SCOTUS Lets Proposition 12 Stand

This article was originally posted at 10:31 a.m. CDT on Thursday, May 11. It was updated with additional information at 11:44 a.m. CDT and 3:45 p.m. CDT on Thursday, May 11.

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LINCOLN, Neb. (DTN) -- California's controversial Proposition 12 stands, as the Supreme Court on Thursday sided with the state and the law that prohibits the sale of pork in the state not produced according to California's production standards.

The ruling is a significant loss for the pork industry. Livestock groups have argued that if California's law stands, then other states can set separate requirements, making it harder to meet each state's production standard.

In a 5-4 ruling, the court affirmed a decision from the U.S. Court of Appeals for the Ninth Circuit. That court dismissed a lawsuit filed by agriculture interests against the law, on the grounds the industry groups did not state a claim of damages.

Proposition 12 makes it a criminal offense and civil violation to sell whole pork meat in California unless the pig it comes from is born to a sow that was housed within 24 square feet of space and in conditions that allow a sow to turn around without touching an enclosure. Proposition 12 applies to any uncooked pork sold in the state, regardless of whether it was raised in California.

Justice Neil Gorsuch wrote for a majority that included Justices Clarence Thomas, Sonia Sotomayor, Elena Kagan and Amy Coney Barrett, declaring the type of meat sold in California is not a constitutional issue.

"What goods belong in our stores?" he wrote. "Usually, consumer demand and local laws supply some of the answer. Recently, California adopted just such a law banning the in-state sale of certain pork products derived from breeding pigs confined in stalls so small they cannot lie down, stand up, or turn around. In response, two groups of out-of-state pork producers filed this lawsuit, arguing that the law unconstitutionally interferes with their preferred way of doing business in violation of this court's dormant Commerce Clause precedents. Both the district court and court of appeals dismissed the producers' complaint for failing to state a claim.

"We affirm. Companies that choose to sell products in various states must normally comply with the laws of those various states. Assuredly, under this court's dormant Commerce Clause decisions, no state may use its laws to discriminate purposefully against out-of-state economic interests. But the pork producers do not suggest that California's law offends this principle.

"Instead, they invite us to fashion two new and more aggressive constitutional restrictions on the ability of states to regulate goods sold within their borders. We decline that invitation. While the constitution addresses many weighty issues, the type of pork chops California merchants may sell is not on that list."

Scott Hays, president of the National Pork Producers Council and a Missouri pork producer, said in a statement the court's decision will hurt the industry.

"We are very disappointed with the Supreme Court's opinion," he said.

"Allowing state overreach will increase prices for consumers and drive small farms out of business, leading to more consolidation. We are still evaluating the court's full opinion to understand all the implications. NPPC will continue to fight for our nation's pork farmers and American families against misguided regulations."

Julie Anna Potts, president and CEO of the North American Meat Institute, said the court's decision leaves in place a law that "remains a costly burden to producers and provides no benefit to animals or consumers. We are disappointed in the court's decision and will carefully study the ruling to determine next steps."

Trish Cook, a pig farmer from Winthrop, Iowa, and president of the Iowa Pork Producers Association:

"The health and safety of their pigs are a top priority for Iowa pig farmers, and we are frustrated to see the Supreme Court uphold Prop 12," Cook said in a statement.

"This ruling sets a bad precedent, enabling other states to regulate commerce outside their boundaries. Consumers, especially low-income ones who rely on affordable nutritious pork to feed their families, will ultimately suffer due to higher food prices. Some small- and medium-sized producers who are already dealing with high feed costs and inflation, will also sadly go out of business as they struggle to comply."

Iowa Secretary of Agriculture Mike Naig said the court's decision likely will lead to similar laws being developed in other states.

"Having the safest, most abundant and most affordable food supply in the world is foundational to the American way of life," Naig said in a statement.

"Today's Supreme Court's decision in National Pork Producers Council v. Ross undermines that firm foundation. While today's ruling is focused on agricultural production, it will certainly creep into other industries. This disappointing decision sets a concerning precedent and opens the door for the largest states to dictate the laws and regulations for consumers and businesses to the rest of America. This sets the stage for a state-by-state patchwork of ever-changing and costly requirements that will increase the cost of production and drive higher costs for food and other consumer products."

Animal-welfare groups were quick to point to the court's ruling as a victory.

"Today's decision by the Supreme Court preserves states' rights to protect the interests of their own citizens, and creates markets for America's independent hog farmers," said Joe Maxwell, president of Farm Action and a Missouri hog farmer.

"Proposition 12 is a lifeline for farmers working to feed their communities and stay in business."

Farm Action said the law allows independent farmers to "compete in a market dominated by monopoly meatpacking corporations like Smithfield Foods, Tyson Foods, JBS USA and Cargill."

Kitty Block, president and CEO of the Humane Society of the United States, said the court's decision, "made clear that preventing animal cruelty and protecting public health are core functions" of state governments.

"We are grateful to our many outstanding allies who helped make Proposition 12 a success," Block said in a statement.

"We won't stop fighting until the pork industry ends its cruel, reckless practice of confining mother pigs in cages so small they can't even turn around."

A 2021 Rabobank report said the U.S. pork industry faces a daunting task to comply with the law.

"With less than 4% of the U.S. sow housing currently able to meet the new standard, Rabobank expects a shortfall in compliant pork to bifurcate the U.S. market, leaving California with a severe pork deficit (and high prices), while generating a surplus in the rest of the U.S. market," the report said.

Rabobank said Proposition 12's restrictions likely would lead more producers across the country to think twice about exporting to California.

If producers outside California adjust their operations to meet Proposition 12, Rabobank said production flows would drop by at least 25%, "which disrupts the entire supply chain."

Rabobank estimates at least 15% of U.S. hog producers would face "considerable cost" to convert their operations.

To make a move from the industry standard of 18 to 20 square feet per sow to a compliant spacing of 24 square feet per sow, a producer would require 20% to 25% more barn space or force a reduction in stocking densities, the study said.

Rabobank said an average barn could cost $1,600 to $2,500 per sow, or $3 million to $4.5 million total. The report said the average costs to comply may be made more difficult by rising building costs since the COVID-19 outbreak, estimated at about 129% higher since October 2020.

The California market is critical for many producers, as the state boasts the largest domestic market for pork at 14% of all U.S. consumption.

Based on current estimates of the number of producers likely to convert sow housing to meet California's demands, Rabobank said the U.S. producers would fill just 40% to 50% of demand.

Read more on DTN:

"Sizing Up Prop 12 SCOTUS Case Arguments," https://www.dtnpf.com/…

"Rabobank: Prop 12 Disrupts Hog Supply," https://www.dtnpf.com/…

Todd Neeley can be reached at todd.neeley@dtn.com

Follow him on Twitter @DTNeeley

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