## Facts

- South Dakota built and operated a state-owned cement plant to address in-state cement shortages and stabilize supply.
- Over time, the plant produced surplus cement and sold a substantial share to out-of-state purchasers in the open market.
- Reeves, Inc., a Wyoming ready-mix concrete distributor, obtained roughly 90–95% of its cement from the South Dakota plant.
- In 1978, a regional cement shortage occurred.
- The South Dakota State Cement Commission adopted a policy restricting sales from the state plant to South Dakota residents, giving in-state customers priority or exclusive access.
- Reeves lost most of its cement supply and sharply reduced production.
- Reeves filed suit, claiming the resident-preference policy discriminated against interstate commerce in violation of the dormant Commerce Clause.

## Issues

1. Whether a state violates the dormant Commerce Clause by favoring its own residents when selling goods produced by a state-owned enterprise.
2. Whether South Dakota’s resident-preference policy is insulated from dormant Commerce Clause scrutiny because the state acted as a market participant rather than as a market regulator.
3. Whether the policy should be treated as an impermissible attempt to reserve a “natural resource” for in-state use.

## Decision

- The Supreme Court affirmed the court of appeals in a 5–4 decision.
- The Court held that South Dakota’s resident-preference policy for cement sold from its state-owned plant did not violate the Commerce Clause.
- Because the state was acting as a seller of its own product, it could choose its trading partners and favor residents absent contrary congressional action.
- The Court rejected arguments that the policy was unconstitutional because the state had previously sold extensively to out-of-state buyers, because it was protectionist, because it “hoarded” cement, or because it could advantage South Dakota firms competing out of state.
- The Court declined to treat cement as a protected “natural resource” category for dormant Commerce Clause purposes, emphasizing that the state was selling a manufactured product produced by its own plant.

## Legal Principles

- When a state acts as a market participant (producer, seller, or purchaser) rather than as a market regulator, it may favor its own citizens in market transactions unless Congress restricts that conduct.
- The dormant Commerce Clause is directed primarily at state taxes and regulatory measures that burden private interstate trade, not at a state’s discretionary choices in disposing of its own goods as a proprietor.
- Policy concerns about the effects of state proprietary discrimination in interstate markets are generally for Congress to address, not for courts to resolve through dormant Commerce Clause invalidation.
- A state-owned enterprise’s sale of a manufactured product is distinct from state attempts to reserve raw natural resources for in-state use.

## Conclusion

The Court upheld South Dakota’s in-state preference for sales from its state-owned cement plant, concluding that the dormant Commerce Clause does not bar a state, acting as a market participant, from favoring residents in its own commercial dealings absent congressional limitation.


Reeves, Inc. v. Stake, 447 U.S. 429 (1980)