Hillside Dairy Inc. v. Lyons

539 U.S. 59 (2003)

Facts: Out-of-state milk producers challenged an amendment to a California milk regulation program involving pricing and pooling. The petitioners claimed that California was not authorized by Congress to restrict interstate commerce in the way they had. However, California urged that 7 U.S.C. §7254 authorized such restrictions. The petitioners also claimed that the amendment unlawfully discriminated against them simply for being from out-of-state, which is unconstitutional under the Privileges and Immunities Clause. California officials argue that they were merely eliminating a loophole that created an unfair advantage for out-of-state producers. The district court dismissed the suit and the Ninth Circuit upheld the dismissal. The producers appealed to the U.S. Supreme Court.

Issue: (1) Are the California regulations an unconstitutional restriction on interstate commerce in violation of the Negative Commerce Clause? (2) Do the regulations unconstitutionally discriminate against out-of-state producers in violation of the Privileges and Immunities Clause?

Rule: States can only pass laws that burden interstate commerce if they are authorized to do so by Congress. A regulation may violate the Privileges and Immunities Clause even if it doesn’t explicitly mention out-of-state citizens on its face.

Analysis: The exemption carved out by Congress is found to only relate to composition and labeling but not pricing and pooling. Therefore, Congress has not acted to permit California to pass those particular laws.

Thus California’s milk regulations are neither exempt from Commerce Clause scrutiny, nor are they exempt from a Privileges and Immunities Clause challenge just because the state statute doesn’t mention out-of-state residents explicitly.

Conclusion: The judgment of the Ninth Circuit is vacated and the case is remanded.

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