolve. example, Pennsylvania keep coal, northwest timber, mining minerals. result embargo retaliated halted lines." 29. 23 See, e. g., Baldwin Montana Fish Game 436 385-386, 1852, 1860-1861, 56 354 argument, although rooted core fit facts. natural resource, like wild game, Cf. (1979) (minnows); supra (landfill sites); West Virginia, 262 553, 43 658, 67 1117 (1923) (natural gas); Kansas Natural Gas 221 229, 31 564, 55 716 (1911) (same); Note, 32 Rutgers L.Rev. 741 end complex process whereby costly physical human labor act raw materials. access limestone materials used make cement. Nor firms sister set plants borders. Tr. Oral Arg. 4. suggested possesses unique needed produce cement.17 exist invoke happenstance there, do here. Third, infirm suppliers, such petitioner, chance can purchase beyond seriously diminished, eliminated several considerations. implies scheme sales totally barred. therefore proves too much, tolerate greater measure protectionism stifling challenge allows. K.S.B. Technical Sales Corp. North Jersey Dist. Water Supply N.J. 298, 381 A.2d 774, 787 (1977) ("It odd indeed becomes parochial suspect Clause"). 847. ("And extent burden tolerated course depend whether interest] promoted well lesser activities"). forgotten approved "not effectively protect[ed] processors pressures competitors plants, but [that] implicitly offer[ed] protection any competitor willing erect processing facility Maryland's boundaries." F.Supp., plight cannot laid feet Dakota. attributable States' providing attracting alternative sources suppliers' failure guard executing contracts 26 last urges region. replaced forces, replicate how conditions. 27 appears simplistic speculative. built failed adequately region 1, supra. indication, way know, moved area, ensured either during season. quite possible never existed—far successfully years—had cement.18 C 28 conclude, then, Reversal projects, though project demonstrably needs helped century. industry.19 Under circumstances, Scrap. 29 judgment 30 so ordered. POWELL, BRENNAN, WHITE, STEVENS join, dissenting. ordered times orders filled. represents precisely prevent.1 finds violation I agree provide violating But withhold order 33 need ensure unrestricted among major impetus drafting Constitution. "The power primary objects America adopted government. ." Gibbons Ogden, Wheat. 190, (1824). Convention called after earlier convention commercial proved inconclusive. C. Beard, Economic Interpretation Constitution 61-63 (1935); Bloom, History Formation Union 14-15 (1940). subsequent debate ratification, Alexander Hamilton importance commerce: 34 "An unrestrained intercourse advance each, interchange respective productions. Commercial enterprise much scope, diversity productions different States. When staple fails call aid another." Federalist, 11, p. 71 (J. Cooke ed., 1961) (A. Hamilton); 42, 283 Madison). 35 weapon strike limitations goods, they animal, vegetable, (1970) (cantalopes); mineral, gas). Only Term, held unconstitutional Florida exclude investment advisers. Lewis BT Investment Managers, 27, 2009, 64 702. 2494, (1976), Nation common lines barriers finished goods demand." presents question. bar imposing restraint supra; cf. Great P Tea Cottrell, 424 366, 923, 47 (1976); Foster-Fountain Packing Haydel, 278 73 147 (1928).2 Conversely, constitutionally adopt marketing excluded come falls polar situations. through engages restricts distribution. question treated regulation business. 37 application nature governmental activity involved. If undertakes "integral operatio[n] areas functions," National League Cities Usery, 833, 852, 2465, 2474, 245 directly relevant. If, enters operates citizens, evade Balkanization. 38 derives governments needs, Perkins Lukens Steel 310 113, 127, 869, 876, 84 1108 (1940); (1903), itself, protect functioning market," supra, 2496. procuring services operation government, reach Yearbook Askew, 339 719 (M.D.Fla.), summarily aff'd, 409 230, 168 (1972). participant forbids impede commerce. These categories recognize "constitutional line trader." York States, 326 572, 579, 66 310, (1946); California, 297 421, 80 567 (1936); Ohio Helvering, 292 360, 54 725, 78 1307 (1934); Carolina 199 437, 110, 261 (1905). holds governed presumed behave 'engaged business.' ante, 439, (1919). frequently respond basis concerns. terms, attempt regulator" participant." 436. situation, pretense equate actor. burdening accomplished agency authorized participate 40 threshold undertaken integral functions, participated firm. latter applies, determine trade. highlights differences here before 41 Virginia pay registered onerous standards processors, thereby diverting "hulks" plaintiff argued diversion 42 today notes, determined constituted direct automobile hulks. Ante, 435. critical question—the second step opinion's analysis—was impermissible Recognizing neatly conventional theory, 807, observed: price. lucrative dispose stated novelty presentation form 'burden' commerce, appellee suspect." "no barrier forbidden involved cases, impedes th[e] movement [of hulks] out 809-810, 2498. Rather, "remain exerted money subsidies provided erected Consequently, forbid program. 45 off trade.3 raise adequate uses, projects. parallel favoring private, customers.4 concerns likely inconsequential producer, shut That discrimination constitutes "of legislature producers. severe desire preserve sovereignty. limitation consciously maintain defeat provincialism. approves protectionist policies. contrary action,5 policies now implemented participates market.6 enforcing work unfairness They still reserve whatever return generated. not, furnish creation economy goal resolved unite decision reconciled purpose. said "had operating bought so-called trust closed down." report advocating noted profits producers "now in" reasoned, "capitalists['] 8. skepticism regarding industry's hallmark Progressivism. R. Hofstadter, Age Reform 227 (1955) ("In era became object widespread hostility"). bastion Populism, 50, leading Progressivist Nye, Midwestern Politics 217-218 (1959); G. Mowry, Theodore Roosevelt Movement 155, 125 (1946). carried 1912, 281, 69, Robert La Follette—on platform calling railroads waterpower, K. MacKay, 1924, pp. 270-271 (app. 4) (1966)—ran strongly (36.9%) 1924. Congressional Quarterly's Guide Elections 287 (1975). backdrop described Schell, 268-269 (3d ed. 1975): "Although voters [in 1918] seemingly subscribed state-ownership philosophy, far Republican administration Pierre go fulfilling campaign promises. [Governor] Norbeck term, urged hail insurance advocated steps toward state-owned coal mine, stockyards. He recommended appropriation surveying dam sites hydroelectric lawmakers readily recommendations law, except stockyards proposal. ". retrospect, [Norbeck's] viewed Progressives' monopolistic prices. was, moreover, fervent available agriculture. tenets philosophy government." "[C]ement finely manufactured mineral product, usually gray color. mixed water sand, gravel, crushed stone, aggregates concrete, rock-like substance most widely world." Portland Association, Industry, (2d 1978). "Ready-mixed term applied ordinary central depot instead site, distributed special trucks." Encyclopedia Britannica 1077 (1974). clear customers. record, shows place 1974. 24. Oklahoma bear 'to prevent privately owned articles shipped sold commerce.' 627, 2537, (1978), 10, 4, (1928). 805-806, 2495-2496. During pendency litigation, discontinue enforcement parties, moot. seasons many decades unable, nearly satisfy demand. Twelfth Biennial (1948); (affidavit Reeves). "(1) duration short fully litigated cessation expiration, (2) [is] reasonable expectation complaining party [will] subjected again." Weinstein Bradford, 423 147, 149, 347, 349, 350 justify effort reduce paid Maryland. achieve satisfactorily payment invoked rationale explicitly reiterating 'substantial 804, accept processor's "reducing manner commerce." concession, dissent's description "we post, 451, "concluded trade," 452, "cut off," ibid., "impede 450. dissent subsidy "divert[ed] 'hulks' Post, 451. sure, interstatecommerce."Ibid. (emphasis added). so, "entered itself." two-step distilled 451-453, collapses inquiry: "program market." agrees answered affirmative Ibid. criticisms reached seem emanate needs," threatens 'the market.' observations, equal stand alone. (MD Fla.1972), upheld requiring obtain printing shops. "state functions" exempt scrutiny. 725. affirmed summarily. Numerous courts rebuffed challenges directed preferences "a states." 58 Iowa 576 (1973). City Phoenix Superior 109 Ariz. 533, 535, 514 P.2d 454, 456 (1973) (citing reaffirm Schrey Allison Mfg. 282, 255 604 (1953)); Denver Bossie, 83 Colo. 329, 266 214 (1928); re Gemmill, Idaho 732, 119 298 (1911); People Holland Bleigh Constr. 61 Ill.2d 274-275, 335 N.E.2d 469, 479 (1975) ); 258 Allen Labsap, 188 Mo. 692, 87 S.W. 926 (1905); Hersey Neilson, Mont. 132, 131 (1913); 904 Dixon-Paul Board Public Contracts, 117 77 908 (1918); Luboil Heat Power Pleydell, 178 Misc. 562, N.Y.S.2d 587, 591 (Sup.1942). departure pattern, Treat Coler, 166 N.Y. 144, 59 N.E. 776 (1901), drew strong dissent, uniformly criticized later decisions. One merits comment. Bethlehem Commissioners, 276 Cal.App.2d 221, Cal.Rptr. 800 (1969), California persons promised Opinion 69-253, 53 Op.Cal.Atty.Gen. 72 (1970), Attorney General prohibited, "foreign commerce" statutes giving California-produced goods. occasion explore constitutionality "Buy American" Compare 774 (1977). note, scrutiny rigorous foreign alleged. Japan Line, Ltd. County Of Los Angeles, 434, 1813, 725 ("ad hoc" inquiry "would unduly functions bring standstill"). Considerations sovereignty independently dictate functions"—such employment certain workers—may subject pursuant power. follows easily intrinsic conduct sphere. Even where operations" implicated, fairly claim interest retaining freedom decide how, whom, whose Supreme 1975 Harv.L.Rev. 56, ("As representative retained shrimp consumption therein"); Toomer Witsell, 334 385, 409, 68 1156, 1168, 92 1460 (1948) (concurring opinion) (state developing food interference transactions products); Helvering Gerhardt, 304 405, 427, 969, 978, 82 1427 (1938) ("The genius our provides sphere demand, what welfare requires"). buys sells, attributes entity Nonetheless, dismiss "private business" element focus character. heretofore "[l]ike individuals businesses, Government enjoys supplies, deal, fix terms purchases." (1940) acknowledging sweepingly phrased principle, ignore similarities entities function 854, 18, 2475, 18; (1936). LaFayette Louisiana Light 435 389, 1123, 364 criticism received immunity B.C.Ind Com.L.Rev. 893, 924-925 Harv.L.Rev., 60-61. inquire unlike warrant proprietary, regulatory, B.C.Ind. Com.L.Rev., 913-915. explained: "It true financial channeled, start. Regardless largesse confined resting same: tend inside flowing remain 2497-2498. (Footnote omitted.) nonprotectionist environmentalism. oversimplification. feature program—the requirement—was aimed improving environment; decreasing profit margin hulk supplier expect receive accessible recycling back encouraging processing. regulation—reducing payments Maryland—was mentioned rebuffing challenge. point demonstration "independent justification" unnecessary sustain 927-928. At bottom, motivated concern underlying channel them. "commendable legitimate" purpose, 2497, required, certainly establishing unstartling goal: quality life generating previously scarce improvements. program, unusual unorthodox utilize funds improve residents' lives. "[a] legitimate traditional, akin enterprise, conducted profit. deem railroad, mill, irrigation bridges, street lights, sewage disposal What day improvident dangerous extension indispensable." 318 altogether, resale purchasers. Although buyer secondary undoubtedly markup borne competitors, wholly unjust. exact premium compensate plan. views added middlemen rough equivalent "premium," equates permissible result. "bottom line" closely parallels removed altogether; compete additional efficiencies exploit location incremental channeled behavior suppliers. seeks "created" relevant 814-817, 2500-2501 clear, notion 824-826, 6, 2504-2506 opinion); 927; 27; Wash. Lee 979, 995 underestimated. explained deal problems. fate illustrates taxpayers setting cost $2 million. mine early 1934 $5,500 estimated loss $175,000 fourteen operation. 1933 Legislature liquidated bonding department project. total venture approximately $265,000." 286 1975). "protectionism," refer relating education, infra, 451-453. attempts decisions address resource exploitation. E. (1979); (1923). contends production, "is proces[s] materials." 444. two respects. principles notably milk (1949); (1970). More fundamentally, definition describes sophisticated activity, exploitation resources. extraction gas, hardly occur "complex "possess cement." cutoff gas. Customers seek supply, substitute without. hoards, consumer denied guarantee "may look competition producing him any." 665. supported tax funds, reprocessing financed revenues generates. 27. thus state-subsidized "residents-first" devastating 75%. 432-433. result, vastly superior position possibility legislate 435-436. Since contains limiting principles, able manufacture prerogative extend, pharmaceutical products, synthetic sources.

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