Summary of a Recent
Judicial
Development in
Farm Commodity Programs
Ohio Milk Inspection Fees Not Violative of Commerce Clause
Steven WhiteNational AgLaw Center Graduate Assistant
Summary of Decision
In Diehl, Inc. v. Ohio Department of Agriculture, 806 N.E.2d 533 (Ohio 2004), the Supreme Court of Ohio held that milk inspection fees imposed by the Ohio Department of Agriculture were not an unconstitutional burden on interstate commerce.
Background
Diehl, Inc., (Diehl), was a licensed milk producer in the state of Ohio that purchased raw milk from producers, a majority of them located out-of-state, and manufactured evaporated milk products. See id. at 534. The Ohio Department of Agriculture (Department) instituted monthly fees to be paid by milk processors and put into a Dairy Industry Fund. See id. The fees charged to Diehl were "based on the number of pounds of milk it received during the month, including out-of-state milk." Id. at 535. Diehl was invoiced for the fees but only paid for the fees based "on the amount of milk it had purchased from Ohio producers." Id. at 534.
Arguments
Diehl argued that "the fees structure violates the Commerce Clause by shifting part of the cost of inspecting Ohio producers (who do not pay an inspection fee) to the cost of processing [out-of-state milk]." Id. at 535. The Department argued this was a regulatory fee collected to fund the Dairy Division and because it was a regulatory fee, it was "exercising its police power to ensure the quality of milk." Id.
Analysis and Holding
The court explained that although states are controlled by the "dormant Commerce Clause," they have broad police power to regulate many things, including safety of citizens. See id. The court then used the test from Pike v. Bruce Church, Inc., which weighs the state's interest against the effect on interstate commerce, to determine whether the regulations burdened commerce. See id. at 535-36.
In applying the test, the court stated that the fees were applied to both in-state and out-of-state producers equally, and that no portion of the fees paid were returned to the in-state producers via subsidy. See id. at 536. The court also noted there was a legitimate state interest involved - the safety of the milk sold in Ohio. See id. The court determined that the effect of the fees on interstate commerce was incidental and that no out-of-state milk processors were adversely affected. See id. It therefore held that the fees did not violate the dormant Commerce Clause. See id.
The case was decided on April 28, 2004; this summary was posted Mar. 24, 2005.