336 U.S. 525 (1949)

Decided April 4, 1949.

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 approximately 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.  Article 21 of the Agriculture and Markets Law of New York  forbids a dealer to buy milk from producers unless licensed to do so by the Commissioner of Agriculture and Markets. For the license he must pay a substantial fee and furnish a bond to assure prompt payment to producers for milk....The Commissioner's denial was based on provisions of this section which require him to be satisfied 'that the issuance of the license will not tend to a destructive competition in a market already adequately served, and that the issuance of the license will be in the public interest....'

Our decision in a milk litigation most relevant to the present controversy deals with the converse of the present situation. Baldwin v. G. A. F. Seelig, Inc. 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 or congressional action, prohibits such regulations for such ends....

The 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....

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, timber, cotton, oil or gas should decree that industries located in that state shall have priority. What fantastic rivalries and dislocations and reprisals would ensue if such practices were begun! Or suppose that the field of discrimination and retaliation be industry. May Michigan provide that automobiles cannot be taken out of that State until local dealers' demands are fully met? Would she not have every argument in the favor of such a statute that can be offered in support of New York's limiting sales of milk for out-of-state shipment to protect the economic interests of her competing dealers and local consumers? Could Ohio then pounce upon the rubber-tire industry, on which she has a substantial grip, to retaliate for Michigan's auto monopoly?

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 export, 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. The weakness of this contention is that a buyer has to buy where there is a willing seller, and the peculiarities of the milk business necessitate location of a receiving and cooling station for nearby producers.....

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.... 

New York has not attempted to regulate the price of milk in Massachusetts or the manner in which it will be distributed there; it has not attempted to put pressure on Massachusetts to reform its economic standards; its law is not hostile to interstate commerce in conception or operation; its purpose to conserve health and promote economic stability among New York producers is not stretched to the breaking point by an argument that New York cannot safely aid its own people's health unless permitted to trespass upon the power of Massachusetts to regulate local affairs in Massachusetts. Nor is this New York law, fairly administered as it has been, the kind that breeds 'rivalries and reprisals.' The circumstances and conditions that brought about invalidation of the law considered in the Baldwin case are too different from those here considered to rest today's holding on the Baldwin decision....

The basic question here is not the greatness of the commerce clause concept, but whether all local phases of interstate business are to be judically immunized from state laws against destructive competitive business practices such as those prohibited by New York's law. 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....

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