U.S. Supreme Court Upholds California’s Ability to Regulate Pork Shipped From Other States

In Nat’l Pork Producers Council v. Ross, the court rejected an industry challenge alleging that California’s animal-welfare law impermissibly regulated extraterritorial business operations.

In 2018, the California Legislature passed Proposition 12. The proposition imposes standards on a number of products, including pork, as a condition of access to the California market. For example, Proposition 12 proscribes the confinement of hogs and requires sows to have at least 24 square feet of living space. As written, all pork products in California must meet the standards of Proposition 12, regardless of whether the hogs came from California.

An industry group, the National Pork Producers Council (“Council”), brought suit against California. They argued that Proposition 12’s practical effect was to control commerce outside of the state in violation of the Dormant Commerce Clause.

The Dormant Commerce Clause prohibits states from discriminating against or unduly burdening interstate commerce. This prohibition stems from the Commerce Clause, article I, section 8 of the U.S. Constitution, which implicitly permits only Congress, and not states, to regulate interstate commerce. South Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2090 (2018). To evaluate state laws under this rule, courts balance the burden a state law imposes on interstate commerce relative to the putative local benefits. Pike v. Bruce Church, Inc., 397 U.S. 137 (1970).

The lower courts dismissed this challenge, and the Council appealed. It pressed for a broad per se rule that a state cannot condition in-state sales on out-of-state business operating in a certain way. In this article, we analyzed oral arguments in the case and predicted that the U.S. Supreme Court would reject any such per se rule.

Like we predicted, the U.S. Supreme Court affirmed the lower-court decisions and rejected the Council’s proposed per se rule. The opinion, authored by Justice Neil Gorsuch, is available here.

The court first held that there was no constitutional support for a per se rule prohibiting state laws with extraterritorial effects. Rather, the core target of the Dormant Commerce Clause is state statutes that deliberately discriminate against out-of-state economic activity. The court acknowledged that the Dormant Commerce Clause protects the “interstate market… from prohibitive or burdensome regulations” but that it does not protect “particular… firms” or “particular structure[s] or methods of operation.”

Next, the court rejected the Council’s claim under the Pike balancing test. While the Council had claimed that Proposition 12’s economic cost substantially outweighed its moral and health benefits, the court rejected this comparison. Judges do not possess the institutional authority to weigh economic costs against noneconomic benefits, as the two are incommensurable. The court thus held that the Council’s alleged harm was too speculative.

While a five-justice majority supported the judgment, four justices joined separate opinions concurring and dissenting in part. Chief Justice John Roberts (joined by Justices Samuel Alito, Brett Kavanaugh, and Ketanji Brown Jackson) contended that the Council had alleged a substantial burden on interstate commerce and thus should have a chance to make their showing on remand. Justice Brett Kavanaugh added that Proposition 12 may also raise questions under the Import-Expert, Privileges and Immunities, and Full Faith and Credit Clauses of the U.S. Constitution.

This opinion not only upholds California’s Proposition 12, but suggests that other state laws that have extraterritorial effects will likely also have good arguments against a Dormant Commerce Clause challenge. A per se rule against extraterritoriality would have jeopardized Colorado’s renewable portfolio standard, for instance, which requires Colorado utilities obtain an increasing proportion of their electricity from renewable sources. See e.g. Colo. Rev. Stat. § 40-2-124. Under this decision, state laws will generally survive a Dormant Commerce Clause challenge absent a deliberate discriminatory effect on out-of-state producers.

Attorneys at Baird Holm LLP have broad experience in environmental law and litigation. Please contact us if you have questions about this case or a related matter.

Hannes D. Zetzsche
Nyla A. Khan, Summer Associate