Meat and Livestock Organizations Challenge USDA COOL Rule

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 implementation of a mandatory country-of-origin labeling (“COOL”) rule finalized by the U.S. Department of Agriculture in May 2013. 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. “All livestock and meat processed at federally inspected establishments in the United States and sold in interstate commerce are subject to the same health and safety requirements, as prescribed by the Federal Meat Inspection Act and the Poultry Products Inspection Act,” the complaint states. “Those products are also graded for quality according to a system administered by AMS [Agricultural Marketing Service] without variation based on where an animal was born or raised.  In short, beef is beef, whether the steer or heifer was born in Montana, Manitoba or Mazatlán.  The same goes for hogs, chickens and other livestock.” 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. Finally, the meat and livestock organizations explain that the COOL rule is arbitrary and capricious.  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.  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.  In a highly illogical move, USDA made COOL requirements even more complex and discriminatory against foreign meat and livestock and Canada and Mexico have already made clear that the new rule does nothing to ease the concerns that prompted their original complaint. Retail organizations have conveyed that the cost of segregating, tracking, and labeling meat according to these complex new rules will force them to reject meat sourced from Canada or Mexico and stock only meat with the designation “Born, Raised, and Slaughtered in the United States.”  Specifically, the complaint notes that new labels will need to be larger, and many grocers will have to acquire new weighing and labeling machines to handle the complex sorting of packages for each possible label.  Canadian cattle and hog producers have made clear that they will have to accept steep discounts to make up for the downstream production costs faced by processors and retailers, according to the complaint. “Sorting and tracking livestock and labeling meat by the various ‘routes’ that livestock may take on the way to market is needlessly complex with no measurable benefits,” said AMI Senior Vice President of Regulatory Affairs and General Counsel Mark Dopp. “Shoes, for example, may say ‘Made in the USA.’  They do not say ‘Leather from cattle born in Canada, harvested in the USA, tanned in South Korea and processed in the USA, yet that is the sort of labeling that we are now being forced to apply.” “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.”