The US Supreme Court faced a choice in deciding a pivotal case on state regulation and interstate commerce.
Last month, the US Supreme Court heard oral arguments in a case that could prove pivotal for the future of regulation and interstate commerce in the United States. in National Pork Producers Council v. RossThe court has been reviewing the decision of the Ninth Circuit dismissing the challenge to California’s proposition 12. That proposition prohibits the sale of pork products from animals that are raised in conditions that California voters consider “cruel” – regardless of the conditions where the animals are located and pork products are produced.
The easiest way to understand National Pigwhich we explained in the previous essay, is to ask the question: “What limits, if any, does the Dormant Commerce Clause, or the US Constitution more generally, impose on the state’s ability to regulate for morality if the significant impact of that. Regulation is felt outside the state? “
Although there are precedential arguments both for upholding and blocking Proposition 12, if the Supreme Court approves California’s far-reaching regulations, some limits will remain in the state’s ability to act on moral grounds to impede trade with other countries. It will also show that US internal law provides a very different approach to these cross-border issues than international trade law and accepted practice in other common markets. Both trade law and the common market, which both give considerable attention to the same question – have adopted regimes that would likely prohibit California’s regulation.
As we explain in the forthcoming academic article, “Bibb Balancing,” Proposition 12 imposes a mismatch burden. Incompatible burdens arise from the interaction of two or more different rules of the state. In a federal system where states have autonomy, regulatory diversity is expected. The question is whether there is a point where such diversity becomes so heavy that it impermissibly segments-or in the words of the Court, balkanizes-the national market. The mismatch case also raises a closely related but conceptually different issue. In particular, because incompatible rules enter other states, they inhibit the ability of other states to regulate in their own territory. Thus, when California requires pork to be sold in its territory to meet certain production processes, the impact of the regulation spills over into other states, such as Iowa and North Carolina, which have their own regulations on how hogs should be raised.
It is unclear in Supreme Court precedent how—or if—courts should resolve mismatches. The court in the oral argument wrestled with this problem. For example, Justice Neil Gorsuch expressed uneasiness and the type of balancing commonly referred to in cases of undue burden.
But the role of the dormant Commerce Clause has long been mediating between state policy priorities, on the one hand, and federalism and national market interests, on the other hand. Proposition 12 implicates that tension because it rests on California’s claim that it has the right to ban products from outside the country because its citizens have ethical objections to the process used to make those products.
Leaving aside the issue of whether it is appropriate for the court to intervene to resolve the mismatch case, our goal here is to consider four ways mismatch cases can be handled, ordered from the most to the least deferential to the state of import—here, California. This order is also, necessarily, reverse deferential to the exporting country and the national market.
First, the Supreme Court could, as Justice Clarence Thomas advocated, eliminate review of the dormant Commerce Clause. Alternatively, as the late Justice Antonin Scalia advocated, the Court can remove the undue burden of the doctrine, leaving only the prohibition against discrimination. Such an approach follows Donald Regan’s argument that all the Supreme Court does, and all it should do, in dormant Commerce Clause cases is smoke a cigarette of deliberate protectionism.
Given the underlying facts National Pig thing, it seems unlikely that the Court will find intentional protectionism-at least as for pigs because there is basically no commercial hog farming in California. Instead, if the Court suspects broader protectionism in Proposition 12-which also prohibits the sale of caged eggs, and California is a large producer of eggs-it will likely remand the case on that issue. Focus on the intention has obvious appeal: Where the intention is clear, the reviewing court should not be balanced. But there are also problems, which include limiting court review and determining whether the challenged country is involved in deliberate protectionism. In addition to judicial reluctance to attribute unconstitutional intent to the states, there are many situations where the intent is unclear. In addition, many problems interfere with the process of ascribing an intention to a law, and uncovering the intention can be difficult, especially given the incentive to hide it. This difficulty weighs against deciding dormant Commerce Clause cases on the basis of intent alone.
Second, rather than unduly reducing the burden, the Court can maintain the status quo of balance. Many oral arguments assume that this is the correct approach. For balancing, the Court must analyze the initial question of whether the Court should accept the moral opprobrium of out-of-state practices as a legitimate state interest that can be weighed against the burden on interstate commerce as part of the balancing test. And assuming that the Court does not accept such ethical issues, it must consider the closely related question if, if ever, the connection between moral objections and the product is too “attenuated” to count.
Without clear boundaries, expanding the accepted justifications for embargoes based on due process to include morality would give importing countries wide latitude to push their preferred policies into other countries’ territories. The elephant in the room is whether countries can ban products from other countries because other countries allow or ban abortion or whether countries can even ban abortion pills. But the question raised by justice – about whether a country can ban products made by workers who have not been paid a certain minimum wage or lack access to certain health benefits that the voters of the importing country consider a moral minimum – shows how much the importing country can spend . if it is allowed to ban products on moral grounds only.
A third approach would draw on multilateral trade rules. The rules include a “national treatment” requirement that prohibits members from using internal laws, taxes, and non-tax regulations to discriminate against imports of “like” domestic goods. The rules define imported products as “like” domestic products if they are “directly competitive or substitutable products”.
The idea behind the concept of national treatment and such products is that the country should not be able to make facially neutral rules that invidiously discriminate against foreign products. As a result, if the permitted product and the prohibited product are sufficiently similar, the trade rules demand that the importing country treat them in the same way.
For example, in the decision is known Tuna I, a trade tribunal found that the United States violated national treatment standards when it banned the import of tuna from Mexico and other countries that were caught using methods that kill dolphins more than US standards allowed. United States-banned tuna is determined to be “like” dolphin-safe tuna that the United States allows.
If the Supreme Court were to adopt the same principle of national treatment for such products, states would be prohibited from using narrow distinctions to differentiate products. Therefore, California cannot ban pigs from gestation crates because caged pigs and cage-free pigs are like products, which is directly competitive and substitutable.
Finally, a fourth potential solution for incompatible cases is for the Supreme Court to follow the Court of Justice of the European Union (CJEU), which interprets the treaty regime that—like the US Constitution—protects the regulatory autonomy of states and multistate markets. for goods and services.
The case of Cassis de Dijon involves a conflict between the French requirement that fruit liqueurs contain at least 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,” where products comply with their regulations. factory conditions supposedly free to circulate in all other European Union countries.
Mutual recognition depends on a crucial assumption, which is that there is enough similarity between the policy objectives of the importing country and the manufacturing country that the former can rely on the latter’s regulation to protect its reasonable interests. But if the importing country can point to important country interests that are not addressed by the manufacturing country’s rules, then the importing country can apply its own rules. To avoid unraveling the benefits of mutual recognition, however, the CJEU construes this exception narrowly.
Similar to the principle of national treatment, the rule of mutual recognition will also create a legal presumption that the importing country must allow the product. So, it is more difficult for importing countries to ban foreign products, such as pork, just because they use different production methods.
in National Pig, out-of-state producers have challenged whether California can ban imports of its pork products because Californians have moral objections to other states’ production processes. If the Supreme Court allows California to justify process-based embargoes on moral grounds, it will have given the state the power to use access to their consumer markets as leverage to promote their preferred policies across the country. Such decisions will strengthen large countries relative to small ones. In deciding to allow states, especially California, to exert this power, the Court must choose from among several alternative ways to address the issue. Each of the alternatives presented here will handle the problem differently, with different impacts on regulation and interstate trade.