The Supreme Court has a pretty interesting and potentially very important “dormant commerce clause” case before it this term—National Pork Producers Council v. Ross. The Dormant Commerce Clause doctrine is a tangled, internally contradictory mess, and this case gives the Court an opportunity to clarify — or more thoroughly confuse — some important principles governing state power in the national marketplace.
The relevant facts (taken here from the opinion below) are clear:
California (Proposition 12, passed by voters in 2018) prohibits the sale of uncooked pork products if the seller knows (or should know) that the meat came from a breeding pig that was confined “in a cruel manner.” The law defines this as including, among other things, providing less than 24 square meters of living space – about the size of two bath towels – per breeding pig. California accounts for about 13% of total US pork consumption; almost all pork sold in California (>99%) comes from out-of-state producers. Currently, only about 4% of U.S. pork producers meet California’s hog space requirements.
The Pork Producers Council (PPC) challenges this law on the grounds that it violates the dormant trade clause. They concede that the law does not fall under the DCC’s prohibition against state laws that “discriminate” against out-of-state producers in favor of in-state producers; Proposition 12, they admit, treats in-state and out-of-state pork producers and sellers alike.
Instead, they rely on two other sides of the DCC doctrine:
- First and foremost, CA law “impermissibly regulates extraterritorial conduct” outside California’s borders by forcing out-of-state manufacturers, as a practical matter, to change their operations (at considerable expense) to comply with California standards.
- Second, it imposes “excessive burdens on interstate commerce without making any progress legitimate local interest.” California’s “philosophical preferences about conduct occurring almost entirely outside of California,” and his “the desire to prevent what California considers animal cruelty, which occurs entirely outside the state’s borders,” cannot justify the burden placed on pork producers across the country.
[Quotations above are from the PPC’s brief, available here ]
The claim of “extraterritoriality” is particularly important and potentially far-reaching. All parties agree that California may not actually be force pork producers in Iowa or Arizona — in the sense of imposing a legal obligation enforceable by fines or other penalties — to accept California’s hog husbandry standards, just as it does not necessarily compel companies in Iowa or Arizona to comply with California’s standards of minimum wage, or California business licensing rules, or California public accommodation law, and so on.
Although this principle of territorial distribution of state power is clear enough, it has proved a bit tricky to pinpoint exactly where, in the Constitution (or elsewhere? “the common law of the people”?), this prohibition is articulated; such as prof. Douglas Laycock once said*, the prohibition against the extraterritorial exercise of state coercive power was “so obvious that the founders neglected to state it.” Much ink has been spilled over the question of whether such action violates the Dormant Commerce Clause, or the Due Process Clause, or both, and the Court may take this opportunity to weigh in on the issue. But wherever it came from, the principle itself seems to be pretty firmly established.
*See Douglas Laycock, Equal Citizens of Equal and Territorial States: The Constitutional Foundations of Choice of Law, col. 92. L. Rev. 249, 251 (1992)
Likewise, generally speaking, California May constitutionally impose their own specific local standards—regarding product labeling or product safety, etc.—on goods and services brought from other countries and used or sold in California. Such laws can, in practice, be extraterritorial effects; out-of-state companies may have to change their practices, preferably significantly, with respect to goods intended for sale in California by changing the method of manufacture or packaging or labeling. But they are not under any law obligation make those changes unless and until they decide to take advantage of the California market and ship their goods there.
In this case, California’s position is: That’s all we do — we apply our local standards to goods sold in California. They didn’t persuasive pork producers in Iowa or Arizona or any other state to adopt our special standards. Iowa pork producers are under no obligation to change their hog farming practices because of Proposition 12; they need to do it only if they want to profit by selling their pork in California.
PPC, needless to say, sees things differently. This is not, they say, the usual state regulation of intrastate sales:
“Although Proposition 12 applies to the sale of pork in California, its practical effects are almost entirely extraterritorial. There are very few sow farms in California. The state imports 99.87% of the pork it consumes. Proposition 12 therefore regulates the housing conditions of sows located almost exclusively outside California, [and] the practical effect of regulation is to control behavior beyond state borders.”
Moreover, they claim, proposition 12 does—“as a practical matter” – to force out-of-state farmers to adhere to its standards, due to the structure of the US pork market:
“The extraterritorial effects of Proposition 12 are not limited to 13% of US pork production [sold] in California. A commercial pig progresses through multiple farms outside of California as it is raised and then processed into many different cuts of meat that are sold across the country. If any part of a pig is sold in California, the sow from which it came must comply with Proposition 12. Sow farmers cannot say with certainty that the meat from their pigs will not be sold in Californiaafter these pigs pass through nurseries and finishing farms, a packinghouse-slaughterhouse, then distributors, before their meat reaches the consumer. Practically, all or most of them [sow] farmers will be forced to comply with California’s requirements.” [emphasis added]
In other words, since pig farmers can’t know if any piece of Elsie sow will end up in California, they will I have to give her 24 square feet of space, lest they find themselves in violation of California law when her feet end up in sausages destined for San Francisco.
It is a rather interesting variation on the theme of extraterritoriality. I don’t believe the Court will accept that, although I could be wrong. That kind of “coercion” is entirely a function of the particular configuration, at the moment, of the pork market, and California is neither responsible for it nor needs to adjust its regulatory affairs to account for it. The dormant trade clause does not and should not be construed as providing industry protection for the particular way in which it has chosen to configure its distribution schemes across the country. This configuration may change in response to market and regulatory pressures; if enough hog farmers are unwilling to change their practices to comply with Proposition 12, the pork distribution market will surely respond; there is no inherent reason why distributors cannot offer “California-free” contracts, promising that no product in their pipeline will be shipped to dealers in California, and this will resolve the “duress” dilemma.
While I am reasonably confident that the Court will disagree with the PPC’s contention that Proposition 12 violates the “extraterritoriality” of the Dormant Commerce Clause, I am not at all sure how it will address their alternative contention – that the law imposes “undue burdens on interstate commerce without advancing any legitimate local interest.” California’s interest here, they argue, is merely a “philosophical preference,” a “desire to prevent what California considers cruelty to animals that occurs entirely across state lines.” Even if California had the right to enforce a health and safety-oriented law against imported pork from another state—certifying the pigs to be trichinosis-free, say—Proposition 12 has no health and safety rationale and therefore cannot overcome or justify the burden imposed on pork producers nationwide.
I’m scratching my head over that; I’m not even sure where the Court might look to answer the question of whether or not preventing cruelty to animals is a “legitimate” public purpose.
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