Amicus Curiae Brief — National Pork Producers Council, et al., Petitioners v. Karen Ross, in Her Official Capacity as Secretary of the California Department of Food & Agriculture, et al.

Supreme Court briefNov 18, 2021

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No. 21-468

In the Supreme Court of the United States

NATIONAL PORK PRODUCERS COUNCIL & AMERICAN

FARM BUREAU FEDERATION,

Petitioners,

KAREN ROSS, ET AL.,

Respondents.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

BRIEF OF AMICI CURIAE IOWA PORK

PRODUCERS ASS’N, MINNESOTA PORK

PRODUCERS ASS’N, IOWA FARM BUREAU

FED’N, MINNESOTA FARM BUREAU FED’N,

AND MINNESOTA AGRIGROWTH COUNCIL

IN SUPPORT OF PETITIONERS’ REQUEST

FOR CERTIORARI

ELDON MCAFEE

Counsel of Record

Brick Gentry P.C.

6701 Westown Parkway, Suite 100

West Des Moines, IA 50266

(515) 274-1450

Eldon.McAfee@brickgentrylaw.com

Additional Counsel Listed on Signature Page

TABLE OF CONTENTS

TABLE OF AUTHORITIES....................................... ii

INTEREST OF AMICI CURIAE ................................ 1

SUMMARY OF ARGUMENT ..................................... 3

ARGUMENT ............................................................... 4

I. Through Proposition 12, California

Projects Its Animal-Rights Regulatory

Scheme into Other States and Extensively

Regulates Commercial Transactions that

Occur Entirely Outside of California. ..................... 7

II.

The Implementation of California’s

Proposition 12 Will Force Hog Farmers in

Iowa, Minnesota, and Other States to Make

Significant Capital Investments and Lose

Significant Profits through Less Efficient

Operations. ............................................................. 15

III. The Implementation of California’s

Proposition 12 Will Force Many Small,

Independent Hog Farmers to Sell or Shut

Down Their Farms................................................. 18

IV. The Implementation of California’s

Proposition 12 Significantly Increases the

Risk of Spreading Swine Diseases. ....................... 21

CONCLUSION .......................................................... 25

APPENDICES

APPENDIX A ........................................................... 1A

APPENDIX B ........................................................... 7A

TABLE OF AUTHORITIES

Cases

Baldwin v. G.A.F. Seelig, Inc.,

294 U.S. 511 (1935)..................................................6

Brown-Forman Distillers Corp. v. New York

State Liquor Authority,

476 U.S. 573 (1986)..................................................5

Great Atlantic & Pacific Tea Co., Inc. v.

Cottrell,

424 U.S. 366 (1976)..................................................4

H. P. Hood & Sons, Inc. v. Du Mond,

336 U.S. 525 (1949)..................................................4

Healy v. Beer Institute, Inc.,

491 U.S. 324 (1989).............................................. 5, 6

Pike v. Bruce Church, Inc.,

397 U.S. 137 (1970)..................................................5

South Dakota v. Wayfair, Inc.,

138 S. Ct. 2080 (2018)..............................................4

Rules

Cal. Health & Safety Code § 25990(b)(2) ...................7

Cal. Health & Safety Code § 25991(a), (f) ..................7

Cal. Health & Safety Code § 25991(e) .................. 7, 16

Cal. Health & Safety Code § 25993(a) ...................... 13

Cal. Health & Safety Code § 25993.1 ................... 8, 12

Iowa Code § 459.304(6) ............................................. 23

Iowa Code § 459.601(3) ............................................. 23

iii

U.S. Const. art. I, § 8, cl. 3 ..........................................4

Treatises

2020 Iowa Pork Industry Report 7 (May 2020),

available at https://www.

iowapork.org/iowa-pork-industrycontribution-study-2020/2020-iowa-porkindustry-report/ ..................................................... 20

Iowa Dep’t of Natural Resources, Confinement

Facility (non-NPDES) On-Site Inspection

Standard Operating Procedure 2 (Sept. 11,

2013) (available under Work Plan

Agreement, Materials, & Reports at

https://iowadnr.gov/EnvironmentalProtection/ .............................................................. 24

Iowa State Univ0 Extension, Historical Hog &

Lamb Prices, available at

https://www.extension.iastate.edu/agdm/

livestock/pdf/b2-10.pdf (last updated Feb.

2021) ....................................................................... 22

Joleen Hadrich, Megan Roberts, & Brigid

Tuck, The Role of Hog Farmers in

Minnesota’s Rural Economy 1 (May 15,

2020), available at

https://conservancy.umn.edu/

handle/11299/214887 ............................................. 20

Laura Valeria Alarcón, Alberto Allepuz, &

Enric Mateu, Biosecurity in Pig Farms: A

Review, Porcine Health Management, Mar.

2021, at 4-5 ............................................................ 23

Lee L. Schultz & Glynn T. Tonsor, Assessment

of the Economic Impacts of Porcine Epidemic

Diarrhea Virus in the United States, 93 J.

Animal Sci. 5111, 5111-13 (Nov. 2015) ................. 22

Swine Fever’s Huge Economic Toll in China,

598 Nature 11 (Oct. 7, 2021) ................................. 21

USDA Agric. Marketing Serv., Swine Direct

Reports, https://www.ams.usda.gov/marketnews/

swine-direct-reports (last accessed Nov. 10,

2021) ....................................................................... 11

USDA Animal & Plant Health Inspection

Serv., African Swine Fever,

https://www.aphis.usda.gov/aphis/

ourfocus/animalhealth/animal-diseaseinformation/

swine-disease-information/african-swinefever/

african-swine-fever (last modified Oct. 19,

2021) ....................................................................... 23

USDA Animal & Plant Health Inspection

Serv., USDA Statement on Confirmation of

ASF in the Dominican Republic,

https://www.aphis.usda.gov/aphis/newsroom

/news/sa_by_date/sa-2021/asf-confirm (July

28, 2021) ................................................................. 21

USDA Nat’l Agric. Statistics Serv., Quarterly

Hogs & Pigs 8 (Sept. 24, 2021), available at

https://usda.library.cornell.edu/concern/publ

ications/rj430453j........................................... 2, 3, 11

USDA Nat’l Agric. Statistics Serv., Quick

Stats, https://quickstats.nass.

usda.gov ................................................................. 11

INTEREST OF AMICI CURIAE

The Iowa Pork Producers Association, Minnesota Pork Producers Association, Iowa Farm Bureau

Federation, Minnesota Farm Bureau Federation, and

Minnesota AgriGrowth Council submit this amici

curiae brief in support of Petitioners. 1

The Iowa Pork Producers Association is a

grassroots organization with more than 4,500

members across Iowa. The organization serves as a

unified voice that represents the interests of Iowa’s

pork producers and promotes a sustainable, socially

responsible, and globally competitive pork industry.

The Minnesota Pork Producers Association

celebrates the story and advocates to protect the

interests of the state’s pork producers. The organization is funded by voluntary contributions from more

than 700 member-farmers who raise the majority of

pigs produced in Minnesota and works to establish the

pork industry as a responsible supplier of high-quality

pork.

The Iowa Farm Bureau Federation is an independent, non-governmental, voluntary organization

of farm families. The organization has more than

153,000 members, which includes members who raise

pork and farmers who grow feed for animals.

1 No counsel for a party authored this brief in whole or in

part, and no entity or person, other than amici curiae, their

members, and their counsel, made a monetary contribution

intended to fund the preparation or submission of this brief.

Counsel of record for the parties received notice of amici’s intent

to file this brief at least ten days before its due date. The parties

have consented to the filing of this brief.

The Minnesota Farm Bureau Federation consists of 78 county farm bureaus with nearly 30,000

member families who are farmers, ranchers, and

others who have an interest in the future of agriculture. The Minnesota Farm Bureau Federation was

formed in November 1919 and, for the past 102 years,

has advocated on behalf of the beliefs and policies of

its members to promote agriculture.

The Minnesota AgriGrowth Council is a nonprofit, nonpartisan member association that serves as

a positive voice for, and champions long-term sustainability, competitiveness, and growth in, Minnesota’s

agriculture and food industry. The organization has

approximately 150 members (consisting of both individual persons and other organizations) and serves as

a convener, advocate, and thought leader that seeks

to access opportunities and create common solutions

to challenges facing our agri-food system.

These organizations share a common interest

in the issues raised by Petitioners—they represent the

interests of farmers who, despite being located halfway across the country from California, will bear the

brunt of the additional capital expenditures,

increased operating costs, intrusive inspection and

certification requirements, and grave biosecurity

risks that California seeks to impose through Proposition 12. Iowa is the largest hog producing state in

the country and, as of September 1, 2021, has an

inventory of 24,400,000 pigs (including 900,000

breeding pigs and 23,500,000 market hogs), which is

nearly one-third of the total swine herd in the United

States. See USDA Nat’l Agric. Statistics Serv.,

Quarterly Hogs & Pigs 8 (Sept. 24, 2021), available at

https://usda.library.cornell.edu/concern/publications/

rj430453j. Minnesota is the second largest hog producing state in the country with an inventory of

9,000,000 pigs (including 530,000 breeding pigs and

8,470,000 market hogs). See id. These organizations

are thus uniquely positioned to address the practical

problems that their farmer-members will face as a

result of California’s implementation of Proposition

12.

SUMMARY OF ARGUMENT

This Court has a long history of applying the

Commerce Clause, consistent with other federalism

principles, to protect the individual sovereignty of

each state and to prevent one state from projecting its

unique regulatory schemes into other states or using

such regulatory schemes to burden interstate commerce. Although California’s Proposition 12 may initially appear to regulate only the sale of pork within

California, the practical impact of this law, and the

regulations by which California proposes to implement this law, is to require hog farmers located in

Iowa and Minnesota (and elsewhere throughout the

world) to subject themselves to California’s regulatory

regime and administrative agents. The effects of this

law will be catastrophic and threaten our Nation’s

supply of safe and wholesome pork. Accordingly, compelling reasons exist for this Court to grant certiorari

review of the Ninth Circuit’s decision in this

proceeding.

ARGUMENT

The Commerce Clause authorizes Congress

“[t]o regulate Commerce with foreign nations, and

among the several States . . . .” U.S. Const. art. I, § 8,

cl. 3. The Commerce Clause was intended “ ‘to create

an area of free trade among the several States,’ ”Great

Atlantic & Pacific Tea Co., Inc. v. Cottrell, 424 U.S.

366, 371 (1976) (quoting McLeod v. J. E. Dilworth Co.,

332 U.S. 327, 330 (1944)), and “ ‘to avoid the tendencies toward economic Balkanization that had plagued

relations among the Colonies and later among the

States under the Articles of Confederation,’ ” South

Dakota v. Wayfair, Inc., 138 S. Ct. 2080, 2089 (2018)

(quoting Hughes v. Oklahoma, 441 U.S. 322, 325-26

(1979)). Or as this Court further explained:

Our system, fostered by the Commerce

Clause, is that every craftsman shall be

encouraged to produce by the certainty

that he will have free access to every

market in the Nation, that no home

embargoes will withhold his export, and

no foreign state by customs duties or regulations exclude them. Likewise, every

consumer may look to the free competition from every producing area in the

Nation to protect him from exploitation

by any. Such was the vision of the

Founders; such has been the doctrine of

this Court which has given it reality.

H. P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 539

(1949).

This Court generally applies “a two-tiered

approach to analyzing state economic regulation

under the Commerce Clause.” Brown-Forman

Distillers Corp. v. New York State Liquor Authority,

476 U.S. 573, 578-79 (1986). First, state laws and regulations may not “directly regulate or discriminate

against interstate commerce” or “favor in-state economic interests over out-of-state interests.” Id. at 579.

Second, when a state law or regulation “has only indirect effects on interstate commerce and regulates

evenhandedly, [this Court] ha[s] examined whether

the State’s interest is legitimate and whether the burden on interstate commerce clearly exceeds the local

benefits.” Id.; accord Pike v. Bruce Church, Inc., 397

U.S. 137, 142 (1970). Under either approach, however,

“the critical consideration is the overall effect of the

statute [or regulation] on both local and interstate

activity.” Brown-Forman, 476 U.S. at 579.

Separately, this Court has also recognized “the

Constitution’s special concern both with the maintenance of a national economic union unfettered by

state-imposed limitations on interstate commerce and

with the autonomy of the individual States within

their respective spheres.” Healy v. Beer Institute, Inc.,

491 U.S. 324, 335-36 (1989). Accordingly, “a statute

that directly controls commerce occurring wholly outside the boundaries of a State exceeds the inherent

limits of the enacting State’s authority and is invalid

regardless of whether the statute’s extraterritorial

reach was intended by the legislature.” Id. at 336. The

Court identified this proposition as a minimum

constitutional requirement and further emphasized

that “[t]he critical inquiry is whether the practical

effect of the regulation is to control conduct beyond the

boundaries of the State,” including “how the challenged statute may interact with the legitimate regulatory regimes of other States and what effect would

arise if [other States] adopted similar legislation.” Id.

(emphasis added). In other words, “the Commerce

Clause protects against inconsistent legislation

arising from the projection of one state regulatory

regime into the jurisdiction of another State.” Id. at

336-37; accord Baldwin v. G.A.F. Seelig, Inc., 294 U.S.

511, 521, 524 (1935).

As described more fully in the Petition, the

Ninth Circuit’s decision in this case ignored this

Court’s unambiguous language in Baldwin, BrownForman, and Healy and improperly limited the prohibition on extraterritorial regulations to price control

or price affirmation statutes. (See Pet. 21-26.) In doing

so, the Ninth Circuit’s decision conflicts with prior

decisions by the Fourth, Sixth, and Seventh Circuits.

(See Pet. 26-28.) Further, aside from the specific prohibitions of extraterritorial regulation, the Ninth Circuit failed to meaningfully balance California’s purported local interest in implementing Proposition 12

(which is non-existent) against the substantial burdens that this California law will impose on interstate

commerce in pork. (See Pet. 28-32.) Accordingly, based

solely on the legal questions presented, compelling

reasons exist for this Court to grant certiorari review

of the Ninth Circuit’s decision in this case.

But in addition to the important constitutional

issues presented, which are adequately covered in the

Petition and other submissions to this Court, the prac-

tical impact that California’s implementation of Proposition 12 will have on pork production throughout the

Nation—and the substantial disruption it will cause

to a critical component of our food supply—is significant and separately provides a compelling reason for

this Court to review the Ninth Circuit’s decision in

this case.

Through Proposition 12, California Projects

Its

Animal-Rights

Regulatory

Scheme into Other States and Extensively

Regulates Commercial Transactions that

Occur Entirely Outside of California.

The operative language of California’s Proposition 12 provides as follows: “A business owner or

operator shall not knowingly engage in the sale within

the state of . . . [w]hole pork meat that the business

owner or operator knows or should know is the meat

of a covered animal[ 2] [that] was confined in a cruel

manner or is the meat of immediate offspring of a

covered animal [that] was confined in a cruel manner.[ 3]” Cal. Health & Safety Code § 25990(b)(2). The

2 A “covered animal” includes a “breeding pig,” which is

defined as “any female pig of the porcine species kept for the

purpose of breeding [that] is six months or older or pregnant.”

Cal. Health & Safety Code § 25991(a), (f).

3 With respect to pork, the statute defines “confined in a

cruel manner” to mean “[c]onfining a covered animal in a manner

that prevents the animal from lying down, standing up, fully

extending the animal’s limbs, or turning around freely” and,

“[a]fter December 31, 2021, confining a breeding pig with less

than 24 square feet of usable floorspace per pig.” Cal. Health &

Safety Code § 25991(e).

law includes a “good faith defense” that allows a business owner who sells pork to “rel[y] in good faith upon

a written certification by the supplier that the . . .

whole pork meat . . . was not derived from a covered

animal who was confined in a cruel manner, or from

the immediate offspring of a breeding pig who was

confined in a cruel manner.” Cal. Health & Safety

Code § 25993.1.

On its face, the statutory language may appear

to only regulate transactions (sales of pork) that occur

within California. But an examination of the statute’s

practical effects in the context of pork production, as

well as the regulations by which California proposes

to implement the law, demonstrate that the statute

will impose the state’s extreme animal-rights regulatory scheme on farmers across the county (and North

America, see Brief of Canadian Pork Council as

Amicus Curiae in Support of Petitioners) and will

regulate numerous businesses that are located, and

commercial transactions that occur, entirely outside

of California. In other words, a closer examination of

the law reveals California Proposition 12’s purported

regulation of sales of pork in California to be a wolf in

sheep’s (or, in this case, pig’s) clothing.

In order to understand the practical effects of

California’s Proposition 12, one must begin with the

general background of hog farming in the United

States. The biological cycle of a hog begins when a sow

or gilt 4 is bred. After a gestation period of approxi4 A sow is a female pig that has previously had at least

one litter of pigs, while a gilt is a female that has not yet had a

litter of pigs.

mately 115 days, the sow will give birth to, or farrow,

a litter of piglets with ten to fourteen piglets in each

litter. The piglets are weaned approximately three

weeks after they are born, after which they may be

referred to as “weaned pigs” or “nursery pigs.” In most

cases, 5 the pigs will be raised until they are ready for

market. In the meantime, the sow that farrowed the

piglets will come into heat again approximately five

days after the pigs are weaned and may be re-bred at

that time. A typical breeding sow will farrow approximately two litters per year.

The growing period of a market hog generally

lasts approximately 22 to 24 weeks after weaning

(approximately 26 weeks from birth) and may be

divided into two phases: (i) a nursery phase begins

when the pigs are weaned and continues until they

reach approximately 40 to 60 pounds (usually

between six and ten weeks after birth), after which

the pigs may be referred to as “feeder pigs” or

“finishing pigs”; and (ii) a finishing phase that

continues until the pigs reach market weight (which

can vary significantly but is generally around 240 to

300 pounds).

Historically, hog production occurred mostly on

small, diversified farms that grew crops and raised

multiple species of livestock—these farmers typically

had a small number of sows that they would breed and

raise the offspring produced from birth until they

were ready to market (referred to as a farrow-to-finish

5 In some cases, weaned pigs may be raised to maturity

and kept for future breeding.

operation). Over the last 40 years, however, hog production in the United States has shifted dramatically

to meet consumer demands. Today, most hog farms

are larger and specialize in one phase of production.

For example, most sows are housed in gestation and

farrowing facilities. After new pigs are weaned, they

are moved from the sow farm to a nursery barn, and

eventually to a finishing barn, on different sites where

they are housed with a group of other pigs that are

approximately the same age and size. 6 This specialization and grouping of similar animals allows hog

farmers to feed specialized rations and provide specialized care that improves animal welfare and meat

quality, maximizes efficient use of land and feed,

reduces input costs, prevents or mitigates disease outbreaks, and improves the environmental sustainability of the farming operation.

Some hog farmers use a vertically integrated

production model in which the producer will typically

own one or more sow farms and will contract with

other farmers to provide nursery and finishing barns

and labor to care for the pigs. Under this model, the

producer will own the hogs from the time they are

born until they are marketed and sold to a packer to

be processed into pork. Integrated production models

generally involve large numbers of sows and pigs.

But other hog farmers continue to operate independent farms that are generally smaller and operate

a single phase of the production cycle. For example, a

6 In some cases, the nursery and finishing phases may be

combined at a single farm, which is often referred to as a weanto-finish operation.

farmer may operate a sow farm that maintains a herd

of breeding sows and sells weaned pigs on the open

market. Other hog farmers may own and operate

nursery farms and buy weaned pigs and later sell

feeder pigs on the open market. Still other hog

farmers may own finishing farms and buy weaned

pigs or feeder pigs from other farmers and then sell

them to a packer when the hogs reach market weight.

In this way, a single pig may be bought and sold two

or three times before it is eventually processed into

pork. In order to facilitate these markets, the USDA

Agricultural Marketing Service publishes on a weekly

and quarterly basis National Direct Feeder Pig

Reports that report numbers and average prices for

weaned pigs and feeder pigs sold on the open market.

See USDA Agric. Marketing Serv., Swine Direct

Reports,

https://www.ams.usda.gov/market-news/

swine-direct-reports (last accessed Nov. 10, 2021).

As noted above, most hogs in the United States

are produced in the upper Midwest (Iowa is the

largest hog producing state in the country and Minnesota is the second largest hog producing state based

on current inventories). See USDA Nat’l Agric. Statistics Serv., Quarterly Hogs & Pigs, supra at 8. In contrast, California’s total inventory of pigs as of December 1, 2020, was just 99,000. See USDA Nat’l Agric.

Statistics Serv., Quick Stats, https://quickstats.nass.

usda.gov (search the Animals & Products sector,

Livestock group, Hogs commodity, and Hogs –

Inventory data item). The reason for this geographic

distribution of hog production is quite simple—the

Midwest is the largest producer of corn and soybeans

(the two primary components of hog feed) in the world,

and feed costs, which generally account for

approximately one-half of the cost of producing a market hog, are therefore lower in this region than in

other states. Further, most packers have also located

their processing facilities in these same areas to be

near the supply of finished hogs and minimize transportation costs.

Thus, although Proposition 12 ostensibly regulates only the sale of pork in California, retailers and

wholesalers who purchase pork for ultimate resale in

California will necessarily require the packers who

produce such pork (virtually all of whom are located

outside of California) to provide written certification

that the pork complies with Proposition 12’s requirements. See Cal. Health & Safety Code § 25993.1.

Those packers, in turn, will require the hog farmers

from whom they purchase the market hogs that are

processed into pork products to provide the same

certification, even though the entire transaction

related to such market hogs almost certainly will have

occurred outside of California. 7 And this requirement

will either exclude smaller independent hog farmers

from the market entirely (if they do not have a regular

supplier and instead purchase weaned pigs from other

farmers) or require them to condition their purchase

of the weaned pigs (which transaction again almost

certainly occurs outside of California) on certification

7 Most modern packing plants process thousands of pigs

every day, and the meat from different pigs is often intermingled

to package pork products to efficiently meet consumer demand

for particular products around the world. Accordingly, it

generally is not feasible for packers to segregate pork that may

be sold in California from other pork that may be sold elsewhere.

of compliance with California’s extreme regulatory

regime. In other words, the practical effect of California’s implementation of Proposition 12 is to burden

interstate commerce in market hogs entirely outside

of California’s jurisdiction.

If there is any remaining doubt that California’s Proposition 12 regulates hog farming outside of

California—and not merely sales of pork within California—such doubts are erased by the regulations proposed by the California Department of Food and Agriculture to implement the law. 8 The proposed regulations require all pork distributors 9 in California, and

“any out-of-state pork distributors selling whole pork

meat into California for purposes of human food use

in the state,” to register on an annual basis with the

California Department of Food and Agriculture. (Pet.

App. 107a-109a.) As a condition of such registration,

however, a pork distributor must maintain records

that are “sufficient for purposes of an audit trail.”

8 Proposition 12 directed that “[t]he Department of Food

and Agriculture and the State Department of Public Health shall

jointly promulgate rules and regulations for the implementation

of this act by September 1, 2019.” Cal. Health & Safety Code

§ 25993(a) (emphasis added). But California ignored this clear

statutory directive and did not formally publish proposed rules

until May 25, 2021. (See Pet. App. E-G.) More than two years

after the deadline—and less than two months before the law is

scheduled to take effect—the state still has not promulgated final

rules or regulations for the implementation of the law.

9 The proposed regulations define a “pork distributor” as

“a person or facility engaged in the business of commercial sales

or distribution of whole pork meat (as a pork producer or

otherwise) to an end-user in California.” (Pet. App. 104a.)

(Pet. App. 111a.) An “audit trail,” in turn, requires

documentation that pork sold in California be “from

pork producers that hold a valid certification as a certified operation issued pursuant to Article 5 of this

Chapter.” (Pet. App. 100a.) Thus, the proposed regulations effectively require that pork producers—i.e.,

hog farmers who operate sow farms (Pet. App. 104a)—

be certified by the State of California, regardless of

where they are located, if the packer to whom the

weaned pigs they produce may eventually be sold,

sells any pork in California.

In order to obtain certification, a pork producer

must file an application with the State of California

and subject themselves to onerous recordkeeping

requirements (including all production records and

records of all sales of hogs) and their production facilities to annual inspections by an agent of California.

(Pet. App. 123a-130a.) In addition to the required

annual inspections, the California Department of

Food and Agriculture “may require that additional

inspections be performed by an accredited certifying

agent [not necessarily the original certifying agent

selected by the farmer] or the Department.” (Pet. App.

129a.) This could include radical animal rights

activists who may become accredited by California as

certifying agents. (See Pet. App. 119a, 136a-140a.) In

other words, Proposition 12 requires hog farmers who

own and operate sow farms to submit information

about their operation to the State of California and

allow any person designated by the state to travel to

and enter their farms (whether those farms are

located in Iowa, Minnesota, Canada, or anywhere

else) to inspect their operations and records. It is dif-

ficult to conceive of a more direct or intrusive regulation of activities occurring entirely outside of California’s jurisdictional boundaries.

The brazen scope of California’s effort to project

its extreme animal rights regulatory scheme and

directly regulate farming activities that occur entirely

in other states presents a grave threat to the

federalism principles upon which our Nation was

founded and a compelling reason for this Court to

review the Ninth Circuit’s decision affirming the constitutionality of Proposition 12.

II.

The Implementation of California’s Proposition 12 Will Force Hog Farmers in Iowa,

Minnesota, and Other States to Make Significant Capital Investments and Lose

Significant Profits through Less Efficient

Operations.

As the Petitioners alleged in their Complaint,

most sow farms in the United States (72 percent) currently house pregnant sows and gilts in individual

maternity pens throughout gestation. (Pet. App.

204a.) This system limits the ability of the sow or gilt

to turn around but protects the animal from aggression and injury from other animals and competition

for access to food and water; improves hygiene and

prevents disease by separating food from manure;

allows the farmer to provide individualized feed

rations and veterinary treatments to the animal;

reduces sow stress; and protects farm workers from

injuries from sows, which can weigh more than 400

pounds. (Pet. App. 151a, 172a-175a, 185a-186a, 222a.)

Other sow farms house pregnant sows and gilts in

group pens with other animals; these pens typically

provide 16 to 18 square feet of space per sow, but these

farms also generally use individual pens for 30 to 40

days from the time a sow finishes weaning a litter

until a new pregnancy is confirmed. (Pet. App. 173a175a, 186a-191a, 204a.) The American Association of

Swine Veterinarians recognizes that either housing

system is appropriate as long as every animal (i) has

access to appropriate food and water; (ii) is protected

from injury, disease, and environmental extremes;

and (iii) is provided with good air quality and proper

sanitation. (See App. 2A. 10) Thus, the selection of the

best housing system is properly left to the individual

farmer based on his or her unique management practices and experience.

Under Proposition 12, however, this decision is

removed from the experts—i.e., the farmers with their

veterinarians and consultants—and is usurped by the

animal activists and bureaucrats in California. Specifically, Proposition 12 prohibits the use of individual

maternity pens and requires all sow farms that produce weaned pigs that may eventually be processed

into pork and sold in California to use group housing

with at least 24 square feet of space per animal. Cal.

Health & Safety Code § 25991(e). As noted above,

nearly all existing sow farms do not meet these

requirements. Hog farmers will therefore be required

This letter represents that comments that the

American Association of Swine Veterinarians submitted to the

State of California in connection with the proposed rules to

implement Proposition 12.

to undertake extensive (and expensive) capital

improvements to remodel or expand existing barns or

build new farms to meet California’s unscientific and

arbitrary sow housing requirements.

The cost of these capital improvements will be

enormous. Dr. Barry Goodwin estimates that the construction of a new swine facility to house 5,200 sows

in compliance with California’s Proposition 12 will

cost $15.6 million. (See App. 16A.) Dr. Steve Meyer

estimates that 672,984 sows housed in compliance

with Proposition 12’s requirements (or 130 of Dr.

Goodwin’s hypothetical 5,200 head facilities) are

needed just to supply pork to California. (See Pet. App.

345a.) Dr. Meyer estimates that hog producers in the

United States will be forced to invest between $294

million and $348 million of additional capital and will

incur additional costs of $13.05 and $13.69 per pig (a

9.2 percent increase) to comply with the requirements

of California’s Proposition 12 (Pet. App. 350a-351a),

and based on increases in the cost of construction supplies, Dr. Meyer’s estimates may be low.

The potential impact on farmers becomes even

more acute as a result of the threat of inconsistent regulations in other states. If California is able to impose

its regulatory requirements on farmers in other states

(and countries), then other states may do the same.

Thus, after hog farmers in Iowa and Minnesota invest

millions of dollars to remodel or build hog farms with

group housing that provides 24 square feet of space

per pig as required by California’s Proposition 12,

New York may pass a law requiring 25 square feet of

space per pig. Is it reasonable to expect hog farmers to

invest millions of dollars in capital expenditures—

over and over again—in order to comply with everchanging standards that other states choose to reach

out and impose on them? And what if Iowa or Minnesota determines that group housing poses an unreasonable safety risk to farm workers and exercises its

sovereign power to require individual maternity pens

in hog farms located within its borders?

In any case, the costs imposed by California

through Proposition 12 are enormous—and will be

borne almost entirely by hog farmers located in other

states and countries. These costs present another

compelling reason for this Court to grant certiorari

review of the Ninth Circuit’s decision in this case.

III.

The Implementation of California’s Proposition 12 Will Force Many Small, Independent Hog Farmers to Sell or Shut

Down Their Farms.

As noted above, the proposed regulations that

California has published to implement Proposition 12

requires pork distributors who sell pork in California

to maintain records that are “sufficient for purposes of

an audit trail.” (Pet. App. 111a.) In effect, this proposed regulation would require pork distributors to

trace the pork they are selling upstream all the way

to the sow farm.

The effect of these regulations will be catastrophic for small, independent hog farmers. Because

of their size, hog farmers who operate small, independent sow farms that sell weaned pigs on the open

market are less likely to have access to the millions of

dollars in additional capital necessary to remodel

existing facilities or build new facilities to comply with

the requirements of Proposition 12. Many of these

farmers will be forced to either sell non-compliant

weaned pigs or simply shut down their farming operation. These effects will then spread downstream to

the independent hog finishers who do not own their

own sow farm but instead purchase weaned pigs from

other farmers—if they are not able to provide documentation that their market hogs originated from a

certified sow farm, packers are likely to significantly

discount the price they will pay for these market hogs

(if they will purchase the hogs at all).

Thus, for small, independent hog farmers, the

best-case scenario is that Proposition 12 will force

them to comply with burdensome recordkeeping

requirements to maintain an “audit trail”; however,

the more likely scenario is that they will suffer significantly reduced revenue or shut down entirely. As Dr.

Goodwin succinctly explained:

The sectoral changes that Proposition 12

is likely to trigger will be unfavorable for

smaller hog farms, who will have less

access to credit and who will be less able

to undertake the investments necessary

to bring facilities into compliance with

the space requirements of the proposition. This will hasten concentration of

the hog industry, with smaller farms

exiting the sector, leaving a US hog

industry that has fewer but larger farms.

(App. 20A.)

The pork industry plays a crucial role in the

economy of Iowa and Minnesota. According to a study

prepared for the Iowa Pork Producers Association in

2020, hog production, slaughter, further processing,

and other related economic activity contributed $40.8

billion in output and more than 147,000 jobs (and

$6.84 billion in labor income) to Iowa’s economy and

generated $893 million in state and local taxes and

$1.3 billion in federal taxes. 2020 Iowa Pork Industry

Report 7 (May 2020), available at https://www.

iowapork.org/iowa-pork-industry-contribution-study2020/2020-iowa-pork-industry-report/. And a recent

report published by the University of Minnesota

Extension Service estimates than hog farmers in

Minnesota generate $1.5 million in economic activity

per farm and that a loss of just 15 percent of hog production in Minnesota would result in $660 million in

lost output and the loss of 2,100 jobs. Joleen Hadrich,

Megan Roberts, & Brigid Tuck, The Role of Hog

Farmers in Minnesota’s Rural Economy 1 (May 15,

2020), available at https://conservancy.umn.edu/

handle/11299/214887. Yet California’s efforts to project its extreme animal rights regulations into Iowa,

Minnesota, and other states threatens to fundamentally disrupt the rural economy and threatens the livelihood of residents halfway across the country. The

significant impact that California’s implementation of

Proposition 12 will have on the economy and welfare

of other states, including Iowa and Minnesota, presents yet another compelling reason for this Court to

grant certiorari review of the Ninth Circuit’s decision.

IV.

The Implementation of California’s Proposition 12 Significantly Increases the Risk

of Spreading Swine Diseases.

Finally, the implementation of California’s

Proposition 12 would significantly increase the risk

that sow farms face from swine diseases, thereby

threatening the health and welfare of the animals.

With respect to swine diseases, the introduction, outbreak, and spread of swine diseases can have catastrophic consequences both for individual farms and

for pork production as a whole.

African Swine Fever (ASF) virus is a fatal and

highly infectious hemorrhagic disease that broke out

in China in August 2018. Researchers estimate that

more than 40 million pigs died in China from the

impacts of the virus and that the outbreak caused an

economic loss of approximately $111.2 billion. See

Swine Fever’s Huge Economic Toll in China, 598

Nature 11 (Oct. 7, 2021). A few months ago, the USDA

confirmed that ASF was detected in the Dominican

Republic earlier this year. USDA Animal & Plant

Health Inspection Serv., USDA Statement on Confirmation of ASF in the Dominican Republic,

https://www.aphis.usda.gov/aphis/newsroom/news/sa

_by_date/sa-2021/asf-confirm (July 28, 2021).

The significant impact that a disease such as

ASF would have on pork production in the United

States is shown from farmers’ past experiences with

other swine diseases. For example, Porcine Epidemic

Diarrhea virus (PEDv) emerged in the United States

in 2013 and spread throughout the U.S. hog population. More than 50 percent of sow farms in the United

States experienced an outbreak of PEDv in 2014. The

virus caused acute diarrhea and vomiting in pigs and

has a mortality rate of between 80 and 100 percent in

suckling pigs. Largely as a result of this virus, the

number of commercial hogs processed in 2014

decreased by more than 5.2 million (a 4.64 percent

decline) from 2013. Lee L. Schultz & Glynn T. Tonsor,

Assessment of the Economic Impacts of Porcine

Epidemic Diarrhea Virus in the United States, 93 J.

Animal Sci. 5111, 5111-13 (Nov. 2015).

Not surprisingly, the PED virus also upended

the hog market. The average price of a weaned pig

increased from $40.83 in 2013 to $59.47 in 2014

(before it went back down to $37.93 in 2015). Similarly, the average price of market hogs in Iowa and

Minnesota increased from $86.77 per cwt. (i.e., 100

pounds) in 2013 to $100.67 per cwt. in 2014 (reaching

a high of $115.78 per cwt. in April 2014) before dropping to $68.98 per cwt. in 2015. These market disruptions reflect that dramatic impact that the outbreak

of the PED virus had on the supply weaned pigs and

market hogs during this time period. Iowa State Univ

Extension, Historical Hog & Lamb Prices, available at

https://www.extension.iastate.edu/agdm/

livestock/pdf/b2-10.pdf (last updated Feb. 2021).

Given the threat that disease outbreaks pose to

their animals, hog farmers invest significant

resources to maintain the biosecurity of their farms.

Because many viruses can be introduced to a farm by

people (either directly or from particles attached to

their boots, clothing, or vehicles), most sow farms

implement strict biosecurity procedures that restrict

visitors and vehicles entering the farm to essential

personnel and, even for these people, require that the

person have been away from all other swine for at

least 24 to 48 hours—and in some cases as much as 72

hours—before entering the farm. These farms also

require authorized visitors to shower into and out of

the barn, where clothing is provided by the farm (after

the shower), and visitors cannot bring any outside

supplies or materials (e.g., paper, pens, cameras) into

the barn. See Laura Valeria Alarcón, Alberto Allepuz,

& Enric Mateu, Biosecurity in Pig Farms: A Review,

Porcine Health Management, Mar. 2021, at 4-5.

Because the spread of ASF across the United States

would be catastrophic to animal health, the food supply, hog producers and their communities, and the

economy, the USDA is encouraging hog farmers to

“follow strict biosecurity practices” to help prevent an

outbreak of ASF in the United States. See USDA

Animal & Plant Health Inspection Serv., African

Swine

Fever,

https://www.aphis.usda.gov/aphis/

ourfocus/animalhealth/animal-disease-information/

swine-disease-information/african-swine-fever/

african-swine-fever (last modified Oct. 19, 2021).

In this context, the proposed rules by which

California intends to implement Proposition 12—and,

in particular, the requirement that each sow farm be

inspected by a certifying agent accredited by California at least annually (see Pet. App. 128a-129a)—poses

an extreme risk of spreading animal diseases among

hog farms and decimating hog production in the

United States through disease outbreak. Unlike existing laws in Iowa, see Iowa Code §§ 459.304(6),

459.601(3), the regulations by which California pro-

poses to implement Proposition 12 do not require

inspectors to follow the farm’s normal biosecurity

requirements. Given the number of inspections that

will be needed to implement the law, it is highly questionable (to be charitable) that California could find a

sufficient number of inspectors to comply with biosecurity requirements and performed the inspections it

seeks to require.

But even if the biosecurity requirements were

followed, the mere fact of inspectors regularly traveling from sow farm to sow farm to perform these invasive inspections poses a significant risk of spreading

diseases. Recognizing this threat, and even though it

has statutory authority to enter livestock buildings if

a farm’s normal biosecurity requirements are

followed, the Iowa Department of Natural Resources

adopted a Standard Operating Procedure stating that

“due to biosecurity and safety concerns, inspectors

will not enter confinement buildings.” Iowa Dep’t of

Natural Resources, Confinement Facility (nonNPDES) On-Site Inspection Standard Operating

Procedure 2 (Sept. 11, 2013) (available under Work

Plan Agreement, Materials, & Reports at

https://iowadnr.gov/Environmental-Protection/

Animal-Feeding-Operations/AFO-Resources-andRegulations.

This threat to animal welfare and the security

of our food supply presents another compelling reason

for this Court to grant certiorari review of the Ninth

Circuit’s decision.

CONCLUSION

For the foregoing reasons, amici curiae respectfully request that this Court grant the petition for a

writ of certiorari in this case.

Respectfully submitted,

MATTHEW BERGER

Gislason & Hunter LLP

2700 S. Broadway

P.O. Box 458

New Ulm, MN 56073

(507) 354-3111

CHRISTINA GRUENHAGEN

Parker & Geadelmann,

P.L.L.C.

5400 University Avenue

West Des Moines, IA

50266

(515) 225-5528

ELDON MCAFEE

Counsel of Record

Brick Gentry P.C.

6701 Westown Parkway

Suite 100

West Des Moines, IA

50266

(515) 274-1450

Eldon.McAfee@

brickgentrylaw.com

APPENDICES

APPENDIX A

[Logo Omitted]

830 26th Street

Perry, Iowa 50220

515-465-5255

aasv@aasv.org

Dr. Elizabeth Cox

Program Manager

Department of Food and Agriculture

Animal Care Program

1220 N Street

Sacramento, CA 95814

animalcare@cdfa.ca.gov

RE: Proposed for adoption – Chapter 10, “Animal

Confinement,” of Division 2 of Title 3 of the California

Code of Regulation

Dear Dr. Cox:

These comments are submitted on behalf of the

American Association of Swine Veterinarians (AASV).

On behalf of our 1300 members involved in veterinary

practice, industry, and academia, we strive to increase

the knowledge of swine veterinarians, protect and

promote the health and well-being of pigs, advocate

science-based approaches to veterinary, industry, and

public health issues, and promote the development

and availability of resources that enhance the

effectiveness of professional activities.

It is the position of AASV that given the

variability inherent in different housing systems, we

support the use of sow housing configurations that

provide every animal with access to appropriate food

and water; protect sows and piglets from detrimental

effects associated with environmental extremes,

particularly temperature extremes; reduces exposure

to hazards that result in disease, pain or injury to

sows or piglets; allow sows and piglets to express

appropriate behaviors and minimize expression of

inappropriate behaviors within the constraints of the

housing type; minimize aggression and competitions

between sows; promote good air quality and allow

proper sanitation; and facilitate evaluation and care

of individual animals while protecting worker safety.

As such, the AASV supports the definition of

“individual treatment” as provided in Article 4,

Section 1324.

The proposed language allows

veterinarians the freedom to use their professional

judgment when assessing and addressing the health

and welfare of breeding pigs. This flexibility allows

for management of breeding pigs including

segregation if sows become injured to allow their

recovery, to prevent fighting that places the sows or

farm workers at risk especially post weaning when

sows are first forming new groups, or if sows

prematurely return to estrus.

Additionally, we

support that the proposed definition of “individual

treatment” relies on the existing veterinarian-clientpatient relationship (VCPR). Under this established

VCPR, pork producers are allowed to administer

treatments as indicated by their veterinarian.

Inclusion and recognition of the VCPR in the proposed

definition would extend the use of this established

relationship and allow flexibility for veterinarians

and producers to implement and comply with this

regulation.

The AASV does have concerns about sections of

Article 5, specifically those defining the frequency of

on-site inspections, the possibility of unannounced

inspections, and accreditation of certifying agents.

There were 66,439 swine operations across the United

States in 2017 (USDA 2017 Agriculture Census) and

the total breeding herd inventory has increased by

almost 100,000 sows in the years since. The number

of swine operations does not account for entities that

have multiple independent sites. It is critical to

understand the scope of the swine industry and,

therefore, the scope of operations that may request

certification under this rule.

Biosecurity is an essential component for

protecting swine health. Veterinarians are committed

to protecting swine health for the welfare of the pigs,

the economic livelihood of their clients, and food safety

and security of the United States. Introduction of an

animal disease on a sow farm can have devastating

effects on the animals and their caretakers and can

contribute to significant economic loss for a farm. For

example, porcine reproductive and respiratory

syndrome (PPRS) [sic] is the costliest disease

currently affecting the US swine industry with

estimated financial damage over $600 million

annually. Impacts on pig health and welfare include

increased morality [sic], increased reproductive

losses, and decreased growth rates. Any introduction

of a foreign animal disease into a pig herd would be

economically devastating for all of agriculture.

Studies led by Dr. Dermot Hayes, economist at Iowa

State University and at the Center for Agriculture

and Rural Development Food and Agriculture Policy

Research Institute, have estimated revenue losses

across agricultural commodities resulting from the

introduction of foot-and-mouth disease (FMD), classic

swine fever (CSF), and African swine fever (AFS). The

introduction of FMD would result in $199.9 billion

cumulative revenue losses across the commodities

modeled over a 10-year period including $57 billion for

pork, $71.2 billion for beef, $0.98 billion for poultry,

$44 billion for corn, $24.9 billion for soybeans, and

$1.8 billion for wheat. Revenue losses to the pork,

corn, and soybean industries resulting from the

introduction of CSF would be $51 billion, $28.4 billion,

and $16.8 billion, respectively with $92.6 billion

cumulative revenue losses across the commodities

modeled over a 10-year period. The first year of an

ASF outbreak, revenue loss would be $8 billion for

pork, $3 billion for beef, $4 billion for corn, and $1.5

billion for soybeans. It would take over 10 years for

these impacted commodities to approach pre-outbreak

commodity prices; a devastating reality for the entire

US farm economy.

People can transfer pathogens on their body

and clothing to pigs. Vehicles and equipment can also

carry pathogens.

Swine facilities are designed

specifically to reduce the introduction of pathogens

and farms have implemented protocols that limit who

and what, how and when individuals, vehicles, and

equipment are allowed enter the farm. Biosecurity

standard operating procedures include steps to

require all visitors park away from the facility, have

physical barriers such as showers prior to farm entry,

require farm specific clothing and footwear,

disinfection protocols for equipment that is allowed to

enter the farm, and requiring downtime away from

pigs or pig facilities for visitors prior to entry. The

industry minimum of pig-free downtime before farm

entry is at least 24 hours, 48 hours if the visitor has

traveled internationally and had contact with

livestock, and at least 5 days if the visitor has traveled

internationally to a country with foot-and-mouth

disease.

The required pig-free downtime often

increases for sow sites, especially nucleus or

multiplier herds, depending on the farm’s herd health

status. With biosecurity requirements in mind, 1

certifying agent could realistically only visit 3 pig sites

per week, and likely fewer sow sites practically

speaking. Requiring certified sites to have on-farm

inspections every 12-months would necessitate

roughly 400 certifying agents for the pig industry

alone, an experienced workforce (as defined in Section

1326.10) that does not exist and would limit the

ability of producers to become certified and eligible to

enter the supply chain.

Unannounced visits also raise concerns for

compliance with biosecurity protocols. Each farm

establishes their unique biosecurity protocols and

downtimes based on the health status of the herd.

Certifying agents must be able to contact the farms

they intend to visit prior to arrival to be able to comply

with their biosecurity protocols. This cannot be

accomplished with unannounced inspections. An

additional concern with unannounced inspections on

nursery and grow-finish sites would be the presence

of the owner or a caretaker on the site during the visit.

It is not uncommon for someone to only be present at

the site a few hours during the day to conduct daily

caretaker duties and facility maintenance.

certifying agent will not be granted unsupervised

access to a facility for either announced or

unannounced inspections.

The

American

Association

Swine

Veterinarians appreciates the opportunity to

comment on the proposed Chapter 10. Animal

Confinement. We strongly urge CDFA to address the

concerns around biosecurity to ensure the swine

industry can continue to protect public and swine

health and the security of the nation’s food supply.

Sincerely,

/s/ Sherrie Webb

Sherrie Webb, MSc

Director, Animal Welfare

American Association of Swine Veterinarians

APPENDIX B

California’s Proposition 12 and its Impacts on

the Pork Industry11

May 13, 2021

Barry K. Goodwin, Ph.D.

Executive Summary

This report provides a high-level overview of

issues surrounding California’s Proposition 12, which

is set to take effect on January 1, 2022. Among other

things, the proposition imposes new space

requirements for breeding sows. All pork sold in

California, with few exceptions, must be sourced from

the offspring of sows that have been provided at least

24 square feet of usable floor space for each sow,

regardless of where the hogs are produced. Because

California produces only a small amount of the pork

sold there, the proposition will impose space

requirements on hog producers across the nation. The

cost of these restrictions are widespread and

extensive. Farmers face the cost of renovation or the

construction of new facilities. Farmers will also face

losses in productivity as they move to new production

and management systems. This lost productivity will

Research report furnished to the National Pork Producers

Council. The views and opinions expressed here are solely

those of the author and do not represent views or opinions of

any other organization, regardless of affiliation.

be especially acute in the short run, as the new

systems are mastered. The new production systems

will lead to increased stress on breeding sows, which

in turn will lead to lower fertility and embryo survival

rates.

The industry must maintain identity

preservation and market segmentations. This will

involve considerable changes in the logistics of pork

product distribution. These costs will have a more

severe impact on smaller, independent operations.

These operations tend to be less efficient and have

lower profit margins. Smaller operations also have

less access to the credit needed to finance renovations

and new construction. Thus, one important outcome

of Proposition 12 will be an increase in the exist of

smaller hog operations. The pork industry will

become more concentrated with fewer but bigger farm

operations. The stresses placed upon the entire

production and marketing chain will also favor larger

processors, thereby leading to ever-increasing

consolidation and concentration of the industry.

California’s Proposition 12 and its Impacts on

the Pork Industry

Proposition 12, the “Prevention of Cruelty to

Farm Animals” Act, was approved by California

voters in 2018 and its provisions for hogs are set to

become effective on January 1, 2022. The Act

proposes to “prevent animal cruelty by phasing out

extreme methods of farm animal confinement, which

also threaten the health and safety of California

consumers and increase the risk of foodborne illness

associated negative fiscal impacts on the State of

California.” The new regulations mandate that all

pork sold in California, with limited exceptions, must

be sourced from the offspring of sows that have been

provided at least 24 square feet of usable floor space

for each sow. Enclosures must be sufficiently large

enough to allow the sows to turn around without

touching the sides of the enclosure. The regulations

apply to any breeding pigs over 6 months of age and

to all whole pork meat marketed in the state,

regardless of where it was produced. The restrictions

given in draft versions of regulations exclude

comminuted products containing more than just pork

and pork used in processed food products.

A limited number of exemptions apply to

Proposition 12. The restrictions do not apply for

animals involved in transportation, research, during

individual treatments, and at slaughter. The space

requirements are also waived for 5 days prior to the

expected farrowing date, while sows are nursing, and

temporarily during breeding activities. The breeding

activity exemption is limited to a maximum of 6 hours

per day, not to exceed 24 total hours over a 30-day

period. The limited nature of these exemptions has

important implications for breeding, farrowing, and

nursing efficiency. These restrictions will decrease

the effectiveness of insemination services and will

diminish the overall health of recently farrowed

piglets. In a presumed effort to improve the welfare

of sows, animals will be intermingled to a much

greater degree than is currently the practice. As is

true of most livestock animals, efforts to establish

10A

social dominance when put into groups will lead to

increased morbidity and mortality.

At present, California has a population of 39.5

million people, or about 12% of the US population. In

2020, California had a hog inventory of about 99,000

head. In comparison, the US had a hog inventory of

77.3 million head, implying that California only has

about 0.12% of the nation’s total hog and pig

inventory. 12 California represents a growing market,

with its population expanding by 6.1% between 2010

and 2019.

The consumption of pork products is not

homogeneous across different ethnic groups. Figure 1

illustrates total expenditures on pork products by

different

demographic groups in the

US.

Consumption is especially high for Hispanic and

Asian ethnic groups.

California’s population is

diverse and ever evolving, with Hispanics and Latinos

accounting for 39.4% of the population and Asians

accounting for 15.5% of the population. 13 These

factors reinforce the importance of California as a

destination market for pork products produced across

the US. Nearly all pork consumed in California is

produced outside of the state.

At present, it is estimated that only about 4%

of existing US hog farm facilities currently conform to

Statistics taken from the USDA’s National Agricultural

Statistics Service quick stats database.

Population statistics taken from the US Department of

Commerce’s Census Bureau.

11A

The

the Proposition 12 space requirements. 14

industry standard sow housing stalls currently

averages 18-20 square feet.

If Proposition 12

withstands ongoing court challenges, the US pork

industry will be subject to significant disruptions and

adjustments, requiring extensive renovation or new

construction to provide facilities that conform to the

proposition’s requirements.

The North American Meat Institute (NAMI)

has filed a petition challenging the constitutionality of

the proposition.

The National Pork Producers

Council, working jointly with the American Farm

Bureau Federation, has also filed suit challenging the

constitutionality of the proposition. 15

These

challenges are in part based upon presumed violations

of the Commerce Clause of the US Constitution,

where it is argued that California’s regulations have

a negative impact on the interstate commerce of other

states. The regulations will also create obstructions

to competition from pork producers outside of

California. The petition has been supported by 20

states, who have filed amicus curiae briefs in support

of the litigation. On February 26, NAMI filed a

petition with the US Supreme Court to overturn

Proposition 12.

See McCracken, C. “US Pork Supply Chain Locked in Limbo

as Producers Await Legal Ruling,” Rabobank Research,

February 2021.

See North American Meat Institute v. Becerra (October 4,

2019) and National Pork Producers Council v. Ross (December 5,

2019).

12A

California’s Proposition 2, which expanded

space requirements for egg-laying hens, withstood

similar legal challenges.

As Proposition 2

demonstrated, these propositions most certainly have

impacts on interstate trade and the methods of

production in other states. The prominence of cagefree egg production rose substantially across the US

as egg producers undertook structural changes to

accommodate the space requirements.

The objection of this article is to review the

impacts and estimate the costs associated with

implementation of Proposition 12. Many of these

costs, such as the costs associated with renovation of

existing facilities and construction of new facilities,

are apparent. However, other costs that will affect the

pork industry are less obvious. For example, I have

noted the potential impacts that the new space

requirements will have on the efficiency of breeding

and the physical well-being of sows. Many of these

costs have been considered in existing evaluations of

Proposition 12.

However, other subtle cost changes have

received less attention in the existing studies of

Proposition 12. To the extent that the Proposition

creates a bifurcation of the market with pork products

segmented into those that are compliant and those

that are not, the entire marketing chain from

processors to retailers will be tasked with preserving

the identity of pork products and effectively

segmenting the market to identify those products that

are compliant from those that are not. Past efforts at

13A

preserving the identity of differentiated basic

commodities such as corn and rice have proven to be

both expensive and difficult to maintain. These costs

have both short run and long run implications. If the

proposition withstands ongoing legal challenges, a

likely outcome in the long run will be widespread

adoption of production practices that conform to

Proposition 12. Because such changes necessarily

apply to long-lived assets in the form of production

facilities, full adjustment of the industry to

Proposition 12 is likely to take several years.

The Cost of Proposition 12

Proposition 12 will bring about fundamental

changes in the structure of the US pork industry.

Although ongoing litigation is attempting to overturn

the restrictions imposed by the proposition,

consumers in some states, with California being a

leading example, are becoming increasingly sensitive

to animal welfare issues. However, consumers may

not fully comprehend the nature of livestock

production systems or the likely impacts of legislated

actions meant to improve animal welfare. 16 As

existing facilities are replaced as a normal course of

business, it is likely that new designs that conform to

the types of animal welfare considerations reflected in

Proposition 12 also imposes space requirements for veal calves

(43 square feet) and egg-laying hens (1 square foot). The support

of consumers for any specific restriction, such as that applying

solely to hogs, is unclear and it is possible that consumer

concerns about specific production practices may be dominated

by only certain types of animals, such as veal calves and hens.

14A

Proposition 12 will be implemented, even in the

proposition is overturned.

A major source of the costs of adjustment to

such regulatory changes relates to the uncertainty

that these changes introduce to the industry. We are

months away from the intended implementation of

Proposition 12 and many details regarding

implementation remain uncertain. Uncertainty, by

its very nature, introduces tangible costs to any

business operation. Alongside efforts to have the

restrictions overturned are several ongoing attempts

to delay implementation of the space requirements.

Many farmers and much of the industry are hesitant

to commit to such fundamental changes if the

likelihood and timing of the space requirements are

unclear.

Renovation and New Construction Costs

Renovation and new construction represent

major irreversible commitments requiring very

significant investments. These costs are exacerbated

by the very active nature of construction industries in

the US.

Building material costs have risen

significantly in recent months as the US economy

emerges from pandemic quarantines.

A recent

(March 17, 2021) Wall Street Journal article noted

that lumber prices are currently twice the level of

typical prices for this time of year. 17 Crude oil, which

R. Dezember and M. Quiroz-Gutierrez, “New Houses Are

Costing More as Prices Jump for Wood, Bricks,” Wall Street

Journal,

March

17,

2021,

available

online

15A

is an important ingredient in many construction

materials, has risen by over 80% since October of

2020. Over the same period, copper, which plays an

important role in water and power services, has

increased by 33%. Concrete prices have reached

record levels in the last month. Figure 3 contains the

US Department of Commerce’s construction price

index. The significant increases in the cost of new

construction are apparent.

An important but less obvious cost associated

with renovating or constructing hog facilities arises

from the irreversible nature of construction. That is,

in addition to the obvious cost of materials, any new

construction imposes a loss of option value for the

investor.

If the restrictions associated with

Proposition 12 are changed at some future date, it is

possible that facilities that were made to be

compatible with Proposition 12 may not satisfy the

new requirements. 18 Further to this same point,

because the imposition of restrictions always has

negative impacts on efficiency, relaxing of the

restrictions may leave producers that did invest in

new facilities at a competitive disadvantage. 19

https://www.wsj.com/articles/commodities-boom-hits-home11615973404 (accessed April 15, 2021).

For example, Rule 901:12-9-02 of the Ohio Administrative

Code requires group housing for all pregnant sows by 2025 but

allows for breeding sow placement in individual stalls until

pregnancy is confirmed. Farmers have transitioned to the new

standards in facility design, but their new facilities will not

satisfy the requirements of Proposition 12.

An important engineering result—the Le Chatelier

Principle—holds that the imposition of restrictions on a profit-

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The cost of converting new facilities to conform

to the Proposition 12 requirements have been

estimated by industry experts to be between $8-$12

per pig. Construction of a new facility covering the

farrow to wean period of production has been

estimated to be about $3,000 per sow. About 75% of

that cost is associated with the facility while 25%

applies to land and infrastructure. These costs vary

substantially by the size of the operation. The $3,000

per sow estimate applies to an operation size of 5,200

sows.

However, smaller operations will pay

considerably more per animal. A farm of 1,000

animals will have costs that are about 15% higher per

animal. These costs are about 10% higher for a farm

of 2,600 sows. This suggests that construction of a

new facility that will allow 5,200 hogs to have the

space requirements mandated by Proposition 12 will

cost $15.6 million (Herring, 2021). 20

The differences in construction costs across

different sized hog farms have important implications

for how the industry will be impacted by Proposition

12. Smaller farms will be more constrained by access

to capital and thinner margins. Figures 4 through 6

illustrate some important differences in the financial

situations of different sized hog farms. 21 The USDA

maximizing producer will almost always lead to lower profits (or

at least no higher profits).

Cost estimates obtained through personal communication via

email with David Herring, Vice President of Hog Slat

Incorporated, on April 11, 2021.

Statistics taken from the ARMS Data Analysis Resource

(https://my.data.ers.usda.gov/arms/data-analysis).

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segments farms according to annual sales. The

diagrams illustrate financial conditions for the

following categories of total annual farm sales—less

than

$100,000,

$100,000-$249,000,

$250,000$499,000, $500,000-$1 million, and over $1 million.

The farms considered are those for which their

principal designation is as a hog farm, meaning that

the largest share of farm’s value of production is

attributable to hogs.

The financial condition of a business operation

is heavily influenced by the availability and cost of

borrowed capital. Figure 4 illustrates the leverage

position (total debts over total assets) in the top panel

and the rate of return to equity in the bottom panel.

Each portion of the panels represent the development

of financial indicators across different economic

classes of farms and the green bar represents the

average value over the 1995-2019 period. The first

block applies to all farms and then moving left to

right, across increasingly larger (by sales) classes of

farms.

Hog operations tend to be much more highly

leveraged than is the case for other types of farms.

According to the Economic Research Service of the

USDA, the debt to assets ratio for all US farms

averaged about 13.6% in 2019. In contrast, the 2019

debt to asset ratio for farms specializing in hog

production is 19.5%. This demonstrates the fact that

hog farms tend to be more highly leveraged than

farms in general and that the leverage ratio tends to

increase with farm size. This is not surprising in that

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the high debt to asset ratio reflects the fact that hog

farm facilities require a substantial up-front capital

investment and therefore hog farms require borrowed

capital to a greater degree than farms in general.

The lower panel of Figure 4 contains the rate of

return to equity for hog farms of various economic

classes. The return to equity on hog farms tends to be

progressively lower for smaller farms, as reflected in

the value of production. This suggests that smaller

farms realize a lower return to investments and

therefore will likely realize less favorable terms of

credit. This has important implications for the ability

of farms to undertake the significant capital

investments that conformity to Proposition 12 would

require.

Figure 5 presents net farm income and the

farms’ operating profit margin. Again, the financial

standing of smaller farms tends to be much less

favorable than is the case for larger farms. The drop

is especially substantial when considering the

smallest category of farms—those with annual sales

of less than $100,000. This smallest category of farms

tends to have net incomes that are close to zero and

operating profit margins that are significantly

negative. Again, this suggests that the smallest hog

farms will be the least able to undertake the changes

that would make facilities conformable to Proposition

12.

Finally, we consider two measures of hog farm

efficiency. The first is given by the ratio of net cash

income to total cash expenses. The second focuses on

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feed efficiency and is given by the ratio of livestock

sales to total feed expenditures. In both cases, the

smallest category of farms tends to be significantly

less efficient, both in terms of the total operation and

in terms of feed efficiency. Overall farming efficiency

tends to be moderately higher as farm size increases.

In contrast, feed efficiency is smaller across all

economic classes of hog farms except for the smallest

farms, which are substantially less efficient.

The review of hog farm financial conditions

provides several important insights that are all

consistent in the implication that smaller farms will

be impacted much for significantly than larger hog

farms. The statistics reveal that hog farms are much

more highly leveraged than farms in general and

therefore are more dependent on credit markets for

the survival. Adopting production processes and

methods that are compatible with the requirements of

Proposition 12 will require substantial access to

borrowed capital.

As noted above, the total

investment involved in the construction or renovation

of facilities that conform to the space requirements

will be several million dollars, making access to credit

a critical variable in the long-run survival of hog

farms. Creditors will consider these financial ratios

and variables when evaluating loans and these

evaluations are likely to be especially negative for the

smallest hog farms. These farms have the lowest

relative incomes and profit margins. The statistics

also demonstrate that the smallest farms tend to be

significantly less efficient, both in terms of overall

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returns over expenses and in terms of the efficiency of

hog feeding.

These economic facts have important

implications for how California’s Proposition 12 is

likely to impact the US hog sector. The increasing

concentration of the US meat processing sector has

been a concern often noted in Congressional rhetoric.

As a rule, this sector has become increasingly

concentrated. Likewise, concern over the economic

viability of small and limited resource farms

continues to be an important factor shaping US

agricultural policy.

The sectoral changes that

Proposition 12 is likely to trigger will be unfavorable

for smaller hog farms, who will have less access to

credit and who will be less able to undertake the

investments necessary to bring facilities into

compliance with the space requirements of the

proposition. This will hasten the concentration of the

hog industry, with smaller farms exiting the sector,

leaving a US hog industry that has fewer but larger

farms. Those farms with thin margins, which tend to

be the smallest operations, will be the first to exit the

industry. Likewise, efficiency differences that favor

larger operations will play a role in smaller farms

being the first to exit the industry.

According to the 2017 Agricultural Census,

there are 58,180 independent hog farmers. These

independent hog farmers had 24.9 million hogs in

inventory.

Contractors/integrators and contract

growers numbered 8,259 and had 47.5 million hogs in

inventory. Independent growers will more than 2,000

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hogs numbered 2,462 and had 22.2 million hogs in

inventory. In contrast, of the farms operated by

contractors or contractees, 5,862 farms had 2,000 or

more hogs in inventory and accounted for 29 million

hogs. These statistics demonstrate that hog farms

with production contracts tend to be larger and

account for a larger share of hog production

(inventory) than independent growers. It is likely

that the processors/integrators will be driving force in

encouraging facility changes that conform to the

proposition. I have shown that larger farms tend to

be more efficient and more profitable. Thus, an

obvious inference to emerge from this consideration of

the 2017 census statistics suggests that the

proposition will likely push more farms to adopt

production contracts. The proposition will therefore

hasten the transition from independent to contract

growers.

Reductions in Available Space

An obvious cost that will be borne by hog

production pertains to the fact that an operation of a

given size will suffer a reduction in output when

facilities are renovated to make the necessary space

available for sows. This space must be taken from

existing uses. According to a recent report by

Rabobank, if stocking density is reduced to meet the

proposition’s space requirements, production flows

will drop by at least 25%. 22 This naturally implies a

See McCracken, C. “US Pork Supply Chain Locked in Limbo

as Producers Await Legal Ruling,” Rabobank Research,

February 2021.

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reduction in herd sizes and a flood of new construction

to meet the requirements. According to the Rabobank

report, to comply with Proposition 12, at least 15% of

US hog producers will need to convert to the new

facility requirements.

These changes will bring about costs associated

with lost stall space, which will reduce the overall

output of facilities of a given size that choose to

convert. The extent to which the processors and

integrators agree to offer premiums for hogs grown

under the new requirements will be a major factor in

determining the adoption of the new production

techniques.

Farm Productivity Declines

Although the space requirements are intended

to improve the welfare of pigs and hogs, there are

many reasons to be concerned that changes in sow

housing arrangements will bring about added stress

to the animals. The existing science does not support

the intentions of the regulations—hogs will be worse

off under the new restrictions. Mixing animals

together, as would be common in many of the

conversion scenarios, will induce stress as animals

compete for dominance and feed. Animals are likely

to fight, therefore causing increases in morbidity and

mortality. This in turn will also negatively impact

fertility and embryo survival rates. The requirements

of the proposition have limited exemptions for sows

undergoing breeding and this will necessarily

increase the amount of time that sows are housed

together.

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Existing research has reached uncertain

conclusions about the productivity penalties

associated with group mixing of sows. However,

existing housing arrangements represent the

optimum, at least at the time the facilities were

constructed. Therefore, there are reasons to conclude

that productivity will suffer because of the

proposition.

Productivity will also suffer because new

production and management systems take time to

master. David Herring of Hog Slat, the leading

facility construction firm, estimated that production

costs could increase by 5-8% in the short run, until the

new techniques are mastered by producers. 23

Regulatory Overhead

The adoption and enforcement of new

regulations always involves additional regulatory

costs. These costs will be borne by both producers and

consumers of pork. The enforcement process remains

unclear in many respects but is likely to involve

auditors working as third parties or on behalf of the

California Department of Food and Agriculture

(CDFA), the regulatory agency responsible for

enforcing the restrictions of the proposition. The

CDFA and California State Department of Public

Health has been jointly tasked with promulgating the

rules and regulations for the implementation of the

proposition. California’s Health and Safety Code

(HSC) Section 25993.1 states that a business owner or

Personal communication via email, April 11, 2021.

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operator must rely in good faith upon a written

certification by their supplier that pork was not

derived from an animal confined in a manner

inconsistent with the proposition. The California code

provides for a $1,000 fine and 180 days of

incarceration for a violation of the proposition.

The current draft rule of the CDFA describes a

certification process that will be carried out by the

CDFA or by a certifying agent, who must be accredited

by the CDFA. The regulations also require that each

producer and handler of pork hold a valid certification

and that any pork handler selling meat in California

must be registered. The proposition requires that all

shipping invoices, bills of lading, and shipping

manifests for all shipments of whole pork meat

entering the state or transported within the state for

commercial sale in California shall include the

statement “California 24+Compliant.”

One can imagine that the proposition will

create a new industry of third-party agents providing

certification. This industry will certainly involve costs

that will be borne by California pork consumers and

producers providing pork to the California market.

This regulatory overhead is commonly referred to as

“deadweight costs” by economists. That is, costs that

do not reflect benefits. From a scientific perspective,

the welfare of hogs will not be appreciably improved

by the restrictions and may, in fact, be diminished.

California consumers and pork buyers elsewhere may

realize some benefit from the knowledge that the pork

that they are enjoying was derived from pigs that had

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extra space. However, as previously noted, the

restrictions also apply to egg-laying hens and veal

calves and the precise motives underlying voters’

intentions are unclear.

Of course, third-party

certification agents will benefit from the new demand

for their services.

These costs will be shared by pork consumers,

retailers, processors, and producers. It has been noted

that a bifurcation of the market whereby pork

commands a premium in California but is made

cheaper outside of the state is likely to emerge in the

short run. A considerable volume of pork that is

currently shipped to California will instead by

channeled to consumers in other states, thereby

lowering the price outside of California. Likewise,

considering the considerable volume of pork that is

exported from the US, import markets may also

realize lower prices. 24 High market segmentation

costs (discussed next) will likely encourage

widespread adoption of the standards as it may be

cheaper overall to adopt the new standards for all

pork than to maintain separate markets for certified

and non-certified pork.

Market Segmentation Costs

A bifurcated marketplace necessarily means

that different qualities of a commodity that may not

be obvious to the consumer must be identified and

The USDA’s Foreign Agricultural Service (FAS) estimates

that 26% of the projected US production of 12.8 million tons will

be exported in 2021. See “Livestock and Poultry: World

Markets and Trade,” USDA-FAS, April 9, 2021.

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preserved throughout the marketing chain. Pork

produced from pigs raised on operations that satisfy

the space requirements of Proposition 12 must be

identified and kept separate throughout the entire

marketing chain, from farm, to processor, wholesaler,

and retailer. Any agent in the marketing chain must

be able to identify and keep separate “certified” pork

products.

A concerned consumer must have

confidence that the pork they are purchasing is

sourced from operations that satisfy the space

requirements. Outside of a package label, consumers

have no way of discerning how the hogs that were

processed into the pork products on grocery shelves

were produced.

This type of identity preservation may be

especially difficult and costly for operations that

utilize bulk pork commodities.

By their very

definition, such bulk commodities are typically

homogeneous in quality and may be highly processed

prior to reaching the end consumer. Large-scale food

service operations often purchase very large amounts

of lower valued trim cuts which may be comingled

from a variety of sources. For such operations, it will

be costly to identify and segment pork derived from

hogs produced under the restrictions of Proposition

12.

The difficulties associated with maintaining

identity preservation have been demonstrated in the

cases of corn and rice. A form of genetically modified

corn, known as Starlink, was not approved for human

consumption, and therefore had to be kept separate

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from other corn hybrids. A similar case arose for MIR162, a genetically modified corn hybrid from Syngenta

that was not approved for sale in China. It provided

impossible to prevent these corn hybrids from being

comingled in the overall corn supply. Significant

economic losses were realized by the companies that

manufactured the corn seed as well as throughout the

marketing chain.

Prices to farmers dropped

significantly when portions of the global market for

commodity corn were closed due to comingling.

Numerous product recalls occurred, and agents

throughout the marketing chain realized significant

economic loss due to the loss of important markets for

corn and commodities that were made from corn.

Questions arise in such cases as to who carries

the liability associated with violations of the

regulations. It may be difficult to ascertain exactly

who is responsible for the loss of identity preservation

in cases of comingling or other inadvertent violations

of the space requirements. The logistics associated

with ensuring that all pork sold in California satisfies

the proposition are complex. Such complexity adds to

the basic costs of business for merchants selling pork

in California and for processors and wholesalers

supplying pork to California. It is difficult to assign a

value to this additional logistical burden, but the costs

are most certainly substantial.

Concluding Remarks

When Proposition 12 takes effect on January 1,

2022, pork sold in California must be sourced from

sows that have at least 24 square feet of space in

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breeding and finishing facilities.

While the

restrictions are to be implemented on this date,

market impacts will be gradual as pork already in the

marketing chain is gradually exhausted.

The

proposition will be costly to the production and

marketing chain for pork in the US. At present, only

about 4% of facilities satisfy the space requirements.

The uncertainty surrounding the implementation and

enforcement of the proposition has led to a “wait and

see” attitude by many in the pork producing sector.

Renovation and new construction costs run into

several million dollars for the typical hog operation.

Growers will need additional compensation to

encourage the long-term investments that the

proposition demands.

The impacts of Proposition 12 will not be

homogeneous across all hog producers. In the short

run, the market will be segmented and supplies of

pork in California will be constrained. This will result

from a shortage of compliant pork. At the same time,

noncompliant pork that once was sold in California

will be relegated to the rest of the US market,

depressing prices of pork everywhere except

California, where pork prices will rise substantially.

As I have noted, the extent to which consumers

comprehend animal welfare issues and recognize the

differences across different types of livestock and

production systems is unclear. More specifically,

consumers may not understand the nuances between

different livestock animals and their space needs. As

is often the case, regulatory initiatives that are

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promoted by special interests may not be consistent

with sound scientific evidence and the extent to which

voters are able to separate emotional rhetoric from

sound scientific evidence is unclear. New construction

will likely consider the increased space requirement

in new facility designs and in the long run much of the

industry may become compliant with these

restrictions.

The costs of the restrictions are widespread and

extensive. Farmers face the costs of renovation or the

construction of new facilities. Farmers are also likely

to face losses in productivity as they move to new

production and management systems. This lost

productivity will be especially acute in the short run,

as the new systems are mastered. The new production

systems will lead to increased stress on breeding sows,

which in turn will lead to lower fertility and embryo

survival rates. The industry must maintain identity

preservation and maintain market segmentations.

This will involve considerable changes to the logistics

of pork product distribution.

These costs will have a more severe impact on

smaller, independent operations. As we have shown,

these operations tend to be less efficient and have

lower profit margins. Smaller operations also have

less access to the credit needed to finance renovations

and new construction. Thus, one important outcome

of Proposition 12 will be an increase in the exit of

smaller hog operations. The pork industry will

become more concentrated with fewer but bigger farm

operations. The stresses placed upon the entire

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production and marketing chain will also favor larger

processors, thereby leading to ever-increasing

consolidation and concentration of the industry.

This document provides a high-level summary

of the expected impacts of California’s Proposition 12.

Much greater research is needed to address the

impacts of the proposition on heterogeneous farm

operations, packers, wholesalers, and retailers. More

in-depth empirical research is needed to quantify the

impacts of the regulations and the long-term

adjustments that the industry will realize. The costs

of the proposition will be significant and will impact

the entire marketing chain. The pork industry will

become more concentrated with fewer but bigger farm

operations. The stresses placed upon the entire

production and marketing chain will also favor larger

processors, thereby leading to ever-increasing

consolidation and concentration of the industry.

[Figures 1-6 Omitted]

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.