Monday, March 17, 2014

Does the Dormant Commerce Clause or Federal Pre-emption Shield Out-of-State Egg Farmers From California Animal Welfare Laws?

By Mike Dorf

Late last year, I blogged about the then-proposed King Amendment to the Farm Bill, which would have precluded states from regulating agricultural products more strictly than sister states.  The amendment was not enacted but a pending federal lawsuit--originally filed by Missouri but now joined by four other states plus the governor of a fifth, aims to achieve through litigation the core of what the King Amendment aimed to achieve through legislation.  According to the amended complaint in Missouri v. Harris, California cannot legally enforce its law forbidding the sale of eggs produced by methods other than those approved in Proposition 2 by California voters in 2008.

In 2008, California voters approved Prop 2 by a nearly two-to-one margin. The provision regulates the conditions of confinement of animals raised for food in California, requiring that each animal be given sufficient room to lie down, stand up, turn around, and spread his or her limbs. Thus, effective in 2015, California will no longer permit gestation crates for pigs, veal crates, or battery cages for hens.  In 2010, California enacted a law that forbids the in-California sale of eggs produced anywhere, unless they were produced in accordance with the same standards as those that implement Prop 2. The lawsuit by Missouri et al challenges that application of California standards to eggs produced outside of California on grounds that it violates the dormant Commerce Clause and/or is pre-empted by the federal Egg Products Inspection Act.

Regular readers of this blog know that I am ambivalent about such regulations. If animal agriculture is inevitable, then I think that measures like Prop 2 are marginally better for the captive animals than leaving the industry unregulated because such measures do reduce suffering a little--although even the pigs, cows, and chickens raised for food under so-called humane conditions are subject to horrific suffering. Perhaps campaigns for laws like Prop 2 raise consciousness more generally, so that people who voted for Prop 2 in 2008 will come to value animal interests more broadly and eventually stop participating in the mistreatment and killing of animals. But there is also the possibility that the marginal improvements like Prop 2 reassure people who really do care about animal interests that they can eat their bacon cheeseburgers with a clean conscience. In my view, the question of whether measures like Prop 2 ultimately do more harm than good is a complex empirical one about which we do not have sufficient information to reach a definitive conclusion.

All of that is by way of full disclosure: As a critic of Prop 2 from "the left", as it were, I have less of a moral investment in its surviving a legal attack than one might think. Put differently, I'm interested in this topic chiefly as a constitutional law scholar, and only secondarily as a vegan.

The complaint cites various bits of the legislative history of the California legislation to show that the purpose of extending Prop 2 to out-of-state egg producers was to "level the playing field." Complying with Prop 2 will substantially increase the capital cost and somewhat increase the marginal cost of egg production, and thus absent the legislation applying the same standards to out-of-state producers, Prop 2 would confer a competitive advantage on the out-of-state producers. Accordingly, the complaint alleges that the legislation is protectionist in violation of the anti-discrimination norm of the dormant Commerce Clause.

The law itself cites a health purpose, not a protectionist purpose.  The law cites a Pew Commission report stating that animal products pose fewer risks to human health when the animals producing those products are treated well. The complaint alleges that the health benefits of the law are illusory, pointing to studies that reach different conclusions, and arguing that, in any event, the health justification was pretextual in light of the legislative history.

This claim strikes me as weak. The law is not facially discriminatory. It imposes the same standards on all eggs offered for sale in California. Thus, the burden will be on the plaintiffs to show that their health studies are clearly right and California's studies are clearly wrong. To the extent that I have a view about this matter, I think I'm probably closer to that of the plaintiffs, but for reasons that they will hardly like and certainly wouldn't introduce in evidence.  Namely: The harmful effects of egg consumption on human health are so large that it's hard to take seriously the state's asserted interest in human health, even if Prop-2-compliant eggs are slightly less dangerous to humans than non-Prop-2-compliant eggs.

But even if the plaintiffs succeed in showing that the real purpose of the legislation was to "level the playing field," that does not count as a discriminatory purpose where, as here, the field is being leveled from a point that is made unlevel by another California law. Suppose that a certain kind of bean grows fastest in soil that is naturally found only in Missouri. If California were to enact a law that requires that sort of bean to be grown in the inferior kind of soil found in California, that would be a de facto protectionist measure.  Although neutral on its face, the law would simply aim to take away an advantage that Missouri beans naturally enjoy.

By contrast, where, as here, another provision of California law confers an advantage on out-of-state egg producers, a law that "levels the playing field" in the sense of applying the same standards to out-of-state egg producers yields equal treatment.  That's why the Ninth Circuit rejected the same sort of argument when brought by out-of-state foie gras producers who challenged the state's application of the same standards to them as applied to California producers under a different statutory provision.

The foie gras decision also pretty much disposes of the other dormant Commerce Clause claims--that the law unduly burdens interstate commerce and that it regulates extraterritorially. The standard for winning a challenge to a neutral law on the ground that it unduly burdens interstate commerce is very high: the plaintiff must show that the burden on interstate commerce clearly outweighs the law's in-state benefits.  The plaintiff states have studies showing high compliance costs but (much to my chagrin), these somewhat higher production costs may well be offset by the marketing opportunity provided by shifting their facilities to "humane" egg production. The key point here, though, is that "undue burden" dormant Commerce Clause challenges rarely succeed.

Likewise, the claim that the California law regulates extraterrititorially is both precluded by the foie gras case and by basic logic. Any state law that imposes product regulation that takes the form of limiting the sale of an item produced in a certain manner would be invalid under the plaintiffs' theory, but that is plainly not the law.

The plaintiffs have a better argument that the California law is pre-empted by the federal law, but here too I think they should lose. The key statutory language provides that "no state or local jurisdiction may require the use of standards of quality, condition, weight, quantity, or grade which are in addition to or different from the official Federal standards." The plaintiffs say that if the California law is a health measure, and thus doesn't fail the nondiscrimination test of the dormant Commerce Clause, then it is pre-empted as an additional "quality" standard that differs from the federal standard.

I think that argument would work if the California law only aimed at protecting human health. But the law's obvious purposes include the promotion of (or, in my view, the marginal reduction in assaults on) the welfare of egg-laying hens. And the text of the California law says: "It is the intent of the Legislature to protect California consumers from the deleterious, health, safety, and welfare effects of the sale and consumption of eggs derived from egg-laying hens that are exposed to significant stress and may result in increased exposure to disease pathogens including salmonella." (Emphasis added).

The linguistic context of that sentence suggests that the law aims at human welfare, and if so, then it would appear to be a "quality" standard that falls within the scope of federal pre-emption. But it is very hard to figure out how human welfare is enhanced by better conditions for laying hens, apart from health and safety, which are also part of the law's purpose. Thus, I think that read in the overall context, the California law has animal welfare as one of its central purposes. And as such, it strikes me that the law is not pre-empted, because the federal Egg Products Inspection Act is not concerned with animal welfare at all.

But does California have an interest in promoting animal welfare in places outside of California? Is promotion of that interest really an effort to regulate extraterritorially in violation of the dormant Commerce Clause after all? I think the pretty clear answer here is no.  Last year the Ninth Circuit upheld California's fuel standards against (among other things) a claim that in regulating based on carbon intensity, California was regulating extraterritorially in violation of the dormant Commerce Clause.  As in the foie gras case, so too in the carbon tax case, the court affirmed the proposition that a state can validly assert an interest in the process by which a product sold in the state has been produced--even if the production process occurred out of state.

So, on the merits, it looks like the plaintiff states should lose their challenge.  I would note two caveats, however.  First, the court may not reach the merits because there are threshold questions of standing and ripeness.  Second, the plaintiffs do have one somewhat stronger claim that the California legislation discriminates against out-of-state egg producers in that California egg producers were given seven years to reconfigure their plants in order to bring them into compliance with Prop 2, but that the out-of-state producers were only given five years to reconfigure their own plants (because the legislation came two years later than Prop 2). If this is a valid claim, then, pursuant to the law's severability clause, it would entitle the out-of-state producers to an extra two years to comply with the law; it would not result in the law's invalidation.

19 comments:

Joe said...

Does this litigation have any connection to National Meat Association v. Harris, where a CA humane slaughter law was struck down?

Michael C. Dorf said...

NMA v Harris was a pre-emption case under a different federal statute, the Federal Meat Inspection Act (FMIA). That Act has a provision requiring that "downer" cattle be separated so that they may be "humanely slaughtered," and so California's stricter law was held to be within its scope, and thus pre-empted. So yes, NMA is relevant, but I think that the differences between the FMIA and the Egg Products Inspection Act suggest a narrower scope of pre-emption for the latter.

Hashim said...

What's the State's valid interest in regulating the process by which a product is made when: (1) the process itself occurs outside of the State; and (2) the process itself doesn't cause any harms inside the State? (As would be the case here, if the focus is solely on animal cruelty rather than consumer safety.) Any such regulation seems to me clearly to be an attempt to leverage the State's police power to regulate extraterritorially.

For example, could (conservative) states refuse to allow the importation of any product manufactured by companies who were barred by (liberal) state law from discriminating against gay employees or from paying less than a certain wage? Such laws likewise regulate "the process" by which an imported product was manufactured, but it's pretty difficult to view such laws as anything other than a trade barrier against states with disfavored local laws.

To put the point most starkly: at the Founding, could the anti-slavery states have banned the importation of cotton manufactured by slaves, purely for the purpose of hastening abolition and without any claim that the cotton itself was somehow defective? To the extent there's a Dormant Commerce Clause at all, I would think that'd be a paradigmatic violation.

Michael C. Dorf said...

Hashim's argument is foreclosed by the 9th Circuit foie gras case I cited but I take him to be suggesting that that case is wrongly decided.

I'll offer two state interests.

1) The animal welfare theory of California's law would be that the product from one process is a different product than the product from the other process. The state asserts a moral interest, not in the treatment of the out-of-state animals, but in its citizens non-participation in that treatment.

2) I also think (although I didn't put this in the post because I haven't run to ground all of the cases to be sure this is consistent with the precedent) that the state has a valid interest in avoiding a race-to-the-bottom that makes it impossible to vindicate its in-state animal welfare law.

If interest 1) is at issue, then the answer to Hashim's hypo is yes, a non-slave state could (subject to the undue burden balancing test) ban the sale of slave-produced goods. By contrast, if it's interest 2) that's doing the work, then that doesn't bear as much on the slavery example.

Note that this issue arises in the parallel int'l law of the WTO. After some backing and forthing in cases involving dolphins/tuna and shrimp/turtles, the WTO law permits (non-discriminatory) application of "extra-territorial" process limits on sales.

Hashim said...

Hard to believe that Baldwin v. Seelig would have come out the other way if NY had defended its law as based on a "moral interest" in preventing its consumers from "participating" in the exploitation of VT milk producers. (Baldwin's not just a "discriminatory effect" case, and while its "extraterritorial regulation" holding did involve a "price" statute, its reasoning sure seems to foreclose *intentionally* trying to affect commerce in other states, by any regulatory means. (The price limitation makes much more sense when dealing with claims merely challenging extraterritorial effect, rather than an avowed extraterritorial purpose.))

It's also hard to understand why we should bother inferring the existence of a Dormant Commerce Clause at all if it wouldn't even have prevented the anti-slave States from starting a trade war with the pro-slave States, which would seem to me to be the quintessential example of "commercial balkanization" that the Court claims the DCC is designed to prevent.

Michael C. Dorf said...

Hashim's use of scare quotes gives away the game, in my view. NY would not be asserting a genuine moral interest in his hypothetical, but merely disguising an effort to apply its economic regulation extra-territorially--although I agree that Baldwin is a better case for undermining the "avoiding race to the bottom" interest.

As to slavery itself, of course the ante-bellum DCC jurisprudence was quite different from the modern DCC jurisprudence. If the question is whether the original understanding of the Commerce Clause would have allowed states to forbid the sale of products made by slaves, well, we might end up with Justice Thomas, who has said: "The negative Commerce Clause has no basis in the Constitution and has proved unworkable in practice."

Hashim said...

Actually, I wasn't using scare quotes, just quoting your post's use of the phrases "moral interest" and "participation."

I don't know why you're so quick to claim that a state would be acting pretextually in asserting a moral interest in barring goods manufactured by producers unable to earn a supposedly living wage. Isn't that the same motive behind all the do-gooders who refuse to buy materials produced in foreign sweatshops? It's only a difference in degree, not kind, for some liberal state to express moral outrage about the low minimum wage, etc., in conservative states. (Or vice versa.)

So are you arguing that, if States did in fact have such a moral motive, they could wage such trade wars today under modern doctrine? Liberal states ban all goods manufactured under the permissive rules allowed by conservative states, and conservative states ban all goods manufactured under the strict rules mandated by the liberal states -- all of which is designed merely to express moral outrage over out-of-state conduct, rather than protect in-state consumers? I'm incredibly skeptical that the current Court would allow that to occur.

Michael C. Dorf said...

You've persuaded me. Perhaps it wouldn't be pretextual, and thus would be permissible--although the argument for something like the price support system at issue in Baldwin is much to defend because it is so clearly economic regulation. It's thus hard to isolate a non-protectionist purpose.

WTO law has long struggled with how to distinguish the legitimate application of environmental and labor standards, notwithstanding their extraterritorial effect, from impermissible protectionism. The answer is that there's no natural baseline. My view--which is broadly consistent with the Supreme Court's under the DCC, though not necessarily with every single case--is that absent facial discrimination, states should be given substantial deference when they assert a plausible labor, environmental or moral interest. After all, if there is a serious problem of protectionism, Congress can always pre-empt.

Michael C. Dorf said...

You've persuaded me. Perhaps it wouldn't be pretextual, and thus would be permissible--although the argument for something like the price support system at issue in Baldwin is much to defend because it is so clearly economic regulation. It's thus hard to isolate a non-protectionist purpose.

WTO law has long struggled with how to distinguish the legitimate application of environmental and labor standards, notwithstanding their extraterritorial effect, from impermissible protectionism. The answer is that there's no natural baseline. My view--which is broadly consistent with the Supreme Court's under the DCC, though not necessarily with every single case--is that absent facial discrimination, states should be given substantial deference when they assert a plausible labor, environmental or moral interest. After all, if there is a serious problem of protectionism, Congress can always pre-empt.

Hashim said...

Fair enough. I'm quite sympathetic to your position, since I don't think there should be a DCC clause at all, precisely because Congress can always preempt state laws that actually interfere with its preferred scheme of interstate commerce. But the current Court doesn't take that view, and I remain skeptical that it'd uphold "morals" legislation with a clear extraterritorial purpose or effect absent a concrete in-state harm. Cf. Lawrence v. Texas.

Joe said...

Thanks.

Cf. Lawrence v. Texas

Five justices relied on substantive due process and held that the conduct was part of the "liberty" of intimate association (what is the liberty here with a similar basis in precedent?) and that "the fact that the governing majority in a State has traditionally viewed a particular practice as immoral is not a sufficient reason for upholding a law prohibiting the practice." So, mere traditional morality isn't enough.

A few years later, four of the five in their dissent to GONZALES v. CARHART (abortion) referenced the principle, but underlined a "fundamental right" was at issue, "criminal law" and not some general liberty (the dissent tied things to gender equality, like Lawrence et. al. in part appealed to equality of gays and lesbians). So, use of the principle even as applied to CURRENT morality when economic liberty is at issue and possibly a civil regulation at that, is something of a reach.

Lawrence v. Texas did not end all morals legislation, including animal welfare laws like the one passed in California. Also, the opening discussion cited health interests. This is a "concrete" harm and not merely a statement of "moral outrage." Small it might be, but especially since economic regulation is involved, the test for constitutional purposes is pretty low. The dormant commerce argument might win -- though trying to figure out how it fits with antebellum practice seems like trying to mix the past and the present that no one but Thomas cares much about -- but mixing this with Lawrence v. Texas seems dubious.

Sam Rickless said...

On policy grounds, I favor Prop 2. But I am having great difficulty understanding why Prop 2 is not pre-empted by federal law as a "quality" standard.

You quote the following language from Prop 2: "It is the intent of the Legislature to protect California consumers from the deleterious, health, safety, and welfare effects of the sale and consumption of eggs derived from egg-laying hens that are exposed to significant stress and may result in increased exposure to disease pathogens including salmonella." You then say this:

"The linguistic context of that sentence suggests that the law aims at human welfare, and if so, then it would appear to be a "quality" standard that falls within the scope of federal pre-emption. But it is very hard to figure out how human welfare is enhanced by better conditions for laying hens, apart from health and safety, which are also part of the law's purpose. Thus, I think that read in the overall context, the California law has animal welfare as one of its central purposes. And as such, it strikes me that the law is not pre-empted, because the federal Egg Products Inspection Act is not concerned with animal welfare at all."

Maybe I'm missing something here, but the reference to "welfare" in the the Prop 2 quote is pretty obviously a reference to *human* welfare, as you recognize, sort of. The sentence actually makes no sense, read as referring to *animal* welfare. We are talking about the "welfare effects of the sale and consumption of eggs derived from egg-laying hens that are exposed to significant stress and may result in increased exposure to disease pathogens including salmonella." The *sale* and *consumption* of eggs that are produced by stressed-out hens exposed to diseases such as salmonella (which is potentially fatal for humans) do not have any (direct) welfare effects on *hens*, but *do* have (direct) welfare effects on *humans*. It is true that, in this case, it is difficult to see how human welfare could be enhanced except through the protection of human health and safety. That means that Prop 2's reference to "welfare" is redundant. This wouldn't be the first time that a piece of legislation included redundancy. And certainly if I have a choice between reading a law's provision as expressing something nonsensical and reading it as expressing something redundant, then I will choose the latter reading every time.

Michael C. Dorf said...

Sam: As I said in the post, the linguistic context indicates that welfare means human welfare, but it is also clear that a purpose of the law is the welfare of hens. One way to get there is by saying that the text awkwardly means that. Another is to say that this is a purpose of the law, just not one of its stated purposes.

Sam Rickless said...

Hi Michael: Thanks for your reply. But I'm still confused.

1. How are we going to distinguish between an unstated purpose and an unstated byproduct (that is not part of the law's purpose)? Suppose I claim that it is no part of the *purpose* of the law to protect the welfare of hens, but that the protection of hen welfare is a byproduct of the measures in the law that are there to protect human welfare. What evidence do you have that I am making a mistake?

What the law requires is that hens be treated in particular ways: they should be able to lie down, stand up, turn around, and spread their limbs. In other words, no battery cages allowed. To what purpose? If the lawmakers themselves tell us that the intent of the law to "protect California consumers [of eggs]", and there is a clear causal connection between giving hens more room and a lower incidence of pathogens in eggs, then why not suppose that the fact that hens are happier when given more room is a mere byproduct of the legislation?

2. I'm not seeing how the text means what you say it "awkwardly" means. As I see it, if you have to say that X *awkwardly means* Y, then X, in fact, does not mean Y. Otherwise, you can read a text as meaning a very great number of things, and the potential for massaging a text to make it mean what you want it to mean is greatly enhanced. I don't mean to be dramatic about this, but the "meaning = awkward meaning" thesis strikes me as dangerous to the rule of law.

Michael C. Dorf said...

Sam:
1) In general, there is no requirement that a law state its purpose at all. If a law states some number of purposes but the legislators could have also supported it for other purposes, then absent some special constitutional rule (such as the Establishment Clause with respect to religious purposes), those other purposes will be sufficient to sustain the law if they otherwise satisfy the relevant constitutional test. Put differently, in most contexts, a law's actual purpose (stated or not) is irrelevant.

2) Here I think our experience as, respectively, a lawyer and a philosopher, make a difference. On numerous occasions I have seen courts construe language to mean X when the relevant linguistic context pretty clearly indicates Y. But this point is independent of 1), in any event.

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