Hughes v. Alexandria Scrap Corp. - 426 U.S. 794, 96 S. Ct. 2488 (1976)

Rule:

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.

Facts:

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.

Issue:

Did Maryland's amended statute violate the Commerce Clause?

Answer:

No

Conclusion:

The United States Supreme Court reversed, ruling that Maryland's amended statute was not contemplated by the Commerce Clause because it did not interfere with the natural functioning of the interstate market, either through prohibition or through burdensome regulation. The Court noted that Maryland did not seek to prohibit the flow of hulks, or to regulate the conditions under which it could occur, but instead entered into the market itself to bid up their price. The Court also ruled that because the amendment bore a rational relationship to Maryland's purpose of using its limited funds to clean up its own environment, it was constitutional.