285 U.S. 262 (1932)
In 1925 the Oklahoma legislature passed Chapter 147 of the Session Laws.1 That statute declared the manufacture, sale, and distribution of ice a public business.2 It prohibited any person from engaging in that business without first obtaining a license from the Corporation Commission.3
The statute directed that a license would issue only after a formal hearing at which competent evidence established the necessity for additional ice facilities at the proposed location.4 It authorized the Commission to deny an application if existing licensed plants already provided sufficient capacity to meet public needs.5 New State Ice Company secured such a license and for several years operated an ice manufacturing and distribution business in Oklahoma City in which it had invested $500,000.6
While New State Ice Company was operating under its license, E.A. Liebmann purchased a parcel of land in Oklahoma City and began construction of an ice plant without applying for or obtaining a license from the Commission.7 Liebmann acted with the purpose of entering the business in direct competition with the licensed company.8 New State Ice Company filed suit in the United States District Court for the Western District of Oklahoma seeking an injunction to prevent Liebmann from manufacturing, selling, or distributing ice without a license.9
The district court dismissed the bill of complaint for want of equity.10 It concluded that the ice business is a private enterprise not subject to the statutory restrictions.11 The Circuit Court of Appeals affirmed the dismissal.12 The case arrived in the Supreme Court on appeal from the circuit court decree.13 The record before the Court included evidence of the structure of the ice industry in Oklahoma, the extent of competition or monopoly in communities across the state, the Commission's prior exercise of regulatory authority over ice plants under earlier statutes dating to 1908, and the practical effects of the 1925 licensing requirement on service and pricing in the state.14
Whether the business of manufacturing, selling, and distributing ice may be declared by a state legislature to be a public business subject to regulation that requires a certificate of public convenience and necessity as a condition of entry?15
Under the Fourteenth Amendment a state may not arbitrarily interfere with private business or impose unreasonable and unnecessary restrictions upon lawful occupations.16 The business of manufacturing ice is essentially private in nature, like that of the grocer or baker, and bears no such relation to the public as to warrant its inclusion in the category of businesses charged with a public use.17
No. In 1925 the Oklahoma legislature passed Chapter 147 declaring the manufacture, sale, and distribution of ice a public business.18 The statute prohibited any person from engaging in that business without first obtaining a license from the Corporation Commission after a hearing establishing necessity for additional facilities.19 New State Ice Company secured such a license and for several years operated its Oklahoma City business in which it had invested $500,000.20
While New State Ice Company operated under its license, E.A. Liebmann purchased land in Oklahoma City and began construction of a competing ice plant without applying for or obtaining a license.21 New State Ice Company sued in the United States District Court for the Western District of Oklahoma to enjoin Liebmann from manufacturing, selling, or distributing ice without a license.22 The district court dismissed the bill for want of equity, concluding that the ice business is a private enterprise not subject to the statutory restrictions, and the circuit court of appeals affirmed.23
The Supreme Court reviewed the record containing evidence of the structure of the ice industry in Oklahoma, the extent of competition or monopoly in communities across the state, the Commission's prior exercise of regulatory authority over ice plants under earlier statutes dating to 1908, and the practical effects of the 1925 licensing requirement.24 The Court held that ice manufacturing is an ordinary private business, not a paramount industry upon which the prosperity of the entire state depends, and that the certificate requirement tends to foster monopoly rather than protect the public.25 The facts demonstrate that while ice is indispensable, it is no more so than food or clothing, which cannot be subjected to legislative regulation on the basis of public use, and that modern alternatives such as electric refrigerators make the entry barrier unnecessary.26
The business of manufacturing, selling, and distributing ice may not be declared by a state legislature to be a public business subject to regulation that requires a certificate of public convenience and necessity as a condition of entry.27
Related opinions on this issue
Joined by Justice Stone
Justice Brandeis dissented.28 He argued that the legislature could reasonably conclude that local conditions in Oklahoma justify treating the manufacture of ice for sale and distribution as a public business.29 A regular supply of ice is a necessary of life comparable to water, gas, and electricity.30
The business lends itself peculiarly to monopoly.31 The statute rests upon seventeen years of experience in regulation dating back to statehood.32 He emphasized that whether the business is a matter of public concern depends upon the conditions existing in the community affected.33
The Court should not strike down the measure unless the legislature's belief of evils was arbitrary, capricious, and unreasonable without first ascertaining the actual conditions, or the beliefs, on which the legislators acted.34 Brandeis further contended that there must be power in the states to remould through experimentation economic practices and institutions to meet changing social and economic needs.35 A single courageous state may serve as a laboratory for novel social and economic experiments without risk to the rest of the country.36
Does an Oklahoma statute violate the Due Process Clause of the Fourteenth Amendment by making it a misdemeanor to engage in the ice business without first obtaining a license from the Corporation Commission upon a showing of public necessity?37
Yes. The statute makes it a misdemeanor to engage in the ice business without a license issued only upon proof of public necessity.40 It authorizes denial where existing facilities are sufficient.41 The established facts show that New State Ice Company used its license to seek an injunction preventing Liebmann from constructing a competing plant in Oklahoma City after the company had invested $500,000 under the same regulatory scheme.42 The restriction does not protect against monopoly but tends to foster it.43 The facts establish that the ice business is an ordinary private enterprise with no peculiar characteristics distinguishing it from other trades subject to free competition.44
The practical tendency of the requirement is to shut out new enterprises and create monopoly in the hands of existing establishments against rather than in aid of the interest of the consuming public.45
The Oklahoma statute violates the Due Process Clause of the Fourteenth Amendment.46