It has been a while since I've written about a U.S. Supreme Court dormant Commerce Clause case, but the recent National Pork Producers Council v. Ross decision provides a great opportunity to revisit the issue. Steve Charnovitz commented on the decision here. (Here are some other takes: Walter Olson of Cato; Jonathan Adler at the Volokh Conspiracy). Let me add a bit more to the discussion, with a focus at the end on what it tells us about different views of the appropriate degree of economic integration.
The California law
The California law at issue was intended to promote the welfare of breeding pigs. The Court explained the law as follows:
This case involves a challenge to a California law known as Proposition 12. In November 2018 and with the support of about 63% of participating voters, California adopted a ballot initiative that revised the State’s existing standards for the in-state sale of eggs and announced new standards for the in-state sale of pork and veal products. ... As relevant here, Proposition 12 forbids the in-state sale of whole pork meat that comes from breeding pigs (or their immediate offspring) that are “confined in a cruel manner.” ... Subject to certain exceptions, the law deems confinement “cruel” if it prevents a pig from “lying down, standing up, fully extending [its] limbs, or turning around freely.”
With regard to the goals of the law, and whether the law achieves its goals, the parties had very different views:
Prior to the vote on Proposition 12, proponents suggested the law would benefit animal welfare and consumer health, and opponents claimed that existing farming practices did better than Proposition 12 protecting animal welfare (for example, by preventing pig-on-pig aggression) and ensuring consumer health (by avoiding contamination).
I worry that using the term "process and production method" (PPM) here muddles the discussion more than it helps, but this appears to be a form of PPM measure, in the sense that California is regulating how pork products sold within its market are produced. It's a bit of an understatement to say that the impact of PPM measures outside the territory of the regulating state has caused a great deal of controversy in trade policy over the years. My view is that the PPM nature of a measure is not all the interesting or relevant, because regardless of whether it is a PPM, you still have to do the same legal analysis of the measure. Nevertheless, I feel compelled to mention it here because I know that many people place a lot of emphasis on this issue.
The basic holding
Two groups of out-of-state pork producers challenged the law as violating the dormant Commerce Clause. As the Court explained the Clause:
The Constitution vests Congress with the power to “regulate Commerce . . . among the several States.” Art. I, §8, cl. 3. ... Reading between the Constitution’s lines, petitioners observe, this Court has held that the Commerce Clause not only vests Congress with the power to regulate interstate trade; the Clause also “contain[s] a further, negative command,” one effectively forbidding the enforcement of “certain state [economic regulations] even when Congress has failed to legislate on the subject.”
The 9th Circuit Court of Appeals had "affirmed the district court’s dismissal for failure to state a claim of an action filed by the National Pork Producers Council and the American Farm Bureau Federation, seeking declaratory and injunctive relief on the ground that California’s Proposition 12 violates the dormant Commerce Clause in banning the sale of whole pork meat (no matter where produced) from animals confined in a manner inconsistent with California standards." On appeal, the Supreme Court affirmed this ruling, meaning that California's law does not violate the dormant Commerce Clause and the claim was rejected.
So far, it's all pretty clear. Making sense of the reasoning by various Supreme Court justices is more of a challenge though.
The dormant Commerce Clause claim and the court's many opinions
Ideally, the court would have issued a 9-0 ruling that offered clear reasoning and definitively answered all questions about the scope and meaning of the dormant Commerce Clause for all time. Instead, we got a majority opinion that includes separately stated views from Justices Gorsuch, Thomas, Barrett, Sotomayor, and Kagan, rejecting the claim for different reasons. Some of these justices seemed to want a narrow standard that focuses on rooting out "protectionism"; others were fine with a balancing test that is broader in some uncertain way; and there was disagreement on the result of balancing in this case.
To start things off, my sense is that just about everyone (the Supreme Court justices and others as well) agrees that intentional discrimination against out-of-state producers would violate the dormant Commerce Clause. Here, however, the petitioners did not argue that there was intentional discrimination:
They do not allege that California’s law seeks to advantage in-state firms or disadvantage out-of-state rivals. In fact, petitioners disavow any discrimination-based claim, conceding that Proposition 12 imposes the same burdens on in-state pork producers that it imposes on out-of-state ones. As petitioners put it, "the dormant Commerce Clause . . . bar on protectionist state statutes that discriminate against interstate commerce . . . is not in issue here."
Why not come up with some argument to the effect that the California law was intentionally discriminatory? Maybe they didn't think they could prove it and didn't want to undermine their credibility? Anyway, for whatever reason, they didn't argue it.
Instead, they made two other arguments. The first one was about "extraterritoriality":
In the first, petitioners invoke what they call “extraterritoriality doctrine.” ... They contend that our dormant Commerce Clause cases suggest an additional and “almost per se” rule forbidding enforcement of state laws that have the “practical effect of controlling commerce outside the State,” even when those laws do not purposely discriminate against out-of-state economic interests. Ibid. Petitioners further insist that Proposition 12 offends this “almost per se” rule because the law will impose substantial new costs on out-of-state pork producers who wish to sell their products in California.
But the court rejected this:
This argument falters out of the gate. Put aside what problems may attend the minor (factual) premise of this argument. Focus just on the major (legal) premise. Petitioners say the “almost per se” rule they propose follows ineluctably from three cases—Healy v. Beer Institute, 491 U. S. 324 (1989); Brown-Forman Distillers Corp. v. New York State Liquor Authority, 476 U. S. 573 (1986); and Baldwin v. G. A. F. Seelig, Inc., 294 U. S. 511 (1935). A close look at those cases, however, reveals nothing like the rule petitioners posit. Instead, each typifies the familiar concern with preventing purposeful discrimination against out-of-state economic interests.
The second argument was about balancing the burdens on interstate commerce with the purported local benefits:
Failing in their first theory, petitioners retreat to a second they associate with Pike v. Bruce Church, Inc., 397 U. S. 137 (1970). Under Pike, they say, a court must at least assess “‘the burden imposed on interstate commerce’” by a state law and prevent its enforcement if the law’s burdens are “‘clearly excessive in relation to the putative local benefits.’” Brief for Petitioners 44. Petitioners then rattle off a litany of reasons why they believe the benefits Proposition 12 secures for Californians do not outweigh the costs it imposes on out-of-state economic interests.
The court rejected this as well, starting out with a suggestion that Pike balancing may be just a proxy for identifying a discriminatory purpose:
In the first place, petitioners overstate the extent to which Pike and its progeny depart from the antidiscrimination rule that lies at the core of our dormant Commerce Clause jurisprudence. As this Court has previously explained, “no clear line” separates the Pike line of cases from our core antidiscrimination precedents. ... While many of our dormant Commerce Clause cases have asked whether a law exhibits “‘facial discrimination,’” “several cases that have purported to apply [Pike,] including Pike itself,” have “turned in whole or in part on the discriminatory character of the challenged state regulations.” Ibid. In other words, if some of our cases focus on whether a state law discriminates on its face, the Pike line serves as an important reminder that a law’s practical effects may also disclose the presence of a discriminatory purpose.
This is where things get interesting as the opinions start to diverge. Three justices, Gorsuch, Thomas, and Barrett, signed on to a part of the majority opinion suggesting that balancing of costs and benefits is not something courts can handle:
... While Pike has traditionally served as another way to test for purposeful discrimination against out-of-state economic interests, and while some of our cases associated with that line have expressed special concern with certain state regulation of the instrumentalities of interstate transportation, see n. 2, supra, petitioners would have us retool Pike for a much more ambitious project. They urge us to read Pike as authorizing judges to strike down duly enacted state laws regulating the in-state sale of ordinary consumer goods (like pork) based on nothing more than their own assessment of the relevant law’s “costs” and “benefits.”
That we can hardly do. Whatever other judicial authorities the Commerce Clause may imply, that kind of freewheeling power is not among them. Petitioners point to nothing in the Constitution’s text or history that supports such a project. ...
...
Not only is the task petitioners propose one the Commerce Clause does not authorize judges to undertake. This Court has also recognized that judges often are “not institutionally suited to draw reliable conclusions of the kind that would be necessary . . . to satisfy [the] Pike” test as petitioners conceive it. Davis, 553 U. S., at 353.
Our case illustrates the problem. On the “cost” side of the ledger, petitioners allege they will face increased production expenses because of Proposition 12. On the “benefits” side, petitioners acknowledge that Californians voted for Proposition 12 to vindicate a variety of interests, many noneconomic. ... How is a court supposed to compare or weigh economic costs (to some) against noneconomic benefits (to others)? No neutral legal rule guides the way. ...
...
So even accepting everything petitioners say, we remain left with a task no court is equipped to undertake. On the one hand, some out-of-state producers who choose to comply with Proposition 12 may incur new costs. On the other hand, the law serves moral and health interests of some (disputable) magnitude for in-state residents. Some might reasonably find one set of concerns more compelling. Others might fairly disagree. How should we settle that dispute? The competing goods are incommensurable. Your guess is as good as ours.
More accurately, your guess is better than ours. In a functioning democracy, policy choices like these usually belong to the people and their elected representatives. They are entitled to weigh the relevant “political and economic” costs and benefits for themselves, ...
To me, this reads like a pretty strong statement by three justices for limiting, perhaps exclusively, the dormant Commerce Clause to claims of intentional discrimination, based on the idea that a balancing of costs and benefits is outside the capability of courts.
Up next is a section of the opinion that Justices Gorsuch, Thomas, Sotomayor, and Kagan sign on to, which holds that "the allegations in the complaint were insufficient as a matter of law to demonstrate a substantial burden on interstate commerce," which arguably applies the Pike balancing test and rejects the claim; and a section that Gorsuch, Thomas, and Barrett sign on to holding that "petitioners have not asked the Court to treat putative harms to out-of-state animal welfare or other noneconomic interests as freestanding harms cognizable under the dormant Commerce Clause, and in any event that the Court’s decisions authorizing claims alleging 'burdens on commerce,' ... do not provide judges 'a roving license' to reassess the wisdom of state legislation in light of any conceivable out-of-state interest, economic or otherwise."
Sotomayor and Kagan then have a separate opinion which joins in the the judgement but not in most of Gorsuch's reasoning. For Sotomayor and Kagan, the key point is that the judgment should be affirmed "because petitioners fail to plausibly allege a substantial burden on interstate commerce as required by Pike":
Pike claims that do not allege discrimination or a burden on an artery of commerce are further from Pike’s core. As THE CHIEF JUSTICE recognizes, however, the Court today does not shut the door on all such Pike claims. See ante, at 17–18, and n. 2; post, at 2–3. Thus, petitioners’ failure to allege discrimination or an impact on the instrumentalities of commerce does not doom their Pike claim.
Nor does a majority of the Court endorse the view that judges are not up to the task that Pike prescribes. JUSTICE GORSUCH, for a plurality, concludes that petitioners’ Pike claim fails because courts are incapable of balancing economic burdens against noneconomic benefits. See ante, at 18–21. I do not join that portion of JUSTICE GORSUCH’s opinion. I acknowledge that the inquiry is difficult and delicate, and federal courts are well advised to approach the matter with caution. See ante, at 28. Yet, I agree with THE CHIEF JUSTICE that courts generally are able to weigh disparate burdens and benefits against each other, and that they are called on to do so in other areas of the law with some frequency. See post, at 3–4. The means-ends tailoring analysis that Pike incorporates is likewise familiar to courts and does not raise the asserted incommensurability problems that trouble JUSTICE GORSUCH.
In my view, and as JUSTICE GORSUCH concludes for a separate plurality of the Court, petitioners’ Pike claim fails for a much narrower reason. Reading petitioners’ allegations in light of the Court’s decision in Exxon Corp. v. Governor of Maryland, 437 U. S. 117 (1978), the complaint fails to allege a substantial burden on interstate commerce. See ante, at 21–25. Alleging a substantial burden on interstate commerce is a threshold requirement that plaintiffs must satisfy before courts need even engage in Pike’s balancing and tailoring analyses. Because petitioners have not done so, they fail to state a Pike claim.
So for Sotomayor and Kagan, doing a balancing analysis is fine, it's just that here the claimants did not make their case about the burden on interstate commerce.
Finally, Barrett offered a brief concurrence holding that "the benefits and burdens of Proposition 12 are incommensurable," but also noting that "the complaint plausibly alleges a substantial burden on interstate commerce because Proposition 12’s costs are pervasive, burdensome, and will be felt primarily (but not exclusively) outside California":
A state law that burdens interstate commerce in clear excess of its putative local benefits flunks Pike balancing. Pike v. Bruce Church, Inc., 397 U. S. 137, 142 (1970). In most cases, Pike’s “general rule” reflects a commonsense principle: Where there’s smoke, there’s fire. Ibid. Under our dormant Commerce Clause jurisprudence, one State may not discriminate against another’s producers or consumers. A law whose burdens fall incommensurately and inexplicably on out-of-state interests may be doing just that.
But to weigh benefits and burdens, it is axiomatic that both must be judicially cognizable and comparable. See Department of Revenue of Ky. v. Davis, 553 U. S. 328, 354–355 (2008). I agree with JUSTICE GORSUCH that the benefits and burdens of Proposition 12 are incommensurable. California’s interest in eliminating allegedly inhumane products from its markets cannot be weighed on a scale opposite dollars and cents—at least not without second-guessing the moral judgments of California voters or making the kind of policy decisions reserved for politicians. Ante, at 18–21; Davis, 553 U. S., at 360 (Scalia, J., concurring in part). None of our Pike precedents requires us to attempt such a feat.
That said, I disagree with my colleagues who would hold that petitioners have failed to allege a substantial burden on interstate commerce. Ante, at 21–25; ante, at 3 (SOTOMAYOR, J., concurring in part). The complaint plausibly alleges that Proposition 12’s costs are pervasive, burdensome, and will be felt primarily (but not exclusively) outside California. See post, at 6–7 (ROBERTS, C. J., concurring in part and dissenting in part). For this reason, I do not join Part IV–C of JUSTICE GORSUCH’s opinion. If the burdens and benefits were capable of judicial balancing, I would permit petitioners to proceed with their Pike claim.
So that's what the different members of the majority thought. What about the dissenters?
First there was an opinion by Roberts, joined by Alito, Kavanaugh, and Jackson, saying the appeals court messed up the legal standard, and that the petitioners "plausibly alleged a substantial burden against interstate commerce" and the case should be remanded:
I agree with the Court’s view in its thoughtful opinion that many of the leading cases invoking the dormant Commerce Clause are properly read as invalidating statutes that promoted economic protectionism. See ante, at 8–11. I also agree with the Court’s conclusion that our precedent does not support a per se rule against state laws with “extraterritorial” effects. See ante, at 11–14. But I cannot agree with the approach adopted by some of my colleagues to analyzing petitioners’ claim based on Pike v. Bruce Church, Inc., 397 U. S. 137, 142 (1970). ...
Pike provides that nondiscriminatory state regulations are valid under the Commerce Clause “unless the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits.” 397 U. S., at 142. A majority of the Court thinks that petitioners’ complaint does not make for “an auspicious start” on that claim. Ante, at 18. In my view, that is through no fault of their own. The Ninth Circuit misapplied our existing Pike jurisprudence in evaluating petitioners’ allegations. I would find that petitioners’ have plausibly alleged a substantial burden against interstate commerce, and would therefore vacate the judgment and remand the case for the court below to decide whether petitioners have stated a claim under Pike.
...
... as I read it, the complaint alleges more than simply an increase in “compliance costs,” unless such costs are defined to include all the fallout from a challenged regulatory regime. Petitioners identify broader, market-wide consequences of compliance—economic harms that our precedents have recognized can amount to a burden on interstate commerce. I would therefore find that petitioners have stated a substantial burden against interstate commerce, vacate the judgment below, and remand this case for the Ninth Circuit to consider whether petitioners have plausibly claimed that the burden alleged outweighs any “putative local interests” under Pike. 397 U. S., at 142.
Finally, there was Justice Kavanaugh writing separately, who wanted to look at some alternative routes for these sorts of claims:
I add this opinion to point out that state economic regulations like California’s Proposition 12 may raise questions not only under the Commerce Clause, but also under the Import-Export Clause, the Privileges and Immunities Clause, and the Full Faith and Credit Clause.
...
In the 1780s, the Framers in Philadelphia and the people of the United States discarded the Articles of Confederation and adopted a new Constitution. They did so in order to, among other things, create a national economic market and overcome state restrictions on free trade—and thereby promote the general welfare. ...
The Constitution crafted by the Framers contains several provisions protecting free trade among the States. The Constitution’s protection of free trade among the States has resulted in an extraordinary 234-year record of progress: It has facilitated robust economic activity within the United States and has helped generate remarkable (albeit at times uneven) economic prosperity and growth in America relative to the other nations of the world.
...
... Through Proposition 12, however, California has tried something quite different and unusual. It has attempted, in essence, to unilaterally impose its moral and policy preferences for pig farming and pork production on the rest of the Nation. It has sought to deny market access to out-of-state pork producers unless their farming and production practices in those other States comply with California’s dictates. The State has aggressively propounded a “California knows best” economic philosophy—where California in effect seeks to regulate pig farming and pork production in all of the United States. California’s approach undermines federalism and the authority of individual States by forcing individuals and businesses in one State to conduct their farming, manufacturing, and production practices in a manner required by the laws of a different State.
...
If upheld against all constitutional challenges, California’s novel and far-reaching regulation could provide a blueprint for other States. California’s law thus may foreshadow a new era where States shutter their markets to goods produced in a way that offends their moral or policy preferences—and in doing so, effectively force other States to regulate in accordance with those idiosyncratic state demands. ...
Some tentative thoughts on all this
My first thought: What a mess!
My second thought is that people fundamentally disagree on some core principles related to economic integration. Here are some questions they disagree on:
-- What exactly are we doing here? Are we promoting a single market or anti-protectionism or something in between? And if it is something in between, can that be defined in a coherent way that allows states to know what they can and cannot do?
-- How do we identify protectionism? Are we looking directly at intent? Can there be proxies we use to "smoke it out," and if so what do they look like?
On the single market vs. protectionism issue, and how much economic integration people are looking to achieve, a key factor is the political circumstances of the market at issue. With a political entity such as the United States, a single market makes sense (although in many sectors we do not have one). The EU is less politically integrated, but obviously the single market has been a major objective there.
For markets where there is less political integration, such as the typical FTA between two or more countries, a single market is probably not something that can be achieved. In these circumstances, we are probably more towards the anti-protectionism side of the economic integration continuum.
As to how to identify protectionism, it's interesting that some Supreme Court justices talk so clearly about "purpose," when that word is such a sensitive one in WTO law. Of course, if this were a case that actually delved into a measure's purpose, everything could be a bit more muddled. We might then see that the justices' views actually vary on how to "smoke out" the protectionist purpose. Would there be a "design, structure, etc."-type analysis? Or more of a focus on balancing burdens on commerce, the importance of the measure's objectives, and whether the measure achieves its objectives?
Also, in the dormant Commerce Clause context, we do not have the complicating factor of (multiple) obligations and exceptions and introductory clauses to the exceptions to deal with when identifying protectionism. The analysis is all done in one place, although there could still be burden of proof issues thrown in there so perhaps things wouldn't look so different from what we see in trade law.
I'm not sure where all this leaves us with the dormant Commerce Clause, or the similar issues in other countries, or in trade law. There may not be a definitive right answer, but rather each economic area will find its own point on the continuum of economic integration, and that point may shift over time.
