throbber
Case: 20-55631, 09/30/2020, ID: 11842814, DktEntry: 23, Page 1 of 36
`
`No. 20-55631
`
`
`IN THE UNITED STATES COURT OF APPEALS
`FOR THE NINTH CIRCUIT
`
`
`NATIONAL PORK PRODUCERS COUNCIL, et al.,
`
`
`Plaintiffs-Appellants,
`
`
`v.
`
`KAREN ROSS, et al.,
`
`
`Defendants-Appellees.
`
`
`
`On Appeal from the United States District Court
`for the Southern District of California
`
`
`BRIEF FOR THE UNITED STATES IN SUPPORT OF APPELLANTS
`
`
`
`
`
`Of Counsel:
`
`STEPHEN A. VADEN
`General Counsel
`CARRIE F. RICCI
`Associate General Counsel
`
`Department of Agriculture
`
`
`JEFFREY BOSSERT CLARK
`Acting Assistant Attorney General
`ROBERT S. BREWER, JR.
`United States Attorney
`MICHAEL S. RAAB
`THOMAS PULHAM
`Attorneys, Appellate Staff
`Civil Division, Room 7323
`U.S. Department of Justice
`950 Pennsylvania Avenue NW
`Washington, DC 20530
`(202) 514-4332
`
`
`
`
`
`
`

`

`Case: 20-55631, 09/30/2020, ID: 11842814, DktEntry: 23, Page 2 of 36
`
`TABLE OF CONTENTS
`
`Page
`
`INTRODUCTION AND INTEREST OF THE UNITED STATES ......................... 1
`
`STATEMENT OF THE CASE .......................................................................................... 5
`
`A.
`
`B.
`
`Statutory Background ..................................................................................... 5
`
`Prior Proceedings ............................................................................................ 9
`
`1.
`
`2.
`
`NAMI .................................................................................................... 9
`
`This Litigation .................................................................................... 10
`
`ARGUMENT ....................................................................................................................... 14
`
`PROPOSITION 12 VIOLATES THE COMMERCE CLAUSE. ................................................... 14
`
`A.
`
`B.
`
`A State Law Improperly Regulates Extraterritorial Conduct When
`Its Practical Effect Is To Control Conduct Outside State Borders. ....... 14
`
`The Purpose And Practical Effects Of Proposition 12 Are To
`Control Methods Of Pork Production Outside California. ..................... 16
`
`CONCLUSION ................................................................................................................... 29
`
`CERTIFICATE OF COMPLIANCE
`
`
`
`
`
`
`

`

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`
`TABLE OF AUTHORITIES
`
`Page(s)
`
`
`Cases:
`
`Association des Eleveurs de Canards et d’Oies du Quebec v. Harris,
`729 F.3d 937 (9th Cir. 2013) ..................................................................................... 24, 25
`
`
`Baldwin v. G.A.F. Seelig,
`294 U.S. 511 (1935) ........................................................................... 16, 17, 20, 23, 27, 28
`
`
`BMW of N. Am., Inc. v. Gore,
`517 U.S. 559 (1996) ...................................................................................................... 1, 15
`
`
`Bonaparte v. Tax Court,
`104 U.S. 592 (1881) ...................................................................................................... 1, 15
`
`
`Brown-Forman Distillers Corp. v. New York State Liquor Auth.,
`476 U.S. 573 (1986) .............................................................................................. 14, 15, 26
`
` C
`
` & A Carbone v. Town of Clarkston,
`511 U.S. 383 (1994) ....................................................................................... 17, 18, 23, 25
`
`
`Chinatown Neighborhood Ass’n v. Harris,
`794 F.3d 1136 (9th Cir. 2015) ............................................................................. 13, 26, 27
`
`
`Cort v. St. Paul Fire & Marine Ins. Cos.,
`311 F.3d 979 (9th Cir. 2002) ............................................................................................. 8
`
`
`Daniels Sharpsmart, Inc. v. Smith,
`889 F.3d 608 (9th Cir. 2018) ............................................................................... 24, 25, 26
`
`
`Healy v. Beer Inst.,
`491 U.S. 324 (1989) ..................................................................................... 1, 3, 15, 24, 26
`
`
`Legato Vapors v. Cook,
`847 F.3d 825 (7th Cir. 2017) ..................................................................................... 21, 22
`
`
`Medtronic v. Lohr,
`518 U.S. 470 (1996) .......................................................................................................... 18
`
`
`
`
`
`
`ii
`
`

`

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`National Foreign Trade Council v. Natsios
` 181 F.3d 38 (1st Cir. 1999),
` aff’d sub nom. Crosby v. National Foreign Trade Council, 530 U.S. 363 (2000) .................. 22
`
`North Am. Meat Inst. v. Becerra,
`420 F. Supp. 3d 1014 (C.D. Cal. 2019) .............................................................. 6, 8, 9, 10
`
`
`North Am. Meat Inst. v. Becerra:
`No. 19-8569, 2020 WL 919153 (C.D. Cal. Feb. 24, 2020) .......................................... 10
`
`
`Pharm. Research & Mfrs. of Am. v. Walsh,
`538 U.S. 644 (2003) .................................................................................................... 25, 26
`
`
`Pike v. Bruce Church, Inc.,
`397 U.S. 137 (1970) .......................................................................................................... 14
`
`
`Rocky Mountain Farmers Union v. Corey,
`730 F.3d 1070 (9th Cir. 2013) ......................................................................................... 25
`
`
`Rocky Mountain Farmers Union v. Corey,
`740 F.3d 507 (9th Cir. 2014) ........................................................................................... 28
`
`
`Rocky Mountain Farmers Union v. Corey,
`913 F.3d 940 (9th Cir. 2019) ............................................................................... 13, 27, 28
`
`
`Sam Francis Found. v. Christies, Inc.,
`784 F.3d 1320 (9th Cir. 2015) ............................................................................. 23, 24, 25
`
`
`South Dakota v. Wayfair, Inc.,
`138 S. Ct. 2080 (2018) ...................................................................................................... 14
`
`
`World-Wide Volkswagen Corp. v. Woodson,
`444 U.S. 286 (1980) .......................................................................................................... 15
`
`
`
`Statutes:
`
` 7
`
` U.S.C. § 1635 et seq .............................................................................................................. 2
`
` U.S.C. § 1635........................................................................................................................ 2
`
` 7
`
`
`
`
`
`iii
`
`

`

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`7 U.S.C. § 2036(a) ................................................................................................................... 3
`
` 7
`
` U.S.C. § 7502(g) ................................................................................................................... 3
`
`
`28 U.S.C. § 517........................................................................................................................ 5
`
`Cal. Health & Safety Code § 25990(a) ........................................................................... 7, 18
`
`Cal. Health & Safety Code § 25990(b)(2) ............................................................................ 8
`
`Cal. Health & Safety Code § 25991(e)(1) ............................................................................. 7
`
`Cal. Health & Safety Code § 25991(e)(3) ............................................................................. 7
`
`Cal. Health & Safety Code § 25991(u) ................................................................................. 8
`
`Cal. Health & Safety Code § 25993(a) ................................................................................. 8
`
`Cal. Health & Safety Code § 25993(b) ................................................................................. 8
`
`Cal. Health & Safety Code § 25995(e) ................................................................................. 6
`
`Proposition 2, https://go.usa.gov/xGp9V .................................................................. 5-6, 6
`
`Proposition 12, https://go.usa.gov/xGpXH ......................................................... 7, 18, 19
`
`
`Rule:
`
`Fed. R. App. P. 29(a) .............................................................................................................. 5
`
`
`Legislative Materials:
`
`Cal. Assembly Comm. on Agric., Bill Analysis of AB 1437,
`
`(Apr. 29, 2009) .................................................................................................................... 6
`
`
`
`
`iv
`
` U.S.C. § 7501(4) ................................................................................................................... 3
`
` U.S.C. § 7502(a) ................................................................................................................... 3
`
` 7
`
` 7
`
`

`

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`Cal. Assembly Comm. on Appropriations, Bill Analysis of AB 1437,
`
`(May 13, 2009) ..................................................................................................................... 6
`
`
`Other Authorities:
`
`Cal. Dep’t of Food & Agric., Draft Article 3 (July 22, 2020),
`https://go.usa.gov/xGpkH .......................................................................................... 4, 9
`
`
`Cal. Dep’t of Food & Agric., Draft Article 5 (July 22, 2020),
`https://go.usa.gov/xGwd2 ........................................................................................... 5, 9
`
`
`Cal. Dep’t of Food & Agric, Proposition 12 Implementation (2020),
`https://www.cdfa.ca.gov/ahfss/Prop12.html ............................................................... 8
`
`
`U.S. Dep’t of Agric., APHIS 2019 Impact Report (March 2020),
`https://www.aphis.usda.gov/publications/aphis_general/rpt-aphis-impact-
`2019.pdf ............................................................................................................................... 5
`
`
`U.S. Dep’t of Agric., Report to Congress: Livestock Mandatory Reporting (2018),
`https://go.usa.gov/xGpBJ ................................................................................................ 2
`
`
`
`
`
`v
`
`

`

`Case: 20-55631, 09/30/2020, ID: 11842814, DktEntry: 23, Page 7 of 36
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`INTRODUCTION AND INTEREST OF THE UNITED STATES
`
`The Constitution takes “special concern” with “the autonomy of the individual
`
`States within their respective spheres.” Healy v. Beer Inst., 491 U.S. 324, 335-36 (1989).
`
`Thus, “[n]o State can legislate except with reference to its own jurisdiction,” Bonaparte
`
`v. Tax Court, 104 U.S. 592, 594 (1881), and no State can “impose its own policy choice
`
`on neighboring States,” BMW of N. Am., Inc. v. Gore, 517 U.S. 559, 571 (1996). The
`
`Commerce Clause helps enforce these limitations by precluding “the application of a
`
`state statute to commerce that takes place wholly outside of the State’s borders.”
`
`Healy, 491 U.S. at 336.
`
`In 2018, California voters adopted Proposition 12, a ballot initiative that
`
`establishes standards for the confinement of pigs within the State and prohibits the
`
`sale of pork meat—including pork produced entirely outside the State—that does not
`
`comply with the requirements imposed on California farmers. The plaintiffs, two
`
`trade associations representing pork producers, claim that Proposition 12 violates the
`
`Commerce Clause by attempting to regulate extraterritorial conduct. The “critical
`
`inquiry” in resolving this claim is to determine “whether the practical effect of the
`
`regulation is to control conduct beyond the boundaries of the State.” Healy, 491 U.S.
`
`at 336.
`
`The district court erred by dismissing the complaint. The objective of the sales
`
`ban is to prevent animal cruelty in other States. California does not identify any in-
`
`state harm caused by the use of prohibited practices elsewhere and has deliberately
`
`
`
`

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`declined to argue that Proposition 12 protects California consumers. Supreme Court
`
`precedent establishes that California may not ban importation of wholesome products
`
`based solely on a desire to prevent what California considers animal cruelty that is
`
`occurring entirely outside the State’s borders. In addition to an improper purpose,
`
`Proposition 12 will also have the practical effect of controlling conduct in other
`
`States. The sales ban dictates to out-of-state farmers how they must confine pigs and
`
`requires them to forsake more efficient and cost-effective farming practices permitted
`
`in their home States. The Pork Council’s factual allegations, which must be taken as
`
`true at this stage of the litigation, confirm that Proposition 12 will have wide-ranging
`
`and costly consequences for participants in the interstate market for pork.
`
`In addition to the burdens imposed on pork producers, Proposition 12 is likely
`
`to have several adverse effects on functions and programs of the U.S. Department of
`
`Agriculture (USDA).
`
`First, changes to the pork industry caused by Proposition 12 will affect price
`
`reports created by the Agricultural Marketing Service (AMS) under the Livestock
`
`Mandatory Reporting Act of 1999, 7 U.S.C. § 1635 et seq. AMS publishes multiple
`
`daily and weekly reports regarding pricing and trade volumes for pork cuts and
`
`commodity market hogs for use by market participants to encourage competition. See
`
`7 U.S.C. § 1635; USDA, Report to Congress: Livestock Mandatory Reporting 14-15 (2018),
`
`https://go.usa.gov/xGpBJ. Most hogs sold today are priced on the basis of formulas,
`
`but there is a great deal of uncertainty regarding how those formulas will be affected
`2
`
`
`
`

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`by Proposition 12, including whether compliant hogs can be separated for price
`
`reporting, and how to capture any price premiums for those hogs. AMS will be
`
`required to dedicate resources to address these and other issues, a task complicated by
`
`the sheer number of market participants who will make decisions about how to
`
`respond to the law’s requirements, the short time frame available to achieve
`
`compliance, and uncertainty as to how producers will respond to any categorization
`
`decisions made by AMS (e.g., whether to treat compliant hogs as “value-added” hogs
`
`with special characteristics). The strain on AMS’s resources will only increase if other
`
`States follow California’s lead by adopting their own sales restrictions. Cf. Healy, 491
`
`U.S. at 336 (explaining that a statute’s “practical effect” includes “what effect would
`
`arise if not one, but many or every, State adopted similar legislation”).
`
`Second, Proposition 12 creates several layers of complexity to USDA’s
`
`administration of the Emergency Food Assistance Program (TEFAP). Under this
`
`program, USDA purchases surplus food commodities for distribution to eligible state
`
`agencies, which in turn distribute the food to local organizations providing nutrition
`
`assistance to the needy. See 7 U.S.C. §§ 2036(a), 7501(4), 7502(a), (g). As a general
`
`policy, USDA does not buy products that are specialized or geographic in nature.
`
`Compliance with local requirements such as Proposition 12 would frustrate that
`
`policy and impose additional burdens on the agency (especially here, given the
`
`complexities of the pork supply chain and the difficulty of tracing and segregating
`
`particular products, see ER 87-88). It is also unclear whether California would
`3
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`
`
`

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`consider the fees and other payments associated with the local distribution of USDA-
`
`purchased pork to be covered sales, and whether local organizations would expect
`
`USDA to provide documentation regarding the origins of its pork products. See Cal.
`
`Dep’t of Food & Agric., Draft Article 3, § 1322(e) (July 22, 2020),
`
`https://go.usa.gov/xGpkH (defining commercial sale to mean “trade or otherwise
`
`distribute in California commerce,” with an exception for donations to certain tax-
`
`exempt organizations).
`
`Third, any increase in prices of pork products attributable to compliance with
`
`Proposition 12 will reduce the buying power of the Supplemental Nutrition
`
`Assistance Program (SNAP). SNAP provides nutrition assistance to low-income
`
`individuals via a monthly benefits card (similar to a debit card) that can be used at
`
`authorized retailers to purchase food. If, as the plaintiffs allege, compliance with
`
`Proposition 12 “will increase production costs per pig” by 9.2% at the farm level,
`
`ER 114, SNAP benefits will not go as far when used for pork meat. This is an
`
`especially significant concern for California residents, who consume “about 13% of
`
`the pork sold in the U.S.” ER 106.
`
`Fourth, and finally, California’s efforts to enforce compliance with Proposition
`
`12 could create biosecurity concerns. Operators of sow breeding farms take care to
`
`reduce the transmission of infectious disease, including locating farms in isolated
`
`areas, filtering air that enters barns, and limiting access to the farm by outsiders.
`
`ER 123. Draft regulations implementing Proposition 12 would require inspections of
`4
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`
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`

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`farms at least every 12 months and at such additional times (“announced or
`
`unannounced”) as the State chooses. Cal. Dep’t of Food & Agric., Draft Article 5,
`
`§ 1326.5(a)(2) (July 22, 2020), https://go.usa.gov/xGwd2. Such inspections—which
`
`may be carried out by inspectors visiting multiple farms in succession—increase the
`
`risk of transmission of disease among farms. (This risk is increased further with each
`
`additional State that imposes its own inspection regime.) Such increased risk in turn
`
`leads to additional burdens on USDA’s Animal Plant and Health Inspection Service
`
`(APHIS), whose Veterinary Services program supports farmers by responding to
`
`animal disease emergencies. See USDA, APHIS 2019 Impact Report 4 (March 2020),
`
`https://www.aphis.usda.gov/publications/aphis_general/rpt-aphis-impact-2019.pdf
`
`(explaining that APHIS conducted 1,701 foreign animal disease investigations, mainly
`
`related to pigs in the U.S. and Canada).
`
`For these reasons, the United States files this amicus brief in support of the
`
`appellants pursuant to 28 U.S.C. § 517 and Federal Rule of Appellate Procedure 29(a).
`
`STATEMENT OF THE CASE
`
`Statutory Background
`A.
`In November 2008, California voters enacted Proposition 2, a ballot initiative
`
`intended to “prohibit the cruel confinement of farm animals.” Proposition 2, § 2,
`
`https://go.usa.gov/xGp9V. Proposition 2 added five new sections to the California
`
`Health and Safety Code that, beginning in 2015, would prohibit farmers in California
`
`from “tethering or confining pregnant pigs, veal calves, and egg-laying hens in a way
`
`
`
`5
`
`

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`that prevented them from lying down, standing up, fully extending their limbs, or
`
`turning around freely.” North Am. Meat Inst. v. Becerra, 420 F. Supp. 3d 1014, 1018
`
`(C.D. Cal. 2019) (NAMI I); see Proposition 2, §§ 3, 5.
`
`Soon after Proposition 2 passed, and before it went into effect, the California
`
`legislature adopted Assembly Bill 1437 (AB 1437). AB 1437 prohibited the sale of
`
`eggs in California produced by hens confined under conditions that would not
`
`comply with Proposition 2. NAMI I, 420 F. Supp. 3d at 1018. The legislative
`
`findings declared an intent “to protect California consumers from the deleterious,
`
`health, safety, and welfare effects” of consuming eggs from hens “exposed to
`
`significant stress,” including a potentially “increased exposure to disease pathogens.”
`
`Cal. Health & Safety Code § 25995(e). The legislative history indicates that the bill
`
`was also motivated by other concerns. A bill analysis explained that “the intent of this
`
`legislation is to level the playing field so that in-state producers are not disadvantaged”
`
`by having to comply with the requirements of Proposition 2 when out-of-state
`
`producers do not. Cal. Assembly Comm. on Appropriations, Bill Analysis of AB
`
`1437, (May 13, 2009); see also Cal. Assembly Comm. on Agric., Bill Analysis of AB
`
`1437, (Apr. 29, 2009) (“Some supporters stated this bill will level the playing field for
`
`California egg producers to remain competitive with out-of-state egg producers.”).1
`
`
`1 The bill analyses are available at https://leginfo.legislature.ca.gov/faces/
`billAnalysisClient.xhtml?bill_id=200920100AB1437.
`
`
`
`
`6
`
`

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`AB 1437 only addressed the sale of eggs. It did not address the production of pork or
`
`other products covered by Proposition 2.
`
`In November 2018, California voters returned to the issue of meat production
`
`with Proposition 12, the ballot initiative at issue here. The stated purpose of
`
`Proposition 12 is “to prevent animal cruelty by phasing out extreme methods of farm
`
`animal confinement, which also threaten the health and safety of California
`
`consumers.” Proposition 12, § 2, https://go.usa.gov/xGpXH. In this litigation,
`
`though, the State has forsaken any reliance on consumer health and safety. See Dkt
`
`No. 18-1, at 12 n.6. Thus, the only relevant objective for present purposes is the
`
`protection of animals.
`
`Proposition 12 attempts to prevent animal cruelty through two complimentary
`
`provisions. The first updates the confinement standards from Proposition 2.
`
`Proposition 12 prohibits a farmer within the State from knowingly causing any
`
`covered animal (i.e., a breeding pig, veal calf, or egg-laying hen) to be “confined in a
`
`cruel manner.” Cal. Health & Safety Code § 25990(a). As applied to breeding pigs,
`
`the definition of “confined in a cruel manner” carries forward the pre-existing “stand-
`
`up, turn-around” requirement, and adds a new requirement (effective December 31,
`
`2021) that each animal have at least 24 square feet of usable floor space. Id.
`
`§ 25991(e)(1), (3). The second operative provision effectively updates AB 1437.
`
`Proposition 12 prohibits a business owner from selling whole veal meat or whole
`
`
`
`7
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`

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`pork meat2 that the owner “knows or should know is the meat of a covered animal
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`who was confined in a cruel manner, or is the meat of immediate offspring of a
`
`covered animal who was confined in a cruel manner.” Id. § 25990(b)(2). Thus,
`
`Proposition 12 “operates in a manner similar to AB 1437” by extending the in-state
`
`confinement requirements to out-of-state farmers whose products are sold in
`
`California, but it does so for all covered animals. NAMI I, 420 F. Supp. 3d at 1019.
`
`Any violation of Proposition 12 is a misdemeanor punishable by fine (up to
`
`$1,000) and imprisonment (up to 180 days). Cal. Health & Safety Code § 25993(a).
`
`Proposition 12 also enables private enforcement by designating a violation of the sales
`
`ban as unfair competition under California Business & Professionals Code § 17200,
`
`which “provides a private cause of action” to those harmed by unfair competition and
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`“entitles an individual litigant . . . to injunctive and restitutionary relief.” Cort v. St.
`
`Paul Fire & Marine Ins. Cos., 311 F.3d 979, 987 (9th Cir. 2002); see Cal. Health & Safety
`
`Code § 25993(b).
`
`Proposition 12 requires the California Department of Food and Agriculture to
`
`issue regulations implementing the new law. The State missed the statutory deadline
`
`of September 1, 2019, but has since posted draft regulations for “informal comment.”
`
`Cal. Dep’t of Food & Agric., Proposition 12 Implementation (2020),
`
`
`2 Whole pork meat is defined as “any uncooked cut of pork” and does not
`include “combination food products, including soups, sandwiches, pizzas, hotdogs, or
`similar processed prepared food products.” Cal. Health & Safety Code § 25991(u).
`8
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`
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`

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`Case: 20-55631, 09/30/2020, ID: 11842814, DktEntry: 23, Page 15 of 36
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`https://www.cdfa.ca.gov/ahfss/Prop12.html. These draft regulations would require
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`any “out-of-state pork producer” raising “a breeding pig for purposes of producing
`
`whole pork meat for human food use in California” to be certified by the State. Draft
`
`Article 3, § 1322.1(b). To obtain certification, a producer must grant California’s
`
`inspectors access to “pastures, fields, equipment, structures, and houses where
`
`covered animals and covered animal products may be kept, produced, processed,
`
`handled, stored or transported, including the inspection of all enclosures for covered
`
`animals.” Draft Article 5, § 1326.1(c). The State would conduct such inspections at
`
`the time of certification, “at least once every 12 months thereafter,” and at such
`
`additional times as the State chooses. Id. § 1326.5(a)(1), (2). Producers must also
`
`maintain records “in sufficient detail to document” compliance with Proposition 12’s
`
`requirements. Id. § 1326.2(b)(1), (4)-(9). Such records would be subject to audit and
`
`inspection “at the discretion of ” the State. Id. § 1326.2(c).
`
`B.
`
`Prior Proceedings
`1. NAMI
`
`A trade association of meat packers and processers challenged Proposition 12
`
`and sought a preliminary injunction. NAMI I, 420 F. Supp. 3d at 1017. The
`
`complaint in that case claimed that “Proposition 12 violates the Commerce Clause of
`
`the United States Constitution by: (1) discriminating against out of state producers,
`
`distributors, and sellers of pork and veal; (2) impermissibly regulating extraterritorial
`
`activities beyond California’s borders; and (3) substantially burdening interstate
`9
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`
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`

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`Case: 20-55631, 09/30/2020, ID: 11842814, DktEntry: 23, Page 16 of 36
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`commerce in a manner that exceeds any legitimate local benefits.” Id. The district
`
`court in that case denied the motion for preliminary injunction on the ground that the
`
`plaintiff had “fail[ed] to raise any serious questions on the merits of [its] claims.” Id.
`
`at 1022; see also id. at 1024-34. The plaintiff appealed and this Court held argument on
`
`June 5, 2020. North Am. Meat Inst. v. Becerra, No. 19-56408 (9th Cir.).
`
`In the meantime, the district court denied the State’s motion to dismiss the first
`
`and third claims and dismissed the second claim on the ground that “Proposition 12’s
`
`in-state sales prohibition only applies to in-state conduct with allegedly significant out-
`
`of-state practical effects and not to conduct that takes place wholly outside
`
`California.” North Am. Meat Inst. v. Becerra, No. 19-8569, 2020 WL 919153, at *7 (C.D.
`
`Cal. Feb. 24, 2020) (quotation marks omitted). After the plaintiff filed an amended
`
`complaint, the district court stayed further proceedings pending this Court’s
`
`resolution of the prior appeal.
`
`2.
`
`This Litigation
`
`The National Pork Producers Council and the American Farm Bureau
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`Federation filed this separate action challenging Proposition 12. For convenience,
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`this brief will refer to the plaintiffs together as the Pork Council.
`
`The following facts are drawn from the Pork Council’s complaint.
`
`Approximately 65,000 pork producers sell around 125 million hogs a year in the
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`United States. ER 86. Pigs are raised throughout the country, but production is
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`concentrated in the Midwest and North Carolina. ER 59, 86. Very little pork is
`10
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`

`

`Case: 20-55631, 09/30/2020, ID: 11842814, DktEntry: 23, Page 17 of 36
`
`produced in California, not even enough to satisfy 1% of the State’s annual demand.
`
`ER 61. That demand, by contrast, is considerable. California’s pork consumption
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`accounts for 13% of the national market. Id.
`
`As a general matter, the pork industry uses a segmented production model
`
`involving multiple steps and transactions between the birth of a piglet on a sow farm
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`and the sale of meat to a consumer. ER 59, 87. A small percentage of pig farms are
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`“wean to finish,” meaning that pigs stay at the same farm throughout the production
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`process. ER 89. But most farms hold pigs only for a specific phase in the production
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`process, and pigs are moved among farms as they develop. ER 89. Farms send
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`finished pigs to packers, who slaughter and butcher the animals and sell meat to
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`wholesale or large retail customers. ER 87. Some pork producers are vertically
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`integrated, handling all or some subset of the steps between breeding and distribution,
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`but for others a supply chain might include many different actors. ER 86-87.
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`Further, one pig is cut into several different cuts of meat, which may then be
`
`combined with products from pigs raised by different producers and shipped to
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`different end users across the country. ER 83, 88. This makes pork a difficult
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`product to trace through the supply chain and the industry does not currently track
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`production details for most commodity products. ER 87-88.
`
`“Only a miniscule portion of sows in the U.S. are housed in compliance with all
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`of Proposition 12’s requirements,” which are “inconsistent with industry practices and
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`standards, generations of producer experience, scientific research, and the standards
`11
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`Case: 20-55631, 09/30/2020, ID: 11842814, DktEntry: 23, Page 18 of 36
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`set by other states.” ER 62. For example, approximately 72% of pork producers
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`house sows in individual stalls throughout gestation. None of these are in compliance
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`with Proposition 12’s space requirements. ER 106. Of the remaining 28% that use
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`group housing, almost all use breeding pens until pregnancy is confirmed, and the
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`group housing generally provides 16-18 square feet per sow. Neither feature complies
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`with Proposition 12. Id.
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`“Producers who attempt to alter their practices to comply with Proposition 12
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`face severe and costly burdens.” ER 109. For example, farms that use common
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`group housing practices would have to reduce inventories by 33%, and those that
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`currently use individual housing would need to reduce inventory by 42% or convert
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`existing structures. Id. Producers would face additional burdens obtaining required
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`permits and financing, and would also have to engage in new and less efficient
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`methods of animal husbandry, with attendant operating, training, and veterinary costs.
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`ER 110-11. Producers who comply with Proposition 12 would need to spend around
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`$300,000,000 “to reconstruct their sow housing and overcome the productivity loss
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`that Proposition 12 imposes.” ER 114. This translates into increased productions
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`costs per pig of 9.2% at the farm level. Id.
`
`The complaint includes two claims for relief. The first claim asserts that
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`“Proposition 12 violates the Commerce Clause and principles of interstate federalism
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`by regulating pork producers and the pork market outside the State of California.”
`
`
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`12
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`Case: 20-55631, 09/30/2020, ID: 11842814, DktEntry: 23, Page 19 of 36
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`ER 128. The second claim asserts that “Proposition 12 places excessive burdens on
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`interstate commerce without advancing any legitimate local interest.” ER 129.
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`The district court dismissed the complaint. With respect to the first claim, the
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`court held that Proposition 12 “does not regulate wholly out-of-state activity” because
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`it “applies both to California entities and out-of-state entities.” ER 9-10. The court
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`rejected the Pork Council’s argument that Proposition 12 improperly imposes
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`California’s housing requirements in other States because it believed that a statute
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`with “significant extraterritorial effects” is immune from Commerce Clause challenge
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`if “those effects result from the regulation of in-state conduct.” ER 10 (quoting
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`Chinatown Neighborhood Ass’n v. Harris, 794 F.3d 1136, 1145 (9th Cir. 2015)). The court
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`declared that California is free “to influence which hog products are sold in-state and
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`create incentives for less harmful farming practices.” Id. (citing Rocky Mountain Farmers
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`Union v. Corey, 913 F.3d 940, 952 (9th Cir. 2019) (Rocky Mountain II)).
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`The district court rejected the second claim based on its conclusion that
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`Proposition 12 did not impose a significant burden on interstate commerce. ER 11-
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`14. It did not determine whether the law advanced the State’s interest in preventing
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`anim

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