Sep 23, 2014
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Ag in the Courtroom

RSS By: John Dillard, AgWeb.com

John Dillard grew up on a beef cattle farm and now works as an agricultural and environmental litigation attorney with OFW Law. His blog analyzes legal issues and court decisions that affect America’s farmers and ranchers.

 

 

 

Appeals Court Upholds mCOOL

Apr 01, 2014

On Friday, a unanimous panel of the D.C. Circuit Court of Appeals upheld USDA’s controversial mandatory Country-of-Origin Labeling (mCOOL) rule. The mCOOL rule requires that fresh muscle cuts of beef, pork, lamb and chicken sold at grocery stores must display a label indicating where the source animal was born, raised, and slaughtered. Although this ruling is a setback for the meat and livestock industry, the mCOOL rule is by no means settled. The WTO’s Dispute Settlement Board is in the process of deciding whether the labeling rule violates the United States’ treaty obligations.

Compliance with this labeling regime has created a substantial burden for meat packing operations located near our northern and southern borders because animals must be slaughtered, packaged, and stored separately based on their country of origin categorization. Several packing plants have cited mCOOL compliance as the one of the reasons for shuttering their plants, costing thousands of jobs and causing feedlots to search farther afield to find packing plants to slaughter their cattle.

Several livestock and meat organizations, such as NAMA (Disclosure: OFW Law represents NAMA in this matter), AMI, SMA, NCBA, NPPC as well as Canadian and Mexican livestock groups challenged the regulation in federal court in July 2013, seeking a preliminary injunction against USDA from enforcing the "born, raised, and slaughtered" rule. Several anti-animal agriculture groups, such as HSUS and Food and Water Watch, joined sides with anti-trade agricultural groups, such as U.S. Cattlemen, R-CALF, and National Farmers Union to support USDA’s efforts to defend the labeling regime. USDA and its supporters prevailed on the first round of litigation in September 2013. The plaintiffs immediately appealed the matter to the D.C. Circuit Court of Appeals.

The plaintiffs did not fare any better on the appeal to the D.C. Circuit. The plaintiffs argued that the mCOOL regulation violated Congress’s intent when it banned the practice of commingling products with different country of origin categorizations. Furthermore, the plaintiffs argued that the mCOOL rule violated the First Amendment by compelling commercial speech. The Court ultimately held that USDA had adopted a permissible interpretation of Congress’s intent when it banned the practice of commingling. Furthermore, the Court held that USDA had the authority to require a simple label so long as it contained factual and non-controversial information.

The Court’s ruling was a departure from previous labeling decisions in the D.C. Circuit. In prior decisions, the Court would only allow a government to require a label in instances where the government had a substantial interest (such as health or safety regulation) or to prevent consumer deception. Neither such interests were implicated in mCOOL. The Court, recognizing that its decision to expand the universe of permissible justifications for mandatory labels does not enjoy universal support, took the unprecedented step of suggesting that the case be re-heard anew by the entire panel of active judges on the D.C. Circuit.

Whether the parties will seek a rehearing remains to be seen. Nonetheless, mCOOL still faces a substantial hurdle in the WTO. In fact, mCOOL is no stranger to the WTO.  The first time around, the WTO determined that the prior mCOOL labeling regime, which allowed commingling, needed to be re-written because it discriminated against Canadian and Mexican livestock. Instead of heeding the WTO’s advice, USDA doubled down and eliminated the practice of commingling, which causes further discrimination against Canadian and Mexican livestock. We can expect the WTO to issue its initial decision in this dispute in June 2014.

I’ll be following this matter and posting updates as they occur.

John Dillard is an attorney with Olsson Frank Weeda Terman Matz P.C. (OFW Law), a Washington, DC-based firm that serves agricultural clients and clients with issues before federal and state courts, EPA, FDA, USDA, and OSHA.  John focuses his practice on agricultural and environmental law.  He occasionally tweets at @DCAgLawyer.  This column is not a substitute for legal advice

 

 

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