West Lynn Creamery v. Healy
Citation and Court
512 U.S. 186 (1994) — Supreme Court of the United States
Facts
Massachusetts imposed a monthly assessment on all fluid milk sold by dealers to Massachusetts retailers, including milk produced out of state. The proceeds were distributed exclusively to Massachusetts dairy farmers as a subsidy. West Lynn Creamery, a Massachusetts milk dealer that purchased most of its milk from out-of-state, challenged the scheme as violating the Dormant Commerce Clause.
Issue
Whether a state pricing order that combines a facially nondiscriminatory assessment on all milk sales with a subsidy paid exclusively to in-state producers violates the Dormant Commerce Clause.
Holding
Yes. The combined effect of the assessment and subsidy scheme is protectionist and unconstitutional under the Dormant Commerce Clause. The scheme effectively uses revenues extracted from the interstate market to subsidize in-state producers at the expense of their out-of-state competitors.
Rule / Doctrine
A state cannot accomplish through a combination of facially neutral measures what it could not do directly. A tax-and-subsidy scheme that: (1) imposes a nondiscriminatory tax on all market participants; and (2) returns the proceeds exclusively to in-state producers as a subsidy — achieves the same protectionist result as facially discriminatory legislation and violates the Dormant Commerce Clause.
Significance
West Lynn Creamery is significant for demonstrating that formal neutrality does not save a regulation that is protectionist in effect. It closed a potential loophole after Boston Stock Exchange v. State Tax Commission (1977) suggested that states could use non-discriminatory taxes if the revenues went to the general fund. By pairing the assessment with the exclusive subsidy, Massachusetts effectively discriminated against out-of-state milk — the Court saw through the structural separation.