Tuesday, July 23, 2013

FDA Law Blog - Amended COOL Regulations Constitutionally Uncool



Posted: 22 Jul 2013 07:30 PM PDT
By Riëtte van Laack –
In a lawsuit filed in federal court, meat industry representatives have challenged the constitutionality of Country of Origin Labeling (“COOL”) regulations as amended by USDA’s Agricultural Marketing Service (“AMS”) in May of 2013.  To understand the origin of the lawsuit, it is helpful to briefly review the history of the regulatory amendments at issue.
In 2008, the Food, Conservation and Energy Act of 2008 (2008 Farm Bill) amended the Agricultural Marketing Act of 1946 to impose COOL requirements on retailers for certain commodities.  Covered commodities include muscle cuts of beef (including veal), lamb, chicken, goat, and pork; ground beef, ground lamb, ground chicken, ground goat, and ground pork; wild and farm-raised fish and shellfish; perishable agricultural commodities; macadamia nuts; pecans; ginseng; and peanuts.  AMS published a final rule for all covered commodities on January 15, 2009, which took effect on March 16, 2009.
The authorization and implementation of the COOL requirements have been controversial, particularly the requirements for COOL of meat and meat products.  Less than a year after the AMS COOL regulations took effect, Canada and Mexico challenged them in the World Trade Organization (“WTO”), arguing that the COOL requirements for meat had a trade-distorting impact by reducing the value and number of cattle and hogs shipped to the U.S. market, thus violating WTO trade commitments agreed to by the United States.
In July 2012, the WTO’s Dispute Settlement Body adopted the WTO lower body’s findings that the COOL requirements for meat and muscle cuts were inconsistent with the U.S. obligations under the WTO Agreement on Technical Barriers to Trade.  The WTO set a deadline of May 23, 2013, for the United States to revise the COOL requirements in compliance with the WTO findings.  On May 24, 2013, AMS issued a final rule amending the regulation requiring labeling of muscle cuts of meat.  The final rule requires that labels show where each production step (i.e., born, raised, slaughtered) occurred and removes the current “allowance for commingling of muscle cuts.”
Approximately 6 weeks later, trade associations representing American meat packers, feedlot, cattlemen, and pork producers and their foreign suppliers, including the Canadian Pork Council, and the North American Meat Association, filed the instant lawsuit against USDA and its Secretary, and AMS and its Administrator.  The lawsuit does not come as a surprise, given that Plaintiffs had previously expressed their concerns and opposition to the amendments in comments to AMS.
Plaintiffs claim that the amended final regulations violate the First Amendment, the AMS Act, and the Administrative Procedures Act.  Specifically, they allege that the amended COOL regulations conflict with definitions and requirements of the COOL statutory provisions in the AMS Act, and exceed AMS’s statutory authority.  Moreover, according to Plaintiffs, the amended regulations do not resolve the WTO violations but instead exacerbate them.  The new COOL requirements would impose costs possibly as high as 192 million dollars without a quantifiable benefit.  COOL is not a food safety program, and AMS’s claim that the labeling will benefit consumers by providing them with more specific information about the source of their food does not constitute a substantial governmental interest.  Plaintiffs claim that this lack of a governmental interest and the uncertain and speculative consumer benefit cause the COOL requirements to violate the First Amendment, in that they compel commercial speech without advancing a substantial government interest.  Plaintiffs request that the Court vacate the amended final rule and enjoin its enforcement. 

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