An Urban's Rural View

This Country, California

Urban C Lehner
By  Urban C Lehner , Editor Emeritus
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When big, powerful countries toughen their rules for agriculture, foreign farmers who export to those countries can come under pressure to conform. California isn't a country, but its law mandating more stretching room for egg-laying hens may well have a similar effect. That's especially true now that the Supreme Court has batted down a challenge to that law.

Will farmers in the six states that brought the challenge (Missouri, Nebraska, Iowa, Oklahoma, Alabama and Kentucky) -- or, for that matter, in any other state -- invest in new cages to comply with California law? Will they skip the investments and forfeit their ability to sell their products in California? Or will a new legal challenge relieve them of the necessity to choose?

The farmers' dilemma is exacerbated because while California is legally only one of 50 states, it has the economic power of a very big and powerful country. Consider:

-- California is far and away the largest agricultural state. Its annual ag receipts in the mid-$40 billion range exceed those of the next largest state -- Iowa -- by more than $10 billion.

-- California has by far the largest population of any state. At 39 million it has almost a third more people than Texas (27 million) and almost twice as many as Florida (20 million).

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-- California has a gross domestic product of $2.4 trillion, which means its economy is larger than the economies of France, Italy, India or Brazil.

-- Indeed, if California were a country, it would be the world's sixth largest economy. By one calculation, it would rank No. 1 in median income per person among industrial countries at $60,000. The comparable income for the No. 2 country, Luxembourg, is only $53,000.

This is the kind of big, powerful market farmers in other American states covet. Under the constitution's Interstate Commerce Clause, they have a right to sell there. The lawsuit brought by the six states alleged that California's law abridged that right.

We don't know whether a court would agree because the states' case wasn't decided on its merits. A federal district court dismissed the suit, saying the states lacked standing to sue on behalf of their citizens. An appeals court upheld the dismissal and the Supreme Court on May 30 declined to hear the case.

The appeals court said the dismissal should be "without prejudice," meaning the states can try again. It will be interesting to see if they try.

The appeals court said states can only sue on behalf of their citizens if they're representing more than just an identifiable group of those citizens, like egg farmers (http://tiny.cc/…). The states said they were also suing on behalf of their citizens as consumers, who would be hurt by rising egg prices. Because they brought the suit before the law took effect, however, the appeals court dismissed the worry about rising prices as "speculative."

With the law in effect, states could, if they wanted to, sue again. They could get an economist or two to model the price impact, which might give them standing in a court's eyes. Then they could try to prove either that California's law restricts interstate commerce or that federal law preempts state law on this issue.

That would be an interesting case, one that would take up fundamental questions of federalism touching on the power of states to set their own product standards. If California lost, the courts would, in effect, be telling states they can only regulate how their producers produce if they're willing to put burdens on them that out-of-state competitors don't have to meet. If the six states lost, the case would affirm the ability of big, powerful states to influence how farmers farm across the country.

Even if the states prevailed, out-of-states producers might someday find themselves forced to move to bigger cages. For California is not just a big, powerful state. It's the place where many trends originate. They take off in California before they sweep the nation. One of the many reasons the Japanese car companies had so much success early on in the U.S. market was they put their design studios in California, not Detroit.

If consumers and voters in other states want more stretching room for animals, they'll get it. It's too early to say whether California has launched another trend. What's clear is that the verdict may be rendered as much in the court of public opinion as it is in a court of law.

Urban Lehner can be reached at urbanize@gmail.com

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Urban Lehner
6/8/2017 | 9:10 PM CDT
That's a good question, but not simple to answer; depends what you include and exclude in the calculus. WalletHub.com does an annual survey that includes a lot of things. For 2017, it ranks California #46 in the list of most federally dependent states (http://tiny.cc/0l7ply). Other studies have indicated that red states generally receive more back from Uncle Sam than blue states. To be clear, that means receive more back than they pay in, not receive more in absolute dollars. Blue states are more likely to pay more in taxes than they get back.
Dunlop Farms Inc. Dunlop
6/7/2017 | 11:32 AM CDT
I'm curious, if California were its own country. How much foreign aid do they receive from the US Govt.? The reason I point this out is that I'm sure they do receive considerable funds from the Federal Govt. for a variety of things. Therefore even residents of Kansas like my self send money to California, and that should give me at least some say in what regulations they pass that negatively affect my bottom line.