The Commerce Clause Vs. The California Progressive Agenda – Pacific Research Institute

The Commerce Clause Vs. The California Progressive Agenda

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So it would seem that Nevada Gov. Joe Lombardo has a valid legal point when he told California Gov. Gavin Newsom that he is troubled by the prospect of California’s environmental laws increasing gasoline prices in Nevada.

Isn’t it written somewhere that one state can’t enact policies that interfere with commerce between other states? Maybe in the Constitution? Maybe in Article I, Section 8, Clause 3?

This passage, known as the Commerce Clause, says that Congress shall have the power “to regulate commerce with foreign nations, and among the several states, and with the Indian Tribes.” According to Congress, the clause “​​restricts states from impairing interstate commerce.” Scholars at the Constitution Center say the clause was written in part because states had “erected an assortment of trade barriers to protect their own businesses from competing firms in neighboring states.”

“​​The Commerce Clause,” says the Cato Institute, “actually provides protections for businesses against state regulations that burden interstate commerce.”

So it would seem that Nevada Gov. Joe Lombardo has a valid legal point when he told California Gov. Gavin Newsom that he is troubled by the prospect of California’s environmental laws increasing gasoline prices in Nevada.

“Since 88 percent of Nevada’s fuels are delivered via pipeline and truck from refineries in California, it’s no surprise that California’s fuel policies significantly impact the costs and availability of fuel for Nevada residents and businesses,” Lombardo wrote in a May 14 letter to Newsom. “I wanted to express my concerns about the unintended consequences of California’s SBX1-2 legislation, which could further raise gas prices for both of our constituencies.”

Lombardo believes California “​​is getting closer to announcing a profits cap structure” under the law and asked for “an assessment of potential impacts of this approach across the West, including not only California, but Nevada and Arizona too” before the state proceeds.

“To assist with this, my Office of Energy stands ready to immediately engage in proactive conversations with the California Energy Commission.”

Newsom’s flippant response through his spokesperson (as he was probably too busy himself preparing for his Vatican climate speech):

“This is a stunt to appease Gov. Lombardo’s Big Oil donors, who contributed tens of thousands of dollars to his campaign. He’s parroting their talking points.”

Those are interesting words from an office that reflexively and without critical thought repeats the lines of green groups and activists determined to send civilization back to the 19th century.

Should Lombardo pursue legal action, it wouldn’t be the first time a state’s environmental policy was challenged based on its effects outside state lines. Colorado’s Renewable Energy Standard was tested in court by plaintiffs who said the requirements the state put forward in demanding that utilities acquire 30 percent of their power from renewable sources, including those out of state, had:

  • “​​The practical effect of controlling commerce occurring entirely outside the boundaries of the state in question.”
  • And imposed “a burden on interstate commerce which is not commensurate with the local benefits secured.”

The plaintiffs lost with the court holding “that Colorado’s regime evaded Commerce Clause scrutiny because it did not consist of pure price controls.” Cato scholars nevertheless argue that the regulations have “a clear anticompetitive and protectionist effect on the interstate energy” and favor “in‐​state (complying) producers over out‐​of‐​state ones.”

California has interfered with commerce in other states before and gotten away with it. Voters passed Proposition 12 in 2018, which “established regulations for housing laying hens, veal calves, and hogs whose food products – eggs, veal, and pork – would be sold in California,” says PRI fellow Pam Lewison. It “​​also included a specific detail forcing adoption of the rules by every other state in the United States: no eggs, veal, or pork could be sold in California – regardless of place of origin – if California’s housing rules were not followed.”

Pork producers and the American Farm Bureau Federation challenged the law because it would impact their costs if they continued selling in California. The average farm was going to have to spend $3.5 million to retrofit its facilities to comply with the law. The producers were of course free to walk away but didn’t want to lose the California market because it is a lucrative one for them. The state consumes 15% of domestically produced pork but has to import almost all of it from other states as it is responsible for less than 1% of all U.S. pork production. The case went all the way to the U.S. Supreme Court, where the plaintiffs lost.

Lombardo will probably lose, too. No matter how reasonable his and other complaints are, California will fight bitterly to keep its progressive agenda on track, no matter the cost to others. Nothing is more important to California policymakers.

Kerry Jackson is the William Clement Fellow in California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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