March 19, 2014

Has California Laid an Egg? Challenge to Animal Welfare Initiative May Clip California Regulators' Wings

Seller Beware: Consumer Protection Insights for Industry

A lawsuit by the Missouri Attorney General over California's unique egg regulations may hatch into something much bigger -- and eventually restrict the scope of California's expansive Safer Consumer Products regulation (aka Green Chemistry).

As a result of Proposition 2, enacted by California voters in 2008, egg-laying hens in California will soon be living the good life. As of January 1, 2015, they must be provided with room to stand up, lie down, and extend their wings, which is supposedly impossible in widely used conventional cages.

But after the law was expanded in 2010 to prohibit the sale of eggs in California from out-of-state farms that do not comply with Proposition 2's requirements (see A.B. 1437), Missouri's Attorney General cried foul. He filed a lawsuit on behalf of Missouri egg farmers, who sell one-third of their eggs to California consumers, challenging the constitutionality of that law. Nebraska, Oklahoma, Alabama, Kentucky, and Iowa also joined the complaint in the Eastern District of California. They allege that the California regulations violate the Commerce Clause of the United States Constitution because "the bill's true purpose was not to protect public health, but to protect California farmers from the market effects of Prop 2."

California has sent mixed messages regarding the law. The legislature stated its purpose was to "protect California consumers from the deleterious, health, safety, and welfare effects of the sale and consumption of eggs derived from egg-laying hens that are exposed to significant stress and may result in increased exposure to disease pathogens including salmonella." But a legislative committee originally stated its intent was to level the playing field for California egg producers, and the Governor's message on signing on the bill crowed about its benefits for "California egg producers and animal welfare" – without mentioning the law's supposed health and safety benefits. The court will need to unscramble these motives. If the court finds that California sought to discriminate in favor of the economic interests of its own citizens, then California will have to show it had no other viable alternative to protect its consumers from supposedly unhealthy eggs produced out of state – a high bar. But even if the court treats the law as non-discriminatory, California won't get over easy. Instead, the egg-producing states can challenge the law if its burden on interstate commerce – the cost of renovating chicken coops producing over five billion eggs a year – is "clearly excessive" in comparison to its "putative local benefits."

The outcome of this lawsuit could have wider implications for California laws that seek to condition the sale of goods in California on compliance with state regulations. Most important, California's Green Chemistry (Safer Consumer Products) regulations authorize wide-ranging restrictions on consumer products sold in the state, regardless of where they are produced. Implementation of the regulations may be subject to challenge based on their extraterritorial reach. As we reported here, the agency recently announced the first three sets of "priority products" to be regulated. Manufacturers of the identified products will be required to engage in an analysis of whether a safer alternative to the identified chemicals could be used, including analysis of the environmental impacts of the manufacturing process, regardless of whether they occur in California. The agency will then take regulatory actions, which may include labeling requirements, use restrictions or bans, end-of-life waste management, and "[a]ny other outcome the department determines accomplishes the requirements."

For decades, California requirements such as Proposition 65 and Volatile Organic Compound limits for personal care products have set de facto national standards for consumer products based on claimed health and environmental impacts inside California. We soon will see whether the interstate commerce clause will clip California's regulatory wings or whether the Missouri AG will end up with egg on his face.

© Arnold & Porter Kaye Scholer LLP 2014 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.

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