Constitutional Law Keyed to Cohen
Reeves, Inc v. Stake
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South Dakota built a cement plant in 1919 to meet the needs of residents and prevent shortages that interfered with and delayed both public and private enterprises. South Dakota operated the plant and soon it was supplying nine nearby states with cement from the plant. Between 1970 and 1977 about 40% of the plant’s output went outside the South Dakota. Reeves was one of the out of state cement buyers who relied on the plant. It bought 95% of its cement from the South Dakota plant. In 1978 there were cement shortages again and the plant was unable to meet all orders. Faced with the same cement shortages that motivated legislatures to create the plant, the State Cement Commission ordered that the plant would first supply all South Dakota customers and then honor all outstanding contractual commitments. The remaining volume would be allocated to out-of-state customers on a first come, first serve basis. Although Reeves had been a customer for 20 years, he did not have a pre-exist ing long term supply contract. Reeves was forced to cut production by 76%. Reeves brought suit against the Commission challenging the plant’s policy of preferring Sough Dakota buyers. The District Court found that the Commission’s order limited the national free market that the Commerce Clause sought to uphold.
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