Case History
Shortly after Proposition 12 passed in 2018, the National Pork Producers Council (NPPC) and the American Farm Bureau Federation (AFBF) (collectively, “challengers”) sued the California Department of Food and Agriculture (CDFA) alleging that Proposition 12 violates the Dormant Commerce Clause. This doctrine holds that the Commerce Clause of Article I, Section 8, of the U.S. Constitution, which gives Congress the power to regulate commerce between the states, also prevents states from imposing restrictions on interstate commerce by discriminating against out-of-state competitors. Although the Dormant Commerce Clause stems from a long history in caselaw, it has seldom been invoked in modern jurisprudence to invalidate state laws.
The challengers argued that even though Proposition 12 does not facially discriminate against out-of-state commerce (the law treats all pork sold in California equally, regardless of whether it comes from a pig raised in-state or out-of-state), it overly burdens interstate commerce because it requires out-of-state producers to raise pigs in a certain manner if they seek to sell their products in California. In particular, the challengers pointed to the costly changes to production practices and infrastructure many producers will need to undertake to comply with Proposition 12’s confinement requirements, which they assert will increase production costs by 9.2% at the farm level. Although the costs fall evenly on both in-state and out-of-state producers, the challengers highlighted that California imports the vast majority of the pork its consumers eat, meaning that the actual costs will primarily fall on out-of-state producers.
Both the District Court of the Southern District of California and the Ninth Circuit ruled in favor of the state, with the District Court granting the state’s motion to dismiss and the Ninth Circuit affirming.1
On appeal to the Supreme Court, the challengers advanced two primary arguments: first, that the Dormant Commerce Clause embodies an “almost per se” rule forbidding the enforcement of state laws that have the practical effect of controlling commerce outside the state (also referred to as the extraterritoriality doctrine); and second, that under the balancing test established in Pike v. Bruce Church, Inc.,2 the burdens on interstate commerce are clearly excessive in relation to any in-state benefits.
The Supreme Court’s Decision
In a fractured decision in NPPC v. Ross, the Supreme Court affirmed the Ninth Circuit and upheld Proposition 12, although the Justices disagreed on specifics in how the Pike balancing test should be applied. Justice Neil Gorsuch wrote the opinion of the Court, considering and rejecting the two main arguments put forth by the challengers.3
First, the Court rejected the challengers’ argument that Supreme Court precedent regarding the Dormant Commerce Clause points to a “per se” rule that prohibits any state law that has “the practical effect of controlling commerce outside the State,” even if the law is not purposefully discriminatory with regard to out-of-state interests. The Court distinguished cases cited by the challengers and emphasized that the discriminatory intent prong of the dormant commerce cause analysis is a key component that cannot be ignored. Moreover, the Court reasoned that such an interpretation would result in a drastic change in state law-making power and “cast a shadow” over existing state laws that have effects outside their own borders.
Second, the Court rejected the challengers’ Pike balancing test arguments, although in a fractured decision. The challengers had argued that Proposition 12 failed the Pike balancing test because Proposition 12 imposed burdens on out of state pork producers that were “clearly excessive in relation to the putative local benefits.” Although a majority of the Justices agreed that the challengers’ Pike claim could not move forward, they disagreed about whether and how the balancing test in Pike could be administered and how the case should be resolved, generating a highly fractured opinion with four Justices writing separate opinions concurring and dissenting in part. A majority of the Court agreed that Pike was primarily focused on protectionist state laws, but the Justices disagreed on issues such as whether courts are equipped to weigh non-economic moral benefits to in-state interests against economic burdens to out-of-state interests (three Justices believe the courts are not so equipped) and whether the challengers adequately pled that Proposition 12 imposed a substantial burden on interstate commerce (five Justices believe the challengers met this initial screen). Despite the fractured decision, the Court ultimately rejected (5-4) the challengers’ argument that Proposition 12 failed the Pike balancing test.
Several Justices also emphasized the role of the democratic process in establishing local norms, including issues such as which products may be sold within a state’s borders, pointing to the fact that a majority of California voters supported Proposition 12 and that Congress has consistently declined, despite requests, to establish nationwide pork-production standards.
Despite the at-times fractured decision, the Court upheld Proposition 12 against the Dormant Commerce Clause challenge.
Next Steps and Implications on Other Cases
The Supreme Court’s decision in NPPC functionally upholds Proposition 12, and the law will continue to be administered by CDFA. The case is but one of several related to Proposition 12 and a similar law in Massachusetts, known as Question 3. The Supreme Court’s decision affects several of those cases differently:
- Iowa Pork Producers Association v. Bonta. A trade association sued California, challenging Proposition 12 on a variety of Constitutional grounds, raising Dormant Commerce Clause issues similar to those in the NPPC case but also challenging the law on other constitutional grounds, including grounds related to due process, federal authority, and privileges and immunities. The case was dismissed, plaintiffs appealed to the Ninth Circuit, and the Ninth Circuit stayed the appeal pending resolution of the NPPC Supreme Court decision.4
- California Hispanic Chambers of Commerce v. Ross. In this case, a group of California-based plaintiffs challenged Proposition 12 with respect to the pork provisions in state court on California Constitutional grounds. In that case, the court enjoined enforcement of Proposition 12 with respect to the prohibition on sales of non-compliant pork until 180 days after the state issued final regulations implementing Proposition 12, which would have been February 28, 2023. The court extended that stay, however, until July 1, 2023, to allow for the decision in NPPC to issue in the event the decision affected Prop 12’s enforceability.5 From July 1, 2023, the state will be permitted to enforce Proposition 12’s pork provisions. California has issued and is in the process of phasing in regulations implementing Proposition 12. The state also appealed the case to the state appellate court, and the appeal has been stayed until July 3, 2023, pending the decision in NPPC.6
- Massachusetts Restaurant Association v. Healey. This case involves a challenge to a Massachusetts state law known as Question 3, which is very similar to Proposition 12. Similar to Proposition 12, Question 3 restricts in-state sales of certain animal products from animals not raised in accordance with Massachusetts’ confinement laws. This case was stayed for a period to last 30 days following the issuance of the final decision in NPPC.7Under the stay order, the parties are required to meet and confer within 10 days of the Court’s final ruling in NPPC and to propose a plan for future proceedings in the Massachusetts case within 20 days of the final ruling. The complaint in the Massachusetts case raises other claims in addition to Dormant Commerce Clause arguments, and it is unclear at this point how the parties will proceed.
It also remains to be seen how CDFA will proceed in implementing Proposition 12 with respect to whole pork meat (which is specifically defined in that law), including how the state will approach products or pigs already in the supply chain, and how supply chains will respond to the law.
Conclusion
The Supreme Court’s decision in the NPPC case paves the way for California to soon begin enforcing Proposition 12 requirements for whole pork meat (as specifically defined under that law). It is unclear how exactly CDFA plans to approach implementation and enforcement, and food companies buying or selling whole pork meat in California should act quickly to assess how the decision may affect their operations.
The Court’s decision may also embolden other states or ballot initiative proponents who may be considering establishing their own state-specific requirements for animal raising practices or other practices related to food production, and food companies should remain especially attentive to state-level policy developments.
Authored by Brian D. Eyink, Trenton H. Norris, and Connie Potter.
References
1 Nat’l Pork Producers Council v. Ross, 6 F. 4th 1021 (9th Cir. 2021); Nat’l Pork Producers Council v. Ross, 456 F. Supp. 3d 1201 (S.D. Cal. 2020).
2 397 U.S. 137 (1970).
3 Nat’l Pork Producers Council v. Ross, No. 21-468, slip op. (U.S. 2023). Decision available here.
4 Iowa Pork Producers Ass’n v. Bonta, No. 22-55336, Order Re Stay of Appellate Proceedings (filed May 26, 2022, 9th Cir.).
5 Cal. Hispanic Chambers of Commerce v. Ross, No. 34-2021-80003765, Order Re Joint Stipulation of All Parties Requesting Modification of February 2, 2022, Judgment and Writ of Mandate Due to Changed Circumstances (filed Nov. 28, 2022, Sacramento Cty. Super. Ct.). Order available here.
6 Cal. Hispanic Chambers of Commerce v. Ross, No. C095799, Order Re Stay of Briefing Requirements (filed April 24, 2023, Cal. Ct. App. 3rd Dist.).
7 Mass. Restaurant Ass’n v. Healey, No. 4:22-cv-11245-MLW (D. Mass. filed Aug. 3, 2022).
