Supreme Court’s Review of California’s Proposition 12 Could Have Implications for State Climate, Energy, and Public Health Legislation

Kelley Drye Client Advisory

On Monday, March 28, 2022, the U.S. Supreme Court agreed to hear industry’s challenge to California’s Proposition 12, a law restricting certain confinement practices in industrial animal agriculture.[1] The case, styled National Pork Producers Council v. Ross, concerns whether this law violates the Supreme Court’s dormant Commerce Clause” doctrine by regulating conduct that occurs entirely beyond California’s borders, and by placing an undue burden on pork producers across the country. A ruling in this case, expected next year, could reach beyond laws concerning cruelty-free” animal products and affect state clean energy statutes and other environmental regulations. For example, a ruling that Proposition 12 impermissibly regulates out-of-state conduct could cast doubt on state laws regulating fuel sources based on their life-cycle carbon emissions or prohibiting the use of certain chemicals in food packaging containers and materials.

Although the Constitution’s Commerce Clause is phrased as an affirmative grant of regulatory power,[2] the Supreme Court has long held that the clause has a negative” aspect that denies States the power to unjustifiably discriminate against or burden the interstate flow of the articles of commerce.[3] The Court has recognized three types of dormant Commerce Clause claims: (1) claims that a state regulation discriminates in favor of state interests or against interstate commerce; (2) claims that a state law regulates extraterritorially; and (3) claims that a state regulation, although not discriminatory or impermissibly extraterritorial, unduly burdens interstate commerce.[4] While its application has varied over time, the general thrust of this judicially-created doctrine is perhaps best summed up as a prohibition on discriminat[ion] between transactions on the basis of some interstate element.”[5]

Across a series of cases, dormant Commerce Clause challenges to state renewable portfolio standards (RPS) have alleged that RPSs, either through facial operation or practical effect, primarily serve a protectionist function. Generally speaking, these challenges have focused on two arguments. First, that the RPS is designed in such a way as to effectively regulate commerce that takes place entirely outside of the state. And second, that the RPS is structured to capture the local or regional economic benefits of renewable energy development, while shielding local industry from outside competition. The Eighth, Ninth, and Tenth Circuits have each taken up the issue of whether these programs have an improper extraterritorial reach, but their analyses and holdings on the issue seem only to have muddied the waters with inconsistent interpretations of an already convoluted principle.[6] Moreover, the Supreme Court recently rebuffed an industry-lead dormant Commerce Clause challenge to Oregon’s Clean Fuel Program.[7] A victory for the industry petitioners in National Pork Producers Council v. Ross could provide new fodder for attacks on state climate change policies.

But an industry win is far from certain. In recent years, the judiciary has become increasingly skeptical of broad dormant Commerce Clause theories. As the U.S. Court of Appeals for the Ninth Circuit wrote in its opinion in upholding Proposition 12: While the dormant Commerce Clause is not yet a dead letter, it is moving in that direction.”[8] The doctrine’s most ardent critic, Justice Clarence Thomas, has written in several concurrences and dissents that he believes that the negative Commerce Clause has no basis in the Constitution.”[9] Moreover, Justice Neil Gorsuch, sitting on the U.S. Court of Appeals for the Tenth Circuit, upheld a Colorado renewable fuels standard against a dormant Commerce Clause challenge.[10] After he joined the Supreme Court, Justice Gorsuch (along with Justice Thomas) voted in favor of a Tennessee law that, according to the majority, blatantly favors the State’s residents.”[11] Justice Alito, by contrast, has strongly endorsed the Court’s dormant Commerce Clause jurisprudence. As far as we can tell, neither Justice Amy Coney Barrett, nor likely soon-to-be Justice Ketanji Jackson Brown, have opined on the dormant Commerce Clause. Thus, National Pork Producers Council v. Ross may provide a glimpse into their views concerning the doctrine and the extent to which states may regulate by health laws the subjects of legitimate commerce.

[1] In 2018, California’s voters passed Proposition 12, a ballot initiative that is the nation’s strongest law concerning living conditions for farmed animals. The law, which went effect on January 1, 2022, affects nearly a million pigs and 40 million egg-laying hens each year.
[2] The Commerce Clause provides, The Congress shall have Power . . . [t]o regulate Commerce . . . among the several states . . . .” U.S. Const. art. I, § 8, cl. 3.
[3] Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality, 511 U.S. 93, 98 (1994).
[4] See Energy and Environmental Legal Institute v. Epel, 793 F.3d 1169, 1171-72 (10th Cir. 2015) (Gorsuch, J.).
[5] Bos. Stock Exch. V. State Tax Comm’n, 429 U.S. 318, 322 n.12 (1977).
[6] North Dakota v. Heydinger, 825 F.3d 912 (8th Cir. 2016). (holding that the GHG provisions of Minnesota’s Next Generation Energy Act did not violate the DCC); Rocky Mountain Farmers Union v. Corey, 730 F.3d 1070 (9th Cir. 2013) (holding that California’s Global Warming Solutions Act’s cap on average carbon intensity of California’s transportation fuel market did not violate the DCC); Energy and Environment Legal Institute v. Epel, 793 F.3d 1169 (10th Cir. 2015) (holding that Colorado’s Renewable Energy Standard did not violate the DCC).
[7] American Fuel & Petrochemical Mfrs. v. O’Keefe, 903 F.3d 903 (9th Cir. 2018).
[8] Nat. Pork Producers Council v. Ross, 6 F.4th 1021, 1033 (9th Cir. 2021).
[9] United Haulers Ass’n v. Oneida-Herkimer, 550 U.S. 330, 349 (2007) (Thomas, J., concurring in judgment).
[10] American Fuel & Petrochemical Manufacturers v. O’Keefe, 903 F.3d 903, 914 (9th Cir. 2018).
[11] Tennessee Wine & Spirits Retailers Ass’n v. Thomas, 139 S. Ct. 2449, 2457 (2019).