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The Supreme Court can limit the powers of economic regulation of the State

In a Supreme Court case scheduled for oral argument Oct. 11, pro-business justices could limit the power of liberal states to pass regulations with economic consequences for big industries across the country. The meat lobbyists National Pork Producers Council (NPPC) v. Ross argue that California’s new agribusiness regulations are forcing them to overhaul pork production practices nationwide. They say the Golden State can’t lift standards for its own consumers if these changes affect the entire industry — an argument that, if true, could have a huge impact on state regulation of issues. such as energy policy, public health and workers’ compensation.

As America’s most populous state, California has a long history of using regulation to raise standards in industries with public health and environmental impacts. Its vehicle emission standards have revived the domestic electric car market. Today, the pork industry portrays California as obnoxiously imposing its “philosophical preferences” on all Americans. He argues that the Court should oppose “allowing a state to export its social experiences extraterritorially”.

A general trend toward more progressive state-led regulation may be precisely why the Court agreed to hear this relatively murky case. Judges who generally defend federalism, or the rights of states, when it serves conservative interests, could weigh on NPPC v. Ross in order to circumvent state-directed economic regulation.

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“It’s pre-established what they’re going to do. They are going to find that it had an undue impact on interstate commerce,” said John Coffee, professor of corporate law at Columbia. Perspective. “It’s the most incoherent thing the Court has done. They are great protectors of federalism — they live and die for federalism. But now they are trampling on federalism.

The American Farm Bureau Federation and NPPC, the agribusiness lobby groups behind the case, are trying to overturn Proposition 12, a ballot Californians passed a ban on the sale of meat and eggs from animals raised in extreme confinement in 2018.

Most female pigs raised for breeding in the United States are currently kept in metal”gestation crates“about the size of their own body, where they are fed a constant stream of laxatives. Since they do not exercise enough to defecate, they become constipated to avoid soiling their cramped living spaces. Pigs in these conditions exhibit desperate behaviors, says animal advocate Matthew Scully in a Shortlike the frantic chewing of bars and the construction of nests with imaginary straw.

Prop 12 farm animals guaranteed new minimum movement standards, including the ability to lie down and turn around in its enclosure. California is not the first state to ban gestation crates. Florida banned cages in 2002 and dark red Arizona banned them in 2006.

But while those states prohibited producers from using crates within state lines, Prop 12 targets the consumer side, banning the sale in the state of pork from pigs raised in gestation crates. anywhere. The agribusiness says this would impose high costs on pig farmers in other states because California imports nearly all of its pork.

The new standards are so expensive that the NPPC and the Farm Bureau write in their Short, because it’s nearly impossible to keep track of a single slice of pork as it makes its way to retail: “A market hog progresses through several farms outside of California as it moves is raised and then processed into many different cuts of meat that are sold across the country.” As a result, they say, the new standards should be implemented consistently across the industry.

A general trend toward more progressive state-led regulation may be precisely why the Court agreed to hear this relatively murky case.

The producers told their shareholders another story. Chinese pork producer Smithfield Foods, which is the largest member of NPPC, bragged about materials for investors that it is piloting “a blockchain process to promote supply chain traceability for consumers.” In other words, Smithfield is telling investors that it actually has the power to track pigs through their life cycle and keep digital records of these operations.

Other growers state in public filings that they are prepared to fully comply with California law. “Prop 12 is about 4% of total production. It’s not important to us today…it’s not something we were excited about, but we can align suppliers,” the CEO of Tyson Foods said in a earnings call.

The meat industry plays its part in the Dormant commercial clause, a legal doctrine aimed at preventing protectionism, which is generally used to assert that states cannot discriminate against outside companies. Proposition 12 does not discriminate—it applies equally to in-state and out-of-state producers—so the industry uses a older strand of the doctrine that says even non-discriminatory state regulations can be challenged if they impose an undue burden on interstate commerce in a way that outweighs “local benefits”.

Coffee said local benefits such as humane treatment of pigs might be more difficult to quantify in the cost-benefit analysis and might be given less weight than more easily measurable business costs.

The Ninth Circuit Court of Appeals overruled the pork industry’s objections, avoiding assessing the costs of California’s ballot measure. But the Supreme Court has agreed to hear the case, suggesting the justices may want to extend the court’s right to assess whether the commercial cost imposed by any new regulations is justified.

In the early 20th century, the Supreme Court frequently struck down laws seen as interfering with the free market: minimum wage laws, child labor laws, banking and insurance regulations. The so-called Lochner era of laissez-faire capitalism, named after a case in which the Court said New York could not set limits on working hours, ended with the New Deal. In Coffee’s view, the Supreme Court’s apparent interest in preventing interference in large interstate markets “could signal the resurgence of a Lochner-like style of judicial review.

Briefs filed in support of pork producers by industry trade groups express enthusiasm for a return to a freer interstate commerce environment in which a pro-business court overturns economic regulation. The hog industry explicitly warns in its brief that if Proposition 12 stands, all sorts of threatening rules could follow.

California could ban goods produced below its own minimum wage of $15 an hour, or goods that are not produced by union members, the NPPC and the Farm Bureau caution. This would paralyze interstate competition, they write, explaining: “It is no exaggeration, given the deep divisions on moral and social issues within our country, to see a threat to the Union in the construction of this type of legal moat around a state’s markets. .”

If the Court strikes down Proposition 12, set out renewable energy standards like those of California and Colorado could be at risk of legal challenge and invalidation, given their impacts on out-of-state energy producers.

Kelsey Eberly, a member of Harvard Law School, published a report listing the laws that could be compromised by the decision. They range from a Missouri law requiring natural gas utilities to receive approval from buy stocks in other utility companies to a Kansas rule regulating payday loans on the Internet. A pharmaceutical industry trade group wrote in a brief that the case could affect the ability of states to require pharmaceutical companies to give notice when they increase the price of drugsa demand that the industry resists.

Preserving the role of states as laboratories of democracy that regulate business would not exclusively benefit progressives. Another looming question of interstate commerce is whether states that strictly ban abortion block abortion pills shipped from other states. In this case, professors Will Baude of the University of Chicago Law School and Dan Epps of Washington University School of Law say on the podcast Split argument“California’s power over Iowa would become Texas’ power over Illinois.”