                                 ATTORNEY GENERAL OF TEXAS
                                               GREG         ABBOTT




                                                     May 6,2008



The Honorable Warren Chisum                                Opinion No. GA-0623
Chair, Committee on Appropriations
Texas House of Representatives                             Re: Whether a foreign corporation may transport
Post Office Box 2910                                       horsemeat for human consumption in-bond through
Austin, Texas 78768-2910                                   Texas for immediate export abroad (RQ-0623-GA)

Dear Representative Chisum:

        Chapter 149 ofthe Texas Agriculture Code makes it a criminal offense for any person to sell
horsemeat as food for human consumption, possess horsemeat with the intent to sell it as food for
human consumption, or transfer horsemeat to a person who intends to sell it as food for human
consumption.! See TEX. AGRIc. CODE ANN. §§ 149.002-.003 (Vernon 2004). You provide a
"factual backdrop" and ask, in light of those facts, "[w]hether Chapter 149 applies to a foreign
corporation that transports horsemeat for human consumption in~ bond2 through Texas for immediate
export to foreign destinations."3

I.       Legal Background

        To provide a context for your question and its factual backdrop summarized below, we
review chapter 149 and administrative and judicial authorities construing the Texas statute and a
similar Illinois statute.


           1All subsequent references in this opinion to the sale, possession, or transfer of horsemeat is intended to refer
to its sale as food for human consumption, possession with intent to sell it as food for human consumption, or transfer
to a person who intends to sell it as food for human consumption consistent with sections 149.002 and 149.003 of the
Agriculture Code.

          2Merchandise destined for a foreign country may be entered and transported through the United States by
posting a bond in an amount sufficient to cover the assessment ofduties should the merchandise be lost or diverted before
its ultimate departure abroad. United States v. Watches, Watch Parts, Calculators & Misc. Parts, 692 F. Supp. 1317,
1318 n.1 (S.D. Fla. 1988). Such merchandise is described as being "in-bond" and may be entered into the United States
by a bonded carrier without the assessment or payment of duties. Id.

        3Letter from Honorable Warren Chisum, Chair, Committee on Appropriations, Texas House ofRepresentatives,
to Honorable Greg Abbott, Attorney General ofTexas, at 1-2 (Sept. 13,2007) (footnote added) (on file with the Opinion
Committee, also available at http://www.oag.state.tx.us) [hereinafter Request Letter].
The Honorable Warren Chisum - Page 2               (GA-0623)



       A.    Chapter 149

       Section 149.002 of the Agriculture Code criminalizes the sale and possession of horsemeat
intended for sale as food for human consumption:

               A person commits an offense if:

               (1) the person sells, offers for sale, or exhibits for sale horsemeat
               as food for human consumption; or

               (2) the person possesses horsemeat with the intent to sell the
               horsemeat as food for human consumption.

TEX. AGRIc. CODE ANN. § 149.002 (Vernon 2004).

         Additionally, section 149.003 criminalizes the transfer ofhorsemeat to a person who intends
to sell it for human consumption:

               A person commits an offense if the person:

               (1) transfers horsemeat to a person who intends to sell the
               horsemeat, offer or exhibit it for sale, or possess it for sale as food for
               human consumption; and

               (2) knows or in the exercise of reasonable discretion should know
               that the person receiving the horsemeat intends to sell the horsemeat,
               offer or exhibit it for sale, or possess it for sale as food for human
               consumption.

Id. § 149.003; see also ide § 149.005 (providing that an offense under chapter 149 is.punishable by
a fine, confinement in jail, or both).

       B.    Attorney general opinion

        In a 2002 attorney general opinion, this office advised that chapter 149 applied to "horse
slaughter plants in Texas that process, possess, sell, or transport horsemeat to foreign countries as
food for human consumption in those countries." Tex. Att'y Gen. Ope No. JC-0539 (2002) at 3.
This office advised in the same opinion that the Federal Meat Inspection Act did not preempt chapter
149. Id. at 4.

       C.    Judicial rulings

      After learning of the attorney general opinion, two horsemeat slaughterhouses operating in
Texas-Beltex and Dallas Crown-and a third operating in Mexico but selling and transferring
The Honorable Warren Chisum - Page 3                       (GA-0623)



horsemeat to Beltex-Empacadora de Carnes de Fresnill04-sued in federal district court for a
judicial declaration of their legal rights and to enjoin potential prosecution under chapter 149. See
Empacadora de Carnes de Fresnillo v. Curry, 476 F.3d 326, 329 (5th Cir.) (reciting factual
background to litigation), cert. denied, 127 S. Ct. 243 (2007). The district court ruled in favor ofthe
slaughterhouses, holding that the statute was implicitly repealed by other state regulations, was
preempted by the Federal Meat Inspection Act, and violated the federal dormant Commerce Clause.
Id.; see also Empacadora de Carnes de Fresnillo v. Curry, 2005 WL 2074884 (N.D. Tex. 2005).

        In a decision issued in 2007, the Fifth Circuit Court ofAppeals overruled the federal district
court and upheld chapter 149 against the three slaughterhouses' statutory and federal constitutional
challenges. See Empacadora de Carnes de Fresnillo, 476 F.3d at 328-29. The court held that
chapter 149 (1) was not repealed by other state regulations and was in force, (2) was not preempted
by the Federal Meat Inspection Act, and (3) did not violate the federal dormant Commerce Clause.
See id. at 329. Significantly, as relevant here, the court's dormant Commerce Clause analysis and
holding were limited to "sales and activity that take place directly in Texas." Id. at 335. The court
expressly carved out the situation and question apparently presented here: "We do not address the
potential application ofChapter 149 to an entity that merely transports horsemeat through Texas but
engages in no other commercial activity within the State, as Empacadora speculates that it may do
one day." Id. (emphasis added); see also id. (noting "[t]hat hypothetical situation is not before us"
and that prosecuting a company that merely transports meat through Texas "would raise unique
dormant Commerce Clause concerns-specifically with regard to the Foreign Commerce Clause").

         After the Fifth Circuit Court of Appeals decision, the two Texas slaughterhouses ceased
slaughtering horses. See Cavel Int'l, Inc. v. Madigan, 500 F.3d 551, 552 (7th Cir. 2007) (reciting
factual background to Illinois litigation). Thereafter, the only remaining horse slaughterhouse in the
United States shut down its operation after the Seventh Circuit Court of Appeals upheld an Illinois
statute, similar to the Texas statute, prohibiting the slaughter of horses and the sale, import, export,
and possession of horsemeat intended for human consumption. See id.; see also Empacadora de
Carnes de Fresnillo, 476 F.3d at 335 n.7 (noting that the only American producer of horsemeat for
human consumption outside of Texas operated in Illinois). The Illinois statute was challenged by
Cavel International, a subsidiary of a Belgian company, whose entire output of horsemeat was
exported to Belgium, France, and Japan. Cavel Int'l, Inc., 500 F.3d at 552-53; see also id. at 552
(noting that Americans no longer eat horsemeat). The Seventh Circuit Court ofAppeals determined
that the Illinois statute was not preempted by the Federal Meat Inspection Act and did not violate the
dormant Commerce Clause. See id. at 554-57.

         It has been reported that with the closure of the horse slaughter operations in the United
States, the horsemeat industry has turned to Mexico and Canada where horses taken from Texas and
New Mexico are slaughtered for their meat for export abroad. See Suzanne Gamboa, Horses on way
to slaughter staying in tax-fundedpens, San Antonio Express-News, Oct. 4, 2007; Suzanne Gamboa,


         4Beltex owned a controlling interest in Empacadora de Carnes de Fresnillo. See Empacadora de Carnes de
Fresnillo v. Curry, 476 F.3d 326,329 (5th Cir.) (reciting factual background to litigation), cert. denied, 127 S. Ct. 243
(2007).
The Honorable Warren Chisu;m - Page 4                   (GA-0623)




State helping get horses to slaughter in Mexico, The Austin American-Statesman, Oct. 3,2007. 5 The
meat is primarily exported to Japan, Italy, Belgium and France. 2005-2006 Legislative Review, 12
ANIMAL L. 277,280 n.16 (2006). With this background, we tum to the factual backdrop you provide
for your question. See Request Letter, supra note 3, at 1-2.

II.     Factual Backdrop

        You inform us that "foreign corporations" operate horse slaughterhouses that process
horsemeat for human consumption. Id. at 1. This horsemeat is sold only in foreign nations,
particularly in Europe. Id. The horsemeat, you inform us, travels through the United States
"'in-bond,' meaning that the product is merely passing through [United States] territory prior to
immediate export, and thus, no custom, duties, or import taxes are assessed upon it." Id. (citing 19
U.S.C. § 1553 (2000) and 19 C.F.R. § 18.10 (2007)). You suggest that in-bond transportation of
horsemeat through Texas is governed by federal law-section 1553 of the Tariff Act of 1930,
19 U.S.C § 1553, and the regulations promulgated thereunder and codified at 19 C.F.R. § 18.21. Id
at 2.

        The information we are provided is limited. You do not indicate how or why the horsemeat
is "transported" through Texas or its ultimate destination in Texas from which it is exported abroad.
You also do not identify any particular corporations or otherwise elaborate on the foreign
corporations about which you ask. The term "foreign corporation" under Texas law may be used to
describe a corporation formed under a jurisdiction other than Texas. See, e.g., TEX. Bus. ORGS.
CODE ANN. § 21.002(7) (Vernon 2007); TEX. Bus. CORP. ACT ANN. art. 1.02(A)(14) (Vernon Supp.
2007) (defining "foreign corporation"). However, based on (i) the use of the term in the context of
your letter, (ii) the Fifth Circuit Court ofAppeals' statement in Empacadora de Carnes de Fresnillo
that it was not addressing the "application of Chapter 149 to an entity that merely transports
horsemeat through Texas but engages in no other commercial activity within the State, as
Empacadora [owned by Beltex, but operating in Mexico] speculates it may do one day,"
Empacadora de Carnes de Fresnillo, 476 F.3d at 335,6 and (iii) reports indicating that after the
closure ofthe Texas and Illinois slaughterhouses, horses are slaughtered for their meat in Canada and
Mexico, we understand you to refer more loosely to a corporation that is formed under a jurisdiction
other than the United States and that slaughters horses at a location outside the United States.

III.     Statutory Preemption

      You ask whether section 1553 of the Tariff Act of 1930 and the federal regulations
promulgated thereunder govern the in-bond transport of horsemeat through Texas by foreign


          5See also Letter Brieffrom Rebecca G. Judd, Esq., The Humane Society ofthe United States, to Honorable Greg
Abbott, at 2 (Nov. 6, 2007) ("Each year, tens of thousands of American horses are exported from the United States to
Mexico to be slaughtered for human consumption in Europe and Asia."); Amicus Curiae Brief ofAnuj A. Shah, Texas
Citizen, at 3-4 (received Nov. 5, 2007) ("Because the slaughterhouses [in the United States] have been shut down, the
horses that were once slaughtered in Texas are being shipped to Mexico.").

         6See also infra note 8.
The Honorable Warren Chisum - Page 5                  (GA-0623)



corporations for sale abroad. See Request Letter, supra note 3, at 1-2. Section 1553 provides in
relevant part:

                 Any merchandise, other than explosives and merchandise the
                 importation of which is prohibited, shown by . . . document to be
                 destined to a foreign country, may be entered for transportation in
                 bond through the United States by a bonded carrier without
                 appraisement or the payment of duties and exported under such
                 regulations as the Secretary of the Treasury shall prescribe ....

19 U.S.C. § 1553(a) (2000); see also id. § 1553(b) (stating that regulations "shall not permit the
transportation of lottery materials in the personal baggage of a traveler"). Citing to 19 C.F.R.
§ 18.21 (b), you state that the only products specifically prohibited by federal regulation in addition
to explosives and some lottery tickets, are illegal narcotics. Request Letter, supra note 3, at 2.
Section 18.21(b) provides:

                 Narcotics and other articles prohibited admission into the commerce
                 of the United States shall not be entered for transportation and
                 exportation . . . , except that exportation or transportation and
                 exportation may be permitted upon written authority from the proper
                 governmental agency and/or compliance with the regulations ofsuch
                 agency.

19 e.F.R. § 18.21(b) (2007); see also id. § 18.21(d) (prohibiting entry of explosives unless the
importer has obtained a license or permit from the proper governmental agency). Finally, you note
that "[h]orsemeat is not precluded from in-bond transportation through the [United States]." Request
Letter, supra note 3, at 2.

        Based on your question and statements summarized above, we understand you to suggest that
section 1553 apd the cited regulations promulgated thereunder may preempt chapter 149 ofthe Texas
Agriculture Code. As indicated earlier, the Fifth Circuit Court ofAppeals in Empacadora de Carnes
de Fresnillo in its statutory preemption analysis addressed only the Federal Meat Inspection Act and
held that it did not preempt chapter 149. See Empacadora de Carnes de Fresnillo, 476 F.3d at
333-36. Here, we·consider only section 1553 and the federal regulations you specifically raise. 7
However, because we have been provided with limited information and no legal arguments
specifying how or why the federal law preempts chapter 149, our analysis is necessarily general and
necessarily speculative to the extent it is premised on certain factual and legal assumptions regarding
what those arguments would be.




         7Your question necessarily assumes that sections 149.002 and 149.003 by their literal terms apply to the
transport of the horsemeat through Texas for export abroad for human consumption; thus, we also assume such
application and consider only the federal challenge you raise.
The Honorable Warren Chisum - Page 6              (GA-0623)



       A.    Legal presence

        Before proceeding with the general statutory preemption analysis, we consider your statement
that goods transported in-bond, including horsemeat, through Texas or other states are "deemed not
to be present-and thus are not taxed or dutied." Request Letter, supra note 3, at 1-2. We
understand you to suggest that based on the federal law, horsemeat transported in-bond through
Texas is not legally present for the purposes of chapter 149. You cite no authority, and we have
found none to support the general proposition that goods transported in-bond through the states are
not legally present there. See, e.g., United States v. Watches, Watch Parts, Calculators & Misc.
Parts, 692 F. Supp. 1317, 1322 (S.D. Fla. 1988) ("The merchandise, though in-bond, was imported
and admitted for entry for purposes of applying the Trademark Act of 1946, 15 U.S.C. § 1124.").
Neither section 1553 nor the federal regulations you cite make such a statement. 19 U.S.C. § 1553
(2000); 19 C.F.R. §§ 18.1, .10-.11, .20-.21 (2007). But even assuming that such a proposition could
be derived from section 1553 and the related regulations, in the context of the federal law, goods
transported in-bond would not be legallypresent in a state for the purposes ofimposing fees, duties,
or taxes as your statement appears to acknowledge. See Request Letter, supra note 3, at 1-2 (stating
that goods transported in-bond are "deemed not to be present-and thus are not taxed or dutied").

       B.     General statutory preemption principles

        We begin our statutory preemption analysis by reviewing its underlying basis and
fundamental principles. Under the Supremacy Clause ofthe United States Constitution, Congress
has the power to preempt state law. Crosby v. Nat'l Foreign Trade Council, 530 U.S. 363, 372
(2000). When addressing preemption claims, a court's "'sole task is to ascertain the intent of
Congress.'" Empacadora de Carnes de Fresnillo, 476 F.3d at 333 (quoting Cal. Fed Save & Loan
v. Guerra, 479 U.S. 272, 280 (1987)). Preemption is not "lightly presumed." Id. Federal law can
expressly preempt state law. Id. But even if the federal law does not expressly preempt state law,
"it may do so implicitly by directly conflicting with [state law] or by occupying a field so pervasively
as to naturally exclude [state law]." Id. (citing Perry v. Mercedes Benz olN Am., Inc., 957 F.2d
1257, 1261 (5th Cir. 1992)); see also Crosby, 530 U.S. at 373 n.6 ("We recognize, of course, that
the categories of preemption are not 'rigidly distinct.''').

        c.    Section 1553

         In order to determine congressional intent by applying these statutory preemption doctrines,
it is necessary to consider and understand the express provisions of the federal law at issue here.
Under section 1553 of the Tariff Act, any merchandise-other than explosives and those whose
importation is prohibited-destined for a foreign country may be entered and transported through
the United States "in bond" without the appraisement or payment of duties and then exported. See
19 U.S.C. § 1553(a) (2000). The related federal regulations detail the requirements and procedures
applicable to the transport of such merchandise. See, e.g., 19 C.F.R. §§ 18.1, .10-.11, .20-.21
(2007). Section 18.10, for instance, provides for the different types of "entries and withdrawals,"
including"[e]ntry for immediate transportation without appraisement" and"[e]ntry for exportation."
Id. § 18.10(1), (5). Section 18.11 provides how such entries must be made for particular types of
The Honorable Warren Chisum - Page 7               (GA-0623)




merchandise. Id. § 18.11. And section 18.21 prohibits the entry for transportation and exportation
of "[n]arcotics and other articles prohibited admission into the commerce of the United States"
unless permitted by the "proper governmental agency" and ofexplosives unless the importer obtains
"a license or permit from the proper governmental agency." Id. § 18.21(b), (d). With this general
overview of the federal law, we consider whether it expressly or impliedly preempts state law with
respect to the transport of horsemeat in-bond for immediate export abroad.

       D.    Express preemption

        Section.1553 does not expressly preempt state law regulating the transportation ofhorsemeat
through a state for export abroad. It does not contain an express preemption clause. See 19 U.S.C.
§ 1553 (2000). Nor do the federal regulations thereunder contain such an express preemption clause.
See 19 C.F.R. §§ 18.1, .10-.11, .20-.21 (2007); see also Hillsborough County v. Automated Med.
Lab., Inc., 471 U.S. 707, 713 (1985) ("We have held repeatedly that state laws can be pre-empted
by federal regulations as well as by federal statutes.").

        E.    Implied preemption

        But as stated above, even if the federal law does not expressly preempt state law, it may do
so implicitly by occupying a field so pervasively as to naturally exclude state regulation or by directly
conflicting with the state law. Empacadora de Carnes de Fresnillo, 476 F.3d at 333-34; see also
Crosby, 530 U.S. at 372 ("And even if Congress has not occupied the field, state law is naturally
preempted to the extent of any conflict with a federal statute.").

              1.    Field occupation

        We first consider whether the cited federal statute and the regulations occupy the field.
"Field preemption requires a clear congressional intent" and "occurs when a federal statute's scope
'indicates that Congress intended federal law to occupy a field exclusively.'" Empacadora de
Carnes de Fresnillo, 476 F.3d at 334 (quoting Freightliner Corp. v. Myrick, 514 U.S. 280, 287
(1995)).

         You do not specify or suggest the "field" preempted here. To proceed with the preemption
analysis, however, it is necessary to posit a "field." Based on the statements made in the request
letter, we assume, for the purposes ofthis opinion, that the broadest field would be the field ofgoods
or merchandise that may be transported through the states in-bond, including horsemeat. Section
1553 and the related federal regulations do not indicate a clear congressional intent to occupy this
field.

        First, section 1553 is part of the Tariff Act of 1930. See Tariff Act of 1930,46 Stat. 590
(current version at 19 U.S.C. ch. 4 (Tariff Act of 1930), subtit. III (Administrative Provisions),
pt. IV (Transportation in Bond and Warehousing of Merchandise) (2000)). The Tariff Act deals
specifically with the appraisement or imposition ofcustom duties on merchandise brought into the
United States. See id Section 1553 precludes only the appraisement or imposition of duties on
The Honorable Warren Chisum - Page 8              (GA-0623)



bonded goods brought into the United States solely for export. Id. § 1553; PortlandPipe Line Corp.
v. Envtl. ImprovementComm 'n, 307 A.2d 1, 34n.55 (Me. 1973). And the related federal regulations
detail how the merchandise must be documented, stored, andtransported, and they restrict or prohibit
the entry of certain merchandise. See 19 C.F.R. pt. 18 (2007) (Transportation in Bond and
Merchandise in Transit). The congressional objective in enacting the Tariff Act was to "encourage
merchants here and abroad to make use of American ports" by "waiv[ing] all duty on goods that
were reexported ... and defer[ring], for a prescribed period, the duty on goods destined for
American consumption." Xerox Corp. v. County ofHarris, 459 U.S. 145, 150-51 (1982). The
United States Supreme Court has stated that this objective "would be frustrated by the imposition
of state sales and property taxes on goods not destined for domestic distribution." Itel Containers
Int'l Corp. v. Huddleston, 507 U.S. 60, 70 (1993) (citing Xerox Corp., 459 U.S. at 150-54, R.J.
Reynolds Tobacco Co. v. Durham County, 479 U.S. 130, 144-47 (1986), McGoldrick v. Gulf
Oil Corp., 309 U.S. 414, 428-29 (1940»). Chapter 149, however, does not impose any taxes or
fees; it prohibits the transport and sale of a particular merchandise-horsemeat for human
consumption-through Texas. ~

        Second, even assuming that the scope of section 1553 is broader than the exemption of
bonded goods in transit from the appraisement and imposition of fees and taxes, the statute is not
mandatory with regard to the merchandise entered and transported through the United States.
See 19 U.S.C. § 1553(a) (2000) ("Any merchandise, other than explosives and merchandise
the importation of which is prohibited . . . destined to a foreign country, may be entered for
transportation in bond through the United States ... and exported under such regulations as the
Secretary ofthe Treasury shall prescribe ....") (emphasis added). And it expressly recognizes that
certain merchandise may be prohibited entry and transportation. See id. The statute does not
expressly or impliedly require that all merchandise destined for a foreign country, other than those
expressly prohibited by federal law, be permitted to enter for transportation in-bond through the
United States. See id. Nor do the federal regulations cited require that all merchandise other than
those prohibited by the regulations be allowed entry and transportation. See 19 C.F.R. § 18.21
(2007).

             2.    Direct conflict or obstacles

        Section 1553 and the related federal regulations also do not preempt chapter 149 by conflict.
Conflict preemption is found where (i) it is "'physically impossible' for a private party to comply
with both federal and state law," or (ii) the state law "stand[s] as an obstacle to the accomplishment
and execution of the full purposes and objectives of Congress." Empacadora de Carnes de
Fresnillo, 476 F.3d at 334 (quoting Planned Parenthood ofHouston & Se. Tex. v. Sanchez, 403 F.3d
324,336 (5th Cir. 2005)). It is not physically impossible to comply with section 1553 and the related
federal regulations on the one hand and chapter 149 on the other. Complying with chapter 149 by
not transporting horsemeat through Texas does not violate any provision of the federal law. And
chapter 149 does not stand as an obstacle to realizing the Tariff Act's objective of encouraging the
use of United States ports by a policy of waiving custom duties on exported goods. See Itel
Containers Int'l Corp., 507 U.S. at 69-70 (discussing the Supreme Court's construction ofthe Tariff
Act's objective); see also Crosby, 530 U.S. at 373 ("What is a sufficient obstacle is a matter of
The Honorable Warren Chisum - Page 9                     (GA-0623)



judgment, to be informed by examining the federal statute as a whole and'identifying its purpose and
intended effects."). Again, chapter 149 does not impose any taxes or duties; it has no implications
for the federal policy of exempting export goods from custom duties.

        Ifthere is a preemption argument here, it would appear to be that application ofchapter 149's
transportation ban is an obstacle to section 1553 because the state law prohibits what the federal law
"allows" by equating failure ofthe federal law to prohibit entry and transportation ofhorsemeat with
direction to the states to permit it. See Request Letter, supra note 3, at 2 ("Horsemeat is not
precluded from in-bond transportation through the [United States]."). No court has so construed or
applied section 1553. See Jones v. RathPacking Co., 430 U.S. 519,526 (1977) (stating that obstacle
preemption inquiry requires a consideration of the "relationship between state and federal laws as
they are interpreted and applied not merely as they are written") (emphasis added). The federal law
neither prohibits the transport of horsemeat through any state nor requires the states to permit such
transport. The state law simply prohibits what the federal law does not prohibit. Bronco Wine Co.
v. Jolly, 95 P.3d 422, 454 (Cal. 2004). This arrangement does not pose an obstacle to the federal
policy embodied in the Tariff Act. Cf Viva! Int'l Voice/or Animals v. Adidas Promotional Retail
Operations,. 162 P.3d 569, 583 (Cal. 2007) (stating that "federal law does not prohibit importation
ofkangaroo products, while state law does" and concluding that the "arrangement poses no obstacle
to current federal policy").

       Based on a review of the federal law, we believe a court would likely find that section 1553
and the federal regulations promulgated thereunder do not expressly or impliedly preempt the
application ofchapter 149 to a foreign corporation that transports horsemeat for human consumption
in-bond through Texas for immediate export abroad.

IV.     Dormant Commerce Clause

       The application of chapter 149 to a foreign company that transports horsemeat in-bond
through Texas for export abroad also implicates foreign commerce, which the Fifth Circuit Court
of Appeals in Empacadora de Carnes de Fresnillo specifically raised as an issue, but did not
address. See Empacadora de Carnes de Fresnillo, 476 F.3d at 335. 8 In order to fully address your
question, we discuss the application of the dormant Commerce Clause in this context. Again, our


        8The court specifically noted with respect to the dormant Commerce Clause discussion:

                 We do not address the potential application of Chapter ·149 to an entity that merely
                 transports horsemeat through Texas but engages in no other commercial activity
                 within the State, as Empacadora speculates that it may do one day. That
                 hypothetical situation is not before us. While prosecuting such a company would
                 raise unique dormant Commerce Clause concerns-specifically with regard to the
                 Foreign Commerce Clause-none of the slaughterhouses fit that description, nor
                 does there appear to be any company that merely transports horsemeat through
                 Texas.

Empacadora de Carnes de Fresnillo, 476 F.3d at 335 (footnote omitted).
The Honorable Warren Chisum - Page 10            (GA-0623)



discussion is necessarily general and necessarily speculative given the general nature of your
question and factual backdrop.

       A.    General Commerce Clause principles

        The United States Constitution's Commerce Clause empowers Congress to "regulate
Commerce with foreign Nations, and among the several States." U.S. CONST. art. I, § 8, cl. 3.
Although this provision does not by its terms limit the powers of states to regulate commerce, it has
been interpreted to contain a negative or dormant aspect that limits the states' .powers to regulate
commerce even in the absence of a conflicting federal statute. United Haulers Assoc., Inc. v.
Oneida-Herkimer Solid Waste Mgmt. Auth., 127 S. Ct. 1786, 1792-93 (2007). The dormant aspect
of the Commerce Clause applies to both the Foreign Commerce Clause ("Commerce with foreign
Nations") and to the Interstate Commerce Clause ("Commerce ... among the several States").
Piazza's Seafood World, LLC v. Odom, 448 F.3d 744,749 (5th Cir. 2006) (citing Supreme Court's
dormant Commerce Clause cases).

        State laws violate the dormant Commerce Clause by discriminating against or unduly
burdening foreign or interstate commerce. Id. at 750 (citing Or. Waste Sys., Inc. v. Dep't ofEnvtl.
Quality, 511 U.S. 93, 98 (1994) (Interstate Commerce Clause) and Kraft Gen. Foods, Inc. v. Iowa
Dep 'tofRevenue andFin. , 505 U.S. 71, 81 (1992) (Foreign Commerce Clause)). Laws that "facially
discriminate are virtually per se invalid." Id. (citing Camps Newfound/Owatonna, Inc. v. Town of
Harrison, 520 U.S. 564,575 (1997), Kraft Gen. Foods, Inc., 505 U.S. at 81, and Nat'l Solid Waste
Mgmt. Ass 'n v. Pine Belt Reg'l Solid Waste, 389 F.3d 491, 497 (5th Cir. 2004)). In contrast,
"evenhanded" laws that only incidentally burden commerce are valid "unless the burden imposed
on such" commerce is clearly excessive in relation to the putative local benefits." Pike v. Bruce
Church, Inc., 397 U.S. 137, 142 (1970). In the context ofthe Foreign Commerce Clause, state laws
are subject to additional scrutiny: Nondiscriminatory s~ate laws affecting foreign commerce are
invalid "'ifthey (1) create a substantial risk ofconflicts with foreign governments; or (2) undermine
the ability ofthe federal government to 'speak with one voice' in regulating commercial affairs with
foreign states.'" Piazza's Seafood World, LLC, 448 F.3d at 750 (quoting New Orleans S.S. Ass 'n
v. Plaquemines Port Harbor & Terminal Dist., 874 F.2d 1018, 1022 (5th Cir. 1989)).

        B.   Facial discrimination

        Chapter 149 does not facially discriminate against interstate or foreign commerce. See TEX.
AGRIc. CODE ANN. §§ 149.002-.003 (Vernon 2005). "In this context, discrimination' simply means
differential treatment of in-state and out-of-state economic interests that benefits the former and
burdens the latter.'" Nat 'I Solid Waste Mgmt." Ass 'n, 389 F.3d at 499 (quoting Or. Waste Sys., Inc.,
511 U. S. at 99). Chapter 149 prohibits any person-.whether foreign or local-from possessing and
transporting horsemeat intended for sale as food for human consumption irrespective of the origin
or destination ofthe horsemeat. See TEx. AGRIc. CODE ANN. §§ 149.002-.003 (Vernon 2004). First,
as the Fifth Circuit Court of Appeals stated, chapter 149 "treats both intrastate and interstate trade
ofhorsemeat equally by way ofa blanket prohibition," does not evidence "economic protectionism,"
and "does not favor in-state actors over out-of-state actors." Empacadora de Carnes de Fresnillo,
The Honorable Warren Chisum - Page 11              (GA-0623)



476 F.3d at 335; see also City ofPhiladelphia v. New Jersey, 437 U.S. 617,623-24 (1978) (stating
that the guiding principle in determining whether a state regulation discriminates against interstate
or foreign commerce is whether the purpose or the effect of the regulation is economic
protectionism).

         Second, the fact that the statute's blanket prohibition also bans the transport of horsemeat
intended as food for human consumptionthrough Texas for export abroad does not make it facially
discriminatory. In Pacific Northwest Venison Producers v. Smitch, the Ninth Circuit Court of
Appeals upheld a state regulation prohibiting the importation, possession, propagation, transfer, or
release of listed "deleterious exotic wildlife" against a Commerce Clause challenge. See Pac. Nw.
Venison Producers v. Smitch, 20 F.3d 1008, 1010-17 (9th Cir. 1994). The Ninth Circuit Court of
Appeals rejected the argument that a state prohibition ofimports or exports is per se discriminatory,
stating that "[a]n import ban that simply effectuates a complete ban on commerce in certain items
is not discriminatory, as long as the ban on commerce does not make distinctions based on the origin
of the items. Id. at 1012. In short, chapter 149 does not facially discriminate because "[n]o local
merchant or producer benefits from the ban," Cavel Int'l, Inc., 500 F.2d at 555; and it "does not
make distinctions based on the origin" of the horsemeat, Pac. Nw. Venison Producers, 20 F.3d at
1012.

        It could be argued, however, that chapter 149 facially discriminates against foreign commerce
because the practical effect of the transportation ban currently falls only on foreign
corporations-only foreign corporations now slaughter horses for human consumption. See supra
pp. 3-4; FC!rd Motor Co. v. Tex. Dep 't ofTransp. , 264 F.3d493, 500 (5th Cir. 2001) (stating that a
facially neutral statute may still be discriminatory because of its effect (citing Minn. v. Clover Leaf
Creamery Co., 449 U.S. 456,471 n.15 (1981))). But the fact that a law affects primarily out-of-state
corporations, "does not tend to prove that a statute is discriminatory." Int'l Truck & Engine Corp.
v. Bray, 372 F.3d 717,726 (5th Cir. 2004) (citing Exxon Corp. v. Governor ofMd. , 437 U.S. 117,
126 (1978), Ford Motor Co., 264 F.3d at 502). "Absent ~ facially discriminatory purpose, a State
statute or regulation is discriminatory when it provides for differential treatment ofsimilarly situated
entities based upon their contacts with the State or has the effect of providing a competitive
advantage to in-state interests vis-a-vis similarly situated out-of-state interests." Ford Motor Co.,
264 F.3d at 501. Chapter 149's transportation ban neither discriminates based on a person's contacts
with Texas nor provides a competitive advantage to in-state persons.

        c.    Incidental burden

        An evenhanded statute-one that does not facially discriminate against out-of-state
commerce and only incidentally affects interstate or foreign commerce-will be upheld unless the
burden it imposes is "clearly excessive in relation to the putative local benefits" ofthe statute. Nat 'I
Solid Waste Mgmt. Ass 'n, 389 F.3d at 498, 501 (quoting Pike, 397 U.S. at 142). This is referred to
as the "Pike balancing test." See ide Under this test,

                if a legitimate local purpose is found, then the question becomes one
                of degree. And the extent of the burden that will be tolerated will of
The Honorable Warren Chisum - Page 12                     (GA-0623)



                  course depend on the nature of the local interest involved, and on
                  whether it could be promoted as well with a lesser impact on
                  interstate activities.

Pike, 397 U.S. at 142.

         In applyingthe Pike test, a court "first look[s] for a legitimate public p~rpose" advanced by
the state statute. Nat '1 Solid Waste Mgmt. Ass 'n, 389 F.3d at 502. Chapter 149's prohibition against
the sale, possession, and transfer of horsemeat through Texas advances legitimate local interests:
preserving horses, preventing the consumption of horsemeat, and preventing horse theft. See
Empacadora de Carnes de Fresnillo, 476 F.3d at 336 (reciting proffered interests advanced by
chapter 149); see also Cavel Int'l, Inc., 500 F.3d at 557 ("States have a legitimate interest in
prolonging the lives of animals that their population happens to like."); ide ("[States] can ban
bullfights and cockfights and the abuse and neglect ofanimals."). And these are legitimate interests
with respect to horses found or slaughtered outside of Texas. Cf Viva! Int '1 Voice for Animals, 162
P.3d at 573 ("state may constitutionally conserve wildlife elsewhere by refusing to accept local
complicity in its destruction"); Ill. Rest. Ass 'n V. City ofChicago, 492 F. Supp. 2d 891, 895 (N.D.
Ill. 2007) (upholding ordinance banning the sale offoie gras, produced elsewhere, in city restaurants
reflecting local judgment that it would "advance the morals ofthe community"). The statutory ban
on transporting horsemeat through Texas-irrespective of its origin and ultimate destination-
advances the state's interest in preserving horses and preventing their consumption and theft. See
Empacadora de Carnes de Fresnillo, 476 F.3d at 336. The Fifth Circuit Court in Empacadora de
Carnes de Fresnillo did not discount that "removing the significant monetary incentives in the global
horsemeat market" increases the preservation ofhorses and decreases the consumption ofhorsemeat
and theft of horses. See Empacadora de Carnes de Fresnillo, 476 F.3d at 336. 9

        Finding a legitimate public purpose, a court will then identify the burden imposed on
interstate or foreign commerce. Nat '1 Solid Waste Mgmt. Ass 'n, 389 F.3d at 502. To successfully
challenge a state regulation, "the challenging party must show that the regulation has 'a disparate
impact on interstate commerce. ", Id. (quoting Automated Salvage Transp., Inc. V. Wheelabrator


         As the Seventh Circuit Court of Appeals explained:
         9



                  Cavel [International] pays for horses; rendering plants [that produce pet food from
                  carcasses of dead horses rather than by the slaughter of horses] do not. If your
                  horse dies, or if you have it euthanized, you must pay to have it hauled to the
                  rendering plant, and you must also pay to have it euthanized if it didn't just die on
                  you. So when your horse is no longer useful to you, you have a choice between
                  selling it for slaughter and either keeping it until it dies or having it killed. The
                  option of selling the animal for slaughter is thus fmancially more advantageous to
                  the owner, and this makes it likely that many horses (remember that Cavel
                  slaughters between 40,000 and 60,000 a year) die sooner than they otherwise would
                  because they can be killed for their meat.

Cavel Int'l, Inc., 500 F.3d at 556-57.
The Honorable Warren Chisum - Page 13                        (GA-0623)



Envtl. Sys., Inc., 155 F.3d 59, 75 (2d Cir. 1998)); see also Empacadora de Carnes de Fresnillo, 476
F.3d at 336 (stating that "incidental" burdens to which Pike refers to are the burdens on interstate
commerce that exceed the burdens on intrastate commerce). If the state regulation does not have
a disparate impact, the court "'must conclude that [the state regulations] have not imposed any
incidental burdens on interstate commerce' and therefore, that it passes the Pike test." Nat 'I Solid
Waste Mgmt. Ass'n, 389 F.3d at 502 (quoting Automated Salvage Transp., Inc., 155 F.3d at 75).

       The Fifth Circuit Court ofAppeals in Empacadora de Carnes de Fresnillo stated that chapter
149 does not place any burden "on interstate commerce that does not equally befall intrastate
commerce." Empacadora de Carnes de Fresnillo, 476 F.3d at 336. Similarly, chapter 149's
transportation ban does not place any burden on the domestic or foreign horsemeat trade that it does
not equally place on in-state trade. Thus, we believe the state transportation ban would pass the Pike
test.

        But even assuming that chapter 149's transportation ban burdens interstate or foreign
commerce, a party challenging the state law has the heavy burden of establishing that the incidental
burdens on interstate and foreign commerce are -clearly excessive in relation to the putative local
benefits. See Cavel Int'l, Inc., 500 F.3d at 555; Int'l Truck & Engine, 372 F.3d at 728; Ford Motor
Co., 264 F.3d at 503-04; Pac. Nw. Venison Producers, 20 F.3d at 1014. "Evidence that interstate
and foreign commerce is in some way affected ... is not enough to meet [this] burden." Pac. Nw.
Venison Producers, 20 F.3d at 1015-.

        It seems unlikely that a challenging party could meet this heavy legal burden and establish
that the impact is "clearly excessive" in relation to the "putative local benefit." Cf United Haulers
Assoc., 127 S. Ct. at 1797 (stating that the Court need not decide whether the city "ordinances
impose any incidental burden ... because any arguable burden does not exceed the public benefits
of the ordinances"); Int'l Truck & Engine, 372 F.3d at 728 (stating that even assuming that the state
statute burdens interstate commerce, "that burden would not be clearly excessive as compared to the
putative local benefits"); Ford Motor Co., 264 F.3d at 503 (stating that even assuming the state
statute burdens interstate commerce, "Ford has failed to establish that the burden is clearly excessive
in relation to the putative local benefits").lo The fact that the statutory ban may simply affect
particular foreign slaughterhouses-most likely slaughterhouses located in Mexico, which is the only
foreign nation that shares a border with Texas-would not establish that the statute's impact on the
foreign horsemeat trade is "clearly excessive" in relation to Texas's legitimate "putative local
interest" in preserving horses and limiting horse consumption and theft. Cf Pac. Nw. Venison
Producers, 20 F.3d at 1015 (stating that evidence that interstate and foreign commerce is in some
way affected by the state law is insufficient to meet plaintiff s burden in showing violation of
Commerce Clause).


          lOIn this regard, the Fifth Circuit Court ofAppeals has stated that in assessing a statute's putative local benefits
the court will not '''second guess the empiricaljudgment oflawmakers concerning the utility oflegislation. '" Int'l Truck
& Engine, 372 F.3d at 728; Ford Motor Co., 264 F.3d at 503 (quoting CTS Corp. v. Dynamics Corp. ofAm., 481 U.S.
69, 92 (1987)). The court will credit a putative local benefit so long as the regulation is not "wholly irrational in light
of its purposes." Int'l Truck & Engine, 372 F.3d at 728; Ford Motor Co., 264 F.3d at 503.
The Honorable Warren Chisum - Page 14              (GA-0623)



       D.    Foreign commerce

        When state regulations affect foreign commerce, additional scrutiny is necessary to determine
whether they interfere with the federal government' s ability to speak with a single voice when
regulating commerce with foreign countries, see Japan Line, Ltd. v. Los Angeles County, 441 U.S.
434, 451 (1979); or implicate "matters of concern to the entire Nation ... such as the potential for
international retaliation." Kraft General Foods, Inc., 505 U.S. at 79. (1992). The United States
Supreme Court has explained that the dormant Foreign Commerce Clause precludes a state from
preferring "domestic commerce over foreign commerce even if the State's own economy is not a
direct beneficiary of the discrimination." Id

        First, chapter 149 treats the transportation offoreign and domestic horsemeat equally. Thus,
the dormant Foreign Commerce Clause is arguably inapplicable. Cf Ill. Rest. Ass 'n, 492 F. Supp.
2d at 905 ("Because the Ordinance treats domestic and foreign foie gras equally ... the dormant
Foreign Commerce Clause is inapplicable.").

         Second, there is no indication that the transportation ofhorsemeat for sale and export abroad
is a matter in which national uniformity is important. At least two other states-California and
Illinois-have laws similar to the Texas law. See CAL. PENAL CODE § 598c (West 1999); 225 ILL.
CaMP. STAT. ANN. 635/1.5 (West 2007). There is no indication that these differing state regulations
create any particular difficulties for foreign producers of horsemeat or for the federal government
in its relations with foreign governments. Thus, again, the Foreign Commerce Clause scrutiny is
arguably inapplicable here. Cf Pac. Nw. Venison Producers, 20 F.3d at 1013-14 (determining that
the higher scrutiny under the Foreign Commerce Clause was unnecessary in the absence ofevidence
that importation of wildlife regulated by state law was a matter in which national uniformity was
important or that international commerce in such animals might be of concern to the whole nation).

        Third, even assuming the additional scrutiny applies here, there is no indication that chapter
149's ban on transporting horsemeat through Texas has any significant impact on foreign horsemeat
trade or creates the potential for foreign retaliation. In Cavel International, Inc., the Seventh Circuit
Court ofAppeals rejected the contention that the substantially similar Illinois statute prohibiting the
slaughter of horses for human consumption burdened foreign commerce in the absence of any
evidence regarding the percentage ofhorsemeat supplied by the corporation and the effect its closure
would have on the price of horsemeat in Europe:

                       Suppose Cavel·were the only source ofhorse meat for human
                consumption in Europe and the law provoked European governments
                into remonstrating with our State Department, which in response
                submitted to us an amicus curiae brief denouncing the law....

                       But assuming therefore that the doctrine of Japan Line
                survives the Barclays Bank case [where the Supreme Court rejected
                a Foreign Commerce Clause challenge even though many foreign
                nations complained about a state law increasing foreign companies'
The Honorable Warren Chisum - Page 15             (GA-0623)



               costoffiling United States tax retums] , this cannot help Cavel, which
               did not tell the district court and has not told us what percentage of
               the horse meat consumed by Europeans it supplies and thus whether
               its being closed down is likely to have a big effect on the price of
               horse meat in Europe.

Cavel In!'l, Inc., 500 F.3d at 558. The Seventh Circuit Court of Appeals concluded that the
"curtailment of foreign commerce by the amendment is slight and we are naturally reluctant to
condemn a state law, supported if somewhat tenuously by a legitimate state interest, on grounds as
slight as presented by Cave!." Id. 558.

        Thus, unless the foreign corporations affected by the Texas ban are the sole or a substantial
source of horsemeat produced for human consumption in Europe and Asia; and their inability to
transport horsemeat through Texas affects the availability and price of horsemeat in those markets
sufficient to provoke European and Asian countries to complain about the Texas law, it is unlikely
that a court would conclude that the Texas ban violates the Foreign Commerce Clause.

        In sum, based on present judicial precedent, we believe a court would likely find that the
application ofchapter 149 to a foreign corporation that transports horsemeat intended for sale as food
for human consumption in-bond through Texas for immediate export abroad does not violate the
federal dormant Commerce Clause by discriminating against or unduly burdening interstate or
foreign commerce.
The Honorable Warren Chisum - Page 16           (GA-0623)



                                      SUMMARY

                      Chapter 149 of the Agriculture Code makes it an offense for
              any person to sell horsemeat for human consumption, possess
              horsemeat with the intent to sell it as food for human consumption,
              or transfer horsemeat to a person who intends to sell it for human
              consumption irrespective of the origin or destination of the
              horsemeat. A court would likely find that section 1553 of the Tariff
              Act of 1930 and federal regulations promulgated thereunder do
              not preempt the application of chapter 149 to a foreign corporation
              that transports horsemeat intended for sale as food for human
              consumption in-bond through Texas for immediate export abroad.
              Similarly, a court would likely find that the application ofchapter 149
              to a foreign corporation that transports such horsemeat in-bond
              through Texas for immediate export abroad does not violate the
              federal dormant Commerce Clause by -discriminating against or
              unduly burdening interstate or foreign commerce.

                                             Very truly yours,




KENT C. SULLIVAN
First Assistant Attorney General

ANDREW WEBER
Deputy Attorney General for Legal Counsel

NANCY S. FULLER
Chair, Opinion Committee

Sheela Rai
Assistant Attorney General, Opinion Committee
