Restraint in the Commerce Clause area is counseled by considerations of state sovereignty, the role of each state as guardian and trustee for its people, and the long recognized right of trader or manufacturer, engaged in an entirely private business, freely to exercise his own independent discretion as to parties with whom he will deal. U.S. Const. art. I, § 8. cl. 3. Moreover, state proprietary activities may be, and often are, burdened with the same restrictions imposed on private market participants. Evenhandedness suggests that, when acting as proprietors, states should similarly share existing freedoms from federal constraints, including the inherent limits of the Commerce Clause.
The state constructed a cement plant in response to a regional cement shortage. The plant began producing more cement than the state's residents could use, so it began selling the cement to out of state buyers. The buyer purchased cement from the plant. The demand for cement rose, while production was slowed. The state then reaffirmed its policy of supplying in-state customers first. The buyer initiated an action against the state alleging that the policy violated the Commerce Clause. The appellate court entered judgment for the state, finding that the state had simply acted in a proprietary capacity. The buyer appealed.
Did the state policy violate the Commerce Clause?
The court affirmed the decision holding that the state's policy did not violate the Commerce Clause. It explained that there was nothing in the Commerce Clause that prohibited the state from participating in the market and exercising such right in favor of its citizens.