United States Court of Appeals
For the First Circuit
No. 00-1040
GRANT'S DAIRY — MAINE, LLC,
Plaintiff, Appellant,
v.
COMMISSIONER OF MAINE DEPARTMENT OF AGRICULTURE, FOOD
& RURAL RESOURCES, ET AL.,
Defendants, Appellees.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MAINE
[Hon. Morton A. Brody, U.S. District Judge]
Before
Selya, Circuit Judge,
Coffin, Senior Circuit Judge,
and Stahl, Circuit Judge.
John H. Vetne, with whom Judith H. Mizner was on brief, for
appellant.
Lucinda E. White, Assistant Attorney General, with whom
Andrew Ketterer, Maine Attorney General, and William R. Stokes,
Assistant Attorney General, were on brief, for appellees.
November 13, 2000
SELYA, Circuit Judge. Federally regulated milk dealers
("handlers") are required by federal law to pay a minimum price
for all the raw milk that they purchase from dairy farmers
("producers").1 In addition, the State of Maine sets a minimum
price that in-state handlers must pay to in-state producers with
respect to milk produced, processed, and sold in Maine ("Maine
milk"). Plaintiff-appellant Grant's Dairy — Maine, LLC
("Grant"), a fully federally regulated handler based in northern
Maine, brought suit against several state plenipotentiaries,
including the Commissioner of the Maine Department of
Agriculture, Food, and Rural Resources and the members of the
Maine Milk Commission ("the Commission"), arguing that, as
applied, Maine's additional level of price regulation violated
the United States Constitution. In an unpublished opinion, the
district court rejected Grant's constitutional claims. Grant
pursues its Supremacy Clause and Commerce Clause challenges in
this venue. Discerning no constitutional infirmity, we affirm
the lower court's entry of summary judgment.
I. BACKGROUND
1
"Handlers" and "producers" are defined terms. See 7 C.F.R.
§§ 1000.9, 1001.12. The definitions are unremarkable.
-2-
To place Grant's antipathy to Maine's imposition of a
minimum milk price in context, we provide a brief overview of
applicable federal and state regulation and then trace the
interaction of the two schemes.
A. Federal Regulation.
More than six decades ago, the Agricultural Marketing
Agreement Act of 1937 ("AMAA"), now codified, as amended, at 7
U.S.C. §§ 601-626, authorized the Secretary of Agriculture (the
Secretary) to set minimum prices for milk. Id. § 608c(1) & (2).
To this end, the Secretary divided the country into regions,
each of which is known as a federal order milk marketing area.2
7 C.F.R. §§ 1001-1135. In each area, a milk marketing order
sets minimum prices that handlers must pay producers. The
Northeast Marketing Area includes five New England states
(Connecticut, Massachusetts, New Hampshire, Rhode Island, and
Vermont), Delaware, New Jersey, the District of Columbia, and
portions of Maryland, New York, Pennsylvania, and Virginia. 7
C.F.R. § 1001.2. Maine is not part of this, or any other,
2As of January 1, 2000, the Secretary reduced the number of
federal order milk marketing areas from thirty-one to eleven.
See 64 Fed. Reg. 47,898 (1999), as amended by 64 Fed. Reg.
70,868 (1999). The parties have stipulated that recent changes
to the federal milk pricing system, including this change, have
no bearing on the litigation at hand.
-3-
federal order milk marketing area. See 64 Fed. Reg. 16,056
(1999).
Although Maine is not within a federal order area,
certain aspects of the federal paradigm are pertinent to an
understanding of the present problem. First, the federal system
takes account of the fact that the value of milk varies
according to use. See West Lynn Creamery, Inc. v. Healy, 512
U.S. 186, 189 n.1 (1994). Before federal regulation came upon
the scene, producers vied to sell their milk for processing as
fluid milk (the use that fetched the highest price). Lansing
Dairy, Inc. v. Espy, 39 F.3d 1339, 1343 (6th Cir. 1994). The
federal order system obviated the need for such cutthroat
competition. Under it, raw milk is classified into four use
categories: Class I (fluid milk); Class II (soft dairy
products, e.g., yogurt and cottage cheese); Class III
(spreadable and hard cheese); and Class IV (butter and powdered
milk). 7 C.F.R. § 1000.40. Each class of milk commands a
different price. Id. § 1000.50. Though handlers pay for raw
milk based on the uses to which they put it, id. §§ 1001.60,
1001.71, producers ultimately receive a uniform "blend" price
based on the percentage of milk used in each class throughout
the marketing area, id. §§ 1001.72-1001.73. The purpose of this
pooling mechanism is to ensure that all producers selling milk
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into a particular federal order area receive a uniform minimum
price for their milk regardless of the milk's end use. See 7
U.S.C. § 608c(5)(B)(ii); see also West Lynn, 512 U.S. at 189 n.1
(discussing computation of blend price).
Another important aspect of the federal order system
relates to geography. The minimum price is subject to an
adjustment based on the location of the handler's plant. See 7
C.F.R. § 1000.52 (table of price differentials arranged by
county). These location adjustments recognize the fact that
handlers holding milk near areas of high consumption have a more
valuable commodity than handlers holding milk out in the
boondocks (who must underwrite the cost of transporting their
milk to population centers). Lansing Dairy, 39 F.3d at 1344-45.
Thus, for example, in the Northeast Marketing Area, handlers
near Boston pay more for raw milk than handlers in outlying
rural communities.
B. Maine Regulation.
Under the Maine Milk Commission Act, Me. Rev. Stat.
Ann. tit. 7, §§ 2951-2963, the Commission is authorized to set
minimum prices anent Maine milk. Id. § 2954(1). The minimum
price that Maine handlers3 must pay to Maine producers for milk
3The Maine statute uses the term "dealer" instead of
"handler," Me. Rev. Stat. Ann. tit. 7, § 2951(4), but, for
simplicity's sake, we use the latter term throughout this
-5-
sold within Maine usually is comparable to the prevailing
federal price in southern New England, plus any premium the
Commission decides is appropriate to reflect the added cost of
producing Maine milk. Id. § 2954(2)(A). The minimum price that
the Commission sets is uniform throughout the state, without any
location adjustments. Maine handlers make payments at (or
above) the Maine minimum directly to the producers with whom
they deal. Id. § 2954-A(1).
Maine producers sell milk not only into the Maine
market, but also into the federal order area. Because an
inordinately high percentage of milk that stays in Maine is used
as Class I drinking milk, Maine producers selling into the Maine
market historically received higher prices for their milk than
Maine producers selling into the federal order area. To
counteract this phenomenon, the Maine legislature in 1983 passed
the Maine Milk Pool Act, Me. Rev. Stat. Ann. tit. 7, §§ 3151-
3156. This law requires that all Maine producers ultimately
receive the same blend price (based on overall usage in the
federal market). Id. § 3151. Maine handlers who have a higher
Class I utilization than the federal average pay that difference
into the Maine Milk Pool. Id. § 3153(2). The funds in the
opinion.
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Maine Milk Pool are distributed among all Maine producers, thus
equalizing the prices received for Maine milk. Id. § 3153(4).
C. The Federal/State Interface.
The case at bar arises from the interaction of these
two regulatory systems. A handler that sells a stipulated
percentage of its milk into the Northeast Marketing Area — the
figure, once ten percent, is now twenty-five percent — becomes
a fully federally regulated handler, even if it is located
outside the area. 7 C.F.R. § 1001.7(a). Being fully federally
regulated means that a handler must pay no less than the federal
minimum price on all the milk that it receives at its plant and
must contribute to the federal pool that equalizes the price
paid to producers for milk put to divergent uses. Id. §§
1001.71, 1001.73.
In 1990, H.P. Hood, one of the first Maine handlers to
become fully federally regulated, simultaneously stopped making
payments into the Maine Milk Pool and started making payments
into the federal pool. Maine brought suit in a state court to
compel Hood to continue paying into the Maine Milk Pool. In an
unpublished rescript dated September 16, 1991, a state superior
court judge ruled that the Maine Milk Pool Act did not apply to
fully federally regulated Maine handlers. From then on,
federally regulated handlers in Maine turned a cold shoulder to
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the Maine Milk Pool. Hood, however, continued to comply with
Maine's minimum price requirement.
Grant is a Maine corporation that owns and operates a
fluid milk bottling plant in Bangor, Maine. In 1997, Grant for
the first time began selling enough milk into the Northeast
Marketing Area to become fully federally regulated. When that
occurred, Grant informed the Commission that it did not consider
itself bound to pay its Maine producers the Maine minimum price,
but would pay them instead the federal minimum (location
adjusted to Bangor). The Commission disagreed, maintaining that
Grant, notwithstanding its federally regulated status, was
obligated to pay the Maine minimum. In a preemptive strike,
Grant brought suit in Maine's federal district court challenging
the authority of state officials to enforce the Maine minimum in
these circumstances.
The district court, in an interlocutory order, found
it "reasonably clear" that Maine's statute did not authorize the
Commission to require a fully federally regulated handler to
honor Maine's minimum pricing. Grant's Dairy, Inc. v.
McLaughlin, 20 F. Supp. 2d 112, 116-18 (D. Me. 1998). Within
months, however, the Maine legislature passed "An Act to Clarify
the Authority of the Maine Milk Commission," Me. Rev. Stat. Ann.
tit. 7, § 2954(9) ("the Clarification Act"). This legislation
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cleared away the mist and made it plain that Maine intended to
require its fully federally regulated handlers to pay the Maine
minimum price to Maine producers for milk destined to be sold
within the state.4 With the meaning of the Maine Milk Commission
Act clarified, the district court, ruling on cross-motions for
summary judgment, determined that Maine's system passed
constitutional muster. This appeal ensued.
II. ANALYSIS
In simplified form, Grant's principal contentions are
that Maine's statutory scheme (1) contravenes the Supremacy
Clause because its state-wide uniform milk price neutralizes the
effect of the federal location adjustments, and (2) offends the
dormant Commerce Clause because it discriminates against
interstate commerce. As a subset of the latter argument, Grant
says that, at the very least, there are genuine issues of
material fact relating to whether the benefits of the
4The Clarification Act provides in pertinent part:
[M]inimum wholesale prices paid by dealers to
producers for their milk that is sold in this State
are subject to the minimum producer prices established
by the Maine Milk Commission, regardless of whether
the dealer is subject to federal milk pricing
regulation in addition to state milk pricing
regulation.
Me. Rev. Stat. Ann. tit. 7, § 2954(9) (footnote omitted).
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legislation justify its burdens. After delineating the standard
of review, we turn to these points.
A. Standard of Review.
A district court may order summary judgment "if the
pleadings, depositions, answers to interrogatories, and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law."
Fed. R. Civ. P. 56(c). The inner workings of the summary
judgment model are familiar:
Once a properly documented motion has
engaged the gears of Rule 56, the party to
whom the motion is directed can shut down
the machinery only by showing that a
trialworthy issue exists. As to issues on
which the summary judgment target bears the
ultimate burden of proof, she cannot rely on
an absence of competent evidence, but must
affirmatively point to specific facts that
demonstrate the existence of an authentic
dispute. Not every factual dispute is
sufficient to thwart summary judgment; the
contested fact must be "material" and the
dispute over it must be "genuine." In this
regard, "material" means that a contested
fact has the potential to change the outcome
of the suit under the governing law if the
dispute over it is resolved favorably to the
nonmovant. By like token, "genuine" means
that the evidence about the fact is such
that a reasonable jury could resolve the
point in favor of the nonmoving party . . .
.
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McCarthy v. Northwest Airlines, Inc., 56 F.3d 313, 315 (1st Cir.
1995) (citations and some internal quotation marks omitted).
Where, as here, summary judgment has been granted, the court of
appeals reviews the matter de novo, regarding the record and all
reasonable inferences therefrom in the light most hospitable to
the party who lost below. Houlton Citizens' Coalition v. Town
of Houlton, 175 F.3d 178, 184 (1st Cir. 1999); Garside v. Osco
Drug, Inc., 895 F.2d 46, 48 (1st Cir. 1990).
B. The Supremacy Clause.
Grant maintains that, as applied to it, Maine's
statutory scheme is preempted under the Supremacy Clause. See
U.S. Const. art. VI, cl. 2 (declaring that federal law "shall be
the supreme Law of the Land . . . any Thing in the Constitution
or Laws of any State to the Contrary notwithstanding").
Congressional intent is the touchstone of preemption analysis.
Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516 (1992);
English v. General Elec. Co., 496 U.S. 72, 78-79 (1990).
Moreover, in undertaking such analyses courts "start with the
assumption that the historic police powers of the States [are]
not to be superseded by . . . Federal Act unless that [is] the
clear and manifest purpose of Congress." Rice v. Santa Fe
Elevator Corp., 331 U.S. 218, 230 (1947).
-11-
Federal law may preempt state law either expressly or
by implication. Express preemption occurs only when a federal
statute explicitly confirms Congress's intention to preempt
state law and defines the extent of that preclusion. English,
496 U.S. at 78-79. Implied preemption can occur in one of two
ways: field preemption or conflict preemption. Massachusetts
Ass'n of HMOs v. Ruthardt, 194 F.3d 176, 179 (1st Cir. 1999).
Field preemption occurs when a federal regulatory scheme is so
pervasive as to warrant an inference that Congress did not
intend the states to supplement it. Gade v. National Solid
Wastes Mgmt. Ass'n, 505 U.S. 88, 98 (1992). Conflict preemption
takes place either when compliance with both state and federal
regulations is impossible or when state law interposes an
obstacle to the achievement of Congress's discernible
objectives. Id.
In this appeal, Grant does not maintain that Congress
preempted the field of milk pricing regulations or that
simultaneous compliance with both the federal and state milk
pricing schemes is infeasible. Instead Grant argues that, while
the AMAA allows complementary state regulation of milk prices,
the Maine Milk Commission Act, as clarified, frustrates
Congress's core objectives. This frustration occurs, Grant
tells us, because Maine's uniform state-wide price neutralizes
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the carefully calibrated federal system of location adjustments.
After all, the federal scheme recognizes that raw milk has
different values at different locations and strives to equalize
producer revenue and promote handler equity by means of location
adjustments. In Grant's view, when Maine forces a federally
regulated handler to pay a flat, state-wide minimum price in
excess of the location-adjusted federal price, it impairs the
accomplishment of these federal objectives.
The theoretical underpinnings of this argument are
impeccable. The "obstacle to accomplishment" branch of implied
preemption doctrine came into clear focus in Hines v.
Davidowitz, 312 U.S. 52 (1941), in which the Court stated that
inquiries into preemption are designed, inter alia, to determine
whether "under the circumstances of [the] particular case,
[state] law stands as an obstacle to the accomplishment and
execution of the full purposes and objectives of Congress." Id.
at 67. The Hines Court emphasized the contextual nature of such
questions. See id. at 68. We take that cue and, recognizing
the salience of context, undertake a search for the objectives
that underlie the federal location adjustment system.
We start by considering the generic objectives of
federal milk price regulation. The AMAA makes clear that
achieving price parity for producers, 7 U.S.C. § 602(1), and
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ensuring the orderly supply of agricultural commodities (thereby
promoting the mutual interests of producers and consumers), id.
§ 602(4), are among the relevant goals of the legislation. The
statutory mandate that the Secretary adjust milk prices to
"reflect [economic] factors, insure a sufficient quantity of
pure and wholesome milk to meet current needs and further to
assure a level of farm income adequate to maintain productive
capacity sufficient to meet anticipated future needs," id. §
608c(18), also must be factored into the mix. We therefore
agree with the Court of Appeals for the District of Columbia
Circuit that the objectives of federal milk price regulation,
generally, are "to guarantee producers parity prices, to protect
the health and purses of consumers, to establish and safeguard
orderly marketing conditions, and to assure to each area of the
country a sufficient quantity of pure and wholesome milk."
Schepps Dairy, Inc. v. Bergland, 628 F.2d 11, 19 (D.C. Cir.
1979) (internal citations and quotation marks omitted).
We next move from the general to the specific.
Gleaning information about the policies behind the federal
location adjustment regime requires us to canvass statements by
the United States Department of Agriculture (USDA) germane to
that issue. According to the USDA, location adjustments are
appropriate because "milk value varies by location." 64 Fed.
-14-
Reg. 16,117 (1999). As Justice Harlan explained: "Delivery to
a plant located nearby the consumer market is, of course,
advantageous to the handler and the producer is compensated for
this service. . . . Conversely, depositing milk at handlers'
plants in outlying districts results in a negative adjustment."
Zuber v. Allen, 396 U.S. 168, 178 n.11 (1969). While the USDA
later identified handler equity with regard to raw product costs
as a goal of its matrix of location adjustments, see 64 Fed.
Reg. 16,109 (1999), the main thrust of the adjustments is to
ease the movement of raw milk from areas in which the supply is
plentiful to areas in which the supply is short. See Lansing
Dairy, 39 F.3d at 1344.
Having catalogued the relevant federal objectives, we
next inquire whether Maine's non-location-adjusted minimum price
clearly conflicts with those objectives. E.g., English, 496
U.S. at 79 (stating that preemption is not to be implied absent
a clear conflict); Rice v. Norman Williams Co., 458 U.S. 654,
659 (1982) (requiring an irreconcilable conflict as a condition
precedent for preemption, not just a hypothetical or potential
conflict). Maine's pricing scheme conflicts with neither the
AMAA's overarching purposes (namely, achieving parity in
producer prices and ensuring an orderly supply of commodities)
nor the goals of federal milk price regulation (namely,
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achieving price equality for producers, safeguarding orderly
market conditions, and assuring a sufficient milk supply). The
Maine minimum promotes price equality for Maine dairy farmers
without in any way detracting from the orderliness of the
market. Furthermore, it contributes to the promotion of an
adequate supply of milk by assuring Maine producers of a steady,
predictable income stream (which in turn encourages production).
In arguing that Maine's uniform minimum price
frustrates federal objectives, Grant emphasizes that the state
system requires it to pay its Maine producers the same price
paid by its Maine-based competitors to the south (who are
situated closer to the more densely populated urban areas), with
no adjustment for its incrementally higher transportation costs.
If the federal system alone were in place, Grant's thesis runs,
it would pay producers less than handlers do in southern Maine,
thereby offsetting its greater transportation costs. Thus, one
effect of the Maine minimum price is to make Grant's sales in
southern Maine less profitable than those of its competitors.
We understand Grant's consternation and, to some
extent, we sympathize with it. But federal location adjustments
were not designed to compensate handlers with perfect fairness.
In Schepps Dairy, the court rejected a handler's claim that
certain federal location adjustments were invalid because they
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did not fully cover actual transportation costs. 628 F.2d at
19. The court found that requiring federal location adjustments
to reflect exact transportation costs would not be feasible and
would countervail the plain meaning of the AMAA. Id. at 18-19.
The same principle applies here: although the Maine minimum
does not take into account handlers' differing transportation
costs, that failure alone does not bring the state scheme into
clear conflict with the federal regime — a regime that does not
require location adjustments to mirror actual transportation
costs.
Nor is Grant's case enhanced by its repeated reference
to 7 U.S.C. § 608c(5)(A). That proviso calls for uniform prices
"as to all handlers, subject only to adjustments for (1) volume,
market, and production differentials customarily applied by the
handlers subject to such order, (2) the grade or quality of the
milk purchased, and (3) the locations at which delivery of such
milk, or any such classification thereof, is made to such
handlers." Id. This is not a statement of policy, but merely
a limitation on the adjustments that the USDA may apply to the
minimum prices that handlers are required to pay. See Zuber,
396 U.S. at 183 (describing congressional intent to confine the
boundaries of the Secretary's delegated discretion). In all
events, the language of this statute ("subject to adjustments")
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has been interpreted authoritatively to mean that such
adjustments are precatory, not obligatory. Schepps Dairy, 628
F.2d at 18-19. That eliminates any potential Supremacy Clause
problem: since location adjustments are permissive under the
federal policy, there is no direct conflict between that policy
and Maine's uniform minimum price.
In an effort to resurrect this facet of its claim,
Grant posits that, whether or not location adjustments are
mandatory, federal policy favors equitable prices for handlers
(as opposed to strictly uniform prices). This argument misses
the mark. To the extent that federal location adjustments
reflect a policy of equalizing raw product costs to handlers,
that policy serves the goal of enabling handlers to compete for
available milk supplies on an equitable basis. 64 Fed. Reg.
16,109-10 (1999). But Grant has presented no evidence that
Maine's minimum price regulation disables it from competing for
milk supplies. In fact, Grant told the court below that if it
were to pay the Maine minimum, its producers would net the
highest profits in the state, given their low transportation
costs. This would make Grant, in effect, a preferred purchaser
and ensure its supply of raw milk. Consequently, as applied to
Grant, the Maine minimum does not clash with the perceived
federal goal.
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Three other particulars bolster our conclusion that no
significant conflict exists between Maine's uniform minimum
price and its federal counterpart. First, the Supreme Court
noted in its most recent milk regulation case that "[t]he
federal order does not prohibit the payment of prices higher
than the established [federal] minima." West Lynn, 512 U.S. at
189 n.1. This is at least some indication that prices higher
than the federal minima are not fundamentally incompatible with
the objectives of the federal regulatory scheme.
Second, there is circumstantial evidence that the
Secretary regards Maine's regime as consistent with the policies
of the AMAA. When the federal order system was restructured,
see supra note 2, Maine could have been added as part of the
Northeast Marketing Area. In declining to do so, the Secretary
reasoned:
Maine has been and continues to be
excluded from Federal order regulation . . .
because of its geographic separation from
other areas, its long history of successful
milk marketing regulation, and the limited
impact of its pricing system on other
regulated areas.
There appears to be little reason to
add the State of Maine to the consolidated
Northeast order area. Maine handlers with
significant distribution in the Federal
order areas can be and are pooled under
Federal orders, limiting the extent of any
competitive advantage. Inclusion of Maine-
regulated handlers in the consolidated
marketing area would have little effect on
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handlers' costs of Class I milk (or might
reduce them), and would reduce returns to a
few producers. When not pooled under
Federal orders, Maine handlers are subject
to minimum prices paid for milk, and
producers are assured minimum prices in
payment for milk. There is no compelling
reason to extend Federal order regulation to
encompass this State-regulated marketing
area.
64 Fed. Reg. 16,056 (1999). We think that this very recent
decision is important in two ways. For one thing, it implies
federal approval of Maine's non-location-adjusted method of
pricing Maine milk and demonstrates the Secretary's sense of
satisfaction that Maine's in-state regulation is an appropriate
response to its unique geographic situation. For another thing,
the decision suggests a belief on the Secretary's part that
Maine's uniform minimum price does not interfere with the
movement of milk in the Northeast Marketing Area.
Finally, the great weight of authority holds that state
regulation of milk prices is not preempted by the extant federal
regime. E.g., Crane v. Commissioner of Dep't of Agric., Food &
Rural Res., 602 F. Supp. 280, 293 (D. Me. 1985); Schwegmann
Bros. Giant Super Mkts. v. Louisiana Milk Comm'n, 365 F. Supp.
1144, 1156-57 (M.D. La. 1973), aff'd, 416 U.S. 922 (1974);
United Dairy Farmers Coop. Ass'n v. Milk Control Comm'n, 335 F.
Supp. 1008, 1014-15 (M.D. Pa. 1971), aff'd, 404 U.S. 930 (1971);
Medo-Bel Creamery, Inc. v. Oregon, 673 P.2d 537, 544 (Or. Ct.
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App. 1983). Against this phalanx, Grant offers us only one case
in which a state milk regulation was held to be preempted by
federal law. That case, Pearce v. Freeman, 238 F. Supp. 947
(E.D. La. 1965), is readily distinguishable.
Pearce dealt with a situation in which Louisiana had
mandated that handlers pay producers a blend price determined by
each individual handler's actual milk usage. Id. at 949-50. In
contrast, federal regulations required handlers to pay producers
a blend price based on market-wide averages of handler milk
usage. Id. at 950-51. Finding the two systems entirely
incompatible — a handler could not adhere to one without
disobeying the other — the Pearce court ruled that the federal
scheme trumped the state regulation. Id. at 955. Since Grant
can comply with both the applicable federal and state
regulations, Pearce lends no support to its Supremacy Clause
claim. See id. at 950 (observing, in dictum, that Louisiana's
minimum prices, which were higher than federal minimum prices,
"caused no difficulty as both were minimum rather than maximum
prices").
To say more on the Supremacy Clause challenge would be
supererogatory. Preemption is strong medicine, not casually to
be dispensed. Ruthardt, 194 F.3d at 178-79. Although Grant
chants the conventional "obstacle to accomplishment" mantra, it
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does not point to the kind of clear conflict that would warrant
such a finding, or even to a genuine issue of material fact
concerning that point. We therefore conclude that the lower
court correctly rejected Grant's Supremacy Clause challenge.
C. The Commerce Clause.
The Constitution cedes to Congress the power "[t]o
regulate Commerce . . . among the several States." U.S. Const.
art. I, § 8, cl. 3. This power includes a negative aspect,
known as the dormant Commerce Clause, "that prevents state and
local governments from impeding the free flow of goods from one
state to another." Houlton, 175 F.3d at 184. The dormant
Commerce Clause prohibits protectionist state regulation
designed to benefit in-state economic interests by burdening
out-of-state competitors. Fulton Corp. v. Faulkner, 516 U.S.
325, 330 (1996); New Energy Co. v. Limbach, 486 U.S. 269, 273-74
(1988).
The Supreme Court most recently addressed the question
of whether state milk price regulation violated the dormant
Commerce Clause in West Lynn Creamery, Inc. v. Healy, 512 U.S.
186 (1994). We construct our analytic framework based on the
blueprint provided by Justice Stevens's majority opinion,
"eschew[ing] formalism for a sensitive, case-by-case analysis of
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purposes and effects." Id. at 201. Using this flexible
approach, we must determine whether the challenged state
statute, as a practical matter, discriminates against interstate
commerce. Id. The question, then, is simply this: Does the
Maine Milk Commission Act treat in-state and out-of-state
economic interests differently in ways that help the former and
hamper the latter?
Rather than letting the cream rise to the top, Grant
presents us with a bewildering array of reasons why the Maine
law ostensibly violates the dormant Commerce Clause. To
facilitate discussion, we divide these reasons into four groups.
1. Direct Regulation of Interstate Commerce. Grant
first contends that, even without a showing of "burden," Maine's
minimum pricing scheme transgresses the dormant Commerce Clause
because it directly regulates interstate commerce. Grant
grounds this contention in the Supreme Court's observation that
"[w]hen a state statute directly regulates or discriminates
against interstate commerce . . . we have generally struck down
the statue without further inquiry." Brown-Forman Distillers
Corp. v. New York State Liquor Auth., 476 U.S. 573, 579 (1986).
But this reference to direct regulation as a basis for
invalidation has not been repeated in subsequent Supreme Court
opinions, e.g., Fulton, 516 U.S. at 330-31; Oregon Waste Sys.,
-23-
Inc. v. Department of Envtl. Quality, 511 U.S. 93, 98-99 (1994),
and it does not fit into the West Lynn framework. See West
Lynn, 512 U.S. at 201 (directing inquiring courts to look for
discriminatory "purposes and effects"). Given that the Brown-
Forman Court itself conceded that "the critical consideration
[in a dormant Commerce Clause analysis] is the overall effect of
the statute on both local and interstate activity," 476 U.S. at
579, we rebuff Grant's attempt to forge a new mode of analysis.
In all events, even were we to give credence to the
Brown-Forman dictum, Grant's "direct regulation" claim fails to
raise a genuine issue of material fact sufficient to undermine
the lower court's entry of summary judgment. Extrapolating from
the fact that the Secretary has declared that all milk acquired,
processed, and sold by fully federally regulated handlers is in
the current of interstate commerce, 64 Fed. Reg. 47,899 (1999),
Grant claims that any state oversight of a fully federally
regulated handler's milk (including regulation of milk that
never leaves the state in which it is produced) is invalid. To
shore up this extreme proposition, Grant cites two cases,
namely, United States v. Wrightwood Dairy Co., 315 U.S. 110
(1942), and Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935).
Neither case lends support.
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Wrightwood Dairy held that the Commerce Clause gives
Congress the authority to regulate purely intrastate
transactions as long as those transactions affect interstate
commerce. 315 U.S. at 125. Nothing in the Court's opinion
intimates that a State may not regulate in areas that touch upon
interstate commerce. So, too, Baldwin — a case that arose
following New York's passage of a law that prohibited the in-
state sale of milk produced beyond its borders unless the out-
of-state dairy farmers were paid the minimum prices established
by New York for its own producers. 294 U.S. at 519. In
striking down the law, the Court analogized the situation to the
placement of a tariff or duty on out-of-state milk as it entered
New York. Id. at 521-22. Baldwin stands for the proposition
that a state law which burdens interstate commerce is invalid.
It does not stand for the markedly different proposition that
federal and state regulations can never apply to the same
product.
That ends this aspect of the matter. The bare fact
that all of Grant's milk is federally regulated is simply not
enough to render concurrent state regulation of some of its milk
unconstitutional. Cf. 7 U.S.C. § 610(i) (recognizing the
coexistence of federal and state regulation of agriculture and
agricultural products).
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In a variation on this theme, Grant seems to assert
that Maine has violated the dormant Commerce Clause by
regulating the milk that Grant sells across state lines. This
assertion depends upon the validity of Grant's allegations that
Maine credits federally required payments on both in-state and
out-of-state milk when it calculates a fully federally regulated
handler's state obligation. By so doing, Grant says, the State
enforces the federal minimum on its out-of-state sales. Even
though this enforcement admittedly has no discriminatory effect
— after all, the price Maine credits is identical to the federal
requirement — Grant insists that the practice abridges the
dormant Commerce Clause.
The most glaring problem with this line of reasoning
is that it misrepresents Maine's method of calculating a fully
federally regulated handler's state obligation. The record
reveals that Maine bases its calculations on the amount of milk
a fully federally regulated handler sells within the state,
multiplying in-state sales by the Maine minimum. In-state sales
are then multiplied by the federal minimum, and the second
number is subtracted from the first. The difference is the
amount the handler owes Maine producers. 5 For aught that
5
To illustrate, assume that a handler bought all its milk in
Maine and then sold 100 units in Maine, with the Maine price set
at $1.00 and the federal price set at 80¢. The ensuing
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appears, Grant's assertion that Maine credits a handler's out-
of-state sales in computing the handler's state obligation is
constructed out of whole cloth.6
2. Discrimination Against Interstate Commerce. The
courts have invalidated state statutes that overtly discriminate
against interstate commerce with a regularity that borders on
the monotonous. E.g., Oregon Waste, 511 U.S. at 108; New
Energy, 486 U.S. at 280. Grant attempts to demonstrate three
times over that Maine's minimum pricing trips this wire.
Initially, Grant attacks Maine's method of computing
its state obligation, arguing that the method results in a
higher assessment against Grant than against handlers that make
only in-state sales. This argument draws its essence from the
Commission's letter to Grant, dated April 10, 1998, pegging
Grant's obligation to Maine producers for January 1998 at
$20,409.71. Grant asseverates that this figure was calculated
by reference to Grant's overall sales, rather than by reference
calculation would run as follows: $100 of in-state sales at the
Maine minimum, minus $80 that would have been paid on in-state
sales at the federal minimum but for the overriding Maine
minimum, leaving $20 owed to the handler's Maine producers (to
be shared pro rata among them).
6 We hasten to add that even if Maine used a figure derived
from a fully federally regulated handler's out-of-state sales at
the federal minimum in some of its calculations, merely
acknowledging that federal obligation is not the same as
enforcing it.
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to its in-state sales, and that the resulting assessment is
higher than it would have been had Maine based its calculation
solely on Grant's in-state sales.7
Taking Grant's factual predicate as true, its claim
nonetheless founders. The January 1998 bill was not paid as
presented, and the Commission has confessed error in the
methodology used to calculate it. Moreover, the Commission
asserts, without contradiction, that the faulty methodology has
been discarded and that fully federally regulated handlers'
obligations now are calculated using a formula that involves
multiplying Maine Class I sales by Maine Class I minimum prices,
less the product of Maine Class I sales and the applicable
federal order minimum price. Grant has neither adduced evidence
to disprove these facts nor explained how the Commission's
revised formula burdens interstate commerce. That puts the cork
in the bottle: Grant cannot prevail prospectively based on an
outdated mistake, since corrected.
7 Maine apparently assigned a value of $1,371,510 to Grant's
total purchases of 93,280.22 hundredweights of milk. It added
a premium of 25¢ per hundredweight to Grant's net sales (gross
sales minus milk purchased from other handlers) of 87,940.38
hundredweights. The total premium added, therefore, was
$21,985, and the total of the assigned value plus the premium
was $1,393,495. Maine then seems to have given Grant a credit
of $1,373,085 ($14.72 per hundredweight) to arrive at the amount
of the underpayment.
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Grant's second theory of a burden on interstate
commerce concerns the alleged impact of the Maine minimum on its
ability to compete in certain metropolitan areas. This argument
derives primarily from geography. Because Maine's minimum
pricing does not take into account a handler's transportation
costs, Grant is at a competitive disadvantage relative to
handlers located in southern Maine with respect to intrastate
sales in Maine's more populous urban areas (e.g., Portland).
Grant claims that this disadvantage ultimately burdens
interstate commerce because it impedes Grant's effectiveness in
selling milk into border areas (e.g., Portsmouth, N.H.) where
the federal minimum price applies.
This claim of lessened distribution efficiency
contemplates, at most, a roundabout kind of burden on interstate
commerce, arising as a side effect of what Grant reasonably
perceives as a burden imposed by Maine law on intrastate
commerce. To substantiate it, Grant must show a "differential
treatment of in-state and out-of-state economic interests that
benefits the former and burdens the latter." Oregon Waste, 511
U.S. at 99. Virtually by definition, such a showing demands a
comparison between two classifications. Bacchus Imports, Ltd.
v. Dias, 468 U.S. 263, 273 (1984). Accordingly, Grant must show
that handlers subject to both federal and state regulation (as
-29-
is Grant) are disadvantaged in their endeavors to compete beyond
Maine's borders relative to handlers who are subject only to
state regulation.
Grant's effort to establish this set of facts fails.
Both types of handlers must pay the Maine minimum price on Maine
milk. Moreover, to the extent that the uniform state-wide price
means that transportation costs to distant markets will erode
profits, both groups are equally disadvantaged. The only
difference is that the handlers who are subject only to state
oversight sell less of their milk (under twenty-five percent)
into the federal order area. In short, Maine's minimum price
treats in-state and out-of-state economic interests
evenhandedly.
This scenario is a far cry from West Lynn, the
precedent to which Grant repeatedly alludes. There,
Massachusetts imposed a tax on all milk sold to in-state
retailers (regardless of whether that milk was produced in or
out of state) and then distributed the proceeds exclusively to
Massachusetts producers. West Lynn, 512 U.S. at 188. Because
Massachusetts producers got money back, the tax effectively
applied to out-of-state producers only, and had the effect of
allowing Massachusetts producers, despite their higher initial
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costs, to sell at prices below those charged by out-of-state
producers. Id. at 194-95.
To be sure, Maine's statutory scheme makes an in-
state/out-of-state distinction — out-of-state handlers, unlike
in-state handlers, do not have to pay the Maine minima.
Nevertheless, this distinction is irrelevant for Commerce Clause
purposes because it does not advantage Maine handlers at the
expense of out-of-state handlers. Quite the contrary: it is
Maine handlers (whether fully federally regulated or not) and,
by extension, Maine consumers, who shoulder a burden for the
benefit of Maine producers. Stripped of rhetorical flourishes,
Grant's argument is nothing more than a lament that the Maine
minimum burdens it relative to fully federally regulated
handlers located in southern Maine. This lament should be
addressed to the Maine legislature, not to the federal courts.
The dormant Commerce Clause does not protect intrastate
competition, but, rather, safeguards interstate markets from
discriminatory regulation. Exxon Corp. v. Governor of Maryland,
437 U.S. 117, 127-28 (1978).
Grant's final "discriminatory effect" theorem posits
that the Maine minimum encourages producers to ship to the
nearest market within Maine, thus discouraging them from selling
across state lines. Grant adds that the Maine minimum similarly
-31-
discourages producers from selling to handlers engaged in
substantial interstate distribution because the more milk the
handler sells out of state, the lower the revenue to the
producer. On these bases, Grant hypothesizes that Maine's
statutory scheme impermissibly keeps milk from leaving the
state.
The Commerce Clause looks askance at state resource-
hoarding. E.g., Chemical Waste Mgmt., Inc. v. Hunt, 504 U.S.
334, 339-41 (1992); Hughes v. Oklahoma, 441 U.S. 322, 338
(1979). Thus, Grant's point, taken in the abstract, possesses
an aura of plausibility. As applied here, however, the
resource-hoarding theory simply does not fit.
In the first place, the suggestion of resource hoarding
contradicts Grant's admission to the district court that, with
the Maine minimum in place, Grant finds it more profitable to
sell milk out of state than in most in-state markets. As this
admission demonstrates (and as the district court explicitly
found), the Maine minimum appears to encourage, rather than
discourage, interstate commerce. In the second place, Grant's
argument about producers' incentives to sell to handlers with
the smallest percentage of interstate distribution is woven out
of the gossamer strands of speculation and surmise, unsupported
by even the slimmest evidentiary thread. Grant has not shown
-32-
that it has difficulty buying milk or that it is losing
producers to handlers who do not sell into interstate markets.
If more were needed — and we doubt that it is —
precedent strongly suggests that Grant's argument is without
merit. Courts routinely have confirmed that state minimum milk
prices (all of which presumably have the effect of insuring an
in-state milk supply) do not offend the Commerce Clause. E.g.,
Highland Farms Dairy, Inc. v. Agnew, 300 U.S. 608, 614-16 (1937)
(rejecting Commerce Clause challenge to Virginia statute setting
minimum prices for milk within state); Marigold Foods, Inc. v.
Redalen, 809 F. Supp. 714, 722 (D. Minn. 1992) (asserting in
Commerce Clause context that "Minnesota has a right to set
minimum prices for milk produced and sold by dairy farmers
located within its borders"); Barber Pure Milk Co. v. Alabama
State Milk Control Bd., 156 So. 2d 351, 355 (Ala. 1963)
(upholding state minimum milk price against Commerce Clause
challenge); School Dist. v. Pennsylvania Milk Mktg. Bd., 683
A.2d 972, 976 (Pa. Commw. Ct. 1996) (concluding that in-state
minimum milk price did not violate Commerce Clause).
In the seminal case on this subject, the Supreme Court
ruled that a Pennsylvania statute which set the price
Pennsylvania handlers paid Pennsylvania producers for all milk
(even milk ultimately shipped to other states) did not
-33-
transgress the Commerce Clause. Milk Control Bd. v. Eisenberg
Farm Prods., 306 U.S. 346, 349-51 (1939). The Court concluded
that the minimum price did not create a barrier to interstate
commerce because the state did not "essay to regulate or to
restrain the shipment of the respondent's milk into New York or
to regulate its sale or the price at which respondent may sell
it in New York." Id. at 352. The case before us fits
comfortably within this mold: Maine imposes no restriction on
the sale of milk out of state and does not attempt to regulate
the price at which Maine-produced milk is sold in other venues.
See Maine Milk Comm'n v. Cumberland Farms N., 205 A.2d 146, 154
(Me. 1964) (finding that Maine's milk price regulation does not
offend the Commerce Clause because it "does not attempt to
control the price paid for milk purchased outside of Maine, or
the sales price outside this state of milk produced here").
The cases Grant cites in connection with its resource-
hoarding claim are inapposite. Those cases concern situations
in which a state either has blocked out-of-staters' access to an
in-state resource, e.g., Philadelphia v. New Jersey, 437 U.S.
617, 628 (1978), or has taken an affirmative step to prevent the
export of a state resource, e.g., H.P. Hood & Sons v. DuMond,
336 U.S. 525, 528-29 (1949). The Maine Milk Commission Act
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contains no such vice. It neither erects barriers to access nor
inhibits exports.
3. Discriminatory Purpose. It is a commonsense
proposition that the purpose of a statute is relevant to a
Commerce Clause analysis. See West Lynn, 512 U.S. at 194; see
also Chemical Waste, 504 U.S. at 344 n.6 (explaining that a
finding of impermissible economic protectionism may be made on
the basis of a discerned discriminatory purpose). Grant
attempts to invoke this proposition, suggesting that Maine's
statutory scheme is invalid because it was designed with a
discriminatory purpose. It relies on four pieces of evidence.
The first is a statement mined from the State's brief in an
earlier case to the effect that allowing Maine handlers to
decide on a monthly basis whether they will be federally
regulated or state regulated would create "economic chaos in the
State's dairy industry." The second consists of a comment made
at oral argument in the same case that the State perceived a
handler becoming federally regulated as being "potentially
disruptive to the State's dairy industry." The third is a
newspaper article in which the Commissioner (a defendant here)
is quoted as saying that Grant's decision to become fully
federally regulated and its refusal to pay the Maine minimum
"shakes the entire system." The fourth is a statement by a
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state functionary calling the Clarification Act "essential to
the stability of an industry undergoing considerable change."
Grant's suggestion that we draw an inference of
protectionist intent from this meager collection of statements
— the first two of which were made in the context of Maine Milk
Pool litigation, not in the context of minimum pricing —
elevates hope above reason. We hold this view notwithstanding
that the summary judgment praxis requires us to evaluate the
evidence in the light most favorable to Grant. See Houlton, 175
F.3d at 184. Despite the generosity of this standard,
"conclusory allegations, improbable inferences, and unsupported
speculation" are entitled to no weight. Medina-Munoz v. R.J.
Reynolds Tobacco Co., 896 F.2d 5, 8 (1st Cir. 1990).
That principle applies here: on their face, the cited
statements seem to be innocuous expressions of concern anent the
stability of the Maine dairy industry in the face of significant
change. Fairly read, they are consistent with the stated
purposes of Maine's minimum price law, which is aimed at
"insuring . . . an adequate supply of pure and wholesome milk to
the inhabitants of this State," Me. Rev. Stat. Ann. tit. 7, §
2954(2), and at stabilizing prices to producers, see id., §
2954(9). Interpreting the statements in a more sinister fashion
would require a leap of faith that we are unwilling to
-36-
undertake. The bottom line, then, is that Grant has not
presented competent evidence to substantiate its conclusory
allegation of discriminatory purpose. See Cadle Co. v. Hayes,
116 F.3d 957, 960, 962 (1st Cir. 1997) (stating and applying
principle that a party having the burden of proof must present
evidence that is "significantly probative," not merely
colorable, to thwart summary judgment).
4. Incidental Effects. Grant tries to pull one last
rabbit from the hat. Shifting away from arguments based on
discriminatory purpose and effect, it contends that even if
Maine's regulations only indirectly burden interstate commerce,
there is a genuine issue of material fact as to whether those
burdens outweigh the benefit conferred by the Maine Milk
Commission Act. This contention, which calls for an application
of what has come to be known as the Pike balancing test, see
Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970); see also
Houlton, 175 F.3d at 185, stands on uncertain legal terrain.
The case-by-case approach described in West Lynn focuses on an
"analysis of purposes and effects." 512 U.S. at 201. In
earlier cases, however, the Court addressed dormant Commerce
Clause questions in a somewhat different way, asking, inter
alia, whether the challenged law "regulates evenhandedly with
only 'incidental' effects on interstate commerce . . ." Oregon
-37-
Waste, 511 U.S. at 99. The answer to this question determined
the level of scrutiny to be applied. Id. It is unclear whether
the Court intended the West Lynn approach to supplant, or merely
to complement, the analytic structure typified by Oregon Waste.
We need not resolve this enigma today. Instead, we
address the Pike balancing test on the merits. In doing so, we
begin with a recitation of the test itself. "Where [a] statute
regulates evenhandedly to effectuate a legitimate local public
interest, and its effects on interstate commerce are only
incidental, it will be upheld unless the burden imposed on such
commerce is clearly excessive in relation to the putative local
benefits." Pike, 397 U.S. at 142.
Grant has canvassed the possible burden on interstate
commerce created by the Maine statute in meticulous detail.
Despite the valiant efforts of capable counsel, Grant has
identified only two conceivable vulnerabilities: (1) the
alleged distribution inefficiency created in some dual-state
metropolitan areas as a result of Grant's inability to sell milk
profitably in southern Maine; and (2) the alleged tendency of
the Maine minimum price to discourage milk from leaving the
state. These possibilities need not detain us. As our earlier
comments make clear, both of them are unsubstantiated. In
short, Grant's slim showing of an imagined burden does not
-38-
suffice to trigger Pike balancing. Moreover, even were we to
give Grant the benefit of the doubt on that issue, the modest
burdens that it describes obviously are outweighed by the
benefits Maine seeks to secure by imposing minimum prices —
benefits that include ensuring an adequate in-state supply of
milk at reasonable prices and maintaining market stability. See
Me. Rev. Stat. Ann. tit. 7, § 2954(2) & (9). Hence, the
district court did not err when it granted summary judgment for
the defendants on this point.
III. CONCLUSION
We need go no further. Grant's various Supremacy
Clause and Commerce Clause claims are factually unsubstantiated,
legally impuissant, or both. Consequently, the judgment below
must be
Affirmed.
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