The US Supreme Court faces choices in deciding a landmark case for state regulation and interstate commerce.
Last month, the U.S. Supreme Court heard oral arguments in a case that could prove pivotal for the future of regulation and interstate commerce in the United States. In National Council of Pork Producers against Rossthe Court is reviewing a Ninth Circuit decision dismissing a challenge to California’s Proposition 12. That proposition prohibited the sale of pork products from animals raised in conditions that California voters consider “cruel,” regardless of the state where the animals were raised and the pork products were produced.
The easiest way to understand National Porkthat we describe in an earlier essay, is that it asks the question, “What limits, if any, does the dormant Commerce Clause, or the US Constitution more generally, impose on the ability of states to regulate morality when significant impacts of this? regulation is felt outside the state?”
While there are precedential arguments for both upholding and passing Proposition 12, if the Supreme Court upholds California’s far-reaching regulation, there would be few limits left on the ability of states to act on moral grounds to prevent trade with others states It would also imply that US domestic law offers an entirely different approach to this cross-border issue than does both international trade law and accepted practice in other common markets. Both commercial and common market law, both of which have devoted substantial attention to similar issues, have adopted regimes that would likely prohibit California’s regulation.
As we will describe in a forthcoming academic paper, “Bibb Balancing,” Proposition 12 imposes a mismatch burden. Mismatch loads arise from the interaction of different rules from two or more states. In a federal system in which the states have autonomy, regulatory diversity is expected. The question is whether there is a point at which this diversity becomes so heavy that it impermissibly segments—or, in the words of the Court, balkanizes—the national market. Mismatch cases also raise a closely related but conceptually distinct issue. Specifically, because inconsistent regulations spill over into other states, they hinder the ability of other states to regulate within their own territory. So when California requires that pork be sold in its territory to comply with certain production processes, the impact of this regulation spills over into other states, such as Iowa and North Carolina, which have their own own regulations on how pigs should be raised.
Supreme Court precedent is unclear about how—or even if—courts should resolve mismatches. The Court at oral argument wrestled with this question. For example, Justice Neil Gorsuch expressed dismay at the kind of balancing that is typically sought in undue burden cases.
But the role of the dormant Commerce Clause has long been to mediate between state policy priorities, on the one hand, and federalism and national market interests, on the other. Proposition 12 involves this tension because it rests on California’s claim that it has the right to ban out-of-state products because its citizens have ethical objections to the process used to make those products.
Leaving aside the question of whether it is appropriate for the courts to intervene to resolve mismatch cases, our purpose here is to consider four ways in which mismatch cases could be handled, ordered from most to least deferential to the importing state: Here, California. This order is also necessarily inversely deferential to the exporting state and the national market.
First, the Supreme Court could, as Justice Clarence Thomas advocates, eliminate dormant Commerce Clause review. Alternatively, as the late Justice Antonin Scalia advocated, the Court could remove the undue burden strand of the doctrine, leaving only the prohibition against discrimination. This approach closely follows Donald Regan’s argument that all the Supreme Court does, and should do, in dormant Commerce Clause cases is eliminate intentional protectionism.
Considering the facts underlying the National Pork In this case, it seems unlikely that the Court would find intentional protectionism, at least with respect to pork, because there is essentially no commercial hog farming in California. Instead, if the Court suspects protectionism more broadly in Proposition 12, which also bans the sale of caged eggs and California is a large egg producer, it would likely remand the case on that issue. Focusing on intent has an obvious appeal: when intent is clear, the reviewing court does not need balancing. But there are also problems, including limiting judicial review and determining whether the challenged state is engaging in intentional protectionism. In addition to judicial reluctance to attribute unconstitutional intent to states, there are many circumstances in which intent is unclear. Moreover, there are numerous problems in the process of attributing a single intent to a law, and discovering intent can be difficult, especially given the incentives to conceal it. These difficulties stand in the way of deciding dormant Commerce Clause cases based on intent alone.
Second, instead of reducing undue burdens, the Court could maintain the status quo of balance. Much of the oral argument assumed that this would be the correct approach. On balance, the Court must analyze the preliminary question of whether the Court should accept the moral opprobrium of out-of-state practices as a legitimate state interest that might weigh against a burden on interstate commerce as part of the balancing test. And assuming the Court accepts these ethical concerns, it must consider a closely related question of when, if ever, the connection between the moral objection and the product is too “attenuated” to count.
Without clear limits, expanding acceptable justifications for process-based embargoes to include morality would give importing states ample latitude to push their preferred policies on other states’ territories. The elephant in the room was whether a state could ban products from other states because those other states allowed or prohibited abortion or whether a state could even ban abortion pills. But the questions raised by the justices about whether states could ban products made by workers who did not receive a certain minimum wage or did not have access to certain health care benefits that voters in the importing state considered moral minimums show that even to what extent an importing state could exclude. if products were allowed to be banned on moral grounds alone.
A third approach would be based on multilateral trade rules. These rules include a “national treatment” requirement that prohibits members from using domestic laws, taxes, and non-tax regulations to discriminate against imports that are “like” domestic goods. The rules define an imported product as “like” a domestic product if it is “a directly competitive or substitutable product.”
The idea behind the domestic treatment and like product concepts is that a state should not be able to enact a facially neutral rule that invidiously discriminates against a foreign product. As a result, if the permitted product and the prohibited product are sufficiently similar, trade rules require the importing state to treat them in the same way.
For example, in a decision known as Tonya I, a trade court found that the United States violated the national treatment standard when it banned imports of tuna from Mexico and other countries that were caught using methods that killed more dolphins than allowed by North American standards. americans The tuna that the United States banned was determined to be “like” the dolphin-safe tuna that the United States allowed.
If the Supreme Court were to adopt a principle analogous to national treatment for similar products, states would be prohibited from using narrow distinctions to differentiate products. Thus, California could not ban pork from gestation crates because caged pork and cage-free pork are like products, meaning they are directly competitive and substitutable.
Finally, a fourth potential solution for mismatch cases would be for the Supreme Court to follow the Court of Justice of the European Union (CJEU), which interprets a treaty regime that, like the US Constitution, protects both state regulatory autonomy like a multi-state market. for goods and services.
The case of Cassis de Dijon involved a clash between France’s requirement that fruit spirits contain no more than 20 percent alcohol and Germany’s requirement that such spirits contain at least 25 percent alcohol. To resolve the conflict, the CJEU developed the principle of “mutual recognition”, under which products that comply with the regulation of their state of manufacture they are putatively free to circulate in all other EU states.
Mutual recognition is based on a crucial assumption, namely that there is sufficient similarity between the policy objectives of the importing state and the manufacturing state that the former can rely on the regulation of the latter to protect its reasonable interests . But if the importing state can point to an important state interest that is not covered by the manufacturing state rule, then the importing state can apply its own rule. However, to avoid revealing the benefits of mutual recognition, the CJEU interprets this exception narrowly.
Similar to the principle of national treatment, a mutual recognition rule would also create a legal presumption that the importing state must allow the product. Therefore, it would be more difficult for importing states to ban out-of-state products, such as pork, just because they use different production methods.
In National Pork, out-of-state producers have questioned whether California can ban imports of its pork products because Californians have a moral objection to other states’ production processes. If the Supreme Court allows California to justify due process-based embargoes on moral grounds, it will have given states the power to use access to their consumer markets as leverage to promote their preferred policies across the country. This decision would give power to large states compared to small ones. In deciding whether to allow the states, particularly California, to exercise this power, the Court will have to choose between several alternative ways of approaching this question. Each of the alternatives presented here would deal with the problem differently, with very different impacts on both regulation and interstate commerce.