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

• Decision Date: 11 September 2013
• Docket Number: Civil Action No. 13–CV–1033 (KBJ).
• Citation: 968 F.Supp.2d 38
• Parties: AMERICAN MEAT INSTITUTE, et al., Plaintiffs, v. UNITED STATES DEPARTMENT OF AGRICULTURE, et al., Defendants.
• Court: U.S. District Court — District of Columbia

968 F.Supp.2d 38

AMERICAN MEAT INSTITUTE, et al., Plaintiffs,

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

Civil Action No. 13–CV–1033 (KBJ).

United States District Court, District of Columbia.

Sept. 11, 2013.

Jonathan Lynwood Abram, Elizabeth Barchas Prelogar, Judith E. Coleman, Catherine E. Stetson, Hogan Lovells U.S. LLP, Washington, DC, for Plaintiffs.

Tamra Tyree Moore, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

KETANJI BROWN JACKSON, District Judge.

I. INTRODUCTION

Before this Court is a motion for a preliminary injunction challenging a regulation that the Agricultural Marketing Service (“the AMS” or “the agency”) promulgated in May of 2013, pursuant to a statute Congress first passed in 2002. The regulation implements a statutory scheme regarding “country-of-origin labeling” (“COOL”) for certain commodities. See78 Fed.Reg. 31,367 (May 24, 2013) (“Final Rule—Mandatory Country of Origin Labeling of Beef, Pork, Lamb, Chicken, Goat Meat, Wild and Farm–Raised Fish and Shellfish, Perishable Agricultural Commodities, Peanuts, Pecans, Ginseng, and Macadamia Nuts,”) [hereinafter, “Final Rule”]. Plaintiffs are a group of meat industry trade associations who implore the Court to enjoin the Final Rule preliminarily, claiming that it violates their First Amendment rights, exceeds the agency's authority under the implementing statute, and violates the Administrative Procedure Act, 5 U.S.C. § 706 (2012)et seq. (the “APA”), and that their members will be irreparably harmed absent a preliminary injunction. Defendants are the United States Department of Agriculture (“USDA”), its Secretary Tom Vilsack in his official capacity, the AMS—a division of the USDA with responsibility for promulgating the Final Rule and administering the COOL program—and AMS Administrator Anne Alonzo in her official capacity (collectively, “Defendants” or the “Government”). The Court has also permitted a group of intervenors (“Defendant–Intervenors”) to join the case on the side of Defendants. The Defendant–Intervenors are several meat industry trade groups and a consumer advocacy group that support the Final Rule.

II. STATUTORY AND REGULATORY FRAMEWORKA. The Agricultural Marketing Act

The legislation underlying the Final Rule was enacted initially in 2002 as an amendment to the Agricultural Marketing Act of 1946, 7 U.S.C. § 1621 et seq. (the “AMA”). SeePub.L. No. 110–171, 121 Stat. 2467 (2002). As originally written, the 2002 country-of-origin statute required retailers of “covered commodities” to inform consumers of the country of origin of such commodities. Id. at sec. 282(a)(1).¹ In addition, the statute provided criteria establishing when a retailer was permitted to designate a covered commodity as having a United States country of origin. Id. at sec. 282(a)(2). In the case of beef, lamb, and pork, the 2002 statute provided that retailers could use a U.S. designation only for meat derived from “an animal that is exclusively born, raised, and slaughtered in the United States.” Id. The statute further instructed the Secretary of Agriculture (the “Secretary”) to “promulgate such regulations as are necessary to implement” the statute no later than September 30, 2004. Id. sec. 284(b). After enacting the statute, however, Congress twice delayed its regulatory implementation, first until 2006 (Consolidated Appropriations Act, Pub.L. No. 108–199, 118 Stat. 3, sec. 749 (2004)), and then until 2008 (Agricultural & Related Agencies Appropriations Act, 2006, Pub.L. No. 109–97, 119 Stat. 2120 sec. 792 (2005)).

In 2008, the relevant provisions of the statute were amended as a part of The Food, Conservation, and Energy Act of 2008 (also known as “the 2008 Farm Bill”), Pub.L. No. 110–234, 122 Stat. 923, sec. 11002, and codified at 7 U.S.C. § 1638a (2008) (the “COOL statute”). As amended in 2008 (and as it exists today), the COOL statute requires retailers to provide consumers with country-of-origin information and also sets forth a detailed categorization system that pertains to the manner in which covered commodities derived from certain livestock are to be designated for COOL purposes. See7 U.S.C. § 1638a (2010) (reprinted in the Appendix to this opinion) [hereinafter “Appendix”]. The statute first instructs that “a retailer of a covered commodity shall inform consumers, at the final point of sale of the covered commodity to consumers, of the country of origin of the covered commodity.” Id. § 1638a(a)(1).² The statute then articulatesdifferent requirements for the designation of muscle cut meats that largely depend upon an animal's geographic history relative to its processing stages. See id. § 1638a(a)(2)(A)-(E). The first four designations relate to (A) an animal that has a United States country of origin ( e.g., an animal that was “born, raised, and slaughtered” in the U.S.); (B) an animal that has multiple countries of origin; (C) an animal that is imported into the United States for immediate slaughter; and (D) an animal that has a foreign country of origin.³ As used in industry parlance and in this litigation, these four classifications for animals from which “muscle cut” meats are derived are referred to as Categories A, B, C, and D, corresponding to the subheadings under which they appear in 7 U.S.C. § 1638a(a)(2). See Appendix at A–1–2.⁴

B. Regulations Implementing the COOL Statute

The 2002 amendments to the AMA directed the Secretary to promulgate “such regulations as are necessary to implement” the provisions of the COOL statute. Pub.L. No. 107–171 sec. 284(b). In 2009, after Congress enacted the 2008 version of the statute, the Secretary, acting through the AMS, published a final rule setting forth four possible COOL designations for retailers to use when marketing muscle cut meats. See74 Fed.Reg. 2658–01 (Jan. 15, 2009) (the “2009 COOL Rule”). The 2009 COOL Rule provided examples of approved labels that corresponded to the four designation categories laid out in the statute: for Category A, “Product of the United States”; for Category B, “Product of the United States, Country X, and (as applicable) Country Y”; for Category C, “Product of Country X and the United States”; and for Category D, “Product of Country X.” Id. The 2009 COOL Rule also explicitly acknowledged that meat processors sometimes engage in “commingling”—the practice of processing multiple animals with varying countries of origin together during a single production day for slaughter and packaging—and directed that muscle cuts produced through this process should be labeled in the same way as Category B covered commodities, regardless of whether the commingled animals would each otherwise fall into Category A, B, or C. Id.⁵ Finally, the 2009 Rule permitted muscle cuts produced through commingling to list in any order the various countries of origin present in the commingled products. Id.C. The WTO Proceedings

In October of 2009, Canada (later joined by Mexico) requested the formation of a panel of the World Trade Organization's (“WTO”) Dispute Settlement Body (“DSB”) to consider Canada's claims that the 2009 COOL Rule discriminated against foreign livestock in violation of the United States's obligations under the WTO Agreement on Technical Barriers to Trade (“TBT”). ⁶ The DSB panel, which issued findings in December of 2011, concluded that the 2009 COOL Rule accorded less favorable treatment to foreign livestock and therefore violated the TBT agreement. See Panel Report, United States—Certain Country of Origin Labeling (COOL) Requirements, WT/DS386/R (Nov. 18, 2011) ¶ 7.546 [hereinafter WTO Panel Report]. Both sides appealed certain aspects of the decision, and in June of 2012, the WTO Appellate Body issued a decision substantially confirming the panel's findings. See Appellate Body Report, United States—Certain Country of Origin Labeling (COOL) Requirements, WDT/AB/R/WT/DS386/R (June 29, 2012) [hereinafter Appellate Body Report]. The case was then transferred to a WTO arbitrator to determine the amount of time that the United States would be given to comply with the findings in the Appellate Body Report. The arbitrator issued a separate 58–page opinion ordering the United States to bring its COOL program into compliance with TBT by May 23, 2013. See Award of the Arbitrator, United States—Certain Country of Origin Labeling (COOL) Requirements, WDT/AB/R/WT/DS386/23 (Dec. 4, 2012) [hereinafter WTO Arbitrator's Report].

D. The 2013 Proposed And Final Rules

As a result of the Appellate Body Report, the AMS undertook a comprehensive review of the then-existing COOL program. On March 12, 2013, the agency issued a notice of proposed rulemaking outlining changes to the COOL program. See Proposed COOL Rule, 78 Fed.Reg. 15,645 (Mar. 12, 2013). This notice explained that the proposed changes were designed both to provide consumers with additional country-of-origin information and also to bring the United States into compliance with the Appellate Body Report. Id. The notice also provided for a 30–day public comment period. Id. At the end of the comment period, the AMS published the Final Rule. See Final Rule, 78 Fed.Reg. 31,367 (May 24, 2013).

The Final Rule generally modifies the 2009 COOL Rule in two respects. First, the Final Rule requires COOL labels for muscle cut meats to specify where the “production steps” for each such product took place—that is, where the animal from which the commodity was derived was born, raised, and slaughtered. ⁷ As with the 2009 COOL Rule, the Final Rule provides examples of acceptable labels: for Category A, “Born, raised, and slaughtered in the United States”; for Category B, “Born in Country X, raised and slaughtered in the United States”; for Category C, “Born and raised in Country X, slaughtered in the United States”; and for Category D, “Product of Country X.” Id. at 31,385. Second, the Final Rule states that “this final rule eliminates the allowance for commingling of muscle cut...