The US Supreme Court faces choices in deciding the landmark case for state regulation and interstate commerce.
Last month, the US Supreme Court heard oral arguments in a case that could prove decisive for the future of regulation and interstate commerce in the US. B National Pork Producers Council v. RossCourt reviews Ninth Circuit decision rejecting appeal of California’s Proposition 12. That proposal banned the sale of pork products from animals raised in conditions that California voters consider “cruel” — regardless of the state where the animals were located and the pork products were produced.
The easiest way to understand National pigwhich we describe in an earlier article, is that it asks the question: “What limit, if any, does the Dormant Commerce Clause, or the US Constitution more generally, impose on the ability of states to regulate morality when significant effects of that regulation are felt outside the state?”
Although there are precedential arguments both for and against Proposition 12, if the Supreme Court upholds California’s far-reaching regulation, few limits will remain on the ability of states to act on moral grounds to prevent trade with other states. It would also indicate that US domestic law provides an entirely different approach to this cross-border issue than international trade law and common market practice. Both trade law and common market law have both devoted much attention to similar questions—adopting regimes that are likely to prohibit on the regulation of California.
As we describe in a forthcoming academic paper, “Bibb Balancing,” Proposition 12 imposes an inconsistency burden. Mismatch loads result from the interaction of different rules of two or more countries. In a federal system where states have autonomy, regulatory diversity is expected. The question is whether there is a point at which such diversity becomes so burdensome that it segments – or in the words of the court, balkanizes – the national market. Cases of incompatibility also raise a related but conceptually distinct issue. Specifically, as incompatible regulations spill over to other countries, they impair other countries’ abilities to regulate within their own territory. Thus, when California requires that pork sold in its territory meet certain production processes, the impact of this regulation spills over into other states, such as Iowa and North Carolina, which have their own regulations regarding how pigs are raised.
It is not clear from Supreme Court precedent how—or even if—courts should resolve inconsistencies. The court at oral hearing grappled with this issue. For example, Justice Neil Gorsuch expressed uneasiness with the kind of balancing typically called for in undue burden cases.
But the dormant commerce clause’s role has long been to mediate between state policy priorities, on the one hand, and federalism and national market interests, on the other. Proposition 12 is indicative of this tension because it rests on California’s claim that it may ban products from outside the state because its citizens have ethical objections to the process used to make those products.
Leaving aside the question of whether it is appropriate for courts to intervene to resolve cases of incompatibility, our purpose here is to consider four ways in which cases of incompatibility can be handled, ranked from most appropriate to least respectful of the importing country—here, California. This order is also, necessarily, a reverse respect for the exporting country and the national market.
First, the Supreme Court can, as advocated by Justice Clarence Thomas, eliminate the review of dormant commerce clauses. Alternatively, as the late Justice Antonin Scalia advocated, the Court could eliminate the heavy burden of the doctrine, leaving only the prohibition against discrimination. Such an approach closely follows Donald Reagan’s argument that all the Supreme Court does, and all it should do, in dormant Commerce Clause cases is to smoke out deliberate protectionism.
Considering the facts underlying the National pig In the event, the court is unlikely to find intentional protectionism—at least with respect to pork, because there is virtually 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 major producer of eggs — it will likely remand the case on that issue. Focusing on intent has an obvious appeal: when the intent is clear, the reviewing court need not balance. But there are also problems, including limiting court review and determining whether the appellant state is engaging in deliberate protectionism. In addition to judicial reluctance to attribute unconstitutional intent to states, there are many circumstances in which intent is unclear. In addition, many problems plague the process of attributing single intent to law, and uncovering intent can be difficult, especially given the incentives to hide it. These difficulties weigh against deciding Dormant Commerce Clause cases based on intent alone.
Second, instead of cutting unnecessary burdens, the court may maintain the status quo of balance. Much of the oral argument assumed that this would be the correct approach. For the purposes of balancing, the court must analyze the preliminary question of whether the court must accept moral objection to out-of-state practices as a legitimate state interest that may weigh the burden on interstate commerce as part of the balancing test. And assuming the court does accept such ethical concerns, it must consider the closely related question of when, if at all, the connection between the moral objection and the product is too “weak” to count.
Without clear boundaries, expanding the accepted justifications for process-based embargoes to include morality would give importing countries wide latitude to push their preferred policies onto other countries’ territories. The elephant in the room was whether a country could ban products from other countries because those other countries allowed or banned abortion or whether a country could even ban abortion pills. But the questions raised by the justices—as to whether states can ban products made by labor that is not paid a certain minimum wage or lacks access to certain medical benefits that the importing country’s voters see as a moral minimum—show how far an importing country can deny whether it were permissible to ban products on the basis morals only.
A third approach would rely 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 “competitive or substitutable product”.
The idea behind the concepts of national treatment and like product is that a country should not be able to enact an internally neutral rule that blatantly discriminates against a foreign product. Consequently, if the permitted product and the prohibited product are sufficiently similar, the trade rules require the importing country to treat them in the same way.
For example, in the so-called decision Tuna I, a trade court found that the U.S. violated the national standard of care when it banned imports of tuna from Mexico and other countries caught using methods that killed more dolphins than U.S. standards allowed. The tuna banned by the United States was determined to be “similar” to tuna safe for dolphins that the US allowed.
If the Supreme Court adopts a principle parallel to the national treatment of similar products, states will be prohibited from using narrow distinctions to differentiate between products. Thus, California could not ban pork from gestation crates because caged pork and cage-free pork are like products, i.e., competitive and directly substitutable.
Finally, a fourth potential solution to cases of incompatibility would be for the Supreme Court to follow the example of the Court of Justice of the European Union (CJEU), which interprets a treaty regime that, like the US Constitution, protects both state regulatory autonomy and a multi-state market. for goods and services.
The case of Cassis de Dijon It involved a clash between France’s requirement that fruit liqueurs contain no more than 20 percent alcohol and Germany’s requirement that such liqueurs contain at least 25 percent alcohol. To resolve the conflict, the CJEU developed the principle of “mutual recognition”, whereby products that comply with their regulations production mode Seemingly free to move around in all other EU countries.
Mutual recognition relies on a crucial assumption, namely that there is sufficient similarity between the policy goals of the importing country and the producing country, so that the former can rely on the regulation of the latter to protect its reasonable interests. But if the importing country can point to an important country interest that is not addressed by the producing country’s rule, then the importing country may apply its own rule. However, to avoid dismantling the benefits of mutual recognition, the EU Court interprets this exception narrowly.
Similar to the principle of national treatment, a rule of mutual recognition will also create a legal assumption that the importing country must permit the product. Thus, it would be more difficult for importing countries to ban products from outside the country, such as pork, simply because they use different production methods.
B National pig, out-of-state producers challenged whether California could ban imports of their pork products because California has a moral objection to other states’ production processes. If the Supreme Court allows California to justify a due process embargo on moral grounds, it will give states the power to use access to their consumer markets as leverage to advance their preferred policies across the country. Such a decision will empower large countries over small ones. In deciding whether to allow the states, particularly California, to exercise this authority, the Court will have to choose from among several alternative ways to address this issue. Each of the alternatives presented here would address the problem differently, with sharply different effects on both regulation and interstate commerce.
