Summary of a Recent
Judicial Development in
Corporate Farming Laws

Court Declines to Rule on Constitutionality
of Amended Iowa Packer Ban

Ross H. Pifer
National AgLaw Center Graduate Assistant

Summary of Decision

In Smithfield Foods, Inc., v. Miller, 367 F.3d 1061 (8th Cir. 2004), the United States Court of Appeals for the Eighth Circuit ruled that, based on the record before it, it was unable to determine whether the amended Iowa Packer Ban, Iowa Code § 9H.2, unconstitutionally discriminated against interstate commerce. The court therefore remanded the case to the district court for further consideration. See id. at 1066.

Background

Plaintiff Smithfield Foods, Inc. (Smithfield) is a large, vertically integrated pork producer. See id. at 1063. Defendant, Thomas J. Miller, is the Iowa Attorney General. See id. at 1061. Smithfield, through a subsidiary company, contracted "for the feeding and care of swine in Iowa." Id. at 1063. In 2002, the Iowa legislature amended its packer ban on livestock ownership to "prohibit[ ] processors from financing a swine operation in Iowa or 'a person who directly or indirectly contracts for the care and feeding of swine in [Iowa].'" Id. (quoting 2002 Iowa Acts ch. 1095, § 4(1)(b)(1)(b)). At the time of the passage of this legislation, the law provided an exception for cooperatives involved in contracting activity. See id.

Smithfield brought an action to challenge the constitutionality of the statute and the district court ruled that "section 9H.2 violated the dormant Commerce Clause, because section 9H.2 discriminated against out-of-state entities on its face, in its purpose, and in its effect." Id. at 1063-64. The district court also ruled that "the cooperative exception rendered section 9H.2 facially discriminatory." Id. at 1064. The Attorney General appealed the district court ruling to the Eighth Circuit. See id. While on appeal, the Iowa legislature amended § 9H.2 by repealing the cooperative exception. See id.

Analysis and Holding

The court examined the standard by which it was required to review this case and stated that it "must review the challenged Iowa law as it now exists, not as the law existed at the time of the district court's judgment." Id. Before considering the merits of the appeal, the court determined that the repeal of the cooperative exception had not rendered this appeal to be moot because "[s]ection 9H.2 appear[ed] to disadvantage Smithfield the same way it did before the 2003 amendment." Id.

The court began its analysis of the constitutionality of § 9H.2 by stating, "[t]he dormant Commerce Clause prohibits states from 'enact[ing] laws that discriminate against or unduly burden interstate commerce.'" Id. (quoting South Dakota Farm Bureau, Inc., v. Hazeltine, 340 F.3d 583, 592 (8th Cir. 2003)). The court explained that there were three indicators of discrimination against interstate commerce. See id. "First, a statute is adopted with a discriminatory purpose. Second, a statute has a discriminatory effect. Third, a statute discriminates against interstate commerce on its face." Id. at 1065 (citations omitted). On the record before it, the court concluded that it was unable to determine whether § 9H.2, as amended in 2003, had either a discriminatory purpose or a discriminatory effect. See id. at 1065-66. The court also did not rule on whether the statute was discriminatory on its face because the record was insufficient to enable the court to determine whether any portions of the statute could "be saved by severing any offending language." Id. at 1066.

Therefore, the court remanded the case to the district court "for discovery and for consideration of whether the new section 9H.2 unconstitutionally discriminate[d] against interstate commerce." Id. The court added that "[i]f the district court concludes section 9H.2 only incidentally discriminates against interstate commerce, the district court must determine whether 'the burden imposed on [interstate] commerce is clearly excessive in relation to the putative local benefits.'" Id. (citation omitted).

The case was decided on May 21, 2004; this summary was posted Jan. 13, 2005.