Protecting Iowa and Missouri Residents From New York Regulation 

States of Iowa and Missouri, et al. v. New York Department of Environmental Conservation 

New York wants to regulate individuals and businesses outside its own borders. Iowa and Missouri, joined by the American Free Enterprise Chamber of Commerce (AmFree), are challenging this illegal imposition of New York’s regulatory power on producers and businesses in their states. Iowa and Missouri have declined New York-style greenhouse-gas reporting and biofuels regulation. New York is trying to override those choices by forcing out-of-state producers to comply with New York’s regulatory regime, regardless of the economic and other harms to Iowa and Missouri residents.

New York remains free to apply a sweeping new Mandatory Greenhouse Gas (GHG) Reporting regulation on its own residents, industries, and those who choose to do business in New York, but the Empire State must respect the equal right of Iowa, Missouri, and their residents to live by their own rules. Instead, the New York regulation requires midwestern and other out-of-state participants in the ethanol and biodiesel industries to register with New York, track any emissions that may eventually affect New York, submit annual emissions reports, preserve records, and pay various compliance and verification costs—or face civil and criminal penalties.

Iowa and Missouri, the two states with the significant ethanol and biodiesel production—and the businesses, workers, and consumers based in those two states—stand to suffer considerable harm from New York’s rule. AmFree’s members who produce biofuels also face substantial compliance costs, including potential fines, and those costs will be passed on to AmFree’s members who purchase biofuels.

Why This Case Matters:

The Constitution governs not only the relationship between states and the federal government, but also how states must respect and interact with each other as equals. This “horizontal federalism” does not permit one State to govern the people, businesses, and policy choices of another. New York’s rule violates our Constitution’s federal structure, exceeds constitutional due-process limits on state jurisdiction, and violates Fourth Amendment prohibitions against unreasonable searches.

If New York can force fuel producers in Iowa, Missouri, and other states to comply with its regulations merely because their products might later enter New York’s market, other states could then do the same across countless industries. The result would be a patchwork of overlapping state mandates, with people and businesses forced to comply with the laws of states where they do not live, work, or have any meaningful connection.

The constitutional stakes go far beyond environmental policy. Americans’ individual rights depend on being able to choose where to live and work based, in part, on which state’s policies they prefer. When people “vote with their feet” by moving to a different state, they discipline state governments to adopt policies that better protect individual rights, spur policy and other innovations, and promote human flourishing.

This arrangement, called competitive federalism, requires the Constitution’s horizontal limits on state power to be enforced. When states like New York regulate beyond their borders, people living elsewhere have no way to escape—they cannot move away and they cannot vote against it at the ballot box.

A win in this case will reinforce a core constitutional principle and the individual rights it protects: A state cannot exploit residents outside its borders. CIR is fighting to protect individual rights by keeping states within their constitutional bounds—ensuring government remains transparent and responsive.

Background:

Individual rights depend on the Constitution’s structural limits on government power, which help limit government abuse. When people think of those structural limits, they often focus on the separation of powers among the branches of our national government that serve as checks on each branch or on the limited and enumerated powers of the national government as a whole.

But the Constitution also includes horizontal limits on states’ power, preventing one state from projecting its laws beyond its borders and displacing the policy choices of other states. Several constitutional provisions reinforce these horizontal limits, including the Due Process Clause’s limits on state jurisdiction, the Full Faith and Credit Clause requiring states to enforce the rights and duties created under the laws of other states, and the Commerce Clause’s dormant restriction on state laws that discriminate against out-of-state economic interests.

The policy at issue is New York’s Mandatory Greenhouse Gas Reporting Program. It requires covered “reporting entities”—including certain fuel suppliers, defined so broadly that it reaches distant out-of-state fuel producers—to register with New York, track emissions-related information, file annual reports, maintain records, and potentially submit to third-party verification. This program is part of New York’s broader effort to gather data in preparation for major statewide greenhouse-gas reductions by 2030 and 2050.

Regardless of how New York wants to regulate climate change within its own borders, it oversteps when it imposes this reporting regime—along with its compliance costs and penalties—on out-of-state biofuels producers. And it oversteps even more when it effectively overrides the different greenhouse-gas policies other states have adopted for their own residents. The steep costs of compliance will be passed on to consumers nationwide, driving up fuel prices in ways that residents of other states never voted for—and can’t vote against.

The Attorneys General of Iowa and Missouri and their office legal staff are co-counsel with CIR on this case.