Catching up on news from last week, on October 2 U.S. District Court Judge Kimberly Mueller threw out a lawsuit brought by six states, including Iowa, seeking to block California's law on egg production standards. Governor Terry Branstad joined that lawsuit in March, after Representative Steve King failed to use the federal Farm Bill as a vehicle for overturning the California law.
Bleeding Heartland covered the plaintiffs' case against the egg production standards here. I predicted the lawsuit would fail because "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."
In fact, the case never got to the point of the judge considering those legal arguments. If I were an attorney, I might have foreseen the reason Judge Mueller dismissed the lawsuit: lack of standing. You can download the 25-page ruling here (document number 102) and read pages 15 to 23 to understand her full reasoning. Daniel Enoch summarized it well for AgriPulse:
"Plaintiffs' arguments focus on the potential harm each state's egg farmers face," Mueller wrote in her 25-page decision. "The alleged imminent injury, however, does not involve an injury the citizens of each state face but rather a potential injury each state's egg farmers face when deciding whether or not to comply with AB 1437." In other words, they failed to show that the law does real harm to citizens, instead of possible future harm to some egg producers.
"It is patently clear plaintiffs are bringing this action on behalf of a subset of each state's egg farmers," Mueller wrote, "not on behalf of each state's population generally."
Mueller dismissed the case "with prejudice," meaning plaintiffs cannot amend their claim and re-file. Plaintiffs including Iowa Attorney General Tom Miller are considering their legal options. While they could appeal the dismissal, I doubt they would prevail in a U.S. Appeals Court.
The Des Moines Register's write-up by Matthew Patane and Donelle Eller highlighted the alleged harm California's law will do to Iowa agriculture when it goes into effect on January 1. I've posted excerpts after the jump. I was disappointed that the Register's reporters led with the spin from "Iowa agricultural leaders" and buried in the middle of the piece a short passage explaining why the lawsuit failed (states can't serve as a legal proxy for a small interest group). Patane and Eller did not mention that if courts accept the reasoning of egg law opponents, a possible outcome would be invalidating any state law or regulation designed to set higher standards for safety, public health, or consumer protection.
Comments provided to the Register by Governor Branstad, Iowa Secretary of Agriculture Bill Northey, and others reinforce Judge Mueller's determination that the lawsuit was designed to protect a group of agricultural producers rather than citizens as a whole. A lot of Iowa Democrats bought into the poultry producers' industry constitutional arguments as well.
UPDATE: Added below Branstad's latest comments. He is either confused about the ruling or determined not to acknowledge the real legal issue.
SECOND UPDATE: Added comments from Representative Steve King and Sherrie Taha, the Democratic nominee for Iowa Secretary of Agriculture.
Excerpts from the article by Matthew Patane and Donelle Eller for the October 4 Des Moines Register, provocatively headlined "California egg law may lead to ag war between states." Note that Secretary Northey speaks of limits on Iowa farmers, Branstad's spokesman talks about "fighting for the state's agriculture industry," and the leader of the Iowa Poultry Association warns of more regulations that could affect producers. No one is even pretending to be concerned about the state's population as a whole.
"One of the reasons the U.S. is prosperous is because we have free trade between the states," said Dermot Hayes, an agriculture economist at Iowa State University. "This opens the doors for states to put barriers against other states.
"And you can always say those barriers are driven by environmental or social restrictions. But in reality you just want to protect your own producers," Hayes said Friday. [...]
"Obviously, I'm disappointed and think it is unfortunate that this court failed to address what I believe is an effort to unconstitutionally limit the ability of Iowa farmers to access California's consumers," said Iowa Secretary of Agriculture Bill Northey. [...]
Jimmy Centers, a spokesman for Gov. Terry Branstad, said the governor plans to continue "fighting for the state's agriculture industry."
"The governor believes that this case demonstrates the very reason the commerce clause was adopted - to prevent states like California from passing burdensome regulations that are a detriment to other states," Centers said.
Kevin Vinchattle, chief executive officer of the Iowa Poultry Association, said he was concerned the ruling would open the doors to more regulations that could hurt Iowa's agricultural industry.
"If they can do this for eggs, I don't know what prohibits them for doing it to anything else we produce in Iowa," Vinchattle said Friday.
Northey and Hayes agreed, saying the barriers could extend beyond agricultural products like eggs, beef and soybeans and include manufactured goods.
UPDATE: Dar Danielson covered Branstad's October 6 press conference for Radio Iowa.
"This is not right, it's not fair, and that's why we joined with Missouri and several other states in this lawsuit. One way or another, we need to find a way to prevent this from continuing to happen," Branstad says. [...]
"It's bad enough trying to break down the barriers to trade with the European Union and with other parts of the world. We don't want a trade war in America, but we think California is dead wrong on this," according to Branstad. "You know, I haven't practiced law for a long time, but I can tell you basic Constitutional law says the Interstate Commerce clause of the United States Constitution is there to prevent barriers to trade from other states."
Branstad, a Republican, isn't sure if the other states will continue to push the fight in court or try to take other action to get California to change. "I think we are going to examine all the different options and alternatives on what to best doe [sic] - but it is so blatant and so obviously unconstitutional that eventually it's not doing to stand. It can't stand, it goes against the very tenants [tenets] of the Constitution of the United States," Branstad says.
SECOND UPDATE: Sounds like Representative Steve King will push for retaliatory measures.
King: We Must Maintain Free Trade Between the States
Oct 3, 2014
Washington, D.C. - Congressman Steve King released the following statement in response to the California Egg Law lawsuit being rejected. This lawsuit was filed by the state of Missouri, along with five others, to eliminate a California law that prohibits the sale of eggs laid by hens held in cages they deem "too small." Mr. King's Protect Interstate Commerce Act (PICA), which the California lawsuit originates from, was attached to the House Farm Bill during markup in the House Agriculture Committee last year but was ultimately not accepted with the final Farm Bill Act of 2014. This act would prohibit any state from enacting laws that place restrictions on the means of production for agricultural goods that are sold within the state but are produced in other states.
"It is not surprising that the egg lawsuit was rejected by the 9th Circuit on a technicality. California's law regulating egg producers in other states is unconstitutional and anti-consumer," said King. "It is trade protectionism for California egg producers who are handicapped by a foolish California policy that would regulate them out of business without protection from competition from Iowa and other states.
Now we renew our efforts at additional litigation and legislation. If we fall short of fixing this problem, the result will be trade retaliation from other state legislatures. It's hard to push for free trade with foreign countries when we have to admit that we can't, at least for now, maintain free trade between the states.
I think I can do without California wine longer than they can without our eggs."
The Des Moines Register published an op-ed by Sherrie Taha, Democratic nominee for Iowa Secretary of Agriculture, on October 8. Taha stated several obvious facts.
It is a waste of Iowans' tax dollars for our current governor and secretary of agriculture to try to think of ways to continue with this lawsuit. It was predictably unwinnable from the start.
As the Register's article states, Judge Mueller found no action against the people of Iowa in the lawsuit. And, there is no infraction of the United States Constitution, according to the commerce clause, when producers within a state are held to the same standard as producers in other states. There are federal minimum standards for safe food production and animal welfare. And, states have the right to codify standards that enhance or exceed those minimum standards.
California is an important market for many Iowa producers. As noted in the Register's article and according to USDA statistics, more than 9 percent (1.3 billion) of Iowa's total annual egg production (14.5 billion) is sold to Californians.
It's clearly an important market that Iowa producers should continue to serve. In any business, change is inevitable. Meeting changes in consumer demands is part of the challenge every business faces every day. Iowa producers can meet that challenge.
Trying to draw attention away from current realities in the free market by creating false arguments of unfair market hurdles serves no one in the long run. The people of Iowa (and Iowa businesses) would be better served by a governor and secretary of agriculture who help identify consumer wants and needs, point the way toward growing markets and help businesses meet those challenges.