In an attempt to block implementation of the U.S. Department of Agriculture's mandatory country-of-origin labeling, eight organizations representing the U.S. and Canadian meat and livestock industries filed a lawsuit in the United States District Court for the District of Columbia.
In their complaint, the meat and livestock organizations explained that the final rule violates the United States Constitution by compelling speech in the form of "costly and detailed labels on meat products that do not directly advance a government interest." In addition, the organizations explained that the 2013 regulation exceeds the scope of the statutory mandate, "because the statute does not permit the kind of detailed and onerous labeling requirements the final rule puts in place, and that the rule is arbitrary and capricious, because it imposes vast burdens on the industry with little to no countervailing benefit."
Plaintiffs include the American Association of Meat Processors, American Meat Institute, Canadian Cattlemen’s Association, Canadian Pork Council, National Cattlemen’s Beef Association, National Pork Producers Council, North American Meat Association, and Southwest Meat Association.
In the complaint, the organizations explained that the new and complex country-of-origin labels required for meat and poultry sold at retail constitute “compelled speech.” Under the U.S. Constitution, commercial speech may be compelled only where it serves a substantial government interest—for example, if the compelled speech is aimed at preventing the spread of a contagious disease. Because these labels offer no food safety or public health benefit, yet impose costs the government modestly estimates at $192 million, the government cannot require them, the groups contend.
Catherine Stetson, partner at Hogan Lovells, explained that the rule could mislead consumers because it may only increase consumer curiosity and force consumers to discriminate against meats without any health or safety advantages.
The organizations also explain in their complaint that in addition to violating the Constitution, the new rule also violates the Agriculture Marketing Act because it exceeds the authority granted to USDA in the 2008 Farm Bill. While Congress mandated COOL, the statute does not permit labels that detail where animals were born, raised and slaughtered -- yet that is what USDA will now require.
Mark Dopp, senior vice president of regulatory affairs at AMI, explained that the final rule is "eerily similar" to a language that was previously found to be problematic. The regulations would require muscle cuts to declare the three production steps – and would then require significant steps taken by retailers to prevent comingling of their product.
“Congress mandated country-of-origin labeling for meat and poultry -- not lifetime itinerary labeling,” Dopp concluded. “Segregating and tracking animals according to the countries where production steps occurred and detailing that information on a label may be a bureaucrat’s paperwork fantasy, but the labels that result will serve only to confuse consumers, raise the prices they pay, and put some producers and meat and poultry companies out of business in the process. Everyone loses under this rule.”
He also warned the will fundamentally alter the meat industry and pick winners and losers in the marketplace with no benefit to anyone—and at great harm to many meat companies, especially those located along U.S.-Mexico or U.S.-Canada borders whose companies depend upon a steady supply of livestock that may have been born in another country.
For example, some Texas-based companies that rely on Mexican-born, but U.S.-raised and -slaughtered cattle will incur dramatic segregation costs that place their businesses at serious risk. Companies along the U.S.-Canadian border will face the same issue. And because retailers must implement the new labeling requirement, they, too, will face onerous segregation burdens in ensuring that meat from animals with multiple countries of origin is not packaged together.
USDA proposed the new rule in March after the World Trade Organization (WTO) panel ruled in response to a complaint by Canada and Mexico that the existing country- of- origin labeling requirements violated the United States’ WTO obligations.
Dopp said the lawsuit targets just the May 23, 2013 final rule released by USDA. If the court agrees with the plaintiffs on any measures, old regulations will go into effect. However, these previous measures had already been determined to be non-WTO compliant.
"It has long been our view that the appropriate solution would be to make a more compatible rule that addresses the integrated markets," Dopp said, adding the groups would look to Congress to determine a legislative fix.