Wednesday, October 01, 2008

Creekstone Farms v. USDA

In a split decision the U.S. Court of Appeals for the D.C. Circuit in Creekstone Farms Premium Beef v. USDA, the majority found that the Virus-Serum-Toxin Act (VSTA) authorizes USDA to prohibit use of a test kit for bovine spongiform encephalopathy (BSE). VSTA authorizes USDA to enact regulations “as may be necessary to prevent the preparation, sale, barter, exchange, or shipment as aforesaid of any worthless, contaminated, dangerous, or harmful virus, serum, toxin, or analogous product for use in the treatment of domestic animals, or otherwise to carry out this chapter.”

The court accepted USDA’s interpretation of “analogous products” to include test kits that are used in the diagnosis of disease. Diagnosis of disease is integral to the treatment of disease, so this is not too far of a stretch to include diagnosis as part of treatment. But Creekstone Farms never intended to use the test for the treatment of disease. Creekstone would have tested only already dead animals. Further, BSE is invariably fatal and untreatable. USDA’s argument that Creekstone’s testing would be a form of treatment stretches plausibility. Nonetheless, a diagnostic test that helps control of the spread of a disease might be squeezed into “treatment.”

But the stretching must continue because VSTA applies to products that are used in treatment of domestic animals and are a “worthless, contaminated, dangerous, or harmful virus, serum, toxin, or analogous product.” The agency appears to lacks authority to restrict useful, non-contaminated, non-dangerous, non-harmful products. USDA finds this BSE test kit worthwhile enough to use in its own testing, so it is not clear how this BSE test kit is worthless, contaminated, dangerous, or harmful.

USDA argues, not that the test kits are worthless, but only Creekstone’s proposed use is worthless. Given the young age of most cattle at slaughter and the long incubation period for BSE, USDA argues the test would produce meaningless results. This authority to regulate the use of otherwise acceptable test needs to be pulled from VSTA general empowerment of USDA to enact regulations to, “otherwise carry out” the Act. What if Creekstone wanted to use home pregnancy test kits on its cattle? Would USDA have the authority to ban this use?

In his dissent, Judge Sentelle remained unpersuaded that VSTA grants this “use” authority. Sentelle found USDA “exceeded the bounds of reasonableness” in aggregating power to itself. Sentelle explained, "congressional provision of an expressed authority mandate to accomplish statutory goals does not create for the agency ‘a roving commission’ to achieve those or ‘any other laudable goal,' by means beyond the authority granted in the statute." [Citations omitted.]

This matter has not ended. One count remains to be decided by the district court. Creekstone argues that USDA's refusal to allow Creekstone to purchase BSE test kits to test its own cattle is arbitrary and capricious. USDA offered two reasons for the denial. The agency asserts that this use would not be scientifically sound, and USDA has a mandate to “maintain domestic international confidence in U.S. cattle and beef products.”

However, Creekstone did not want to test to ensure the safety of its beef but, rather, to allow the company export its meat to Japan and Korea. From Judge Sentelle’s dissent, “It seems that the Department’s fear is that Creekstone’s use of the test kits would enable it to provide buyers with a false assurance that the cattle from which its beef is obtained are free of Bovine Spongiform Encephalopathy. However, as I read the record, all Creekstone hopes to do is assure foreign buyers that the beef is as well-tested as would be the case with beef produced in the home countries of those buyers.” The purpose of VSTA is not to prevent false claims, and USDA has other authorities to prevent false claims, as does the Federal Trade Commission.

Granted, USDA has a mandate to maintain domestic international confidence in U.S. cattle and beef products. How USDA finds these reasons within its authority under VSTA is unclear. It will be interesting to see whether either of these reasons can survive the arbitrary and capricious test on the district court’s review.

Hat tip to Jonathan Adler and The Volokh Conspiracy for his insight on this decision.

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