Pigs Fly! SCOTUS Upholds State Sovereignty in CA Pork Case

Last week in National Pork Producers Council v. Ross, the U.S. Supreme Court upheld a California ballot initiative addressing animal cruelty in the pork industry against a dormant Commerce Clause challenge. The ruling was a strong affirmation of states’ authority to tackle far-reaching problems, with positive implications for state environmental, energy, and climate initiatives.

The law at issue, California’s Proposition 12, bans the in-state sale of products derived from breeding pigs confined in stalls that prevent the sows from lying down, standing up, or turning around. The ballot initiative sought to address the pigs’ welfare, as well as potential threats to the health and safety of California consumers associated with the confinement practices, such as risk of foodborne illness.

Petitioners National Pork Producers Council and the American Farm Bureau Federation filed a lawsuit alleging that Proposition 12 impermissibly burdens interstate commerce because California imports most of the pork it consumes, and the law would impose excessive compliance costs on out-of-state pig farmers. The Constitution grants Congress the authority to “regulate Commerce…among the several States.” The pork producers, in their case, sought to rely on a judicially crafted doctrine, known as the “dormant Commerce Clause,” which interprets this positive grant of power to Congress to include an implicit prohibition on states from enacting certain laws that overly burden interstate commerce.

In a self-described “splintered decision” led by Justice Gorsuch, the Supreme Court rejected the challenge, quipping that “[w]hile the Constitution addresses many weighty issues, the type of pork chops California merchants may sell is not on that list.” (Slip Op. at 2) As we stay tuned for developments regarding the scope of federal agency powers that are expected next term, this case demonstrates that there is clear room for states to exercise their sovereign authority to take strong climate and environmental action.

The decision offers four key takeaways for states seeking to regulate complex environmental, energy, and climate issues that involve upstream or downstream effects in other states:

1. There is no per se rule against state laws with extraterritorial effects.

The Court confirmed the right of state governments to exercise their traditional sovereign authority even in cases where a state law has extraterritorial effects. Justice Gorsuch was quite emphatic on this point, noting that “[i]n our interconnected national marketplace, many (maybe most) state laws have the ‘practical effect of controlling’ extraterritorial behavior.” He explicitly cited state environmental laws, among a long list of other types of state regulations, that have a “considerable” influence on commerce outside state borders, concluding that a per se rule against laws with extraterritorial effects “would cast a shadow over laws long understood to represent valid exercises of the States’ constitutionally reserved powers.” (Slip Op. at 12-13).

Even the dissenters, who took a broader view of the reach of the dormant Commerce Clause, agreed that extraterritorial effects alone were not sufficient to violate the doctrine. This is good news for state governments in general, and it has particular significance for state environmental, energy, and climate programs.

Many important state energy and environmental laws could have been in jeopardy under petitioners’ broad reading of the extraterritorial test, as explained in an amicus brief filed by a coalition of states led by Michigan and Illinois (for more on this topic see this column, written while the case was still pending). For example, clean energy programs targeting a certain percentage of renewable energy for consumption within the state, producer responsibility schemes that impose environmentally-focused requirements for products sold in-state, and a host of waste management programs that deal with up-stream and down-stream aspects of waste generated by state residents, all have clear extraterritorial effects. These critical programs are now buttressed against dormant Commerce Clause challenges after last week’s ruling.

As discussed above, the justices unanimously agreed to reject an outright prohibition on state laws with extraterritorial impacts. Beyond that, there was little consensus on the specifics of the legal test that should apply in dormant Commerce Clause cases. In particular, the justices failed to agree on how to apply Pike v. Bruce Church, Inc., a 1970 Supreme Court decision that found Arizona’s requirement that cantaloupes grown in state must be packed in the state to be an impermissible attempt to insulate in-state businesses from competition.

In debating how to apply Pike, the justices did not agree on how essential protectionist or discriminatory motives are to the legal test. Justice Gorsuch’s position was that those motives should be central, thus limiting the impact of the doctrine. He again turned to environmental regulation to explain the point and cited Maine’s ban on single use plastic bags as an example of a state law that, out of respect for federalism, should not be subject to inquisition surrounding its extraterritorial impacts because it was clearly not protectionist in nature.

However, a majority of justices, in a series of separate concurring and dissenting opinions, took the position that there is some tipping point of negative impacts on interstate commerce that could trigger a balancing of benefits and burdens under the Pike test, even in cases where protectionism was not at issue. These justices were further split on whether the pork producers had plausibly alleged a sufficient burden on interstate commerce to trigger such balancing under Pike. This is one area to watch closely in the future, as states consider adopting environmental regulations that may have upstream or downstream impacts that impose cognizable costs on out-of-state actors.

The Court did not adopt the pork producers’ arguments that California could not lawfully assert a governmental interest in out-of-state conduct. The pork producers argued that California’s interests were simply moral concerns, and that the state could not possibly have a legitimate interest in expressing condemnation regarding how pigs were treated in other states. This argument was also a key element of the federal government’s amicus brief, which took the position that Proposition 12 ought to be struck down, noting: “California’s attempt to regulate out-of-state farms based on a philosophical objection to animal-welfare policy in other States makes Proposition 12 ‘a very different thing’ from state laws that would likely survive Pike scrutiny because they are directed toward a legitimate in-state interest.” The DOJ emphasized that state statutes that seek to address environmental harm within the state are permissible, citing a long list of state clean energy, waste management, and environmental laws.

Such distinctions did not dominate the Supreme Court’s decision, and Justice Gorsuch’s opinion gave credence to the idea that states may consider the social policy implications of conduct outside their territorial boundaries, should it connect to in-state commerce, stating that “States may sometimes ban the in-state sale of products they deem unethical or immoral without regard to where those products are made (for example, goods manufactured with child labor). And, at least arguably, Proposition 12 works in just this way—banning from the State all whole pork products derived from practices its voters consider ‘cruel.’. . . In a functioning democracy, policy choices like these usually belong to the people and their elected representatives. They are entitled to weigh the relevant political and economic costs and benefits for themselves, and try novel social and economic experiments if they wish.” (Slip Op. at 19-20, cleaned up)

Going forward, the decision might impact how states weigh extraterritorial burdens and benefits when shaping environmental, energy, and climate programs. State police powers are traditionally focused on protecting the welfare of in-state residents. Consideration of the broader social or moral consequences of the state’s participation in interstate commerce raises complicated questions. For example, may a state consider out-of-state biodiversity impacts from farming practices for food sold in-state? What about consideration of localized human health or environmental impacts from out-of-state extraction of source materials for electric vehicle batteries sold in-state? Such questions will be left for another day. For now it is worth remarking that in a case about the interconnectedness of markets, the Court left room for a state to acknowledge that human empathy toward other living things also crosses state lines.

Several justices were occupied by questions surrounding the role of the Court in evaluating the economic burdens of the California law alongside its intended benefits. In fact, this was the thread that tethered Justice Barrett to the plurality affirming the law, offering a critical fifth vote. Justice Barrett wrote a separate concurrence solely to make the point that while, in her view, the pork producers plausibly alleged a burden on interstate commerce, the Court could not offer relief because the benefits and burdens of Proposition 12 were “incommensurable” and therefore outside the scope of judicial review under the dormant Commerce Clause. This issue is also what prompted Justice Sotomayor, joined by Justice Kagan, to write a separate concurrence reaching the exact opposite conclusions — mainly that the law should be affirmed, not because courts are incapable of balancing economic burdens against noneconomic benefits, but because a state choice that affects certain pork producers’ favored methods of operation fails to plausibly allege a substantial burden on interstate commerce.

Such divisions within the Court may play out in future cases relating to climate and environmental policy. Issues ranging from assessments of the true costs of our reliance on fossil fuels to ensuring equity and justice in clean energy transitions will prompt important questions about how to balance economic costs alongside values-based considerations for years to come. It remains to be seen whether the U.S. Supreme Court will engage directly in such questions outside the context of the dormant Commerce Clause, and if so, how.