California Should Not Get To Set Policy For All Of The US

Authored by Curtis Hill via RealClearMarkets,

California has decided it should dictate how the rest of America packages everything from cereal and soap to industrial spare parts.

Seventeen Republican attorneys general have filed suit to stop it. They are right. The rest of the country should say so – and reject California’s attempt to impose its policies on everyone else.

California’s Senate Bill 54 effectively tells companies: If you want to sell in California, redesign your packaging, cut plastic on California’s timetable, and pay fees to a private Washington, D.C., organization called Circular Action Alliance. CAA sets the fees, keeps its methodology confidential, and handles disputes through arbitration rather than a court.

But packaging is not a California issue. It is a national supply-chain issue. Companies do not invent a unique box for Sacramento and another for South Bend. They build one system. When California attaches conditions to its market, those conditions travel. Costs travel with them – onto manufacturers, distributors, and the families who buy toothpaste and canned goods in states that never voted for this scheme.

California is using the size of its market to impose its preferences on commerce that happens everywhere else. The attorneys general call that what it is: one state trying to set national policy.

I have seen this movie before.

As Indiana Attorney General, I led multistate efforts against this same tactic. California cities tried to use “public nuisance” lawsuits to dictate national energy policy from a courtroom in San Francisco. I argued then that California localities cannot regulate economic activity beyond their borders, and that the nation should not sit idle while California tried to turn itself into a regulatory empire.

We also led a coalition to the U.S. Supreme Court challenging Massachusetts’s attempt to tell farmers in other states how to house their hens and hogs as a condition of selling eggs and pork in Boston. Same theory. Same abuse. Market access as a weapon.

California and a handful of like-minded states have a playbook: Pass a rule at home. Make compliance a condition of doing business. Watch national supply chains conform because it is cheaper to surrender than to maintain two systems. Then call the result “progress” and dare anyone to object.

That is not federalism. It is the big dog sitting on the porch, growling at every other house on the street.

Multistate action is how the other states push back. One attorney general filing a brief is a protest. Seventeen states joining a federal lawsuit – alongside a business that has already challenged this model in Oregon – send a message a judge must take seriously.

This is not a trade association seeking a special exemption. It is sovereign states defending their authority to set policy for their own people. And it tells Sacramento that when California exports the costs of its policies, the response will be coordinated legal action – not a press release and a shrug.

That is the point of the office I once held. An attorney general is not a commentator; the job is to defend the state’s legal interests when another government tries to impose its policies beyond its borders. California’s packaging scheme does exactly that. Fees collected by a private organization with little meaningful public oversight are one back door. So is a mandate that forces a plant in Iowa or a distributor in Indiana to pay for California’s regulatory experiment.

None of this requires opposition to clean streets, recycling, or reducing waste. States are free to run recycling programs, set their own environmental policies, and punish fraud or deception in labeling. What they may not do is force businesses across the country to follow one state’s rules while handing the collection plate to an unelected private organization. States can pursue their own policies. They cannot conscript the interstate economy into a single regulatory religion.

The seventeen attorneys general are doing the unglamorous work of saying no. They deserve support – from other states, from boards that still remember fiduciary duty, and from anyone who understands that the Constitution divided power for a reason. California is large. It is not the legislature of the United States.

If other states sit this one out, they should not be surprised when the next California rule arrives already attached to their store shelves. Empires are not always built with armies. Sometimes they are built with a market, a mandate, and a fee.

Curtis Hill is Senior Fellow with the Free Enterprise Project and former Indiana Attorney General.