By Matt Reese
The long-awaited May 11 ruling from the U.S. Supreme Court on California’s Proposition 12 animal confinement law was not in favor of the arguments made by the National Pork Producers Council (NPPC) and the American Farm Bureau Federation.
“We are very disappointed with the Supreme Court’s opinion,” said Scott Hays, NPPC president, and Missouri pork producer. “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.”
The groups initially petitioned the U.S. Supreme Court to take their case against California’s Prop 12 back in September of 2021.
The decision by the court was 5-4 with dissention from Justices Samuel Alito, Brett Kavanaugh, and Ketanji Brown Jackson and Chief Justice John Roberts.
“Companies that choose to sell products in various states must normally comply with the laws of those various states,” wrote Justice Neil Gorsuch in the court ruling. “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.”
Prop 12 was approved by California voters in in 2018, but the law’s impact spreads to other states and internationally. The law sets living space standards for sows, egg-layers, and veal calves. For the pork industry, Prop 12 requires that sows must have 24 square feet or more of space. There is very little pork production in California, but the state is a huge consumer of pork and the real rub with Prop 12 is that the regulations apply to products sold in California, with fines, jail sentences and civil action in place as punishment for selling pork, eggs, or veal from animals not raised according to the standards.
With California accounting for 15% of domestic U.S. pork sales, the industry now faces $1.9 billion to $3.2 billion in estimated costs of converting sow barns to group pens, according to University of Minnesota research, roughly $3,500 per sow. A 4,000-sow farm would have to invest $14 million to be compliant. The measure will also be a challenge for the meat processing industry, as product differentiation will be more important.
“We have been fighting Prop 12 here for going on four or five years. It’s been a hard fought battle,” said Michael Formica, National Pork Producers Council Chief Legal Strategist. “Perhaps what’s most disappointing is that a majority of the Supreme Court agreed with us that Prop 12 will cause significant harm to interstate commerce, especially to the U.S. pork industry. Unfortunately, we knew going in that this was not an easy fight to win, mostly because the areas of the Constitution that we had to address and litigate over are ones that are in constant state of flux and part of a highly charged political and legal environment. So, while the majority of the court agreed that this is causing significant harm to the pork industry and that this is having an impact on commerce, a majority of the court also agreed, and we had a couple of judges go on to the other side, that this ultimately is a political issue. Judges are not equipped to judge and make the determination, balance the competing interests that are at play when one state decides to reach outside its borders and regulate activity in another state. This is part of a longer-term fight and NPPC and myself stand here ready to continue to defend not just the pork industry, but the right of all farmers to farm and to raise food for consumers here in this country and across the world.”
Moving forward, many other questions remain unanswered, Formica said.
“One of the things we need to work out with California is what does this implementation period look like? There is currently an injunction in place on enforcement of Proposition 12 until July 1, but what exactly does that mean? What has to happen on July 1? Is that when product on the shelves needs to turn over? Is that when sows need to be moved into compliant Prop 12 housing? Is that when piglets need to be born by? There’s a number of questions,” he said. “We’re in active discussions and communication with California trying to work through this, trying to get clarity so we have minimal disruptions to the marketplace. Our concern is with the farmers. Our concern is also with consumers of California and making sure that they and their families continue to have a supply of pork.”
A possible silver lining for some hog producers is that, while NPPC lost the legal battle, it did buy some time to establish some compliant operations capable of supplying pork to meet to Prop 12 guidelines. Around 1% to 4% of the current U.S. pork industry production meets Prop 12 standards, according to the U.S. international Trade Commission.
“The prescriptive mandates Prop 12 had imposed had a timeline that was near impossible for the industry to comply with and so we set out both to challenge Prop 12, but also to give the industry time to begin working on figuring out a way to come into compliance,” Formica said. “Many of our producers took advantage of that time to begin investing in new facilities, new production and retrofitting existing production and have made substantial investments to that regard going forward.”
Compounding the challenges of the Prop 12 loss are also broad economic issues facing the nation’s hog industry as a whole, said Bryan Humphreys, NPPC CEO.
“This ruling comes at a difficult for our industry where we are facing high input costs and some of the most challenging economic times the pork industry has seen in 20 years. So, it’s not only a difficult ruling, it’s a difficult time for our industry to navigate through,” Humphreys said. “While it’s a challenge that we’re going to have to deal with as an industry, American pork producers are known for being resilient. We have been dealt blows before and we’ll learn to navigate and work our way through as best as possible. Never underestimate the desire of the American pork producer to succeed even in light of these challenging struggles that we face. We are evaluating all of our options and there are a number of conversations going on. We’ve seen comments from members of Congress too who are just as frustrated by this ruling as we are and, at this point, we haven’t ruled anything out.”