[318 U.S. 261, 262] Mr. Harris C. Arnold, of Lancaster, Pa., for appellant Penn Dairies, inc.
Mr. Charles Fahy, of Washington, D.C., Sol. Gen., for appellant the United States.
[318 U.S. 261, 265] Mr. Frank E. Coho, of Pittsburgh, Pa., for appellee.
Mr. Chief Justice STONE delivered the opinion of the Court.
Decision of this case turns on the question whether the minimum price regulations of the Pennsylvania Milk Control Law of April 28, 1937, P.L. 417, Purdon's Pa.Stat.Ann., Tit. 31, 700j-101 et seq., may constitutionally be applied to the sale of milk by a dealer to the United States, the sale being consummated within the territorial limits of the state in a place subject to its jurisdiction.
The Pennsylvania Milk Control Law establishes a milk control commission, 201, with authority to fix prices for milk sold within the state wherever produced, 801-803, including minimum wholesale and retail prices for milk sold by milk dealers to consumers, 802, and to issue rules, regulations and orders to effectuate this authority, 307. [318 U.S. 261, 267] In the fall of 1940 the United States established, under a permit from the Commonwealth of Pennsylvania, a military encampment on lands belonging to the Commonwealth. As is conceded, the permit involved no surrender of state jurisdiction or authority over the area occupied by the camp. On February 1, 1941, the purchasing and contracting officer at the encampment, an officer of the Quartermaster's Corps of the United States Army, invited bids for a supply of milk for the period from March 1 to June 30, 1941, for consumption by troops stationed at the camp. On February 4, the Milk Control Commission sent a notice to interested parties, including appellant, Penn Dairies, Inc., a Pennsylvania corporation, addressed to 'all milk dealers interested in submitting bids to furnish milk to the United States Government' at the encampment. The notice was accompanied by the Commission's Official General Order No. A-14 , 4-B of which prescribed the 'minimum wholesale prices to be charged by or paid to milk dealers'. The notice announced that the unit prices specified for sales to institutions by that section of the order should be considered in the preparation of bids and that sales of milk at prices below the prescribed minima would be construed as violations of the milk control law. The dairy submitted a bid offering to sell milk in wholesale quantities at prices substantially below those prescribed by the Commission. Its bid was accepted by a War Department Purchase Order of March 1, 1941, the contract was awarded to it as the lowest bidder, and it performed the contract by deliveries of the milk at the contract price-all within the state.
On March 5, 1941, the Commission, pursuant to 404 and 405 of the Milk Control Act, issued a citation to the dairy to show cause why its application for a milk dealer's license for the year beginning May 1, 1941, should not be denied because of its sale and delivery of the milk at prices below the minima fixed by the Commission's order. [318 U.S. 261, 268] Section 404 makes the grant of a license mandatory save in circumstances not now material, but provides that the Commission may deny or cancel a license where the applicant or licensee 'has violated any of the provisions of this act, or any of the rules, regulations or orders of the commission ....'
The dairy's answer to the citation challenged the constitutional authority of the State to regulate prices charged to the United States. After a hearing the Commission denied the dairy's license application because of its sale of milk to the United States at prices below those fixed by the Commission. The Commission's order was sustained on review by the Court of Common Pleas of Lancaster County. The Superior Court affirmed this judgment, 148 Pa.Super. 261, 24 A.2d 717, in an opinion which was adopted by the Supreme Court of Pennsylvania, 344 Pa. 635, 26 A.2d 431, both courts holding that the Commission's price-fixing order was applicable to sales of milk made to the United States, and that as thus applied the statute did not impose an unconstitutional burden on the United States or otherwise infringe the Constitution or laws of the United States. The case comes here on appeal under 237 of the Judicial Code, 28 U.S.C.A. 344. The government was granted leave to intervene in the Court of Common Pleas, and has participated in all subsequent stages of the litigation.
Appellants urge that the Pennsylvania Milk Control Act, as applied to a dealer selling to the United States, violates a constitutional immunity of the United States, and also conflicts with federal legislation regulating purchases by the United States and therefore cannot constitutionally apply to such purchases.
Appellants' first proposition proceeds on the assumption that local price regulations normally controlling milk dealers who carry on their business within the state, when applied to sales made to the government, so burden it [318 U.S. 261, 269] or so conflict with the Constitution as to render the regulations unlawful. We may assume that Congress, in aid of its granted power to raise and support armies, Article I, 8, cl. 12, and with the support of the supremacy clause, Article VI, cl. 2, could declare state regulations like the present inapplicable to sales to the government. Cf. Pittman v. Home Owners' Loan Corp., 308 U.S. 21, 33 , 60 S.Ct. 15, 18, 124 A.L. R. 1263; Federal Land Bank St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 101 , 104 S., 62 S.Ct. 1, 6; Parker v. Brown, 317 U.S. 341 , 63 S. Ct. 307, at page 313, 87 L.Ed. --, and cases cited. But there is no clause of the Constitution which purports, unaided by Congressional enactment, to prohibit such regulations, and the question with which we are now concerned is whether such a prohibition is to be implied from the relationship of the two governments established by the Constitution.
We may assume also that, in the absence of congressional consent, there is an implied constitutional immunity of the national government from state taxation and from state regulation of the performance, by federal officers and agencies, of governmental functions. State of Ohio v. Thomas, 173 U.S. 276 , 19 S.Ct. 453; Johnson v. State of Maryland, 254 U.S. 51 , 41 S.Ct. 16; Hunt v. United States, 278 U.S. 96 , 48 S.Ct. 38; State of Arizona v. State of California, 283 U.S. 423 , 51 S.Ct. 522. But those who contract to furnish supplies or render services to the government are not such agencies and do not perform governmental functions, Metcalf & Eddy v. Mitchell, 269 U.S. 514, 524 , 525 S., 46 S.Ct. 172, 174; James v. Dravo Contracting Co., 302 U.S. 134, 149 , 58 S.Ct. 208, 216, 114 A.L.R. 318; Buckstaff Bath House Co. v. McKinley, 308 U.S. 358, 359 , 362 S., 363, 60 S.Ct. 279, 281 and cases cited; cf. Susquehanna Power Co. v. State Tax Comm'n, 283 U.S. 291, 294 , 51 S.Ct. 434, 435; Helvering v. Mountain Producers Corp., 303 U.S. 376, 385 , 386 S., 58 S.Ct. 623, 627, and the mere fact that non-discriminatory taxation or regulation of the contractor imposes an increased economic burden on the government is no longer regarded as bringing the contractor within any implied immunity of the government from state taxation or regulation. State of Alabama v. King & Boozer, 314 U.S. 1, 9 , 62 S.Ct. 43, 45, 140 A.L.R. 615, and cases cited; [318 U.S. 261, 270] Baltimore & A.R. Co. v. Lichtenberg, 176 Md. 383, 4 A.2d 734, s.c., United States v. Baltimore & A.R. Co., 308 U.S. 525 , 60 S.Ct. 297.
Here the state regulation imposes no prohibition on the national government or its officers. They may purchase milk from whom and at what price they will, without incurring any penalty. See the opinion below, Penn Dairies, Inc., v. Milk Control Commission, 148 Pa.Super. at page 270, 271, 24 A.2d 717. As in the case of state taxation of the seller, the government is affected only as the state's regulation may increase the price which the government must pay for milk. By the exercise of control over the seller, the regulation imposes or may impose an increased economic burden on the government, for it may be assumed that the regulation if enforcible and enforced will increase the price of the milk purchased for consumption in Pennsylvania, unless the government is able to procure a supply from without the state, see Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 , 55 S.Ct. 497, 101 A.L.R. 55. But in this burden, if Congress has not acted to forbid it, we can find no different or greater impairment of federal authority than in the tax on sales to a government contractor sustained in Alabama v. King & Boozer, supra; or the state regulation of the operations of a trucking company in performing its contract with the government to transport workers employed on a Public Works Administration project, upheld in Baltimore & A.R. Co. v. Lichtenberg, supra; or the local building regulations applied to a contractor engaged in constructing a postoffice building for the government, sustained in James Stewart & Co. v. Sadrakula, 309 U.S. 94 , 60 S.Ct. 431, 127 A.L.R. 821.
The trend of our decisions is not to extend governmental immunity from state taxation and regulation beyond the national government itself and governmental functions performed by its officers and agents. We have recognized that the Constitution presupposes the continued existence of the states functioning in coordination with the national government, with authority in the states to lay [318 U.S. 261, 271] taxes and to regulate their internal affairs and policy, and that state regulation like state taxation inevitably imposes some burdens on the national government of the same kind as those imposed on citizens of the United States within the state's borders, see Metcalf & Eddy v. Mitchell, supra, 269 U.S. at page 523, 524, 46 S.Ct. at page 174. And we have held that those burdens, save as Congress may act to remove them, are to be regarded as the normal incidents of the operation within the same territory of a dual system of government, and that no immunity of the national government from such burdens is to be implied from the Constitution which established the system, see Graves v. People of State of New York ex rel. O'Keefe, 306 U.S. 466, 483 , 487 S., 59 S.Ct. 595, 599, 601, 120 A.L.R. 1466
Since the Constitution has left Congress free to set aside local taxation and regulation of government contractors which burden the national government, we see no basis for implying from the Constitution alone a restriction upon such regulations which Congress has not seen fit to impose, unless the regulations are shown to be inconsistent with Congressional policy. Even in the case of agencies created or appointed to do the government's work we have been slow to infer an immunity which Congress has not granted and which Congressional policy does not require. Reconstruction Finance Corp v. J. G. Menihan Corp., 312 U.S. 81 , 61 S.Ct. 485, and cases cited; Colorado Nat. Bank v. Bedford, 310 U.S. 41, 53 , 60 S.Ct. 800, 805, and cases cited; cf. Baltimore Nat. Bank v. State Tax Commission, 297 U.S. 209 , 56 S.Ct. 417. Our inquiry here, therefore, must be whether the state's regulation of this contractor in matter of local concern conflicts with Congressional legislation or with any discernible Congressional policy.
To establish such a conflict the government places its reliance on Acts of Congress requiring competitive bidding in the purchase of supplies for the Army. Section 3709 of the Revised Statutes, 41 U.S.C. 5, 41 U.S. C.A. 5, requires public advertising for all government purchases save 'when immediate delivery or performance is required by the public exigency.' 1 [318 U.S. 261, 272] A similar provision had appeared in 5 of the Act of March 3, 1809, 2 Stat. 536, which required all purchased by the Treasury, War or Navy Departments to be made 'by open purchase, or by previously advertising for proposals respecting the same'. The Appropriation Act of March 2, 1901, 31 Stat. 905, and subsequent appropriation acts, included a provision requiring public advertising for the purchase of all supplies for the use of the Army, with exceptions not now material, 'except in cases of emergency or where it is impracticable to secure competition' and requiring the purchase of such supplies 'where the same can be purchased the cheapest, quality and cost of transportation and the interests of the Government considered'. 10 U.S.C. 1201, 10 U.S.C.A. 1201. And a provision enacted as part of the Appropriation Act of July 5, 1884, 23 Stat. 109, 10 U.S.C. 1200, 10 U.S.C.A. 1200, requires that all purchases of quartermaster's supplies be made by contract after public notice and that the award be made to 'the lowest responsible bidder for the best and most suitable article, the right being reserved to reject any and all bids'.
It is to be noted that while these statutes direct government officials to invite competitive bidding by contractors undertaking to furnish Army supplies, and also require them to accept the lowest responsible bid if any is accepted, they do not purport to set aside local price regulations or to prohibit the states from taking punitive measures for violations of such regulations. They are wholly consistent with the continued existence of such price regulations, and with the acceptance by government officers of the regulated price where that is the low- [318 U.S. 261, 273] est bid, or the omission of competitive bidding in circumstances where local price regulations render it 'impracticable to secure competition'. Nor are we able to discern, in the language or legislative history of these or related statutes regulating government contracts, any indication that low cost was such a controlling consideration with Congress as to justify an inference that Congress intended to displace state regulations affecting the price of articles purchased by the government. The reason for the passage of 5 of the Act of March 3, 1809, has been said to be 'to throw additional safeguards around this subject; to prevent favoritism, and to give to the United States the benefit of competition ....' 2 Op. Atty.Gen., 257, 259.
We are not advised of any statute in which Congress has undertaken to set aside state laws affecting the price of goods supplied to the government in order to secure a lower price than would otherwise be obtainable. And Congress has often required the inclusion in government contracts of terms not directly related to the interests of the government as purchaser, which have the effect of increasing cost. Title III, 2 of the Act of March 3, 1933, 47 Stat. 1520, 41 U.S.C. 10a-10c, 41 U.S.C.A . 10a to 10c, requires the use of American-produced goods on all public works contracts unless the head of the department finds that the use of such materials is 'impracticable' or would 'unreasonably increase the cost'. The Eight Hour Law of August 1, 1892, 27 Stat. 340, as amended, 40 U.S.C. 321-326, 40 U.S.C.A. 321-326, limits to eight hours per day the work of persons employed by contractors with the government and requires all government contracts to include provisions to that effect. The Davis-Bacon Act of March 3, 1931, 46 Stat. 1494, as amended, 40 U.S.C . 276a, 40 U.S.C.A. 276a, requires all contracts for public buildings to contain prevailing minimum wage provisions, and the Walsh-Healey Act, 49 Stat. 2036, 41 U.S.C. 35, 41 U.S.C.A. 35, requires the inclusion in all gov- [318 U.S. 261, 274] ernment contracts in excess of $10,000 of provisions requiring the contractor's adherence to prescribed minimum wages, maximum hours, restrictions on employment of child labor and requirements for safety of working conditions.