USCA1 Opinion
UNITED STATES COURT OF APPEALS UNITED STATES COURT OF APPEALS
FOR THE FIRST CIRCUIT FOR THE FIRST CIRCUIT
____________________
No. 95-1243
UNITED EGG PRODUCERS, ET AL.,
Plaintiffs, Appellees,
v.
DEPARTMENT OF AGRICULTURE OF THE
COMMONWEALTH OF PUERTO RICO, ET AL.,
Defendants, Appellants.
____________________
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF PUERTO RICO
[Hon. Juan M. Perez-Gimenez, U.S. District Judge] ___________________
____________________
Before
Torruella, Chief Judge, ___________
Campbell, Senior Circuit Judge, ____________________
and Watson,* Senior Judge. ____________
____________________
Edgardo Rodriguez-Quilichini, Assistant Solicitor General, with _____________________________
whom Carlos Lugo-Fiol, Solicitor General, and Jacqueline Novas-Debien, ________________ _______________________
Acting Deputy Solicitor General, were on brief for appellants.
Philip C. Olsson with whom Olsson, Frank and Weeda, Enrique M. _________________ _________________________ __________
Bray and Nachman, Santiago, Bray & Guillemard were on brief for ____ _______________________________________
appellees.
____________________
March 6, 1996
____________________
*Of the United States Court of International Trade, sitting by
designation.
____________________
CAMPBELL, Senior Circuit Judge. Defendants-appellants the Puerto Rico ____________________
Department of Agriculture and its former Secretary, Alfonso D vila, in
his individual and official capacities, challenge an order of the
United States District Court for the District of Puerto Rico granting
a permanent injunction against the enforcement of Puerto Rico Market
Regulation Number 3, section X(F). Section X(F) requires that eggs
imported into Puerto Rico from the mainland United States be stamped
with the two-letter postal code of the state of origin. The district
court ruled in favor of plaintiffs-appellees United Egg Producers and
Instituto Puertorrique o de Carnes, Inc.,1 after determining that
section X(F) imposed a substantial burden on interstate commerce
contrary to the Dormant Commerce Clause.
I. The Egg Products Inspection Act and Section X(F) I. The Egg Products Inspection Act and Section X(F)
Although not a state, the Commonwealth of Puerto Rico is subject
to the constraints of the Dormant Commerce Clause to the same degree
as are the states. Trailer Marine Transp. Corp. v. Rivera Vazquez, _____________________________ _______________
977 F.2d 1, 7 (1st Cir. 1992). In the proceedings below, the district
court ruled that the regulation in question, Puerto Rico Market
Regulation Number 3, section X(F), was an impermissible burden on
interstate commerce hence invalid under the Dormant Commerce Clause.
____________________
1United Egg Producers is an Atlanta, Georgia, national trade
association whose members include egg producers in every state.
Instituto Puertorrique o de Carnes, Inc., is a San Juan, Puerto Rico,
trade association representing Puerto Rican distributors of food
products.
3
Section X(F) requires the labeling of eggs imported from elsewhere in
the United States into Puerto Rico:
Imported eggs to be marketed in Puerto Rico shall have the
letters from the state of origin if produced in a state of
the United States using the initials established by the
United States Postal Service, . . . stamped on each egg, as
established by the Egg Products Inspection Act (21 USC 1031,
Section 23 b,2).
Puerto Rico Market Regulation Number 3, section X(F). Section X(F)
purports to have been promulgated in conformity with the Egg Products
Inspection Act (EPIA), which provides that:
no State or local jurisdiction other than those in _____________________________________________
noncontiguous areas of the United States may require labeling ________________________________________
to show the State or other geographical area of production or
origin.
21 U.S.C. 1052(b)(2) (emphasis supplied). Puerto Rico is, of
course, one of the noncontiguous jurisdictions excepted from the
statute's prohibition against egg-labeling.
This appeal presents two main questions: (1) whether section X(F)
of Puerto Rico's Market Regulation Number 3 was, in effect,
Congressionally authorized, so as to be beyond the reach of the
constraints of the Dormant Commerce Clause; and (2) if the Dormant
Commerce Clause is applicable, whether section X(F) impermissibly
burdens interstate commerce. We address each of these issues.
II. Congressional Authorization II. Congressional Authorization
The Commerce Clause provides that "Congress shall have Power . .
. To regulate Commerce . . . among the several States." U.S. Const.
art. I, 8, cl. 3. The Supreme Court has interpreted this
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affirmative grant of authority to Congress as also establishing what
has come to be called the Dormant Commerce Clause -- a self-executing
limitation on state authority to enact laws imposing substantial
burdens on interstate commerce even in the absence of Congressional
action. See South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, ___ _______________________________ ________
87 (1984). The Dormant Commerce Clause does not, however, apply to
state or local regulations directly authorized by Congress. "It is .
. . clear that Congress may 'redefine the distribution of power over
interstate commerce' by 'permit[ting] the states to regulate the
commerce in a manner which would otherwise not be permissible.'" Id. ___
at 87-88 (quoting Southern Pac. Co. v. Arizona ex rel. Sullivan, 325 _________________ ________________________
U.S. 761, 769 (1945)); see also White v. Massachusetts Council of _________ _____ _________________________
Constr. Employers, 460 U.S. 204, 213 (1983); New England Power Co. v. _________________ _____________________
New Hampshire, 455 U.S. 331, 340 (1982). Thus, state or local ______________
jurisdictions operating under "Congressional consent" are free to
enact laws burdening interstate commerce.
The standard for finding Congressional consent is, however, high.
Congressional consent to otherwise impermissible state regulation must
be either "expressly stated," Sporhase v. Nebraska ex rel. Douglas, ________ _________________________
458 U.S. 941, 960 (1982), or "made unmistakably clear," South-Central, _____________
467 U.S. at 91. The state or local jurisdiction (in this case the
Commonwealth of Puerto Rico) has the burden of demonstrating Congress'
unmistakably clear intent to allow otherwise discriminatory
regulations. Wyoming v. Oklahoma, 502 U.S. 437, 458 (1992). _______ ________
To determine if Congressional consent was extended here, so as
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to authorize Puerto Rico's labeling regulation regardless of its
impact on commerce, we begin by examining Congress' language. In
section 1052(b)(2), Congress did not state affirmatively that
noncontiguous jurisdictions could "require labeling to show the State
or other geographical area of production or origin." Instead,
Congress excepted "noncontiguous areas of the United States" including
Puerto Rico, from the blanket prohibition it was placing upon egg-
labeling in all other places. 21 U.S.C. 1052(b)(2). Read literally,
1052(b)(2) can be said to go no further than to exempt Puerto Rico
from Congress' own egg-labeling ban. The exemption is consistent with
intending to allow Puerto Rico to adopt only egg-labeling requirements
that do not otherwise violate the Dormant Commerce Clause -- i.e.,
regulations justified by a legitimate state interest, such as to
protect the health of its residents, that could not be met via
nondiscriminatory alternatives.2
To be sure, the statutory exemption is perhaps susceptible to a
reading going beyond the above. One can argue that as Congress had
____________________
2Before the enactment of 1052(b)(2), any egg-labeling
requirements passed by the states would have been subject to Dormant
Commerce Clause analysis and upheld only if they did not substantially
burden interstate commerce or if the burden on interstate commerce was
justified by a legitimate state interest. After the enactment of
1052(b)(2), states in contiguous areas of the United States were
prohibited from enacting any egg-labeling requirements, regardless of
whether it was possible to compose such a requirement in such a way as
to withstand Dormant Commerce Clause scrutiny. In addition, in
1052(b)(2), Congress indicated a preference for Puerto Rico and other
noncontiguous areas of the United States by specifically exempting
them from its blanket prohibition on egg-labeling.
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before it the whole subject of egg-labeling, its exemption of
noncontiguous jurisdictions must be understood to signify, by
implication, Congressional approval of any and all egg-labeling
requirements in those places regardless whether justified or
unjustified by Dormant Commerce Clause considerations. But this seems
to us a more extreme reading than either the statutory language or
legislative history necessitates.3 Absent, at least, an
affirmatively stated grant of permission to noncontiguous
jurisdictions of the United States to require egg-labeling, we are
unable to conclude that appellants have met their burden of showing
that Congress' intent to allow Puerto Rico to enact protectionist egg-
labeling regulations was "unmistakably clear." See e.g., Maine v. ___ ____ _____
Taylor, 477 U.S. 131, 139 (1986) (holding that state statutes are ______
exempt "from the implied limitations of the [Commerce] Clause only
when the congressional direction to do so has been 'unmistakably
clear'"); South-Central, 467 U.S. at 90 (finding that "on those _____________
occasions in which consent has been found, congressional intent and
____________________
3The legislative history of 1052(b)(2) is silent on whether
Congress intended to immunize regulations like section X(F) from
Dormant Commerce Clause scrutiny. It is true that the United States
Department of Agriculture, arguing in opposition to the exemption,
stated that 1052(b)(2)'s "exemption would allow ... Puerto Rico ...
to require eggs shipped from the continental United States to be
labeled" and therefore recommended eliminating the exemption in order
to "eliminate trade barrier labeling requirements." H.R. Rep. No.
1670, 91st Cong., 2nd Sess. (1970). We are, however, unsure what
weight, if any, to accord to the Department's position, given that the
Department did not expressly refer to the Dormant Commerce Clause and
given that Congress decided to exempt noncontiguous jurisdictions from
its prohibition on egg-labeling in spite of the Department's
objection.
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policy to insulate state legislation from Commerce Clause attack have
been 'expressly stated'"). We agree with the district court that
"[a]lthough the E.P.I.A. permits noncontiguous areas to impose a
labeling requirement, the statute does not permit such a requirement
to be imposed in a manner that discriminatorily burdens interstate
commerce."
III. Dormant Commerce Clause Analysis III. Dormant Commerce Clause Analysis
Having determined that section X(F) was not Congressionally
authorized in such a fashion as to exempt it from Dormant Commerce
Clause scrutiny altogether, we turn to the question whether section
X(F) violates the Clause. We must decide whether section X(F)
discriminates against interstate commerce by disproportionately
impairing out-of-state commerce, and, if so, whether Puerto Rico can
justify such discrimination. Trailer Marine, 977 F.2d at 10-12. ______________
A regulation that discriminates against interstate commerce may
be facially discriminatory or may be neutral on its face but
discriminatory in effect. Pike v. Bruce Church, Inc., 397 U.S. 137, ____ __________________
142 (1970). Here, the Puerto Rico Department of Agriculture has
promulgated a regulation which imposes a burden on other United States
jurisdictions -- namely, egg-labeling -- that is not imposed on Puerto
Rico. The record amply supports the district court's finding that "if
enforced, [section] X(F) would impose on mainland and foreign egg
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producers significant costs not imposed on Puerto Rican producers."4
Thus, section X(F) facially discriminates against interstate commerce.
Because section X(F) discriminates against interstate commerce,
the burden falls on appellants to show that it "serves a legitimate
local purpose" that could not be served "as well without
discriminating against interstate commerce." Hughes v. Oklahoma, 441 ______ ________
U.S. 332, 336 (1979). Appellants argue that section X(F) serves a
legitimate state interest in protecting the health of Puerto Rican
consumers. They argue that imposing a labeling requirement on
imported eggs will enable authorities to remove from supermarkets eggs
produced in a geographic area known to be the source of an outbreak of
salmonella poisoning. However, appellants failed to support this
assertion with any evidence showing (1) whether there is a substantial
problem with salmonella in eggs; (2) whether egg-labeling is an
efficient way to trace contaminated eggs;5 (3) whether section X(F)
____________________
4The evidence produced below tended to show that section X(F)
would increase the market price of eggs imported into Puerto Rico from
other United States jurisdictions, to the advantage of locally-
produced eggs. For example, the Vice President of Radlo Brothers, a
company which exports eggs to Puerto Rico, testified that in order to
comply with section X(F) he would have to purchase new machinery for
each of his thirty-five locations from which he ships eggs to Puerto
Rico. He further testified that such egg-labeling would hinder his
ability to satisfy his other clients' emergency needs, because these
clients would likely not accept labeled eggs.
5The utility of egg-labeling as a means of tracing contaminated
eggs is not self-evident. Testimony by the Vice President of United
Egg Producers described a process by which tainted eggs are traced
back to the farm that produced them through the standard documentation
already used by packers and producers.
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was passed with the purpose of tracing contaminated eggs; and (4)
whether eggs imported from elsewhere in the United States are more
likely to be contaminated than eggs imported from other countries that
need only be labeled "foreign." We therefore accept the district
court's finding that appellants "did not offer evidence proving that
the discriminatory burden of [section] X(F) is justified by any factor
'unrelated to economic protectionism.'" See New Energy Co. v. ___ ________________
Limbach, 486 U.S. 269, 274 (1988). We hold that section X(F) violates _______
the Dormant Commerce Clause, and affirm the order of the district
court granting a permanent injunction against the enforcement of
section X(F).
So Ordered. So Ordered. ___________
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