F OR P UBLICATION



### UNIT E D ST AT E S CO URT O F APPE AL S FO R T H E NINT H CIRCUIT

R O C K Y M O U N T A I N F A R M E R S U N I O N ; R E D W O O D C O U

N T Y M I N N E S O T A C O R N A N D S O Y B E A

N G R O W E R S ; P E N N Y N E W M A N G R A I N , I N C .; R E X N E D E R E N D ; F R E S N O C O U

N T Y F A R

M B U R E A U ; N I S E I F A R

M E R S L E A G

U E ; C A L I F O R

N I A D A I R

Y C A M P A I G

N ; G R O W T H E N E R

G Y ; R E N E W A B L E F U E L S A S S O C I A T I O N ; A M E R I C A N F U E L & P E T R

O C H E M I C A L M A N U F A C T U R

E R S A S S O C I A T I O N , F KA National Petrochemical & Refiners Association; A M E R I C A N T R U C K I N G S A S S O C I A T I O N S ; C E N T E R
F O R N O R

T H A M E R

I C A N E N E R G Y S E C U R I T Y ; T H E C O N S U

M E R E N E R

G Y A L L I A N C E , Plaintiffs-Appellees

,

v

.

R I C H A R D W

. C O R

E Y , in his official capacity as Ex ecutive Officer of the California Air Resources B oard; M A R Y D

. N I C H O L S ; D A

N I E L S P E R L I N G ; K E N Y E A G E R ; D O R

E N E D’A D A M O ; B A R

B A R A R I O R D A N ; J O H N R. B A L M E S ; L Y D I A H

. K E N N A R D ; S A N D R A B E R G ; R O N N o. 12-15131

D.C. Nos. 1:09-cv-02234- L J O-GSA 1:10-cv-00163- L J O -DL BR O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

E Y 2

R O B E R T S ; J O H N G. T E L L E S , in his official capacity

as member of the California Air Resources B oard; R O N A L D O. L O V E R

I D G E , in his official capacity

as member of the California Air Resources B oard; E D M U N D G. B R

O W N , J R

. , in his official capacity

as Governor of the State of California; K A M A L A D. H A R R I S , Attorney

General, in her official capacity

as Attorney

General of the State of California,

Defendants-Appellants

,

E N V I R O N M E N T A L D E F E

N S E F U N D ; N A T U R A L R E S O U R

C E S D E F E

N S E C O U N C I L ; S I E R

R A C L U B ; C O N S E R V A T I O N L A W F O U N D A T I O N , Intervenor-Defendants-Appellants

.

R O C K Y M O U N T A I N F A R M E R S U N I O N ; R E D W O O D C O U

N T Y M I N N E S O T A C O R N A N D S O Y B E A

N G R O W E R S ; P E N N Y N E W M A N G R A I N , I N C .; R E X N E D E R E N D ; F R E S N O C O U

N T Y F A R

M B U R E A U ; N I S E I F A R

M E R S L E A G

U E ; C A L I F O R

N I A D A I R

Y C A M P A I G

N ; G R O W T H E N E R

G Y ; R E N E W A B L E F U E L S A S S O C I A T I O N ; A M E R I C A N F U E L & P E T R

O C H E M I C A L M A N U F A C T U R

E R S A S S O C I A T I O N , F KA National Petrochemical & N o. 12-15135

D .C. Nos. 1:09-cv-02234- L J O-GSA 1:10-cv-00163- L J O-DL B

ORDERR O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

E Y 3

Refiners Association; A M E R I C A N T R U C K I N G S A S S O C I A T I O N S ; C E N T E R
F O R N O R

T H A M E R

I C A N E N E R G Y S E C U R I T Y ; T H E C O N S U

M E R E N E R

G Y A L L I A N C E , Plaintiffs-Appellees

,

v

.

R I C H A R D W

. C O R

E Y , in his official capacity as Ex ecutive Officer of the California Air Resources B oard; M A R Y D

. N I C H O L S ; D A

N I E L S P E R L I N G ; K E N Y E A G E R ; D O R

E N E D’A D A M O ; B A R

B A R A R I O R D A N ; J O H N R. B A L M E S ; L Y D I A H

. K E N N A R D ; S A N D R A B E R G ; R O N R O B E R T S ; J O H N G. T E L L E S , in his official capacity

as member of the California Air Resources B oard; R O N A L D O. L O V E R

I D G E , in his official capacity

as member of the California Air Resources B oard; E D M U N D G. B R

O W N , J R

. , in his official capacity

as Governor of the State of California; K A M A L A D. H A R R I S , Attorney

General, in her official capacity

as Attorney

General of the State of California,

Defendants-Appellants

,

E N V I R O N M E N T A L D E F E

N S E F U N D ; N A T U R A L R E S O U R

C E S D E F E

N S ER O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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C O U N C I L ; S I E R

R A C L U B ; C O N S E R V A T I O N L A W F O U N D A T I O N , Intervenor-Defendants-Appellants

.

F iled J anuary

22, 2014

B efore: Dorothy

W . Nelson, Ronald M. Gould, and Mary H. Murg u ia, Circuit J udg es.

Order; Concurrence by

J udg e Gould; Dissent by

J udg e Milan D. Smith, J r.

SUMMARY *

F uel Standards/Com m erce Clause

The panel denied the petitions f o r rehearing en banc on behalf of the court in a case alleg ing that California’s L ow Carbon F u el Standard, Cal. Code Reg s. tit. 17, §§ 95480–90 (2011), violated the dormant Commerce Clause a nd wa s preempted b y Section 211(o) of the Clean Air Act, 42 U .S.C. § 7545(o).

I n the opin i o n , the panel h eld that the F uel Standard’s ethanol provisions were not facially discrimin a t o r y , a nd reversed that portion of the d istrict c o u r t ’ s decision. The

* T h is su m m ary co n stitu

tes n o part o f th e o p in io n o f th e co u rt. It h as b een p rep ared b y

co u rt staf

f f o r th e co n v en i en ce o f

th e read er.R O C K Y M O U N T A I N F A R M E R S U N I O N V

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panel also reversed the district court’s decision that the F uel S tandard was an impermissible ex traterritorial reg ulatio n

. The panel a ffirmed the district court’s conclusion that the F uel Standard’s crude o il provisions were not facially discriminatory , but reversed the district court’s holding that the provisions were discriminatory in purpose and effect. The panel affirmed the d istrict court’s conclusion that Section 211(c)(4)(b) of the Clean Air Act did n ot insulate California from scrutiny under the dormant C o m m erce Clause. J udg e Murg uia c oncurred in part and dissented from the majority ’s conclusion that the ethanol reg ulations did n ot facially discriminate ag ainst interstate commerce.

Concurri n g in the denial of r ehearing en banc, J udg e Gould stated that in h i s view the opinion and partial dissent fairly presented the key iss u es in this appeal, and the denial order should b e read with the majority opinion’s reasoning in mind. He w rote to o ffer supplemental o b s e r vations that responded to the views of the judg e s who dissented from the denial of rehearing

en banc.

Dissenting from the denial of rehearing en banc, J udg e M. Smith, joined by J udg es O’Scannlain, Calla h an , B ea, I k uta and N .R. Smith, and joined b y J u d ge Murg uia as to Part I I I
, stated that in upholding California’s ethanol reg ulations, the majority d isreg arded long standing dormant C ommerce Clause doctrine, and placed the law o f this circuit squarely at odds with Supreme Court precedent.R O C K Y M O U N T A I N F A R M E R S U N I O N V

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ORDER

The f ull court was adv i s ed o f the petitions for rehearing

en banc. A judg e requested a v o t e o n whether to r ehear the
matter en banc, a

nd the matter failed to r eceive a majority o f the votes o f the nonrecused a ctive judg es in favor o f en banc consideration. F ed. R. App. P. 35.

The petitions for rehearing en banc are DENIED

.

GOUL D, Circuit J udg e, concurring in the denial of rehearing en banc:

I respe ctfully file this separate concurrence in the denial order. I n my view, the o pinion and partial dissent fair l y p r esent the k ey issues in this appeal, and the denial order should be r ead with the majority opinion’s reasoning in mind. B ut in lig ht of the views of my dissenting colleag ues, I

offer supplemental observations.

F irst, the dissent is riddled with overstatements. F o r

ex a mple, it claims that Calif o r n i a ’s L ow Carbon F uel Standard (“L CF S”)—and the ethanol provisions conta i n e d therein—ex plicitly discriminates ag ainst other states and is a “protectionist reg ulat o ry scheme that threatens to B alkaniz e

our national economy .” D issent at 14. Not only is this mere alarmist rhetoric, it also d o es n ot fit the re a l i t y of the Ca l i f ornia leg islation. Moreover, althoug h the dissent trumpets that nine states seek re hearing

, the converse is that 41 do not. And some states, like W as h i n gt o n and Oreg on, have already joined California in its en d e a v or to c ombat
g lobal warming by reducing g reenhouse g as emissions fromR O C K Y M O U N T A I N F A R M E R S U N I O N V

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fuels. F inally

, the d i s s ent characteriz es the L CF S a s an

ex traterritorial reg ulation, and a r gu e s that the majority ’s position to the contrary contravenes Supreme Co u r t precedent. This is an incorrect view of the law: California is free to reg ulate commerce within its borders even if it has an ancillary g oal of influencing the c hoices of actors i n o t her
states. See P harm. Research & Mfrs. of Am. v. W alsh

, 538 U.S. 644, 669 (2003).

Second, the dissent is writte n as if the majority opinion conclusively dete rmined that the L CF S was above constitutional reproach. I t beg ins, for e x a m p le, by accusing the majority of “upholding California’s ethanol reg ulations.” Dissent at 1 4

. I t later repeats this charg e

. S ee Dissent at 19. W e did no such thing

. B elieving that findi n gs o f fact a nd

more p roceeding s in the dis t ri ct c ourt were needed to determine the L CF S’s constitutionality

, we remanded. All we did, in other words, was to reject t he arg ument that the L CF S’s ethanol provisions facially discriminate ag ainst outof-state commerce. Our remand advises the district court to determine “whether the F uel Standard’s e thanol provisions discriminate in p urpose or in pr a c t i cal e ffect.” Rocky M tn. Farmers Union v. Corey
, 730 F .3d 1070
, 1078 (9th Cir. 2013). And we instruc t e d t h e district court to apply strict scrutiny to those provisions if it f ound that they did discriminate, or to apply the b alancing test set forth in Pike v

. Bruce Church, Inc.
, 397 U.S. 137 (1970), if it found that they did not. Rocky Mtn. Farmers Union
, 730 F .3d at 1078. The dissent ackn o w l e dg es o ur remand, but it rhetorically arg ues that the r e m and h as a “ predestined” outcome, Dissent a t 17, because of our statement that the L CF S incorporate s s t ate bou n d a r ies f or “g ood and non-discriminatory ” reasons, Rocky Mtn. Farmers Union
, 7 30 F. 3 d a t 1107. There is a simple
response to this critique, w hich has no leg al merit: W eR O C K Y M O U N T A I N F A R M E R S U N I O N V

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reviewed this case at the summary judg ment stag e

. As such,

we had to ta ke as true all facts presented by California a nd reasonable inferences therefrom. Our statement, then, about
g ood and n on-discriminatory r e a sons for incorporating state boundaries into the L CF S methodolog y is based on evidence that had to be credited at the summary judg ment stag e. I t will
not control what th e district court decides on r emand as it considers the L CF S’s purpos e a nd effect and makes f actual finding s on disputed evidence.

Similar l y , the d issent asserts that our opinion “nullifies” constitutional limitations on states’ ability to leg islate in way s t hat a ffect other states. Dissent at 15. I disag ree. I f t h e L CF S in p urpose or practical effe ct discriminates ag ainst interstate commerce, such limitations still ex ist in the form o f strict scrutiny

. And even if it does not discriminate, the Pike balancing test imposes its own limitations on states’ ability to leg islate in this arena. 1

Third, the d issent arg ues that the L CF S’s e thanol
p r o v i s i o n s f

a c i a l ly d i s c r i m i n a t e a ga i n s t o u t

- o f

- s t a t e

commerce b y drawing lines based on s t ate borders, and that strict scrutiny therefore appl i e s to invalidate the law. I disag ree. F or the rea s o n s stated in the majority o pinion, I believe that California made its g eog r aphic distinctions based

on the carbon impact an d intensity of various fuels, not on their state-of-orig in. True, the L CF S d oes attribute different

1 T h e d issen t’ s in sisten ce t h a t s t r i c t scru tin y sh o u ld b e ap plied to th e reg u lato ry p ro v isio n s h ere, ab sen t a f in d in g o f d iscrim in ato ry p u rp o se or ef f ect, i s a ty p e of “ arch aic f

o rm alism ” th at sh o u ld n o t b e en co u rag ed b y th e Su p rem e Co u rt. Ro cky M

tn

. Fa rmers Un io n , 7 3 0 F.3 d at 1 1 0 7

. In m y

v iew

, th e Su

p rem e Co u rt h as n o t ap p lied s t rict scru tin y to p ro v i sio n s lik e th o se in th e L CFS b ased o n

a th eo ry o f f acial d iscrim in atio n

.R O C K Y M O U N T A I N F A R M E R S U N I O N V

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c arbon intensity values to f u els from different g eog raphi c

areas. C A L

. C O D E R E G S

. tit. 1 7, § 95486(b). B ut the dissent’s
arg ument that it is “ c lear that the challeng e d reg ulations discriminate ag a inst interstate c o mmerce” is wide o f the mark. Dissent at 21. A leg islative g eog raphic distinction is
not facially discriminatory merely because it affects in

- s tate and out-of-state interests unequally

. Rather, as long as there is “some reason, apart from their orig in, t o treat them differently ,” California may disting u i s h b e t w e en Midwestern, B raz ilian, a n d California ethanols. P hiladelphia v

. New Jersey
, 4 37 U.S. 617, 627 ( 1978). The dissent disreg ards this principle. To the ex tent that California treats fuels based on their location, it does so for non- d i scriminatory reasons; if Midweste rn ethanol is more carbon-intensive than its California counterpart, that is so not because of its orig in but rather because of its method of production and other objective factors, including

transportation-related emissions.

F urther, the pathway s set forth in the L CF S— and reproduced at the end of the majority o p i n i o n in Appendix One—are not immutable leg islative classifications. They a re default pathwa y s , a n d while they may be relied upon b y producers, they

may also b e supplanted if a producer creates

an individualiz ed pathway by supply ing its o w n d ata about the c arbon e mission impact of its product. This a llows ethanol producers in California a n d elsewhere some control

o v e r the carbon intensity value assig ned to their fuels. A n d it shows that t h e dissent’s position that the L CF S facially discriminates is incorrect. The L CF S’s ethanol provisions a re based on an obje c tive fact, carbon emissions, not on the constitutionally im p e r

missible g oal o f benefitting local companies at the ex pense of foreig n ones. Such a sy stem does not warrant strict scrutiny

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The dissent notes that “the F uel Standard ex p re s sly assig ns a hig her carb o n intensity to Midwestern ethanol.” Dissent at 21. I n fact, however, the lowest c a rbon intensity values y et—supplied b y pr o d u c e rs who went outside the default p athway s to provide their own data—ar e from Midwestern and B raz ilian e thanol producers. See C A L

. C O D E R E G S

. tit. 17, § 95486(b)(1); Rocky M t n

. F armers Union
, 730 F

. 3d at 1084. This is so larg ely because the L CF S takes into account carbon emissions from transportation, and most California ethanol producers i mport corn from the Midwest
to make their p r o d uct, whereas Midwestern e thanol producers, who have corn close by

, avoid those transportation emissions. The g eog raphic distinctions made by California, then, are not classifications based on state boundaries per se ; rather, they are classifications based on the carbon impact o f fu e l s as calculated u nder a rubric that considers transportation-related e missions. That does not warrant strict scrutiny unless the district court concl u d e s that the L CF S discriminates ag ainst out-of-state com m e r c e in purpose o r practical effect. That is why we remanded with instructions to consider such purpose and effect.

F ourth, the tone and substance of the dissent is pe r h aps aimed at encourag ing Supreme Court review. A petition for writ of certiorari from t h e parties who soug ht rehearing is likely forthcoming

, but our court properly declines to g ive its judicial imprimatur to the dissent’s position. B ecause Supreme Court review is p ossible, however, I set forth my

own views on that prospect. On the one hand, th e Supreme Court’s considered judg ment c o uld be helpful to clarify a s

soon as practical what states may do o f their own accord to deter or slow g lobal warming

. T he Supreme Court, if it

w ants to do so at this time, can set c onstitutional limits, binding in all circuits, as to what the individual states in ourR O C K Y M O U N T A I N F A R M E R S U N I O N V

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Union may do to combat g lobal warming

. The S upreme Court also can g ive meaning to, o r limit, the g eneral principle that st a te ex perimentation is often a desirable predicate to

a c t ions by other states or the federal g overnment. O n t h e other hand, the record in this case is incomplete and t h us unsuitable for understanding the f ull scope of the issues presented. The panel remanded for finding s on discriminatory p urpose or effect w hich, if it ex ists, would invoke strict scrutiny

. And, i f not, the majority required on remand that t h e d i strict court eng ag e in Pike balancing

, weig hing the L CF S’s benefits a g ainst its impact on interstate competition. The issu e s raised b y the dissent, then, may be rendered moot by the district court’s decision, and in any event there will be a more complete record, including finding s on p u rpose and effect, on which to make a ruling about the controlling leg a l principles.

F ifth, the dissent contends that Califor n ia admits its scheme w ill, by itself, have little effect in a v e r ting environmental catastrophe. Dissent at 2 2

. This arg ument ig nores not only the principle that incremental chang e , when
ag g r eg ated, can be sig nificant, b u t a l s o the possibility that successful ex perimentation b y California could lead to broader a ction by other states a nd/or the federal g overnment. The Supreme Court h as reminded us that it is “erroneous” to

assume that “ a small, incremental step, because it is i n c r e m e n t a l ” i s l e g a l l y

— o r t r u l y

— i n s i g n i f i c a n t

. Massachusetts v. EPA
, 549 U.S. 4 9 7, 524 (2007). J ust as a journey of 1,000 miles beg ins with a sing le step, so too must leg islati v e action to fig h t g lobal warming start somewhere. F urther, once other states appreciate the benefits of the L CF S, there may be a cascade of similar laws throug hout the country —and perhaps federal a ction—aimed at stemming the tide of g lobal warming

. I nd eed, proposed leg islation inR O C K Y M O U N T A I N F A R M E R S U N I O N V

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Oreg on and W ashing ton is an e x ample of this. See Rocky Mtn. Farmers U

nion
, 7 3 0 F

. 3d at 1 104 n.14; Michael W ines, Climate P act Is Signed by 3 States and Partner
, N.Y. T I M E S , Oct. 30, 2 0 1 3
, a t A18 (noting an ag reement b etween California, Oreg on, and W ashing ton, as well as B ritish Columbia, to “raise the c o s t of g reenhouse g as p ollution, promote z ero-emission vehicles and push for the use o f cleaner-burning fuels in transportation” a s p a rt of a “ broad alliance to combat climate chang e”).

Meanwhile, g lobal temperatures a r e i n c r e a s i n g , s t o r

m s a re in t e n s i f y ing

, polar ice c a

ps a r e melting

, and seas are rising

. I f California’s ex periment w ith the L CF S is to succeed in inducing increased p roduction of alternative fuels and/or decreas e d carbon impact of ex isting fuels, the sooner it can proceed, the better; it c ould take y ears, or d ecades, for other
states to r ecog niz e the benefits of the L CF S, to react to it, a nd
to eng ag e in similar ex periments themselves. J u stice B randeis recog niz ed the importance of t h is sort of state

ex p erimentation in his now-famous dissent in New State Ice C o

. v

. Liebmann

, when h e wrote: “I t is one of the ha p p y incidents of the federal sy stem that a sing le courag eous state may , if its citiz e ns choose, s er v e a s a laboratory ; and try novel social and economic e x periments witho u t risk to the
rest of the country .” 2 85 U.S. 262, 311 (1932) (B randeis, J
., dissenting ). This is what California h as done with the L CF S. The benefits that may flow from such cooperative state action do not, as t h e d i ssent urg e s, threaten to “B alkaniz e our national economy

. ” D issent at 14. Rather, the development of alternative fuels and a market sy stem reg ulating c arbon emissions would likely

benefit the national economy

.

Six th, the dissent’s arg ument that California’s “economic clout” means that the “p r a c t ical e ffect” of the L CF S is toR O C K Y M O U N T A I N F A R M E R S U N I O N V

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reg ulate c ommerce bey ond California’s b orders misstates the law. D issent at 24. I n f

act, Supreme Court precedent points in a contrary direction. See, e

. g

. , W alsh

, 538 U.S. at 669 (refusing to apply the ex traterritoriality d octrine to a law that “does not reg u late the price o f any out-of-state transaction, either by its ex press terms o r b y its inevitable effect” (internal quotation marks omitted)). W hile a state may n ot mandate compliance with its preferred policies in wholly out-of-state transactions, it may reg ulate commerce within its boundaries

even if one of its g oals is to influence the out-of-state choices of market participants. See i d

. This is what California permissibly

has done with the L CF S. 2

A majority of active judg e s on our court wisely refused to g rant en b anc consideration in this case. I concur in the order deny ing rehearing

en banc.

2 If th e d issen t’ s p ositio n

w ere ad o pted , it w o u ld sp ell th e en d o f m u ch b en ef icen t s tate leg islatio n

. L et u s assu m e, f o r ex am p le, th a t a s af

ety

co n scio u s state reg u lates au to m o b i les, p rev en tin g t h em f ro m b ein g so ld in th at state ab sen t certain saf ety pro t ectio n s lik e airb ag s o r a p erf o rm an ce stan d ard req u irin g a m in im u m su rv iv al r a te f

ro m a crash at 4 0 m iles per h o u r. T h e d issen t ap p aren t ly w o u ld say th at t h e saf ety

- co n scio u s state is
reg u latin g ex traterrito rially b ecau se i ts restrictio n s p ro v id e in c en tiv es to

au to m ak ers in o th er states to m ak e th eir cars saf er if th ey w ish to s ell th em in th e saf ety

- co n scio u s state. I resp ectf u lly d isag ree. T h e Su

p rem e Co u rt h as n o t said an y

t h in g t o th at ef

f ect, an d

, as ex plain ed ab o v e, its p reced en t p o in ts in th e o p p osite d irectio n

.R O C K Y M O U N T A I N F A R M E R S U N I O N V

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M. SMI TH, Circuit J udg e, with whom O’SCANN L A I N
, CAL L A HAN, B EA, I KUTA, and N

. R

. SMI TH, Circuit J udg e s, join, and with whom MURGUI A, Circuit J udg e, joins

as to Part I I I
, dissenting from the denial of rehearing en banc:

I n upholding California’s ethanol reg ulations, the 2-1 majority in this case finds at least facially c o n s t i tutional a protectionist re gu l atory scheme that threatens to B alkaniz e

our national e c o n o m y

. I n so d oing

, the majority disreg ards long standing dormant Commerce Clause doctrine, and places the law o f this circuit squarely at odds with Supreme Court precedent.

The delet e r i o u s e f

fects o f California’s scheme on our national economic union are not speculative. The states o f Nebraska, I llinois, I owa, Kansas, Michig an, Missouri, N orth Dakota, Ohio, and South Dakota (which are major producers of corn a nd ethanol) filed an amicus brief in s upport of en banc rehearing

. 1 They arg u e that Cal i f o r nia’s e thanol
reg ulations “imping e[ ] on the sovereig n interests of the Amici States to reg ulate farming

, ethanol p roduction, and other activities within their own bord e r s as they see fit.” These
states f urther o bserve that California’s reg ulations “close[ ] the California border to ethanol produced in Amici States in fa v o r of chemically -identical ethanol produced within C a l i f o r n i a

. . . .” These are the very ty pes of concerns that
g enerated the Suprem e Court’s dormant Commerce Clause case law, and the panel majority ig nores them.

1 In h is co n c u r r e n ce in th e d en i al o f reh earin g en ban c, J u d g e Go u ld

n o tes th at 41 states d id n o t j o in i n t h e am icu s b rief seek in g en b an c reh earin g

. T h i s sh o u ld b e n o su rp rise s in ce o n e o f th o se s tates is Calif o rn ia, w h ich p ro m

u l g ated th e o f

f en d i n g reg u latio n s, an d m o st o f th e

o th er states are n o t m aj o r co rn o r eth an o l p ro d u cers.R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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Our federal sy stem g rants states substantial discretion to remedy perceived local problems. B ut the Constitution sharply constrains their power to do so at the e x pense of other
states. B e cause the majority opinion nullifies an y s u c h limitations, I respectfully dissent from our failure to rehear this case en banc.

I

.

I n the Global W arming Solutions Act of 2006, California pledg ed to reduce its g reenhouse g as emissions to 1990 levels by the y ear 2020. T o implement this g oal, the California Air Resources B oard (CARB ) promulg ated the L ow Carbon F uel Standard (F uel Standard). T h e F u el Standard requires businesses that sell transportation f u els i n California to reduce the “carbon intensity ” of their f uels by ten p er c e nt before 2020. As CARB describes it, “[ c] arbon intensity is not

an inherent chemical property of a fu e l

, but rather it is reflective of the process in making

, distributing

, and using that fuel.”

The F uel Standard ex plicitly treats in-state and o u t-ofstate ethanol differently i n c alculating carbon intensity

. 2 I n d e e d

, a fuel’s c arbon intensity depends in part on t h e location w here it is produced. All else equal, the reg ulations alway s a ssi gn a hig her c a rbon intensity to Midwestern ethanol than ethanol from California. As such, CARB predicts that the F uel Standard will s o o n eliminate Midwestern ethanol from the California market. F urther, the
reg ulations sweep bey ond the borders of California. B ecause

2 Fo r th e sak e o f b rev ity

, I f o cu s o n th e m aj o rity ’ s en do rsem en t of Calif o rn ia’ s eth an o l reg u latio n s. B u t th e pan el’ s ap p ro v al of Calif o rn ia’ s

sw eep in g cru d e o il reg u latio n s also m erited en b an c rev iew

.R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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a fuel’s carbon inte n s i t y d e p ends larg ely on out-of-state production and land use decisions, C a l ifornia’s scheme necessarily

affects those processes.

On December 23, 2009, and F ebruary 2, 2 010, PlaintiffsAppellees filed suit in the United States District Court for the Eastern District of California, contending that California’s
reg ulations violate the dormant Commerce Clause. Specifically

, two g roups of Plaintiffs led by t h e R o c k y Mountain F armers Union (Rocky Mountain) and the American F uels & Petrochemical Manufacturers Association challen ged the F uel Standard’s ethanol reg ulations. On December 29, 2011, the district court a g reed that the e thanol
reg ulations violate the d ormant Commerce Clause, awarded
summary judg ment o n that basis, an d g ranted Rocky Mountain’s motion for a preliminary injunction.

On Septemb er 18, 2013, a divided panel of our court reversed and r emanded in principal part

. A ccording to the majority

, the F uel Standard’s e thanol reg u l a t i ons do not facially discriminate a g ainst interstate commerce because California has “g ood and non-discrim i n a t ory r eason[ s] ” for treating out-of-state ethanol diffe r e ntly

. Rocky Mountain Farmers Union v. Corey
, 730 F .3d 1070, 1107 (9 t h Cir. 2013). T he majority further concluded that the reg u lations do
not have ex traterrito r i a l reach because they merely provide incentives to out-of-state f irms. The majority therefore reversed the judg ment of the district court in relevant part, vacated the preliminary injunction, and remanded to the district court for consideration of whethe r the e thanol
reg ulations “discriminate in pu r p ose or in p ractical e ffect.” Id. at 1 0 7 8

. T h e panel instructed the district court to a pply strict scrutiny if it fin d s t h a t they do, and to apply the b a lancing test established in Pike v. Bruce Church, I n c

. ,R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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397 U.S. 1 37 (1970), if it determines that they do not. Rocky Mountain Far mers U

nion
, 730 F .3d at 1078. However, the majority made c lear that the o utcome of this an a ly sis is predestined, instructing the district court that the reg ulations

“ i n c o r p o r a t e s t a t e b o u n d aries fo r go o d an d n o n

discriminatory

reason[ s] .” Id. at 1107.

J udg e Murg uia concurred i n p art and dissented in part. W h ile she a g reed with the majority in some respects, she disag reed r eg arding the ethanol reg ulations. J udg e Murg uia determined that the ethanol r eg ulat i o ns were facially discriminatory

, and she concluded that they failed to withstand strict scrutiny

because California could attempt to mitig ate climate chang e throug h non-discriminatory means.

I I

.

I n the name of combati n g “ a new ty pe of harm,” the

m ajority rejects long standing d ormant Commerce Clause precedent as mere “archaic formalism.” Rocky Mountain Farmers U

nion
, 730 F .3d a t 1107. I t h erefore beg in with a brief survey of the doctrine, and i t s critical place in our constitutional order.

“ Du r i n g the first y ears of our history as an independent confederation, the National Government lacked the power to reg ulat e c o m m erce among the States,” and “each State was free to a d o p t measures fostering its own local interests without r e g ard to possible prejudice to nonre s i d e n t s

. . . . ” Camps Newfound/Owatonna, Inc. v. Town of Harrison, Me.
, 520 U.S. 564, 571 (1997). This “ conflict of co m m e r cial
reg ulations, d estructive to the harmony of the States

. . . . was t h e immediate cause that led to the forming of a [ constitutional] convention.” Id. (quoting Gibbons v. Ogden

,R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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22 U.S. ( 9 W heat.) 1, 224 (1824) (J ohnson, J

. , concurring in the judg ment)). Thus, a s J ustice Cardoz o observed long ag o, the Constitution “ was framed upon the theory that the peoples of the several states must sink or sw i m t o ge t her, and that in the long run prosperity a nd salvation are in union an d not division.” Baldwin v. G.A.F. Seelig, Inc.
, 294 U.S. 511, 523 (1935).

To implement the C o n stitution’s objective of n ational economic uni t y , the Supreme Court “has consistently h eld that the Constitution’s ex press g r a n t to Cong ress of the power to ‘reg ulate Commerce . . . among the several States,’ Art. I
, § 8
, c l. 3, contains ‘a further, neg ative command, k nown a s the dormant Commerce Clause . .

. .’” Am. Trucking Ass’ns

v. Mich. Pub. Serv. Comm’n
, 545 U.S. 429, 433 (2005) (quoting Okla. Tax Comm’n v. Jefferson Lines, Inc.
, 5 14 U.S. 175, 179 (1995)). 3 The dormant Commerce Clause promotes

e c onomic integ ration b y “sig nificantly limit[ ing ] the ability of States and localities to reg u late or otherwi s e b u r d en the flow of interstate commerce.” McBurney v. Y oung , 133 S. Ct. 1709, 1719 (2013) (quoting Maine v. Taylor

, 477 U.S. 131, 151 (1986)). “I t is driven by a concern about ‘ e conomic protectionism—that is

, r eg u latory measures desig ned to benefit in-state economic interests by burdening out-of-state

3 “ T h e ‘ n eg ativ e’ asp ect of th e C o m m er c e C l a u s e w as co n sid ered th e

m o re im po rtan t b y th e ‘ f

ath er o f th e Co n stitu

tio n ,’ J am es Mad iso n

. In on e

o f h is letters, Mad iso n

w ro te th at th e Co m

m erce Clau se ‘ g rew o u t o f th e ab u se o f t h e p ow er b y th e im

p ortin g States in tax in g th e n o n -i m p o rtin g , an d w as in ten ded as a n eg ativ e an d prev en tiv e p ro v isio n ag ain st in j u stice

am o n g th e States th em s elv es, rath er t ha n a s a po w er to b e u sed f o r th e p o sitiv e p u rp o s es o f th e Gen eral Go v ern m en t.’ ” W

. Lyn n Crea mery, In c.

v. Hea ly

, 5 1 2 U.S. 1 8 6
, 1 93 n .9 (1 9 9 4 ) (q u o t in g 3 M. Farran d

, Reco rd s of th e Fed eral Co n v en tio n

o f 1 7 8 7 , at 4 7 8 (1 9 11 )).R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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competitors.’” McBur n e

y , 133 S. Ct. at 1719 (quoting New Energy Co. of

I nd. v. Limbach

, 486 U.S. 269, 273–74 (1988)).

I n upholding California’s sweeping and discriminatory ethanol reg ulations, the majority b rushes a si d e two f o u n d a t i o n a l t e n e t s o f d o r m a n t C o m merce Clau s e jurisprudence. Fi rst, the majority g ives short shrift to the principle that “[ s] tate laws that discriminate ag ainst interstate

commerce face ‘a virtually per se r u le of inval i d i t y .’” Granholm v. Heal d

, 544 U.S. 460, 476 (2005) (quoting Philadelphia v

. New Jersey
, 437 U .S. 617, 624 ( 1 978)). Second, the majority abjures the rule that “a state law that has the ‘ practic al effect’ of reg ulating commerce occurring wholly outside that State’s borders is invalid .

. . . ” Healy v

. Beer Inst. , 491 U.S. 324, 332 (1989).

Until recently

, our circuit faithfully ap plied these doctrines, striking down parochial state laws that burdened interstate commerce. See, e

. g. , Birth Hope Adoption Agency, Inc. v. Ariz. Health Care Cost Containm e n t Sys.
, 218 F .3d 1040, 1044–45 (9th Cir. 2000); NCAA v. Miller

, 10 F .3d 633, 640 (9th Cir. 1993); BFI Med. W aste Sys. v. W

h atcom Cnty.
, 9 83 F .2d 911, 913 (9th Cir. 1993). The majority op i n i o n represents a dramatic and unwarranted chang e of course.

I I I

.

The majority ’s most ba sic, and p e rhaps most consequential

, e rror is its contention that California’s
reg ulatory scheme does n ot facially d iscriminate ag ainst outof-state commerce. The majority concludes, in essence, that the reg ulations are not discriminatory on t h eir face because C a l i fornia has “some reason, apart from [ its] orig in, to trea t [ out-of-state ethanol] differently .” Rocky Mountain FarmersR O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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Union
, 730 F .3d at 1089 (quoting Philadelphia

, 437 U.S. at 627). As J udg e Murg u ia observes in dissent, however, th is reasoni n g “puts the cart before the horse,” and is therefore “inconsistent with Supreme Court p r ecedent.” Rocky Mou n t a in Farmers Union
, 730 F .3d at 1108 (Murg uia, J
., concurring

in part and dissenting in part).

Contra r y to the majority ’s a naly tical framework, “[ d] etermining whether a reg u lation facially disc r i minates
ag ainst intersta t e commerce b eg ins and ends with the
reg ulation’s plain lang uag e.” Id. U n d er the dormant C o m m e r c e C l a u s e , “‘ d i s c ri m i n a t i o n ’ s i m p l y m e a n s differential trea tment of in-state and out-of-state economic interests that benefits the former and burdens the latter.” Or. W aste S y s

. , Inc. v. Dep’t of Envtl. Q uality

, 511 U.S. 93, 99 (1994). “[ T] h e purpose o f, o r j u s t i fication for, a law has no bearing o n w hether i t is facially discriminatory .” Id. at 100 (citing Chem. W

aste Mgmt., Inc. v. Hunt
, 5 04 U.S. 334, 340–41 (1992)).

F urther, the lang uag e from Philadelphia

, 437 U.S. at 627,

on which th e majority r elies h as nothing to do with determining whether a r eg u lation facially discriminates
ag ainst interstate commerce. Rath e r , it merely shows that

some discriminatory reg ulations may ultimately survive strict scrutiny

. S

e e United Haulers Ass’n v. Oneida-Herkimer Solid W aste Mgmt. Auth.

, 550 U.S. 3 30, 3 66 (2007) ( Alito, J
., dissenting ) (citing quoted passa ge from Philadelphia a s

ex a mple of apply i n g s trict scrutiny ). Thus, whether California has g ood reasons for penaliz ing Midw estern ethanol simply h as nothing to do with whether the s tate’s
reg ulations are facially

discriminatory

.R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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I t is clear that the challeng e d reg ulatio n s d iscriminate
ag ainst interstate commerce. Most b latantly

, the F uel Standard ex pressl y assig ns a hig h er carbon intensity to Midwestern ethanol, ba sed in part on the g reenhouse g a s

e missions arising from its transportation to Californ i a. E thanol produced in-state faces no such penalty

. As J u d ge M u r g u i a n o t e s , t h e r e g u l a t o r y s c h e m e t h e r e f o r e “differentiates between in-state and o ut-of-state ethanol, according more preferential treatment to the form e r at the

ex p ense of the latter.” Rocky Mountai n F armers Union
, 730 F .3d at 1108 (Murg uia, J
., conc u r r ing in part a nd dissenting in part). B ecause ethanol from Midwestern states faces a reg ulator y burden that c hemically identical in-state

e t h a n o l d o e s n o t , C a l i f o r n i a ’ s r egi m e i s f

a c i a l l y discriminatory

. See O r

. W a s t e , 511 U.S. at 9 9 –100. I n concluding otherwise, the majority contravenes blac k letter law and renders our dormant Commerce C l a u se jurisprudence incoherent.

I V.

The majorit y co mpounds its error by concluding that leg itimate local concerns s u p p ort California’s reg ulation o f the interstate ethanol mark e t

. B ecause the reg ulations a re facially discriminatory

, any justifications for them must “pass the ‘strictest scrutiny

. ’” Id. at 101 (quoti n g Hughes v

. Oklahoma

, 441 U.S. 322, 337 ( 1 979)). To w ithstand this

se a r c h i ng review, “the statute must serve a leg itimate local
purpose, and the purpose must b e one that cannot be served

as well by avail a b l e nondiscriminatory means.” Maine
, 477 U.S. at 140. “This is a n e x tremely difficult burden, ‘so heavy that facial discrimination by itself may be a f a tal defect.’” Camps Newfound

, 520 U.S. at 582 (quoting Or. W aste , 511 U.S. at 101)).R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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California fails to c a r ry its heavy burden. According to the majority

, “[ i] f [ g reenhouse g as] emissions continue to increase, California may see its coastline crum ble under rising seas, i t s l abor force imperiled by rising temperatures, and its farms d e v astated b y severe droug hts.” Rocky Mountain F

a r m ers Union
, 7 3 0 F .3d at 1097. W hen viewed
ag ainst this bac k drop, California’s reg ulatory justifications
appear weig hty indeed. B ut the majority overlooks a critical fact—the F uel Standard w ill not r emedy the problem. To the

co n t rary , CARB acknowledg es that “[ g reenhouse g as] emission reductions by the [ F u el S tandard] alone w ill not result in sig nificant c limate chang e.” I n other words, California admits that its scheme will have little to no effect in averting the environmental catastrophe envisioned by t h e majority

. This concession alone shows that the r eg ula t ions fail strict scrutiny

. 4

And the defects in California’s ethanol r e gi m e g o w ell bey ond its ineffectiveness. W hile the r e gulations may not slow climate chang e, they will a ssuredly p romot e C alifornia’s
energ y industry at the ex pense of o ut-of-state competitors. CA R B acknowledg es that the F uel Standard will “reduc[ e] the volume of transportation fuels that are imported from other states

. . . .” As such, CARB ex pects t h a t t he
reg ulations will “keep[ ] m ore money in the State,” and that they “will provide needed employ ment, [ and] an increased
tax b ase for the State

. . . .” I n short, CARB admit s that it

4 A s J u d g e Mu rg u ia o b serv es in d issen t, th e eth an o l reg u latio n s also f ail strict scru tin y b ecau se Calif o rn ia co u l d en deav or t o red u ce g reen h o u se g as

em issio n s th ro u g h n o n

- d i scrim in ato ry m ean s. Calif o rn ia co u ld

, f

or in stan ce, “ treat[] eth an o l pro d u ced in ef f icien t p lan ts m o re f

av orab ly th an eth an o l f ro m in effi c i en t p lan ts

. . . .” Ro cky Mo u n ta in Fa rmers Un io n , 7 3 0 F.3 d at 1 1 0 9 (Mu rg u ia, J
., co n cu rrin g in p art an d d issen tin g in p art).R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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purposefully “developed the [ F uel Standard] in a manner that minimi z e s c osts and max imiz es the total benefits to California.”

Of course, states may p ass leg islation that benefits l o c al industry

. B ut, “in a ll but the narrowest circumstances,” they
may n o t d o so at the ex pense of other states. Granholm

, 544 U.S. at 472. I n c o nclu d ing that California’s e thanol
reg ulations are facially neutral in s p i te of their overt a nd unjustifie d d iscrimination ag ainst interstate commerce, the majority departs from settled law and cuts this circuit’s dormant Commerce Clause jurisprudence l oose from its mooring s.

V.

California’s ethanol reg ulations suffer f rom another constitutional defect: they seek to control conduct i n o t her
states. T he Supreme Court has clearly and c onsistently i n s t r u c ted that “a state law that has the ‘practical effect’ of
reg ulating commerce occurring wholly out s i d e that State’s borders is invalid

. . . .” Heal y , 4 91 U.S. a t 332; see also Baldwin

, 294 U.S. at 521–22. And the etha n o l reg ulations plainly have e x tra t e rritorial reach, a s they seek to influence out-of-state land use de cisions and production methods. I n concluding otherwise, the majority disreg ards c o ntrolling precedent and departs from the holding s of the Su preme Court and our sister circuits. M o r e fundamentally

, the majority approves a reg ime th a t threatens the very sort o f “economic B a lkan i z a tion that had plag ued r elations a mong the Colonies a

nd later among the States under the A rticles o f Confederation.” Granholm

, 544 U.S. at 4 72 (quoting Hughes , 441 U.S. at 325–26)).R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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The rule that one sta t e “ h a s n o p ower to p r oject its leg islation into” another state, Baldwin

, 294 U.S. a t 5 2 1
, is fundamental to our federal sy stem. I t embo d ies “the Constitution’s special concern both with the maintenance of

a national economic union unfetter e d by state-imposed limitations on interstate c ommerce and with the autonomy o f the individual States w ithin their respective spheres.” Healy

, 491 U .S. at 335–36 (footnotes o mi t t e d). Thus, “the ‘Commerce Cla u s e

. . . precludes the application of a state statute to c ommerce that takes place wholly outs i d e o f the State’s borders

, whether o r not the c ommerce has effects within the State

. . . . ’” Id. a t 336 (qu o t i n g Edgar v

. M ITE Corp.
, 457 U.S. 624, 642–43 (1982) ( plurality o pinion)). California’s ethanol reg

ulations fail this test.

I t is no answer to assert, as the m aj o r i ty does, that the F uel Standard merely provides “incen t ives” that mig ht influence out-of-state conduct. See R ocky Mountain Farmers Union
, 730 F .3d at 1103–04. B y penaliz ing certain out-ofstate practices, California’s reg ulations control out-of-state conduct just as surely as a mandate w o u l d

, particularly in view o f Cal i f

o rnia’s economic clout. Thus, whether C a l i f o r n i a ’ s s c h e m e i s c h a r a c t e r i z e d a s p ro v i d i n g “incentives” o r e stablishing “ mandates,” it has the practical effect of reg ulating interstate commerce. And, under the dormant Commerce Clause, “[ t] h e critical inquiry is whether the pra c t i c a l effect o f the reg ulation is to control conduct bey ond the boundaries of the State.” Healy

, 491 U.S. at 336 (citing Brown-Forman Distille r s Corp. v. N.Y

. State Liquor Auth. , 476 U.S. 573, 579 (1986)) (emphasis added). 5

5 Oth er co u rts o f ap p eals h av e co rrectly h eld th at Co m m erce C l a u se

an aly sis tu

rn s o n a law ’ s p ractical co n seq u en ces, n o t o n sem an tics. S ee, e.g

. , Na t ’l Fo reig n Tra d

e Co un cil v. Na tsi o s , 1 8 1 F.3 d 3 8
, 6 9 (1 st Cir.R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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F inally

, the majority sig nificantly u nderestimates the risk
t hat California’s ethanol scheme will spur other states t o enact “the kind of competing and interlocking local economic
reg ulation that the Commerce Clause was meant to preclude.” H ealy

, 491 U.S. at 337. F or ex ample, now that the p a n el

m a j o r i t y h a s b l e s s e d C a l i f o r n i a ’ s e x p e r i m e n t i n

ex traterritorial reg ulation, Oreg on may move forward with its

own Clean F uels Prog ram. The majority assures us that the Oreg o n p r o g ram and those of other states will merely “complement[ ] ” California’s, Rocky Mountain Farmers Union
, 7 30 F .3d at 1104, but there is no g uarantee that this is

so. 6 I n a

ny event, ethanol producers will s o o n face the daunting prospect of navig ating several interlocking

, if not entirely contradictory

, reg ulatory reg imes. F rag mentation o f the national economy

may ensue.

Two brief ex amples illustrate th e point. I f California
may , c onsistent w ith the dormant Commerce Clause, seek to influence out-of-state ethanol production, it may just a s leg itimately seek to influence any out-of- s tate conduct with perceived local effects. Under the majo r ity ’ s reasoning

,

1 9 9 9 ), a ff’d su b no m. Cro sb

y v. Na t’l Fo re i

g n T ra d e Co u n cil

, 5 3 0 U .S. 3 6 3 (2 0 0 0 ); N

a t’l So lid W

a stes M g m t. Ass’n v. Meyer
, 6 3 F .3 d 6 5 2
, 6 6 1

– 6 2 (7 th

Cir. 1 9 9 5 ).

6 C a l if o rn ia recen tly p led g ed to alig n i ts en erg y p o licies w ith O reg o n , W ash i n g to n , an d B ritish Co lu m b i a

. M ich ael W in es, Clima te Pa ct Is S ig n ed by 3 S t

a tes a n d Pa rtn er , N .Y. T im es, O ct. 3 0
, 2 0 1 3
, at A 1 8

. If

, as th e m aj o rity h o ld s, th e C o n s ti tu tio n p o ses n o o b stacle t o Calif o rn ia’ s reg u latio n o f in terstate co m m erce, th ere is little reaso n to d o u b t th at Calif o rn ia m ay reg u late f

oreig n co m

m erce as w ell. U n s u rp risin g ly

, th is

co n clu sio n

p u ts u s sq u arely

at o d d s w i th

o u r sister circu its. See N

a tsio s , 1 8 1 F.3 d at 6 9. Fu

rth er, th e g ro u

p in g o f states in th is f ash io n rep resen ts th e ty p e o f “ eco n o m ic B alk an izatio n ” th at t h e C o m m e rce Clau se w as in ten d ed to p rev en t. Hu gh es , 4 41 U.S. at 3 2 5

.R O C K Y M O U N T A I N F A R M E R S U N I O N V

. C O R

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California could impose reg ul atory penalties ( or g rant “incentives”) to require manufacturers in Tex as to pay hig her
wag es to their employ ees if they intend to sell their products in California. Such a measure would, of course, benefit California to the ex tent that it would minimiz e the risk o f competition from Tex as bu s i n esses, with their lower labor
costs. B ut under the same log ic, T e x as could—and assuredly would—respond in kind, p erhaps by penaliz i n g California
ag riculture o n a c c o unt of its reliance on costly irrig ation methods.

Similarly

, California could—under t h e majority ’s reasoning —penaliz e out-of-state w ineries to account for the environm ental effects of transporting their wines to California. L ike the F uel Standard, such a reg ulation would promote California businesses at the ex p ense o f out-of-state interests. And, also like the F uel Standard, such a reg ulation could lead to destructive interstate retaliation. 7

The very purpose of the dormant Commerce Clause is to

ensure that “[ r] ivalries among the State s a r e

. . . kept to a minimum, a

nd a proliferation of trad e z ones is prevented.” Granholm

, 544 U.S. at 4 72 (citing C & A Carbone, I n c

. v

. Town of Clarkstown, N.Y

. , 511 U .S. 383, 390 (1994)). Until the majority ’s r

uling

, the d ormant Commerce Clause g u arded
ag ainst such economic frag mentation. See Baldwin

, 2 9 4 U.S.
at 524 (ex plaining that a state may not “condition importation

7 In h is co n cu rren ce in th e d en ial o f r eh earin g en ban c, J u d g e Go u ld relies o n Ph a rma ceu tica l Resea rch & Ma n u fa ctu rers o

f Am e r ica v. W

a lsh

, 5 3 8 U.S. 6 4 4
, 6 6 9 (2 0 0 3 ), f or th e p ro p o sitio n th at Calif o rn ia m ay leg i tim ately

reg u late in

- state co m

m erce w ith

th e g o al o f in f

lu en cin g o u to f

- state co n d u ct. B u t n oth in g in W a lsh rep u diates th e p rin cip le th at a state

m ay n o t clo se its b o rd ers to o u t- o f

- state g o o d s u n less ex

p o rters alter th eir

o u t- o f

- s tate co n du ct. See Ba ld

win , 2 9 4 U.S. at 5 2 4

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upon proof of a satisfactory wag e scale in factory or shop ”). Now, the dormant Commerce Clause h a s been rendered toothless in our circuit, and we stand in open defiance o f controlling Supreme Court precedent.

VI

.

The majority opinion in t h i s case upholds a reg ulatory

sc h eme that, on its face, promotes California industry at the

ex p ense of out-of-state interests. T h e majority opinion also sanctions California’s clear attempt to project i t s authority into other states. B e c a u se the Constitution forbids such an

ex p ansive and discriminatory ex er c i s e of state power over interstate commerce, I r espectfully dissent from our failure to rehear this case en banc.