West Lynn Creamery, Inc. v. Healy

Background

Two Massachusetts milk dealers, West Lynn Creamery and LeComte’s Dairy, bought and sold fluid milk in the State. The Massachusetts Commissioner declared an emergency after local farmers lost market share to lower‑cost producers in neighboring States and issued a pricing order. The order required every dealer to pay a monthly premium based on the difference between a $15 target price and the federal blend price, with payments tied to Class I (fluid) sales. Although about two‑thirds of the milk sold in Massachusetts was produced out of State, the full fund was distributed only to Massachusetts dairy farmers.

Reasoning

The Court asked whether this scheme unfairly burdens out‑of‑state producers by favoring local farmers. The majority held that it does. Even though the charge applied to all dealers, most of the revenue came from sales of out‑of‑state milk, and the money was rebated only to Massachusetts farmers. That combination functioned like a tariff or targeted subsidy, disadvantaging out‑of‑state producers. The Court rejected arguments that the components were separately lawful, that dealers paying the charge were not competitors, and that local benefits justified the burden.

Real world impact

The ruling stops this specific Massachusetts pricing order and limits similar state programs that raise revenue from general sales but return it only to in‑state producers. Dealers and consumers may avoid added costs tied to such schemes, and out‑of‑state farmers keep stronger access to the Massachusetts market. Because the decision is a constitutional ruling rather than a temporary order, states with similar plans will face legal risk and may need other means to help local agriculture.

Dissents or concurrances

Justice Scalia agreed with the outcome but preferred narrower rules allowing some subsidies; Chief Justice Rehnquist dissented, arguing the State law was a lawful local subsidy.