512 U.S. 186 (1994)
In the 1980s and early 1990s, Massachusetts dairy farmers began to lose market share to lower-cost producers in neighboring states.1 A Special Commission appointed by the Governor found that many producers had sold their dairy farms during the past decade.2 The commission concluded that if prices paid to farmers were not significantly increased, a majority of the remaining farmers in Massachusetts would be forced out of business within the year.3
On January 28, 1992, the Commissioner of the Massachusetts Department of Food and Agriculture declared a state of emergency.4 He noted that the average federal blend price had declined from $14.67 per hundredweight in 1990 to $12.64 per hundredweight in 1991.5 Costs of production for Massachusetts farmers had risen to an estimated average of $15.50 per hundredweight.6
Promptly after the emergency declaration, the Commissioner issued a pricing order.7 The order requires every dealer in Massachusetts to make monthly premium payments into the Massachusetts Dairy Equalization Fund.8 The amount of each payment is computed by subtracting the monthly federal blend price from $15, dividing the difference by three to obtain the order premium, and then multiplying that premium by the volume of the dealer's Class I sales in Massachusetts.9 Each month the entire fund is distributed to Massachusetts producers, with each receiving a share equal to its proportionate contribution to the state's total production of raw milk, subject to a 200,000-pound cap per producer and a net-price ceiling of $15 per hundredweight.10
Petitioner West Lynn Creamery, Inc., is a licensed Massachusetts milk dealer that purchases about 97 percent of its raw milk from out-of-state farmers.11 Petitioner LeComte's Dairy, Inc., purchases all of its milk from West Lynn for distribution to retail outlets in Massachusetts.12 The petitioners complied with the pricing order for two months and paid almost $200,000 into the fund.13 Starting in July 1992 the petitioners refused to make further payments, prompting the Commissioner to commence license-revocation proceedings against them.14
The petitioners filed suit in state court seeking an injunction against enforcement of the order.15 The state court denied relief and the licenses were conditionally revoked.16 The parties agreed to an expedited appellate procedure.17 The Supreme Judicial Court of Massachusetts transferred the cases to its own docket and affirmed the validity of the order.18 The United States Supreme Court granted certiorari.19
Whether the Massachusetts milk pricing order that imposes an assessment on all milk sold by dealers to retailers in the state and distributes the entire proceeds exclusively to in-state dairy farmers unconstitutionally discriminates against interstate commerce?20
The dormant Commerce Clause prohibits states from enacting laws that discriminate against interstate commerce.21 A state statute that discriminates against interstate commerce on its face is virtually per se invalid.22 Even if a statute regulates evenhandedly and imposes only incidental burdens on interstate commerce, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.23 The combination of a uniform tax on milk sales and a subsidy distributed only to in-state producers effectively taxes only out-of-state milk.24
Yes. The pricing order imposes a uniform assessment on all milk dealers selling in Massachusetts, including West Lynn Creamery which sources 97 percent of its milk from out-of-state farmers, yet distributes every dollar of the resulting fund exclusively to Massachusetts dairy producers.25 This structure burdens out-of-state milk by raising the effective cost to dealers while simultaneously subsidizing only local production.26 The order's stated purpose was to enable higher-cost Massachusetts farmers to compete with lower-cost producers from neighboring states.27
That purpose produces the same distorting effect on the geography of production as a protective tariff.28 Because the tax and subsidy are integrated in a single program funded solely by milk sales rather than general revenues, the political safeguard of in-state interests opposing the tax is eliminated.29 The measure therefore discriminates against interstate commerce in violation of the dormant Commerce Clause.
The Massachusetts milk pricing order unconstitutionally discriminates against interstate commerce in violation of the dormant Commerce Clause.30
Related opinions on this issue
Joined by Justice Thomas
Justice Scalia, joined by Justice Thomas, concurred in the judgment.31 He believed the Court's opinion represented a broad expansion of negative Commerce Clause jurisprudence.32
On stare decisis grounds, he would enforce the negative Commerce Clause against facially discriminatory state laws and laws indistinguishable from previously invalidated ones.33
He described the Massachusetts program as a nondiscriminatory tax with revenues placed in a segregated fund disbursed as subsidies to in-state producers.34 Although the question was close, he concluded this methodology would not be a principled stopping point for the doctrine.35
Joined by Justice Blackmun
Chief Justice Rehnquist, joined by Justice Blackmun, dissented.36 He maintained that the Court was less than just in its description of the reasons behind the Massachusetts law.37
The law sought to aid struggling Massachusetts dairy farmers through a subsidy funded by an evenhanded tax on all milk dealers. He argued that the tax is evenhanded on its face and affects all dealers regardless of the point of origin of the milk.38 The State had not acted to strong-arm sister States and its motives were purely local.39
He contended that nothing in the dormant Commerce Clause suggests that the fate of state regulation should turn upon the particular lawful manner in which the state subsidy is enacted.40 Rehnquist warned that the decision bodes ill for the values of federalism which have long animated constitutional jurisprudence.41