
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                                          4        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                                          5        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.                                          6        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.                                            7        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                                          8        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.                                          9        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.        ___________                                          10
