Branstad joins lawsuit against California law on egg production (updated)

I’m always fascinated when conservatives who claim to support “states’ rights” cry foul when another state enacts a law they dislike. In 2008, California voters approved Proposition 2, a law designed “to prohibit the cruel confinement of farm animals,” including new rules on conditions for egg-laying hens. State lawmakers later passed and Governor Arnold Schwarzenegger signed a law extending those rules to producers of any eggs sold in California. Representative Steve King (R, IA-04) tried but ultimately failed to insert language in the federal Farm Bill overturning California’s law, which will affect Iowa egg producers when it becomes effective on January 1, 2015. King argued that the law violates the Commerce Clause of the U.S. Constitution, creating an illegal trade barrier between states.

Since President Barack Obama signed into law a five-year Farm Bill that does not include King’s amendment, attorneys general in Missouri, Nebraska, Oklahoma, Alabama, and Kentucky have filed a federal lawsuit challenging the California law. Governor Terry Branstad announced yesterday that he has joined that lawsuit on Iowa’s behalf. Details are after the jump, including excerpts from the court filing and statements released by Branstad and King.

I am not an attorney, much less a specialist on the Commerce Clause, but I doubt the plaintiffs will succeed in overturning the California law, for three reasons: 1) the law does not “discriminate”; 2) the law does not force any conduct on egg producers outside the state of California; and 3) overturning this law would prompt a wave of lawsuits seeking to invalidate any state regulation designed to set higher standards for safety, public health, or consumer protection.

The plaintiffs’ case rests in part on the argument that California’s law is an illegal trade barrier that “discriminates” against Iowa’s egg producers. Here’s the press release Governor Branstad’s office released on March 6:

Gov. Branstad joins lawsuit opposing a California law that discriminates against Iowa egg producers

– Gov. Branstad today joined a lawsuit in the Eastern District of California opposing California’s egg-production law that discriminates against Iowa’s egg producers.

Gov. Branstad, along with other five other states, argues that California’s egg-production law is unconstitutional and violates the commerce clause.

“The burdensome law from the State of California effectively regulates the industry across state lines, hurts Iowa agriculture and is detrimental to Iowa egg producers,” said Branstad. “Iowa is by far the leading egg producing state in the nation. This law is an unwarranted burden being imposed on Iowa’s producers by another state and violates the interstate commerce clause of the United States Constitution.”

Iowa’s egg farmers lead the nation in egg production by producing nearly 15 billion eggs per year.  Almost one out of every five eggs produced in the United States are produced in Iowa.  The Iowa egg industry contributes about $2 billion in total sales and impacts about 8,000 jobs.

“Governor Branstad and I know a strong agricultural economy is critical to our continued economic growth,” said Iowa Lt. Governor Kim Reynolds. “California’s law adversely affects Iowa agricultural jobs and we believe its negative effects and regulations felt by egg producers across the country is a violation of the commerce clause. We’re pleased that Democrats and Republicans are coming together in support of agriculture and against onerous regulations.”

The lawsuit, which was filed by Missouri Attorney General Chris Koster and co-signed by the attorney generals of Nebraska, Oklahoma, Alabama, Kentucky and Gov. Branstad, argues that the court should rule that California’s law violates the Commerce Clause of the U.S. Constitution.  The commerce clause prohibits any state from enacting legislation that regulates conduct wholly outside its borders, protects its own citizens from out-of-state competition, or places undue burdens on interstate commerce.

“California’s effort to unconstitutionally limit the ability of Iowa farmers to access California’s consumers must be stopped.   I support all efforts to uphold the right of Iowa farmers to sell their products, including eggs, in every state free from unconstitutional restraints imposed by any state,” said Iowa Secretary of Agriculture Bill Northey.

California’s law puts unnecessary burdens on Iowa farms which could force some Iowa farmers out of business.

Facts about Iowa egg production

Iowa is the number on [sic] state in egg production.  Iowa farmers produce over 14.4 billion eggs per year.

Approximately 9.1% of those eggs – 1.07 billion eggs per year – are sold in California.

Iowa farmers export more eggs to California than any other state.

30% of the eggs imported to California are produced in Iowa.

The plaintiffs might have a case if California’s law imposed more arduous rules on out-of-state egg producers, or granted some special privileges and exemptions to egg producers in California. But the plaintiff’s own court filing (pdf) shows that is not the case. Excerpt from pages 2 and 3:

3. In 2008, California voters approved Proposition 2 (“Prop 2”), attached as Ex. A, a ballot initiative that will prohibit California farmers from employing a number of agricultural production methods in widespread use throughout the United States. Starting in 2015, for example, California egg producers will no longer be allowed to house that state’s 20 million egg-laying hens in any enclosure it provides sufficient room for each hen to stand up, lie down, turn around freely, and fully extend their limbs. Almost all hens on commercial egg farms in California are currently kept in conventional cage-systems that house between 4 and 7 birds per cage and provide about 67 square inches of space per bird. Prop 2 effectively bans the use of these industry-standard cage-systems.

4. Although Prop 2 does not specify what size enclosures will satisfy its new behavior-based standards, animal behavior experts have estimated anywhere from 87.3 square inches to 403 square inches per hen, depending on how the statutory language is interpreted. […]

5. Even before the initiative passed, California farmers, economists, and legislators became concerned that Prop 2 would put their state’s egg producers at a competitive disadvantage by increasing the cost of egg production within California. […] To “level the playing field” and protect their own farmers from Prop 2’s economic consequences, in 2010 the California Legislature passed AB1437 (attached as Ex. D), which requires egg farmers in other states to comply with behavior-based enclosure standards identical to those in Prop 2 if they want to continue selling their eggs in California.

In other words, California’s law AB1437 does not discriminate against egg producers based in other states. They are not subject to any rules that do not also apply to producers based in California. Moreover, they are free to ignore California’s rules on enclosures for hens, as long as they sell their eggs anywhere in the world outside California’s borders.

In fact, page 3 of the plaintiff’s filing goes on to say (emphasis added),

Egg producers in Missouri, Nebraska, Oklahoma, Alabama, Kentucky, and Iowa face a difficult choice regarding AB1437. Either they can incur massive capital improvement costs to build larger habitats for some or all of their egg-laying hens, or they can walk away from the largest egg market in the country. For example, Missouri farmers-who export one third of their eggs to California each year-must now decide whether to invest over $120 million in new hen houses or stop selling in California.

How is that any different from the “difficult choice” faced by any number of private companies who need to alter their products for sale in the state of California? Longstanding precedent protects states’ rights to regulate insurance, for example. Consequently, some insurance companies choose not to sell policies in states where they would have to offer higher levels of benefits.

Manufacturers of various retail products might have to change the way they make certain items in order to comply with higher safety standards. Whether they choose to comply with California rules or refrain from selling their products in California is entirely up to the corporate management. State laws cannot dictate what those companies decide.

Steve King has repeatedly claimed that California’s law seeks to control the behavior of egg producers in Iowa. Most recently, here is the statement his office released on March 6 (emphasis in original):

King: “Litigation Was Inevitable but It Isn’t the Only Option”

Washington, DC – Congressman Steve King released the following statement in response to the announcement that Governor Branstad is joining the multi-state lawsuit against California is necessary to nullify AB1437, an act which attempts to regulate interstate commerce by placing requirements on producers in other states. Congressman King is the author of the Protect Interstate Commerce Act amendment to the Farm Bill.

“So far, I have been taking the lead on this three year effort to restore the Commerce Clause of the Constitution and protect Iowa and American producers, including egg producers, from overreach by California. The best way was to pass a legislative fix, which I will continue to pursue. Litigation is now the quickest and most likely way to resolve the issue. I’m also hopeful that many states will file suit against California and pass resolutions calling upon California to repeal AB1437. This conflict can only be resolved in favor of Iowa and the states because California’s law is clearly unconstitutional.  

The Constitution sets up a 50 state free trade zone thereby prohibiting individual states from regulating interstate commerce by granting Congress the exclusive authority to regulate it.  California’s law is a trade barrier – constructed for the purpose of protecting California egg producers from a competitive disadvantage.  This law reaches beyond the borders of that state and attempts to assert authority over producers in other states. How can we negotiate free trade agreements with other nations if we allow California to set up trade protection for their producers and impose billions of costs on the other states? Litigation was inevitable, but it isn’t the only option. Congress has the power and duty to regulate interstate commerce, protect producers in other states from California’s laws, and restore free trade among the states. California should immediately correct its own actions, repeal the law, and avoid more egg on its face.”

My understanding is that a “trade barrier” would be setting quotas on eggs imported from outside California, or creating a double standard on egg production that favored facilities in California. AB1437 does neither.

In King’s mind, the law “attempts to assert authority over producers in other states,” but the plaintiffs’ own court filing makes clear that producers are not mandated to follow California’s law. Rather, they face “a difficult choice.” Excerpt from page 4:

By conditioning the flow of goods across its state lines on the method of their production, California is attempting to regulate agricultural practices beyond its own borders. Worse, the people most directly affected by California’s extraterritorial regulation-farmers in our states who must either comply with AB1437 or lose access to the largest market in the United States-have no representatives in California’s Legislature and no voice in determining California’s agricultural policy.

Again, how is this different from any number of private enterprises that may need to alter their products for sale in California, even if the corporation is based out of state?

Page 20 of the plaintiffs’ filing argues that the California law would “impose a substantial burden on interstate commerce” regardless of what any individual egg producers decide.

Even if farmers in Missouri would choose to forgo the California market instead of incurring increased production costs, AB1437 would still impose a substantial burden on interstate commerce. Without California consumers, Missouri farmers would produce a surplus of 540 million eggs per year. If one third of Missouri’s eggs suddenly had no buyer, supply would outpace demand by half a billion eggs, causing the price of eggs-as well as egg farmers’ margins-to fall throughout the Midwest and potentially forcing some Missouri producers out of business. The same goes for egg producers in Nebraska, Alabama, Oklahoma, Kentucky, and Iowa.

If I understand the logic behind this argument, then a comparable state law’s constitutionality would depend on whether the population of that state is large enough to affect national demand for the product. But it makes no sense for a federal court to say, in effect, California’s lawmakers can’t pass rules that would be permissible for a small state, such as Vermont or Rhode Island.  

King’s point about the law being “constructed for the purpose of protecting California egg producers from a competitive disadvantage” touches on another argument raised in the court filing. On pages 13 through 16, the plaintiffs argue that there is no real public health purpose for California’s law. Defendants will surely quote the law’s stated intent “to protect California consumers from the deleterious, health, safety, and welfare effects of the sale and consumption of eggs derived from egg-laying hens that are exposed to significant stress that may result in increased exposure to disease pathogens including salmonella.” The campaign in favor of Prop 8 in 2008 focused on issues of public health as well as animal welfare.

The plaintiffs cite published research challenging any link between hens being crowded in cages and stress levels or salmonella. They also quote from a California legislative analysis prepared for a 2009 committee hearing:

“Rationale. With the passage of Proposition 2 in November 2008, 63% of California’s voters determined that it was a priority for the state to ensure the humane treatment of farm animals. However, the proposition only applies to in-state producers. The intent of this legislation is to level the playing field so that in-state producers are not disadvantaged. This bill would require that all eggs sold in California must be produced in a way that is compliant with the requirements of Proposition 2.”

The plaintiffs also point out that California’s own state Department of Food and Agriculture argued against linking crowded hen cages to salmonella and warned that such arguments might not hold up in federal court if someone challenged the law on commerce clause grounds. Furthermore, California’s Department of Food and Agriculture recommended that Governor Arnold Schwarzenegger sign AB1437 to “ensure a level playing field for California’s shell egg producers.”

Finally, the plaintiffs note,

In his signing statement, Governor Schwarzenegger makes no mention of AB1437’s purported public health rationale at all. The only purposes he cites for enacting the law is protecting California farmers from the market effects of Prop 2: “The voters’ overwhelming approval of Proposition 2 demonstrated their strong support for the humane treatment of egg producing hens in California. By ensuring that all eggs sold in California meet the requirements of Proposition 2, this bill is good for both California egg producers and animal welfare.”

I hope some attorneys in the Bleeding Heartland community will weigh in on whether this argument is likely to stand up in federal court.

From where I’m sitting, if states can regulate out-of-state companies that sell insurance or cars or other consumer goods, there should be no prohibition against regulations affecting eggs or other kinds of food. But is it a problem for California to expand regulations on egg producers when the original language of Prop 8 regulated only in-state livestock farmers?

The six states suing California have a back-up legal argument in case federal courts reject their Commerce Clause claims. Pages 17 through 19 flesh out the case that, “Even assuming that AB1437 served a legitimate public health purpose within California by limiting the methods of egg production outside California, the statute would be expressly and implicitly preempted by the Federal Egg Products Inspection Act (“EPIA”), 21 U.S.C. § 1031 et seq.” That law is designed to protect public health from risks associated with egg production and consumption.

If the courts uphold that argument, many other state laws and regulations related to food safety could go out the window.

Any relevant comments are welcome in this thread.

UPDATE: The March 11 edition of the Des Moines Register carried a guest editorial by Bruce Friedrich, senior policy director for Farm Sanctuary, a national farm animal protection organization. He noted,

This past August, the Ninth U.S. Circuit Court of Appeals ruled on a challenge to a law that is almost identical in form to the one [Missouri Attorney General Chris] Koster and Branstad are challenging, but instead of banning an egg production system, it bans both the production and sale of force-fed duck liver.

In response to a challenge from the pate industry in New York and Canada that makes an argument identical to Branstad’s, the Ninth Circuit stated that where a state bans the same procedure for in-state and out-of-state production, “it is not discriminatory.”

This is a precise and complete retort to the claim that the ban on the sale of battery-cage eggs (from anywhere) somehow advantages California producers – a theory that Missouri’s Koster claimed, inaccurately, has not been tried.

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  • California has had special regulations governing cars

    sold in California for decades regardless of where they were manufactured. If auto makers can meet their requirements, so can egg producers if they want to sell eggs there.

    • that's what I'm thinking

      what a huge can of worms federal courts would be opening if they strike down this law.