H. P. Hood & Sons, Inc. v. Du Mond

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. For it is inconceivable that Congress could pass uniform national legislation capable of adjustment and application to all the local phases of interstate activities that take place in *546 the 48 states. See Robertson v. California, 328 U. S. 440, 449, 459-460 . It is equally inconceivable that Congress would attempt to control such diverse local activities through a “swarm of statutes only locally applicable and utterly inconsistent.” Kidd v. Pearson, 128 U. S. 1, 21 .

First. New York has a comprehensive set of regulations to control the production, distribution and sale of milk. Their over-all purposes are two: (1) to promote health by maintaining an adequate supply and an orderly distribution of uncontaminated milk; (2) to promote the general welfare by saving farmer milk-producers from impoverishment and insolvency. The state legislature concluded that achievement of these goals demanded elimination of destructive competition among milk dealers. The legislature believed that while cutthroat competition among purchaser dealers temporarily raises the price of farmers’ milk, the end result of the practice in New York had been economic distress for the farmers. After destructive dealer competition had driven financially weak dealers from the contest, the more opulent survivors had pushed producers’ prices far below production costs. Nebbia v. New York, 291 U. S. 502 , 515— 516, gives a graphic description of the plight of these farmers prior to the enactment of these regulations and makes clear that the chief incentive for the regulations was the promotion of health and the general welfare by financial rehabilitation of the farmers. And despite due-process objections, the Nebbia case sustained the state’s constitutional power to apply its law to New York dealers in order to promote the health, economic stability and general welfare of the state’s people.

That part of the regulatory plan challenged here bars issuance of licenses for additional milk-handling plants if new plants would “tend to destructive competition in a market already adequately served” or would be con *547 trary to “the public interest.” In determining whether a milk market is “adequately served,” the state follows a plan similar to the federal law in that both divide the country into “marketing areas.” Under this plan, the state legislature did not attempt to prescribe one rule applicable throughout the whole state limiting the number of milk dealers or the number of their plants. A single rule of this kind would have lacked the necessary flexibility to accommodate the varying needs of markets in different parts of the state. So a state commissioner was authorized to hold hearings and make findings of fact to determine whether existing plants could adequately supply a given local producer’s market or whether new plants would bring about the destructive competition among dealers that the law was designed to prevent. The commissioner’s findings and orders were subject to judicial review. There is no challenge to the constitutional validity of the New York law as applied to New York milk dealers who sell milk in New York.

Second. Petitioner, a milk dealer, has two plants in New York. It buys milk, cools it, and ships it to Boston. It applied to the commissioner for a license to operate a third plant in the same local market area. After evidence the commissioner found that petitioner’s two plants plus the others in the vicinity were adequate outlets for all the milk produced in that vicinity; some of the dealers in the area had plant capacities already in excess of the available supply. Petitioner was one of these. Prom this the commissioner found that more plants would bring about the kind of destructive competition against which the law was aimed. That finding is not challenged. Nor is it charged that the order was prompted by desire to prevent New York milk from going to Boston.

There was a finding that the destructive competition incident to the operation of a new plant probably would *548 reduce the volume of milk purchased by some existing dealers who supplied milk to certain New York cities. One of these cities had recently suffered a milk shortage. But this finding neither proves nor implies that petitioner’s application was denied to keep milk from going to Boston or to aid local economic interests. In gauging the effect of an order denying an application for additional milk plants in a purchasing area, it seems essential to intelligent administration that the commissioner consider the available supply in that area in relation to the consumer demand on dealers as sellers. For if existing area plants already are unable to buy enough milk to supply their consumer demands, new plants, striving to buy a portion of the short supply, will inevitably intensify competition among purchasing dealers, thus bringing one kind of destructive competition the New York law was designed to prevent. Consequently, in determining whether new plants would tend to destructive competition, the commissioner cannot ignore a fundamental economic truth — the interrelation of supply and demand. Whether the new plants would service Troy, Boston, or elsewhere, the effect new plants would have on the available supply to existing consumers is a relevant consideration. And the New York law requires that consideration without regard to the geographical location of the consumers.

Had a dealer supplying New York customers applied for a license to operate a new plant, the commissioner would have been compelled under the Act to protect petitioner’s plants supplying Boston consumers in the same manner that this order would have protected New York consumers. In protecting inter- or intra-state dealers from destructive competition which would endanger the milk farmers’ price structure or the continued supply of healthful milk to the customers of existing dealers, the commissioner would be faithful to the Act’s avowed pur *549 poses. The commerce clause should not be stretched to forbid New York’s fair attempt to protect the healthful milk supply of consumers, even though some of the consumers in this case happen to five in Troy, New York. And unless this Court is willing to charge an unfairness to the commissioner that has not been charged by petitioner or shown by the evidence, the Court cannot attribute to the commissioner an invidious purpose to discriminate against petitioner’s interstate business in order to benefit local intrastate competitors and their local consumers. Of course if this were a case involving such discrimination, relief could be obtained under the principles announced in Best & Co. v. Maxwell, 311 U. S. 454 .

The language of this state Act is not discriminatory, the legislative history shows it was not so intended, and the commissioner has not administered it with a hostile eye. The Act must stand or fall on this basis notwithstanding the overtones of the Court’s opinion. If petitioner and other interstate milk dealers are to be placed above and beyond this law, it must be done solely on this Court’s new constitutional formula which bars a state from protecting itself against local destructive competitive practices so far as they are indulged in by dealers who ship their milk into other states.

Third. The number of plants petitioner can have in the New York market is of concern to petitioner, to New York, and to the nation. Petitioner’s business interest, however, under the Nebbia rule must be subordinated to the public interest. New York’s concern derives from its interest in the health and well-being of its people deemed by the legislature of New York to be threatened by competitive trade practices of dealers who buy and sell milk produced in the state. That its concern is great is manifested by the state law, its background, its purposes, and its administration. The national concern, reflected in the commerce clause, flows from federal solicitude for *550 freedom of trade among the states. That solicitude is great.

Reconciliation of state and federal interests in regulation of commerce always has been a perplexing problem. The claims of neither can be ignored if due regard be accorded the welfare of state and nation. For in the long run the welfare of each is dependent upon the welfare of both. Injury to commercial activities in the states is bound to produce an injurious reaction on interstate commerce, and vice versa. The many local activities which are parts of interstate transactions have given rise to much confusion. The basic problem has always been whether the state or federal government has power to regulate such local activities, whether the power of either is exclusive or concurrent, whether the state has power to regulate until Congress exercises its supreme power, and the extent to which and the circumstances under which this Court should invalidate state regulations in the absence of an exercise of congressional power. This last question is the one here involved.

Fourth. Gibbons v. Ogden, 9 Wheat. 1 , decided in 1824, held invalid a New York statute regulating commerce which conflicted with an Act of Congress. The Court there left undecided the question strongly urged that the commerce clause of itself forbade New York to regulate commerce. In 1847 this undecided question was discussed by Chief Justice Taney. 1 His view was that the commerce clause of itself did no more than grant power to Congress to regulate commerce among the states; that until Congress acted states could regulate the commerce; and that this Court was without power to strike down state regulations unless they conflicted with a valid federal law. This the Chief Justice thought *551 was the intention of the Constitution’s framers, drawing his inference of their intent from his belief that they knew “a multitude of minor regulations must be necessary, which Congress amid its great concerns could never find time to consider and provide . 2

In 1852 this Court rejected in part the Taney interpretation of the commerce clause. Cooley v. Board of Wardens, 12 How. 299 . The opinion there stated that the commerce clause per se forbade states to regulate commerce under some circumstances but left them free to do so under other circumstances. The dividing line was not precisely drawn, but the Court outlined broad principles to guide future determinations of the side of the line on which commercial transactions would be held to fall. In doing so, it apparently took into consideration Mr. Chief Justice Taney’s 1847 belief that absolute prohibition of all state regulation of commerce would create an area immune from any regulation at all. For in the Cooley case the Court held at p. 319 that the commerce clause per se only prohibited state regulation of local interstate commerce activities which “are in their nature national, or admit only of one uniform system.” It was also held at p. 320 that the commerce clause left states free to regulate interstate commerce activities where diverse conditions incident to different customs, habits and trade practices, could best be treated and regulated by different regulations “drawn from local knowledge and *552 experience, and conformed to local wants.” Thus cautiously did the Court enter this new field of judicial power. It decided no more than that this Court in passing upon state regulations of commerce would always weigh the conflicting interests of state and nation. Moreover, implicit in the rule, as shown by what the Court said, was a determined purpose not to leave areas in which interstate activities could be insulated from any regulation at all.

Fifth. The basic principles of the Cooley rule have been entangled and sometimes obscured with much language. In the main, however, those principles have been the asserted grounds for determination of all commerce cases decided by this Court from 1852 until today. Pertinent quotations from some of these cases appear in Mr. Justice Frankfurter’s dissenting opinion and he refers to others. Many of the cases have used the words “restraints,” “obstructions,” “in commerce,” “on commerce,” “burdens,” “direct burdens,” “undue burdens,” “unreasonable burdens,” “unfair burdens,” “incidental burdens,” etc., but such words have almost always been used, as the opinions reveal, to aid in application of the Cooley balance-of-interests rule. 3

There have been some sporadic deviations from the Cooley principle as illustrated by Di Santo v. Pennsylvania, 273 U. S. 34 . The powerful dissents of Mr. Justice Brandéis and Mr. Justice Stone, concurred in by Mr. *553 Justice Holmes, pointed out the Di Santo deviation. The necessity for delicate adjustment of the conflicting state and federal claims was pointed out. It was emphasized that decision on such an issue required a consideration of facts such as the nature of the regulation, the character of the business, the regulation’s actual effect on interstate commerce. Mr. Justice Brandeis pointed out the dangers in deviating from these principles, and, perhaps with prophetic insight as to the future fate of the Di Santo case, cited a long list of cases in which such deviations had required this Court later to overrule or explain away the prior deviations. P. 43, n. 4. In California v. Thompson, 313 U. S. 109, 115-116 , this Court explained away the Di Santo case. It could not stand, so said the Court, because it was a departure from the principle that had been recognized ever since Cooley v. Board of Wardens, supra.

In this Court, challenges to the Cooley rule on the ground that the rule was an ineffective protector of interstate commerce from state regulations have been confined to dissents and concurring opinions. 4 Duckworth v. Arkansas, 314 U. S. 390, 400-401 ; Bob-Lo Excursion Co. v. Michigan, 333 U. S. 28, 37-38, 41, 42, 45 ; Independent Warehouses v. Scheele, 331 U. S. 70, 85, 95 . In the Duckworth case by application of the Cooley rule the majority of this Court sustained a state regulation of interstate transportation. A concurring opinion expressed the view that the Court’s opinion written by Chief Justice Stone, rooted as it was in the Cooley principle, “let commerce struggle for Congressional action to *554 make it free,” and expressed the writer’s unwillingness to follow the Court’s “trend” 5 beyond the “plain requirements” of existing cases, at p. 401.

The philosophy of this Duckworth concurring opinion which the Court rejected, can alone support the holding and opinion today. That philosophy commends itself to many thoughtful people. Some people believe in this philosophy because of fear that judicial toleration of any state regulations of local phases of commerce will bring about what they call “Balkanization” of trade in the United States — trade barriers so high between the states that the stream of interstate commerce cannot flow over them. 6 Other people believe in this philosophy because of an instinctive hostility to any governmental regulation of “free enterprise”; this group prefers a laissez jaire economy. 7 To them the spectre of “Bureaucracy” is more frightening than “Balkanization.”

The Cooley balancing-of-interests principle which the Court accepted and applied in the Duckworth case is today supplanted by the philosophy of the Duckworth concurring opinion which though presented in the Duck-worth case gained no adherents. 8 For the New York statute is killed by a mere automatic application of a new mechanistic formula. The Court appraises nothing, unless its stretching of the old commerce clause interpretation results from a reappraisal of the power and duty *555 of this Court under the commerce clause. Numerous cases, for examples Parker v. Brown, 317 U. S. 341 , and Milk Board v. Eisenberg Co., 306 U. S. 346 , which made judicial appraisals under the Cooley rule, are gently laid to rest. Their interment is tactfully accomplished, without ceremony, eulogy, or report of their demise. The ground beneath them has been deftly excavated by a soothing process which limits them to their facts, their precise facts, their “plain requirements.” The vacancy left by the Cooley principle will be more than filled, however, by the new formula which without balancing interests, automatically will relieve many businesses from state regulation. This Court will thereby be relieved of much trouble in attempting to reconcile state and federal interests. State regulatory agencies too will be relieved of a large share of their traditional duties when they discover that bad local business practices are now judicially immunized from state regulation. But it is doubtful if the relief accorded will promote the welfare of the state or nation since Congress cannot possibly undertake the monumental task of suppressing all pernicious local business practices.

Sixth. The Court strongly relies on Baldwin v. Seelig, 294 U. S. 511 . The crucial facts of that case were these. New York law fixed a minimum price for milk bought by New York dealers from New York farmers. Vermont’s legislative policy left Vermont farmers and milk dealers free to fix milk prices by bargaining. Seelig, a New York dealer, sold milk in New York which had been bought from Vermont farmers at prices below that fixed for New York farmers by New York law. New York law forbade sale of Seelig’s milk in New York because the Vermont farmers had not received the New York fixed price for their milk. New York’s object was to save its farmers from competition with Vermont milk. And the Court saw the New York law as a discriminatory “barrier to *556 traffic between one state and another as effective as if customs duties, equal to the price differential, had been laid upon the thing transported.” Baldwin v. Seelig, supra, at 521 . The effect of the law, therefore, was precisely the same as though in order to protect its farmers from competition with Vermont milk, New York had imposed substantially higher taxes on sellers of Vermont produced articles than it imposed on sellers of New York produced articles. Under many previous decisions of this Court such discriminations against interstate commerce were not permitted. See Best & Co. v. Maxwell, 311 U. S. 454 .

Even though the Court regarded the Baldwin v. Seelig law as discriminatory, other considerations were added to weight the scales on the side of invalidation. Its impact on Vermont economy and Vermont legislative power was weighed. To whatever extent it is desirable to reform the economic standards of Vermont, “the legislature of Vermont and not that of New York must supply the fitting remedy.” Baldwin v. Seelig, supra, at 524 . This is a due process concept. 9 In emphasizing the due process objectionable phase of New York’s law, the Court was well within the Cooley philosophy. 10 Furthermore under the Cooley rule, aside from due process, a state’s regulation that immediately bears upon nothing but activities wholly within its boundaries is far less vulnerable than one which casts burdens on activities within the boundaries of another state. 11

*557 It was because New York attempted to project its law into Vermont that even its admitted health purpose was insufficient to outweigh Vermont’s interest in controlling its own local affairs. Baldwin v. Seelig, supra, p. 524 . Added to this was the Court’s appraisal of the law as a plain discrimination against interstate commerce that would inescapably erect a barrier to suppress competitive sales of Vermont milk in New York, thus leading to retaliatory “rivalries and reprisals,” at p: 522. Quite differently here 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.

Seventh. Milk Board v. Eisenberg Co., 306 U. S. 346 , would control this case but for the Court’s limiting that case to its precise facts. That law required a state license of all persons who handled or purchased milk within the commonwealth for sale within or without the commonwealth. It required all dealers, interstate and intrastate, to keep records and to make bonds. Dealers who sold their products within or without the state were required to pay state-fixed prices. The state granted or denied licenses on the Act’s enumerated terms and suspended *558 or revoked them for cause. Avowed purposes of the Pennsylvania law were identical with the stated purposes of the New York law. Like New York the method chosen to achieve these purposes was protection of milk farmers from what were deemed to be the evil consequences of cutthroat competition. The law was applied against interstate dealers in Pennsylvania, who like petitioner in New York, bought, weighed, tested, and cooled milk in Pennsylvania preparatory to shipment outside the state.

The Eisenberg case thus sustained the power of a state to require licenses from interstate dealers and to impose conditions on their interstate commerce transactions in order to effectuate legitimate state policies. And the conditions Pennsylvania imposed were burdensome, as this Court recognized. They erected obstacles which were bound to limit the number of interstate dealers. The limited number of interstate dealers who could get and hold state licenses were compelled to incur expenses that added to the costs of state-fixed milk prices they were required to pay as a condition precedent to the state’s allowing them to buy and ship out any milk at all. Pennsylvania imposed these burdens on interstate commerce to promote health and to protect its farmers from the consequences of destructive competition among dealers. This New York law was designed to promote health and to protect New York farmers from destructive competition in New York.

It requires more than invocation of the spectre of “Balkanization” and eulogy of the Constitution’s framers to prove that there is a gnat’s heel difference in the burdens imposed on commerce by the two laws. It cannot even be said that one regulation was “on commerce” and one was not (whatever “on commerce” means), for both affected the capacity of dealers to buy milk for interstate sales. There is this difference. The handicap *559 of state-fixed high-priced milk, big bonds, and large bookkeeping expenses would probably reduce the volume of interstate shipments far more than the New York limitation of new plants in particular localities. True, this New York regulation might reduce the volume of milk this particular dealer might get and ship. But the commerce clause was not written to let one particular dealer’s interests destroy a state’s orderly marketing system.

There has certainly been no proof here that New York is wrong in believing that its law will rehabilitate farmers, induce more of them to get and stay in the milk business, and thus provide a greater New York production of better milk available for sale both in and out of New York. Should this result follow, interstate commerce will not be burdened, it will be helped. And it seems to me that here as in the Eisenberg case, this Court should not pit its legal judgment against a legislative judgment that is in harmony with the views of persons who have devoted their lives to a practical study of the milk problem.

Eighth. I think that Congress and its authorized federal agency have knowingly acquiesced in, if they have not actually encouraged and approved, enactment and enforcement of the New York law here held invalid. The New York law authorizes its administrator to act in cooperation with federal milk-control authorities and after consultation to make such supplementary orders as might be helpful in accomplishing the joint state-federal program. So also, 7 U. S. C. § 610 (i) authorizes and directs the Secretary of Agriculture to confer and hold joint hearings with the authorities of any state in order to “obtain uniformity in the formulation, administration, and enforcement of Federal and State programs relating to the regulation of the handling of agricultural commodities . . . The section further authorizes the Secretary to “issue orders . . . complementary to orders or *560 other regulations issued by such [State] authorities; and to make available to such State authorities the records and facilities of the Department of Agriculture . . .

In the foregoing provisions Congress manifested its purpose to subject the milk industry to two cooperating authorities: (1) state legislatures and their selected administrative authorities, and (2) the Secretary of Agriculture. Congress did far more than direct a formal, polite cooperation between New York and the Secretary of Agriculture. Recognizing the compelling necessity for a state-federal integrated regulatory system for the milk industry, Congress was careful to leave the door open for the Secretary of Agriculture and state authorities working together to formulate mutually complementary orders in the field. These complementary state-federal laws and orders were to be aimed at precisely the same evils believed to have been generated by chaotic competitive conditions in the milk industry. The objective of both laws was to help impoverished farmers. 48 Stat. 31 , 7 U. S. C. § 601 .

This record does not reveal the extent to which there was state-federal cooperation in connection with enactment and enforcement of the New York law here involved. Absence of a full showing of such cooperation is doubtless due to the failure of the petitioner to raise any commerce questions in the hearing before the New York Commissioner. This in itself should be enough to cause this Court, at the very least, to follow Mr. Justice Frankfurter’s suggestion and remand the case. This would afford the state opportunity to develop the facts concerning federal and state cooperation. New York’s law should not be condemned on the basis of abstract rhetoric about the “fathers” and the commerce clause. Surely a state is still entitled to present its side of a constitutional controversy, though perhaps today’s new rule makes it an exercise in futility.

*561 New York has presented some evidence in its brief of such state-federal cooperation. Without such showing we should assume that the Secretary has followed congressional directions. If such an assumption be not made we cannot ignore the action of Congress in selecting the Secretary of Agriculture to protect interstate commerce in milk. Congress has even given him power to limit milk shipments as between different federal marketing areas. 12 This is hardly consistent with a congressional purpose to deny the Secretary power to approve this state regulation and order complementary to his own basic program. And here there is no evidence whatever to show that fair enforcement of the New York law would limit the total volume of New York milk available for shipment into other states. The basic purpose of the New York law like that of the federal law was to protect producers from low prices on the theory that this protection would insure an adequate milk supply for inter- as well as intra-state shipments.

From the foregoing, it seems to me that the Court now steps in where Congress wanted it to stay out. The Court puts itself in the position of guardian of interstate trade in the milk industry. Congress, with full constitutional power to do so, selected the Secretary of Agriculture to do this job. Maybe this Court would be a better guardian, but it may be doubted that authority for the Court *562 to undertake the task can be found in the Constitution— even in its “great silences.” At any rate, I had supposed that this Court would not find conflict where Congress explicitly has commanded cooperation. 13

The sole immediate result of today’s holding is that petitioner will be allowed to operate a new milk plant in New York. This consequence standing alone is of no great importance. But there are other consequences of importance. It is always a serious thing for this Court to strike down a statewide law. It is more serious when the state law falls under a new rule which will inescapably narrow the area in which states can regulate and control local business practices found inimical to the public welfare. The gravity of striking down state regulations is immeasurably increased when it results as here in leaving a no-man’s land immune from any effective regulation whatever. It is dangerous to assume that the aggressive cupidity of some need never be checked by government in the interest of all.

The judicially directed march of the due process philosophy as an emancipator of business from regulation appeared arrested a few years ago. That appearance was illusory. That philosophy continues its march. The due process clause and commerce clause have been used like Siamese twins in a never-ending stream of challenges to government regulation. See for example, Pacific Tel. Co. v. Tax Comm’n, 297 U. S. 403, 420 . The reach of one twin may appear to be longer than that of the other, but either can easily be turned to remedy this apparent handicap.

*563 Both the commerce and due process clauses serve high purposes when confined within their proper scope. But a stretching of either outside its sphere can paralyze the legislative process, rendering the people’s legislative representatives impotent to perform their duty of providing appropriate rules to govern this dynamic civilization. Both clauses easily lend themselves to inordinate expansions of this Court’s power at the expense of legislative power. 14 For under the prevailing due process rule, appeals can be made to the “fundamental principles of liberty and justice” which our “fathers” wished to preserve. In commerce clause cases reference can appropriately be made to the far-seeing wisdom of the “fathers” in guarding against commercial and even shooting wars among the states. Such arguments have strong emotional appeals and when skillfully utilized they sometimes obscure the vision.

The basic question here is not the greatness of the commerce clause concept, but whether all local phases, of interstate business are to be judicially immunized from state laws against destructive competitive business practices such as those prohibited by New York’s law. Of course, there remains the bare possibility Congress might attempt to federalize all such local business activities in the forty-eight states. While I have doubt about the wisdom of this New York law, I do not conceive it to be the function of this Court to revise that state’s eco *564 nomic judgments. Any doubt I may have concerning the wisdom of New York’s law is far less, however, than is my skepticism concerning the ability of the Federal Government to reach out and effectively regulate all the local business activities in the forty-eight states.

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. Nor does it seem to me that such a problem should be disposed of on a record from which we cannot tell what weights to put in which side of the scales.

In the interest of clarity, the controlling facts in this case may thus be fairly summarized.

Hood, the petitioner, is a Massachusetts corporation engaged in supplying the Boston market with fluid milk. In New York State, on the border of Vermont and Massachusetts, it operates two milk-receiving plants to which milk is delivered by local producers and whence it is shipped to Boston without processing. These two plants — at Eagle Bridge and Salem — are quite close together. On January 30, 1946, Hood applied to the Com *565 missioner of Agriculture and Markets of New York for an extension of its New York license to purchase milk which would permit it to operate an additional receiving plant at Greenwich, New York. Greenwich is ten miles from Salem and twelve miles from Eagle Bridge. Hood proposed to divert to the plant at Greenwich milk deliveries of producers living in that vicinity who were then delivering to its more distant plants at Eagle Bridge and Salem and to take on at Greenwich twenty or thirty additional producers then delivering to competing dealers in the vicinity of Greenwich.

The Commissioner of Agriculture and Markets denied Hood’s application for extension of its license. In so doing, it rested its decision upon the following “conclusions” :

“If applicant is permitted to equip and operate another milk plant in this territory, and to take on producers now delivering to plants other than those which it operates, it will tend to reduce the volume of milk received at the plants which lose those producers, and will tend to increase the cost of handling milk in those plants.

“If applicant takes producers now delivering milk to local markets such as Troy, it will have a tendency to deprive such markets of a supply needed during the short season. . . .

“The issuance of a license to applicant which would permit it to operate an additional plant, would tend to a destructive competition in a market already adequately served, and would not be in the public interest.”

Hood instituted proceedings in the Supreme Court of New York to review the order which were transferred without hearing to the Appellate Division. The Appellate Division sustained the Commissioner’s action in a *566 per curiam opinion, and leave to appeal to the Court of Appeals was granted. That court considered Hood’s claim that the order violated the commerce clause and denied it on the ground that “any interference with the free flow of interstate commerce was incidental only.” 297 N. Y. 209, 215 , 78 N. E. 2d 476, 478-79 .

Some of the principles relevant to decision of this case are settled beyond dispute. One of these is that the prevention of destructive competition is a permissible exercise of the police power. Nebbia v. New York, 291 U. S. 502 ; United States v. Rock Royal Co-operative, 307 U. S. 533 ; Sunshine Coal Co. v. Adkins, 310 U. S. 381, 395 . Another is that a State is not barred from licensing an activity merely because it is interstate commerce. 1 Even more basic is the principle that as to matters which do not demand that regulation be uniformly present or uniformly absent, see Cooley v. Board of Wardens, 12 How. 299 , the State may impose its own requirements “even though they materially interfere with interstate commerce.” South Carolina State Highway Dept. v. Barnwell Bros., 303 U. S. 177, 188 . And only recently, be it noted, this Court has characterized the buying of milk *567 for out-of-state shipment as an “essentially local” business. Milk Control Board v. Eisenberg Farm Products, 306 U. S. 346, 352 .

Behind the distinction between “substantial” and “incidental” burdens upon interstate commerce is a recognition that, in the absence of federal regulation, it is sometimes — of course not always — of greater importance that local interests be protected than that interstate commerce be not touched.

“When Congress has not exerted its power under the Commerce Clause, and state regulation of matters of local concern is so related to interstate commerce that it also operates as a regulation of that commerce, the reconciliation of the power thus granted with that reserved to the state is to be attained by the accommodation of the competing demands of the state and national interests involved.” Parker v. Brown, 317 U. S. 341, 362 .

“But the Commerce Clause does not cut the States off from all legislative relation to foreign and interstate commerce. South Carolina Highway Dept. v. Barnwell Bros., 303 U. S. 177 ; Western Live Stock v. Bureau, 303 U. S. 250 . Such commerce interpenetrates the States, and no undisputed generality about the freedom of commerce from state encroachment can delimit in advance the interacting areas of state and national power when Congress has not by legislation foreclosed state action. The incidence of the particular state enactment must determine whether it has transgressed the power left to the States to protect their special state interests although it is related to a phase of a more extensive commercial process.” Union Brokerage Co. v. Jensen, 322 U. S. 202, 209-10 .

“. . . in the necessary accommodation between local needs and the overriding requirement of freedom for *568 the national commerce, the incidence of a particular type of State action may throw the balance in support of the local need because interference with the national interest is remote or unsubstantial. A police regulation of local aspects of interstate commerce is a power often essential to a State in safeguarding vital local interests. At least until Congress chooses to enact a nation-wide rule, the power will not be denied to the State.” Freeman v. Hewit, 329 U. S. 249, 253 .

See also Southern R. Co. v. King, 217 U. S. 524, 533 ; Illinois Natural Gas Co. v. Central Illinois Pub. Serv. Co., 314 U. S. 498, 506 . 2

*569 The Court’s opinion deems the decision in Baldwin v. Seelig, 294 U. S. 511 , as most relevant to the present controversy. But it is the essential teaching of that case that “considerations of degree” determine the line of decision between what a State may and what a State may not regulate, when what is sought to be regulated is part of the shuttle-work of interstate commerce. Id. at 525 . What was there held and all that was held was accurately defined in Milk Control Board v. Eisenberg Farm Products, 306 U. S. 346 , 353: “In Baldwin v. G. A. F. Seelig, 294 U. S. 511 , this Court condemned an enactment aimed solely at interstate commerce attempting to affect and regulate the price to be paid for milk in a sister state, and *570 we indicated that the attempt amounted in effect to a tariff barrier set up against milk imported into the enacting state.” The nakedness of New York’s purpose to reach into Vermont was ill-concealed by the tenuous justification that if Vermont farmers got cheap prices for their milk they would be tempted to save the expense of sanitary precautions and thereby affect the health of New York consumers. “If New York, in order to promote the economic welfare of her farmers, may guard them against competition with the cheaper prices of Vermont, the door has been opened to rivalries and reprisals that were meant to be averted by subjecting commerce between the states to the power of the nation.” 294 U. S. at 522 . But guarding against out-of-state competition is a very different thing from curbing competition from whatever source. A tariff barrier between States, moreover, presupposes a purpose to prefer those who are within the barrier; where no such preference appears there can be no justification for reprisals and there is consequently little probability of them. In the determination that an extension of petitioner’s license would tend to destructive competition, the fact that petitioner intended the out-of-state shipment of what it bought was, so far as the record tells us, wholly irrelevant; under the circumstances, any other applicant, no matter where he meant to send his milk, would presumably also have been refused a license.

As I see the central issue, therefore, it is whether the difference in degree between denying access to a market for failure to comply with sanitary or book-keeping regulations and denying it for the sake of preventing destructive competition from disrupting the market is great enough to justify a difference in result. But for that difference in degree, the judgment below would fully rest on the Eisenberg case. If, on the other hand, petitioner’s competitors were like itself engaged in interstate com *571 merce, Buck v. Kuykendall, 267 U. S. 307 , and Bush & Sons Co. v. Maloy, 267 U. S. 317 , would be powerful precedents in favor of reversal. See also Lemke v. Farmers Grain Co., 258 U. S. 50 ; Shafer v. Farmers Grain Co., 268 U. S. 189 .

This case falls somewhere between these most nearly decisive authorities. It is closer to the Buck and Bush cases than to the Eisenberg case in that the denial of a license to enter a market because the market is “adequately served” imposes a disqualification beyond the power of the applicant to remove. In that respect the effect upon the free flow of commerce is more enduring than is the case where all that is required is compliance with a local regulation. The State’s interest in restricting competition, moreover, is less obvious than its interest in preserving health or insuring probity in business dealings. Yet the commerce involved in the Buck and Bush cases — the operation of busses between Seattle, Washington, and Portland, Oregon — was exclusively interstate. Here, however, it does not appear that any of Hood’s competitors sent milk out of the State, and, in fact, only about 8% of New York’s entire production of milk is sent out. 3 In this respect the case resembles the Eisenberg case, in which it appeared that only slightly more than 10% of the milk produced in Pennsylvania was exported. 306 U. S. at 350 . In upholding the State’s licensing power in that case, the Court remarked that this percentage was “only a small fraction of the milk produced by farmers in Pennsylvania” and concluded that as a consequence “the effect of the law on interstate commerce is incidental.” Id. at 353 . But comparison could be carried further and still the similarities and dissimilarities of the facts in the record before us to the *572 Eisenberg case and the Buck and Bush cases would be inconclusive. In an area where differences of degree depend on slight differences of fact, precedent alone is an inadequate guide.

It is argued, however, that New York can have no interest in the restriction of competition great enough to warrant shutting its doors to one who would buy its products for shipment to another State. This must mean that the protection of health and the promotion of fair dealing are of a different order, somehow, than the prevention of destructive competition. But the fixing of prices was a main object of the regulation upheld in the Eisenberg case, and it is obvious that one of the most effective ways of maintaining a price structure is to control competition. 4 The milk industry is peculiarly subject to internecine warfare, as this Court recognized in sustaining against due-process attack the precursor of New York’s present milk-control law. Nebbia v. New York, 291 U. S. 502 . A picture of ruthless and wasteful competition was painted in that case as in each of the other cases in which the Court has upheld the regulation of the milk industry. United States v. Rock Royal Co-operative, 307 U. S. 533 ; H. P. Hood & Sons v. United States, 307 U. S. 588 ; United States v. Wrightwood Dairy Co., 315 U. S. 110 . And, *573 so far as appears, State action to maintain the price structure in conjunction with complementary regulation by the Secretary of Agriculture is no less necessary for the dairy industry than for the raisin industry. Compare Parker v. Brown, 317 U. S. 341 ; see United States v. Rock Royal Co-operative, Inc., 307 U. S. 533, 548-49 . In view of the importance that we have hitherto found in regulation of the economy of agriculture, I cannot understand the justification 'for assigning, as a matter of law, so much higher a place to milk dealers’ standards of bookkeeping than to the economic well-being of their industry.

As matters now stand, however, it is impossible to say whether or not the restriction of competition among dealers in milk does in fact contribute to their economic well-being and, through them, to that of the entire industry. And if we assume that some contribution is made, we cannot guess how much. Why, when the State has fixed a minimum price for producers, does it take steps to keep competing dealers from increasing the price by bidding against each other for the existing supply? Is it concerned with protecting consumers from excessive prices? Or is it concerned with seeing that marginal dealers, forced by competition to pay more and charge less, are not driven either to cut corners in the maintenance of their plants or to close them down entirely? Might these consequences follow from operation at less than capacity? What proportion of capacity is necessary to enable the marginal dealer to stay in business? Could Hood’s potential competitors in the Greenwich area maintain efficient and sanitary standards of operation on a lower margin of profit? How would their closing down affect producers? Would the competition of Hood affect dealers other than those in that area? How many of those dealers are also engaged in interstate commerce? How much of a strain would be put on the price structure maintained by the State by a holding that it cannot regulate *574 the competition of dealers buying for an out-of-state market? Is this a situation in which State regulation, by supplementing federal regulation, is of benefit to interstate as well as to intrastate commerce?

We should, I submit, have answers at least to some of these questions before we can say either how seriously interstate commerce is burdened by New York’s licensing-power or how necessary to New York is that power. The testimony of the dealers with whom Hood seeks to compete is too inexplicit to supply the answers. Since the needed information is neither accessible to judicial notice nor within its proper scope, I believe we should seek further light by remanding the case to the courts of the State. It is a course we have frequently taken upon records no more unsatisfactory than this one. Compare Chastleton Corp. v. Sinclair, 264 U. S. 543 ; Hammond v. Schappi Bus Line, 275 U. S. 164 ; Borden’s Farm Products Co. v. Baldwin, 293 U. S. 194 ; Polk Co. v. Glover, 305 U. S. 5 ; Gibbs v. Buck, 307 U. S. 66 ; Mayo v. Canning Co., 309 U. S. 310 — all cases remanded to avoid constitutional adjudication without adequate knowledge of the relevant facts.

Nor should we now dispose of the case upon the claim that New York cannot discriminate against interstate commerce by keeping its milk for absorption by “local markets such as Troy.” In support of this claim reliance is placed on Oklahoma v. Kansas Natural Gas Co., 221 U. S. 229 , and Pennsylvania v. West Virginia, 262 U. S. 553 , and there is much force in the argument that if a State cannot keep for its own use a natural resource like gas, as it can keep its wild game, Geer v. Connecticut, 161 U. S. 519 ; see New York ex rel. Silz v. Hesterberg, 211 U. S. 31, 41 , then a fortiori it cannot prefer its own inhabitants in the consumption of a product that would not have come into existence but for its commercial value. But compare Heisler v. Thomas Colliery Co., 260 U. S. 245 ; Oliver Iron Mining Co. v. Lord, 262 *575 U. S. 172 . It is only as to this aspect of the case, at any rate, that I can see the relevance of Baldwin v. Seelig, 294 U. S. 511 , as dealing with what is characterized as “the converse of the present situation.” Support is also sought in Foster-Fountain Packing Co. v. Haydel, 278 U. S. 1 , and Toomer v. Witsell, 334 U. S. 385 , but in these cases what the State had done was to halt for the benefit of local processors a product already moving in interstate commerce without entirely withholding the product from interstate commerce.

Broadly stated, the question is whether a State can withhold from interstate commerce a product derived from local raw materials upon a determination by an administrative agency that there is a local need for it. For me it has not been put to rest by Pennsylvania v. West Virginia, supra. More narrowly, the question is whether the State can prefer the consumers of one community to consumers in other States as well as to consumers in other parts of its own territory. It is arguable, moreover, that the Commissioner was actuated not by preference for New York consumers, but by the aim of stabilizing the supply of all the local markets, including Boston as well as Troy, served by the New York milkshed. It may also be that he had in mind the potentially harmful competitive effect of efforts by dealers supplying the Troy market to repair, by attracting new producers, the aggravation of Troy’s shortage which would result from the diversion to Boston of part of Troy’s supply. These too are matters as to which more light would be needed if it were now necessary to decide the question.

In the view I take of the issue of destructive competition, however, this question need not now be decided. It is impossible to say from a reading of the opinions below that the Commissioner’s finding that extension of Hood’s license would tend to destructive competition *576 would not by itself have been a sufficient basis for his order; and it is a basis which evidence adduced upon remand might put upon solid constitutional ground. A decision at this stage of the question of preferment of local needs, assuming that the record presents it, would prove to be purely advisory, therefore, if when the case came back to the State court, it found the order adequately supported by the justification of preventing destructive competition. It may be answered, to be sure, that the State would have no reason to decide whether or not the latter justification was adequate in the absence of an indication by this Court that the former — the retention of locally needed milk — is constitutionally invalid. And such an indication would amount to decision of the very constitutional issue professedly left open. To which my reply would be that it is a very different thing to recognize the difficulty of a constitutional issue and to point out circumstances in which it would not arise than it is to decide the issue.

My conclusion, accordingly, is that the case should be remanded to the Supreme Court of Albany County for action consistent with the views I have stated.

The License Cases, 5 How. 504, 578-579 . And see Frankfurter, The Commerce Clause, 50-58 (1937).

State legislation which patently discriminates against interstate commerce has long been held to conflict with the commerce clause itself. The writer has acquiesced in this interpretation, Adams Mfg. Co. v. Storen, 304 U. S. 307, 331-332 , although agreeing with the views of Chief Justice Taney that the commerce clause was not intended to grant courts power to regulate commerce even to this extent. The equal protection clause would seem to me a more appropriate source of judicial power in respect to such discriminatory laws.

Dowling, Interstate Commerce and State Power, 27 Va. L. Rev. 1 (1940); and see for illustration Southern Pacific Co. v. Arizona, 325 U. S. 761 , 768-769; United States v. Underwriters Assn., 322 U. S. 533, 547-549 ; Cloverleaf Co. v. Patterson, 315 U. S. 148, 154-155 ; California v. Thompson, 313 U. S. 109, 113 ; Milk Board v. Eisenberg Co., 306 U. S. 346 ; S. C. Hwy. Dept. v. Barnwell Bros., 303 U. S. 177, 184-191 ; Hartford Indemnity Co. v. Illinois, 298 U. S. 155 ; Kidd v. Pearson, 128 U. S. 1 . And see cases collected by Mr. Justice Brandeis, in his dissenting opinion in Di Santo v. Pennsylvania, 273 U. S. 34, 39-40 .

The writer’s view has been that the Cooley rule resulted in this Court’s invalidating state statutes that should be left operative unless Congress should strike them down. See dissenting opinion in Southern Pac. Co. v. Arizona, 325 U. S. 761 , 784-796. But since my views were rejected, I joined in disposition of Morgan v. Virginia, 328 U. S. 373, 386-388 , by application of the Cooley rule.

Dowling, Interstate Commerce and State Power, 27 Va. L. Rev. 1 (1940); Braden, Umpire to the Federal System, 10 U. of Chi. L. Rev. 27 (1942).

Bane, Interstate Trade Barriers, 16 Ind. L. J. 121 (1940); and see the collection of articles on the subject of Trade Barriers in 9 Geo. Wash. L. Rev. 755 (1941).

Melder, The Economics of Trade Barriers, 16 Ind. L. J. 127, 131 (1940); Reynolds, The Distribution of Power to Regulate Interstate Carriers Between the Nation and the States, 379 (1928).

Barnett, Interstate Commerce — State Control, 21 Ore. L. Rev. 385, 391-392 (1942); Note, 26 Minn. L. Rev. 654 , 655 (1942).

Allgeyer v. Louisiana, 165 U. S. 578 ; cf. Hoopeston Co. v. Cullen, 318 U. S. 313, 318-319 ; Hartford Ind. Co. v. Delta Co., 292 U. S. 143, 149-150 .

Morgan v. Virginia, 328 U. S. 373, 386 ; and compare dissenting opinion at pp. 391, 394; Bob-Lo Excursion Co. v. Michigan, 333 U. S. 28, 37, n. 16, 40, 41-42 .

Southern Pac. Co. v. Arizona, 325 U. S. 761 , 767-768, n. 2; S. C. Hwy. Dept. v. Barnwell Bros., 303 U. S. 177, 184-186 .

7 U. S. C. § 608c (5) (G). This section restricts the Secretary of Agriculture’s power in two respects: (1) It forbids him to “prohibit” shipment of “milk” from one federal marketing area to another. (2) It forbids him to “limit” market-to-market shipment of “milk products.” The Chairman of the Committee in charge of the Act in which this provision appeared explained to the House that a failure to grant the Secretary power to “limit” milk shipments “would absolutely wreck the whole milk program.” 79 Cong. Rec. 9572-9573. See also 79 Cong. Rec. 13022, 13023; Bailey Farm Dairy Co. v. Anderson, 157 F. 2d 87 -96; Bailey Farm Dairy Co. v. Jones, 61 F. Supp. 209, 221-224 .

Union Brokerage Co. v. Jensen, 322 U. S. 202, 209 ; Parker v. Brown, 317 U. S. 341 ; Townsend v. Yeomans, 301 U. S. 441, 454 ; Rice v. Bd. of Trade, 331 U. S. 247, 255 ; Prudential Ins. Co. v. Benjamin, 328 U. S. 408, 433-436 .

Other constitutional provisions with vague contours are available as instruments for the judiciary to protect business from legislative regulation. Appealing phases of these vague contour provisions can be judicially integrated to provide a variety of techniques to accomplish a single purpose, the protection of business against legislative regulations obnoxious to courts. Under such a constitutional philosophy courts can invalidate business regulations on substantive grounds or they can put obstacles in the path of enforcement making it impossible to suppress business practices outlawed by valid legislation.

Among considerations of State concern which have been found sufficient to allow State licensing are the maintenance of sanitary conditions, Milk Control Board v. Eisenberg Farm Products, 306 U. S. 346 ; and adequate prices, see Brief of Petitioner in Milk Control Board v. Eisenberg Farm Products, supra, at pp. 20-21; control of the transportation of liquor, Ziffrin, Inc. v. Reeves, 308 U. S. 132 ; Duckworth v. Arkansas, 314 U. S. 390 ; the prevention of “fraud and overreaching” by transportation agents, California v. Thompson, 313 U. S. 109, 113 ; “safeguarding the interests of its [the State’s] own people in business dealings with corporations not of its own chartering but who do business within its borders,” Union Brokerage Co. v. Jensen, 322 U. S. 202, 208 ; and protection of the public from “fraud, misrepresentation, incompetence and sharp practice” on the part of insurance agents, Robertson v. California, 328 U. S. 440, 447 .

Every case determining whether or not a local regulation amounts to a prohibited “burden” on interstate commerce belongs at some point along a graduated scale. Considering only those decided since Milk Control Board v. Eisenberg Farm Products, 306 U. S. 346 , at one end are the tax cases; since a State has other sources of revenue, the need for a tax “on” interstate commerce is hard to justify. It is to be expected, therefore, that State revenue laws should constitute the largest group of laws invalidated as “burdening” commerce. And so they do. McCarroll v. Dixie Greyhound Lines, 309 U. S. 176 ; McGoldrick v. Gulf Oil Corp., 309 U. S. 414 ; McLeod v. Dilworth Co., 322 U. S. 327 ; Nippert v. City of Richmond, 327 U. S. 416 ; Freeman v. Hewit, 329 U. S. 249 ; Joseph v. Carter & Weekes Co., 330 U. S. 422 ; Central Greyhound Lines v. Medley, 334 U. S. 653, 662 . Yet there has been an increasing recognition of the States’ interest in seeing that interstate commerce “pays its way,” and a consequent disposition to classify the object of the tax as intrastate. McGoldrick v. Berwind-White Co., 309 U. S. 33 ; McGoldrick v. Felt & Tarrant Co., 309 U. S. 70 ; McGoldrick v. Compagnie Generale Transatlantique, 309 U. S. 430 ; Nelson v. Sears, Roebuck & Co., 312 U. S. 359 ; Nelson v. Montgomery Ward & Co., 312 U. S. 373 ; Northwest Airlines v. Minnesota, 322 U. S. 292 ; General Trading Co. v. State Tax Comm’n, 322 U. S. 335 ; International Harvester Co. v. Department of Treasury, 322 U. S. 340 ; Independent Warehouses v. Scheele, 331 U. S. 70 ; cf. Aero Mayflower Transit Co. v. Board of R. Comm’rs, 332 U. S. 495 . By the same principle, a regulation which makes a good deal of trouble for *569 an interstate railroad must be struck down in the absence of any very convincing showing that the regulation is a reasonable response to a serious local need. Southern Pacific Co. v. Arizona, 325 U. S. 761 ; Morgan v. Virginia, 328 U. S. 373 . But a more impressive showing of such a contribution on the one hand and a less persuasive demonstration of inconvenience on the other has brought about the opposite result. Terminal Railroad Assn. of St. Louis v. Brotherhood of Railroad Trainmen, 318 U. S. 1 ; Bob-Lo Excursion Co. v. Michigan, 333 U. S. 28 . Where motor carriers are concerned, a State is regarded as having a proprietary interest in its highways which justifies a generally more aggressive assertion of its self-interest. Welch Co. v. New Hampshire, 306 U. S. 79 ; Clark v. Paul Gray, Inc., 306 U. S. 583 ; Maurer v. Hamilton, 309 U. S. 598 . And the protection of its own citizens through maintenance of high standards of business dealing by such regulations as those involved in California v. Thompson, 313 U. S. 109 ; Union Brokerage Co. v. Jensen, 322 U. S. 202 ; and Robertson v. California, 328 U. S. 440 , is a matter of local concern that has been given almost as much latitude as the protection of health, Clason v. Indiana, 306 U. S. 439 . But at the opposite extreme from revenue measures, perhaps, is control of the transportation of intoxicating liquor, in the name of which quite confining hobbles have been put upon interstate commerce and sustained under the Commerce Clause, without resorting to the Twenty-first Amendment. Ziffrin, Inc. v. Reeves, 308 U. S. 132 ; Duckworth v. Arkansas, 314 U. S. 390 ; Carter v. Virginia, 321 U. S. 131 .

For this information I am indebted to the Department of Agriculture of the United States.

Thus, in the Interstate Commerce Act of 1920, Congress gave the Interstate Commerce Commission power to limit competition both by withholding certificates of public convenience and necessity and by permitting consolidations beyond the reach of the antitrust laws and at the same time gave it power to prescribe minimum rates; the two forms of control supplement each other. See 41 Stat. 477 -478, as amended, 49 U. S. C. § 1 (18), (19), (20); 41 Stat. 480 -481, as amended, 49 U. S. C. § 5 (11); 41 Stat. 484 -85, as amended, 49 U. S. C. § 15 (1); Biklé, Power of the Interstate Commerce Commission to Prescribe Minimum Rates, 36 Harv. L. Rev. 5 ,26; see also Mr. Justice Brandéis, dissenting in New State Ice Co. v. Liebmann, 285 U. S. 262, 280, 308-10 , and authorities there cited. Compare the Miller-Tydings Act, 50 Stat. 693 , 15 U. S. C. § 1 .