Each month, a panel of constitutional experts convenes to discuss the Court’s upcoming docket sitting by sitting. The cases that will be covered are included below.
Sackett v. Environmental Protection Agency (October 3) – environmental law; water policy regulations; administrative law
Delaware v. Pennsylvania and Wisconsin (October 3) – State claims dispute over travelers checks; financial services & e-commerce
Merrill v. Milligan (October 11) – election law; whether Alabama’s 2021 redistricting plan violated the Voting Rights Act
National Pork Producers Council v. Ross (October 11) – interstate commerce, dormant commerce clause
Helix Energy Solutions Group v. Hewitt (October 12) – labor law; regulatory policy on overtime pay and exemptions; Fair Labor Standard’s Act
- Donald Kochan, Professor of Law and Deputy Executive Director, Law and Economics Center, Antonin Scalia Law School, George Mason University
- Prof. Michael Dimino, Professor of Law, Widener University Commonwealth Law School
- Charles Yates, Attorney, Pacific Legal Foundation
- Prof. Patrick Parenteau, Professor of Law, Vermont Law School
- Moderator: Adam Gustafson, Senior Counsel for Environmental and Regulatory Affairs at Boeing
To register, please click the link above.
As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.
Nathan Kaczmarek: Good morning, and welcome to "A Seat at the Sitting". This is a special webinar series presented by The Federalist Society's Practice Groups designed to preview the October SCOTUS docket in 90 minutes or less.
Last term was kind of ho-hum for the Court, so we've gathered an excellent panel of legal experts today to excite and inform us about what's next. My name is Nate Kaczmarek. I am Vice President and Director of the Practice Groups. As always, please note that all expressions of opinion are those of our guests today.
We are happy today to have Adam Gustafson lead us through our October program. Adam, how are you?
Adam Gustafson: I’m great, Nate. Thanks for having me.
Nathan Kaczmarek: It's certainly our pleasure to have you as always. Adam is Senior Counsel for Environmental and Regulatory Affairs with Boeing. Before Boeing, he served as Deputy General Counsel at the EPA, and prior to that, he was a partner at Boyden Gray & Associates. He received his law degree from Yale Law School and his undergrad from the University of Virginia. For full bios for Adam and all of our panelists, you can check out our website or the promotional emails for this webinar.
In a moment I'll turn it over to Adam. Once our panel has had ample time to summarize and discuss the upcoming cases, we'll go to audience Q&A, so please think of the difficult questions you'd like to ask them. Audience questions can be submitted via the Zoom function for Q&A or the raised hand function. We will do our best to address each of your questions as the time will allow.
With that, thank you everyone for being with us this morning. Adam, the floor is yours.
Adam Gustafson: Thank you, Nate. It's an honor to be here with The Federalist Society to preview the opening cases of the term. And we are joined by an excellent panel: Professor Donald Kochan of Scalia Law School, who will address a couple of property law and Dormant Commerce Clause cases; Professor Patrick Parenteau of Vermont Law School and Charles Yates of the Pacific Legal Foundation will both address a blockbuster environmental law case; and Professor Michael Dimino of Widener University Commonwealth Law School will tell us about the Court's latest election law case.
And as Nate said, we're looking forward to questions from the audience, so please do raise your hand or submit a question either between each speaker's remarks or at the end of the presentation today.
Let's turn first to Delaware v. Pennsylvania and Wisconsin, an original jurisdiction case about the escheatment of traveler's checks. And we're fortunate to have Professor Kochan here to tell us about it.
Donald Kochan is Professor of Law and Deputy Executive Director at the Law and Economics Center at the Antonin Scalia Law School. He previously taught at Chapman University’s Dale E. Fowler School of Law and was an Olin Fellow at the University of Virginia School of Law. Professor Kochan's fellowship focuses on areas of property law, constitutional law, administrative law, natural resources and environmental law, tort law, and law and economics. He's an elected member of the American Law Institute and served as advisor to the Restatement of the Law Fourth, Property. Professor Kochan is a Nonresident Scholar at the Center for the Constitution at Georgetown University Law Center. He received his JD from Cornell Law School where he was a John M. Olin Scholar in law and economics and managing editor of the Cornell International Law Journal. He received his BA from Western Michigan University magna cum laude with majors in political science and philosophy. Professor Kochan was a law clerk to Judge Richard Suhrheinrich on the U.S. Court of Appeals for the Sixth Circuit, and he practiced in the fields of natural resources and environmental law at Crowell & Moring.
Professor Kochan, the floor is yours.
Prof. Donald Kochan: Thank you so much. And thank you to Nate and to Adam and to the entire Federalist Society team for organizing this panel.
I'm going to be talking to you, as Adam pointed out, about Delaware v. Pennsylvania and Wisconsin. This is a case consolidated with Arkansas v. Delaware. And as Adam mentioned, this is an original jurisdiction case. It's also an abandoned property or unclaimed property case. So when Nate said you're going to get excited, we're starting with the most exciting stuff right away.
So the issues are—and I'm just going to read these and then get into the deeper dive on what all of it means—whether MoneyGram official checks or a money order traveler's check or other similar written instrument, other than a third-party bank check, on which a banking or financial organization or a business association is directly liable pursuant to 12 U.S.C. 2503, the Federal Disposition of Abandoned Money Orders and Traveler's Check Act, or the FDA, as we will call it throughout here. The second is whether the Court should command Wisconsin and Pennsylvania not to assert any claims over abandoned and unclaimed property relating to MoneyGram official checks. And third, whether all future sums payable on abandoned MoneyGram official checks should be remitted to Delaware.
Now, once one state sues another, the other state, of course, has to come back with a countersuit. And so, we see, in a third-party complaint, Pennsylvania seeking to apply the FDA, the Disposition Act, that was mentioned above. Or, if that Act does not apply—in other words, if these are not truly money orders that we're talking about, these "official" checks from MoneyGram—then, instead, they would like to modify a standard that was set in a previous case in 1965 called Texas v. New Jersey, which we're going to spend a little time talking about.
So next thing I want to do is tell you what are the stakes. You may think that this abandoned or unclaimed property isn't really that big a deal, but why do the states care about this? Well, really, there's about $150 million on the table here where this money is being diverted to Delaware right now. And the concern is that this should be shared among the other states if we had a different standard. And so, the states are losing revenues that they think should be coming to them from this abandoned property, that is, property that no one is claiming. Which state allows it can get it by escheat. And we'll talk a little bit, again, about what escheat means to remind you from back in your law school days. So $150 million on the table right here, and according to at least one report, by some estimates, unclaimed checks, overall, may total more than $500 million this year. So where we set the standard is going to be critically important.
So what are these transactions that are the subject of the dispute? Mostly these are disputes between several states over which state should be able to keep the abandoned property. In other words, which state should be able to get the unclaimed or uncashed checks issued by MoneyGram payment systems? MoneyGram is the largest provider of money orders in the country. In addition to money orders, the company also issues official checks which, unlike most money orders—by name, "money orders"—and then the question under the Act is going to be, "Well, is a money order only the thing that goes by a money order name label, or does a money order actually encompass a lot of different kinds of checks, including, perhaps, these official checks?"
So MoneyGram issues a number of different instruments, including these official checks, which, unlike most money orders—and what we typically as laymen think of as money orders—these official checks are for larger amounts and are sold at financial institutions. In particular, the Court is concerned about teller's checks and agent's checks under this category that are remitting to Delaware, where MoneyGram is incorporated. Should it go to Delaware, or should it go to a different state? And we have different options. One could be where the checks were purchased. That's the Act, the Disposition Act, that we're talking about. Or it could be to some other place, and the Court may need to figure that out.
So the history of all this? Let's go through a little bit of that so you understand how this dispute came about. In 2015 and 2016, Pennsylvania and some other states began suing Delaware in federal district courts for return of funds they said were for unclaimed property that was improperly remitted to Delaware. In other words, it should have been remitted to those states. They said, "Look. These unclaimed checks were for people that -- were for either transactions that occurred in our state or were for people who were in our state, and therefore, they should come to us." Delaware claims that these official checks should be escheated to the state where the check issuer or debtor is incorporated, not the state where the checks were purchased by the creditor. And so, here, MoneyGram is the debtor. They are the ones issuing the checks. The creditors are the ones with the property rights entitled to the checks. They're just not claiming. They're not grabbing onto their property rights and, consequently, we need to figure out, "Well, where should that money go?'
Delaware moved to dismiss those cases that were being brought by the states in the federal district courts. And on May 26, 2016—so quite a while ago—they filed this original jurisdiction action, a motion with the United States Supreme Court, requesting leave to file a bill of complaint against other states regarding escheatment of uncashed official checks. And so, what did they claim? They claimed original jurisdiction here. Just a refresher on that. This is both under the Constitution, Article III, but also under 1251 of 28 USC, where "The Supreme Court shall have original and exclusive jurisdiction over all controversies between two or more States". And so, here are two states claiming that they both are entitled to have this abandoned property flow into their state coffers—escheat to them under the technical term—rather than the other.
So let's get back to basics again and talk about what does escheat mean; what is abandoned property; and give some of the basic law of finders of abandoned property, and then see how that plays out in all of this.
As you will recall from your early law school—probably first-semester days—the idea is that abandoned property traditionally under property law goes to the first finder. That is abandoned property is fully relinquished. It is unequivocally relinquished, and then the first finder gets to take that property. And they get it as now the owner of that abandoned property because the other person has given up all their rights to it. Now, the owner's -- even though the first to acquire this usually get this, with things like unclaimed property that is deemed abandoned by law, statutes may govern what it means to acquire that property. The statutes may govern what it means to abandon it, and unclaimed checks that are out there kind of fall into that category sometimes regulated by a statute. But oftentimes they aren't, and the courts, over time, have had to figure out what do we do about that if it hasn't.
So under common law rules, an uncashed check typically escheats to the state of the creditor's last known address. There is a secondary rule. When there is no address or we can't figure out where this person is, established in the 1965 Supreme Court case of Texas v. New Jersey—and more on that in just a minute. Suffice it to say under the general property rules of priority, unclaimed property with an unknown owner address escheats to the state where we try to find it, where it follows the owner of the property. But if unclaimed property with an unknown owner address is escheated, and we don't know where that state is that this person actually lives, then the standard in Texas v. New Jersey was that it escheats to the state where the holder is incorporated.
Now, why do we end up with some of these rules under Texas v. New Jersey? Part of it is this idea of the common law maxim mobilia sequuntur personam. This is the idea that intangible property may be found to follow the domicile of its owner, here the creditor. And so, this is why the traditional rule is that the creditor is the one entitled to the money. They have the entitlement. They have the property right, and so the property right follows with them, and so the property right lands in the place where they are. The problem is when we don't know where they are, and that's where these kinds of cases come in.
The debtor or issuer—just to make sure we have all of our terminology straight—does not have an entitlement to this property; the creditor does. So if the creditor has not claimed it, it's the creditor's entitlement that's being abandoned. So in that sense, it does make sense that the jurisdiction with the closest ties to the creditor would get the property if the property is to escheat.
And what is escheat? Well, every state has some statute at varying levels of specificity regarding the state's ability or inability to take title to certain abandoned property through escheat. A procedure—as now quoting from Texas v. New Jersey—" a procedure with ancient origins whereby a sovereign may acquire title to abandoned property if, after a number of years, no rightful owner appears." So, again, it's where does it go? And we have choices there.
So the precedents have been established in three key cases over time at the Supreme Court, and this is really what's before the Court to interpret in addition to interpreting the Act that we talked about—the FDA—before. These precedents are, first off, Texas v. New Jersey. The Supreme Court established so-called "priority rules" there. So what were those priority rules? And these are what are at the heart of much of this debate.
The first opportunity to escheat the property belongs to the state of the last known address of the creditor under this common law rule. This was before the Act. Remember the Act doesn't come until 1974. In 1965, the Court is struggling with coming up with a common law rule that can solve this. So the primary rule is that we look for the last known address of the creditor, and that's where the property should escheat. This is based large in part as should follow from the previous discussion on principles of property and that the rights follow the owner.
Justice Powell later explained in his 1972 Pennsylvania v. New York—1972 Supreme Court case Pennsylvania v. New York—in a dissent joined by Justices Blackman and Rehnquist, that "in looking at the residence of the creditor of the rule adopted by the court recognized"—the court in Texas he is referring to, the 1965 case—"recognized that companies' unclaimed debts were assets of the individual creditors rather than assets of the debtor." Justice Powell also noted in that dissent, in the 1972 case, that this rule better reflected a distribution of property that was a reflection of a distribution of commerce across the United States. In other words, in that dissent, he explained, "in distributing the property among the creditor states, the rule had the advantage of dividing the property in a manner roughly proportionate to the commercial activities of each state's residents. In using the last known address as the sole indicator of domicile, the rule could be easy to administer or apply." The idea, then, was what was seen as consistent with the Texas v. New Jersey.
But then, we have to decide what happens when there is not a known address, and that's where we get the secondary rule. That is in the 1965 case the court came up with the primary rule that I just explained, and then the secondary rule. The secondary rule was that if there's no record of any address if the creditor's last known address is in a state which does not provide for the escheat or we do not know where that address is, the Court really seemed to apply an equitable standard at that point and say, "What we should do is just if we don't know where it goes, it should go to the debtor's state as the secondary rule." Now, as Justice Powell stressed in that later dissent in 1972, the secondary rule was expected to be in a lot of language. And the '65 case indicates this was expected to be a very narrow category.
So then we get to the 1972 case in which Pennsylvania sues New York. And Pennsylvania proposed that we should solve this issue of transactions in escheat by looking at where the debtor -- if we did not have records of where the creditor last owned property, that it should be the state of the origin of the transaction that should be allowed to escheat it. And the majority, in that case, said, "No, we're going to stick with the Texas standard, and we're going to apply that secondary rule," and that the priority rule established there should apply rather than this place of purchase.
Effectively, the Powell dissent went on to explain what he thought some of the consequences of that action would be. He said, "Effectively, then the obligation of the debtor will be converted into an asset of the debtor's state of domicile in exclusion of the creditor state." So in other words, if everything's going to the debtor, it's going to go there. The court in Texas v. New Jersey, he points out specifically reputed this result on the ground that it was inconsistent with the principles of fairness. It would have exulted a minor factor to permit escheat of obligations incurred all over the country by the state of which a debtor happened to incorporate itself. The fact the Court was willing to permit this result in a few cases in which no record of address was available or in which no law of escheat applies does not diminish the clear view that the Court or this result would be impermissible on a basis of overall more than a small minority of debts.
Now, I am running out of time, so I want to just kind of get to why all that history matters because then Congress comes in and passes the statute. The statute says that we're going to apply that point of purchase rule for money orders, traveler's check, or other similar instruments. And we then get this claim as to whether or not these official checks are indeed money orders. So we have a matter of statutory interpretation. Is this, indeed, a money order? Or is it of a similar instrument? And that's what the Court has to determine, whether or not it falls under the Act, and if it does, then this place of purchase applies, and then escheat will occur throughout the United States rather than all of these things, MoneyGram going to Delaware.
Alternatively, Pennsylvania and the other states have argued for a revisiting of that 1965 secondary rule and, instead, coming up with something else. So the special master overall sided that -- stated that, in his interim report, that official checks were similar to money orders and, if not, they were other similar written instruments. And in this case, Delaware's asking the Supreme Court to review that and to set it aside. And the other states are asking that that be upheld and/or strengthened.
So that's where we are with this case, and I look forward to any questions you might have on it. It will have implications across a number of different areas of financial transactions. It may, in fact, be much broader than we expect. So it looks like a narrow issue as to one interpretation of a couple words in the Act, but the overall determination could not only result in a determination of where hundreds of millions of dollars go but also—in these kind of instruments—but also a number of other financial instruments that may or may not escheat to the state as a result of being unclaimed property or abandoned property.
Adam Gustafson: Thank you, Professor Kochan. And if there are any questions, feel free to either raise your hand or use the Q&A function to ask them.
One question that I will ask is whether you think there's any likelihood that the Court wants to do a broad revisit of its prior equitable rules. Or is it, instead, going to look for statutory interpretation solution to this problem?
Prof. Donald Kochan: So I think now that Congress has intervened -- I mean, there's two ways to go about that. One is that you could say Congress has shown that it has the capacity to intervene and pass a statute which will govern these things, and their failure to do it with the greater specificity is their fault, and we should recognize this is Congress's domain, kick it back to Congress. If Congress wants to more clearly identify similar instrument, then do so because similar instrument is really relatively broad, and a lot of the arguments, on both sides, are bringing in intent arguments and other things that the justices may not want to tackle.
So I do think there's a good case to be made to just pump this -- just say we're not going to resolve our equity. We're going to try and resolve this on statutory interpretation grounds, but the problem there is that since they have to decide, if they decide the statute doesn't apply, then the residual area of regulation goes to common law. So I think they will have to. If they can determine that it doesn't apply under the statute, but they will have to decide the residual common law authority for governing the rest of it—because they can't just say there is no rule—and in that situation, I think it's very likely that they will try to at least clarify what they meant by that secondary rule. And there's a lot of language in the 1965 case which indicates that was not meant to be an exclusive secondary rule that you could have different secondary rules depending on different equities in different circumstances, and I think that would likely be where they go.
Adam Gustafson: Well, thank you, Professor Kochan. I find myself wondering if any of those traveler's checks have my name written on them, and I just failed to cash them.
Let's turn next to Sackett v. EPA, a case about the perennial question of the meaning of the phrase "waters of the United States." I'll introduce our two speakers in turn.
Professor Patrick Parenteau is Emeritus Professor of Law and Senior Fellow for Climate Policy in the Environmental Law Center at Vermont Law School. He previously served as Director of the Environmental Law Center and was the founding director of the Environment and Natural Resources Law Clinic. Professor Parenteau's previous positions include Vice President for Conservation with the National Wildlife Federation, Regional Counsel to EPA's New England Regional Office, Commissioner of the Vermont Department of Environmental Conservation, and Senior Counsel with the Perkins Coie law firm. Professor Parenteau is a Fulbright US Scholar and a Fellow in the American College of Environmental Lawyers. He holds a BS from Regis University, a JD from Creighton University, and an LLM in environmental law from the George Washington University.
Our second speaker on this topic is Charles Yates. Charles Yates is an attorney in Pacific Legal Foundation’s Environmental Practice Group, where he litigates to defend private property rights and uphold the structural protections guaranteed by the Constitution’s separation of powers. His practice at PLF focuses primarily on the Endangered Species Act, the Clean Water Act, and related regulatory issues. After obtaining a BA in political science and international relations from the University of Western Australia, Charles moved to the U.S., where he earned his JD magna cum laude from the University of Baltimore School of Law. During law school, he served as president of his school’s chapter of The Federalist Society and was an editor of the University of Baltimore Law Review.
Let's turn first to Professor Parenteau. I think you're on mute.
Prof. Patrick Parenteau: You'd think I'd figure that out by now. Wouldn't you? Thank you. So good morning, and thank you, Adam.
As Adam mentioned, at the center of the Sackett case, it certainly is one of the most vexed terms in all of environmental law, which is the meaning of the phrase "waters of the United States." After 50 years of the Clean Water Act, you would think we might have an answer to that question, but we don't. This is the fourth time that question has been presented to the United States Supreme Court. And I'll give a quick overview of the Sackett case and the chronology. It's a saga, soon to be a Netflix documentary, I'm quite certain.
In round one, the Supreme Court ruled that EPA's compliance order—issued in 2007 to the Sacketts—requiring them to stop filling a wetland on their property adjacent to Priest Lake in the tip of the Idaho panhandle, which was—EPA alleged—a water of the United States, ordered them to stop filling it and restore the portion they'd filled. The Sacketts claimed that that was a final agency action that they should be entitled to challenge in court since they had not had a hearing before EPA. That question of pre-enforcement review was one that had been bouncing around the circuit courts for a number of years. And so, the Supreme Court resolved that question and ruled that compliance orders under the Clean Water Act, which has very significant penalty implications for those who fail to comply, was indeed a final agency action subject to review under the Administrative Procedure Act Section 706(2), and so remanded the case to the district court in Idaho, which then held a very extensive trial. And I'm sure Charles could fill in a lot of the details on that since the Pacific Legal Foundation has been representing the Sacketts from the beginning and, of course, has been successful, frankly, at getting the Supreme Court to grant review twice in this case.
So in round one, after the district court held a very extensive set of hearings reviewing the administrative record, allowing supplementation, further inspections, and so on, finally rule in EPA's favor and said indeed the wetland, on the Sackett property, was water of the United States and that the findings of the Court are important because facts do matter. This is a wetland that lies within 30 feet of what has been described in the record as an "unnamed tributary" but a relatively permanent perennial body of water, a stream, which flows directly into Priest Lake, which is a major lake, of course. In fact, it's a lake renowned for its clarity and water quality. The wetland is also 300 feet from the lake. And the wetland on the Sackett property is part of a larger wetland complex known as the Kalispell Wetland Complex. And the record revealed, according to the Court's decision—lower court's decision—that the wetland does provide very significant ecological benefits to water quality and fish and wildlife and so forth in the lake.
And so, the district court ruled that the wetland was adjacent to both this unnamed tributary and the lake within the meaning of the then applicable regulations, which is an important point that I think is going to be addressed in the oral argument upcoming on October 3rd before the Supreme Court. Both the lower court, district court, and the Ninth Circuit applied the 2008 Corps of Engineer EPA regulations defining when a wetland constituted a water of the United States. And, significantly, those regulations said that a wetland that was otherwise adjacent, and therefore jurisdictional, would still be jurisdictional, notwithstanding that there was an artificial barrier, like a berm—or in the case of the Sacketts—a road between the wetland and a tributary. So that's part of the factual context of the Sackett case. You've got a wetland that is adjacent but there's an intervening road. And what is the Supreme Court going to do about that?
The Ninth Circuit, then, upheld the district court pretty much straightforward upholding of the lower court's findings and conclusions of law. And, of course, importantly, applied—and this is where things get more interesting—Justice Kennedy's concurring opinion in the fractured decision in the Rapanos case—which I hope people are familiar with. I don't know how you couldn't be—and that concurring opinion adopted what's known as the significant nexus test.
It's instrumental that all of the Circuit Courts, ten of them, have addressed the question of which test under Rapanos is the controlling test, have looked to the Kennedy test, the significant nexus test. Some of the circuits have said if it's a wetland that's jurisdictional under either the Kennedy test or Justice Scalia's plurality opinion in Rapanos, under either test—if the wetland meets either test—it's jurisdictional. One circuit, the Eleventh Circuit, had said only the Kennedy test applies, so we have—not exactly a crazy quilt—but we have a number of different Circuit Court decisions trying to ascertain what exactly is the governing test for wetlands. This case, on the record, appears to be solely focused on a wetland, not the tributary. Charles may want to say something about that as well.
Yes, I see the question. There is no continuous surface water connection between the wetland and the tributary because of the road. The record establishes, not surprisingly, there is underground—groundwater connection—quite close connection, in fact. It's all a part of a hydrologic system, as you might imagine, so there's much interaction between the streams and the wetlands and the lake and all of that.
So, to get to the specific issue—because I know I have limited time here—the original petition—which Charles may want to discuss—was seeking a pretty broad review. And, basically—and I don't want to steal any thunder from Charles—but basically, an adoption of the Scalia test and a rejection of the Kennedy test—there's probably more to it than just that simple—but at least a rejection of the significant nexus test and adoption of the Scalia test, which contains two elements. One, a relatively permanent body of water—that being the lake or the tributary—and a wetland continuously connected by a surface connection. Scalia's language in his plurality opinion doesn't say a continuous water surface connection—but it may be implied—but it doesn't say that. It talks about, in one sense, a physical connection and in another sense a continuous surface connection. So what that means is also likely to be the subject of some inquiry. So the question presented, though, that the Court reframed, is simply this, did the Ninth Circuit apply the correct test in determining whether this wetland is a jurisdictional wetland under the Clean Water Act?
In the background—and I'll quickly move to the conclusion—we have another juxtaposition of an ongoing rulemaking. There's lots and lots of other things going on with waters of the United States and the Navigable Waters Protection Rule that was adopted by the prior administration and the courts that have been reviewing that. And two courts have vacated that. And what's the status of that rule? Lots and lots of confusion, frankly, about what's going on in this space called waters of the U.S.
But EPA and the Corps are embarked on a two-phase rulemaking right now. The first phase the Corp and EPA said in light of the courts that have vacated the Trump rule, the Navigable Waters Protection Rule, we are going to codify the pre-2015 waters of the U.S. rule—that's the rule adopted by the Obama administration—and readopt the earlier mid-1980s, actually, rules on waters of the U.S. with a couple of—as we say in New Orleans—lagniappes, a couple of extra items which is waters that meet either the Kennedy or Scalia test in Rapanos would also qualify as waters of the U.S.
So we have an ongoing rulemaking. That rule has been presented to the White House for clearance within the last two weeks. It's expected to be published in the Federal Register, maybe even before the oral argument before the Supreme Court, might come up in the argument, might not. Court probably won't take any kind of judicial review over the rule. It's not completely final. But you have that rulemaking. And then—just to top things off—EPA's promising and the Corps promising yet another rulemaking to refine this rule that they're now in the process of finalizing and taking into account further stakeholder views.
So let me stop—one minute. Thank you very much, Adam—and just say this. It isn't about wetlands. Okay? This definition of waters of the U.S., which the Congress did not define in 1972 and has not taken the pains to define it ever since, in spite several entreaties from the different justices, including Chief Justice Roberts, to come up with a final rule that resolves a lot of this. The reason it's so important is because this undergirds all of the programs in the Clean Water Act, all of the permit programs, all of the standard-setting programs, all of the planning programs, all of the financial assistance programs, the oil and hazardous waste spill provisions. It undergirds the whole federal Clean Water Act. So getting an answer to this question is obviously very important.
Whether we get the definitive answer that a lot of people are looking for, the once and for all definition of waters of the United States, I'm not certain about that at all. I'll leave that for the Q&A. Thank you, Adam.
Adam Gustafson: If history is any indication, there will always be room for further clarification and --
Prof. Patrick Parenteau: Yes.
Adam Gustafson: -- amendment on this question.
Charles let's turn to you. Charles Yates.
Charles Yates: Yeah. Thank you, Adam. And thank you to Professor Parenteau for that very good summary. And thank you to The Federalist Society. I really appreciate you having me on this panel.
So Professor Parenteau provided a good summary of the case in terms of its facts, the regulatory history. So what I want to do is focus in on some of the specifics and sort of some of the broader implications of the case for this question that, as Professor Parenteau noted, has really vexed regulators, courts, and property owners for nearly five decades at this point.
Now, at the outset, one thing I want to note is the unique posture in which this case comes to the Supreme Court. And that Professor Parenteau referenced the regulations that were in effect in 2008 when the Sacketts saga began, as well as the Biden administration's ongoing rulemaking. And I think an important thing to note is that the posture of this case comes to the Court is that we—because of this sort of convoluted regulatory history that's occurred over the past 15 years since Rapanos, we've sort of come full circle to the point where, as a result of a vacatur order, which vacated the Trump administration's 2020 rule out of Arizona back in 2021, EPA and the Army Corps are now applying, on the ground, their pre-2015 understanding of the operative term, which is the exact same post-Rapanos regime under which the Sacketts' property was deemed jurisdictional.
And another important note is that the—as Professor Parenteau noted—the Biden administration in its Step One rulemaking, the rulemaking that is -- notice in common has now concluded on, really purports just to simply codify that post-Rapanos understanding of the term. So we're looking at a situation where the regulations that are being applied on the ground and continue to be applied on the ground are identical to those that the Sacketts have been subjected to for the past 15 years.
And with that, I want to discuss a few broader implications of the case. I've got three here. The first is this question of regulatory clarity. I think that one thing that we can be sure of is that no matter what, in the Supreme Court revisiting Rapanos, provided we get a clear majority opinion, that will go a long way in providing substantial regulatory clarity to the public. As Professor Parenteau noted, the Court last addressed this question in 2006 in a split opinion in Rapanos, and in that decision, a majority of the justices agreed that this operative tone, "navigable waters" or "waters of the United States" must provide some geographic limitation on the scope of the federal government's authority, but they couldn't reach a consensus as to the appropriate test. So we have the vying Scalia plurality, which bases wetlands jurisdiction on a surface connection, and Justice Kennedy's significant nexus test, which was -- under which the Sackett's property was deemed jurisdictional by EPA and under which the -- which is what the Ninth Circuit applied below in upholding EPA's determination.
And that significant nexus test is based on just the fact that a bordered wetland might have some sort of attenuated connection to a navigable water through the watershed. It's a very fact-specific and sort of complicated analysis that needs to occur. But since Rapanos was decided, successive presidential administrations have tried and failed to define the term navigable waters in a manner that survives judicial review. And what we've really experienced is a sort of 15-year game of regulatory ping pong where the Obama administration, the Trump administration both embarked upon significant notice and common rule makings neither of which took effect nationwide for more than a couple of months.
We have this convoluted regulatory history that's resulted in a situation where the regulated public every few years—every time there's a new presidential administration, every time a court vacates one of these rules—has had to pivot back to the underlying regime. And that's been a cause of significant confusion and cost. So I think one thing, provided the Supreme Court does provide a majority opinion, it will go a long way in clarifying the post-Rapanos Clean Water Act regime that we've been subject to.
But the second point I want to note relates to the significant separation of powers implications of the decision here, and particularly of the Court revisiting this question. And this is because this case, Sackett, presents the Supreme Court with the opportunity to correct what the agencies have essentially treated as a boundless view of their jurisdictional authority under the Clean Water Act. Professor Parenteau noted this centrality of this term navigable waters to the Clean Water Act. It is the term that defines the geographic scope of the federal government's authority to assert authority pursuant to the [inaudible 41:26] in the Clean Water Act. So really, the term navigable waters represents jurisdictional out of scope of the federal government's authority to regulate pursuant to the Clean Water Act.
But standing in the mid-1970s, EPA and the Army Corps really began interpreting that tone incredibly broadly to the point where by 1986 the regulations we're discussing, the agencies were interpreting the term as a sort of nearly limitless grant of authority reaching, basically, any damp surface that one could think of. And at the time, a lot of observers noted that in just over a decade the Act had really taken on -- [inaudible 42:00] in the Act had really taken on the character of a federal land use or zoning code.
And I think this is well demonstrated by the facts of the Sacketts' case because the Sacketts were engaged in, really, a sort of quintessentially ordinary act of land use. They were attempting to build a single-family home on a residentially zoned lot in a subdivision that had been fully built out around them. And they were doing so with all of the necessary local permits to do so. However, due to this assertion of federal authority pursuant to the Clean Water Act, they've been delayed in pursuing that project now for 15 years.
In focusing on Justice Kennedy's significant nexus test -- which will be significant at the hearing and in terms of the Supreme Court reaching a decision deciding which test applies. So the significant nexus test, really, Justice Kennedy has framed it -- in his opinion framed it as a limitation on agency authority. He linked it to the text of the statute. But from the beginning, the agencies have treated this test, due to its broad nature, as really just providing a name for their prior boundless approach to the Clean Water Act, and that's evidenced by some of the amici. Two former EPA administrators submitted an amicus brief in support of the responders. And they, essentially, confirmed in their view that significant nexus test really just provides a name for what they'd been doing all along.
So it's important that by adopting the Sacketts profit framework and rejecting the significant nexus test, adopting a framework based upon a continuous surface water connection, the Supreme Court would have the opportunity to restore EPA and the Army Corps to their proper role by clarifying the scope of the agency's authority in accordance with the text of the statute.
And with that, I will conclude. I look forward to some discussion and some questions.
Adam Gustafson: Thank you, Charles. And thank you, Professor Parenteau. If anyone has any questions, please feel free to submit them by Q&A or raise your hand. I'll start with one that's already been submitted from John Sheller. And Professor Parenteau, it looks like you already have an answer. "Is federal law exclusive here due to preemption, or does state law play a role?"
Prof. Patrick Parenteau: I think the question before the Court is simply the interpretation of the term "waters of the United States" in the Clean Water Act, but the Clean Water Act does not preempt state law. States would be free to adopt a much broader definition of jurisdiction for waters covered by their state regulatory programs whether it's wetlands, tributaries, lakes, or others. So the Supreme Court decision in Sackett is not going to impair a state's ability to adopt those laws. The real question is, obviously, a political one.
The Environment Law Institute did a study some years ago in which they concluded that 28 states have laws on the books saying they will not regulate any stricter than federal law. So there would have to be -- with a really narrow Supreme Court decision in Sackett, if the states were going to fill that gap, there'd have to be a lot of changes across the country for that to happen.
Adam Gustafson: Thank you. Got one more question, and that is about the structure of the Act. Charles, Michael Hertz notes that the phrase "navigable waters" is itself a defined term in the Clean Water Act and that that definition is what we're talking about here. And so, the question is "Does the Clean Water Act -- or do you agree that the Clean Water Act jurisdiction that the EPA has under it extends beyond waters that are traditionally navigable?"
Charles Yates: So the test that the Sacketts have proposed is that the Clean Water Act -- and I think it's indisputable that the focus of the Clean Water Act was on the traditionally navigable waters of the United States. But the way that term is used -- so the proffered test that the Sacketts define that term "waters of the United States" is that the focus is on the traditionally navigable waters of the United States that is subject to Congress' channels of commerce or authority, and that really when we're talking about non-navigable waters or non-water features such as wetlands, to the extent they're regulation is implicated in the Act, it's only to the extent that there is no ability to distinguish. So we're talking specifically about shoreline wetlands, a situation where there's no sort of clear demarcation between wetlands on the shore of a water that would be more traditionally ordinarily considered to be a traditionally navigable water, so it's really to the extent we're talking about features beyond non-water features.
The Sackett's test focuses on that indistinguishability, that line-drawing ambiguity between shoreline wetlands and a water and accepts that under those circumstances where there's really no ability to distinguish, where there's no physical or other structure separating the two features, that those wetlands are brought in within the scope of the act.
Adam Gustafson: Thank you. What role, if any, will judicial deference to agencies play in this case? I note that in the last term, the Supreme Court bypassed several different opportunities to rule on Chevron deference and, in fact, avoided mentioning the doctrine at all. Is there any room here for Chevron? And if so, what would be the Agency decision that the Court would defer to? What role do you think that principal will have here if any? Let's start with Professor Parenteau.
Prof. Patrick Parenteau: Yeah. Great question. I am going to be very interested to see if Chevron comes up in the questioning.
I can say that in the SWANCC case, which is the second time that the Supreme Court looked at this question—a Justice Rehnquist opinion—he decided -- I should say the majority decided that no deference was due to the Corps of Engineers, which was the defendant in that case, on this question of waters of the U.S. because he'd said if you accepted the Corps' broad interpretation, it would press the outer edges of Congress' Commerce Clause authority. And he invoked the Constitutional Avoidance Doctrine, which Charles may want to comment on.
And so, I think if Chevron does come up in Sackett, we may see a further elaboration of that constitutional avoidance question because we know that several justices are interested in that. And I'm not sure where that's going to lead.
I guess my bottom line would be I doubt that this majority of the Supreme Court is going to grant very much deference, maybe the lesser form—not Chevron deference—but some deference to the Agency's expertise but probably not controlling deference in the way Chevron would. It is a vague term. It is an undefined term. It's certainly ambiguous. So you could make a case that Chevron Step Two should apply, and then you'd have a question as to whether the Agency's interpretation was reasonable. And with that, I'll toss it to Charles.
Charles Yates: Yeah. So that's a very good question. The question of Chevron in this context is very interesting because Chevron applied in the first of the trilogy of cases on this question. In Riverside Bayview, the Supreme Court did apply Chevron deference. But in the context of Sackett, I think it's unlikely that it will be applied or even come up because the agencies, themselves, haven't invoked Chevron deference. They've invoked deference, but it's more of a form of prudential deference in that they're -- to the extent they brief deference, they're really just asking that the Supreme Court defer to their future rulemaking as a sort of hold off on coming to a conclusion that might tie the Agency's hands given there is a rulemaking ongoing.
And I think the reason for this absence of Chevron is that the vying test—Scalia's plurality in Rapanos and Justice Kennedy's significant nexus test—the way I read them, are both framed as under a sort of Chevron Step One analysis. I mean, Justice Scalia quite unambiguously ties his understanding of the waters of the United States to the plain text of the statute. Justice Kennedy is a little less clear, but he does, too, tie his analysis to—in coming to the significant nexus test—to the text of the statute. And I think it's important to note that the dissenters in Rapanos actually faulted Justice Kennedy for not invoking deference.
Now, one quick note is to the extent deference may apply, I think it's less of the Chevron variety and more of the sort of State Farm Baltimore Gas and Electric variety. Somewhere down the line, when we get to this question of agency expertise, I think that really focuses on the technical question. So once we get a test from the Supreme Court, how to effectuate that test -- so for instance, if the Supreme Court adopts the Sackett's test—of the surface water connection test—there would be some play in the joint, some room for agency expertise or rulemaking on this question as to what precisely constitutes that continuous surface water connection, but that's not dereference in the Chevron sense of the term.
Adam Gustafson: Well, thank you both for that. And it will be interesting to see how the saga continues.
The next case we're going to address is Merrill v. Milligan, our election law case for this sitting, and it concerns a challenge to Alabama's 2021 redistricting plan. Our expert on this case is Professor Dimino.
Michael Dimino is a professor at Widener University Commonwealth Law School. He's the lead author of the casebooks Voting Rights and Election Law and Understanding Election Law and Voting Rights and has written on the First Amendment, judicial selection, and other topics relating to constitutional law. In 2011 and 2017, Professor Dimino was awarded Widener's Douglas E. Ray Award for Excellence in Faculty Scholarship. After graduating cum laude in 2001 from Harvard Law School, where he was Articles Editor of the Harvard Journal of Law and Public Policy, Professor Dimino served as Chief Clerk to Associate Judge Albert Rosenblatt of the New York State Court of Appeals and then clerked for Senior Judge Larry Silberman of the U.S. Court of Appeals for the D.C. Circuit and Judge Paul Friedman of the U.S. District Court for the District of Columbia.
Professor Dimino, thanks for being with us today.
Prof. Michael Dimino: Thank you, Adam. Thank you, Nate. Thanks to the whole Federalist Society. It's really an honor to be part of this panel. And if you'll permit me to quote the great Vince Scully, "Hi, everybody, and a very pleasant good [morning] to you, wherever you may be."
Today I'm going to talk about Merrill v. Milligan, which is a challenge to the redrawing of Alabama's congressional districts following the 2020 census. Alabama has seven congressional seats, and for the last several redistricting cycles, one of those districts has been majority black. The challenge, in this case, relates to the contention that Alabama needs to draw a second majority-black district to comply with the Voting Rights Act, specifically Section 2, of the Voting Rights Act. And the state is resisting that allegation and saying that "not only do we not have to draw a second majority-black district but that if we did draw a second majority-black district, we would have to consider race to such an extent in the districting process that we would violate the Constitution by creating a racial gerryman."
And so what the case involves is a very stark conflict between the prevailing interpretation of Section 2 of the Voting Rights Act, which requires states to take account of race, including to the point of consciously drawing majority-minority districts and the Courts' doctrine associated with Shaw v. Reno, which goes by the name "The Racial Gerrymandering Cases" that places a limit on the extent to which states can consider race in districting.
Now, the Shaw cases don't forbid states from considering race in districting, but they do forbid states from drawing district lines when the predominant consideration in redistricting is race. So you're allowed to consider race but only a little bit or only so much that it doesn't become the predominant factor in districting. If race is the predominant factor, then that use of race violates the Constitution. And Alabama is saying, in this case, that drawing that second black district, the second majority-black district out of seven, would require race to predominate in the drawing of the district lines.
And that's true, they say because the geographical distribution of black voters in Alabama is such that, if you account for traditional districting concerns, most especially if you try to maintain the core of the existing districts and just kind of tinker around the edges, that there is no neutral way of coming up with a districting plan that produces two majority-minority districts. Instead, the only way that you get two majority-minority districts is by looping voters together on the basis of race, specifically the District One in Alabama, which had been the Gulf Coast Region kind of centered on Mobile; and District Two, which is the adjoining district, would have to be fairly radically altered so that both would run all the way across the state from east to west with District One just going, not only along the Gulf Coast, but also along the Florida Panhandle, and District Two going east to west just north of District One.
The claim is that drawing districts in that way would combine radically different communities of interest in a way that would necessarily mean that race would predominate in the drawing of the district lines over pretty much all other kinds of traditional districting considerations with the exception, of course, of the requirement that you place the same number of people in each of the districts.
Now, to understand this conflict, you need to understand a little bit about the prevailing doctrine with respect to Section Two of the Voting Rights Act. The statute, itself, is kind of famously or infamously vague. It says, "No voting prerequisite or standard or practice or procedure with respect to voting shall be imposed in a manner which results in a denial or abridgment of the right of any citizen of the United States to vote on account of race or color." This is the so-called results test that was imposed in 1982 by Congress after the Supreme Court, in an earlier case City of Mobile v. Bolden, had interpreted the prior version of the Voting Rights Act to require discriminatory intent. Congress amended the Voting Rights Act after that decision and said, "No, we don't want to require discriminatory intent. We want to impose a results test. So we want to declare illegal those voting practices or procedures,"—which has been interpreted to include redistricting—"that result in a denial or abridgment of voting rights on account of race or color."
Now, the statute goes on in Section B to clarify a little bit about what this results test means. And the Court says that you have a violation of that section if, based on the totality of the circumstances, the political processes leading to nomination or election are not equally open to participation by members of a class of citizens defined by race or color in that its members have less opportunity than other members of the electorate to participate in the political process and to elect representatives of their choice. So Alabama claims that this process is equally open. There is an equal opportunity to participate in the political process because if you draw a neutral map without consideration of race, you don't get two majority-minority districts, and nobody—no racial group or any other group—should have the right under the Voting Rights Act or any other provision of law to require districts to be drawn in such a way as to maximize their chances of success politically.
The most important prior case to interpret this provision, post-1982, is Thornburg v. Gingles where the Supreme Court established three preconditions that challengers to a districting scheme have to demonstrate in order to succeed on a Section Two of the Voting Rights Act claim. And those three preconditions are, number one, the minority group that says that it should be given an extra district must establish that it is sufficiently large and geographically compact to constitute a majority in a single-member district. Number two and three, when they're combined—these second and third preconditions—are combined in a term that we call racially polarized voting. Two, the second precondition, is that the minority community must vote as a block. And the third precondition is that the so-called "white majority" must sufficiently vote as a block to defeat the candidate that is preferred by the minority community. Together, we call that racially polarized voting. And, again, the challengers say here, "This group"—the blacks in Alabama—"are sufficiently large and geographically compact. They constitute a majority in a second single-member district because if we draw the districts in this east-to-west way, we can get a majority of blacks in a second district." Alabama says, "Well, the only way that you can do that is"—to reiterate—"by prioritizing race to such an extent that it would be unconstitutional."
The case, then, really boils down to a question of whether the Court is going to revise its interpretation of Section Two of the Voting Rights Act that it established in Gingles. If it sticks with Gingles, if it says that you can establish these three preconditions and then have a right to a second majority-minority district so long as you establish that the totality of the circumstances means that the existing plan doesn't give you an equal opportunity for voting influence, then it's quite likely that the challengers would win. The challengers did win at the district court here. If Alabama wins, what we might see is a substantial restructuring of the Court's interpretation of Section Two possibly including a constitutional ruling that suggests that a very broad interpretation—or even the traditional, the established interpretation under Thornburg v. Gingles—may produce a constitutional problem.
So to wrap up, I think -- and I'll leave some for the questions and answers. I should mention that blacks in Alabama are 27 percent of the state's population. If they get two districts, they will have roughly proportionate representation in Congress. Two-sevenths is roughly their proportion of the population. But the Supreme Court has never said that any group, including a racial minority, has a right to proportional representation in Congress. And the Voting Rights Act, itself—Section Two of the Voting Rights Act—seems specifically to disclaim a right to proportional representation where it says, "nothing in this section establishes a right to have members of a protected class elected in numbers equal to their proportion in the population."
On the other hand, the way the Court has interpreted Section Two is to say, "Well, we have to figure out some way to determine—based on the totality of the circumstances—whether this group has an equal opportunity to participate in the political process and elect representatives of its choice. How else are we going to determine whether they have this equal opportunity other than to compare the number of legislative seats they control as against their share of the population?" So despite that proviso in the statute, the Court has focused—at least to some extent—on rough proportionality.
So, in short, I think if Alabama wins this case, it is entirely possible that it could be because the Court is willing to entertain a major rethinking of how Section Two should be interpreted or how Section Two interacts with the Equal Protection Clause and the general suspicion that the Court has that there's a problem when we focus on race in drawing district lines.
Thanks very much.
Adam Gustafson: Thank you, Professor Dimino. If anyone has a question, please feel free to raise your hand or submit it through the Q&A. I'll start with one from Jeffrey Wood, who notes that this is not the only case on the Court's docket this term that deals with race consciousness. This is about race-conscious redistricting, but we've got the Students for Fair Admissions v. Harvard and the companion UNC case that are about race-conscious admissions at universities, and Jeffrey Wood asks, "What is the likely intellectual spillover between this case and those university-admissions cases?"
Prof. Michael Dimino: I think that's a great question. And the confluence of those two cases during the same term—in fact, they're argued a month apart—is going to be quite fascinating for the whole country.
It is possible that -- and you'll hear more about it in next month's "Seat at the Sitting" I suppose. It's possible that the Supreme Court would take on the affirmative action cases and establish a fairly clear principle that bans consideration of race at least in college admissions and other similar kinds of things. It is, of course, conceivable that the Court would apply that same kind of race neutrality rule to districting decisions and say, "It's unconstitutional to draw district lines considering race." But if it did that, number one, that's clearly not where the law is now. It's not where the law is with respect to affirmative action, and it's definitely not where the law is with respect to the creation of majority-minority districts under the Voting Rights Act.
In fact, the Supreme Court has been -- it's been said repeatedly, although it has not been clear on the point, it's said repeatedly that race can be considered in drawing district lines. In fact, it would be unrealistic to expect people to disregard race since the people who draw district lines are intimately familiar with the demographics of their states. But instead, we have this kind of vague prescription on considering race too much.
So the answer to Mr. Wood's question is that it depends on what the Court says in that case. If the Court establishes a clear rule that says, "Race may not be considered for any purpose whatsoever," then you could, certainly, get a kind of intellectual spillover, but you don't have to. The Court could say that the consideration of race is unconstitutional for your more typical affirmative action controversies but that the historical and other kinds of needs of protecting against racial discrimination in voting justifies some amount of consideration of race such that would make the creation -- the intentional creation of majority-minority districts constitutional under the Voting Rights Act.
Adam Gustafson: One last question. Devin Watkins asks an interesting counterfactual. "If the Court were to ban consideration of race in redistricting, how would the composition of Congress change?" That may not be a question you've given any thought to, but it's an interesting question to ponder.
Prof. Michael Dimino: Well, I'm not sure how much numbers would change overall, but there are allegations, in this very case, that if race were not considered at all, the United States government -- the Solicitor General, of course, is supporting the challengers to this law. The Solicitor General argues that if we banned consideration of race at all, then it's possible—in fact, reasonably likely—that Alabama would not have any majority-minority districts, and the 27 percent of blacks would be without any representation given the amount of racially-polarized voting in the state. So to the extent that that pattern is repeated throughout the nation, I think that if we were to ban consideration of race, we would certainly see a great reduction in the number of majority-minority districts across the country.
Adam Gustafson: Thank you, Professor Dimino.
Our last case that's going to get full treatment today is National Pork Producers Council v. Ross. As I gather, this is basically a case about whether California can set requirements on how pig farmers in other states deal with their pigs. And we're lucky to have Professor Kochan here back from the first case to talk to us about this one. Professor Kochan.
Prof. Donald Kochan: Great. Thank you very much, Adam.
And as Adam mentioned, I'm going to be talking about National Pork Producers Council v. Ross. This is a Dormant Commerce Clause case. Broadly stated, it's asking the Court to consider what are the limits on state authority to regulate when that state regulation or legislation has extraterritorial effects. In other words, how much extraterritorial effect is too much extraterritorial effect in essence?
So the questions presented in the case are whether the allegations that a state law has dramatic economic effects, largely outside the state, and requires pervasive changes to an integrated nationwide industry, state a violation of the Dormant Commerce Clause or whether the extraterritoriality principle described in the Supreme Court's decisions is now a dead letter. And that language is drawing from a quotation directly from the Ninth Circuit calling it a dead letter or largely a dead letter that I'll talk to you about in just a moment.
And the second question presented is whether such allegations concerning a law that is based solely on preferences regarding out-of-state housing of farm animals stated claim under Pike v. Bruce Church Company -- or excuse me -- Bruce Church Inc. And so those are what the Court is looking at.
So what is the California law at issue here? The California law is a 2018 law where the California's ratified Proposition 13 -- excuse me -- Proposition 12, which bans any business from "knowingly selling whole veal or pork meats that the business owner knows or should know is the meat of an animal confined in a cruel manner." And so, the cruel manner, there's a variety of -- the Act goes into the kind of purposes that it's trying to avoid, but basically, certain levels of confinement without sufficient space limitations and the ability to turn around, etc., is considered a cruel manner. So we have a definition of cruel manner, and it controls how the pigs are actually managed.
As a result, because it is talking about the selling of this inside of California, it means that it's affecting anyone who is doing an out-of-state housing of farm animals and planning to or trying to sell some part in the California market. One of the things that the pork producers ultimately explain is that this is a highly nationalized market in which different pieces of the animals go to different places, and so it's very segmented. And so, if you're doing any kind of farming like this in Connecticut, you're likely to be selling in California just as you are if you're in Michigan or in Georgia. Something's going to flow into the California market meaning that these restrictions essentially control how you would be able to do that if you want to sell in this large and lucrative market known as California.
So the out-of-state pork producers who "sell whole pork meat into California for purposes of human food use in the state" are also required to register with the California department. And the regulations would require if you want to sell pork, for it to be certified by the Department of Food and Agriculture in California, and you also have the possibility of inspections from California agents coming out to other states to look at this.
So the complaint, as characterized by the Ninth Circuit, "alleges that Proposition 12 violates the Dormant Commerce Clause in two ways. First, it impermissibly regulates extraterritorial conduct outside of California borders by compelling out-of-state producers to change their operations to meet California standards. Second, it imposes excessive burdens on interstate commerce without advancing any legitimate local interest because it significantly increases operation costs but is not justified by any animal welfare interest and has no connection to human health or foodborne illness." So that is sort of our second question as to whether or not the Pike v. Bruce Church standard would be met.
Now, this is how the Ninth Circuit characterizes the complaint at first. Obviously, as you look through the Ninth Circuit opinion, and you look through the complaint itself, the complainant, actually, was much more detailed than that, but that gives you the gist of it. It is important that the complaint is more detailed than presented there even as the Ninth Circuit recognizes later, as it goes through the various allegations in the complaint, it's important because we're going to see in a moment that the Ninth Circuit actually rejected this and granted a motion to dismiss claiming that there was not a plausible claim in the complaint of a violation of the Dormant Commerce Clause.
So before we get to the Ninth Circuit's ruling on this and what the Court has to consider, a brief note on what is the Dormant Commerce Clause. Well, to be textually fidelitous, there is no Dormant Commerce Clause. There is no clause which talks about this, but it is the absence of the clause and the implication from the Commerce Clause—the Interstate Commerce Clause—that states are limited in what they can do to regulate activities that are outside their borders. So the basic idea is that if Congress has the power to regulate interstate commerce, then states may not take actions that interfere with interstate commerce because it, in some way, would infringe upon that congressional power. In other words, the decision not to act is still a decision, for example. So Congress not acting in a field doesn't mean that they don't have that exclusive authority to regulate interstate commerce and that it might also violate federalism or interferes with federalism's operation or violates some other basic principles of the Constitution.
There are a span of arguments regarding what constitutes a violation, and there's great debate about it. So it spans from there is no Dormant Commerce Clause. And the Ninth Circuit very quickly points out that Justice Thomas has been highly critical of the existence of the Dormant Commerce Clause. So why do some justices and judges say there is no Commerce Clause? Well, because it's not in -- there's no express text that creates it. They say it's made up. It's not in the Constitution. Others say it might be real, but it's not judicially administrable. Others say it might be real, but it's not for the courts to police. And a variety of justifications come under that, too, likely an invitation to activism on the courts. Others are concerned about separation of powers and evading the province of Congress especially when Congress has the power to preempt states if states are interfering with Congress's power.
Other ways in which the Dormant Commerce Clause has been seen as enforceable would be in direct interference with key national concerns or areas requiring uniformity. Other theories posit that it extends to direct interference where there are attempts to regulate activities internal to another state. Other theories talk about direct discriminatory laws harming out-of-state actors. And yet others talk about direct discriminatory laws privileging in-state actors and thus, indirectly harming out-of-state actors. Another is state laws that have extraterritorial effects that cause indirect rulings on out-of-state actors or activities internal to other states.
Part of the concern with all of this, of course, is that one state will have the ability to impose its policy preferences on other states, who, in our system of federalism, should have the ability to pursue their own policy preferences. And that's especially true when you have one big state with substantial market power like California that can use it to, essentially, bully other states by precluding access to its markets if you do not play by its rules. Of course, whether or not that's constitutionally violative is a bigger question.
So, briefly, I'll point out a couple of things that the Ninth Circuit does. And note that I'm going to talk about some of the rather broad statements that the Ninth Circuit has here which makes me think it would be unlikely that the Court would want to take this case up in order to affirm the Ninth Circuit. It's just such an extreme opinion in that sense that it's more likely that they're either trying to cut it back or say that "Look. This at least should have survived past the motion-to-dismiss stage," whether or not they want to invite further percolation of the issue put before it.
But the Ninth Circuit starts out by saying that under the precedent, "state law violates the Dormant Commerce Clause only in narrow circumstances because the complaint here does not plausibly allege that such narrow circumstances apply to Proposition 12, we conclude the district court did not err in dismissing the complaint for failure to state a claim."
They go on to explain their view of the Dormant Commerce Clause as follows: "Under our precedent, state laws that regulate only conduct in the state, including the sale of products in the state, do not have impermissible extraterritorial effects. A state law may require out-of-state producers to meet burdensome requirements in order to sell their products in the state without violating the" Commerce Clause -- "the Dormant Commerce Clause. Even if a state’s requirements have significant upstream effects outside of the state, and even if the burden of the law falls primarily on citizens of other states, the requirements do not impose impermissible extraterritorial effects. A state law is not impermissibly extraterritorial unless it directly regulates conduct that is wholly out of state." Of course, the idea of recognizing that there's an effects test but then saying that it must be direct seems like a contradiction in terms.
Later—and this is one of the last quotes I'll give you—is that the Court goes on to say, "California is free to regulate commerce and contracts within its borders with the goal of influencing the out-of-state choices of market participants."
So again, there is this strong statement in here, and they end with quoting Justice Thomas, as I mentioned, "While the dormant Commerce Clause is not yet a dead letter, it is moving in that direction. Indeed, some justices have criticized Dormant Commerce Clause jurisprudence as being “unmoored,"—and this is the quote, Thomas quote—"from any constitutional text” and resulting in “policy-laden judgments the courts are ill-equipped and arguably unauthorized to make."
So that is the opinion that needs to be analyzed. I do think that what the Court may be looking at is that this was just too quick a dismissal of the potential claims. They may also want to allow these for some percolation by encouraging more complaints to be brought under the Dormant Commerce Clause by saying that this should have survived past that, which I assume would send the signal to people to file these lawsuits. There is a growing list of similar state laws that try to impose regulations for that purpose, like at the end of the Ninth Circuit opinion, for the purpose of influencing policy choices outside of the state.
And I'll end with one last thing in that all of the briefing was done before Dobbs. I do wonder if those who might have been worried—not as worried about—not as worried about Dormant Commerce Clause issues—on the left of the Court would be more worried now. And I can give you an example. For example, if you were to pass a law in Texas that said you can't have reciprocal privileges to practice in hospitals in Texas if indeed you provide for heart surgery if you indeed also provide abortion services in New York. I think that would survive the Ninth Circuit test, and I'm not sure that that kind of state authority would be welcome by all members of the Court.
Adam Gustafson: Thank you, Professor Kochan. You mentioned that the Court didn't grant to affirm the Ninth Circuit. If it did, I think it would be the first time in a while. I think all of the Ninth Circuit's cases that went to the Court last term were reversed.
If we have any questions, now is the time, so please do raise your hand or submit your question through the Q&A feature.
Professor Kochan, we've got a question here from Jack Park who asks about the implications of California's theory. "If California were to prevail here, what would the limits be? Could it regulate chicken production in Georgia even if only a limited number of those chickens made it to California?"
Prof. Donald Kochan: I think that absolutely. It would be indirect regulation, obviously, but in order to enforce their indirect regulation, they could be sending inspectors to confirm that these Georgia operations are consistent with this. So there could be in-state Georgia California inspectors. But, if indeed, they were trying to -- if any of that Georgia products from those chickens is likely to—or not even likely—is possible to end up in California, then it would have to—in order to enter that market—meet the California standards, which would change the behavior in Georgia unless they didn't want to sell to Californians.
Adam Gustafson: Well, thank you very much. And thank you to our entire panel for your remarks. We got through half of the cases on the Court's October term. Very briefly, the remaining cases are four.
Arellano v. McDonough, which will be heard October 4, concerns the question whether a one-year statutory deadline for veterans' disability claims is subject to equitable tolling. The Veterans Affairs Administration said no, and the federal circuit split evenly en banc.
Reed v. Goertz, will be heard October 11. It's another deadline case, but this one asks whether the statute of limitations begins to run on a Section 1983 claim seeking DNA testing of crime scene evidence either when the state trial court denied the request or, instead, when the appeals process concluded.
Andy Warhol Foundation v. Goldsmith, I think that we heard 12th. I may have got that wrong. You could call that 15 minutes of fame for the Fair Use Doctrine. The case asks whether Warhol's use of a photographic image of the performing artist Prince transformed the original work giving it new purpose and character. So we'll see what the Court does with the purpose and character prong of that test.
Finally, Helix Energy Solutions v. Hewitt asks whether a supervisor making more than $200,000 is entitled to overtime compensation despite a regulatory exemption for highly compensated employees because he was paid on a daily basis rather than by salary.
So that is the opening session for the Court. We've got one question here that we can conclude with from Solveig Singleton. "California has enacted other laws that affect out-of-state firms in particular. There's California's internet privacy law, which in effect, requires a lot of e-commerce operations to comply with California rules. Do the Dormant Commerce Clause rules operate differently with e-commerce?"
Professor Kochan, any thoughts on the implications of this case for e-commerce?
Prof. Donald Kochan: I think that's certainly one thing that has to be concerned. We have the Wayfair decision and other recent e-commerce decisions, which seem to indicate that there are ways in which Dormant Commerce Clause might apply, and so there's no reason why it shouldn't. If it's e-commerce, it makes it harder to figure out where the regulations stop, but I don't see why most of the arguments can't be made to do that. And so, you have a variety of states who have these laws, which do have these extraterritorial effects and are designed to change the policies of other states. So it may be more difficult to administer, and whether the Court wants to take that into account in defining where the Commerce Clause reaches is another question.
Adam Gustafson: Thank you, Professor --
Prof. Donald Kochan: The other way that we might decide, ultimately, that is the need for uniformity, which is a separate standard that we don't have time to talk about today, but the need for uniformity may, in fact, come into play.
Adam Gustafson: Well, thank you for those thoughts, and thanks to our whole panel. I'll turn it back to you, Nate.
Nathan Kaczmarek: Well, as promised, an exciting, informative, and efficient preview. Our thanks to Adam, Donald, Patrick, Charles, and Mike for your time and expertise. We look forward to having an opportunity to invite each of you back again soon. We welcome audience feedback by email at email@example.com. Thank you all for joining us. Have a great day.