throbber
Case: 20-55631, 07/28/2021, ID: 12185108, DktEntry: 70-1, Page 1 of 24
`
`FOR PUBLICATION
`
`UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`No. 20-55631
`
`D.C. No.
`3:19-cv-02324-
`W-AHG
`
`OPINION
`
`
`
`NATIONAL PORK PRODUCERS
`COUNCIL; AMERICAN FARM BUREAU
`FEDERATION,
`
`Plaintiffs-Appellants,
`
`v.
`
`KAREN ROSS, in her official capacity
`as Secretary of the California
`Department of Food & Agriculture;
`TOMÁS J. ARAGÓN, in his official
`capacity as Director of the California
`Department of Public Health; ROB
`BONTA,* in his official capacity as
`Attorney General of California,
`Defendants-Appellees,
`
`and
`
`THE HUMANE SOCIETY OF THE
`UNITED STATES; ANIMAL LEGAL
`DEFENSE FUND; ANIMAL EQUALITY;
`THE HUMANE LEAGUE; FARM
`SANCTUARY; COMPASSION IN
`
` * Rob Bonta is substituted for his predecessor, Xavier Becerra, as
`Attorney General of California; and Tomás J. Aragón is substituted for his
`predecessor, Sonia Angell, as Director of the California Department of
`Public Health. Fed. R. App. 43(c)(2).
`
`

`

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`2
`
`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
`
`WORLD FARMING USA;
`COMPASSION OVER KILLING,
`Intervenor-Defendants-Appellees.
`
`Appeal from the United States District Court
`for the Southern District of California
`Thomas J. Whelan, District Judge, Presiding
`
`Argued and Submitted April 14, 2021
`Pasadena, California
`
`Filed July 28, 2021
`
`Before: Milan D. Smith, Jr. and Sandra S. Ikuta, Circuit
`Judges, and John E. Steele,** District Judge.
`
`Opinion by Judge Ikuta
`
`** The Honorable John E. Steele, United States District Judge for the
`Middle District of Florida, sitting by designation.
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`3
`
`SUMMARY***
`
`Constitutional Law
`
`The panel 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.
`
`The panel held that the complaint did not plausibly plead
`that Proposition 12 violates the dormant Commerce Clause
`by compelling out-of-state producers to change their
`operations
`to meet California standards and
`thus
`impermissibly regulating extraterritorial conduct outside of
`California’s borders. First, Proposition 12 does not dictate
`the price of a product and does not tie the price of in-state
`products to out-of-state prices. Further, the interconnected
`nature of the pork industry does not mean that Proposition
`12’s extraterritorial impact violates the underlying principles
`of the dormant Commerce Clause. The panel held that the
`complaint plausibly alleged that Proposition 12 has an
`indirect practical effect on how pork is produced and sold
`outside California, but such upstream effects do not violate
`the dormant Commerce Clause. The panel also held that
`California’s promulgation of regulations to implement
`Proposition 12, which, as a practical matter, may result in the
`
`*** This summary constitutes no part of the opinion of the court. It has
`been prepared by court staff for the convenience of the reader.
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`mposition of complex compliance requirements on out-of-
`state farmers, does not have an impermissible extraterritorial
`effect.
`
`4 i
`
`The panel further held that the complaint did not plausibly
`plead that Proposition 12 violates the dormant Commerce
`Clause by
`imposing excessive burdens on
`interstate
`commerce without advancing any legitimate local interest.
`The panel concluded that alleged cost increases to market
`participants and customers did not qualify as a substantial
`burden to interstate commerce for purposes of the dormant
`Commerce Clause.
`
`COUNSEL
`
`Timothy S. Bishop (argued) and Brett E. Legner, Mayer
`Brown LLP, Chicago, Illinois; Dan Himmelfarb and Colleen
`M. Campbell, Mayer Brown LLP, Washington, D.C.; Travis
`Cushman, American Farm Bureau Federation, Washington,
`D.C.; Michael C. Formica, National Pork Producers Council,
`Washington, D.C.; for Plaintiffs-Appellants.
`
`R. Matthew Wise (argued), Deputy Attorney General; Mark
`R. Beckington, Supervising Deputy Attorney General;
`Thomas S. Patterson, Senior Assistant Attorney General;
`Attorney General’s Office, Sacramento, California; for
`Defendants-Appellees.
`
`Bruce A. Wagman (argued), Riley Safer Holmes & Cancila
`LLP, San Francisco, California; Rebecca A. Cary and Ralph
`E. Henry, Humane Society of the United States, Washington,
`D.C.; for Intervenor-Defendants-Appellees.
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`5
`
`Catherine E. Stetson and Danielle Desaulniers Stempel,
`Hogan Lovells US LLP, Washington, D.C.; Patrick Hedren
`and Erica Klenicki, Manufacturers’ Center for Legal Action,
`Washington, D.C.; Stephen P. Lehotsky and Jonathan D.
`Urick, U.S. Chamber Litigation Center, Washington, D.C.;
`Stephanie K. Harris, FMI—The Food Industry Association,
`Arlington, Virginia; Scott Yager, National Cattlemen’s Beef
`Association, Washington, D.C.; Katie Sweeney, National
`Mining Association, Washington, D.C.; for Amici Curiae
`National Association of Manufacturers, Chamber of
`Commerce of the United States of America, FMI—The Food
`Industry Association, National Cattlemen’s Beef Association,
`and National Mining Association.
`
`Curtis T. Hill Jr., Attorney General; Thomas M. Fisher,
`Solicitor General; Kian J. Hudson, Deputy Solicitor General;
`Julia C. Payne, Deputy Attorney General; Office of the
`Attorney General, Indianapolis, Indiana; Steven Marshall,
`Alabama Attorney General; Clyde Sniffen Jr., Alaska
`Attorney General; Leslie Rutledge, Arkansas Attorney
`General; Christopher M. Carr, Georgia Attorney General;
`Tom Miller, Iowa Attorney General; Derek Schmidt, Kansas
`Attorney General; Jeff Landry, Louisiana Attorney General;
`Eric Schmitt, Missouri Attorney General; Timothy C. Fox,
`Montana Attorney General; Doug Peterson, Nebraska
`Attorney General; Wayne Stenehjem, North Dakota Attorney
`General; Dave Yost, Ohio Attorney General; Mike Hunter,
`Oklahoma Attorney General; Alan Wilson, South Carolina
`Attorney General; Jason R. Ravnsborg, South Dakota
`Attorney General; Ken Paxton, Texas Attorney General; Sean
`D. Reyes, Utah Attorney General; Patrick Morrisey, West
`Virginia Attorney General; Bridget Hill, Wyoming Attorney
`General; for Amici Curiae Indiana, Alabama, Alaska,
`Arkansas, Georgia, Iowa, Kansas, Louisiana, Missouri,
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`6 M
`
`ontana, Nebraska, North Dakota, Ohio, Oklahoma, South
`Carolina, South Dakota, Texas, Utah, West Virginia, and
`Wyoming.
`
`Robert S. Brewer Jr., United States Attorney; Michael S.
`Raab and Thomas Pulham, Appellate Staff; Civil Division,
`United States Department of Justice, Washington, D.C.;
`Carrie F. Ricci, Associate General Counsel, Department of
`Agriculture, Washington, D.C.; for Amicus Curiae United
`States.
`
`Brian M. Boynton and Amy Lishinksi, Wilmer Cutler
`Pickering Hale and Dorr LLP, Washington, D.C., for Amici
`Curiae Association of California Egg Farmers and Pacific
`Egg & Poultry Association.
`
`Matthew G. Berkowitz and Yue (Joy) Wang, Shearman &
`Sterling LLP, Menlo Park, California; L. Kieran Kieckhefer,
`Shearman & Sterling LLP, San Francisco, California; Ian E.
`Roberts, Shearman & Sterling LLP, Dallas, Texas; for Amici
`Curiae Health Care Without Harm, National Council for
`Occupational Safety and Health, Consumer Federation of
`America, and Food & Water Watch.
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`7
`
`OPINION
`
`IKUTA, Circuit Judge:
`
`In 2018, California voters passed Proposition 12, which
`bans the sale of whole pork meat (no matter where produced)
`from animals confined in a manner inconsistent with
`California standards. The National Pork Producers Council
`and the American Farm Bureau Federation (collectively
`referred to as “the Council”) filed an action for declaratory
`and injunctive relief on the ground that Proposition 12
`violates the dormant Commerce Clause. Under our
`precedent, a state law violates the dormant Commerce Clause
`only in narrow circumstances. Because the complaint here
`does not plausibly allege that such narrow circumstances
`apply to Proposition 12, we conclude that the district court
`did not err in dismissing the Council’s complaint for failure
`to state a claim.
`
`I
`
`Proposition 12 amended sections 25990–25993 of the
`California Health and Safety Code to “prevent animal cruelty
`by phasing out extreme methods of farm animal confinement,
`which also threaten the health and safety of California
`consumers, and increase the risk of foodborne illness and
`associated negative fiscal impacts on the State of California.”
`Cal. Prop. 12, § 2 (2018). The relevant portion of Proposition
`12 precludes a business owner or operator from knowingly
`engaging in a sale within California of various products,
`including the sale of “[w]hole pork meat” unless the meat was
`produced in compliance with specified sow confinement
`restrictions. Cal. Prop. 12, § 3(b) (2018); see Cal. Health &
`Safety Code §§ 25990(b)(1)–(2), 25991(e)(1)–(4).
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`On December 5, 2019, the Council filed a complaint
`against California officials (referred to collectively as the
`California defendants) challenging Proposition 12 and
`seeking, among other things, a declaratory judgment that
`Proposition 12 is unconstitutional under the dormant
`Commerce Clause, and a permanent injunction enjoining the
`implementation and enforcement of Proposition 12.1 The
`complaint alleged that Proposition 12 violates the dormant
`Commerce Clause in two ways. First, it impermissibly
`regulates extraterritorial conduct outside of California’s
`borders by compelling out-of-state producers to change their
`operations to meet California standards. Second, it imposes
`excessive burdens on interstate commerce without advancing
`any legitimate local interest because it significantly increases
`operation costs, but is not justified by any animal-welfare
`interest and “has no connection to human health or foodborne
`illness.”
`
`On April 27, 2020, the district court granted the
`California defendants’ motion to dismiss and the intervenors’
`motion for judgment on the pleadings. The district court held
`that Proposition 12 did not
`impermissibly control
`extraterritorial conduct and did not impose a substantial
`burden on interstate commerce. Although the district court
`had granted the Council leave to amend, the Council instead
`moved for entry of judgment, and the district court dismissed
`the complaint with prejudice. The Council timely appealed.
`
`We have jurisdiction under 28 U.S.C. § 1291, and review
`de novo the district court’s order granting a motion to dismiss
`for failure to state a claim under Rule 12(b)(6) of the Federal
`
`1 On January 9, 2020, several nonprofit organizations were granted
`intervention as defendants (referred to collectively as the intervenors).
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`9
`
`Rules of Civil Procedure, Cousins v. Lockyer, 568 F.3d 1063,
`1067 (9th Cir. 2009), and the district court’s order granting a
`motion for judgment on the pleadings under Rule 12(c) of the
`Federal Rules of Civil Procedure, Lyon v. Chase Bank USA,
`N.A., 656 F.3d 877, 883 (9th Cir. 2011). At the motion to
`dismiss stage, we take as true the facts plausibly alleged in
`the complaint. See Ashcroft v. Iqbal, 556 U.S. 662, 678–79
`(2009).
`
`II
`
`The Constitution grants Congress the power to “regulate
`Commerce . . . among the several States.” U.S. Const. art. I.,
`§ 8, cl. 3. The Commerce Clause does not, on its face,
`impose any restrictions on state law in the absence of
`congressional action. Nonetheless, “[f]rom early in its
`history,” the Supreme Court has interpreted the Commerce
`Clause as implicitly preempting state laws that regulate
`commerce in a manner that is disruptive to economic
`activities in the nation as a whole. See South Dakota v.
`Wayfair, Inc., 138 S. Ct. 2080, 2090 (2018); Gibbons v.
`Ogden, 22 U.S. (9 Wheat.) 1, 200–01 (1824). In its most
`recent consideration of the scope of the dormant Commerce
`Clause, the Court stated there are “two primary principles that
`mark the boundaries of a State’s authority to regulate
`interstate commerce.” Wayfair, 138 S. Ct. at 2090. “First,
`state regulations may not discriminate against interstate
`commerce; and second, States may not impose undue burdens
`on interstate commerce.” Id. at 2091. Although “State laws
`that discriminate against interstate commerce face ‘a virtually
`per se rule of invalidity,’” id. (quoting Granholm v. Heald,
`544 U.S. 460, 476 (2005)), “State laws that ‘regulat[e] even-
`handedly to effectuate a legitimate local public interest . . .
`will be upheld unless the burden imposed on such commerce
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`is clearly excessive in relation to the putative local benefits,’”
`id. (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142
`(1970)). Wayfair indicated that these two principles are
`“subject to exceptions and variations.” Id. Among other
`things, Wayfair cited an earlier decision holding that a state
`law may violate the dormant Commerce Clause when it has
`extraterritorial effects. Id. (citing Brown-Forman Distillers
`Corp. v. N.Y. State Liquor Auth., 476 U.S. 573 (1986)).
`
`The Council does not argue that the complaint has
`plausibly pleaded that Proposition 12 discriminates against
`out-of-state interests, and so has foregone the first principle
`recognized in Wayfair. Instead, it argues the second Wayfair
`principle, that Proposition 12 places an undue burden on
`interstate commerce, and the Brown-Forman variation, that
`Proposition 12 has an impermissible extraterritorial effect. At
`the motion to dismiss stage, we must determine whether the
`Council has plausibly pleaded a dormant Commerce Clause
`claim under its theories.
`
`A
`
`The Council’s primary argument is that the complaint
`adequately alleges that Proposition 12 has an impermissible
`extraterritorial effect.
`
`1
`
`In making this claim, the Council relies primarily on three
`historical Supreme Court cases that first delineated when a
`state law violates the dormant Commerce Clause by
`impermissibly regulating prices in other states. See Baldwin
`v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935); Brown-Forman,
`476 U.S. at 579; Healy v. Beer Inst., Inc., 491 U.S. 324
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`11
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`(1989). In Baldwin, the Court struck down a New York law
`that required a dealer selling milk in New York to pay an out-
`of-state milk producer the minimum price set by New York
`law in order to equalize the price of milk from in-state and
`out-of-state producers. 294 U.S. at 518–19. As the Court
`later explained, the New York law in Baldwin was “aimed
`solely at interstate commerce attempting to affect and
`regulate the price to be paid for milk in a sister state, [which]
`amounted in effect to a tariff barrier set up against milk
`imported into the enacting state.” Milk Control Bd. of Pa. v.
`Eisenberg Farm Prods., 306 U.S. 346, 353 (1939). In
`Brown-Forman, the Court invalidated a New York law
`requiring every liquor distiller or producer selling to
`wholesalers within the state to affirm that the prices charged
`for every bottle or case of liquor were no higher than the
`lowest price at which the same product would be sold in any
`other State during the month covered by the particular
`affirmation. 476 U.S. at 576. The Court concluded that the
`price-affirmation law was invalid because it had the
`“practical effect” of requiring “producers or consumers in
`other States to surrender whatever competitive advantages
`they may possess,” by forcing them to sell their product in-
`state for a set price. 476 U.S. at 580, 583. Last, Healy struck
`down a Connecticut price-affirmation statute that, in
`interaction with the laws in the neighboring states, had the
`practical effect of controlling prices in those states, causing
`an anti-competitive result. 491 U.S. at 337–39.
`
`These cases used broad language. For instance, Healy
`states that the extraterritoriality principle “protects against
`inconsistent legislation arising from the projection of one
`state regulatory regime into the jurisdiction of another State,”
`and “precludes the application of a state statute to commerce
`that takes place wholly outside of the State’s borders, whether
`
`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`or not the commerce has effects within the [regulating]
`State.” Id. at 336–37 (cleaned up). But such broad
`statements are “so sweeping that most commentators have
`assumed that these cases cannot mean what they appear to
`say.” Katherine Florey, State Courts, State Territory, State
`Power: Reflections on the Extraterritoriality Principle in
`Choice of Law and Legislation, 84 Notre Dame L. Rev. 1057,
`1090 (2009); see also Jack L. Goldsmith & Alan O. Sykes,
`The Internet and the Dormant Commerce Clause, 110 Yale
`L.J. 785, 806 (2001) (suggesting that the Court’s “overbroad
`extraterritoriality dicta” can be
`ignored).
` The
`extraterritoriality test cannot strictly bar laws that have
`extraterritorial effect, scholars argue, because “[i]n practice,
`states exert regulatory control over each other all the time.”
`Gillian E. Metzger, Congress, Article IV, and Interstate
`Relations, 120 Harv. L. Rev. 1468, 1521 (2007) (noting, for
`example, “Delaware’s corporate law, which has de facto
`nationwide application”).
`
`And indeed, the Supreme Court has given force to these
`scholarly observations, as
`it has
`indicated
`that
`the
`extraterritoriality principle in Baldwin, Brown-Forman, and
`Healy should be interpreted narrowly as applying only to
`state laws that are “price control or price affirmation
`statutes,” Pharm. Rsch. & Mfrs. of Am. v. Walsh, 538 U.S.
`644, 669 (2003). We have adopted this interpretation and
`held that the extraterritoriality principle is “not applicable to
`a statute that does not dictate the price of a product and does
`not tie the price of its in-state products to out-of-state prices.”
`Ass’n des Eleveurs de Canards et d’Oies du Quebec v. Harris
`(Eleveurs), 729 F.3d 937, 951 (9th Cir. 2013) (cleaned up).
`The Tenth Circuit has followed suit. See Energy & Env’t
`Legal Inst. v. Epel, 793 F.3d 1169, 1172 (10th Cir. 2015)
`(Gorsuch, J.) (holding that the “three essential characteristics”
`
`

`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`13
`
`that mark Baldwin, Brown-Forman, and Healy are that the
`state law at issue (1) was a price-control statute, (2) linked
`prices paid in-state with those paid out-of-state, or
`(3) discriminated against interstate commerce).
`
`Under this narrow interpretation, Baldwin, Brown-
`Forman, and Healy do not support the Council’s arguments.
`It is undisputed that Proposition 12 is neither a price-control
`nor price-affirmation statute, as it neither dictates the price of
`pork products nor ties the price of pork products sold in
`California to out-of-state prices. See Eleveurs, 729 F.3d
`at 951. And the Council has not claimed that Proposition 12
`discriminates against interstate commerce.
`
`2
`
`The Council nevertheless asks us to hold that Proposition
`12’s extraterritorial impact violates the underlying principles
`of the dormant Commerce Clause in light of the unique nature
`of the pork industry. According to the allegations of the
`complaint, the pork industry is highly interconnected. A
`single hog is butchered into many different cuts which would
`normally be sold throughout the country. In order to ensure
`they are not barred from selling their pork products into
`California, all the producers and the end-of-chain supplier
`will require assurances that the cuts and pork products come
`from hogs confined in a manner compliant with Proposition
`12. This means that all pork suppliers will either produce
`hogs in compliance with California specifications or incur the
`additional cost of segregating their products. As a practical
`matter, given the interconnected nature of the nationwide
`pork industry, all or most hog farmers will be forced to
`comply with California requirements.
` The cost of
`compliance with Proposition 12’s requirements is high, and
`
`

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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`would mostly fall on non-California transactions, because
`87% of the pork produced in the country is consumed outside
`California. Therefore, the complaint alleges, Proposition 12
`violates the dormant Commerce Clause given its substantial
`extraterritorial impact as a practical matter.
`
`is not barred by Walsh’s
`theory
`The Council’s
`characterization of the Baldwin line of cases as being limited
`to price-control and price-affirmation statutes. We have
`recognized that the Supreme Court has not expressly
`narrowed the extraterritoriality principle to only price-control
`and price-affirmation cases, and we have recognized a
`“broad[er] understanding of the extraterritoriality principle”
`may apply outside this context, Ward v. United Airlines, Inc.,
`986 F.3d 1234, 1240–41 (9th Cir. 2021). But even though the
`Council’s complaint plausibly alleges that Proposition 12 has
`an indirect “practical effect” on how pork is produced and
`sold outside California, we have rejected the argument that
`such upstream effects violate the dormant Commerce Clause.
`
`Under our precedent, state laws that regulate only conduct
`in the state, including the sale of products in the state, do not
`have impermissible extraterritorial effects. See Rosenblatt v.
`City of Santa Monica, 940 F.3d 439, 445 (9th Cir. 2019). A
`state law may require out-of-state producers to meet
`burdensome requirements in order to sell their products in the
`state without violating the dormant Commerce Clause. See
`Rocky Mountain Farmers Union v. Corey (Rocky II),
`913 F.3d 940, 952 (9th Cir. 2019); Eleveurs, 729 F.3d at 942.
`Even if a state’s requirements have significant upstream
`effects outside of the state, and even if the burden of the law
`falls primarily on citizens of other states, the requirements do
`not impose impermissible extraterritorial effects. See
`Eleveurs, 729 F.3d at 942, 948–53. A state law is not
`
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`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
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`15
`
`impermissibly extraterritorial unless it directly regulates
`conduct that is wholly out of state. Rosenblatt, 940 F.3d at
`442, 445 (holding that a city ordinance restricting vacation
`rentals in a California city did not violate the dormant
`Commerce Clause even though 95% of vacation rentals in the
`city involved an out-of-state party, because the ordinance
`penalized only conduct within the city).
`
`The Council’s allegations regarding the upstream effects
`of Proposition 12 are most closely analogous to those we
`rejected in Eleveurs. 729 F.3d at 942. In Eleveurs, plaintiffs
`argued that a law banning the sale in California of certain
`duck products made by force feeding the duck violated the
`extraterritoriality principle because it controlled commerce
`outside of California. According to the plaintiffs, the law
`targeted out-of-state entities and compelled out-of-state
`farmers to comply with California’s standards. Id. at 949.
`We held that the plaintiff’s argument failed because the state
`law applied to “both California entities and out-of-state
`entities,” and the law merely precluded “a more profitable
`method of operation—force feeding birds for the purpose of
`enlarging its liver—rather than affecting the interstate flow of
`goods.” Id.
`
`The requirements under Proposition 12 likewise apply to
`both California entities and out-of-state entities, and merely
`impose a higher cost on production, rather than affect
`interstate commerce. Therefore, even though Proposition 12
`has some upstream effects, California is “free to regulate
`commerce and contracts within [its] boundaries with the goal
`of
`influencing
`the out-of-state choices of market
`participants.” Rocky Mountain Farmers Union v. Corey
`(Rocky I), 730 F.3d 1070, 1103 (9th Cir. 2013); see also
`Eleveurs, 729 F.3d at 948–49 (“A statute is not invalid merely
`
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`because it affects in some way the flow of commerce between
`the States.” (cleaned up)).
`
`For the same reason, California’s promulgation of
`regulations to implement Proposition 12, which, as a practical
`matter, may result in the imposition of complex compliance
`requirements on out-of-state farmers, does not have an
`impermissible extraterritorial effect. Proposition 12 required
`the California Department of Food and Agriculture (CDFA)
`to publish implementing regulations. Cal. Prop. 12 § 6
`(2018); Cal. Health & Safety Code § 25993(a). Under the
`proposed regulations,2 an out-of-state producer must hold a
`valid California certification in order to sell its products in
`California. CDFA, Proposed Regulations at 30 (May 28,
`2021) (proposing to adopt California Code of Regulations
`Title 3, § 1322.1(b)). And to obtain the certification, a
`producer must “allow access by the certifying agent, and/or
`authorized representatives of the Department, to . . . houses
`where covered animals and covered animal products may be
`kept . . . .” Id. at 40 (proposing to adopt § 1326.1(c)). Once
`certified, pork-producing operations must also comply with
`the recordkeeping requirements. Id. at 40–41 (proposing to
`adopt § 1326.2).
`
`2 The complaint alleges that Proposition 12 charges California
`agencies with promulgating regulations to implement the proposition.
`After oral argument was held in this appeal, CDFA published proposed
`regulations implementing Proposition 12. The proposed regulations are
`located at http://www.cdfa.ca.gov/ahfss/pdfs/regulations/AnimalConfin
`ementText1stNotice_05252021.pdf. See also 22-Z Cal. Regulatory Notice
`Reg. 594 (May 28, 2021).
`
`Although the CDFA has published the proposed regulations, it has not
`yet promulgated a final version.
`
`

`

`Case: 20-55631, 07/28/2021, ID: 12185108, DktEntry: 70-1, Page 17 of 24
`
`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
`
`17
`
`Even assuming these proposed regulations become
`effective, “[a]ppropriate certificates may be exacted” from
`out-of-state producers for in-state health and safety purposes
`without violating the dormant Commerce Clause. Baldwin,
`294 U.S. at 524. Indeed, in Rocky I, we held that a California
`law did not impermissibly regulate extraterritorial conduct
`even though it required out-of-state fuel distributors “to seek
`regulatory approval in California before undertaking a
`transaction also in California” and imposed reporting
`requirements on out-of-state producers. 730 F.3d at 1104.
`Therefore, the proposed regulations’ requirement that out-of-
`state producers seek a California certification in order to
`access the California market is not an impermissible
`extraterritorial effect.
`
`3
`
`The Council relies on a handful of cases in which we
`determined
`that a state
`law had an
`impermissibly
`extraterritorial effect because it directly regulated transactions
`conducted entirely out of state. In Daniels Sharpsmart, Inc.
`v. Smith, we struck down a California law requiring a
`company that sent medical waste out of state for disposal to
`use only a medical waste facility that met California
`requirements. 889 F.3d 608, 612–13, 615–16 (9th Cir. 2018).
`The transaction at issue in that case (the purchase of medical
`waste disposal services from out-of-state treatment facilities
`in Kentucky and Indiana) occurred wholly outside California.
`Id.; see also Sam Francis Found. v. Christies, Inc., 784 F.3d
`1320, 1323 (9th Cir. 2015) (en banc) (striking down a law
`that required California residents to pay five percent of their
`sales price in out-of-state art sale transactions to the artists).
`And in National Collegiate Athletic Ass’n v. Miller, we held
`that a statute had extraterritorial effect because it was
`
`

`

`Case: 20-55631, 07/28/2021, ID: 12185108, DktEntry: 70-1, Page 18 of 24
`
`18
`
`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
`
`interstate
`interstate commerce and only
`“directed at
`interstate
`commerce,” given
`that “it regulates only
`organizations, i.e., national collegiate athletic associations
`which have member institutions in 40 or more states.”
`10 F.3d 633, 638 (9th Cir. 1993); see also Legato Vapors,
`LLC v. Cook, 847 F.3d 825, 833 (7th Cir. 2017) (invalidating
`a state law which “govern[ed] the services and commercial
`relationships between out-of-state manufacturers and their
`employees and contractors”). Citing Daniels Sharpsmart and
`Miller, the Council argues that Proposition 12 necessarily
`controls transactions conducted among out-of-state pork
`producers, processors, distributors and sellers of pork
`products, because it compels them to ensure that pork
`products that may eventually be sold in California are
`traceable to hogs that have been confined in a manner that
`meets California requirements.
`
`The Council’s reliance on the Daniel Sharpsmart line of
`cases is misplaced, because Proposition 12 does not regulate
`transactions conducted wholly outside of California. Rather,
`Proposition 12 directly regulates only the in-state sales of
`“products that are brought into or are otherwise within the
`borders of [California].” Daniels Sharpsmart, 889 F.3d
`at 615. Nor does Proposition 12 directly regulate interstate
`commerce; rather, by its terms, it is aimed at the in-state sales
`of pork, regardless whether it is produced by in-state or out-
`of-state farmers. We have not extended the Daniel
`Sharpsmart line of cases to a situation where the state law
`had an upstream effect only as a practical matter on out-of-
`state transactions. As explained above, we have rejected
`similar arguments relying on this theory. See Eleveurs,
`729 F.3d at 942; see also Epel, 793 F.3d at 1174 (holding that
`the Supreme Court has rejected the “grand[] proposition” that
`the Baldwin line of cases “require [courts] to declare
`
`

`

`Case: 20-55631, 07/28/2021, ID: 12185108, DktEntry: 70-1, Page 19 of 24
`
`NATIONAL PORK PRODUCERS COUNCIL V. ROSS
`
`19
`
`automatically unconstitutional any state regulation with the
`practical effect of controlling conduct beyond the boundaries
`of the State” (cleaned up)).
`
`4
`
`Finally, the Council argues that Proposition 12 violates
`the dormant Commerce Clause because it poses a risk of
`inconsistent regulations that undermines a “compelling need
`for national uniformity in regulation.” See Gen. Motors
`Corp. v. Tracy, 519 U.S. 278, 299 n.12 (1997). While
`Wayfair did not overrule this principle (so it may be deemed
`a “variation” of the two primary principles of the dormant
`Commerce Clause), see 138 S. Ct. at 2090–91, we have held
`that only “state regulation of activities that are inherently
`national or require a uniform system of regulation” violates
`the dormant Commerce Clause, Rosenblatt, 940 F.3d at 452
`(quoting Chinatown Neighborhood Ass’n v. Harris, 794 F.3d
`1136, 1146 (9th Cir. 2015)); see also Ward, 986 F.3d at 1242
`(holding that to prevail on the contention that it will
`inevitably be subjected to a patchwork of inconsistent
`regulations, a party must show that the challenged state law
`“regulates in an area that requires national uniformity”).
`Absent such a need for uniform national regulation, a state
`regulation does not violate the dormant Commerce Clause
`even where there is a threat of conflicting regulations. See
`Chinatown, 794 F.3d at 1146–47. The “small number” of
`cases dealing with “activities that are inherently national or
`require a uniform system of regulation” generally concern
`taxation or interstate transportation. See Rosenblatt, 940 F.3d
`at 452 (quoting Chinatown, 794 F.3d at 1146). Unless the
`state law at issue interferes with a system of national concern,
`it does not violate the dormant Commerce Clause. Thus in
`Eleveurs, we held that “Plaintif

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