Reeves, Inc. v. Stake, 447 U.S. 429 (1980)

Reeves, Inc. v. Stake

No. 79-677

Argued April 16, 1980
Decided June 19, 1980
447 U.S. 429

CERTIORARI TO THE UNITED STATES COURT OF APPEALS

FOR THE EIGHTH CIRCUIT

Syllabus

For more than 50 years, South Dakota has operated a cement plant that produced cement for both state residents and out-of-state buyers. In 1978, because of a cement shortage, the State Cement Commission announced a policy to confine the sale of cement by the state plant to residents of the State. This policy forced petitioner ready-mix concrete distributor, one of the out-of-state buyers, to cut its production severely. Petitioner then brought suit in Federal District Court, challenging the policy. The court granted injunctive relief on the ground that the policy violated the Commerce Clause. The Court of Appeals reversed on the ground that the State had simply acted in a proprietary capacity.

Held: South Dakota’s resident-preference program for the sale of cement does not violate the Commerce Clause. Pp. 434-447.

(a) "Nothing in the purposes animating the Commerce Clause prohibits a State, in the absence of congressional action, from participating in the market and exercising the right to favor its own citizens over others." Hughes v. Alexandria Scrap Corp., 426 U.S. 794, 810. Pp. 434-436.

(b) The Commerce Clause responds principally to state taxes and regulatory measures impeding free private trade in the national marketplace, and there is no indication of a constitutional plan to limit the ability of the States themselves to operate freely in the free market. Restraint in this area is also counseled by considerations of state sovereignty, each State’s role as guardian and trustee for its people, and the recognized right of a trader to exercise discretion as to the parties with whom he will deal. Moreover, state proprietary activities often are burdened with the same restrictions as private market participants. And, as this case illustrates, the competing considerations in cases involving state proprietary action often will be subtle, complex, politically charged, and difficult to assess under traditional Commerce Clause analysis. Given these factors, the adjustment of interests in this context is, as a rule, better suited for Congress than this Court. Pp. 436-439.

(c) The arguments for invalidating South Dakota’s resident-preference program -- that the State, having long exploited the interstate market for cement, should not be permitted to withdraw from it when a shortage arises; that the program responds solely to the nongovernmental objective of protectionism; that hoarding may have undesirable consequences; that the program places South Dakota suppliers of ready-mix concrete at a competitive advantage in the out-of-state market; and that, if South Dakota had not acted, free market forces would have generated an appropriate level of supply at free market prices for all buyers in the region -- are weak, at best. Whatever residual force inheres in them is more than offset by countervailing considerations of policy and fairness. To invalidate the program would discourage similar state projects and rob South Dakota of the intended benefit of its foresight, risk, and industry. Pp. 440-447.

603 F.2d 736, affirmed.

BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J. . and STEWART, MARSHALL, and REHNQUIST, JJ., joined. POWELL, J., filed dissenting opinion, in which BRENNAN, WHITE, and STEVENS, JJ., joined, post, p. 447.