For Now, Court Is Cool with California in Charge

Law students frequently find the U.S. Supreme Court’s Dormant Commerce Clause doctrine confusing. That is no surprise given the sharp disagreement over that doctrine among seasoned practitioners, academics, and even judges. And the Supreme Court’s recent opinion in National Pork Producers Council v. Ross did little to bring clarity to that critically important area of the law.

In narrow terms, the Court in National Pork upheld a California law that prohibited the sale of whole pork from the offspring of breeding sows confined in a manner that California residents consider to be cruel. The case, however, is about much more than pork chops. It involves weighty constitutional issues about the power of the states to regulate activity within their borders. The case also concerns the limits on those powers when a state’s laws interfere with the ability of other states to regulate within their borders—or when those laws undercut the national marketplace.

California, which accounts for roughly 13 percent of U.S. pork consumption, imports roughly 99.9 percent of the pork its residents consume. Because California has virtually no commercial hog farming, the two industry groups that challenged the California law did not assert that California drafted the law (at least as applied to pork) with the intention of protecting in-state producers from their out-of-state competitors. In other words, they did not make the usual Dormant Commerce Clause argument that the California regulation was both intended to and had the effect of protecting domestic competitors from out-of-state competition.

Instead, petitioners argued that the California law would impose requirements more onerous and expensive than industry practice, as well as more harmful to porcine and human health. Because it is not practical to trace pork sold in stores back to the birthing sow, the entire industry would have to adopt the California standard, petitioners contended.

Drawing on those assertions, the industry raised two claims under the Dormant Commerce Clause: first, that the law was impermissibly extraterritorial, and, second, that the law imposed an undue burden on interstate commerce. The trial court dismissed the petitioners’ case for failing to state a claim; the Ninth Circuit affirmed, and the Supreme Court granted certiorari last year.

By a vote of five-to-four in May of this year, the Court affirmed the lower courts’ dismissal of the lawsuit. But the justices’ opinions were fractured. No group of five justices supported the same reasoning for upholding the Ninth Circuit’s dismissal.

On the claim that the California law was impermissibly extraterritorial, petitioners asserted an “almost per se” constitutional prohibition of state laws that had the “practical effect of controlling commerce outside the state.” Every justice, including the dissenters, rejected such a sweeping extraterritoriality doctrine, in spite of some broadly suggestive language in a few prior Supreme Court cases.

Justice Gorsuch authored the main opinion, and he wrote for a five-vote majority in rejecting petitioners’ extraterritoriality claim. The majority noted that, if adopted, the per-se rule advocated by petitioners, which would invalidate any state legislation with spillover effects, would go far beyond prior doctrine. The majority rightly concluded that such a result could not fairly be inferred from reading the cases, and that, if adopted, such a broad reading would prevent states from regulating just about anything because laws regularly have at least some extraterritorial effects.

Indeed, all nine justices rejected petitioners’ conception of extraterritoriality.

Although the Court rejected petitioners’ interpretation, it acknowledged constitutional limitations on extraterritorial regulation arising not only from the Dormant Commerce Clause but from other parts of the Constitution, including the Privileges and Immunities Clause. Yet none of the four opinions in the case gave any insight into the content of such limitations.

In contrast with their unanimous rejection of petitioners’ extraterritoriality claim, the justices split over the petitioners’ undue burdens claim. Under the Court’s Dormant Commerce Clause doctrine, a state law imposes an undue burden on interstate commerce if, as the Court famously articulated in Pike v. Bruce Church, the burden on interstate commerce is “clearly excessive in relation to its putative local benefits” and the law is not narrowly tailored to achieve those benefits.

Three members of the Court—Justices Gorsuch, Thomas, and Barrett—read the Court’s undue burden precedents narrowly not to permit balancing, at least in cases involving “ordinary consumer goods” or when the benefits and burdens are incommensurables, such as with the California pork regulations, where the benefits are largely noneconomic—and, specifically, are moral—but the costs are mostly economic.

The other six justices all explicitly reaffirmed Pike balancing. However, two of these six justices—Justices Sotomayor and Kagan—voted nonetheless to affirm the Ninth Circuit’s dismissal because the petitioners, in their opinion, failed to plausibly allege a substantial burden to interstate commerce, a threshold requirement for Pike balancing. Unfortunately, those justices do not tell us what would be necessary in their opinion to constitute such an allegation. By contrast, five members of the Court—the four partial dissenters and Justice Barrett in her concurrence—concluded that the petitioners had properly alleged a burden on interstate commerce.

The Chief Justice authored an opinion concurring in part and dissenting in part, joined by Justices Alito, Kavanaugh, and Jackson. Those justices affirmed the dismissal of the extraterritoriality claim, but they would have reversed on the undue burden claim and remanded the case to the lower court. Defending Pike balancing, they argued that balancing of incommensurables is often required by the law. The Dormant Commerce Clause requires such balancing for state regulations, even those that are not intentionally protectionist, in order to protect “our national common market,” those justices contended. They further argued that the petitioners had sufficiently alleged a burden to interstate commerce by citing major changes in the industry brought by the California law that would require even “producers who do not wish to sell in the regulated market” to make such changes.

In a separate concurrence and dissent, Justice Kavanaugh wrote that state economic regulations might also be limited by other constitutional provisions, particularly the Import-Export, Privileges and Immunities, and Full Faith and Credit Clauses of the Constitution. Justice Kavanaugh grasped the most important federalism issue presented by the case: that California, through its embargo on pork from “cruelly” confined breeding sows, tried to “unilaterally impose its moral and policy preferences for pig farming and pork production on the rest of the Nation.”

Justice Kavanaugh also noted that the plurality’s decision to affirm rested on Justice Sotomayor’s concurrence joined by Justice Kagan, and that those justices would allow to proceed properly pled challenges to state regulations similar to the California pork embargo, or even to the embargo itself. This suggests that other parties, raising better burden arguments, could survive summary judgment on an undue burdens claim.

But the fractured and fact-dependent outcome of this case does not just concern the pork industry. This case is about states’ power to regulate activity within their borders and what limitations the Constitution places on those powers.

On the one hand, fans of the opinion applaud the Court’s humility in allowing state citizens and legislatures to make these decisions rather than federal judges, a decision fans see as reinforcing our federalist system. The “California Effect,” as it has been called, could work for other states, both liberal and conservative.

On the other hand, critics worry that the opinion provides states with a roadmap for how to impose their own moral and policy preferences on other (generally smaller) states, which, in turn, will lead to interstate economic warfare and undercut the national marketplace. Far from reinforcing our federalist system, critics see National Pork as imperiling federalism.

The Supreme Court’s decision in National Pork opens the door for states looking to create their own California Effect by adopting regulations that are likely to have large adverse economic effects on out-of-state economic interests. But it is not entirely clear where the Court will land on extraterritoriality or undue burdens doctrines. National Pork was an unusual case. Specifically, the lack of competing in-state producers prevented the complainants from making an argument about protectionism, the issue which lies “at the heart” of the Court’s Dormant Commerce Clause cases.

And although there were six votes to maintain Pike balancing, it is not clear, given Justice Sotomayor’s thinly reasoned concurrence that Justice Kagan joined, what constitutes a burden on interstate commerce for a majority of the Court. In our view, and that of the partial dissenters, the pork producers alleged classic burdens on interstate commerce by claiming that many producers would be forced to adopt the California standards even if they were willing to avoid the California market.

Yet, Justices Sotomayor and Kagan never explained why the pork producers failed to allege a burden. In today’s highly polarized political environment, with state legislatures increasingly adopting “unflinchingly conservative or liberal agendas,” states are likely to act aggressively, leaving lower courts to determine and apply what limits they conclude the Constitution imposes without clear guidance from the Supreme Court.

Michael Knoll is the Theodore K. Warner Professor of Law & Professor of Real Estate at the University of Pennsylvania Carey Law School and the Wharton School.

Ruth Mason is the Edwin S. Cohen Distinguished Professor of Law and Taxation at the University of Virginia School of Law.