Our latest blog post on this proposition was on January 17, 2019, which discussed the efforts of various states to challenge California’s ban on the sale of eggs, pork and veal that have not been raised according to California’s strict standards for animal protection. Those standards establish minimum space requirements considerably more generous than the industry standards. The ban originally applied only to California farmers, but they quickly realized that they would be at a substantial competitive disadvantage if the ban did not apply to such foods produced in other states. In 2010, the legislature extended the egg ban to all states.
The states initially challenged the egg ban in District Court. The District Court dismissed the case for want of standing and the Ninth Circuit affirmed. The states then asked the Supreme Court to invoke its original jurisdiction to review their commerce clause challenges to the proposition. The Supreme Court declined.
In 2018, the voters adopted Proposition 12, which extended the ban to out-of-state production of pork and veal. Earlier this month, the North American Meat Institute sued to enjoin the proposition as applied to pork and veal produced in states other than California. The complaint asserts that the proposition gives the Institute’s members a Hobson’s choice: abandon the California market or spend hundreds of millions to make their production facilities California-compliant.
The complaint alleges three legal theories. First, the proposition violates the dormant commerce clause. The dormant commerce clause prohibits states from discriminating against out-of-state products. A principal motivating factor behind the Constitutional Convention was the protectionist tactics allowed by the Articles of Confederation. The stated purpose of the proposition was to protect California producers from out-of-state competitors who were not required to make the expensive alterations necessary to comply with California’s animal protection laws. The necessary effect of then proposition is to prevent out-of-state producers from enjoying the competitive advantage they otherwise would have.
A state may defend a protectionist statute only by proving that it is defending a legitimate local interest (unrelated to protectionism) that could not be protected in any other way. Here, California claims that its animal protection measures protect the public health and safety by minimizing the risk of foodborne illnesses. The Institute argues that there is no scientific evidence linking space limitations to a higher risk of illness. The Institute also claims that the extensive federal regulation of egg and meat production makes any such link highly unlikely. Finally, the Institute argues that California could combat any such risk by intensive inspections of out-of-state products.
The Institute’s second argument is that the proposition violates the ban on extraterritorial state regulation, a combination of the commerce clause and the inherent nature of a federal system. The only way that out-of-state producers can legally sell in California is to comply with California space requirements, which constitutes direct extraterritorial regulation.
The Institute launches a parade of horribles about what states could do if the California proposition were upheld. Texas could refuse the sale of products produced in states that do not allow right to work. Washington could prohibit the sale of products produced in states that do not have a $15 an hour minimum wage. California could ban the sale of products from states that have not tackled global warming. That would effectively terminate the national market the commerce clause was intended to ensure.
Third, the Institute argues that the proposition violates the dormant commerce clause under the balancing test articulated in Pike v. Bruce Church, Inc. The Pike test asks whether the challenged regulation burdens interstate commerce and, if so, whether that burden substantially outweighs any local benefit.
The Institute argues that the burdens are clear: producers must invest hundreds of millions of dollar to expand the space allocated for pigs and calves intended for sale in California. The necessary result is higher prices for pork and veal sold into California. If producers want to segregate California-bound pigs and calves from other pigs and calves, there will be additional expense as well.
The Institute argues that there is no local benefit. California has identified two interests allegedly served by its proposition: animal welfare and reducing the risk of foodborne illness. The Institute asserts that California has no local interest in the welfare of animals in other states and that there is no evidence that the proposition is necessary to avoid the risk of illness.
California’s response to the motion is due the 1st of November. The hearing is set for November 18.