Federal Court Refuses to Enjoin Amended COOL Rules

A federal court in the District of Columbia has denied the American Meat
Institute’s motion for a preliminary injunction in a challenge to the amended
country-of-origin labeling (COOL) rules adopted by the U.S. Department of
Agriculture’s (USDA’s) Agricultural Marketing Service in response to a World
Trade Organization (WTO) determination that the original rules violated the
WTO Agreement on Technical Barriers to Trade by according less favorable
treatment to foreign livestock. Am. Meat Inst. v. USDA, No. 13-1033 (D.D.C., decided September 11, 2013).

The court was not persuaded that the plaintiffs, meat processing interests,
were likely to succeed on the merits of their First Amendment and statutory
challenges to the amended rule. Additional information about the challenge
appears in Issue 495 of this Update.

Assessing the First Amendment claims under a lenient reasonableness
standard because the rule involved commercial speech that mandated purely
factual and uncontroversial disclosures, the court determined that the rule,
requiring disclosure of specific product-step information, was reasonably
related to the government’s interest in preventing consumer confusion about
the origins of muscle-cut meat. The court also rejected the plaintiffs’ claim
that the agency exceeded its statutory authority in enacting regulations
that mandate the disclosure of “born, raised, and slaughtered” information.
According to the court, “the text and structure of the COOL statute present
obstacles that appear to be too great for Plaintiffs to overcome.” The court
also disagreed that USDA exceeded its mandate by adopting a rule that will
allegedly end commingling, that is, processing animals from different countries
of origin together during a single production day. As the court noted, not
only does “commingling” not appear anywhere in the COOL statute, but the
concept of commingling is not “unambiguously present in the statutory text.”
The court dismissed other commingling arguments because they were “based
on the same type of loose textual analysis.”

The court concluded that the plaintiffs’ statutory arguments, which “cherry-pick
the trees and miss the forest,” are “unlikely to succeed on the merits in
the overall scheme of things.” In this regard, the court noted that it was clear
Congress intended to provide consumers with more information about
the origins of their meat, not less. Because the plaintiffs based their textual
arguments on the opposite assumption, their “reading of the statute is flatly
inconsistent with nearly every statement that members of Congress made
about COOL when the law was enacted and amended,” the court said.

As to the plaintiffs’ Administrative Procedure Act challenge, the court rejected
claims that the amended rule would require inaccurate or misleading labels,
stating “it is of no moment that Plaintiffs can dream up scenarios in which,
under the Final Rule, ‘labels will in many cases be inaccurate’ or will ‘some-
times omit’ relevant production step information.” The court also found that
the agency did its best to comply with the WTO ruling and any shortcomings
that may lead to further proceedings before that body do not prove that
it acted arbitrarily and capriciously. The court further found fault with the
plaintiffs’ argument that the rule’s effective date was arbitrary and capricious,
finding that it was mandated by the WTO ruling and the agency thus had a
sufficiently reasoned basis for establishing it, given the potential for retaliatory
sanctions as a result of any delay in compliance with WTO’s deadline.

Addressing the other preliminary injunction factors, the court determined
that the plaintiffs had not shown they were likely to experience irreparable
harm, finding the statements of dire economic consequences filed by the
declarants speculative in that they were based on what the meat producers
expected to happen in the marketplace, what their customers were likely to
demand and what could happen to their businesses if required to follow the
rule. While the court found that the rule would impose significant compliance
costs that may not be outweighed by sanctions that could result from the U.S.
government’s failure to comply with its international trade obligations, this
was insufficient alone to merit preliminary injunctive relief.