As part of a complex plan for ridding the State of abandoned
automobiles, a Maryland statute provided that anyone in possession
of an inoperable automobile over eight years old ("hulk") could
transfer it to a licensed scrap processor, who then could claim a
"bounty" from the State for its destruction, without delivery to
the processor or subsequent submission to the State of any
documentation of title. In 1974, the statute was amended to require
a processor to submit title documentation in order to receive a
bounty. But the documentation requirements differ as between a
processor with a plant in Maryland and an out-of-state processor.
The former need only submit an "indemnity agreement" in which an
unlicensed hulk supplier certifies his own right to the hulk and
agrees to indemnify the processor for any third-party claims
arising from its destruction; the non-Maryland processor must
submit either a certificate of title, a police certificate vesting
title, or a bill of sale from a police auction. Appellee is a
Virginia processor participating in the Maryland plan whose supply
of bounty-eligible hulks received from Maryland sources declined
after enactment of the 1974 amendment. Appellee brought suit
claiming that the amendment violated the Commerce Clause, and
denied appellee equal protection of the laws. A three-judge
District Court granted summary judgment for appellee, and enjoined
Maryland from giving further effect to the part of the 1974
amendment that restricts the right to obtain bounties based on
indemnity agreements to Maryland processors only.
1. The amendment does not constitute an impermissible burden on
interstate commerce in violation of the Commerce Clause. Pp.
426 U. S.
(a) Maryland's amendment of its statute was not the kind of
action with which the Commerce Clause is concerned. Maryland has
not sought to prohibit the interstate flow of hulks or to regulate
the conditions under which the flow may occur, but,
Page 426 U. S. 795
rather, has entered into the market itself by offering bounties
to bid up the price of hulks; an impact on interstate commerce has
occurred only because the amendment made it more lucrative for
unlicensed suppliers to dispose of their hulks in Maryland instead
of taking them out of the State. Pp. 426 U. S.
(b) Nothing in the purposes of the Commerce Clause forbids a
State's entry into the market as purchaser of potential articles of
interstate commerce where the State restricts its trade to its own
citizens. Although the practical effect of the 1974 amendment was
to channel the benefits of the bounties to domestic processors, no
trade barrier of the type forbidden by the Commerce Clause impedes
movement of hulks out of the State. Pp. 426 U. S.
2. Nor does the 1974 amendment deny appellee equal protection of
the laws. The amendment's distinction between domestic and foreign
scrap processors, complemented by the reasonable assumptions that
hulks delivered to Maryland processors are likely to have been
abandoned in Maryland, and those delivered to non-Maryland
processors are likely to have been abandoned outside Maryland,
bears a rational relationship to the basic statutory purpose of
using state funds to clear Maryland's landscape of abandoned
automobiles. That is all the Constitution requires in the case of
economic legislation. That Maryland might have furthered its
underlying purpose more artfully, more directly, or more completely
does not warrant a conclusion that the method it chose is
unconstitutional. Pp. 426 U. S.
POWELL, J., delivered the opinion of the Court, in which BURGER,
C.J., and STEWART, BLACKMUN, REHNQUIST, and STEVENS JJ., joined.
STEVENS, J., filed a concurring opinion, post,
426 U. S. 814
BRENNAN, J., filed a dissenting opinion, in which WHITE and
MARSHALL, JJ., joined, post,
p. 426 U. S.
Page 426 U. S. 796
MR. JUSTICE POWELL delivered the opinion of the Court.
This case involves a two-pronged constitutional attack on a
recent amendment to one part of a complex Maryland plan for ridding
that State of abandoned automobiles. The three-judge District Court
agreed with appellee, a Virginia scrap processor that participates
in the plan, that the amendment violated the Commerce Clause and
denied appellee equal protection of the laws. We disagree on both
The 1967 session of the Maryland Legislature commissioned a
study to suggest some way to deal with the growing aesthetic
problem of abandoned automobiles. The study concluded that the root
of the problem was the existence of bottlenecks in the "scrap
cycle," the course that a vehicle follows from abandonment to
processing into scrap metal for ultimate re-use by steel mills. At
its 1969 session, the legislature responded by enacting a
comprehensive statute designed to speed up the scrap cycle by using
state money both as a carrot and as a stick. [Footnote 1
] The statute is intricate, but its
provisions relevant to this case may be sketched briefly.
The legislative study had found that one of the bottlenecks
occurred in the junkyards of wrecking companies, which tended to
accumulate vehicles for the resale value of their spare parts. The
statute's stick designed to clear this bottleneck is a requirement
that a Maryland wrecker
Page 426 U. S. 797
desiring to keep abandoned vehicles on its premises must obtain
a license and pay a recurring fine for any vehicle of a specified
age retained for more than a year. [Footnote 2
] The study had identified as another cause of
sluggishness in the scrap cycle the low profits earned by wreckers
and others for delivering vehicles to scrap processors. The carrot
written into the statute to remedy this problem is a "bounty" paid
by the State for the destruction, by a processor licensed under the
statute, of any vehicle formerly titled in Maryland. [Footnote 3
] When a wrecker licensed under the
statute to stockpile vehicles delivers one of them for scrapping,
it shares the bounty equally with the processor. The processor
receives the entire bounty when it destroys a vehicle supplied by
someone other than a licensed wrecker. [Footnote 4
These penalty and bounty provisions work with elementary laws of
economics to speed up the scrap cycle. The penalty for retention of
vehicles, plus the prospect of sharing the bounty, work in tandem
to encourage licensed wreckers to move vehicles to processors. The
bounties to processors on vehicles from unlicensed suppliers also
encourage those suppliers to deliver to the processors, because the
processors are able to pay higher than normal market prices by
sharing the bounties with them. [Footnote 5
Page 426 U. S. 798
The penalty and bounty provisions, however, did not remove
another impediment to the smooth functioning of the scrap cycle
that was legal, rather than economic, in origin. This was the
possibility of suits for conversion against a processor by owners
who might claim that they had not abandoned their vehicles. To meet
this problem, the statute specified several documents with which a
processor could prove clear title to a vehicle, and required that a
processor obtain one of these documents from its supplier and
submit it to the State as a condition of receiving the bounty. One
of the documents, called a "Wrecker's Certificate," can be given
only by a wrecker licensed under the statute. [Footnote 6
] It is essentially a clear title that
the wrecker secures by following statutory notice procedures at the
time it first obtains a vehicle. Suppliers other than licensed
wreckers must provide some other document -- either a properly
endorsed certificate of title, a certificate from a police
department vesting title in the supplier after statutory notices,
or a bill of sale from a police auction. [Footnote 7
These documentation requirements, although vital for the
protection of processors, are themselves some slight encumbrance
upon the free transfer of abandoned vehicles to processors.
Apparently in recognition of this fact, and the reduced potential
for owners' claims in the case of ancient automobiles, the statute
placed vehicles over eight years old and inoperable ("hulks") into
a special category. Section 11-1002.2(f)(5) of the statute,
Page 426 U. S. 799
as originally enacted, provided, in substance, that anyone in
possession of a hulk could transfer it to a scrap processor, and
the processor could claim a bounty for its destruction, without
delivery to the processor or subsequent submission to the State of
any documentation of title. [Footnote 8
The statute extends its burdens of fines, and its benefits in
the form of a share in bounties, only to wreckers that maintain
junkyards located in Maryland, and requires a license only of those
wreckers. There is no similar residency requirement for scrap
processors that wish to obtain a license and participate in the
bounty program, [Footnote 9
and, in fact, seven of the 16 scrap processors that have
participated are located in either Pennsylvania or Virginia.
Appellee, a Virginia corporation with a processing plant near the
Potomac River in Alexandria, was an original licensee under the
Maryland statute. Presumably because of its proximity to the
Page 426 U. S. 800
and Washington, D.C., areas, appellee attracted enough
Maryland-titled vehicles to its plant to rank third among licensed
processors in receipt of bounties through the summer of 1974.
As is apparently the case with most of the licensed processors,
virtually all (96%) of the bounty-eligible vehicles processed by
appellee during that period were hulks, upon which appellee did not
have to demand title documentation from its suppliers in order
later to receive the bounty. In the summer of 1974, however,
Maryland changed significantly the treatment of hulks by amending §
] Under the law as amended, it is no longer possible for a
licensed scrap processor to receive a bounty on a hulk without
submitting title documentation to the State. But the documentation
required of a processor whose plant is in Maryland differs from
that required of a processor, like appellee, whose plant
Page 426 U. S. 801
is not in Maryland. The former need only submit a simple
document in which the person who delivered the hulk certified his
own right to it and agreed to indemnify the processor for any
third-party claims arising from its destruction. Hulk processors
long had required such "indemnity agreements" from their hulk
suppliers as a matter of industry practice. The effect of the 1974
amendment is to give these agreements legal recognition and to
require one when a Maryland processor applies for a bounty on a
hulk. The non-Maryland processor, however, cannot submit a simple
indemnity agreement. For it, receipt of a bounty on a hulk now
depends upon the same documentation specified for abandoned
vehicles in general: a certificate of title, a police certificate
vesting title, a bill of sale from a police auction, or -- in the
case of licensed wreckers only -- a Wrecker's Certificate.
The complaint in this case was filed shortly after the effective
date of the amendment to § 11-1002.2(f)(5). Papers submitted to the
three-judge District Court on summary judgment indicated that
enactment of the amendment had been followed by a precipitate
decline in the number of bounty-eligible hulks supplied to
appellee's plant from Maryland sources. [Footnote 11
] Appellee attributed the decline primarily
to the effect of the amendment upon the decision of unlicensed
suppliers as to where to
Page 426 U. S. 802
dispose of their hulks. [Footnote 12
] It is easier for an unlicensed supplier to
sign an indemnity agreement upon delivering a hulk to a processor
than it is for it to secure some form of title documentation.
Because only a Maryland processor can use an indemnity agreement to
obtain a bounty, the amendment gave Maryland processors an
advantage over appellee and other non-Maryland processors in the
competition for bounty-eligible hulks from unlicensed suppliers.
Such hulks therefore now tend to remain in State instead of moving
to licensed processors outside Maryland.
Appellee contended below that the 1974 amendment to §
11-1002.2(f)(5) violated the Commerce Clause by interfering with,
or "burdening," the flow of bounty-eligible hulks across state
lines, and denied appellee equal protection of the laws by
discriminating arbitrarily between it and licensed processors
located in Maryland as to the right to claim bounties on hulks by
submitting indemnity agreements. The District Court granted summary
judgment to appellee on both claims, and enjoined the State of
Maryland from giving further effect to that part of the 1974
amendment which restricts the right to obtain bounties based on
indemnity agreements to Maryland processors only. 391 F. Supp.
. The State appealed, and we noted probable jurisdiction. 423
In this Court appellee relies on the Commerce Clause
Page 426 U. S. 803
argument that was adopted by the District Court. The argument
starts from the premise, well established by the history of the
Commerce Clause, that this Nation is a common market in which state
lines cannot be made barriers to the free flow of both raw
materials and finished goods in response to the economic laws of
supply and demand. See Great A&P Tea Co. v. Cottrell,
424 U. S. 366
424 U. S.
-371 (1976). Appellee concedes that, until the 1974
amendment, the Maryland system operated in conformity with the
common market principle. There was free competition among licensed
processors for Maryland hulks from unlicensed suppliers, and an
unimpeded flow of such hulks out of Maryland to appellee and other
non-Maryland processors. The only effect of the bounty was to
enhance the value of hulks, and thus make it more likely that they
would be moved to processing plants.
The practical effect of the amendment, however, was to limit the
enhanced price available to unlicensed suppliers to hulks that
stayed inside Maryland, thus discouraging such suppliers from
taking their hulks out of State for processing. The result was that
the movement of hulks in interstate commerce was reduced. [Footnote 13
Page 426 U. S. 804
contends that this effect of the 1974 amendment is a "burden" on
interstate commerce, the permissibility of which must be determined
under the test of Pike v. Bruce Church, Inc., 397 U.
, 397 U. S. 142
(1970). The Court there stated that
"the extent of the burden that will be tolerated will . . .
depend on the nature of the local interest involved, and on whether
it could be promoted as well with a lesser impact on interstate
See also Great A&P Tea Co. v. Cottrell, supra
424 U. S.
The District Court accepted appellee's analysis, and concluded
that the 1974 amendment failed the Pike
test. First, the
court found that the amendment did impose "substantial burdens upon
the free flow of interstate commerce." 391 F. Supp. at 62.
Moreover, it considered the disadvantage suffered by out-of-state
processors to be particularly suspect under previous decisions of
this Court, noting that, to avoid the disadvantage, those
processors would have to build new plants inside Maryland to carry
on a business which, prior to the amendment, they had pursued
efficiently outside the State. See Foster-Fountain Packing Co.
v. Haydel, 278 U. S. 1
Pike v. Bruce Church, Inc., supra
at 397 U. S. 145
Maryland's principal argument in support of the amendment was that,
by making it difficult for out-of-state processors to claim
bounties on hulks delivered by unlicensed suppliers, the amendment
tends to reduce the amount of state funds paid for destruction of
Maryland-titled hulks abandoned in the States where those
Page 426 U. S. 805
located instead of in Maryland. The District Court acknowledged
the validity of this interest, but considered the means employed
inappropriate under Pike
because the same interest could
have been furthered, with less impact upon interstate commerce, by
amending the statute to condition the bounty upon a hulk's
abandonment in Maryland, instead of its previous titling there.
This line of reasoning is not without force if its basic premise
is accepted. That premise is that every action by a State that has
the effect of reducing in some manner the flow of goods in
interstate commerce is potentially an impermissible burden. But we
are not persuaded that Maryland's action in amending its statute
was.the kind of action with which the Commerce Clause is
The situation presented by this statute and the 1974 amendment
is quite unlike that found in the cases upon which appellee relies.
In the most recent of those cases, Pike v. Bruce Church,
a burden was found to be imposed by an Arizona
requirement that fresh fruit grown in the State be packed there
before shipment interstate. The requirement prohibited the
interstate shipment of fruit in bulk, no matter what the market
demand for such shipments. In H. P. Hood Sons v. Du Mond,
336 U. S. 525
(1949), a New York official denied a license to a milk distributor
who wanted to open a new plant at which to receive raw milk from
New York farmers for immediate shipment to Boston. The denial
blocked a potential increase in the interstate movement of raw
milk. Appellee also relies upon Toomer v. Witsell,
334 U. S. 385
(1948), in which this Court found interstate commerce in raw shrimp
to be burdened by a South Carolina requirement that shrimp boats
fishing off its coast dock in South Carolina and pack and pay taxes
on their catches before transporting
Page 426 U. S. 806
them interstate. The requirement increased the cost of shipping
such shrimp interstate. In Foster-Fontain Packing Co. v.
Haydel, 278 U. S. 1
a Louisiana statute forbade export of Louisiana shrimp until they
had been shelled and beheaded, thus impeding the natural flow of
freshly caught shrimp to canners in other States. Both Shafer
v. Farmers Grain Co., 268 U. S. 189
(1925), and Lemke v. Farmers Grain Co., 258 U. S.
(1922), involved efforts by North Dakota to regulate,
and thus disrupt, the interstate market in grain by imposing
burdensome regulations upon and controlling the profit margin of
corporations that purchased grain in State for shipment and sale
outside the State. And in Pennsylvania v. West Virginia,
262 U. S. 553
(1923), the Court found a burden upon the established interstate
commerce in natural gas when a new West Virginia statute required
domestic producers to supply all domestic needs before piping the
surplus, if any, to other States.
The common thread of all these cases is that the State
interfered with the natural functioning of the interstate market
either through prohibition or through burdensome regulation. By
contrast, Maryland has not sought to prohibit the flow of hulks, or
to regulate the conditions under which it may occur. Instead, it
has entered into the market itself to bid up their price. There has
been an impact upon the interstate flow of hulks only because,
since the 1974 amendment, Maryland effectively has made it more
lucrative for unlicensed suppliers to dispose of their hulks in
Maryland, rather than take them outside the State. [Footnote 15
Page 426 U. S. 807
Appellee recognizes that the situation presented by this case is
without precedent in this Court. It argues that the 1974 amendment
nevertheless must be subjected to the same scrutiny as the state
actions in earlier cases, because
"[w]hat is controlling . . . is not the means by which Maryland
has chosen to discriminate, but the practical effect of that
discrimination upon interstate commerce."
Brief for Appellee 63. In short, appellee urges that the alleged
burden upon interstate commerce from the 1974 amendment "is not
immunized by its novelty." Ibid.
We believe, however, that the novelty of this case is not its
presentation of a new form of "burden" upon commerce, but that
appellee should characterize Maryland's action as a burden which
the Commerce Clause was intended to make suspect. The Clause was
designed in part to prevent trade barriers that had undermined
efforts of the fledgling States to form a cohesive whole following
their victory in the Revolution. [Footnote 16
Page 426 U. S. 808
aspect of the Clause's purpose was eloquently expressed by Mr.
"Our system, fostered by the Commerce Clause, is that every
farmer and every craftsman shall be encouraged to produce by the
certainty that he will have free access to every market in the
Nation, that no home embargoes will withhold his exports, and no
foreign state will by customs duties or regulations exclude them.
Likewise, every consumer may look to the free competition from
every producing area in the Nation to protect him from exploitation
by any. Such was the vision of the Founders; such has been the
doctrine of this Court which has given it reality. . . ."
H. P. Hood & Sons v. Du Mond, supra
at 336 U. S. 539
In realizing the Founders' vision, this Court has adhered strictly
to the principle "that the right to engage in interstate commerce
is not the gift of a state, and that a state cannot regulate or
restrain it." Id.
at 336 U. S. 535
] But, until
today, the Court has not been asked to hold that the entry by the
State itself into the market as a purchaser, in effect, of a
potential article of interstate commerce creates a burden upon that
commerce if the State restricts its trade to its own citizens or
businesses within the State.
Page 426 U. S. 809
We do not believe the Commerce Clause was intended to require
independent justification for such action. Maryland entered the
market for the purpose, agreed by all to be commendable as well as
legitimate, of protecting the State's environment. As the means of
furthering this purpose, it elected the payment of state funds --
in the form of bounties -- to encourage the removal of automobile
hulks from Maryland streets and junkyards. It is true that the
state money initially was made available to licensed out-of-state
processors as well as those located within Maryland, and not until
the 1974 amendment was the financial benefit channeled, in
practical effect, to domestic processors. But this chronology does
not distinguish the case, for Commerce Clause purposes, from one in
which a State offered bounties only to domestic processors from the
start. [Footnote 18
Regardless of when the State's largesse is first confined to
domestic processors, the effect upon the flow of hulks resting
within the State is the same: they will tend to be processed inside
the State, rather than flowing to foreign processors. But no
Page 426 U. S. 810
trade barrier of the type forbidden by the Commerce Clause, and
involved in previous cases, impedes their movement out of State.
They remain within Maryland in response to market forces, including
that exerted by money from the State. Nothing in the purposes
animating the Commerce Clause prohibits a State, in the absence of
congressional action, [Footnote
] from participating in the market and exercising the right
to favor its own citizens over others. [Footnote 20
The District Court also found the 1974 amendment to be violative
of the Equal Protection Clause. [Footnote 21
Page 426 U. S. 811
supports this holding by contending that no difference between
the operations of foreign and domestic processors justifies denying
to the former the right to use indemnity agreements, and that this
discriminatory denial furthers no legitimate state purpose.
Maryland, having licensed out-of-state processors, does not justify
the amendment's distinction on the basis of any difference in the
manner of operation. But Maryland does insist that several state
interests are served by it. We agree with Maryland with respect to
its primary justification for the 1974 amendment, and thus find it
unnecessary to consider other interests that also may be
Maryland argues that the distinction between domestic and
foreign processors in the 1974 amendment is related to the basic
statutory purpose of clearing Maryland's landscape of abandoned
automobiles. Underlying this argument are the complementary
assumptions that hulks delivered to Maryland processors are likely
to have been abandoned in Maryland, and those delivered to
non-Maryland processors are likely to have been abandoned outside
Maryland. Based upon those assumptions, the
Page 426 U. S. 812
State contends that the 1974 amendment, by making it easy for an
in-state processor to receive bounties but difficult for an
out-of-state processor to do so, tends to ensure that the State's
limited resources are targeted to hulks abandoned inside Maryland
as opposed to some contiguous State.
The District Court rejected this argument with the observation
that Maryland had
"not proffered a scintilla of factual support for [its]
assumption that nonresident processors are more likely than
in-state processors to claim bounties for vehicles abandoned
outside of Maryland."
391 F. Supp. at 57. The District Court demanded too much.
Maryland's underlying assumptions certainly are not irrational: in
terms of likelihood, the Maryland Legislature reasonably could
assume that a hulk destroyed by a non-Maryland processor is more
likely to have been abandoned outside Maryland than is a hulk
destroyed by a Maryland processor, and vice versa. The State is not
compelled to verify logical assumptions with statistical evidence.
Appellee contends that the alleged relationship of the amendment
to the statutory purpose is belied by a "loophole" in the statute
that remains even after the amendment. This "loophole" results from
the fact that the statute conditions the payment of bounty upon
previous titling of a vehicle in Maryland, rather than upon proof
of its abandonment in that State. Thus, even after the 1974
amendment, an in-state processor remains free to
Page 426 U. S. 813
recover bounties on hulks previously titled in Maryland but
delivered to it after abandonment elsewhere. A more discriminating
effort to achieve the statutory purposes, according to appellee,
would have changed the statute to condition the bounty upon proof
of abandonment in Maryland. [Footnote 23
It is well established, however, that a statutory classification
impinging upon no fundamental interest, and especially one dealing
only with economic matters, need not be drawn so as to fit with
precision the legitimate purposes animating it. Williamson v.
Lee Optical Co., 348 U. S. 483
348 U. S. 489
(1955). That Maryland might have furthered its underlying purpose
more artfully, more directly, or more completely, does not warrant
a conclusion that the method it chose is unconstitutional. See
Katzenbach v. Morgan, 384 U. S. 641
384 U. S. 657
Moreover, the statute in its present form still allows payment
of bounty on a hulk to a non-Maryland processor upon proper
documentation of title. The logic in support of the 1974 amendment
-- that Maryland processors are more likely than out-of-state
Page 426 U. S. 814
destroy hulks abandoned inside the State suggests the
rationality of Maryland's discontinuing bounties to out-of-state
processors altogether. If Maryland could do that, we are not
prepared to say that it is forbidden to go part of the way by an
amendment that has the practical effect, through the distinction as
to documentation of title, of substantially curtailing bounty
payments to out-of-state processors. [Footnote 24
Few would contend that Maryland has taken the straightest road
to its goal, either in its original drafting of the statute or in
the refinement introduced by the 1974 amendment. But in the area in
which this bounty scheme operates, the Equal Protection Clause does
not demand a surveyor's precision. The 1974 amendment bears a
rational relationship to Maryland's purpose of using its limited
funds to clean up its own environment, and that is all the
Constitution requires. See Dandridge v. Williams,
397 U. S. 471
397 U. S. 486
487 (1970); San Antonio School Dist. v. Rodriguez,
411 U. S. 1
411 U. S. 44
(1973); McGinnis v. Royster, 410 U.
, 410 U. S. 270
410 U. S.
We hold that the District Court erred in finding the 1974
amendment invalid under either the Commerce Clause or the Equal
Protection Clause. Accordingly, its judgment is reversed.
1969 Md.Laws, c. 556. The law, as amended, is codified at
Md.Ann.Code, Art. 66 1/2, § 5-201 et seq.
(1970 ed. and
Md.Ann.Code, Art. 66 1/2, §§ 5-202, 5-203(d) (Supp. 1975).
Md.Ann.Code, Art. 66 1/2, § 5-205 (Supp. 1975).
In addition to receiving vehicles from licensed wreckers,
processors receive them from the owners of the vehicles themselves
and, more frequently, from unlicensed wreckers who tow an abandoned
or wrecked vehicle directly to a processor rather than retaining it
for its spare-part value.
The bounty started at $10 per vehicle and moved up to $16 by the
time of this suit. As noted in the text, supra,
wrecker receives half of this sum directly from the State. A profit
margin for unlicensed suppliers is assured by the willingness of
processors, who need a fairly constant supply of hulks to run their
expensive machinery efficiently, to "rebate" most of the bounty.
Appellee, for example, regularly pays $14 of the current $16 bounty
to its unlicensed suppliers.
Md Ann.Code, Art. 662, § 203(b), (c) (1970 ed. and Supp.
Md.Ann.Code, Art. 66 1/2, §§ 203.1, 11-002.2(f)(1-4), 11-1002.2
(a-d) (1970 ed. and Supp. 1975).
Maryland Ann.Code, Art. 66 1/2, § 11-1002.2(f)(5) (1970), as
originally enacted, read as follows:
"Notwithstanding any other provisions of this section, any
person, firm, corporation, or unit of government upon whose
property or in whose possession any abandoned
vehicle is found, or any person being the owner of a motor vehicle
whose title certificate is faulty, or destroyed, may dispose of the
motor vehicle to a wrecker or scrap processor without the title
and without notification procedures
of subsection (c)
[subsections (a) and (b)] of this section, if the motor vehicle
is over eight years old and has no engine or is otherwise totally
A participating processor must meet statutory requirements
relating to its storage area for vehicles, its records and books of
account, and its processing equipment. Md.Ann.Code, Art. 66 1/2, §
5-202 (Supp. 1975). An administrative regulation promulgated
pursuant to the statute requires that a licensed non-Maryland
processor maintain an "office" within the State approved by the
State Motor Vehicle Administration. Md. A.R.R. § 11.02.05.45.
1974 Md.Laws, c. 465. The amendment did not change the wording
of the original section, n
but added the following language:
"In those cases only, a scrap processor whose plant is
physically located and operating in this State shall execute an
indemnity agreement that shall be filed with the Motor Vehicle
Administration. The indemnity agreement shall contain the name,
address and signature of the person delivering the vehicle. The
indemnity agreement and the manufacturer's serial or identification
number shall be satisfactory proof that the vehicle has been
destroyed and shall be acceptable for payment of the full bounty
authorized.by section 5-205 if the vehicle identified in the
indemnity agreement was titled in this State. Otherwise, for the
purpose of administering the provisions of this section, the
provisions of section 5-205 shall not apply."
Section 5-205, mentioned in the amendment, is the only statutory
provision authorizing bounty payments. See supra
426 U. S. 797
Without the benefit of § 11-1002.2(f)(5) following the 1974
amendment, out-of-state processors must depend upon other sections
that authorize a § 5-205 bounty only upon more elaborate title
documentation. See supra
at 426 U. S.
Appellee submitted an affidavit of its general manager
containing statistics that showed the decline. During the six-month
period immediately preceding the effective date of the amendment,
appellee received 14,253 hulks from Maryland sources. In the six
months immediately thereafter, the total was 9,723. This marked a
decline of 31.8% in the number of bounty-eligible hulks, at a time
when appellee's figures showed an increase of 11.9 % in the number
of vehicles supplied from non-Maryland sources.
Appellee's figures showed that the number of hulks delivered by
licensed wreckers, which before and after the amendment tended to
use Wrecker's certificates almost exclusively, more than doubled in
the six months following the amendment (from 1,934 vehicles in the
preceding six months to a total of 4,161 vehicles). The number of
hulks delivered by unlicensed suppliers, however, plummeted by
54.9%, from 12,319 during the six months before the amendment to
5,561 in the comparable period thereafter.
The amendment did not accomplish this effect directly. After the
amendment, it still was possible for licensed non-Maryland
processors to receive bounty-eligible hulks from unlicensed
Maryland suppliers. But because it was significantly easier for
those suppliers to obtain an enhanced price from Maryland
processors, they tended to deliver inside the State. The practical
effect was substantially the same as if Maryland had withdrawn
altogether the availability of bounties on hulks delivered by
unlicensed suppliers to licensed non-Maryland processors. Indeed,
this is the way appellee characterized the operation of the
"Old and inoperable hulks continued to fetch an 'artificially
enhanced value' for their suppliers, but only if delivered
intrastate to 'a scrap processor whose plant is physically located
and operating' in Maryland. Old and inoperable hulks exported for
processing in contiguous states were ineligible for bounty, and
sold at much lower prices prevailing on the free market for scrap
metal. For towing services and other unlicensed suppliers, in
business for profit and attracted by high prices, transactions with
licensed processors beyond Maryland's borders now entailed
financial sacrifice. Accordingly, their hulks were withdrawn from
interstate commerce and delivered for processing within Maryland
for the bounty-generated rebates which only Maryland-based
processors could provide."
Brief for Appellee 34.
Cf. infra, 426 U. S.
Again, we emphasize that the 1974 amendment, by its terms, does
not require unlicensed suppliers to deliver hulks in State to
receive enhanced prices. This is simply its effect in practice, and
this is the way appellee itself views the amendment as operating.
To whatever extent unlicensed suppliers still take
hulks from Maryland to appellee and other non-Maryland processors,
of course, there has been no interruption of interstate
"It was . . . to secure freedom of trade, to break down the
barriers to its free low, that the Annapolis Convention was called,
only to adjourn with a view to Philadelphia. Thus, the generating
source of the Constitution lay in the rising volume of restraints
upon commerce which the Confederation could not check. They were
the proximate cause of our national existence down to today."
"As evils are wont to do, they dictated the character and scope
of their own remedy. This lay specifically in the commerce clause.
No prohibition of trade barriers as among the states could have
been effective of its own force or by trade agreements. . . . Power
adequate to make and enforce the prohibition was required. Hence,
the necessity for creating an entirely new scheme of
W. Rutledge, A Declaration of Legal Faith 25-26 (1947). See
H. P. Hood & Sons v. Du Mond, 336 U.
, 336 U. S.
The cases upon which appellee primarily relies, and which are
discussed in the text, supra
at 426 U. S.
-806, illustrate that this principle makes suspect
any attempt by a State to restrict or regulate the flow of commerce
out of the State. The same principle, of course, makes equally
suspect a State's similar effort to block or to regulate the flow
of commerce into the State. See, e.g., Baldwin v. G. A. F.
Seelig, Inc., 294 U. S. 511
(1935); Dean Milk Co. v. Madison, 340 U.
(1951); Polar Ice Cream & Creamery Co. v
Andrews, 375 U. S. 361
(1964). See generally Great A&P Tea Co. v. Cottrell,
424 U. S. 366
We note that the commerce affected by the 1974 amendment appears
to have been created, in whole or in substantial part, by the
Maryland bounty scheme. We would hesitate to hold that the Commerce
Clause forbids state action reducing or eliminating a flow of
commerce dependent for its existence upon state subsidy instead of
private market forces. Because the record contains no details of
the hulk market prior to the bounty scheme, however, this issue is
not clearly presented.
We also note that appellee undertook to build no new plant nor
add additional machinery in reliance upon the prospect of receiving
additional hulks under the Maryland bounty scheme. Instead,
appellee stipulated in the District Court that participation in the
program has caused no alteration in its method of operation. We
intimate no view as to the consequences, if any, in a Commerce
Clause case of a different state of facts in this respect. Cf.
Pennsylvania v. West Virginia, 262 U.
, 262 U. S. 587
(1923); F. Ribble, State and National Power over Commerce 219
Our reference to the absence of congressional action implies no
view on whether Congress could prohibit the type of selective
participation in the market undertaken by Maryland. It is intended
only to emphasize that this case involves solely the restrictions
upon state power imposed by the Commerce Clause when Congress is
Appellee and the other licensed non-Maryland processors are free
to withdraw from the bounty program should they decide that the
benefits they receive from it after the 1974 amendment do not
justify the annual license fee. They are not in the position of a
foreign business which enters a State in response to completely
private market forces to compete with domestic businesses, only to
find itself burdened with discriminatory taxes or regulations.
See, e.g., Best & Co. v. Maxwell, 311 U.
(1940); Nippert v. Richmond,
327 U. S. 416
(1946); Memphis Steam Laundry v. Stone, 342 U.
(1952); West Point Grocery v. Opelika,
354 U. S. 390
(1957); Halliburton Oil Well Co. v. Reily, 373 U. S.
Maryland argued in this Court that appellee, a Virginia
corporation, cannot claim the protection of the Fourteenth
Amendment, which prohibits a State's denial of equal protection to
persons "within its jurisdiction." Maryland relies upon Blake
v. McClung, 172 U. S. 239
(1898), where a Virginia corporation was held unprotected by the
Equal Protection Clause against a Tennessee statute that
subordinated its claims as a creditor to those of Tennessee
corporations. But the situation here differs significantly from
The Court in that case noted that the Virginia
corporation was not
"doing business in Tennessee under the statute here involved, or
under any statute that would bring it directly under the
jurisdiction of the courts of Tennessee by service of process on
its officers or agents."
at 172 U. S. 261
Appellee, however, paid a fee to become licensed under Maryland
law, maintains an office in Maryland as required by Maryland
regulation, and has been found by the District Court to be subject
to the jurisdiction of Maryland courts under the State's "long arm"
statute. Although appellee carries on no active business inside
Maryland (all vehicles are brought by others to its plant in
Virginia), it is "within [Maryland's] jurisdiction" at least for
the purposes of this licensing and bounty program. We think this
entitles appellee to claim Fourteenth Amendment protection with
respect to that program. Cf. WHYY v. Glassboro,
393 U. S. 117
393 U. S. 119
(1968); Wheeling Steel Corp. v. Glander, 337 U.
, 337 U. S.
As noted earlier, n
licensed wreckers use primarily Wrecker's
Certificates when delivering hulks to processors. The 1974
amendment did not affect the ability of foreign processors to claim
bounties on an equal footing with domestic processors by submitting
such certificates. That was consistent with Maryland's effort to
reduce the amount of bounty payments for hulks that had rested in
some other State: since all licensed wreckers are inside Maryland,
at 426 U. S.
-797, 426 U. S. 799
hulks delivered with certificates always will have been eyesores in
In fact, appellee argues that the statute, as it now stands,
conditioning payment of bounties only upon previous Maryland
titling, manifests no policy to restrict the payment of bounties to
vehicles abandoned in Maryland. This comes close to an argument
that this intricate statutory scheme was instituted not for the
purpose of clearing Maryland's environment of abandoned vehicles,
but for the purpose of destroying Maryland titled hulks wherever
they might be found -- even if it happened to be Virginia or
Pennsylvania. Appellee's argument is especially unpersuasive in
light of the legislative history of this statute which appellee
itself discussed in its brief. That history shows beyond question
Maryland's purpose to use the bounty to clear its own streets,
lots, and junkyards of abandoned vehicles. That the bounty is
conditioned upon previous Maryland titling, rather than proof of
abandonment in Maryland, is probably a decision made in the
interest of administrative convenience. Determining the place of
abandonment would present problems of proof, as well as invite
It is worth emphasizing that appellee and other out-of-state
processors are subject to Maryland licensing, with its annual fee
requirements and other nominal burdens, only if they choose to
participate in the bounty. If they feel their benefits from such
participation after the 1974 amendment do not merit the expense,
they are free to withdraw entirely.
MR. JUSTICE STEVENS, concurring.
The dissent creates the impression that the Court's opinion,
which I join without reservation, represents a significant retreat
from its settled practice in adjudicating
Page 426 U. S. 815
claims that a state program places an unconstitutional burden on
interstate commerce. This is not the fact. There is no prior
decision of this Court even addressing the critical Commerce Clause
issue presented by this case.
It is important to differentiate between commerce which
flourishes in a free market and commerce which owes its existence
to a state subsidy program. Our cases finding that a state
regulation constitutes an impermissible burden on interstate
commerce all dealt with restrictions that adversely affected the
operation of a free market. This case is unique because the
commerce which Maryland has "burdened" is commerce which would not
exist if Maryland had not decided to subsidize a portion of the
automobile scrap-processing business.
By artificially enhancing the value of certain abandoned hulks,
Maryland created a market that did not previously exist.
which Maryland initiated in 1969 included subsidies for scrapping
plants located in Virginia and Pennsylvania, as well as for plants
located in Maryland. Those subsidies stimulated the movement of
abandoned hulks from Maryland to out-of-state scrapping plants, and
thereby gave rise to the interstate commerce which is at stake in
That commerce, which is now said to be burdened, would never
have existed if, in the first instance, Maryland had decided to
confine its subsidy to operators of Maryland plants. A failure to
create that commerce would have been unobjectionable, because the
Commerce Clause surely does not impose on the States any
Page 426 U. S. 816
to subsidize out-of-state business. Nor, in my judgment, does
that Clause inhibit a State's power to experiment with different
methods of encouraging local industry. Whether the encouragement
takes the form of a cash subsidy, a tax credit, or a special
privilege intended to attract investment capital, it should not be
characterized as a "burden" on commerce. Accordingly, the program
in effect in Maryland since 1974 could hardly have been challenged
if it had been adopted in 1969.
Since Maryland did subsidize Virginia and Pennsylvania plants
from 1969 to 1974, it is easy to describe the elimination of the
out-of-state subsidy as a burden on interstate commerce. Indeed, we
may assume that the temporarily subsidized interstate business has
now been totally eliminated. It does not follow, however, that such
a "burden" is impermissible.
Unquestionably, Maryland could terminate its entire program,
discontinuing subsidy payments to Maryland operators as well as
out-of-state firms, without offending the Constitution. Since, by
hypothesis, we are dealing with a business that is dependent on the
availability of subsidy payments, such a complete termination of
Maryland's program would have precisely the same effect on the
out-of-state plants as the partial termination effected in 1974.
The "burden" on the Virginia processor is caused by the nonreceipt
of the subsidy, regardless of whether or not Maryland elects to
continue to subsidize its local plants. It follows, I believe, that
the constitutional issue presented by the 1974 amendment is the
same as the question which would have arisen if Maryland had never
made the subsidy available to out-of-state concerns.
This is the first case in which any litigant has asked a federal
court to address the question whether a state
Page 426 U. S. 817
subsidy constitutes a "burden" on interstate commerce. That fact
is significant because there must have been countless situations
during the past two centuries in which the several States have
experimented with different methods of encouraging local enterprise
without providing like encouragement to out-of-state competitors.
The absence of any previous challenge to such programs reflects, I
believe, a common and correct interpretation of the Commerce Clause
as primarily intended (at least when Congress has not spoken) to
inhibit the several States' power to create restrictions on the
free flow of goods within the national market, rather than to
provide the basis for questioning a State's right to experiment
with different incentives to business. The District Court's novel
interpretation of the "burden" concept represented a departure
which, had it been accepted, would impair, rather than protect,
* It might be more accurate to state that Maryland substantially
enlarged the market that was previously too small to be
significant. But the analysis is the same whether we are dealing
with the newly created portion of a preexisting market or with an
entirely new market.
MR. JUSTICE BRENNAN, with whom MR. JUSTICE WHITE and MR. JUSTICE
MARSHALL join, dissenting.
The Court continues its reinterpretation of the Commerce Clause
and its repudiation of established principles guiding judicial
analysis thereunder -- in this case shifting its focus from
congressional power arising under the Commerce Clause, see
National League of Cities v. Usery, post,
p. 426 U. S. 833
the role of this Court in considering the constitutionality of
state action claimed impermissibly to burden interstate commerce.
Principles of legal analysis heretofore employed in our cases
considering claims under the Commerce Clause, e.g., South
Carolina Hwy. Dept. v. Barnwell Bros., 303 U.
(1938); Southern Pacific Co. v. Arizona ex
rel. Sullivan, 325 U. S. 761
(1945); H. P. Hood & Sons, Inc. v. Du Mond,
336 U. S. 525
(1949); Bibb v. Navajo Freight Lines, 359 U.
Page 426 U. S. 818
(1959); Pike v. Bruce Church, Inc., 397 U.
(1970); Great A&P Tea Co. v.
Cottrell, 424 U. S. 366
(1976), are ignored, [Footnote 2/1
and an area of state action plainly burdening interstate commerce,
an area not easily susceptible of principled limitation, is
judicially carved out and summarily labeled as not "the kind of
action with which the Commerce Clause is concerned." Ante
at 426 U. S. 805
I cannot agree that well established principles for analyzing
claims arising under the Commerce Clause are inapplicable merely
because of the "kind of [state] action" involved, or that it is
defensible that legal analysis should cease, irrespective of the
impact on commerce or the other facts and circumstances of the
case, merely because the Court somehow categorically determines
that the instant case involves "a burden which the Commerce Clause
was [not] intended to make suspect." Ante
at 426 U. S. 807
] In my view,
"[e]very case determining whether or not a local regulation
amounts to a prohibited 'burden' on interstate commerce belongs at
some point along a graduated scale."
H. P. Hood Sons, Inc. v. Du Mond, supra
at 336 U. S. 568
n. 2 (Frankfurter, J., dissenting). Therefore, I am
"constrained to dissent, because I cannot agree
Page 426 U. S. 819
in treating what is essentially a problem of striking a balance
between competing interests as an exercise in absolutes."
at 336 U. S.
I note that appellants do not claim and the Court does not and
could not find that the market for scrap metal -- including its
processing -- is not interstate commerce. In addition, there is no
claim by appellee that Maryland, if it wishes to run a bounty
program to achieve its environmental objectives, must pay a bounty
on all scrap hulks irrespective of their State of origin as
abandoned vehicles. Plainly, Maryland, pursuant to its
environmental program, may "artificially enhance" the price of only
those hulks originating as abandoned vehicles within its
boundaries. The only questions respecting the Commerce Clause
concern the issue of whether Maryland may in effect require that
the processing of such scrap, an aspect of its program not
obviously related in the first instance to its environmental
objectives, be restricted to processors located within the State in
light of the asserted governmental objectives in so doing and the
consequent effect upon interstate commerce.
However, I cannot agree with the Court that this case is solely
to be analyzed in terms of Maryland's "purchase" of items of
interstate commerce and its restriction of such "purchases" to
items processed in its own State. The result of this single-minded
concept of the issues presented is that the Court, in my view, not
only erroneously decides a weighty constitutional question not
previously directly addressed by this Court, but also that it
ignores another and equally pressing issue under the Commerce
I first address the question that the Court answers: the
question whether a State may restrict its purchases
Page 426 U. S. 820
of items of interstate commerce to items produced, manufactured,
or processed within its own boundaries. When a State so restricts
purchases for its own use, it does not affect the total flow of
interstate commerce, but rather precludes only that quantum that
would otherwise occur if the State were to behave as a private and
disinterested purchaser. Nevertheless, it cannot be gainsaid that a
State's refusal for purposes of economic protectionism to purchase
for end use items produced elsewhere is a facial and obvious
"discrimination against interstate commerce" that we have often
said "[t]he commerce clause, by its own force, prohibits . .
whatever its form or method." South Carolina Hwy. Dept. v.
303 U.S. at 303 U. S. 185
See H. P. Hood & Sons, Inc. v. Du Mond,
336 U.S. at
336 U. S. 535
Best & Co. v. Maxwell, 311 U.
, 311 U. S.
-456 (1940); Pennsylvania v. West Virginia,
262 U. S. 553
262 U. S. 596
(1923). Clearly, the "aim and effect" of such a discrimination is
"establishing an economic barrier against competition with the
products of another state or the labor of its residents,"
Baldwin v. G. A. F. Seelig, Inc., 294 U.
, 294 U. S. 527
(1935). Certainly the Court's naked assertion today that
"[n]othing in the purposes animating the Commerce Clause
prohibits a State . . . from participating in the market and
exercising the right to favor its own citizens over others,"
at 426 U. S. 810
stands in stark contrast to our
"repeated emphasis upon the principle that the State may not
promote its own economic advantages by curtailment or burdening of
H. P. Hood & Sons, Inc. v. Du Mond, supra
336 U. S.
Moreover, the particular form of discrimination arising when the
State restricts its purchases for use to items produced in its own
State is of a kind particularly suspect under our precedents, as it
is aimed directly at requiring
Page 426 U. S. 821
the relocation of labor and industry within the bounds of the
State, thus tending "to neutralize advantages belonging to" other
States, Baldwin v. G. A. F. Seelig, Inc., supra
294 U. S. 527
Halliburton Oil Well Co. v. Reily, 373 U. S.
, 373 U. S. 72
(1963), and forcing "an artificial rigidity on the economic pattern
of the industry." Toomer v. Witsell, 334 U.
, 334 U. S. 404
(148). See Foster-Fountain Packing Co. v. Haydel,
278 U. S. 1
"viewed with particular suspicion state statutes requiring
business operations to be performed in the home State that could
more efficiently be performed elsewhere. Even where the State
is pursuing a clearly legitimate local interest, this particular
burden on commerce has been declared to be virtually
Pike v. Bruce Church, Inc.,
397 U.S. at 397 U. S. 145
(emphasis supplied). And we have never held protection of a State's
own citizens from the burden of economic competition with citizens
of other States to be ouch a "clearly legitimate local interest."
See, e.g., H. P. Hood & Sons, Inc., supra; Baldwin v. a. A.
F. Seelig, Inc., supra.
Patently, so to hold "would be to eat
up the rule under the guise of an exception." 294 U.S. at
294 U. S.
It is true, as the Court notes, that we have not previously
directly addressed the question whether, when a State enters the
market as purchaser for end use of items in interstate commerce, it
may "[restrict] its trade to its own citizens or businesses within
the State." Ante
at 426 U. S. 808
] The novelty of the
question, however, does not
Page 426 U. S. 822
justify the Court's conclusory assertion, without analysis
employing established constitutional principles or policies,
"[n]othing in the purposes animating the Commerce Clause
prohibits a State . . . from participating in the market and
exercising the right to favor its own citizens over others."
at 426 U. S. 810
Certainly the Court does not attempt to tell us the source of any
such "right." [Footnote 2/4
have argued that the barriers to interstate commerce imposed by
restrictive state purchasing policies are already of great
significance, Melder, The
Page 426 U. S. 823
Economics of Trade Barriers, 16 Ind.L.J. 127, 139-141 (1940),
and other courts have refused, "in the light of the expanding
proprietary activities of the state," invitations to forgo all
Commerce Clause analysis merely because the State is acting in a
proprietary purchasing capacity in implementing its discriminatory
policies. Garden State Dairies of Vineland, Inc. v. Sills,
46 N.J. 349, 358, 217 A.2d
, 130 (1966). See also
Recent Cases, 80 Harv.L.Rev.
1357, 1360-1361 (1967).
I would hold, consistent with accepted Commerce Clause
principles, that state statutes that facially or in practical
effect restrict state purchases of items in interstate commerce to
those produced within the State are invalid unless justified by
asserted state interests -- other than economic protectionism -- in
regulating matters of local concern for which "reasonable
nondiscriminatory alternatives, adequate to conserve legitimate
local interests, are [not] available." Dean Milk Co. v.
Madison, 340 U. S. 349
340 U. S. 354
(1951). See Great A&P Tea Co. v. Cottrell,
424 U.S. at
424 U. S. 373
Pike v. Bruce Church, Inc., supra
at 397 U. S. 142
Polar Ice Cream Creamery Co. v. Andrews, 375 U.
, 375 U. S. 375
n. 9 (1964); Baldwin v. G. A. F. Seelig, Inc., supra
294 U. S. 524
Page 426 U. S. 824
Second, the Court's insistence on viewing this case as
qualitatively different under the Commerce Clause merely because
the State is in some sense acting as a "purchaser" of the affected
items of commerce leads it completely to forgo analysis of another
equally vital question. For even those courts and commentators that
have concluded that facially restrictive state purchasing statutes
are permissible under the Commerce Clause, e.g., American
Yearbook Co. v. Askew, 339 F.
(MD Fla.), summarily aff'd,
409 U.S. 904
(1972); McAllister, Court, Congress and Trade Barriers, 16 Ind.L.J.
144, 115 (1940), have restricted this conclusion to instances where
the State in a "proprietary" capacity is purchasing items of
commerce for end use, and have distinguished other modes of
regulation burdening interstate commerce. But it is clear that
Maryland in the instant case is not "purchasing" scrap processing
for end use; rather, by in effect requiring "price enhanced" hulks
to be processed within the State of Maryland, it is affecting one
link in the chain of interstate commerce for scrap metal, a line of
commerce that originates prior to Maryland's regulation and
continues long past that point. Even if, as the Court concludes,
state economic protectionism in "purchasing" items of interstate
commerce is not a suspect motive under the Commerce Clause,
analysis in this case cannot cease at that point, for, by the
instant regulation, Maryland is allegedly affecting a larger area
of commerce by diverting processing of scrap metal in interstate
commerce to within its own boundaries. [Footnote 2/6
Page 426 U. S. 825
The Court's only apparent reference to this impact on the larger
area of commerce in scrap metal is that "Maryland has not
to prohibit the flow of hulks,
Page 426 U. S. 826
or to regulate the conditions under which it may occur."
at 426 U. S. 806
(emphasis supplied). This conclusion is arguable, at best,
] and our cases
establish that "[o]ne challenging the validity of a state
enactment" on Commerce
Page 426 U. S. 827
Clause grounds is not bound by the State's "declarations of
purpose," and may show that the purported objective "is a feigned,
and not the real, purpose." Foster-Fountain Packing Co. v.
278 U.S. at 278 U. S. 10
See also Toomer v. Witsell, 334 U.
(1948); Buck v. Kuykendall, 267 U.
, 267 U. S.
-316 (1925). More importantly, regardless of the
purity of the State's motives or intent with respect to burdening
interstate commerce, analysis does not cease at that point, for
"a state may not, in any form or under any guise, directly
burden the prosecution of interstate business.'" Baldwin v. G.
A. F. Seelig, Inc., 294 U.S. at 294 U. S. 522;
see Best & Co. v. Maxwell, 311 U.S. at 311 U. S.
"A different view . . . would mean that the Commerce Clause of
itself imposes no limitations on state action . . save for the rare
instance where a state artlessly discloses an avowed purpose to
discriminate against interstate goods."
Dean Milk Co. v. Madison,
340 U.S. at 340 U. S.
Rather, once a legitimate state regulation of an object of local
concern is found to burden interstate commerce, "this states the
beginning of a problem in constitutional law; it does not give the
answer." Bode v. Barrett, 344 U.
, 344 U. S. 589
(1953) (Frankfurter, J., dissenting). Established principles
dictate that, in such a situation, analysis proceed as follows:
"Where the 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. . . . If a legitimate local purpose is
found, then the question becomes one of degree. And the extent of
the burden, that will be tolerated will, of course, depend on the
nature of the local interest involved, and on whether it could be
Page 426 U. S. 828
as well with a lesser impact on interstate activities."
Pike v. Bruce Church, Inc.,
397 U.S. at 397 U. S.
Mr. Justice Frankfurter, universally recognized to be among the
foremost students and judicial practitioners of the jurisprudence
of the Commerce Clause, has said:
decision [Willson v. Black-Bird
Creek Marsh Co.,
2 Pet. 245 (1829)] begins a
wholesome emphasis upon the concrete elements of the situation that
concerns both state and national interests. The particularities of
a local statute touch its special aims and the scope of their
fulfillment, the difficulties which it seeks to adjust, the price
at which it does so. These and kindred practical considerations, in
their myriad manifestations, have weighed with the Court in
determining the fate of state legislation impinging on the
activities of national commerce, ever since Marshall, in the
case, set the standard for deciding such
controversies 'under all the circumstances of the case.' . . . In
the history of the Supreme Court, no single quality more
differentiates judges than the acuteness of their realization that
practical considerations, however screened by doctrine, underlie
resolution of conflicts between state and national power."
F. Frankfurter, The Commerce Clause Under Marshall, Taney and
Waite 33-34 (1937) The Court today fails that test, in my view, by
mechanically concluding that Maryland's action is not "the kind of
action with which the Commerce Clause is concerned," ante
at 426 U. S. 805
merely because the State is in some sense acting as a "purchaser"
of items in interstate commerce.
In the absence of some limiting principle, this is a disturbing
conclusion, for little imagination is required to
Page 426 U. S. 829
foresee future state actions "set[ting] barrier[s] to traffic
between one state and another as effective a if customs duties . .
. had been laid upon the thing transported," Baldwin v. G. A.
F. Seelig, Inc., supra,
at 294 U. S. 521
This can surely occur if all state action is to be immunized from
further analysis merely because the design of the regulatory scheme
is to "artificially enhance" the price of goods produced within its
State by the State's becoming in some sense a "purchaser" of such
goods at a point in the total line of commerce short of end
It may well be, as developed in 426 U. S.
that there are limiting principles in the
circumstances of this case because, by means of its policy
restricting the location of scrap processing, Maryland is truly
regulating matters of local concern respecting its environment, and
there is, as a practical matter, an absence of "reasonable
nondiscriminatory alternatives, adequate to conserve legitimate
local interests." Dean Milk Co. v. Madison, supra
340 U. S. 354
But the Court fails to search for such limiting circumstances and
shuts off analysis merely because of the form of the state
regulation, thus effectively "immun[izing]" state "statutes . . .
requiring that certain kinds of processing be done in the home
State before shipment to a sister State," Pike v. Bruce Church,
at 397 U. S. 141
so long as the mode of regulation may be characterized as the State
functioning as a "purchaser." Clearly, if the States are to be
absolutely unrestrained in their regulation of interstate markets
so long as they use methods that may fairly be characterized as
"purchasing" items by "artificially enhancing" the price, then the
door is open for the States to "set up what is equivalent to a
rampart of customs duties designed to neutralize advantages
belonging to the place of origin.'" Polar Ice Cream Creamery
Co. v. Andrews, 376 U.S. at 376 U. S.
Page 426 U. S. 830
Maryland argues that its effective preclusion of out-of-state
scrap processors from the relevant portion of the bounty program is
required in order to help ensure that bounty payments are limited
to hulks abandoned within Maryland and that its public funds are
not used in effect to aid in the clearance of hulks abandoned in
other States. Certainly this asserted interest is a legitimate
object of local concern, and, since Willson v.
Black-Bird Creek Marsh Co.,
2 Pet. 245 (1829), we
"recognized that, in the absence of conflicting legislation by
Congress, there is a residuum of power in the state to make laws
governing matters of local concern which nevertheless in some
measure affect interstate commerce or even, to some extent,
Southern Pacific Co. v. Arizona ex rel. Sullivan,
U.S. at 325 U. S. 767
see Huron Cement Co. v. Detroit, 362 U.
, 362 U. S. 443
444 (1960). But the mere assertion of a legitimate local interest
being served by the challenged regulation does not end the matter,
for there exists an
"infinite variety of cases in which regulation of local matters
may also operate as a regulation of commerce, in which
reconciliation of the conflicting claims of state and national
power is to be attained only by some appraisal and accommodation of
the competing demands of the state and national interests
Southern Pacific Co. v. Arizona ex rel. Sullivan, supra
at 325 U. S.
-769. In resolving such questions in close cases, the
Court is necessarily involved in "differences of degree [resolution
of which] depend[s] on slight differences of fact." H. P. Hood
& Sons, Inc. v. Du Mond,
336 U.S. at 336 U. S. 572
(Frankfurter, J., dissenting); Southern Pacific Co. v. Arizona
ex rel. Sullivan, supra
at 325 U. S. 796
(Douglas, J., dissenting), and an adequate record containing the
"relevant factual material which will afford a sure basis' for
an informed judgment" is required.
Page 426 U. S.
Id. at 325 U. S. 770
(Court's opinion). Such a record is lacking in the instant
This case comes to us in a summary judgment posture, and,
respecting the impact of the state regulation on the larger area of
interstate commerce, the record, as the Court notes, "contains no
details of the hulk [processing] market prior to the bounty
at 426 U. S. 809
n. 18. [Footnote 2/8
respecting the State's justification for the preclusion of
out-of-state processors -- ensuring that bounties are not paid for
hulks originating out of State -- the record, as the Court also
notes, but only in the equal protection context, contains no
evidence of whether this objective is, in fact, achieved by the
challenged action, or in what degree. Nor is the record developed
in regard to the availability of "reasonable nondiscriminatory
alternatives, adequate to conserve [this] legitimate local
[interest]." Dean Milk Co. v. Madison,
340 U.S. at
340 U. S. 354
The only evidence in the record is speculative, at best, revealing
that neither the statute nor administrative regulations promulgated
thereunder limit bounty payments to hulks originating in Maryland
or protect against hulks originating out of State from being
processed by in-state processors under the bounty program.
Nevertheless, an adequately developed factual record might well
inform a judgment that the simple preclusion of out-of-state
processors, in light of transportation costs to scrap haulers when
they haul Maryland hulks to out-of-state processors, is as
reasonable and inexpensive a
Page 426 U. S. 832
means of ensuring that bounty payments are not made for hulks
originating out of State as is available to the State under all the
circumstances. Accordingly, I would vacate the judgment below and
remand for the development of a record adequate to inform a
reasonable judgment on these factual issue. Florida Avocado
Growers, Inc. v. Paul, 373 U. S. 132
373 U. S.
-137 (1963); H. P. Hood & Sons, Inc. v. Du
at 336 U. S. 574
(Frankfurter, J., dissenting).
"For a hundred years, it has been accepted constitutional
doctrine that the commerce clause, without the aid of Congressional
legislation, . . . affords some protection from state legislation
inimical to the national commerce, and that, in such cases, where
Congress has not acted, this Court, and not the state legislature,
is, under the commerce clause, the final arbiter of the competing
demands of state and national interests."
Southern Pacific Co. v. Arizona ex rel. Sullivan,
325 U. S. 761
325 U. S. 769
Heretofore, adjudication under the Commerce Clause has invoked a
sensitive judicial scrutiny, entailing
"a consideration of all the facts and circumstances, such as the
nature of the regulation, its function, the character of the
business involved and the actual effect on the flow of
Di Santo v. Pennsylvania, 273 U. S.
, 273 U. S. 44
(1927) (Stone, J., dissenting). See Great A&P Tea Co. v.
Cottrell, 424 U. S. 366
424 U. S. 371
The Court has, however, summarily affirmed a lower court ruling
to this effect which distinguished state purchases in a
"proprietary" capacity of goods for its own use from other state
burdens imposed on interstate commerce. American Yearbook Co.
v. Askew, 339 F.
(MD Fla.), summarily aff'd,
409 U.S. 904
(1972) (BRENNAN and WHITE, JJ., voting to note probable
The Court has said in other contexts that,
"[l]ike private individuals and businesses, the Government
enjoys the unrestricted power to produce its own supplies, to
determine those with whom it will deal, and to fix the terms and
conditions upon which it will make needed purchases."
Perkins v. Lukens Steel Co., 310 U.
, 310 U. S. 127
(1940). See also Heim v. McCall, 239 U.
, 239 U. S.
-192 (1915); Atkin v. Kansas, 191 U.
, 191 U. S.
-223 (1903). None of these cases involved challenges
to restrictive state purchasing statutes under the Commerce Clause.
Cf. Field v. Barber Asphalt Co., 194 U.
(1904), which upheld in the face of a Commerce
Clause challenge local governmental contracts that mandated the
purchase of out-of-state material.
The absence of any articulated principle justifying this summary
conclusion leads me to infer that the newly announced "state
sovereignty" doctrine of National League of Cities v. Usery,
p. 426 U. S. 833
also the motivating rationale behind this holding. It is true that
the Court disclaims any conclusion today respecting congressional
power to legislate in this area, ante
at 426 U. S. 810
n.19, and I hope that is so. I confess a logical difficulty,
however, in understanding why, if the instant state action is not
"the kind of action with which the Commerce Clause is concerned,"
at 426 U. S. 805
there can be any congressional power to legislated in this area.
This exposes one of the difficulties with the Court's categorical
approach to today's decision, which simply carves out an area of
state action to which it declares the Commerce Clause has no
application, rather than employing heretofore accepted principles
of analysis looking to the state interest asserted, the impact on
interstate commerce flowing from the challenged action, and the
availability of reasonable and nondiscriminatory methods for
achieving the state interest, and concluding with a reasoned and
considered judgment under all the circumstances of the
permissibility of the action.
In Pike v. Bruce Church, Inc.,
although we stated that
"statutes requiring business operations to be performed in the home
State that could more efficiently be performed elsewhere" are
burdens on commerce "virtually per se
illegal," 397 U.S.
at 397 U. S. 145
we recognized that such an effect as "an incidental consequence of
a regulatory scheme could perhaps be tolerated" if necessary to
achieve substantial state interests in regulating matters of local
at 397 U. S. 146
Accordingly, even in this area of effect on interstate commerce, we
recognized the need for our traditional balancing approach to
Commerce Clause analysis, id.
at 397 U. S. 142
rather than the absolutist approach employed by the Court
For my conclusions respecting whether the instant statutory
discrimination may be justified under accepted Commerce Clause
principles, see infra, 426 U. S.
When the State imply refuses to purchase for it own use items
that have been processed out of State, the impact on interstate
commerce may be crudely measured by multiplying the value added in
processing times the number of items the State purchases. In this
case, however, the impact on commerce is not so restricted; the
State, in effect, not only requires that the value added by
processing in respect to the State's environmental objective --
presumptively, the amount of the bounty paid which is retained by
the processors, a small amount, since the record shows that
processors customarily pass the largest portion of the bounty on to
the scrap haulers -- be added within the State, but also that the
entire addition of value, including that occurring in response to
market demand for scrap metal qua
metal, be done within
the State. In other words, by this mode of regulation, as opposed
to what occurs by virtue of restrictions on proprietary purchases
for the State's own use, Maryland is, in effect, diverting
processing to locations within its borders of both that element of
value that it "purchases," and that arising in response to
interstate demand for scrap metal that it does not "purchase."
The concurring opinion asserts that, "by hypothesis," a
hypothesis unsupported in the record, see infra
426 U. S. 831
and n. 8, "we are dealing with a business that is dependent on the
availability of subsidy payments,"
"[t]hat [the] commerce, which is now said to be burdened, would
never have existed if, in the first instance, Maryland had decided
to confine its subsidy to operators of Maryland plants,"
and that the
"'burden' on the Virginia processor is caused by the nonreceipt
of the subsidy, regardless of whether or not Maryland elects to
continue to subsidize its local plants."
at 426 U. S. 815
426 U. S. 816
With all respect, however, the evidence and legal arguments are to
the contrary. An uncontradicted affidavit in the record reveals
that § 14 of the § 16 "subsidy" is customarily passed on to the
scrap hauler, App. 79A, and the inability of the out-of-state
processor to pass this subsidy on to the haulers, rather than
simply the lack of subsidization of scrap processing itself, is
alleged to burden interstate commerce by diverting scrap processing
The complaint alleges that
"[a] substantial portion of the Plaintiff's business consists of
the destruction and processing of vehicles acquired in interstate
commerce from towers and other third persons in Maryland;"
that the challenged amendment
"enabl[es] Maryland scrap processors to provide financial
inducements to [towers] while depriving the plaintiff of the
ability to provide [the] same;"
"[i]n consequence . . . , the plaintiff is placed at a severe
competitive and economic disadvantage with Maryland scrap
processors because of the arbitrary diversion of [hulks] away from
the normal channels of interstate commerce;"
and that appellee has been "depriv[ed] . . . of a vital source
of scrap, iron, steel and nonferrous scrap which normally moved in
interstate commerce." Id.
The stipulated facts establish that the
"market value of . . . hulks is heavily dependent upon the
prices steel mills are willing to pay for . . . scrap [metal],
which, in turn, is influenced by national and international
and that "[t]he result is relatively fierce competition by scrap
processors for the acquisition of the available . . . hulks."
An uncontradicted affidavit in the record asserts that "[t]he
lifeblood of the scrap metal processing industry is old cars," that
"[t]he primary source of Plaintiff's raw materials is trade in . .
. hulks," and that "[a] very substantial portion of the Plaintiff's
trade in old cars is derived from Maryland." Id.
74A-75A. "The ability to acquire eight-year-old or older [hulks]
from Maryland . . . is of crucial importance to the conduct of the
Plaintiff's business," id.
at 78A, and the market response
to the challenged amendment which disabled appellee from passing
the bounty on to the haulers "was an almost total abandonment of
Plaintiff by its former regular [haulers participating in the
"[I]n times of scarcity of old cars, when both the offering
price is high and the competition [among scrap processors] for the
available cars is sharpest, the ability to [pass the bounty on to
the scrap haulers] which is, in effect, an offer of a higher price
without increasing the cost of the raw material to the processor,
imparts a distinct competitive edge to those processors fully able
to participate in the bounty program."
The preamble to the Act amending the method by which scrap
processors may obtain title sufficient for participation in the
bounty program and limiting the only practical method to scrap
processors located within the State declares that the Act is "[f]or
the purpose of protecting certain
scrap processors who
destroy certain abandoned motor vehicles. . . ." Id.
15A (emphasis in original).
The concurring opinion asserts that the interstate market in
processing scrap metal allegedly burdened by Maryland's bounty
scheme as amended "was previously too small to be significant."
at 426 U. S. 815
n. Nothing in the record supports this factual judgment, as
appellants themselves argue, Brief for Appellants 37-39; Reply
Brief for Appellants 3, and as the Court below noted, 391 F.
, 62 (1975).