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 (U.S. Dist. Ct., 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 “cherrypick 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.