Institution v. U.S. Dep't of Agric.

• Decision Date: 04 April 2014
• Docket Number: No. 13–5281.,13–5281.
• Citation: 746 F.3d 1065
• Parties: AMERICAN MEAT INSTITUTE, et al., Appellants v. UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

746 F.3d 1065

AMERICAN MEAT INSTITUTE, et al., Appellants

v.UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Appellees.

No. 13–5281.

United States Court of Appeals, District of Columbia Circuit.

Argued Jan. 9, 2014.

Decided March 28, 2014.

Rehearing En Banc Granted, Opinion Vacated April 4, 2014.

Appeal from the United States District Court for the District of Columbia (No. 1:13–cv–01033).

Catherine E. Stetson argued the cause for appellants. With her on the briefs were Jonathan L. Abram, Judith E. Coleman, Mary Helen Wimberly, and Elizabeth B. Prelogar.

Daniel Tenny, Attorney, U.S. Department of Justice, argued the cause for appellees. With him on the brief were Stuart F. Delery, Assistant Attorney General, Ronald C. Machen Jr., U.S. Attorney, and Mark B. Stern, Attorney.

Terence P. Stewart was on the brief for intervenors United States Cattlemen's Association, et al. in support of appellees.

Zachary B. Corrigan was on the brief for amici curiae Food and Water Watch, Inc., et al. in support of appellees.

Jonathan R. Lovvorn and Aaron D. Green were on the brief for amicus curiae American Grassfed Association, et al. in support of appellees.

Before: GARLAND, Chief Judge, SRINIVASAN, Circuit Judge, and WILLIAMS, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge WILLIAMS.

WILLIAMS, Senior Circuit Judge.

In 2013 the Agricultural Marketing Service (“AMS”), a branch of the Department of Agriculture, adopted a rule modifying its prior rule implementing Congress's requirements of country-of-origin labeling (“COOL”). Mandatory Country of Origin Labeling, 78 Fed.Reg. 31,367 (May 24, 2013) (“2013 rule”). The rule requires retailers of “muscle cuts” of meat, i.e., covered meat other than ground meat (which is governed by 7 U.S.C. § 1638a(a)(2)(E)), to list (with some qualifications) the countries of origin and production steps—born, raised or slaughtered—occurring in each country. Id. at 31,367/3. The AMS's previous rule had merely required a list of the countries of origin (again with some qualifications) preceded by the phrase “Product of.” Mandatory Country of Origin Labeling, 74 Fed.Reg. 2658, 2706 (Jan. 15, 2009) (“2009 rule”). The 2013 rule also eliminated the prior rule's allowance for commingling—a practice by which cuts from animals of different origins, but processed on the same day, could all bear identical labels.

The appellants, a group of trade associations representing livestock producers, feedlot operators, and meat packers, whom we'll collectively call American Meat Institute (“AMI”), challenged the 2013 rule in district court as a violation of the COOL statute and the First Amendment. AMI moved for a preliminary injunction halting enforcement, and the district court denied the motion. Agreeing with the district court that AMI is unlikely to succeed on the merits of its claims, and believing that any error in the district court's balancing of the other factors governing issuance of a preliminary injunction could not on these facts outweigh the likely outcome on the merits, we affirm.

* * *

The COOL statute, 7 U.S.C. § 1638a, adopted in 2008, assigns retailers an obligation to inform consumers of a cut's country of origin. This may be quite complicated where an animal was born, raised, and slaughtered in more than one country. Id. § 1638a(a)(2). The statute sets forth four categories of muscle-cut meat and how to determine the country of origin depending on the locale of the production steps:

(A) United States country of origin[.] A retailer ... may designate the covered commodity as exclusively having a United States country of origin only if the covered commodity is derived from an animal that was ... exclusively born, raised, and slaughtered in the United States....

(B) Multiple countries of origin[.] A retailer of a covered commodity ... that is derived from an animal that is (I) not exclusively born, raised, and slaughtered in the United States; (II) born, raised, or slaughtered in the United States, and (III) not imported into the United States for immediate slaughter, may designate the country of origin of such covered commodity as all of the countries in which the animal may have been born, raised, or slaughtered.

(C) Imported for immediate slaughter[.] A retailer of a covered commodity ... that is derived from an animal that is imported into the United States for immediate slaughter shall designate the origin ... as ... the country from which the animal was imported; and ... the United States.

(D) Foreign country of origin[.] A retailer of a covered commodity ... that is derived from an animal that is not born, raised, or slaughtered in the United States shall designate a country other than the United States as the country of origin....

Id. (emphases added). The parties call meat covered by § 1638a(a)(2)(A) “Category A meat,” that covered by § 1638a(a)(2)(B) “Category B meat,” and so on. The COOL statute also requires the Secretary of Agriculture to “promulgate such regulations as are necessary to implement” the statutory regime. Id. § 1638c(b).

The 2009 rule did not demand explicit identification of the country for each of the three production steps-born, raised and slaughtered. It called more simply for labeling with a phrase starting “Product of,” followed by mention of one or more countries. 7 C.F.R. § 65.400 (2010). So Category A meat would be labeled, “Product of the United States”; Category B meat would be labeled, “Product of the United States and X”; Category C meat would be labeled, “Product of X and the United States”; and Category D meat would be labeled “Product of X.” See id.; see also id. § 65.300 (2010).

The 2009 rule also made allowance for a production practice known as “commingling.” This occurs when a firm processes meat from animals with different countries of origin on a single production day. 7 C.F.R. § 65.300(e)(2), (e)(4) (2010). The rule allowed retailers to label commingled meat cuts with all the countries of origin for all the commingled animals. As a result,Category A meat processed on the same day as Category B or C meat could be labeled “Product of United States and X.” Id.

In the year of the 2009 rule's adoption, Canada and Mexico filed a complaint with the Dispute Settlement Body of the World Trade Organization, which found the rule to be in violation of the WTO Agreement on Technical Barriers to Trade. 2013 rule, 78 Fed.Reg. at 31,367/2. The gravamen of the WTO's ruling appears to have been an objection to the relative imprecision of the information required by the 2009 rule. See Appellate Body Report, United States—Certain Country of Origin Labelling (COOL) Requirements, ¶ 343, WT/DS384/AB/R (Jun. 29, 2012). A WTO arbitrator gave the United States until May 23, 2013, to bring its COOL requirements into compliance with the ruling. 2013 rule, 78 Fed.Reg. at 31, 367/2.

The 2013 rule increased the required level of precision. Now, except for Category D meat, each country of origin would generally be preceded by the production step that occurred in that country. Id. at 31,385/3. For instance, instead of saying, “Product of the United States,” a label for Category A meat will now read, “Born, Raised, and Slaughtered in the United States.” Id. Similarly, Category B meat might now have to be labeled, “Born in X, Raised and Slaughtered in the United States,” and Category C meat “Born and Raised in X, Slaughtered in the United States.” Id. The 2013 rule also eliminated the special allowance for commingled meat. Id. at 31,367/3.

AMI challenged the 2013 rule in district court as (1) exceeding the authority granted by the COOL statute, and (2) violating the First Amendment. AMI also moved for a preliminary injunction halting enforcement of the 2013 rule, which the district court denied. AMI contends on appeal to us that the district court erred in its determination that AMI is unlikely to succeed on the merits of either claim. We review questions of law—AMI's substantive claims—de novo. Sherley v. Sebelius, 644 F.3d 388, 393 (D.C.Cir.2011). Because we disagree with AMI on its chances of success on the merits, we affirm the district court.

* * *

At oral argument the question arose whether AMI has standing to raise its claims. None of the appellants is a retailer, the type of market actor expressly covered by the bulk of the COOL requirements. See 7 U.S.C. § 1638a(a). But § 1638a(e) requires that upstream producers “provide information to the retailer indicating the country of origin of the covered commodity.” In effect, then, the appellants are required to make the same disclosures that retailers are, only to a different recipient. Accordingly, we are satisfied that the challenged regulations inflict on AMI the sort of injury-in-fact needed for Article III standing. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992).

We thus turn to AMI's arguments as to why the COOL statute does not authorize the 2013 rule: (1) the rule “bans” commingling, and therefore alters production practices over which the COOL statute gives the Secretary no authority; and (2) production-step labeling is both outside of and contrary to the plain language of the COOL statute. We are not persuaded.

AMI's argument that the rule unlawfully “bans” commingling fails at a key first step—the 2013 rule does not actually ban any element of the production process. It simply requires that meat cuts be accurately labeled with the three phases of production named in the statute. It appearsthat under current practices meat packers cannot achieve that degree of accuracy with commingled production. The necessary changes to production are, to be sure, costly for the packers, but, contrary to AMI's claim, the new rule does not “force the segregated handling of animals with varying geographical histories,” except in the sense that compliance with any regulation may induce changes in unregulated production techniques that a profit-seeking...