H.P. Hood & Sons, Inc. v. Du Mond, Commissioner of Agriculture & Markets of New York

Supreme Court of United States
336 U.S. 525 (1949)

ELI5:

Rule of Law:

A state may not use its regulatory power to deny a license for facilities to be used in interstate commerce for the purpose of protecting local economic interests from out-of-state competition or to curtail the volume of interstate commerce. Such economic protectionism is a per se violation of the dormant Commerce Clause.

Facts:

H. P. Hood & Sons, Inc., a Massachusetts corporation, distributed milk in Boston, sourcing much of it from other states, including New York.
Hood operated three licensed milk receiving depots in New York, where it purchased raw milk from local farmers.
The purchased milk was not processed in New York but was immediately shipped on the same day as fluid milk to Boston.
Hood sought a license to open a fourth receiving depot in Greenwich, New York, to shorten hauls for some existing suppliers and attract new ones.
Competing milk dealers in the area opposed Hood's application, arguing it would create 'destructive competition' and take milk supplies needed for local New York markets, such as Troy.
There was evidence of a temporary milk supply shortage in the Troy market during the previous year.

Procedural Posture:

H. P. Hood & Sons applied to the New York Commissioner of Agriculture and Markets for a license to operate an additional milk receiving plant.
The Commissioner denied the application, finding that the new plant would create 'destructive competition' and could deprive local markets of milk.
Hood sought review of the Commissioner's order in the New York state court system.
The New York Court of Appeals, the state's highest court, sustained the Commissioner's denial of the license against Hood's constitutional challenge.
The United States Supreme Court granted certiorari to review the decision of the New York Court of Appeals.

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Issue:

Does New York's denial of a license for an additional milk purchasing facility violate the dormant Commerce Clause when the denial is based on protecting local economic interests from competition and preserving local supply?

Opinions:

Majority - Mr. Justice Jackson

Yes, New York's denial violates the Commerce Clause. A state may not promote its own economic advantages by curtailing or burdening interstate commerce, as such actions create economic barriers that are hostile to the national free trade unit envisioned by the Constitution. While states may regulate for health, safety, and fraud, they cannot use their police power to suppress competition or hoard local resources for local consumption at the expense of the national market. The New York law, as applied here, is not a health or safety measure but a protectionist one designed to limit interstate commerce to aid local economic interests, which is precisely what the Commerce Clause was intended to prevent.

Dissenting - Mr. Justice Black

No, New York's denial does not violate the Commerce Clause. The New York law is a legitimate regulation designed to prevent destructive competition and ensure a stable milk supply for the health and welfare of its people, which are permissible state goals. The Court's new formula improperly immunizes local phases of interstate business from state regulation, creating a regulatory void and usurping the state's power to address local economic problems without evidence of discriminatory intent against interstate commerce. The regulation's effect on interstate commerce is incidental, and the state should be free to control local business practices found to be inimical to the public welfare.

Dissenting - Mr. Justice Frankfurter

A decision should not be made on the current record. The central issue is whether the difference in degree between denying market access for sanitary reasons versus preventing destructive competition justifies a different result. This requires balancing competing state and national interests, which is impossible without more facts about the actual economic impact on the local market and the necessity of the regulation. The case should be remanded to the state courts to develop a more complete factual record before making a constitutional adjudication.

Analysis:

This decision is a cornerstone of dormant Commerce Clause jurisprudence, strongly affirming the principle that states cannot engage in economic protectionism. It extends the rule from Baldwin v. Seelig, which prohibited states from burdening incoming commerce, to also prohibit states from burdening outgoing commerce for local economic advantage. The case solidifies the idea of the United States as a single national economic unit, where states are forbidden from erecting trade barriers or isolating their markets. Future cases involving state regulations that impact interstate commerce would be scrutinized to determine if their true purpose is health and safety or impermissible economic protectionism.

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