HILLSIDE DAIRY INC. et al. v. LYONS, SECRE- TARY, CALIFORNIA DEPARTMENT OF FOOD AND AGRICULTURE, et al.

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59 OCTOBER TERM, 2002
Syllabus
HILLSIDE DAIRY INC. et al. v. LYONS, SECRE-
TARY, CALIFORNIA DEPARTMENT OF
FOOD AND AGRICULTURE, et al.
certiorari to the united states court of appeals for
the ninth circuit
No. 01–950. Argued April 22, 2003—Decided June 9, 2003*
In most of the country, but not California, the minimum price paid to dairy
farmers producing raw milk is regulated pursuant to federal marketing
orders, which guarantee a uniform price for the producers, but through
pooling mechanisms require the processors of different classes of dairy
products to pay different prices. California has adopted a similar, al-
though more complex, program to regulate the minimum prices paid
by California processors to California producers. Three state statutes
create California’s milk marketing structure: 1935 and 1967 Acts estab-
lish milk pricing and pooling plans, while a 1947 Act governs the compo-
sition of milk products sold in the State. Under the state scheme, Cali-
fornia processors of fluid milk pay a premium price (part of which goes
into a price equalization pool) that is higher than the prices paid to
producers. During the 1990’s, it became profitable for some California
processors to buy raw milk from out-of-state producers. In 1997, the
California Department of Food and Agriculture amended its regulations
to require contributions to the price equalization pool on some out-of-
state purchases. Petitioners, out-of-state dairy farmers, brought these
suits, alleging that the 1997 amendment unconstitutionally discriminates
against them. Without reaching the merits, the District Court dis-
missed both cases. The Ninth Circuit affirmed, holding, inter alia, that
a 1996 federal statute immunized California’s milk pricing and pooling
laws from Commerce Clause challenge, and that the individual petition-
ers’ Privileges and Immunities Clause claims failed because the 1997
amendment did not, on its face, create classifications based on any indi-
vidual’s residency or citizenship.
Held:
1. California’s milk pricing and pooling regulations are not exempted
from Commerce Clause scrutiny by § 144 of the Federal Agriculture
Improvement and Reform Act of 1996, 7 U. S. C. § 7254, which provides:
*Together with No. 01–1018, Ponderosa Dairy et al. v. Lyons, Secretary,
California Department of Food and Agriculture, et al., also on certiorari
to the same court.

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60 HILLSIDE DAIRY INC. v. LYONS
Syllabus
“Nothing in this Act . . . shall be construed to . . . limit the authority of
. . . California . . . to . . . effect any law . . . regarding . . . the percentage
of milk solids or solids not fat in fluid milk products sold . . . in [that]
State . . . ; or . . . the labeling of such fluid milk products . . . .” Section
144 plainly covers California laws regulating the composition and label-
ing of fluid milk products, but does not mention pricing laws. This
Court will not assume that Congress has authorized state regulations
that burden or discriminate against interstate commerce unless such an
intent is clearly expressed. South-Central Timber Development, Inc.
v. Wunnicke, 467 U. S. 82, 91. Because § 144 does not express such an
intent with respect to California’s pricing and pooling laws, the Ninth
Circuit erred in relying on that section to dismiss petitioners’ Commerce
Clause challenge. Pp. 64–66.
2. The Ninth Circuit’s rejection of the individual petitioners’ Privi-
leges and Immunities Clause claims is inconsistent with Chalker v. Bir-
mingham & Northwestern R. Co., 249 U. S. 522, 527, in which this Court
held that the practical effect of a Tennessee tax—which did not on its
face draw any distinction based on citizenship or residence, but did im-
pose a higher rate on persons having their principal offices out of
State—was discriminatory, given that an individual’s chief office is com-
monly in the State of which he is a citizen. In these cases as well, the
absence of an express statement in the California laws and regulations
identifying out-of-state residency or citizenship as a basis for disparate
treatment is not a sufficient basis for rejecting petitioners’ claim. In
so holding, this Court expresses no opinion on the merits of that claim.
Pp. 66–67.
259 F. 3d 1148, vacated and remanded.
Stevens, J., delivered the opinion of the Court, Parts I and III of which
were unanimous, and Part II of which was joined by Rehnquist, C. J.,
and O’Connor, Scalia, Kennedy, Souter, Ginsburg, and Breyer, JJ.
Thomas, J., filed an opinion concurring in part and dissenting in part,
post, p. 68.
Roy T. Englert, Jr., argued the cause for petitioners in
both cases. With him on the briefs were Lawrence S. Rob-
bins, Charles M. English, Jr., Wendy M. Yoviene, and Nicho-
las C. Geale.
Barbara McDowell argued the cause for the United States
as amicus curiae urging reversal. With her on the brief
were Solicitor General Olson, Assistant Attorney General

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61 Cite as: 539 U. S. 59 (2003)
Opinion of the Court
McCallum, Deputy Solicitor General Kneedler, and Mark
B. Stern.
Mark J. Urban argued the cause for respondents in both
cases. With him on the brief were Bill Lockyer, Attorney
General of California, Manuel M. Medeiros, State Solicitor
General, Richard M. Frank, Chief Assistant Attorney Gen-
eral, Bruce F. Reeves and Mark J. Urban, Deputy Attorneys
General, and Andrea Hackett Henningsen.†
Justice Stevens delivered the opinion of the Court.
In most of the United States, not including California,
the minimum price paid to dairy farmers producing raw milk
is regulated pursuant to federal marketing orders. Those
orders guarantee a uniform price for the producers, but
through pooling mechanisms require the processors of differ-
ent classes of dairy products to pay different prices. Thus,
for example, processors of fluid milk pay a premium price,
part of which goes into an equalization pool that provides a
partial subsidy for cheese manufacturers who pay a net price
that is lower than the farmers receive. See West Lynn
Creamery, Inc. v. Healy, 512 U. S. 186, 189, n. 1 (1994).
The California Legislature has adopted a similar program
to regulate the minimum prices paid by California processors
to California producers. In the cases before us today, out-
of-state producers are challenging the constitutionality of a
1997 amendment to that program. They present us with
two questions: (1) whether § 144 of the Federal Agriculture
†Briefs of amici curiae urging reversal were filed for the State of Ne-
vada et al. by Brian Sandoval, Attorney General of Nevada, and by the
Attorneys General for their respective States as follows: Mike Hatch of
Minnesota, Mike McGrath of Montana, Hardy Myers of Oregon, Christine
O. Gregoire of Washington, and Peggy A. Lautenschlager of Wisconsin; for
Continental Dairy Products, Inc., et al. by Benjamin F. Yale; and for the
Dairy Institute of California by Thomas S. Knox.
John J. Vlahos filed a brief for Western United Dairymen as amicus
curiae urging affirmance.

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62 HILLSIDE DAIRY INC. v. LYONS
Opinion of the Court
Improvement and Reform Act of 1996, 110 Stat. 917, 7
U. S. C. § 7254, exempts California’s milk pricing and pooling
regulations from scrutiny under the Commerce Clause; and
(2) whether the individual petitioners’ claim under the Privi-
leges and Immunities Clause is foreclosed because those reg-
ulations do not discriminate on their face on the basis of state
citizenship or state residence.
I
Government regulation of the marketing of raw milk has
been continuous since the Great Depression.1 In California,
three related statutes establish the regulatory structure for
milk produced, processed, or sold in California. First, in
1935, the State enacted the Milk Stabilization and Marketing
Act, Cal. Food & Agric. Code Ann. §§ 61801–62403 (West
2001), “to establish minimum producer prices at fair and rea-
sonable levels so as to generate reasonable producer incomes
that will promote the intelligent and orderly marketing of
market milk . . . .” § 61802(h). Then, California created
requirements for composition of milk products in the Milk
and Milk Products Act of 1947. §§ 32501– 39912. The
standards created under this Act mandate minimum percent-
ages of fat and solids-not-fat in dairy products and often re-
quire fortification of milk by adding solids-not-fat. In 1967,
California passed another milk pricing Act, the Gonsalves
Milk Pooling Act, §§ 62700–62731, to address deficiencies in
the existing pricing scheme. Together, these three Acts (in-
cluding numerous subsequent revisions) create the state milk
marketing structure: The 1935 and 1967 Acts establish the
milk pricing and pooling plans, while the 1947 Act governs
the composition of milk products sold in California.
While it serves the same purposes as the federal market-
ing orders, California’s regulatory program is more complex.
1 The history and purpose of federal regulation of milk marketing is
described in some detail in Zuber v. Allen, 396 U. S. 168, 172–187 (1969).

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Federal orders typically guarantee all producers the same
minimum price and create only two or three classes of end
uses to determine the processors’ contributions to, or with-
drawals from, the equalization pools, whereas under the Cali-
fornia scheme some of the farmers’ production commands a
“quota price” and some receives a lower “overbase price,”
and the processors’ end uses of the milk are divided into five
different classes.
The complexities of the California scheme are not relevant
to these cases; what is relevant is the fact California proces-
sors of fluid milk pay a premium price (part of which goes
into a pool) that is higher than either of the prices paid to
the producers.2 During the early 1990’s, market conditions
made it profitable for some California processors to buy raw
milk from out-of-state producers at prices that were higher
than either the quota prices or the overbase prices guaran-
teed to California farmers yet lower than the premium prices
they had to pay when making in-state purchases. The regu-
latory scheme was at least partially responsible for the ad-
vantage enjoyed by out-of-state producers because it did not
require the processors to make any contribution to the equal-
ization pool on such purchases. In other words, whereas an
in-state purchase of raw milk resold as fluid milk required
the processor both to pay a guaranteed minimum to the
farmer and also to make a contribution to the pool, an out-
of-state purchase at a higher price would often be cheaper
because it required no pool contribution.
In 1997, the California Department of Food and Agricul-
ture amended its plan to require that contributions to the
2 Because processors of fluid milk typically manufacture some other
products as well, their respective pool contributions reflect the relative
amounts of those end uses. Each processor’s mix of end uses produces an
individual monthly “blend price” that is multiplied by its total purchases.
Under federal orders the term “blend price” has a different meaning; it
usually refers to the price that the producer receives. See West Lynn
Creamery, Inc. v. Healy, 512 U. S. 186, 189, n. 1 (1994).

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64 HILLSIDE DAIRY INC. v. LYONS
Opinion of the Court
pool be made on some out-of-state purchases.3 It is the im-
position of that requirement that gave rise to this litigation.
Petitioners in No. 01–950 operate dairy farms in Nevada;
petitioners in No. 01–1018 operate such farms in Arizona.
They contend that the 1997 amendment discriminates
against them. In response, the California officials contend
that it merely eliminated an unfair competitive advantage for
out-of-state producers that was the product of the regulatory
scheme itself.
Without reaching the merits of petitioners’ constitutional
claims, the District Court dismissed both cases and the
Court of Appeals for the Ninth Circuit affirmed. 259 F. 3d
1148 (2001). Relying on its earlier decision in Shamrock
Farms Co. v. Veneman, 146 F. 3d 1177 (1998), the court held
that a federal statute enacted in 1996 had immunized Califor-
nia’s milk pricing and pooling laws from Commerce Clause
challenge. It also held that the corporate petitioners had no
standing to raise a claim under the Privileges and Immuni-
ties Clause, and that the individuals’ claim under that Clause
failed because the 1997 plan amendments did not, “on their
face, create classifications based on any individual’s residency
or citizenship.” 259 F. 3d, at 1156. We granted certiorari
to review those two holdings, 537 U. S. 1099 (2003), but in
doing so we do not reach the merits of either constitutional
claim.
II
In some respects, the State’s composition standards set
forth in the 1947 Act exceed those set by the federal Food
and Drug Administration (FDA). For example, California’s
minimum standard for reduced fat milk requires that it con-
tain at least 10 percent solids-not-fat (which include protein,
3 After the 1997 amendment, processors whose blend price exceeds the
quota price must make contributions to the pool on their out-of-state pur-
chases as well as their in-state purchases.

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calcium, lactose, and other nutrients). Cal. Food & Agric.
Code Ann. § 38211 (West 2001). Federal standards require
that reduced fat milk contain only 8.25 percent solids-not-fat.
See 21 CFR §§ 131.110, 101.62 (2002). Some of California’s
standards were arguably pre-empted by Congress’ enact-
ment of the Nutrition Labeling and Education Act of 1990,
104 Stat. 2353, which contains a prohibition against the appli-
cation of state quality standards to foods moving in inter-
state commerce. See 21 U. S. C. § 343–1(a). The District
Court so held in Shamrock Farms Co. v. Veneman, No. Civ–
S–95–318 (ED Cal., Sept. 25, 1996). In response to that de-
cision, California sought an exemption from both the FDA
and Congress. See Shamrock Farms, 146 F. 3d, at 1180.
Before the FDA acted, Congress responded favorably with
the enactment of the statute that governs our disposition of
these cases. That statute, § 144 of the Federal Agriculture
Improvement and Reform Act of 1996, provides:
“Nothing in this Act or any other provision of law shall
be construed to preempt, prohibit, or otherwise limit the
authority of the State of California, directly or indi-
rectly, to establish or continue to effect any law, regula-
tion, or requirement regarding—
“(1) the percentage of milk solids or solids not fat in
fluid milk products sold at retail or marketed in the
State of California; or
“(2) the labeling of such fluid milk products with regard
to milk solids or solids not fat.” 7 U. S. C. § 7254.
Thereafter, Shamrock Farms brought another suit against
the Secretary of the California Department of Food and
Agriculture challenging the validity of both the State’s com-
positional standards and its milk pricing and pooling laws.
In that case, the Court of Appeals held that § 144 had immu-
nized California’s marketing programs as well as the compo-
sitional standards from a negative Commerce Clause chal-

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66 HILLSIDE DAIRY INC. v. LYONS
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lenge. Shamrock Farms, 146 F. 3d, at 1182. In adhering
to that ruling in the cases before us today, the Ninth Cir-
cuit erred.
The text of the federal statute plainly covers California
laws regulating the composition and labeling of fluid milk
products, but does not mention laws regulating pricing.
Congress certainly has the power to authorize state regula-
tions that burden or discriminate against interstate com-
merce, Prudential Ins. Co. v. Benjamin, 328 U. S. 408 (1946),
but we will not assume that it has done so unless such an
intent is clearly expressed. South-Central Timber Develop-
ment, Inc. v. Wunnicke, 467 U. S. 82, 91–92 (1984). While
§ 144 unambiguously expresses such an intent with respect
to California’s compositional and labeling laws, that expres-
sion does not encompass the pricing and pooling laws. This
conclusion is buttressed by the separate California statutes
addressing the composition and labeling of milk products, on
the one hand, and the pricing and pooling of milk on the
other. See supra, at 62–65 and this page. The mere fact
that the composition and labeling laws relate to the sale of
fluid milk is by no means sufficient to bring them within the
scope of § 144. Because § 144 does not clearly express an
intent to insulate California’s pricing and pooling laws from
a Commerce Clause challenge, the Court of Appeals erred in
relying on § 144 to dismiss the challenge.
III
Article IV, § 2, of the Constitution provides:
“The Citizens of each State shall be entitled to all Privi-
leges and Immunities of Citizens in the several States.”
Petitioners, who include both individual dairy farmers and
corporate dairies, have alleged that California’s milk pricing
laws violate that provision. The Court of Appeals held that
the corporate petitioners have no standing to advance such

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a claim, and it rejected the individual petitioners’ claims be-
cause the California laws “do not, on their face, create classi-
fications based on any individual’s residency or citizenship.”
259 F. 3d, at 1156. Petitioners do not challenge the first
holding, but they contend that the second is inconsistent with
our decision in Chalker v. Birmingham & Northwestern R.
Co., 249 U. S. 522 (1919). We agree.
In Chalker, we held that a Tennessee tax imposed on a
citizen and resident of Alabama for engaging in the business
of constructing a railroad in Tennessee violated the Privi-
leges and Immunities Clause. The tax did not on its face
draw any distinction based on citizenship or residence. It
did, however, impose a higher rate on persons who had their
principal offices out of State. Taking judicial notice of the
fact that “the chief office of an individual is commonly in the
State of which he is a citizen,” we concluded that the practi-
cal effect of the provision was discriminatory. Id., at 527.
Whether Chalker should be interpreted as merely applying
the Clause to classifications that are but proxies for differen-
tial treatment against out-of-state residents, or as prohibit-
ing any classification with the practical effect of discriminat-
ing against such residents, is a matter we need not decide at
this stage of these cases. Under either interpretation, we
agree with petitioners that the absence of an express state-
ment in the California laws and regulations identifying out-
of-state citizenship as a basis for disparate treatment is not
a sufficient basis for rejecting this claim. In so holding,
however, we express no opinion on the merits of petitioners’
Privileges and Immunities Clause claim.
* * *
The judgment of the Court of Appeals is vacated, and
these cases are remanded for further proceedings consistent
with this opinion.
It is so ordered.

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68 HILLSIDE DAIRY INC. v. LYONS
Opinion of Thomas, J.
Justice Thomas, concurring in part and dissenting in
part.
I join Parts I and III of the Court’s opinion and respect-
fully dissent from Part II, which holds that § 144 of the Fed-
eral Agriculture Improvement and Reform Act of 1996, 7
U. S. C. § 7254, “does not clearly express an intent to insulate
California’s pricing and pooling laws from a Commerce
Clause challenge.” Ante, at 66. Although I agree that the
Court of Appeals erred in its statutory analysis, I neverthe-
less would affirm its judgment on this claim because “[t]he
negative Commerce Clause has no basis in the text of the
Constitution, makes little sense, and has proved virtually un-
workable in application,” Camps Newfound/Owatonna, Inc.
v. Town of Harrison, 520 U. S. 564, 610 (1997) (Thomas, J.,
dissenting), and, consequently, cannot serve as a basis for
striking down a state statute.