California's Proposition 12 Survives Supreme Court Challenge
California’s Proposition 12 is here to stay...unless Congress decides to weigh in. On May 11, 2023, the United States Supreme Court ruled that the 2018 law forbidding the sale of whole pork meat that comes from breeding pigs “confined in a cruel manner” did not violate the dormant Commerce Clause of the U.S. Constitution. The decision means that any pork producers around the country wishing to sell their products in California must meet strict sow housing conditions mandated by California. National Pork Producers Council v. Ross, No. 21-468 (May 11, 2023).
Sixty-three percent of California voters approved Proposition 12 in 2018. This law revised existing standards for the sale of eggs in California and created new standards for the sale of pork and veal. Specifically, any pork sold in California must come from a breeding pig that was not “confined in a cruel manner.” This means that the pig must not be prevented from “lying down, standing up, fully extending [its] limbs, or turning around freely.” Proponents of the law argued the law was intended to promote animal welfare and human health. Proposition 12 standards differ significantly from common agricultural practices throughout the country. Violating Proposition 12 is a crime punishable by a $1,000 fine or 180-day prison sentence. Civil penalties also apply.
Shortly after the passage of Proposition 12, two farm organizations, the American Farm Bureau and the National Pork Producers, filed a lawsuit on behalf of members who raise and process pigs. The lawsuit alleged that the California law violated the U.S. Constitution by impermissibly burdening interstate commerce. They argued that California’s requirements depart significantly from standard agricultural practices and that in many cases, the California standards would worsen animal health and welfare. Because 13 percent of the nation’s pork is sold in California, while less than 1 percent is raised there, the petitioners alleged that most producers across the country would have to modify their production practices to comply with the law. This, they argued, would increase production prices and disrupt the more than $20 billion national pork market. They also argued that the law would require processors to revise their systems to segregate and trace pork to prevent non-complying pork from entering the California market.
The district court dismissed the lawsuit, finding that the complaint failed to state a claim as a matter of law. The Ninth Circuit Court of Appeals affirmed, and the petitioners sought review by the Supreme Court.
Supreme Court Opinion
Justice Gorsuch delivered the opinion of the Court, affirming the dismissal of the petitioners’ complaint. The opinion was fractured, with five Justices (Gorsuch, Thomas, Sotomayor, Kagan, and Barrett) agreeing that the case should be dismissed. Four Justices (Roberts, Alito, Kavanaugh, and Jackson) would have remanded the case for further proceedings.
Almost Per Se Rule
The first part of the Gorsuch opinion was joined by Thomas, Barrett, Sotomayor, and Kagan. Gorsuch first reviewed dormant Commerce Clause jurisprudence and noted that an antidiscrimination principle lies at the very heart of Court precedent. Specifically, the Court has said that the Commerce Clause prevents the enforcement of state laws “driven by economic protectionism—that is, regulatory measures designed to benefit in-state economic interests by burdening out of state competitors.” Because petitioners did not allege that California’s Proposition 12 sought to advantage in-state firms or disadvantage out-of-state firms (they are all subject to the same law), the complaint did not implicate the core antidiscrimination principle. As such, Gorsuch explained that the petitioners were left to pursue two more ambitious theories, neither of which were successfully pleaded.
First, the petitioners argued that the dormant Commerce Clause suggested an additional and “almost per se” rule forbidding enforcement of state laws that have the practical effect of controlling commerce outside the State, even when those laws do not purposely discriminate against out-of-state interests. The petitioners argued that California violated this per se rule because Proposition 12 will impose substantial new costs on out-of-state producers who wish to sell their pork in California.
Gorsuch made short work of this argument, rejecting the notion that the Court had embraced an “almost per se” rule. Instead, Gorsuch summarized the cases upon which petitioners relied and demonstrated that they had all sought to prevent “purposeful discrimination against out-of-state economic interests.” For example, in one case, the Court refused to enforce a New York law that barred out-of-state producers from selling their milk in the state unless they charged a price that met the minimum price guaranteed to in-state producers. This law created an economic barrier protecting a major local industry against competition from out-of-state producers. That law and others attempting to enact protectionist policies violated the dormant Commerce Clause.
Here, Gorsuch said, Proposition 12 did no such thing. The law applied evenly between out-of-state producers and in-state producers. It did not seek to secure an advantage for California producers. Gorsuch noted that many (if not most) state laws have the practical effect of controlling extraterritorial behavior. Tax laws, inspection laws, quarantine law, tort laws, and many others have considerable influence on commerce outside a state’s boundary. Gorsuch explained that enacting the petitioners’ “almost per se” rule would cast a shadow over laws long understood to represent valid exercises of the States’ constitutionally reserved powers. “This Court has never before claimed so much ground for judicial supremacy under the banner of the dormant Commerce Clause,” Gorsuch concluded.
Pike v. Bruce Church Balancing Test
Gorsuch next analyzed the petitioners’ claim that Proposition 12 violated the dormant Commerce Clause under a balancing test set forth in Pike v. Bruce Church, Inc. 397 U.S. 137 (1970). Petitioners had argued that the Court should assess “the burden imposed on interstate commerce” by a state law and restrict its enforcement if the burdens are “clearly excessive” compared to the local benefits. Gorsuch reviewed the relevant authority and explained that Pike has traditionally served as just another way to test for purposeful discrimination against out-of-state economic interests.
As Gorsuch continued, only a minority of the Court joined him. Barrett and Thomas agreed as Gorsuch opined that the dormant Commerce Clause is not a “roving license for federal courts to decide what activities are appropriate for state and local governments to undertake.” Judges, Gorsuch continued, are not equipped to compare or weigh economic costs against noneconomic benefits. “In a functioning democracy, policy choices like these usually belong to the people and their elected representatives,” Gorsuch concluded. If the pork industry is threatened by a “massive” disruption, it is Congress, not the courts, to whom the petitioners should turn.
Justice Sotomayor (joined by Justice Kagan) also would have dismissed petitioners’ claims. In fact, they joined Gorsuch on all but the part of his opinion where he stated that courts are not equipped to conduct a balancing test under Pike. Sotomayor wrote separately to describe her position. While she believed that courts are generally able to weight disparate burdens and benefits against each other and that they are called to do so frequently, she asserted that the petitioners’ claims failed the Pike test because the complaint failed to state a substantial burden on interstate commerce. That, argued Sotomayor, was a threshold requirement before the Court could engage in the balancing test.
Justice Barrett wrote a separate concurrence to explain that she agreed with Gorsuch with respect to Pike only because she believed that the benefits and the burdens in this case were incommensurate. In other words, they were not comparable. California’s interest in eliminating allegedly inhumane production practices cannot be weighed against dollars and cents, she asserted. Barrett concluded by stating that if the burdens and benefits were capable of judicial balancing, she would permit petitioners to continue with their Pike claim.
Chief Justice Roberts Dissent and Concurrence
Chief Justice Roberts, joined by Justices Alito, Kavanaugh, and Jackson, agreed with Gorsuch’s view that the dormant Commerce Clause has generally been used to invalidate state statutes that promote economic protectionism. He also rejected the “per se” rule advocated by the petitioners. But Roberts argued that the petitioners had plausibly alleged a substantial burden against interstate commerce and that their complaint should not have been dismissed for failure to state a claim. The Ninth Circuit, he argued, should have considered whether it was plausible that the burden was “clearly excessive in relation to the putative local benefits.”
Kavanaugh Dissent and Concurrence
Justice Kavanaugh also wrote separately to clarify that six Justices affirmatively retained the Pike balancing test for analyzing dormant Commerce Clause challenges to state economic regulations (Sotomayor, Kagan, Roberts, Alito, Kavanaugh, and Jackson). While Kavanaugh agreed with Justice Roberts, he wrote separately to suggest that regulations like Proposition 12 might also raise questions under the Import-Export Clause, the Privileges and Immunities Clause, and the Full Faith and Credit Clause. He pointed out the danger of laws like those of Proposition 12. “California’s law thus may foreshadow a new era where States shutter their markets to goods produced in a way that offends their moral or policy preferences—and in so doing, effectively force other States to regulate in accordance with those idiosyncratic state demands. That is not the Constitution the Framers adopted in Philadelphia in 1787.”
What Does This Mean?
In the wake of the Ross decision, pork producers are left to comply with Proposition 12 if they wish to sell their pork into the California market. Similarly, processors must ensure that they are tracing the origin of their whole pork to ensure compliance with Proposition 12. Contracts between producers and integrators will likely be revised to adapt to the standards. In the meantime, Congress may consider a legislative response to prevent states from regulating agricultural production practices in other states. One vehicle for that solution could be the 2023 Farm Bill. In the meantime, a judicial stay on the enforcement of Proposition 12, will be lifted on July 1, 2023.
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