California’s Food Fight
2022-04-25 · Guest: Richard Epstein (Hoover Senior Fellow and NYU Law professor) · 52:35
Constitutional challenge to California Proposition 12 pork regulations
Bob Zadek and Richard Epstein discuss the constitutional implications of California’s Proposition 12, which regulates the living conditions of pigs raised for pork sold in the state. They explore the Dormant Commerce Clause, the potential for extraterritorial regulation, and how the Supreme Court might rule on the challenge brought by pork producers.
Topics: Proposition 12, Dormant Commerce Clause, National Pork Producers Council v. Ross, animal rights, interstate commerce, extraterritoriality, Supreme Court
Speakers: Bob Zadek, Richard Epstein
Introduction to California’s Pork War [00:00]
Bob Zadek: Hello, everyone. Welcome to the Bob Zadek Show, the longest-running live libertarian talk radio show in all of radio. Today and always, the show of ideas, never once the show of attitude. Thank you so much for joining us this morning. This is a very serious show. We, being the residents of California, are about to say goodbye to real bacon. If you enjoy real bacon, you will not, in the state of California, enjoy it much longer—at least if the Supreme Court does what many observers believe they’re going to do, or unless the Supreme Court does what we hope they will do.
The subject is California’s legislature’s war on pork producers around the country. California considers itself to be the most important state in terms of adjusting the lives of residents of the entire country, not just the state of California. As many of you know, California was an early adopter, and indeed probably the only state to adopt, something called standards—it was called CAFE—and it was standards for the amount of emissions a car could spew out the exhaust. And California said, for cars sold in the state of California, they have to be cleaner. Well, automobile manufacturers kind of cared about making sales in California, so they had no choice but to make cars that conformed to the California standards. Of course, they didn’t just manufacture cars for sale and use only in the state of California; they had to adjust all their cars, which means the rest of the country was dragged along for the ride.
So California is accustomed to being in the forefront of setting policy around the country. And California once again has flexed its extraterritorial muscle and has enacted legislation which dictates the environment in which pigs can be raised for the purpose of providing pork. And California has set certain standards: pigs have to go to the gym twice a week, and they have to be fed three square meals, and they have to have access to Netflix. So California has these rules, which we’ll get into. And if the pig, which ultimately ends up being in part bacon, is not raised according to California’s standards for the humane raising of pigs—well, the pork produced by that pig who grew up in an unhappy environment, that pork cannot be sold in California. And there has to be a certification, and the regulations are not yet established. Therefore, if a pork producer in South Carolina, a large, I believe, pork-producing state, doesn’t produce pigs that are raised in that happy environment, the pork cannot be sold in California. Therefore, probably, pork producers in the rest of the country are not going to sell their pork in California. Therefore, we get used to turkey bacon.
Does California have the right and the power under the Constitution to pass legislation that in effect reaches well beyond California’s borders and dictates how a pork producer in, for example, South Carolina must conduct his business? One would think, well, of course not. That’s not California’s business. They cannot so regulate. Or can they? That issue will be before the Supreme Court in a case entitled National Pork Producers Council v. Ross. Is that constitutional? Is that regulating interstate commerce? If so, who cares? To help us sort through these kind of hard issues, I’m happy to welcome back to the show Richard Epstein. Richard is a Hoover Senior Fellow and host of the Defining Ideas podcast, which I listen to within minutes of it becoming accessible. Richard also teaches law at New York University School of Law, my alma mater. Richard, these are complex constitutional issues. First, lay the landscape for us. Does the Constitution have much to say about this? If so, what? And can California pass legislation that affects what a pork producer in South Carolina, who has never set foot in California, can do? Can California affect how that hypothetical pork producer conducts his or her business?
The Commerce Clause and the Dormant Commerce Clause [06:00]
Richard Epstein: Okay, look, thanks so much. Let me just first start off with a small correction, which actually doesn’t matter a bit. This particular thing, Proposition 12, was a referendum that passed in 2018. It was not a piece of legislation. Now, it turns out this actually has some significance. Generally speaking, when you’re dealing with legislation, what you do is you have compromises, you have give and take, and one thing or another yields, and slowly you get a bill which essentially is not a pure version. When you do something by referendum, the people who have like-minded views do it; there’s no compromise whatsoever. And since the turnout on referendums may be very low, and the only people who vote are those who are interested in the particular issue, you could get a strong majority in favor of the referendum even though a majority of the people inside the state might think the other way. And this is sort of important because one of the questions you’re always worrying about is not only the interstate issues, but to what extent is there support in California for the pigs and for the pig farmers outside the state, what not, how could you accommodate those issues?
Putting all that into the question, when you start looking at the commerce powers of the United States, it turns out that this is a very difficult issue which has been shrouded in controversy since the first Supreme Court case on the matter, a case called Gibbons v. Ogden, decided around 1824. And what the Constitution says, as usual, is the soul of brevity. The sole relevant provision in this case is the so-called Commerce Clause, and it provides in three parts: the Congress shall have the power to regulate commerce with foreign nations, among the several states, and with the Indian tribes. And if you just look at it, there are two things that seem to become clear. It starts to talk about what it is that Congress could do; it doesn’t seem to have any direct statement of what it is that the states cannot. It also suggests that you have to have a definition of commerce which essentially works for the three relevant markets: for Indian tribes, for foreign nations, and of course among the several states. And it certainly is not the case that you have a huge commerce power in terms of being able to regulate the internal affairs of Great Britain or France in the way in which they do their agriculture. And so it’s always been a question of why it is that you have this power in the United States when this should be left to the states.
So what we do is the fixed stars today is we have a very broad commerce power, and it therefore follows that if the federal government wanted in any way, shape, or form to undo what happened in California, passing a federal statute that either prohibited the sale of pigs into California if they didn’t meet these standards or required California to take them would be perfectly permissible. At this particular point historically, it turns out that the federal government very frequently, if ever, interferes in any activity that starts to take place when states start to put limitations on what can happen with respect to other states. The earlier version of this was that the Congress would supervise the interaction; it never came to pass. So after this case called Gibbons v. Ogden, what happened is there were intimations in Supreme Court opinions that even if it turned out that there was some degree of silence in the federal legislation, the mere force of the Commerce Clause itself would block certain activities that took place within the states. And this was called the Dormant Commerce Clause, the part of the clause that starts to sleep. And it’s an extremely important kind of provision because if you do not have some kind of a Dormant Commerce Clause situation enforceable by the courts, you run the risk of serious balkanization in the United States.
And so what you do is you see the following kind of interesting contradiction. If you go back to the period between 1940 and 1950, what happens is the federal government’s power to consolidate the regulation of all farming in the United States is extremely strong. And what the United States did is, in fact, it used that power to set up agricultural cartels that raised prices and reduced output around the nations—I think a very unlaudable cause. And within five years, all of a sudden, you see other cases under the Dormant Commerce Clause where the argument is that the whole purpose of the Dormant Commerce Clause is to make sure that competition between the states shall thrive. And that meant, for instance, you could not impose on goods that came within the state taxes that you did not produce or impose on those goods that were made within the state. And there’s a case called Dean Milk which does that and says you can’t tell people who come from Illinois that they have to pasteurize their milk in a certain way by only using Wisconsin facilities, even if you say that some Wisconsin farmers have to yield to it in the city of Madison and others do not. So it’s very much there.
So what usually happened under these circumstances is that the Dormant Commerce Clause did was it prevented the states from engaging in activities which, when products came into the state, would put them at a competitive disadvantage. In this particular case, it doesn’t quite work because California has no real pig market anyhow; it’s virtually zero. And so then the question is, if you’re not worried about discrimination between state in-state and out-state of activities, are you still worried about what you talked about—the ability of California to impose rules, whether it’s on gasoline content or anything else, which would bind the nation? And there is a case from the early—about 1970—called Pike, in which the issue was whether or not the state of Arizona could require certain people who sold goods in Arizona to ship their goods interstate by using in-state facilities when out-state facilities provided them cheaper and better access. And what happened is Justice Stewart at the time said, look, if the burden on interstate commerce is very great and the benefits to people inside the state are only incidental, you can’t do it. So the Dormant Commerce Clause now applies when there’s no discrimination.
So this is the background when we come to this particular case. Easy case: suppose it could be shown that if you had goods that were prepared in the way in which farmers outside the state prepared them, they were more likely to have some kind of a bacterial infection or other kinds of contamination within them. Probably, and certainly you could inspect these things for risk that would be material, and it would be a closer case as to whether or not you could ban them if it turns out that you showed that the incidence of danger was fairly high so as to make the cost of individual inspections very large. In this particular case, there are many people in the brief who said, you know, we think the way in which you’re raising these cows is harmful, but what they never did allege was that any of the pigs that actually came into the state did carry a risk of public health in that particular fashion. So the traditional grounds for dealing with extraterritorial stuff, which is it poses a health hazard inside the state, is not available.
So then what’s the next thing that you can start to do? You say, well, look, folks in the state of California are really enormously sensitive, and what they do is they suffer deep psychic income loss if it turns out that they know that the food that they’re coming within the state is, in fact, food that does not meet this particular standard. And for that psychic income, we’re entitled essentially to ban it. The difficulty here is that the psychic disabilities could take place in all sorts of ways. And suppose there are people in North Carolina who like the South Carolina stuff, and they say we have deep satisfaction or dissatisfaction if it turns out that the state of South Carolina and its farmers yield to any regulations that are imposed by the state of California. So what they say in effect is you are required to use standard devices for farming inside your own state in order to ship stuff into my state, North Carolina. And then you get a deep contradiction: you are required to use one form of preparation for California, another form for North Carolina. You’ve got 48 other states out there, each of which could start to impose different kinds of requirements. And so the strong argument under these circumstances is, rather than having everybody mess this stuff up, none of them can start to tell people how they prepare the goods unless the goods prepared show some kind of risk of causing harm anywhere else.
The earlier cases in California and to some extent sanctioned by the Supreme Court seemed to think that the psychic interest may have weight. And the reason why the Supreme Court took this particular case is in a very exhaustive opinion prepared by Judge Sandra Ikuta in California. She upheld the California restriction. She’s a Republican judge, so this is not necessarily a partisan kind of issue. I think the case was taken by the Supreme Court because people started to realize that the extraterritorial issue was going to be a huge one and that they had to deal with it. Somebody could say, look, I mean, what happens is if we allow pigs prepared in South Carolina their way to come inside our state, it has an extraterritorial effect. I think that this is a bit exaggerated because at that point everybody can veto everything. And the better way in which to think about this is essentially to worry about the conflicts of interest and to say nobody can tell somebody else how to do things within its own state unless the product that comes out is defective.
Now, this interestingly enough, here there’s a second debate, and I’ll just stop with this, is if you look at the statute—or what the rather not the statute but the referendum says—is farmers must provide each sow with 24 feet of usable floor space and largely prohibits the use of individual stalls, even during the critical period between weaning and the confirmation of pregnancy, which when sows recover from the stress of giving birth and so forth. Now, it’s a huge battle here as to whether the folks in California got it right. You have to put it this way: they’ve got a bunch of people who have all sorts of motives, not because they want to take care of the cows; they’re basically against the use of meat in any form. They are kind of vegan-type individuals. And then it turns out you have to ask the question: these farmers have been doing this for a long time. If what they wanted was the appropriate situation, they would have adopted it voluntarily, particularly on the way in which you keep cows. Is it better to keep them alone or in groups? And you know, I’m not an expert on cows, but I tend to defer to people who do it for a living rather than for people who do not. So that’s the second layer of complexity here. And the danger is if, in fact, you allow these things to be psychic public health measures, it turns out that the people who adopt them through this referendum process actually don’t know what they’re talking about. We have no idea which way this thing is going to come out in the Supreme Court based upon past precedent, but my guess is the simple fact that they took this particular case suggests that there are a number of people who are extremely worried about this. So if I had to hazard a guess, I would assume that the statute would actually be struck down, not affirmed. If you ask me the question as to whether or not I see in this a political division, interestingly enough, if you look at the tradition of Dormant Commerce cases, it turns out that the left and the right are closer on those than they are on all sorts of cases where the federal government essentially dictates cartel practices for nationwide industry. So that’s the sort of background of this case. I’m sorry to have taken so much time, but I think it’s important to set the scene with some degree of clarity.
Animal Rights and Psychic Harm [17:23]
Bob Zadek: Now, there’s a bunch of issues to discuss, one of which is, I think it’s kind of important—it may not be important from the standpoint of constitutional law, the Dormant Commerce Clause and the like—but the proposition itself, which is therefore the law in California, is not one, Richard, I don’t think, that expresses any concern about the health and safety of any real serious concern about citizens. This is done to protect the pigs, not the humans.
Richard Epstein: Well, well, the justifications that come up is that it’s done to protect the psychic concern of citizens in California about the state of the pig. And what happens is it turns out if you allow psychic harms at the thought of things being done the way in which you don’t like, then nobody’s allowed to do anything that anybody disagrees with. There is a First Amendment component in this case, and let me explain briefly what it is. Everybody understands in certain ways that there are certain kinds of speech that you cannot do notwithstanding the fact that speech is protected. And so what happens is the two standard varieties of speech are on the one hand fraud or misrepresentation, and those are libertarian vices because you say something false to somebody, you could get them to enter into various kinds of bargains or transactions which are against their interest by misstating the relative value of what they receive and what they give off. And it’s also the case of defamation is a kind of speech which is false. And what I tell you, Bob, is that David Springer is a disappointing man and you should fire him forthwith. If I say that to you and the consequence is if you believe what I have said, you’re going to have to get a new staff attendant, and so people who have been defamed to third parties have always been allowed in some sense to sue. And those are basically pretty good kinds of rules because they’re designed to temper down against contracts we don’t like.
What happens is many people say, well, there’s a third category that we have to take into account, and that’s taking offense. So you burn your flag and I’m visibly disappointed in what you’ve done, or what you do is you engage in certain kinds of pagan religious rituals and they offend me deeply, and the list can go on. You decide to throw a benefit for Donald Trump or for Joe Biden, and other people take offense. And the rule here is exactly the opposite: the last thing you want to do is to encourage people to get really angry at what somebody else does so that they can now claim a harm by way of offensive behavior which allows them to shut down somebody else’s speech. That risk never arises if somebody has to commit acts of fraud or defamation; they have to trigger it. But in this way, what happens is the madder you start to get, the greater your entitlement against somebody else, which means that everybody else should have fulsome tirades against the people whom they like the least. So First Amendment doctrine says offense doesn’t carry it.
Well, if it doesn’t carry it under the First Amendment, my view is that these kinds of issues really don’t carry it anywhere else. So I would never, ever allow those kinds of things to start to take place. I just think it’s too risky under the circumstances. But that’s the way in which the argument is starts to be made. And you can see, in fact, you just get enough people to be offended about inconsistent things and the world comes to a halt. So I think, in effect, the kind of interest that we’re talking about, which is if people are offended, don’t ban the stuff. What you do is make the following situation: if you wish to sell goods in California and you know some people are offended, then what you have to do is to put on your packages that go to California “not made in accordance with the standard set out in Proposition 12.” And that could only be done with respect to California; you don’t have to do it anywhere else. And people who say I think the standards are just fine could buy it; everybody else doesn’t have to buy it. So that what you do is you get a partition of the local market and you don’t have to basically disrupt the production chains. You mentioned at the beginning there are basically two grim alternatives: one is if to comply with the California standards you have to redo your entire assembly line, there’s going to be a massive price increase and shortage nationwide; or what you have to do is you have to forgo the California market. The labeling situation I’m talking about is a very low-cost situation; it’s much more precise because it gets to only those Californians who really are upset about this unless everybody else buys it. And it’s therefore, in my view, should be much preferred. So if I were writing this opinion, I would say that’s how California can protect itself without disrupting the rest of the universe.
Animal Rights and Legal Standing [22:04]
Bob Zadek: Richard, you triggered a question in your presentation of a second ago that really got into my head. You explained that the proposition is defended by those who choose to defend it by saying it causes psychic loss of income, whatever phrase you use—I don’t want I’m not quoting you exactly.
Richard Epstein: That’s good enough.
Bob Zadek: That it found a harm to a California human. Now, my question is what if there was no even claimed harm to a human? The rule stands: you can’t sell pork which is the product of a pig who didn’t have access to Netflix, whatever the rule is. And that was the proposition. Is that fatal to its constitutionality?
Richard Epstein: Look, the world is becoming stranger. That is, for a long time, it turned out that the only way you could bring an action for harm was to prove that it was for harm to a human being. But since the beginning of the animal rights movement and now the animist movement, there have been many cases in which people purport to be representatives not of themselves because they own animals, but they are kind of guardians ad litem—that is, lawyers with respect to the litigation—and that the real principal is, in fact, the animal itself or the inanimate object itself. I regard those theories as slightly loony. And in effect, I think what happens is you cannot say somebody is going to be a principal if, in fact, the only way they could work is through an agent, and if the agent can never communicate with them because they simply have no way to cognitively figure out what’s going on. So I think the correct way in which to bring those particular lawsuits is to say that you are a guardian with respect to the animal whose interest has been compromised, and as their guardian, you require that something be done. The state can, in fact, try to do that in some ways, but at that point, you then get various kinds of defenses against guardians which wouldn’t apply perhaps against animals, and the kind of relief is going to be somewhat different. But for example, just take it simply: suppose you have a pet farm in which there are lots of animals and somebody wants to attack it. You could certainly sue them and protect your attacks because you’re protecting your property, and that property includes the animals. So I think that’s the way in which you want to deal with these things. The other suits, I think, simply go too far afield. And then, you know, you have to have the following thing: it turns out that, well, you’ve got a river that may be flooded if you take a dam and put it in place upstairs, so the river sues. But then if you basically protect the river, you’re going to hurt a gully somewhere else. So now what you’re going to have is the river against the gully; you have two non-animate parties suing one another, and you’re trying to figure out what’s going on in this case. I am not a favor of that.
The original impetus for this was a thing by an impish friend of mine named Chris Stone, who wrote a book, a paper called Do Trees Have Standing? Chris died recently, but we were colleagues together at the University of Southern California when he hatched up this whimsical idea. And just as fate would have it, one of his prize students was going to clerk for Justice Douglas the next year. And Chris managed to whip a copy of this particular article out to Judge Douglas, who managed to put it in there. And so Chris gets his great fame. I would say 99% of the attention given to a very eminent scholar and a wonderful human being was given for this one article because if you really go off the wall, there’re going to be all sorts of people who love to talk about it. He always relished speaking about this particular problem because his whimsical nature was such that he thought it just presented a whole series of conundrums, and the fact that he might have won or lost was to him not the issue; to him the issue was always the way the spirited debate happened to go. I’ve spent a fair bit of time working on animal rights cases, and I have to tell you that some of them are extremely strange on both sides. And indeed, this thing came up—I don’t know if you want the digression, but I’ll give it to you anyhow. I got a phone call from a reporter named William Glaberson of the New York Times back sometime in, I think it was April or May 1998, before we had the internet connections that were reliable. And Glaberson said that there was a course being taught at Harvard by a man, I believe it was Steven Wise, on not on animal law but on the rights of animals, and he wanted to know what my opinion of this. And I said, well, I’m going to put on my Roman law hat and let you know all the complexities associated with protecting Roman law animals. You could protect them from other people, how you conveyed them and all the rest of them, whether you were liable for them if they damaged somebody else. And I went through the details and said, look, you know, animals in a prehistoric society were much more important than they are today, and they’re darn important today. And then I made two kinds of remarks: one of them says if we’re going to protect animals, are we going to protect bacteria, even bacteria that attack animals? And the other remark that I made at the time is the animal rights movement were in effect in ancient Rome, so you couldn’t use your oxen on your fields, all human beings would starve. What happens is Steve takes these quotes and puts them in the article a couple days later, Glaberson, and my name appears on the front page. And so I’m doing an antitrust case in Charlotte, and I come back to my voicemail box and I’ve got 19 emails or voicemails. What’s going on? And it turned out everybody said, well, you’re now an instant expert on animal rights; will you appear on our show? And I felt so guilty about being an expert so-called that I actually learned something about the field and then did a number of shows on this kind of an issue. And the topic has always been that, and I think the answer in every case is guardianship is welcome, but that independent rights are not. And you cannot make the two things square. So I am not in favor of doing that. And certainly if you did do it, would California be able to protect animals that are located in South Carolina? I think the answer is no. Then we could have the same thing: you get animals in South Carolina, you get enthusiasts in California, and you get enthusiasts in New Mexico, and they have inconsistent protections for animals that are located within neither state but in South Carolina. And it just it just cannot work that particular way. Extraterritoriality has to be essentially a rule which says the folks in the state are the ones who run things that keep their contents there. It would like be saying, you know, we have a deep concern about animals in South Carolina; we’re not residents there, but even though we’re not residents in South Carolina, we ought to have the right to vote because we’re affected by what takes place in that state. And then what would happen is everybody could vote in the elections everywhere throughout the United States because we’re all affected by what everybody does everywhere.
Enforcement Challenges of Proposition 12 [29:00]
Bob Zadek: Richard, assuming for one reason or another the Supreme Court does not find the California proposition violates the Dormant Commerce Clause, how in the world—I want to go back and discuss a little history in a moment, because this is not California’s first foray into animal rights; there was the foie gras—I always pronounce it wrong—but we’ll discuss that in a second. But before we go there, just to put a historical perspective on all of this, before we go there, let us assume the proposition as passed stands. Therefore, there would have to be a certification process, I presume, and there would also have to be California government employees to inspect and enforce the statute. Just to show how incredibly thoughtless propositions are—not that legislation is per se thoughtful, but presumably at least a bit more thoughtful than a proposition, which is a matter of impulse and voting one’s heart. But give us your imagination: if this passes, what would the enforcement regime look like?
Richard Epstein: Well, I mean, this is a nightmare. But let’s start off. First of all, it’s not at all clear that California has the right to enter the state absolutely. And they’re going to say, look, it’s very simple: we won this case; you want your pigs to come into our state, what you have to do is to let us come and inspect them. This is not unheard of. Many pharmaceutical companies manufacture drugs for the American market overseas, and what happens is that the FDA insists that it inspect them at the point of manufacture and that they have some real power to watch their movement over the chain of control, the chain of custody, because it’s easy to contaminate or to remove or to add suspect products into the chain. So I think in effect that they would start to say this. Then the other state’s going to come and start to say, look, I mean, you want to come and inspect all this stuff? This is a very serious problem. How do we know that you’re honest agents? Suppose you have a zealot in your ranks, and what you do is you come in there and you say that a certain plant is non-compliant when in fact it is compliant. Do we have a chance to sort of challenge that particular decision that you’ve made? Or do we have it right to inspect you as you inspect them? So this issue, for example, is written seriously in terms of the Endangered Species Act, where there are sites which are thought to be endangered, and lots of people, ornithologists and so forth working for environmental groups, want to come on the land. And the farmers have absolute conniptions about this because their argument is you’re going to come on this land and you’re going to take a species that’s pretty rare and plant it on the land, you put it there, and then you’re going to say, hey, I found it there, and all of a sudden it becomes endangered habitat. So what happens is it’s always the case if you’re going to get an inspector from the out-of-state situation, you’re going to get an inspector from the inside who wants to inspect what the inspector has done so that there are going to be no mistakes. And you can see how easily this thing can start to do it. It’s also going to be a question, well, how many pig farms do you have and how often do you have to inspect? So one of the things you can do is to say we’re OSHA and we’ll make random inspections of one kind or another. Or another thing you could do is we want to basically inspect every pig as it comes off the line and every particular accommodation. And so what we want to do is to have permanent people who are going to stay there. Which means that not only do you have to allow us to inspect, but you have to allow us to have places where we can gather our resources inside the plant. Do we have to pay for that when we sit there, or is it required to be given by the state? It’s very difficult to sort of run these things because what you’re doing is you’re creating a regime of dual sovereignty. You’re never creating a regime in which the outsiders have exclusive control over the territory that they don’t own. And the moment you split the authority, you can see what happened. Add a third state that does the same thing, and you can see how the problems become sort of exponential. So I think in general, you’re not going to do this unless it’s like the FDA case where the only things that you inspect are those goods which are slated for delivery into the United States. You’re not going to select the rest of the stuff that’s going there because it turns out you have no interest in that. That’s why the difference between inspection of the product and inspection of the premises are completely different. You can inspect the product after it’s made, see that it’s properly sealed and so forth, relatively non-intrusive. But if you want to inspect the conditions under which the animals breed and raise their young, it turns out it’s far more intrusive. International commerce clause, international stuff, Dormant Commerce Clause stuff are often said to weigh a balancing of the interest. And if it turns out you put the inspection issue on the scale, that’s an argument which says don’t do this at all because if you’re in for a dime, you’re in for a dollar, and we’re going to have all sorts of very large and systematic conflicts that we’re going to have to solve before this thing can be resolved, can be settled. So I would look for this to be a source of chronic problems. Why? Because there’s going to be mutual distrust on both sides.
And also, if you inspect the product before it comes in, how do you—a pig carcass or part of a pig, the bacon part of the pig, whatever that is—I don’t mean to be a jerk, I don’t have any idea what it’s called—but the part of the pig that the bacon comes from, one piece of bacon, I imagine, could come from a lot of different pigs at a lot of different sources. How do you trace back unless every cell has a serial number? So it’s not only absurd, this statute, it’s—
Richard Epstein: Well, I mean, let’s put it this way: it presents certain novel administrative challenges.
Historical Context: Foie Gras and Wine [35:18]
Bob Zadek: I’ll accept that. Now, Richard, to put this in context, this is not the first time this type of issue has hit us originating from California. Give us a bit of historical perspective, because it’s instructive as to what might happen here with California and its animus towards foie gras.
Richard Epstein: Well, I mean, I actually had a brief role in working on that case sometime ago. It was another Dormant Commerce Clause case, but you’re not talking about the pig, you’re talking about foie gras, right? So the dislocations that are going to take place are on a tiny fraction of what’s going on, so it’s not the entire displacement of the energy. And what happened is the argument is that you could not serve it in American restaurants in California because of the way in which it was manufactured. And this was, in fact, actually a more concrete argument which says that in order to make foie gras, what you have to do is to stuff pigs in a way which is extremely uncomfortable.
Bob Zadek: Actually, they’re geese. I think they’re called geese. I wasn’t raised on a farm either, Richard.
Richard Epstein: Well, whatever the animal that makes it—if it was goose pâté, that’s fine—but whatever it is, it was thought to say that you had to distend the livers and create some sort of physical damage. That kind of allegation is not made in these particular cases. They say we think that these conditions are not humane, but they didn’t make an allegation that they were force-fed in any fashion. And the California law was upheld when again in the Ninth Circuit against a Dormant Commerce Clause challenge. But it sort of petered out, and people were very strongly offended that major restaurants could not supply this. And I don’t know whether or not it was repealed or whether it just withered away in some sense, but the issue essentially did not last. Now, what’s happening is foie gras is a delicacy, and you know, pork products are, in fact, dominant products today. I think that I my guess is there are at least as many and perhaps even more sales of pork products than there are beef products. So what you’re talking about is a massive disruption of the market. And what’s going to happen is all the people who didn’t vote on the referendum or otherwise are going to be outraged. And so you’re going to start to see immediate pushback starting to take place within the state legislature to get rid of the referendum, and then you’re going to see major pushback from all the pork producers around the country in the Congress to get federal kinds of protection. So the thing to understand about what’s happening in this litigation is the Supreme Court can end this by essentially striking down this particular referendum, or it can sustain the referendum, at which point the battle will then shift to other kinds of fronts. My guess is that you will also see some change in industrial organization. There will be some companies which will come by and say, look, everybody else is coming out of the California market. What we’re going to do is we’re going to be the California piggery; we’re going to start a new business, everything that we’re going to do is being keyed to California, we’re not going to sell anywhere else because the California market is large enough. And it may well be that you would develop some kind of market segmentation between new entrants and existing companies. That will take a little bit of time because you’re going to have to start new plants. The evidence seems pretty good that the only way you can change plants that are currently in existence to meet the California law is to make them financially utterly unacceptable with respect to the rest of the nation. That’s not going to happen. But if you had a captive California market with no competition, you would have both a safety feature on the one hand and oddly enough a monopoly feature on the other hand, and it would be an open question as to how much of that stuff that you could sell. As I said, I don’t think it’s going to come to that. I think that the fear that people have that they’re going to be just too many other kinds of laws that would create massive disclosures will run. And the doctrinal point is if you don’t have a domestic market so that there’s a discrimination test which is easy to protect outsiders, it’s much more dangerous when you don’t have to worry about hitting your own people when you hit everybody else. And so what the Supreme Court should say is as follows: if, in fact, there is a domestic population of some substantial amount and you impose the restrictions on the locals as opposed to the outsiders, as on both of them, once you do that, you know, there’s going to be a brake and they’ll be a little bit more careful. But if there’s no local party, then oddly enough when there’s no discrimination issue on the table, you want a higher, not a lower level of scrutiny, a higher level of scrutiny by the United States Supreme Court. I believe that is, in fact, the correct argument. Whether it’s going to be articulated in one form or another, nobody ever knows. One of the things that’s a wildcard is that you have a lot of amicus briefs, and it turns out that the people who are arguing the case may have tunnel vision in some particular way or they may be amazingly perspective, you know, seeing. So the quality of the argument, the questions of the judges, who happens to be a clerk or whatever it is, there’s always that kind of random element when you deal with the United States Supreme Court.
Political Shortcuts and the Ideological Divide [40:21]
Bob Zadek: Richard, there’s a phrase in political science called voting shortcuts. Ilya Somin over at the Scalia School of Law often refers to that in his book, The Ignorance of the American Voter. Now, so voting shortcuts: is when this if when the Supreme Court takes this case, is this one that will be decided along predictable constitutional law orientation lines, typically conservative versus progressive, if there’s such a thing in the Supreme Court? And as to the public at large, the voting public often relies upon voter pamphlets as to to help them understand issues through a certain prism. Can you identify the outcome based upon the political orientation either of a voter if this was on the ballot or in the Supreme Court?
Richard Epstein: Well, look, let’s just take the two issues. One of them is how people vote when they have rational limitations on the amount of time that they could spend on election. And the other thing is how the issue is set up and resonated in the Supreme Court given the liberal-conservative divide. On this first particular question, what Somin’s referring to is rational ignorance has been well understood in the political science literature, which is you have one vote out of many, it’s not likely to change the outcome of any election. You feel a kind of a duty and an entitlement as a citizen to think about this, but you’re going to look for shortcuts. You’re going to figure out, well, who’s endorsing this bill or who’s opposed to this bill. And it may well be that you rely on the shortcuts to determine the way in which you vote. And on many issues which are on the ballot, it’s like this. This was a referendum, so it got a little bit more attention because there was no other issue to worry about. But if it turns out that this thing should be upheld and there will be a change, my view about it is it’s a big enough issue that it will not suffer from voter ignorance. You’re telling millions upon millions of people who spend millions upon millions of dollars what they can and cannot eat in the state of California; this is going to provoke a huge uproar and response. So if you’re trying to figure out whether this is how it is you amortize water bonds, you’re going to have this rational stuff, but I would think this is more closer to kinds of issues about what do we do with a woke curriculum when we’re running a public school system. And you know, there’s rational ignorance in the state of Virginia, but when the Republican won the election, this was the issue that drove it. And so I think this can be a driving issue.
When it comes to the Supreme Court, I think the answer is as I mentioned to you earlier: the Dormant Commerce Clause seems to have bipartisan support. The left is generally against monopolies that are imposed by the state as is the right. The difference between the two parties is whether the federal government has the power to rule comprehensively or whether or not it’s going to be limited only to those particular cases that involve transportation and like activities. So I cannot imagine that this thing will produce that kind of situation. To give you an illustration of why other things matter: the two most reluctant members of the Supreme Court in dealing with the Dormant Commerce Clause were the late Justice Scalia and his often traveling companion, current Justice Thomas. Their objection to this is not because of the economics; they’re constitutionalists. And their attitude is that the ambiguities that I referred to at the beginning, namely that there is only an affirmative power for Congress to pass legislation and it has to be an implied power on the states to limit it, they are very skeptical of that, so they want to give the commerce clause in its Dormant aspect a very narrow reading. So what happens is you’ve got a kind of funny loop. And if you took somebody like Justice Kagan or Justice Breyer, who’s retiring, and my view is that the new Justice Jackson, when she’s appointed, will be sort of like that, they do not have this sort of very literalist, formalist interpretation of the Constitution; they’re much more free-wheeling. So the formalist objections are not going to raise are not going to weigh very heavily with them. And then the question is how many justices of the Supreme Court think that states should be able to impose parochial barriers on competition? And that number is pretty small in terms of the outright merits. And even Justice Scalia, when he had to deal with some of these cases, was prepared to strike down tax schemes at the state level which were particularly odious. “Oh, we’re going to tax you and the foreign companies equally, but then we’re going to give a rebate to the domestic companies,” which is just a fraud. And the guy who struck it down was Justice Scalia when he was on the court. So I think the answer is I would see this as being a more bipartisan situation. I do not see anybody who is going to be strongly opposed to it. My guess is if there were a dissent, the most likely person would be Justice Thomas, who would dissent from his argument would be there is no real Dormant Commerce Clause, I’m only going to apply it in the narrowest possible way, and this case does not fall within the prohibition on discrimination, and so therefore I won’t touch it. I’ve tried to explain to you why I think discrimination is an important category, easy to please, but that states are much more dangerous when they can impose restrictions on other states even though it turns out that they do not have any product of their own. That is, I think the argument goes exactly the opposite: the conventional wisdom is if you don’t have a situation and you can be have a free hand to do what you want with foreign goods, knowing that there’s going to be no domestic opposition to you on based upon domestic producers, that’s where the real danger is. And I hope that that’s the argument that will be emphasized when this case gets to the Supreme Court. I assume it’s going to be held over to next year given the fact that we’re already in late April, and that will mean that Justice Breyer, who would be I think sympathetic to the Dormant Commerce Clause claim, would be that way. Justice Jackson, you remember, was his clerk. And I see no reason to think on this kind of issue that she would not be inclined to follow the way in which he had gone. So again, I mean, who knows what’s going on? The drift of the local court lower court precedents have been in favor of things like the California statute, but I think on this issue the Supreme Court is likely to be more interventionist than was the Ninth Circuit.
Bob Zadek: So what’s your handicap number prediction on the outcome?
Richard Epstein: I think it’s 75% it will be struck down, and I think the likely vote is probably 7-2 or 8-1. I’m reasonably optimistic on this particular case, even though there are many cases that come to the Supreme Court in which, you know, I have no idea what’s going to happen or why.
Comparison to Wine Shipping and Wayfair [47:14]
Bob Zadek: Now, as you were presenting the issue, you presented a hypothetical—I think it involved Arizona involving goods—it was a real case, yeah. Real case, no, I mean, but it created in my mind a related question: states for many years have been with regard to alcoholic beverages generally and wine in particular have prevented the interstate transport through Amazon and the like of wine from California into New York State where because it hurt New York State vineyards. When you were describing the Dormant Commerce Clause, doesn’t that run four-square against it? And those laws, I don’t think exist anymore, but they were—
Richard Epstein: They’ve been struck down in some cases. The difficulty, and I’d have to go back and review all this stuff, is that alcohol was subject to the 18th Amendment when the prohibition took place, and then it was undone with the 21st Amendment, which gave states residual power to regulate exclusive power over the sale of wines within their own borders. And so what that does in effect is it does create a constitutional authorization for giving local preference. And the tension between that on the one hand and the general stuff having to do with interstate commerce on the other makes it a trickier kind of case. I agree with you in the end, I think that the arguments that this is rampant discrimination, worst kind of thing, is beginning to gain traction. So I think whether it’s as a political matter or as a legal matter, these kinds of restrictions are likely to disappear. On the other hand, if you remember there’s a famous case called Wayfair, and what this involved was a question as to whether or not local states can impose a user tax on goods that were shipped within their states or whether this was blocked by the Dormant Commerce Clause. And what the Supreme Court through Justice Kennedy said, everybody’s entitled to do this because otherwise there’s a tax abuse. And now what has happened is everybody has managed to impose taxes on just about everybody else, and it’s going to hurt and has hurt the interstate market. So there’s always a question as to whether or not Congress is going to try to do something to limit the amount of taxes that local governments can impose on the shipment of foreign goods, which means that this is a constant and recurring problem. That is, if you think of the billions upon billions of dollars of stuff that go back and forth across state lines every year and realize that there’s always a very complicated contest between the federal government and the states on the way in which these things are regulated, you can see that this problem is not going to stand or fall, disappear no matter how it is that the the pig case comes out in the Supreme Court. This has been a battle that has gone on since the beginning of time, 1824. To give you but one last example, I guess we’re sort of running out of time, there is a great case called Champion v. Ames from 1903 or so, and the question was if lottery tickets are legal in the state of New York where they are made and are legal in the state of Pennsylvania where they are sold, can the federal government prevent their shipment in interstate commerce on the grounds that they are illegal when they’re sitting in the train? And the Supreme Court said that they could impose those kinds of restrictions. Most of us, myself included, think it’s a kind of a wrong distinction on this situation, but it shows you that this is a problem which was really important very early on. And you may not care much about lottery tickets, but within a couple of years you pass the Food and Drug Administration, and now the question is what sort of power does the federal government have over the shipment of drugs made in one state and sold in another? And what you applied to lottery tickets you now apply to drugs, and so it turns out that you have a huge extension of federal jurisdiction in an area that really matters in a way that lottery tickets do not. It’s a kind of a landscape sort of issue. You can do an epic on the joint on the Dormant Commerce Clause. There are a lot of people who know more about this than I do, but what all I’m trying to say in this situation is that I have strong feelings about this particular case, but treat it not as a war but one of the battle in a war that that began long before the case came about and will last long after the case is decided.
Bob Zadek: And I have to end on a low note just with an observation: we are now going to have not gun runners but bacon runners who are going to drive to the Nevada-California border somewhere around Truckee and are going to be emptying the trunk of their car with bacon grown illegally in South Carolina, and people in trench coats will be paying cash to buy it. That’s what’s in store for the residents of California.
Richard Epstein: Well, I mean, you get it’s the same thing with cigarette taxes. So for bacon and tobacco at the same time, and you and I will be middlemen and take our piece.
Bob Zadek: Thank you so much, Richard, for giving us the time right before the weekend. And thank you to my friends out there for sparing an hour of your time to listen to Richard and I talk about the soon-to-be bacon-less California. How sad. Thank you and have a nice weekend, everyone.