Meat industry sues USDA over latest COOL rule
By Rita Jane Gabbett on 7/9/2013
Eight organizations representing the U.S. and Canadian meat and livestock industries filed suit in the United States District Court for the District of Columbia to block a mandatory country-of-origin labeling (COOL) rule that USDA finalized in May.
The lawsuit challenges the COOL rule from three angles.
The lawsuit argues the final COOL 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.
Under the 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 lawsuit contends.
Exceeds scope of original statute
The lawsuit argues the new rule 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 – which is what the final rule requires.
Arbitrary and capricious
The lawsuit further claims the rule is arbitrary and capricious because it imposes vast burdens on the industry with little to no countervailing benefit.
“The rule 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,” the groups argued in a statement.
For example, the groups allege companies that rely on cattle born in Mexico or Canada but raised and slaughtered in the U.S. could incur dramatic segregation costs that place their businesses at serious risk.
American Meat Institute General Council Mark Dopp noted a small company in Texas that processes 150 cattle per day estimated it would incur $250,000 in costs, while larger processors would spend “multiple millions of dollars” on such expenses as pens to segregate cattle and coolers to segregate carcasses and products, as well as the additional cost of generating more SKUs to comply with the rule.
While the rule went into effect in late May, USDA has given the industry a six month grace period to comply.
Catherine Stetson, partner at Hogan Lovells, told reporters on a conference call that because of multiple loopholes in the final rule, resulting labels could end up misleading consumers or even giving them inaccurate information.
For example, a tenderloin from a hog born in Canada but raised and slaughtered in the United States then sold in a grocery store, would be labeled, “Born in Canada, Raised and Slaughtered in the U.S.” But if that same tenderloin were marinated or sold in a restaurant, it would be exempt from COOL rules and could be voluntarily labeled “Product of the U.S.”
The litigants also said retailers face onerous segregation burdens to ensure meat from animals with multiple countries of origin are labeled properly and not packaged together.
They further asserted the final rule does not address the concerns about the COOL rules long expressed by the World Trade Organization or by Canada or Mexico.
Plaintiffs in the case 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.
To read the lawsuit, click here.