Rule Of Law: An Eggs-traordinary Tale Of Economic Reasoning

Jessica Medeiros-Garrison President, Rule of Law Defense Fund
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American eggs seem as wholesome as apple pie. A California law, however, puts the breakfast favorite at the center of a less than sunny side-up plan to cost American egg producers and consumers billions of dollars. The only obstacle remaining until the law’s 2015 effective date is the 225 year old Commerce Clause of the U.S. Constitution and the rule of law championed by Republican Attorneys General.

In 2008, California voters approved a ballot initiative, Proposition 2, which set new “living standards” for certain types of farm animals and significantly increased the minimum cage size for egg-laying hens. The law effectively made all conventional chicken cages obsolete in California.

Californians restricting their own agriculture economy fits squarely within the animal liberation agenda which has gripped the state. The cost to Californians is not nominal. According to a UC-Davis study, the law, set to go into effect on January 1, 2015, will increase the cost of egg production in California by 20 percent as compliance with the law will force significant investments of almost $400 million by California farmers – a cost that will certainly be passed along to the consumers.

Faced with the real-world cost of compliance, California lawmakers were prohibited by the state constitution from overturning the popular referendum. So without regard to federal law, they dispensed the bad medicine to all American egg producers to equalize the negative economics the voters wrought on their own egg industry. Passed in 2010, AB 1437, extends the California caging standards to all eggs sold in California from any state and creates a misdemeanor for noncompliance. A California grocer selling, for example, an egg from an Ohio hen not housed in the souped-up coop would incur a $1,000 fine and imprisonment for up to half a year.

States such as Iowa, Minnesota, Missouri, and Ohio account for about 70 percent of California’s egg imports. Egg exporters to California have two options under the law: incur major expenses to comply or forgo the California market, the eighth largest economy in the world.

The Republican attorneys general of Alabama (Luther Strange), Oklahoma (Scott Pruitt), and Nebraska (Jon Bruning), along with the Republican governor of Iowa and AGs of Missouri and Kentucky, filed suit earlier this year to stop California’s enforcement of the law. The Commerce Clause of the U.S. Constitution prevents an individual state from regulating interstate commerce or economic activity outside of its borders. Furthermore, existing federal law, 21 U.S. Code § 1052, already regulates egg production for eggs sold across state borders and expressly preempts the state law under the Constitution’s Supremacy Clause.

Alabama Attorney General Luther Strange summarized the situation saying, “[This] is about California’s attempt to protect its economy from its own job-killing laws by extending those laws to everyone else in the country. … If California can get away with this, it won’t be long before the environmentalists in California tell us how we must build cars, grow crops, and raise cattle too.”

Groups like the Animal Legal Defense Fund, Farm Sanctuary, and Compassion Over Killing all have filed a “friend of the court” brief to support California. Regardless of their claims about animal welfare and food safety, the intent of the law was laid bare during its committee hearing in 2009. The Bill Analysis provides the following:

Rationale. With the passage of Proposition 2 in November 2008, 63% of California’s voters determined that it was a priority for the state to ensure the humane treatment of farm animals. However, the proposition only applies to in state producers. The intent of this legislation is to level the playing field so that in-state producers are not disadvantaged. This bill would require that all eggs sold in California must be produced in a way that is compliant with the requirements of Proposition 2.

Reviewing the roster of plaintiffs on the suit, the reader may note that Governor Branstad of Iowa, not its Attorney General, joined this suit on behalf of the number one egg-producing state in the nation. Iowa produces 14.4 billion eggs annually and exports more eggs to California than any other state, over 1.07 billion per year. Thirty percent of the eggs consumed by Californians are laid in Iowa hen houses, about 90 percent of which are the conventional cages utilized throughout the United States. Iowa Attorney General Tom Miller decided to sit this one out, despite the devastating effect it portends for the Iowa economy and Iowa egg farmers. This, among other examples of selective action, or inaction, surely will weigh on the minds of Iowa voters when they choose between Miller and Republican candidate Adam Gregg, this November.

Rule of Law is a regular column from the Republican Attorneys General Association.