In 2018, voters in California passed Proposition 12 (Prop 12). Prop 12 was a ballot initiative that enacted a law requiring farmers to provide a minimum amount of square feet to egg-laying hens, veal calves, and breeding pigs. Prop 12 also requires California stores to verify that the eggs, veal meat, and pork they sell were derived from animals raised in accordance with Prop 12’s square footage requirements. There are two compliance dates associated with Prop 12. The first compliance date required farmers raising egg-laying hens and veal calves to provide a certain number of square feet to each hen and veal calf by January 1, 2020. At that time, California stores were required to sell eggs and veal meat that were produced in a way that complies with Prop 12. The second deadline required egg-laying hen producers to have cage free facilities, and hog producers to provide their animals a certain number of square feet by January 1, 2022. After January 1, 2022, California stores selling eggs and pork must ensure those products were raised in compliance with Prop 12.
Since Prop 12 was enacted, it has been the subject of litigation. Particularly, plaintiffs have focused on the provisions pertaining to hogs and pork. Due to this litigation, Prop 12 is currently unenforceable as it applies to whole pork sales. This blog post examines the two on-going court cases involving Prop 12, and how it affects raising hogs and selling pork. The first case is in federal court and deals with the constitutional law concept known as the Dormant Commerce Clause. The second case is in state court and deals with statutory interpretation and administrative procedure.
National Pork Producers Council v. Ross
In December 2019 the National Pork Producers Council and the American Farm Bureau Federation (Plaintiffs) filed a lawsuit in the United States District Court for the Southern District of California against the California Department of Food and Agriculture (CDFA) and the California Department of Public Health (CDPH). In their complaint, the Plaintiffs in National Pork Producers Council v. Ross, 456 F.Supp. 3d 1201 (S.D. Cal. 2020), argued that Prop 12 violated the Commerce Clause of the United States Constitution.
The Commerce Clause states that Congress has the power “to regulate commerce with foreign nations, and among the several states, and with Indian tribes.” U.S. Const. art. I, § 8, cl. 3. Additionally, courts have read into this clause a concept called the Dormant Commerce Clause, which is the idea that states cannot pass laws that excessively burden interstate commerce, or commerce across state borders. In other words, states cannot pass laws that favor that state’s citizens or businesses over citizens and businesses from other states without violating the Dormant Commerce Clause. However, this legal doctrine is not clear and courts in different jurisdictions may come to different conclusions when presented with the same facts in a Dormant Commerce Clause dispute.
The Plaintiffs in National Pork Producers Council v. Ross, claimed Prop 12 violated the Dormant Commerce Clause because Prop 12 requires any hog producer—including those located outside of California—who sells pork in California to provide a minimum amount of square feet to each hog. To successfully argue that Prop 12 violated the Dormant Commerce Clause, the Plaintiffs needed to prove that Prop 12 has both an “extraterritorial effect,” and a substantial burden on interstate commerce. At both the District Court and Circuit Court levels, the judges felt the Plaintiffs did not meet these requirements, and therefore concluded that Prop 12 does not violate the Dormant Commerce clause.
In National Pork Producers Council v. Ross, the District Court found that Prop 12 has neither an extraterritorial effect nor does it substantially burden interstate commerce.
To determine whether Prop 12 has an extraterritorial effect, the District Court asked whether Prop 12 controls conduct that occurs only outside of California’s borders. The District Court explained that, under its precedent, a “statute that applies both to California entities and out-of-state entities does not target wholly extraterritorial activity.” The District Court also noted that the Supreme Court of the United States has held that a law violates the Dormant Commerce Clause if it controls commerce occurring wholly outside the boundaries of the state. See Healy v. Beer institute, Inc., 491 U.S. 324, 336 (1989). This means that if a law controls commerce that takes place fully within the state the same way it controls commerce that stretches beyond the state’s borders, then the law does not have an extraterritorial effect. The District Court found that Prop 12 “does not regulate extraterritorially because it does not target solely interstate commerce and it regulates in-state and out-of-state conduct equally.”
The second part of the test to determine whether a law violates the Dormant Commerce Clause is to determine whether the law places a substantial burden on interstate commerce. A law places a substantial burden on interstate commerce when it regulates activities that inherently require a uniform system of regulation, or impairs the free flow of materials and products across state borders. Nat’l Ass’n of Optometrists & Opticians v. Harris, 682 F.3d 1144, 1154-55 (9th Cir. 2012). The District Court found that “the fact that some Proposition 12 compliant pork might reach states other than California does not mean Proposition 12 has the effect of requiring a uniform system of regulation.” Under the District Court’s reasoning, an unconstitutional state law would require all pork produced in the United States to comply with Prop 12.
In arguing Prop 12 places a substantial burden on interstate commerce, the Plaintiffs reasoned that the law will incentive consolidation in the pork industry. The District Court explained that this argument does not address Prop 12’s constitutionality. Instead such an “argument relates to the wisdom of the statute, not its burden on commerce.” Quoting Exxon Corp. v. Governor of Maryland, 437 U.S. 117, 128 (1978).
Because the District Court found that Prop 12 does not have an extraterritorial effect and does not substantially burden interstate commerce, it held that Prop 12 does not violate the Commerce Clause of the United States Constitution.
After the District Court ruled in favor of CDFA and CDPH, the Plaintiffs appealed the case to the United States Court of Appeals for the Ninth Circuit. National Pork Producers Council v. Ross, 6 F.4th 1021 (9th Cir. 2021). Again, the Plaintiffs claimed that Prop 12 impermissibly regulates “extraterritorial conduct outside of California’s borders by compelling out-of-state producers to change their operations to meet California standards”; and that Prop 12 imposes an excessive burden on interstate commerce without advancing any legitimate local interest.
Although the Ninth Circuit dealt with the same facts and legal concept as the District Court, it had a different way of explaining impermissible extraterritorial effects. The Ninth Circuit explained that even “if a state’s requirements have significant upstream effects outside of the state, and even if the burden of the law falls primarily on citizens of other states, the requirements do not impose impermissible extraterritorial effects. [. . .] A state law is not impermissibly extraterritorial unless it directly regulates conduct that is wholly out of state.” The Ninth Circuit found that although Prop 12 has upstream effects (requiring out-of-state pork producers to gain California certification to sell their products in California), Prop 12 does not have impermissible extraterritorial affects because it simply regulates the sale of pork within California.
For the second part of the Dormant Commerce Clause test, the Ninth Circuit explained that a statute imposes a substantial burden on interstate commerce if it is discriminatory, or if the statute regulates an activity that requires uniform regulations in every state such as taxation and interstate transportation. The Ninth Circuit found that Prop 12 does not have a discriminatory effect and does not fall into the narrow class of activities that require uniform regulation.
Additionally, the Ninth Circuit explained that “laws that increase compliance cost, without more, do not constitute a significant burden on interstate commerce.” In response to the Plaintiffs’ claim that Prop 12 will increase pork production costs, the Ninth Circuit explained that even “if producers will need to adopt a more costly method of production to comply with Proposition 12, such increased costs do not constitute a substantial burden on interstate commerce. [. . .] Nor do higher costs to consumers qualify as a substantial burden on interstate commerce.” Therefore, the Ninth Circuit agreed with the District Court and held that Prop 12 does not violate the Dormant Commerce Clause.
After the Ninth Circuit filed its opinion on July 28, 2021, the Plaintiffs appealed the decision to the Supreme Court of the United States. On March 28, 2022, the Supreme Court announced it will hear the case during its 2022-2023 term. This means that the Supreme Court will have the ultimate say on Prop 12’s constitutionality. The Supreme Court did not announce why it decided to hear the case, but its decision, which will be published after the Court hears the case, may help clarify the Dormant Commerce Clause doctrine.
California Hispanic Chamber of Commerce v. Ross
A lawsuit challenging Prop 12 has also been filed in California state court. On January 21, 2022 a California Superior Court judge decided that CDFA and CDPH cannot enforce Prop 12, as it applies to whole pork meat, until the state agencies promulgate regulations implementing Prop 12. California Hispanic Chamber of Commerce v. Ross, No. 34-2021-80003765, 2022. The text of Prop 12 required CDFA and the CDPH to finalize regulations by September 1, 2019. These regulations are to create a certification process to help stores verify they are selling eggs, veal, and pork in compliance with Prop 12. However, the state agencies have not yet published final regulations.
To avoid potentially facing criminal charges for unknowingly violating Prop 12 due to the lack of regulations, the California Hispanic Chamber of Commerce (the Chamber), and others who sell whole pork meat in California, sued CDFA and CDPH. The Chamber asked the state court to determine both whether CDFA and CDPH may enforce Prop 12 before finalizing regulations, and if not, how long after such regulations are finalized may CDFA and CDPH start enforcing the law.
Prop 12 states that CDFA and CDPH “shall” jointly promulgate rules and regulations before enforcing the law. When interpreting laws, the term “shall” typically designates a command or something that must be done. Despite this command, the state agencies argued that regulations are not needed for entities regulated by Prop 12 to know how to comply. However, the court found this argument “inconsistent with textual evidence that the voters wanted regulations before the square-footage requirements took effect.” Thus, the court held that CDFA and CDPH must finalize regulations before enforcing Prop 12. The court also held that the state agencies must give regulated entities 180 days to come into compliance after the regulations are finalized before taking enforcement actions.
This opinion came out of a superior court, the lowest court in California’s court system. This means that the decision is appealable to a Court of Appeal. CDFA and CDPH have 60 days after the superior court rendered its opinion to file an appeal. Therefore, if CDFA and CDPH decide to appeal the superior court’s decision, the state agencies must do so before March 22, 2022.
What’s to Come
Although no court has found Prop 12 unconstitutional, the law as it applies to whole pork is not currently enforceable in California. Without further judicial intervention, it will likely be enforceable 180 days after CDFA and CDPH publish final regulations implementing Prop 12. However, the fate of Prop 12 remains unclear.
**This blog post was edited on March 29, 2022, to reflect the Supreme Court’s decision to hear National Pork Producers Council v. Ross.**
To listen to a podcast about Prop 12 featuring NALC Senior Staff Attorney Elizabeth Rumley, click here.
To view a compilation of state farm animal confinement laws, including Prop 12, visit NALC’s state compilation here.
For more National Agricultural Law Center resources on Animal Welfare law, click here.
**This article was written by former NALC Staff Attorney Jana Caracciolo.