U.S. Supreme Court Reeves, Inc. v. Stake, 447
U.S. 429 (1980) Reeves, Inc. v. Stake No. 79-677 Argued April 16, 1980 Decided June 19, 1980 447
U.S. 429 CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE EIGHTH
CIRCUIT Syllabus For more than 50 years, South Dakota has operated a cement plant
that produced cement for both state residents and out-of-state
buyers. In 1978, because of a cement shortage, the State Cement
Commission announced a policy to confine the sale of cement by the
state plant to residents of the State. This policy forced
petitioner ready-mix concrete distributor, one of the out-of-state
buyers, to cut its production severely. Petitioner then brought
suit in Federal District Court, challenging the policy. The court
granted injunctive relief on the ground that the policy violated
the Commerce Clause. The Court of Appeals reversed on the ground
that the State had simply acted in a proprietary capacity. Held: South Dakota's resident-preference program for
the sale of cement does not violate the Commerce Clause. Pp. 447 U. S.
434 -447.

															(a) "Nothing in the purposes animating the Commerce Clause
prohibits a State, in the absence of congressional action, from
participating in the market and exercising the right to favor its
own citizens over others." Hughes v. Alexandria Scrap
Corp., 426 U. S. 794 , 426 U. S. 810 .
Pp. 447 U. S.
434 -436.

															(b) The Commerce Clause responds principally to state taxes and
regulatory measures impeding free private trade in the national
marketplace, and there is no indication of a constitutional plan to
limit the ability of the States themselves to operate freely in the
free market. Restraint in this area is also counseled by
considerations of state sovereignty, each State's role as guardian
and trustee for its people, and the recognized right of a trader to
exercise discretion as to the parties with whom he will deal.
Moreover, state proprietary activities often are burdened with the
same restrictions as private market participants. And, as this case
illustrates, the competing considerations in cases involving state
proprietary action often will be subtle, complex, politically
charged, and difficult to assess under traditional Commerce Clause
analysis. Given these factors, the adjustment of interests in this
context is, as a rule, better suited for Congress than this Court.
Pp. 447 U. S.
436 -439.

															(c) The arguments for invalidating South Dakota's
resident-preference program -- that the State, having long
exploited the interstate market for cement, should not be permitted
to withdraw from it when a shortage Page 447 U. S. 430 arises; that the program responds solely to the nongovernmental
objective of protectionism; that hoarding may have undesirable
consequences; that the program places South Dakota suppliers of
ready-mix concrete at a competitive advantage in the out-of-state
market; and that, if South Dakota had not acted, free market forces
would have generated an appropriate level of supply at free market
prices for all buyers in the region -- are weak, at best. Whatever
residual force inheres in them is more than offset by
countervailing considerations of policy and fairness. To invalidate
the program would discourage similar state projects and rob South
Dakota of the intended benefit of its foresight, risk, and
industry. Pp. 447 U. S.
440 -447.

															603 F.2d 736, affirmed.

															BLACKMUN, J., delivered the opinion of the Court, in which
BURGER, C.J. . and STEWART, MARSHALL, and REHNQUIST, JJ., joined.
POWELL, J., filed dissenting opinion, in which BRENNAN, WHITE, and
STEVENS, JJ., joined, post, p. 447 U. S.
447 .

															MR. JUSTICE BLACKMUN delivered the opinion of the Court.

															The issue in this case is whether, consistent with the Commerce
Clause, U.S.Const., Art. I, § 8, cl. 3, the State of South Dakota,
in a time of shortage, may confine the sale of the cement it
produces solely to its residents. I In 1919, South Dakota undertook plans to build a cement plant.
The project, a product of the State's then prevailing Progressive
political movement, was initiated in response to recent regional
cement shortages that "interfered with and delayed both public and
private enterprises," and that were "threatening the people of this
state." Eakin v. South Dakota State Cement Comm'n, 44 S.D.
268, 272, 183 N.W. 651, 652 Page 447 U. S. 431 (1921). [ Footnote 1 ] In
1920, the South Dakota Cement Commission anticipated "[t]hat there
would be a ready market for the entire output of the plant within
the state." Report of State Page 447 U. S. 432 Cement Commission 9 (1920). The plant, however, located at Rapid
City, soon produced more cement than South Dakotans could use. Over
the years, buyers in no less than nine nearby States purchased
cement from the State's plant. App. 26. Between 1970 and 1977, some
40% of the plant's output went outside the State.

															The plant's list of out-of-state cement buyers included
petitioner Reeves, Inc. Reeves is a ready-mix concrete [ Footnote 2 ] distributor organized under
Wyoming law and with facilities in Buffalo, Gillette, and Sheridan,
Wyo. Id. at 15. From the beginning of its operations in
1958, and until 1978, Reeves purchased about 95% of its cement from
the South Dakota plant. Id. at 15 and 22. In 1977, its
purchases were $1,172,000. Id. at 17. In turn, Reeves has
supplied three northwestern Wyoming counties with more than half
their ready-mix concrete needs. Id. at 15. For 20 years,
the relationship between Reeves and the South Dakota cement plant
was amicable, uninterrupted, and mutually profitable.

															As the 1978 construction season approached, difficulties at the
plant slowed production. Meanwhile, a booming construction industry
spurred demand for cement both regionally and nationally. Id. at 13. The plant found itself unable to meet all
orders. Faced with the same type of "serious cement shortage" that
inspired the plant's construction, the Commission

															"reaffirmed its policy of supplying all South Dakota customers
first and to honor all contract commitments, Page 447 U. S. 433 with the remaining volume allocated on a first come, first
served basis." Ibid. [ Footnote
3 ]

															Reeves, which had no preexisting long-term supply contract, was
hit hard and quickly by this development. On June 30, 1978, the
plant informed Reeves that it could not continue to fill Reeves'
orders, and on July 5, it turned away a Reeves truck. Id. at 17-18. Unable to find another supplier, id. at 21,
Reeves was forced to cut production by 76% in mid-July. Id. at 20.

															On July 19, Reeves brought this suit against the Commission,
challenging the plant's policy of preferring South Dakota buyers,
and seeking injunctive relief. Id. at 3-10. After
conducting a hearing and receiving briefs and affidavits, the
District Court found no substantial issue of material fact, and
permanently enjoined the Commission's practice. The court reasoned
that South Dakota's "hoarding" was inimical to the national free
market envisioned by the Commerce Clause. Id. at
27-30.

															The United States Court of Appeals for the Eighth Circuit
reversed. Reeves, Inc. v. Kelley, 586 F.2d 1230, 1232
(1978). It concluded that the State had "simply acted in a
proprietary capacity," as permitted by Hughes v. Alexandria
Scrap Corp., 426 U. S. 794 (1976). Petitioner sought certiorari. This Court granted the
petition, vacated the judgment, and remanded the case for further
consideration in light of Hughes v. Oklahoma, 441 U.
S. 322 (1979). Reeves, Inc. v. Kelley, 441 U.S.
939 (1979). On remand, the Court of Appeals distinguished that
case. [ Footnote 4 ] Again
relying on Alexandria Page 447 U. S. 434 Scrap, the court abided by its previous holding. Reeves, Inc. v. Kelley, 603 F.2d 736 (1979). We granted
Reeves' petition for certiorari to consider once again the impact
of the Commerce Clause on state proprietary activity. 444 U.S. 1031
(1980). [ Footnote 5 ] II A Alexandria Scrap concerned a Maryland program designed
to remove abandoned automobiles from the State's roadways and
junkyards. To encourage recycling, a "bounty" was offered for every
Maryland-titled junk car converted into scrap. Processors located
both in and outside Maryland were eligible to collect these
subsidies. The legislation, as initially enacted in 1969, required
a processor seeking a bounty to present documentation evidencing
ownership of the wrecked car. This requirement however, did not
apply to "hulks," inoperable automobiles over eight years old. In
1974, the statute was amended to extend documentation requirements
to hulks, which comprised a large majority of the junk cars being
processed. Departing from prior practice, the new law imposed more
exacting documentation requirements on out-of-state than in-state
processors. By making it less remunerative for suppliers to
transfer vehicles outside Maryland, the Page 447 U. S. 435 reform triggered a "precipitate decline in the number of
bounty-eligible hulks supplied to appellee's [Virginia] plant from
Maryland sources." 426 U.S. at 426 U. S. 801 .
Indeed,

															"[t]he 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." Id. at 426 U. S. 803 ,
n. 13; see id. at 426 U. S. 819 (dissenting opinion).

															Invoking the Commerce Clause, a three-judge District Court
struck down the legislation. 391 F. Supp.
46 (Md.1975). It observed that the amendment imposed
"substantial burdens upon the free flow of interstate commerce," id. at 62, and reasoned that the discriminatory program
was not the least disruptive means of achieving the State's
articulated objective. Id. at 63. See generally Pike
v. Bruce Church, Inc., 397 U. S. 137 , 397 U. S. 142 (1970). [ Footnote 6 ]

															This Court reversed. It recognized the persuasiveness of the
lower court's analysis if the inherent restrictions of the Commerce
Clause were deemed applicable. In the Court's view, however, Alexandria Scrap did not involve "the kind of action with
which the Commerce Clause is concerned." 426 U.S. at 426 U. S. 805 .
Unlike prior cases voiding state laws inhibiting interstate
trade,

															"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," id. at 426 U. S. 806 ,
"as a purchaser, in effect, of a potential article of interstate
commerce," and has restricted "its trade to its own citizens or
businesses within the State." Id. at 426 U. S. 808 .
[ Footnote 7 ] Page 447 U. S. 436 Having characterized Maryland as a market participant, rather
than as a market regulator, the Court found no reason to "believe
the Commerce Clause was intended to require independent
justification for [the State's] action." Id. at 426 U. S. 809 .
The Court couched its holding in unmistakably broad terms.

															"Nothing in the purposes animating the Commerce Clause prohibits
a State, in the absence of congressional action, from participating
in the market and exercising the right to favor its own citizens
over others." Id. at 426 U. S. 810 (footnote omitted). [ Footnote
8 ] B The basic distinction drawn in Alexandria Scrap between
States as market participants and States as market regulators makes
good sense and sound law. As that case explains, the Page 447 U. S. 437 Commerce Clause responds principally to state taxes and
regulatory measures impeding free private trade in the national
marketplace. Id. at 426 U. S.
807 -08, citing H. P. Hood& Sons v. Du Mond, 336 U. S. 525 , 336 U. S. 53 (1949)
(referring to "home embargoes," "customs duties," and "regulations"
excluding imports). There is no indication of a constitutional plan
to limit the ability of the States themselves to operate freely in
the free market. See L. Tribe, American Constitutional Law
336 (1978) ("the commerce clause was directed, as an historical
matter, only at regulatory and taxing actions taken by states in
their sovereign capacity"). The precedents comport with this
distinction. [ Footnote 9 ] Page 447 U. S. 438 Restraint in this area is also counseled by considerations of
state sovereignty, [ Footnote
10 ] the role of each State " as guardian and trustee for its
people,'" Heim v. McCall, 239 U.
S. 175 , 239 U. S. 191 (1915), quoting Atkin v. Kansas, 191 U.
S. 207 , 191 U. S.
222 -223 (1903), [ Footnote 11 ] and "the long recognized right of trader or manufacturer, Page 447 U. S. 439 engaged in an entirely private business, freely to exercise his
own independent discretion as to parties with whom he will
deal." United States v. Colgate & Co., 250 U.
S. 300 , 250 U. S. 307 (1919). [ Footnote 12 ]
Moreover, state proprietary activities may be, and often are,
burdened with the same restrictions imposed on private market
participants. [ Footnote 13 ]
Evenhandedness suggests that, when acting as proprietors, States
should similarly share existing freedoms from federal constraints,
including the inherent limits of the Commerce Clause. See State
e rel. Collins v. Senatobia Blank Book & Stationery Co., 115 Miss. 254, 260, 76 So. 258, 260 (1917); Tribune Printing
& Binding Co. v. Barnes, 7 N.D. 591, 597, 75 N.W. 94, 906
(1898). Finally, as this case illustrates, the competing
considerations in cases involving state proprietary action often
will be subtle, complex, politically charged, and difficult to
assess under traditional Commerce Clause analysis. Given these
factors, Alexandria Scrap wisely recognizes that, as a
rule, the adjustment of interests in this context is a task better
suited for Congress than this Court. Page 447 U. S. 440 III South Dakota, as a seller of cement, unquestionably fits the
"market participant" label more comfortably than a State acting to
subsidize local scrap processors. Thus, the general rule of Alexandria Scrap plainly applies here. [ Footnote 14 ] Petitioner argues, however,
that the exemption for marketplace participation necessarily admits
of exceptions. While conceding that possibility, we perceive in
this case no sufficient reason to depart from the general rule. A In finding a Commerce Clause violation, the District Court
emphasized "that the Commission . . . made an election to become
part of the interstate commerce system." App. 28. The gist of this
reasoning, repeated by petitioner here, is that one good turn
deserves another. Having long exploited the interstate market,
South Dakota should not be permitted to withdraw from it when a
shortage arises. This argument is not persuasive. It is somewhat
self-serving to say that South Dakota has "exploited" the
interstate market. An equally fair characterization is that
neighboring States long have benefited from South Dakota's
foresight and industry. Viewed in this light, it is not surprising
that Alexandria Scrap rejected an argument that the 1974
Maryland legislation challenged there was invalid because cars
abandoned in Maryland had been processed in neighboring States for
five years. As in Alexandria Scrap, we must conclude
that

															"this chronology does not distinguish the case, for Commerce
Clause purposes, Page 447 U. S. 441 from one in which a State offered [cement] only to domestic
[buyers] from the start."

															426 U.S. 809. [ Footnote
15 ]

															Our rejection of petitioner's market exploitation theory
fundamentally refocuses analysis. It means that, to reverse, we
would have to void a South Dakota "residents only" policy even if
it had been enforced from the plant's very first days. Such a
holding, however, would interfere significantly with a State's
ability to structure relations exclusively with its own citizens.
It would also threaten the future fashioning of effective and
creative programs for solving local problems and distributing
government largesse. See 447 U. S. 1, supra. A healthy regard for federalism and good government
renders us reluctant to risk these results.

															"To stay experimentation in things social and economic is a
grave responsibility. Denial of the right to experiment may be
fraught with serious consequences to the Nation. It is one of the
happy incidents of the federal system that a single courageous
State may, if its citizens choose, serve as a laboratory, and try
novel social and economic experiments without risk to the rest of
the country." New State Ice Co. v. Liebmann, 285 U.
S. 262 , 285 U. S. 311 (1932) (Brandeis, J., dissenting). Page 447 U. S. 442 B Undaunted by these considerations, petitioner advances four more
arguments for reversal:

															First, petitioner protests that South Dakota's preference for
its residents responds solely to the "non-governmental objectiv[e]"
of protectionism Brief for Petitioner 25. Therefore, petitioner
argues, the policy is per se invalid. See Philadelphia
v. New Jersey, 437 U. S. 617 , 437 U. S. 624 (1978).

															We find the label "protectionism" of little help in this
context. The State's refusal to sell to buyers other than South
Dakotans is "protectionist" only in the sense that it limits
benefits generated by a state program to those who fund the state
treasury and whom the State was created to serve. Petitioner's
argument apparently also would characterize as "protectionist"
rules restricting to state residents the enjoyment of state
educational institutions, energy generated by a state-run plant,
police and fire protection, and agricultural improvement and
business development programs. Such policies, while perhaps
"protectionist" in a loose sense, reflect the essential and
patently unobjectionable purpose of state government -- to serve
the citizens of the state. [ Footnote 16 ] Page 447 U. S. 443 Second, petitioner echoes the District Court's warning:

															"If a state in this union were allowed to hoard its commodities
or resources for the use of their own residents only, a drastic
situation might evolve. For example, Pennsylvania or Wyoming might
keep their coal, the northwest its timber, and the mining states
their minerals. The result being that embargo may be retaliated by
embargo, and commerce would be halted at state lines."

															App. 29. See, e.g., Baldwin v. Montana Fish & Game
Comm'n, 436 U. S. 371 , 436 U. S.
385 -386 (1978). This argument, although rooted in the
core purpose of the Commerce Clause, does not fit the present
facts. Cement is not a natural resource, like coal, timber, wild
game, or minerals. Cf. Hughes v. Oklahoma, 441 U.
S. 322 (1979) (minnows); Philadelphia v. New Jersey,
supra, (landfill sites); Pennsylvania v. West
Virginia, 262 U. S. 553 (1923) (natural gas); West v. Kansas Natural
Gas Page 447 U. S. 444 Co., 221 U. S. 229 (1911) (same); Note, 32 Rutgers L.Rev. 741 (1979). It is the end
product of a complex process whereby a costly physical plant and
human labor act on raw materials. South Dakota has not sought to
limit access to the State's limestone or other materials used to
make cement. Nor has it restricted the ability of private firms or
sister States to set up plants within its borders. Tr. of Oral Arg.
4. Moreover, petitioner has not suggested that South Dakota
possesses unique access to the materials needed to produce cement.
[ Footnote 17 ] Whatever
limits might exist on a State's ability to invoke the Alexandria Scrap exemption to hoard resources which by
happenstance are found there, those limits do not apply here.

															Third, it is suggested that the South Dakota program is infirm
because it places South Dakota suppliers of ready-mix concrete at a
competitive advantage in the out-of-state market; Wyoming
suppliers, such as petitioner, have little chance against South
Dakota suppliers who can purchase cement from the State's plant and
freely sell beyond South Dakota's borders.

															The force of this argument is seriously diminished, if not
eliminated, by several considerations. The argument necessarily Page 447 U. S. 445 implies that the South Dakota scheme would be unobjectionable if
sales in other States were totally barred. It therefore proves too
much, for it would tolerate even a greater measure of protectionism
and stifling of interstate commerce than the challenged system
allows. See K.S.B. Technical Sales Corp. v. North Jersey Dist.
Water Supply Comm'n, 75 N.J. 272, 298, 381
A.2d 774 , 787 (1977) ("It would be odd indeed to find that,
when a state becomes less parochial . . . its purpose becomes
suspect under the Commerce Clause"). Cf. Pike v. Bruce Church,
Inc., 397 U.S. at 397 U. S. 142 ("And the extent of the burden that will be tolerated will of
course depend . . . on whether [the state interest] could be
promoted as well with a lesser impact on interstate activities").
Nor is it to be forgotten that Alexandria Scrap approved a
state program that "not only . . . effectively protect[ed] scrap
processors with existing plants in Maryland from the pressures of
competitors with nearby out-of-state plants, but [that] implicitly
offer[ed] to extend similar protection to any competitor . . .
willing to erect a scrap processing facility within Maryland's
boundaries." 391 F. Supp. at 63. Finally, the competitive plight of
out-of-state ready-mix suppliers cannot be laid solely at the feet
of South Dakota. It is attributable as well to their own States'
not providing or attracting alternative sources of supply and to
the suppliers' own failure to guard against shortages by executing
long-term supply contracts with the South Dakota plant.

															In its last argument, petitioner urges that, had South Dakota
not acted, free market forces would have generated an appropriate
level of supply at free market prices for all buyers in the region.
Having replaced free market forces, South Dakota should be forced
to replicate how the free market would have operated under
prevailing conditions.

															This argument appears to us to be simplistic and speculative.
The very reason South Dakota built its plant was because the free
market had failed adequately to supply the Page 447 U. S. 446 region with cement. See n 1, supra. There is no indication, and no way to
know, that private industry would have moved into petitioner's
market area, and would have ensured a supply of cement to
petitioner either prior to or during the 1978 construction season.
Indeed, it is quite possible that petitioner would never have
existed -- far less operated successfully for 20 years -- had it
not been for South Dakota cement. [ Footnote 18 ] C We conclude, then, that the arguments for invalidating South
Dakota's resident-preference program are weak, at best. Whatever
residual force inheres in them is more than offset by
countervailing considerations of policy and fairness. Reversal
would discourage similar state projects, even though this project
demonstrably has served the needs of state residents and has helped
the entire region for more than a half century. Reversal also would
rob South Dakota of the intended benefit of its foresight, risk,
and industry. [ Footnote 19 ]
Under Page 447 U. S. 447 these circumstances, there is no reason to depart from the
general rule of Alexandria Scrap. The judgment of the United States Court of Appeals is
affirmed. It is so ordered. [ Footnote 1 ]

															It was said that the plant was built because the only cement
plant in the State "had been operating successfully for a number of
years until it had been bought by the so-called trust and closed
down." Report of South Dakota State Cement Commission 6 (1920). In
its report advocating creation of a cement plant, the Commission
noted both the substantial profits being made by private producers
in the prevailing market and the fact that producers outside the
State were "now supplying all the cement used in" South Dakota.
Under the circumstances, the Commission reasoned, it would not be
to the "capitalists['] . . . advantage to build a new plant within
the state." Id. at 8. This skepticism regarding private
industry's ability to serve public needs was a hallmark of
Progressivism. See, e.g., Hofstadter, The Age of Reform
227 (1955) ("In the Progressive era, the entire structure of
business . . . became the object of a widespread hostility"). South
Dakota, earlier a bastion of Populism, id. at 50, became a
leading Progressivist State. See R. Nye, Midwestern
Progressive Politics 217-218 (1959); G. Mowry, Theodore Roosevelt
and the Progressive Movement 155, and n. 125 (1946). Roosevelt
carried South Dakota in the election of 1912, id. at 281,
n. 69, and Robert La Follette -- on a platform calling for public
ownership of railroads and waterpower, see K. MacKay, The
Progressive Movement of 1924, pp. 270-271 (app. 4) (1966) -- ran
strongly (36.9%) in the State in 1924. Congressional Quarterly's
Guide to U.S. Elections 287 (1975).

															The backdrop against which the South Dakota cement project was
initiated is described in H. Schell, History of South Dakota
268-269 (3d ed.1975):

															"Although a majority of the voters [in 1918] had seemingly
subscribed to a state ownership philosophy, it was a question how
far the Republican administration at Pierre would go in fulfilling
campaign promises. As [Governor] Norbeck entered upon his second
term, he again urged a state hail insurance law and advocated steps
toward a state-owned coal mine, cement plant, and state-owned
stockyards. He also recommended an appropriation for surveying dam
sites for hydroelectric development. The lawmakers readily enacted
these recommendations into law, except for the stockyards proposal.
. . ."

															". . . In retrospect, [Norbeck's] program must be viewed as a
part of the Progressives' campaign against monopolistic prices.
There was, moreover, the fervent desire to make the services of the
state government available to agriculture. . . . These were basic
tenets of the Progressive philosophy of government."

															[ Footnote 2 ]

															"[C]ement is a finely ground manufactured mineral product,
usually gray in color. It is mixed with water and sand, gravel,
crushed stone, or other aggregates to form concrete, the rock-like
substance that is the most widely used construction material in the
world."

															Portland Cement Association, The U.S. Cement Industry, An
Economic Report 5 (2d ed.1978). "Ready-mixed concrete is the term
applied to ordinary concrete that is mixed at a central depot
instead of on the construction site, and is distributed in special
trucks." 4 Encyclopedia Britannica 1077 (1974).

															[ Footnote 3 ]

															It is not clear when the State initiated its policy preferring
South Dakota customers. The record, however, shows that the policy
was in place at least by 1974. App. 24.

															[ Footnote 4 ]

															We now agree with the Court of Appeals that Hughes v.
Oklahoma does not bear on analysis here. That case involved a
State's attempt " to prevent privately owned articles of trade
from being shipped and sold in interstate commerce.'" Philadelphia v. New Jersey, 437 U.
S. 617 , 437 U. S. 627 (1978), quoting Foster-Fountain Packing Co. v. Haydel, 278 U. S. 1 , 278 U. S. 10 (1928). Thus, it involved precisely the type of activity
distinguished by the Court in Alexandria Scrap. See 426 U.S. at 426 U. S.
805 -806. [ Footnote 5 ]

															During the pendency of this litigation, economic conditions have
permitted South Dakota to discontinue enforcement of its
resident-preference policy. We agree with the parties, however,
that the case has not become moot. During at least three
construction seasons within as many decades, the cement plant has
been unable, or nearly unable, to satisfy demand. See,
e.g., Twelfth Biennial Report of the South Dakota State Cement
Commission (1948); App. 23 (affidavit of C. A. Reeves). Under these
circumstances,

															"(1) the challenged action was in its duration too short to be
fully litigated prior to its cessation or expiration, and (2) there
[is] a reasonable expectation that the same complaining party
[will] be subjected to the same action again." Weinstein v. Bradford, 423 U.
S. 147 , 423 U. S. 149 (1975).

															[ Footnote 6 ]

															Maryland sought to justify its reform as an effort to reduce
bounties paid to out-of-state processors on Maryland-titled cars
abandoned outside Maryland. The District Court concluded that
Maryland could achieve this goal more satisfactorily by simply
restricting the payment of bounties to only those cars abandoned in
Maryland.

															[ Footnote 7 ]

															The Court invoked this rationale after explicitly reiterating
the District Court's finding that the Maryland program imposed
" substantial burdens upon the free flow of interstate
commerce.'" 426 U.S. at 426 U. S. 804 .
Moreover, the Court was willing to accept the Virginia processor's
characterization of the Maryland program as "reducing in some
manner the flow of goods in interstate commerce." Id. at 426 U. S. 805 .
Given this concession, we are unable to accept the dissent's
description of Alexandria Scrap as a case in which "we
found no burden on commerce," post at 447 U. S. 451 ,
"concluded that the subsidies . . . erected no barriers to trade," post at 447 U. S. 452 ,
and determined that the Maryland program did not "cut off," ibid., or "impede the flow of interstate commerce," post at 447 U. S. 450 .
Indeed, even the dissent in the present case recognizes that the
Maryland subsidy program "divert[ed] Maryland `hulks' to in-state
processors." Post at 447 U. S. 451 .
To be sure, Alexandria Scrap rejected the argument that
"the bounty program constituted an impermissible burden on
interstate commerce." Ibid. (emphasis added). It did so,
however, solely because Maryland had "entered into the market
itself." 426 U.S. at 426 U. S. 806 .
Thus, the two-step analysis distilled by the dissent from Alexandria Scrap, see post at 447 U. S.
451 -453, collapses into a single inquiry: whether the
challenged "program constituted direct state participation in the
market." Post at 447 U. S. 451 .
The dissent agrees that that question is to be answered in the
affirmative here. Ibid. [ Footnote 8 ]

															The dissent's central criticisms of the result reached here seem
to be that the South Dakota policy does not emanate from "the power
of governments to supply their own needs," and that it threatens
" the natural functioning of the interstate market.'" Post at 447 U. S. 450 .
The same observations, however, apply with equal force to the
subsidy program challenged in Alexandria Scrap. [ Footnote 9 ] Alexandria Scrap does not stand alone. In American
Yearbook Co. v. Askew, 339 F.
Supp. 719 (MD Fla.1972), a three-judge District Court upheld a
Florida statute requiring the State to obtain needed printing
services from in-state shops. It reasoned that "state proprietary
functions" are exempt from Commerce Clause scrutiny. Id. at 725. This Court affirmed summarily. 409 U.S. 904 (1972).
Numerous courts have rebuffed Commerce Clause challenges directed
at similar preferences that exist in "a substantial majority of the
states." Note, 58 Iowa L.Rev. 576 (1973). City of Phoenix v.
Superior Court, 109 Ariz. 533, 535, 514 P.2d
454 , 456 (1973) (citing American Yearbook to reaffirm Schrey v. Allison Steel Mfg. Co., 75 Ariz. 282, 255 P.2d 604 (1953)); Denver v. Bossie, 83 Colo. 329, 266 P. 214
(1928); In re Gemmill, 20 Idaho 732, 119 P. 298 (1911); People ex rel. Holland v. Bleigh Constr.
Co., 61 Ill. 2d
258 , 274 275, 335 N.E.2d
469 , 479 (1975) (citing American Yearbook); State ex rel.
Collins v. Senatobia Blank Book & Stationery Co., 115
Miss. 254, 76 So. 258 (1917); Allen v. Labsap, 188 Mo.
692, 87 S.W. 926 (1905); Hersey v. Neilson, 47 Mont. 132,
131 P. 30 (1913); Tribune Printing & Binding Co. v.
Barnes, 7 N.D. 591, 75 N.W. 904 (1898). See also
Dixon-Paul Printing Co. v. Board of Public Contracts, 117
Miss. 83, 77 So. 908 (1918); Luboil Heat & Power Corp. v.
Pleydell, 178 Misc. 562, 564, 34 N.Y.S.2d 587, 591 (Sup.
1942). The only clear departure from this pattern, People ex
rel. Treat v. Coler, 166 N.Y. 144, 59 N.E. 776 (1901), drew a
strong dissent, and has been uniformly criticized in later
decisions. See, e.g., State ex rel. Collins v. Senatobia Blank
Book & Stationery Co., supra; Allen v. Labsap, supra. One other case merits comment. In Bethlehem Steel Corp. v.
Board of Commissioners, 276 Cal. App.
2d 221 , 80 Cal. Rptr. 800 (1969), the court struck down a
California statute requiring the State to contract only with
persons who promised to use or supply materials produced in the
United States. In Opinion No. 69-253, 53 Op.Cal.Atty. Gen. 72
(1970), the State's Attorney General reasoned that Bethlehem
Steel similarly prohibited, under the "foreign commerce"
Clause, statutes giving a preference to California-produced goods.
We have no occasion to explore the limits imposed on state
proprietary actions by the "foreign commerce" Clause or the
constitutionality of "Buy American" legislation. Compare
Bethlehem Steel Corp., supra, with K.S.B. Technical Sales Corp. v.
North Jersey Dist. Water Supply Comm'n, 75 N.J. 272, 381 A.2d
774 (1977). We note, however, that Commerce Clause scrutiny may
well be more rigorous when a restraint on foreign commerce is
alleged. See Japan Line, Ltd. v. County of Los Angeles, 441 U. S. 434 (1979).

															[ Footnote 10 ] See American Yearbook Co. v. Askew, 339 F. Supp. at 725
(" ad hoc " inquiry into burdening of interstate commerce
"would unduly interfere with state proprietary functions, if not
bring them to a standstill"). Considerations of sovereignty
independently dictate that marketplace actions involving "integral
operations in areas of traditional governmental functions" -- such
as the employment of certain state workers -- may not be subject
even to congressional regulation pursuant to the commerce power. National League of Cities v. Usery, 426 U.
S. 833 , 426 U. S. 852 (1976). It follows easily that the intrinsic limits of the Commerce
Clause do not prohibit state marketplace conduct that falls within
this sphere. Even where "integral operations" are not implicated,
States may fairly claim some measure of a sovereign interest in
retaining freedom to decide how, with whom, and for whose benefit
to deal. The Supreme Court, 1975 Term, 90 Harv.L.Rev. 1, 56, 63
(1976).

															[ Footnote 11 ] See Foster-Fountain Packing Co. v. Haydel, 278 U.S. 278 U. S. the
State might have retained the shrimp for consumption and use
therein"); Toomer v. Witsell, 334 U.
S. 385 , 334 U. S. 409 (1948) (concurring opinion) (state power to provide for own
citizens by developing food supply distinguished from interference
with private transactions in food products); Helvering v.
Gerhardt, 304 U. S. 405 , 304 U. S. 427 (1938) (concurring opinion) ("The genius of our government provides
that, within the sphere of constitutional action, the people . . .
have the power to determine as conditions demand, what services and
functions the public welfare requires").

															[ Footnote 12 ]

															When a State buys or sells, it has the attributes of both a
political entity and a private business. Nonetheless, the dissent
would dismiss altogether the "private business" element of such
activity and focus solely on the State's political character. Post at 447 U. S. 450 .
The Court, however, heretofore has recognized 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.
S. 113 , 310 U. S. 127 (1940) (emphasis added). While acknowledging that there may be
limits on this sweepingly phrased principle, we cannot ignore the
similarities of private businesses and public entities when they
function in the marketplace.

															[ Footnote 13 ] See, e.g., National League of Cities v. Usery, 426 U.S.
at 426 U. S. 854 ,
n. 18; New York v. United States, 326 U.
S. 572 (1946); United States v. California, 297 U. S. 175 (1936). See also Lafayette v. Louisiana Power & Light
Co., 435 U. S. 389 (1978).

															[ Footnote 14 ]

															The criticism received by Alexandria Scrap, in part,
has been directed at its application of the proprietary immunity to
state subsidy programs. See Note, 18 B.C.Ind. &
Com.L.Rev. 893, 924-925 (1977). But see The Supreme Court,
1975 Term, 90 Harv.L.Rev. at 60-61. We have no occasion here to
inquire whether subsidy programs unlike that involved in Alexandria Scrap warrant characterization as proprietary,
rather than regulatory, activity. Cf. 18 B.C.Ind. &
Com.L.Rev. at 913-915.

															[ Footnote 15 ]

															Alexandria Scrap explained:

															"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. 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 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."

															426 U.S. at 426 U. S.
809 -810. (Footnote omitted.)

															[ Footnote 16 ]

															Petitioner would distinguish Alexandria Scrap as involving state legislation designed to advance the
nonprotectionist goal of environmentalism. This characterization is
an oversimplification. The challenged feature of the Maryland
program -- the discriminatory documentation requirement -- was not
aimed at improving the environment; indeed, by decreasing the
profit margin a hulk supplier could expect to receive if he
delivered to the most accessible recycling plant, it is likely that
the amendment somewhat set back the goal of encouraging hulk
processing. The stated justification for the discriminatory
regulation -- reducing payments to out-of-state processors for
recycling of hulks abandoned outside Maryland -- was not even
mentioned by the Court in rebuffing the Virginia processor's
Commerce Clause challenge. Indeed, the central point of the Court's
analysis was that demonstration of an "independent justification"
was unnecessary to sustain the State's program. See Note,
18 B.C.Ind. & Com.L.Rev. at 927-928. At bottom, the
discrimination challenged in Alexandria Scrap was
motivated by the same concern underlying South Dakota's
resident-preference policy -- a desire to channel state benefits to
the residents of the State supplying them. If some underlying
"commendable as well as legitimate" purpose, 426 U.S. at 426 U. S. 809 ,
is also required, it is certainly present here. In establishing the
plant, South Dakota sought the most unstartling governmental goal:
improvement of the quality of life in that State by generating a
supply of a previously scarce product needed for local construction
and governmental improvements. A cement program, to be sure, may be
a somewhat unusual or unorthodox way in which to utilize state
funds to improve the quality of residents' lives. But

															"[a] State's project is as much a legitimate governmental
activity whether it is traditional, or akin to private enterprise,
or conducted for profit. . . . A State may deem it as essential to
its economy that it own and operate a railroad, a mill, or an
irrigation system as it does to own and operate bridges, street
lights, or a sewage disposal plant. What might have been viewed in
an earlier day as an improvident or even dangerous extension of
state activities may today be deemed indispensable." New York v. United States, 326 U.S. at 326 U. S. 591 (dissenting opinion).

															[ Footnote 17 ]

															Nor has South Dakota cut off access to its own cement
altogether, for the policy does not bar resale of South Dakota
cement to out-of-state purchasers. Although the out-of-state buyer
in the secondary market will undoubtedly have to pay a markup not
borne by South Dakota competitors, this result is not wholly
unjust. There should be little question that South Dakota at least
could exact a premium on out-of-state purchases to compensate it
for the State's investment and risk in the plan. If one views the
added markup paid by out-of-state buyers to South Dakota middlemen
as the rough equivalent of this "premium," the challenged program
equates with a permissible result. The "bottom line" of the scheme
closely parallels the result in Alexandria Scrap: out-of-state concrete suppliers are not removed from the market
altogether; to compete successfully with in-state competitors,
however, they must achieve additional efficiencies or exploit
natural advantages such as their location to offset the incremental
advantage channeled by the State's own market behavior to in-state
concrete suppliers.

															[ Footnote 18 ]

															Petitioner also seeks to distinguish Alexandria Scrap on the ground that there, unlike here, the State "created" the
relevant market. See 426 U.S. at 426 U. S.
814 -817 (concurring opinion). It is clear, however, that Alexandria Scrap could not, and did not, rest on the
notion that Maryland had created the interstate market in hulks. Id. at 426 U. S. 809 ,
n. 18. See id. at 426 U. S. 824 -826, n. 6 (dissenting opinion); Note, 18
B.C.Ind. & Com.L.Rev. at 927; The Supreme Court, 1975 Term, 90
Harv.L.Rev. at 62, n. 27; Note, 34 Wash. & Lee L.Rev. 979, 995
(1977).

															[ Footnote 19 ]

															The risk borne by South Dakota in establishing the cement plant
is not to be underestimated. As explained in n 1, supra, the cement plant was one of several
projects through which the Progressive state government sought to
deal with local problems. The fate of other similar projects
illustrates the risk borne by South Dakota taxpayers in setting up
the cement plant at a cost of some $2 million. Thus,

															"[t]he coal mine was sold in early 1934 for $5,500 with an
estimated loss of nearly $175,000 for its fourteen years of
operation. The 1933 Legislature also liquidated the state bonding
department and the state hail insurance project. The total loss to
the taxpayers from the latter venture was approximately
$265,000."

															H. Schell, History of South Dakota 286 (3d ed.1975).

															MR. JUSTICE POWELL, with whom MR. JUSTICE BRENNAN, MR. JUSTICE
WHITE, and MR. JUSTICE STEVENS join, dissenting.

															The South Dakota Cement Commission has ordered that, in times of
shortage, the state cement plant must turn away out-of-state
customers until all orders from South Dakotans are filled. This
policy represents precisely the kind of economic protectionism that
the Commerce Clause was intended to prevent. [ Footnote 2/1 ] The Court, however, finds no violation of
the Commerce Clause, solely because the State produces the cement.
I agree with the Court that the State of South Dakota may provide
cement for its public needs without violating the Commerce Clause.
But I cannot agree that South Dakota may withhold its cement from
interstate commerce in order to benefit private citizens and
businesses within the State. I The need to ensure unrestricted trade among the States created a
major impetus for the drafting of the Constitution. "The power over
commerce . . . was one of the primary objects for which the people
of America adopted their government. . . ." Gibbons v.
Ogden , 9 Wheat. 1, 22 U. S. 190 (1824). Indeed, the Constitutional Convention was called after an
earlier convention on trade and commercial problems proved
inconclusive. C. Beard, An Economic Interpretation of the Page 447 U. S. 448 Constitution 61-63 (1935); S. Bloom, History of the Formation of
the Union Under the Constitution 14-15 (1940). In the subsequent
debate over ratification, Alexander Hamilton emphasized the
importance of unrestricted interstate commerce:

															"An unrestrained intercourse between the States themselves will
advance the trade of each, by an interchange of their respective
productions. . . . Commercial enterprise will have much greater
scope, from the diversity in the productions of different States.
When the staple of one fails . . . , it can call to its aid the
staple of another."

															The Federalist, No. 11, p. 71 (J. Cooke ed., 1961) (A.
Hamilton); see id. No. 42, p. 283 (J. Madison).

															The Commerce Clause has proved an effective weapon against
protectionism. The Court has used it to strike down limitations on
access to local goods, be they animal, Hughes v. Oklahoma, 441 U. S. 322 (1979) (minnows); vegetable, Pike v. Bruce Church, Inc., 397 U. S. 137 (1970) (cantaloupes); or mineral, Pennsylvania v. West
Virginia, 262 U. S. 553 (1923) (natural gas). Only this Term, the Court held
unconstitutional a Florida statute designed to exclude out-of-state
investment advisers. Lewis v. BT Investment Managers, Inc.,
ante, p. 447 U. S. 27 . As we
observed in Hughes v. Alexandria Scrap Corp., 426 U.
S. 794 , 426 U. S. 803 (1976),

															"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."

															This case presents a novel constitutional question. The Commerce
Clause would bar legislation imposing on private parties the type
of restraint on commerce adopted by South Dakota. See
Pennsylvania v. West Virginia, supra; cf. Great A&P Tea Co. v.
Cottrell, 424 U. S. 366 (1976); Foster-Fountain Packing Co. v. Haydel, 278 U. S. 1 (1928).
[ Footnote 2/2 ] Conversely, Page 447 U. S. 449 a private business constitutionally could adopt a marketing
policy that exclude customers who come from another State. This
case falls between those polar situations. The State, through its
Commission, engages in a commercial enterprise and restricts its
own interstate distribution. The question is whether the
Commission's policy should be treated like state regulation of
private parties or like the marketing policy of a private
business.

															The application of the Commerce Clause to this case should turn
on the nature of the governmental activity involved. If a public
enterprise undertakes an "integral operatio[n] in areas of
traditional governmental functions," National League of Cities
v. Usery, 426 U. S. 833 , 426 U. S. 852 (1976), the Commerce Clause is not directly relevant. If, however,
the State enters Page 447 U. S. 450 the private market and operates a commercial enterprise for the
advantage of its private citizens, it may not evade the
constitutional policy against economic Balkanization.

															This distinction derives from the power of governments to supply
their own needs, see Perkins v. Lukens Steel Co., 310 U. S. 113 , 310 U. S. 127 (1940); Atkin v. Kansas, 191 U. S. 207 (1903), and from the purpose of the Commerce Clause itself, which
is designed to protect "the natural functioning of the interstate
market," Hughes v. Alexandria Scrap Corp., supra at 426 U. S. 806 .
In procuring goods and services for the operation of government, a
State may act without regard to the private marketplace and remove
itself from the reach of the Commerce Clause. See American
Yearbook Co. v. Askew, 339 F.
Supp. 719 (MD Fla.), summarily aff'd, 409 U.S. 904
(1972). But when a State itself becomes a participant in the
private market for other purposes, the Constitution forbids actions
that would impede the flow of interstate commerce. These categories
recognize no more than the "constitutional line between the State
as government and the State as trader." New York v. United
States, 326 U. S. 572 , 326 U. S. 579 (1946); see United States v. California, 297 U.
S. 175 (1936); Ohio v. Helvering, 292 U.
S. 360 (1934); South Carolina v. United States, 199 U. S. 437 (1905).

															The Court holds that South Dakota, like a private business,
should not be governed by the Commerce Clause when it enters the
private market. But precisely because South Dakota is a State, it
cannot be presumed to behave like an enterprise " engaged in an
entirely private business.'" See ante at 447 U. S. 439 ,
quoting United States v. Colgate & Co., 250 U.
S. 300 , 250 U. S. 307 (1919). A State frequently will respond to market conditions on the
basis of political, rather than economic, concerns. To use the
Court's terms, a State may attempt to act as a "market regulator,"
rather than a "market participant." See ante at 447 U. S. 436 .
In that situation, it is a pretense to equate the State with a
private economic actor. State action burdening interstate trade is
no less state action because it is Page 447 U. S. 451 accomplished by a public agency authorized to participate in the
private market. II The threshold issue is whether South Dakota has undertaken
integral government operations in an area of traditional
governmental functions, or whether it has participated in the
marketplace as a private firm. If the latter characterization
applies, we also must determine whether the State Commission's
marketing policy burdens the flow of interstate trade. This
analysis highlights the differences between the state action here
and that before the Court in Hughes v. Alexandria Scrap
Corp. A In Alexandria Scrap, a Virginia scrap processor
challenged a Maryland program to pay bounties for every junk car
registered in Maryland that was converted into scrap. The program
imposed more onerous documentation standards on non-Maryland
processors, thereby diverting Maryland "hulks" to in-state
processors. The Virginia plaintiff argued that this diversion
burdened interstate commerce.

															As the Court today notes, Alexandria Scrap determined
that Maryland's bounty program constituted direct state
participation in the market for automobile hulks. Ante at 447 U. S. 435 .
But the critical question -- the second step in the opinion's
analysis -- was whether the bounty program constituted an
impermissible burden on interstate commerce. Recognizing that the
case did not fit neatly into conventional Commerce Clause theory,
426 U.S. at 426 U. S. 807 ,
we found no burden on commerce.

															The Court first observed:

															"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 . . .
Maryland effectively Page 447 U. S. 452 has made it more lucrative for unlicensed suppliers to dispose
of their hulks in Maryland. . . ." Id. at 426 U. S.
806 .

															We further stated

															"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." Id. at 426 U. S. 807 .
The opinion then emphasized that "no trade barrier of the type
forbidden by the Commerce Clause, and involved in previous cases,
impedes th[e] movement [of hulks] out of State." Id. at 426 U. S.
809 -810. Rather, the hulks "remain within Maryland in
response to market forces, including that exerted by money from the
State." Id. at 426 U. S. 810 .
The Court concluded that the subsidies provided under the Maryland
program erected no barriers to trade. Consequently, the Commerce
Clause did not forbid the Maryland program. B Unlike the market subsidies at issue in Alexandria
Scrap, the marketing policy of the South Dakota Cement
Commission has cut off interstate trade. [ Footnote 2/3 ] The State can raise such a bar when it
enters the market to supply its own needs. In order to ensure an
adequate supply of cement for public uses, the State can withhold
from interstate commerce the cement needed for public projects. Cf. National League of Cities v. Usery, supra. The State, however, has no parallel justification for favoring
private, in-state customers over out-of-state customers. [ Footnote 2/4 ] Page 447 U. S. 453 In response to political concerns that likely would be
inconsequential to a private cement producer, South Dakota has shut
off its cement sales to customers beyond its borders. That
discrimination constitutes a direct barrier to trade "of the type
forbidden by the Commerce Clause, and involved in previous cases. .
. ." Alexandria Scrap, 426 U.S. at 426 U. S. 810 .
The effect on interstate trade is the same as if the state
legislature had imposed the policy on private cement producers. The
Commerce Clause prohibits this severe restraint on commerce. III I share the Court's desire to preserve state sovereignty. But
the Commerce Clause long has been recognized as a limitation on
that sovereignty, consciously designed to maintain a national
market and defeat economic provincialism. The Court today approves
protectionist state policies. In the absence of contrary
congressional action, [ Footnote
2/5 ] those policies now can be implemented as long as the State
itself directly participates in the market. [ Footnote 2/6 ]

															By enforcing the Commerce Clause in this case, the Court would
work no unfairness on the people of South Dakota. They still could
reserve cement for public projects and share in whatever return the
plant generated. They could not, however, use the power of the
State to furnish themselves with cement forbidden to the people of
neighboring States.

															The creation of a free national economy was a major goal of the
States when they resolved to unite under the Federal Constitution.
The decision today cannot be reconciled with that purpose.

															[ Footnote 2/1 ]

															By "protectionism," I refer to state policies designed to
protect private economic interests within the State from the forces
of the interstate market. I would exclude from this term policies
relating to traditional governmental functions, such as education,
and subsidy programs like the one at issue in Hughes v.
Alexandria Scrap Corp., 426 U. S. 794 (1976). See infra at 447 U. S.
451 -453.

															[ Footnote 2/2 ]

															The Court attempts to distinguish prior decisions that address
the Commerce Clause limitations on a State's regulation of natural
resource exploitation. E.g., Hughes v. Oklahoma, 441 U. S. 322 (1979); Pennsylvania v. West Virginia, 262 U.
S. 553 (1923). The Court contends that cement
production, unlike the activities involved in those cases, "is the
end product of a complex process whereby a costly physical plant
and human labor act on raw materials." Ante at 447 U. S. 444 .
The Courts distinction fails in two respects. First, the principles
articulated in the natural resources cases also have been applied
in decisions involving agricultural production, notably milk
processing. E.g., H. P. Hood & Sons v. Du Mond, 336 U. S. 525 (1949); Pike v. Bruce Church, Inc., 397 U.
S. 137 (1970). More fundamentally, the Court's
definition of cement production describes all sophisticated
economic activity, including the exploitation of natural resources.
The extraction of natural gas, for example, could hardly occur
except through a "complex process whereby a costly physical plant
and human labor act on raw materials."

															The Court also suggests that the Commerce Clause has no
application to this case because South Dakota does not "posses[s]
unique access to the materials needed to produce cement." Ante at 447 U. S. 444 .
But in its regional market, South Dakota has unique access to
cement. A cutoff in cement sales has the same economic impact as a
refusal to sell resources like natural gas. Customers can seek
other sources of supply, or find a substitute product, or do
without. Regardless of the nature of the product the State hoards,
the consumer has been denied the guarantee of the Commerce Clause
that he "may look to . . . free competition from every producing
area in the Nation to protect him from exploitation by any." H.
P. Hood & Sons v. Du Mond, supra at 336 U. S.
539 .

															[ Footnote 2/3 ]

															One distinction between a private and a governmental function is
whether the activity is supported with general tax funds, as was
the case for the reprocessing program in Alexandria Scrap, or whether it is financed by the revenues it generates. In this
case, South Dakota's cement plant has supported itself for many
years. See Tr. of Oral Arg. 27. There is thus no need to
consider the question whether a state-subsidized business could
confine its sales to local residents.

															[ Footnote 2/4 ]

															The consequences of South Dakota's "residents-first" policy were
devastating to petitioner Reeves, Inc., a Wyoming firm. For 20
years, Reeves had purchased about 95% of its cement from the South
Dakota plant. When the State imposed its preference for South
Dakota residents in 1978, Reeves had to reduce its production by
over 75%. Ante at 447 U. S. 432 -433. As a result, its South Dakota
competitors were in a vastly superior position to compete for work
in the region.

															[ Footnote 2/5 ]

															The Court explicitly does not exclude the possibility that,
under the Commerce Clause, Congress might legislate against
protectionist state policies. See ante at 447 U. S.
435 -436.

															[ Footnote 2/6 ]

															Since the Court's decision contains no limiting principles, a
State will be able to manufacture any commercial product and
withhold it from citizens of other States. This prerogative could
extend, for example, to pharmaceutical goods, food products, or
even synthetic or processed energy sources.