KETANJI BROWN JACKSON, District Judge.
Before this Court is a motion for a preliminary injunction challenging a regulation that the Agricultural Marketing Service ("the AMS" or "the agency") promulgated in May of 2013, pursuant to a statute Congress first passed in 2002. The regulation implements a statutory scheme regarding "country-of-origin labeling" ("COOL") for certain commodities. See 78 Fed.Reg. 31,367 (May 24, 2013) ("Final Rule — Mandatory Country of Origin Labeling of Beef, Pork, Lamb, Chicken, Goat Meat, Wild and Farm-Raised Fish and Shellfish, Perishable Agricultural Commodities, Peanuts, Pecans, Ginseng, and Macadamia Nuts,") [hereinafter, "Final Rule"]. Plaintiffs are a group of meat industry trade associations who implore the Court to enjoin the Final Rule preliminarily, claiming that it violates their First Amendment rights, exceeds the agency's authority under the implementing statute, and violates the Administrative Procedure Act, 5 U.S.C. § 706 (2012) et seq. (the "APA"), and that their members will be irreparably harmed absent a preliminary injunction. Defendants are the United States Department of Agriculture ("USDA"), its Secretary Tom Vilsack in his official capacity, the AMS — a division of the USDA
The legislation underlying the Final Rule was enacted initially in 2002 as an amendment to the Agricultural Marketing Act of 1946, 7 U.S.C. § 1621 et seq. (the "AMA"). See Pub.L. No. 110-171, 121 Stat. 2467 (2002). As originally written, the 2002 country-of-origin statute required retailers of "covered commodities" to inform consumers of the country of origin of such commodities. Id. at sec. 282(a)(1).
In 2008, the relevant provisions of the statute were amended as a part of The Food, Conservation, and Energy Act of 2008 (also known as "the 2008 Farm Bill"), Pub.L. No. 110-234, 122 Stat. 923, sec. 11002, and codified at 7 U.S.C. § 1638a (2008) (the "COOL statute"). As amended in 2008 (and as it exists today), the COOL statute requires retailers to provide consumers with country-of-origin information and also sets forth a detailed categorization system that pertains to the manner in which covered commodities derived from certain livestock are to be designated for COOL purposes. See 7 U.S.C. § 1638a (2010) (reprinted in the Appendix to this opinion) [hereinafter "Appendix"]. The statute first instructs that "a retailer of a covered commodity shall inform consumers, at the final point of sale of the covered commodity to consumers, of the country of origin of the covered commodity." Id. § 1638a(a)(1).
The 2002 amendments to the AMA directed the Secretary to promulgate "such regulations as are necessary to implement" the provisions of the COOL statute. Pub.L. No. 107-171 sec. 284(b). In 2009, after Congress enacted the 2008 version of the statute, the Secretary, acting through the AMS, published a final rule setting forth four possible COOL designations for retailers to use when marketing muscle cut meats. See 74 Fed.Reg. 2658-01 (Jan. 15, 2009) (the "2009 COOL Rule"). The 2009 COOL Rule provided examples of approved labels that corresponded to the four designation categories laid out in the statute: for Category A, "Product of the United States"; for Category B, "Product of the United States, Country X, and (as applicable) Country Y"; for Category C, "Product of Country X and the United States"; and for Category D, "Product of Country X." Id. The 2009 COOL Rule also explicitly acknowledged that meat processors sometimes engage in "commingling" — the practice of processing multiple animals with varying countries of origin together during a single production day for slaughter and packaging — and directed that muscle cuts produced through this process should be labeled in the same way as Category B covered commodities, regardless of whether the commingled animals would each otherwise fall into Category A, B, or C. Id.
In October of 2009, Canada (later joined by Mexico) requested the formation of a panel of the World Trade Organization's ("WTO") Dispute Settlement Body ("DSB") to consider Canada's claims that the 2009 COOL Rule discriminated against foreign livestock in violation of the United States's obligations under the WTO Agreement on Technical Barriers to Trade ("TBT").
As a result of the Appellate Body Report, the AMS undertook a comprehensive review of the then-existing COOL program. On March 12, 2013, the agency issued a notice of proposed rulemaking outlining changes to the COOL program. See Proposed COOL Rule, 78 Fed.Reg. 15,645 (Mar. 12, 2013). This notice explained that the proposed changes were designed both to provide consumers with additional country-of-origin information and also to bring the United States into compliance with the Appellate Body Report. Id. The notice also provided for a 30-day public comment period. Id. At the end of the comment period, the AMS published the Final Rule. See Final Rule, 78 Fed.Reg. 31,367 (May 24, 2013).
The Final Rule generally modifies the 2009 COOL Rule in two respects. First, the Final Rule requires COOL labels for muscle cut meats to specify where the "production steps" for each such product took place — that is, where the animal from which the commodity was derived was born, raised, and slaughtered.
The Final Rule also recognizes that, because of the new labeling requirements and the commingling ban, "it may not be possible for all of the affected entities to achieve 100% compliance immediately." Id. The Final Rule therefore provides that, during a six-month period following the effective date of the Rule, the agency will "conduct an industry outreach and education program concerning the provisions and requirements of this rule." Id. That grace period remains ongoing as of the writing of this opinion.
Plaintiffs filed the original complaint in this action on July 8, 2013. (ECF No. 1.) On July 23, 2013, an amended complaint followed. ("Compl.," ECF No. 15.) The complaint contains three separate counts that challenge the Final Rule as violating the First Amendment (Count I), the AMA (Count II), and the APA (Count III). On July 25, 2013, Plaintiff filed a motion for a preliminary injunction along with a memorandum of law in support of the motion. ("Pl. Br.," ECF No. 24.)
On August 9, 2013, pursuant to a Court-ordered briefing schedule, the agency filed an opposition to Plaintiffs' preliminary injunction motion. ("Def. Br.," ECF No. 30.) On that same day, Defendant-Intervenors filed a motion to intervene (ECF No. 28), along with a brief in opposition to Plaintiffs' Motion ("Int. Br.," ECF No. 28-12).
Upon consideration of the arguments presented in the briefs and at oral argument, and for the reasons explained below, the Court concludes that Plaintiffs' motion for a preliminary injunction must be DENIED. A separate order consistent with this memorandum opinion will issue.
A preliminary injunction is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff is entitled to such relief." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008). A party seeking a preliminary injunction "must establish [1] that [it] is likely to succeed on the merits, [2] that [it] is likely to suffer irreparable harm in the absence of preliminary relief, [3] that the balance of equities tips in [its] favor, and [4] that an injunction is in the public interest." Id. at 20, 129 S.Ct. 365. In conducting an inquiry into these factors, "[a] district court must `balance the strengths of the requesting party's arguments in each of the four required areas.' ... If the showing in one area is particularly strong, an injunction may issue even if the showings in other areas are rather weak." Chaplaincy of Full Gospel Churches v. England ("CFGC"), 454 F.3d 290, 297 (D.C.Cir.2006) (quoting CityFed Fin. Corp. v. Office of Thrift Supervision, 58 F.3d 738, 746 (D.C.Cir.1995)). However, "a movant must demonstrate `at least some injury' for a preliminary injunction to issue." Id. (citation omitted).
Count I of Plaintiffs' Complaint alleges that the Final Rule violates Plaintiffs' First Amendment rights by compelling them to speak when they would rather not. (Compl. ¶¶ 72-80; see also Pl. Br. at 12.) It is "a basic First Amendment principle that freedom of speech prohibits the government from telling people what they must say." Agency for Int'l Dev. v. Alliance for Open Soc'y Int'l, Inc., ___ U.S. ___, 133 S.Ct. 2321, 2327, 186 L.Ed.2d 398 (2013) (internal quotation marks and citations omitted); see also Nat'l Ass'n of Mfrs. v. NLRB, 717 F.3d 947, 957 (D.C.Cir.2013) ("[T]he First Amendment freedom of speech includes both the right to speak freely and the right to refrain from speaking at all." (internal quotation marks and citation omitted)). Compelled speech, no less than restricted speech, is subject to strict scrutiny in most circumstances. See, e.g., Riley v. Nat'l Fed'n of the Blind of No. Carolina, Inc., 487 U.S. 781, 798, 108 S.Ct. 2667, 101 L.Ed.2d 669 (1988) (applying "exacting First Amendment scrutiny" to a state-law disclosure requirement applicable to professional fundraisers); see also Nat'l Ass'n of Mfrs. v. Taylor, 582 F.3d 1, 11 (D.C.Cir.2009) (applying strict scrutiny to a disclosure provision that applied to professional lobbyists).
Compelled commercial speech is generally evaluated under the intermediate scrutiny test that the Supreme Court first articulated in Central Hudson Gas & Electric Corporation v. Public Service Commission of New York, 447 U.S. 557, 100 S.Ct. 2343, 65 L.Ed.2d 341 (1980). To
There is, however, an exception to the prevailing Central Hudson rule. In Zauderer v. Office of Disciplinary Counsel of Supreme Court of Ohio, the Supreme Court held that, where a law compels disclosure of "purely factual and uncontroversial information," the law need only be "reasonably related to the [government's] interest in preventing deception of consumers" to pass muster under the First Amendment. 471 U.S. 626, 651, 105 S.Ct. 2265, 85 L.Ed.2d 652 (1985).
The parties in the instant case differ sharply as to whether the Central Hudson (intermediate scrutiny) or the Zauderer (reasonableness) standard applies to the Final Rule's compelled disclosure of production step information, and they largely rely on two recent decisions from the D.C. Circuit that illuminate the question of which test should be applied here. In R.J. Reynolds Tobacco Co. v. Food and Drug Administration ("RJR"), several tobacco companies challenged on First Amendment grounds an FDA regulation requiring graphic images to be displayed along with warnings on cigarette packs. 696 F.3d 1205 (D.C.Cir.2012). A divided panel of the D.C. Circuit ruled that intermediate scrutiny, not the Zauderer standard, applied for two main reasons: first, because the government had not shown that there is a "danger" that the tobacco companies' advertisements "mislead consumers" without a warning that includes graphic images, id. at 1214; and second, because "the graphic warnings d[id] not constitute the type of purely factual and uncontroversial information or accurate statements to which the Zauderer standard applied." Id. at 1216 (citing Zauderer, 471 U.S. at 651, 105 S.Ct. 2265, and Milavetz, 559 U.S. at 250, 130 S.Ct. 1324). Applying intermediate scrutiny per Central Hudson, the panel majority struck down the regulation on the second prong of the Central Hudson test, finding that the FDA had not provided enough evidence that the rule requiring graphic images along with warning labels would directly and materially further the government's substantial interest in reducing smoking. RJR, 696 F.3d at 1221-22.
The First Amendment arguments that the parties seek to advance in this case are largely based on the D.C. Circuit's analyses in RJR and Spirit Airlines. Plaintiffs urge the Court to rely on language from RJR, and accordingly, they maintain that Central Hudson's intermediate scrutiny applies. While Plaintiffs apparently do not dispute that the Final Rule's production step labeling requirement is purely factual and noncontroversial, Plaintiffs vigorously assert that the Final Rule does not target "deceptive speech" and that, therefore, Zauderer does not apply. (Pl. Reply at 3-9.) To this end, Plaintiffs argue that the agency never said anything about prevention of consumer deception during the rule-making process, so its attempt to do so now qualifies as the type of classic "post hoc rationalization" that the Court should not accept. (Id. at 4.) In addition, Plaintiffs maintain that RJR's statement that "the government [cannot] seek review under the lenient Zauderer standard absent a showing that the advertisement at issue would likely mislead consumers," RJR, 696 F.3d at 1214, must be taken at face value, and that the agency has not made the requisite "showing" of deception. (Pl. Reply at 7; see also Hr'g Tr. at 8:1-20, Aug 27, 2013, ECF No. 46.)
Defendants, on the other hand, rely largely on Spirit Airlines to argue that the ambit of the "consumer deception" required to invoke Zauderer is not nearly as narrow as Plaintiffs claim. The agency essentially maintains that common sense demonstrates that compelled disclosure of production steps targets misleading speech and consumer confusion insofar as it corrects aspects of the 2009 COOL Rule that led retailers to use misleading labels, such as the allowance for commingling. (See Def. Br. at 32-34 (noting that "the Secretary promulgated the 2013 Final Rule to correct discrepancies under the prior regulation that led to potentially misleading labels").) Similarly, Defendant-Intervenors contend that "[l]ike the DOT rule [at issue in Spirit Airlines], the Final Rule was targeted at preventing consumer confusion
Against the backdrop of RJR and Spirit Airlines, the Court concludes that the production step labeling mandated by the Final Rule is the type of disclosure requirement subject to review under Zauderer's "reasonableness" standard. As a preliminary matter, it is undisputed, and the Court agrees, that the Final Rule mandates "purely factual and uncontroversial" disclosures about where an animal was born, raised, and slaughtered, Zauderer, 471 U.S. at 651, 105 S.Ct. 2265, and thus satisfies this prerequisite to Zauderer's application.
Moreover, even if Plaintiffs are correct that Zauderer requires an affirmative showing of consumer confusion as the basis for the disclosure requirement, the agency appears likely to be able to satisfy that burden here. When it issued the Final Rule, the agency explicitly stated that it was requiring the disclosure of production step information to provide consumers with "more specific information on which to base their purchasing decisions," and also to "ensure [that] label information more accurately reflects the origin of muscle cut covered commodities." See Final Rule, 78 Fed.Reg. at 31,375. Public comments that the agency relied on in crafting the Final Rule indicated that the disclosure requirement "makes labels more informative for consumers," id. at 31,369, and the Final Rule also specifically dictates how production step information is to be presented to consumers using language that indicates that consumer confusion was the major driver behind the rule's promulgation. See, e.g., id. ("Therefore, under this final rule, abbreviations for the production steps are permitted as long as the information can be clearly understood by consumers.").
Having concluded that Zauderer, and not Central Hudson, applies, the Court now turns to an assessment of Plaintiffs' likelihood of success on the merits of their First Amendment claim. Under Zauderer, the government need only show that the compelled disclosure at issue is "reasonably related to the [government's] interest in preventing deception of consumers." Zauderer, 471 U.S. at 651, 105 S.Ct. 2265. This standard of review is unquestionably lenient; indeed, the D.C. Circuit has explained that the Zauderer standard is "akin to rational-basis review." RJR, 696 F.3d at 1212.
Not surprisingly, the parties differ as to whether the Final Rule passes muster even under the Zauderer standard. While Defendants maintain that the Final Rule easily satisfies Zauderer (Def. Br. at 34-35), Plaintiffs argue that the Final Rule's production step disclosure requirement fails this lenient test primarily because, in Plaintiffs' view, compelled disclosure of production step information imposes burdens far in excess of any marginal possibility of consumer confusion that is alleviated by the rule. (Pl. Reply. at 11-12.) In other words, from Plaintiffs' perspective, the harm (i.e., the confusion that the rule is supposedly designed to address) is not adequately defined (id. at 11), and the production step disclosure requirement is not only too costly relative to that ill-defined problem, it purportedly causes as many labeling inaccuracies as it cures (id. at 11-12).
Second, Plaintiffs' excess-burden argument essentially attempts to graft a "tailoring" requirement onto the reasonableness standard the Supreme Court has articulated. But Zauderer's reasonableness inquiry contains no tailoring requirement; rather, it requires only that a regulation such as the one at issue here be reasonably related to the government's interest in preventing consumer deception. See RJR, 696 F.3d at 1212. Here, there is clearly a reasonable relationship between the government's interest in preventing consumer confusion about the origins of muscle cut meat, on the one hand, and the required disclosure of specific production step information, on the other. Accordingly, the Final Rule satisfies the reasonableness standard articulated in Zauderer, and the Court finds that Plaintiffs' First Amendment challenge is unlikely to be successful.
As a second basis for challenging the Final Rule, Plaintiffs argue that the rule contravenes the will of Congress in two respects. First, Plaintiffs maintain that the Final Rule exceeds the authority that the COOL statute grants to the AMS with respect to the country-of-origin labeling program because it requires retailers to specify where an animal was "born, raised, and slaughtered," which, according to Plaintiffs, "the COOL statute does not permit." (Compl. ¶ 82.) Second, Plaintiffs argue that the Final Rule impermissibly bans commingling practices — a ban that, according to Plaintiffs, clearly exceeds the bounds of the agency's limited statutory authority to regulate labels. (See Pl. Br. at 32 ("Congress did not give AMS authority to dictate how to produce and package meat.").) In defense of the Final Rule, the AMS and Defendant-Intervenors argue that the agency's action is entitled to deference because the COOL statute does not clearly prohibit regulations that require the more detailed label information required under the Final Rule. (Def. Br. at 10-15; Int. Br. at 13-17.) Moreover, Defendants maintain that Congress specifically authorized the agency to promulgate regulations that are consistent with the legislature's intent to provide consumers with more specific country-of-origin information, and in the absence of any express prohibition, the commingling ban permissibly
Plaintiffs' statutory authority arguments implicate the familiar two-step Chevron standard. See Chevron, U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 843, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984). The Supreme Court has long held that "if the statute speaks clearly `to the precise question at issue,' we `must give effect to the unambiguously expressed intent of Congress.'" Barnhart v. Walton, 535 U.S. 212, 217-18, 122 S.Ct. 1265, 152 L.Ed.2d 330 (2002) (quoting Chevron, 467 U.S. at 842-43, 104 S.Ct. 2778). If, however, "the statute `is silent or ambiguous with respect to the specific issue,' we must sustain the Agency's interpretation if it is `based on a permissible construction' of the [statute]." Id. at 218, 122 S.Ct. 1265 (citations omitted). The Court's task here, then, is to examine the COOL statute for indicia of congressional intent in light of Plaintiffs' contentions and to determine whether Plaintiffs are likely to succeed in claiming that the agency lacked statutory authority to promulgate the Final Rule.
The first aspect of Plaintiffs' statutory challenge is their assertion that the COOL statute unambiguously prevents the AMS from requiring muscle cut retailers to affix what Plaintiffs call "point-of-processing" labels (Pl. Br. at 25-30) — i.e., labels that identify the specific geographic locations where the animal that was the source of the muscle cuts was "born, raised, and slaughtered." (Id.)
First and foremost, Plaintiffs can point to no statutory provision that expressly prohibits the AMS from enacting regulations that mandate the disclosure of "born, raised, and slaughtered" information. This omission is significant because the COOL statute does expressly require the Secretary of Agriculture, who heads the AMS, to "promulgate such regulations as are necessary to implement" the law. 7 U.S.C. § 1638c(b). (See also Def. Br. at 18 (arguing that the Secretary has broad discretion to promulgate rules "necessary to implement" the COOL statute).)
In the absence of any statutory prohibition limiting the agency's power to dictate the disclosure of production step information, Plaintiffs maintain that the statute's text nevertheless clearly establishes Congress's intent to leave no room for the agency to do so. Plaintiffs' argument in this regard focuses on the statute's prescriptions regarding which country constitutes the "country of origin" for certain covered commodities under specified circumstances. For example, Plaintiffs read the language of 7 U.S.C. § 1638a(a)(2)(C) to mandate that the country of origin for meats that fit into Category C will be "two places only — the country from which it was imported and the United States" (Pl. Br. at 26), and thus, Plaintiffs argue that Congress could not have intended for the production steps to be revealed because, in the Category C instance, "the animal's `country of origin' has nothing to do with
Plaintiffs' statutory arguments are likely to be unavailing for several reasons. First of all, Plaintiffs rely heavily on, and seek to advance, the notion that when Congress speaks to a matter in any respect, an agency is thereby prohibited from building upon what the statute requires even in the absence of an express prohibition. In this regard, Plaintiffs ardently maintain that Congress's decision to determine the acceptable "country of origin" designation for animals of different backgrounds unambiguously evidences its intent to prevent the AMS from requiring that retailers inform consumers of any additional origin-related information. (See Pl. Br. at 29 (reasoning that "COOL labels must not specify each point of processing, from birth to raising to slaughter, because not every animal's statutorily defined `country of origin' includes those production steps"); see also id. at 28 ("[W]hile Congress defined `country of origin' differently for separate categories of meat, with some categories encompassing an animal's country of birth or raising ... the statute's language and structure make clear that labels must not list this information by detailing each production step.").) But such extrapolation — i.e., that because Congress mandated that the country of origin be disclosed, and went further to define the country of origin in particular (and sometimes inconsistent) circumstances, such information is obviously the only permissible disclosure — is rarely successful. See, e.g., Entergy Corp. v. Riverkeeper, Inc., 556 U.S. 208, 219, 129 S.Ct. 1498, 173 L.Ed.2d 369 (2009) (finding that, where Congress mandated the exact level of discharge of pollutants in one provision of a regulatory scheme, the agency retained discretion to determine discharge amounts in other contexts); see also Catawba Cnty., N.C. v. EPA, 571 F.3d 20, 36 (D.C.Cir.2009) ("When interpreting statutes that govern agency action, we have consistently recognized that a congressional mandate in one section and silence in another often `suggests not a prohibition but simply a decision not to mandate any solution in the second context, i.e., to leave the question to agency discretion.'" (quoting Cheney R.R. Co. v. ICC, 902 F.2d 66, 69 (D.C.Cir. 1990) (emphasis omitted))).
Moreover, and perhaps even more to the point, in each textual instance that Plaintiffs point to, rather than indicating that the statutorily-defined country of origin is the sole bit of information that may properly appear on the labels of muscle cut commodities, Congress appears to be engaged in the more fundamental task of developing a uniform system for determining which geographic location qualifies as the "country of origin" for designation purposes
The same is true of Categories C and D, and Plaintiffs' reading of those provisions is similarly unpersuasive. Plaintiffs insist that Congress intended its requirements about country-of-origin designations in these circumstances to serve as a prohibition against point-of-processing labeling. (See Pl. Br. at 27.) But nowhere in those statutory provisions does Congress purport to address the content of the disclosure that a retailer is required to make to consumers with respect to the muscle cut categories that the statute creates. Instead, just as with Congress's clearly stated intention to establish which types of animals are properly designated as Category A, the language of subparagraphs (C) and (D) reads much more like Congress is sorting livestock-explaining which animals fall into which categories based on factors such as where they were born, raised, or slaughtered; whether they have been imported into the U.S. for immediate slaughter; or whether they were processed before they were imported — and not like Congress is making pronouncements about what information retailers can be required to disclose to consumers, as Plaintiffs strenuously maintain.
The best Plaintiffs can do to support their contention that the statute prohibits the AMS from requiring point-of-processing labels is to maintain that Congress's selective use of the word "shall" in the COOL statute evidences its intention that the prescribed country-of-origin designations be the only information that is disclosed to consumers pursuant to the statute. (Pl. Br. at 29-30.) This argument homes in on the statutory text as follows. In subparagraph (C), Congress says that a retailer whose muscle cuts will be derived from an animal that has been imported into the United States for immediate slaughter "shall designate the origin of such covered commodity as — (i) the country from which the animal was imported; and (ii) the United States," 7 U.S.C. § 1638a(a)(2)(C)(emphasis added), so who
There are plenty of hints in the statutory language that this may be precisely how Congress intended for its subsection (a)(2) provisions to be read. The most prominent textual clue that the statute's instructions regarding designation in subsection (a)(2) do not necessarily limit the scope of the information that retailers are required to give consumers pursuant to subsection (a)(1) is, of course, the fact that Congress used two different terms — "inform" and "designate" — in these consecutive subsections of the statute. See Sosa v. Alvarez-Machain, 542 U.S. 692, 711 n. 9, 124 S.Ct. 2739, 159 L.Ed.2d 718 (2004) (noting that the use of different words in a single statute presumably means that Congress intended that the different words had different meanings and effects); Vonage Holdings Corp. v. FCC, 489 F.3d 1232, 1240 (D.C.Cir.2007) ("[W]e have repeatedly held that where different terms are used in a single piece of legislation, the court must presume that Congress intended the terms to have different meanings." (internal quotation marks and citations omitted)). And these two words can have very different meanings. Merriam-Webster's collegiate dictionary explains that to "inform" is to "impart information or knowledge," whereas to "designate" means to "to distinguish" or "to indicate and set apart for a specific purpose." Merriam-Webster's Collegiate Dictionary 313, 599 (10th ed.1999). That Congress used two terms that can mean different things in subsections (a)(1) and (2) is indicative of a lack of congressional intent that "inform" and "designate" be construed as one-and-the-same, as Plaintiffs suggest. Also seemingly relevant to a determination of what Congress intended when it used "inform" in subsection (a)(1) and "designate" in subsection (a)(2) is the fact that the concept of designating the country of origin of a commodity apart from labeling that commodity is employed elsewhere with respect to a similar regulatory and statutory framework.
To be sure, it is also possible to construe the term "designate" to mean "specify" or "stipulate" — an alternative interpretation that would permit an inference that subsection (a)(1)'s duty to inform consumers is, in fact, the equivalent of a retailer's obligation to designate the country of origin for the purpose of subsection (a)(2). Indeed, if by "designate" Congress meant "specify," then the statutory terms "inform" and "designate" overlap, giving some credence to Plaintiffs' argument that Congress's pronouncements about what a retailer can (or must) do when designating the country of origin governs the scope of the information that can be provided to consumers under the terms of the COOL statute. Nevertheless, the reasonable possibility that Congress meant the two terms to be construed differently as explained above remains, so, at most, any conceivable
Chevron's step two requires the Court to defer to an agency's interpretation of a statute unless that interpretation is impermissible. Chevron, 467 U.S. at 843, 104 S.Ct. 2778; see also Coalition for Common Sense in Government Procurement v. United States, 707 F.3d 311, 317 (D.C.Cir. 2013) (noting that "[t]he Chevron step two question" is "whether the [agency's] rule reflects a reasonable interpretation of" the relevant statute). Here, the AMS stated in the Final Rule itself, and reiterated in its briefs, that it considers the changes that the rule makes to the previous labeling requirements to be "consistent with the provisions of the statute." Final Rule, 78 Fed.Reg. at 31,368. Pointing out that the COOL statute expressly "provides authority for the Secretary to promulgate regulations necessary to implement the COOL program," id. at 31,370, the agency also explained the basis for this interpretation:
Id. There is nothing plainly wrong or impermissible about this statutory interpretation; indeed, based on the analysis above, the agency's view of the statute as permitting the point-of-processing labeling structure set out in the Final Rule is entirely reasonable. In any event, on summary judgment or at trial, the Court would be required to give the agency's interpretation great deference at this point in the Chevron analysis, see Vill. of Barrington, Ill. v. Surface Transp. Bd., 636 F.3d 650, 667 (D.C.Cir.2011), which means that Plaintiffs' contention that the COOL statute prohibits production step labeling would likely fail.
Plaintiffs' second statutory challenge is their assertion that the AMS exceeded its statutory authority when it issued a Final Rule that prohibits the longstanding practice of commingling. (Compl. ¶ 84; see also Pl. Br. at 25 (arguing that "the Final Rule's bar on commingling extends beyond the limited authority Congress granted the AMS to regulate product labels by instead dictating how meat is processed and packaged
First, the term "commingling" does not appear anywhere in the text of the COOL statute. This omission in and of itself renders doubtful Plaintiffs' assertion that Congress clearly intended to address, and to protect, the practice. Cf. Jama v. Immigration & Customs Enforcement, 543 U.S. 335, 341, 125 S.Ct. 694, 160 L.Ed.2d 708 (2005) ("We do not lightly assume that Congress has omitted from its adopted text requirements that it nonetheless intends to apply...."). Certainly, if Congress was as supportive of commingling as Plaintiffs insist, one would have expected the COOL statute's drafters to have inserted language to that effect.
Nor is even the concept of commingling unambiguously present in the statutory text, despite Plaintiff's arguments to the contrary. (See Pl. Reply at 16-17.) A straightforward reading of the statutory provision related to Category B muscle cut commodities makes this evident. That provision, which is entitled "Multiple Countries of Origin" (and is thus the most logical place to look for evidence that Congress intended to preserve commingling) states:
7 U.S.C. § 1638a(a)(2)(B)(i). Plaintiffs argue that this provision indicates Congress's intent to make allowances for the kind of multiple-country labels that result from the commingling practice (Pl. Reply at 17), but close examination reveals that this statutory provision expressly refers to the proper designation of "an" animal or "the animal," making clear that it relates solely to the threshold question of how to designate muscle cuts that derive from "an" animal that, itself, is of mixed origin.
In the absence of any clear congressional guidance on the mixed muscle cuts situation, the AMS previously permitted retailers who had commingled animals with different country-of-origin designations into a mixed muscle cuts package to list all of the relevant countries on the label of that commodity, and to list those countries in any order. See 2009 COOL Rule, 74 Fed.Reg. at 2659; see also id. at 2670 (recognizing that "[c]ommingling like products is a commercially viable practice that has been historically utilized by retailers"). This means, of course, that the much-heralded practice of commingling animals for slaughter and then affixing a multiple-country label to identify all of the applicable countries of origin is likely a creature of regulation from its inception, not a product of the statute, as Plaintiffs maintain. And what the agency once giveth, it can surely taketh away without running afoul of the authorizing statute. Cf. FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120, 156-57, 120 S.Ct. 1291, 146 L.Ed.2d 121 (2000) (noting that "an agency's initial interpretation of a statute that it is charged with administering is not "carved in stone"" and that agencies "must be given ample latitude to adapt their rules and policies to the demands of changing circumstances." (internal quotation marks and citations omitted)).
Undaunted, Plaintiffs insist that Congress's use of the word "may" in subparagraphs (A) and (B) — when contrasted with its use of the term "shall" in subparagraphs (C) and (D) — is the key to discerning a congressional intent to "preserve commingling flexibility." (Pl. Reply at 17; see also Hr'g Tr. at 14:7-10.) To this end, Plaintiffs assert that "may" means that Congress clearly intended to provide meat packers and retailers with a commingling-related choice in regard to making country-of-origin designations, and with respect to subparagraph (B) in particular, Plaintiffs highlight a Senate report that appears on first blush to confirm this conclusion. (See Pl. Reply at 17 (quoting S.Rep. No. 110-220, at 198 (2007) as stating that "the `may' used in subsection (B) is to provide flexibility to packers when working with livestock from multiple countries of origin").) Plaintiffs are correct that the text of subsection (B) does appear to provide a choice, just not the one for which Plaintiffs advocate.
Focusing again on the statutory language quoted above, subparagraph (B) authorizes a retailer who has "an" animal that has multiple countries of origin — e.g., born in Argentina, raised in Mexico, and slaughtered in the United States — to choose to designate "all of the countries of origin in which the animal may have been
The bottom line is this: even if Plaintiffs are correct that Congress secretly wished to preserve commingling and infused subparagraph (B) with that intention, the most plausible reading of what Congress actually wrote is that the statute gives retailers a choice when designating an animal that has mixed countries of origin — either designate all of the countries or select one of the non-U.S. jurisdictions as the country of origin. The provision neither expressly addresses commingling nor does it necessarily preserve any commingling related choice.
Plaintiffs' other commingling arguments relate to subparagraph (A) and are based on the same type of loose textual analysis. Here, Plaintiffs maintain that Congress deliberately uses "may" rather than "shall" in subparagraph (A) in order to convey that retailers who have livestock that would otherwise be entitled to be labeled "product of the USA" may choose to affix a mixed-country label to the muscle cuts of such livestock instead. (See Pl. Br. at 32; see also Hr'g Tr. at 14:7-15:8.) This labeling choice would occur, Plaintiffs argue, when a retailer opts to commingle muscle cuts from pure U.S. animals (or animals born in Alaska or Hawaii, or animals present in the U.S. before July 15, 2008) with the cuts of animals that have a different country of origin. But to reach the conclusion that Congress intended to preserve commingling in this manner, Plaintiffs have to both construe the "may" in subparagraph (A) entirely out of context and also ignore the equally important statutory terms "only" and "exclusively." When the entire statutory framework and all of the words that Congress employed are taken into account, however, it seems far more likely that, rather than crafting such a convoluted bulwark to guard against the destruction of commingling, Congress was not addressing commingling in the text of the COOL statute at all.
To understand why this is so, one must begin at the beginning of section 1638a, with the general rule that Congress adopted in 2002, and that remained unchanged when Congress revisited the COOL statute in 2008. That provision reads:
7 U.S.C. § 1638a(a)(1). Subsection (a)(2) then proceeds to lay out a series of rules for retailers to follow when "[d]esignat[ing]" the country of origin if the covered commodity is muscle cuts of beef, lamb, pork, chicken or goat. See id. § 1638a(a)(2). Significantly, the first part of subsection (a)(2) — subparagraph (A) — states:
Id. § 1638a(a)(2)(A). When subparagraph (A) is construed in light of the general rule at subsection (a)(1), a retailer who has muscle cuts that are derived from an animal that fits the first of the subparagraph (A) scenarios — born, raised, and slaughtered in the U.S. — has no choice at all: such retailer "shall inform consumers" of the country of origin (id. § 1638a(a)(1)(emphasis added)), and the only conceivable country of origin for an animal that is born, raised, and slaughtered in the United States is the United States. Consequently, Plaintiffs' insistence that the term "may" in subparagraph (A) must mean that Congress intended to provide a choice related to such livestock contravenes the clear mandate of subsection (a)(1) and for that reason alone is extremely doubtful. See Brown & Williamson Tobacco Corp., 529 U.S. at 133, 120 S.Ct. 1291 ("It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme. A court must therefore interpret the statute as a symmetrical and coherent regulatory scheme, and fit, if possible, all parts into an harmonious whole." (internal quotation marks and citations omitted)); 2A Norman J. Singer, Sutherland on Statutes and Statutory Construction § 46:06, 230-44 (6th ed. 2000) ("A statute should be construed so that effect is given to all its provisions, so that no part will be inoperative or superfluous, void or insignificant, and so that one section will not destroy another unless the provision is the result of obvious mistake or error.").
But Plaintiffs go even further, doing serious damage to the statute's text, when they read "may" as standing alone in subparagraph (A), when that term is clearly working in conjunction with "only" and "exclusively" to establish the sole circumstances in which a retailer "may" (meaning can or is permitted to) designate a muscle cut commodity as a product of the U.S. exclusively. In other words, Plaintiffs are wrong to suggest that the question that
Subparagraph (A) makes crystal clear that the answer to this question is "no." By its terms, "[a] retailer ... may designate the covered commodity as exclusively having a United States country of origin only" under the three listed circumstances. See 7 U.S.C. § 1638a(a)(2)(A) (emphasis added). Congress's use of the word "only" — which Plaintiffs ignore — means that the term "may" as it is used in subparagraph (A) does not convey any choice whatsoever; to the contrary, the provision effectively restricts, rather than augments, retailer discretion. In short, Plaintiffs are unlikely to prevail on this interpretation of the statute because they interpret subparagraph (A) as prescribing what a retailer "may" do when designating the muscle cuts of an animal that fits within one of the three listed types, when, with Congress's use of "may" "only" and "exclusively," the text actually states what a retailer cannot do in making a designation regarding the muscle cuts of all other types of animals.
Mindful that a statute must be construed as a whole, see Brown & Williamson Tobacco Corp., 529 U.S. at 133, 120 S.Ct. 1291, this Court notes that the remainder of subsection (a)(2) is entirely consistent with the view that the COOL statute's designation rules are not conveying commingling choice as Plaintiffs assert, but are most likely aimed at limiting what a retailer can claim about the origins of its meat products so far as U.S. designations are concerned. In section (a)(2)(A), Congress sets out the "only" circumstances in which an exclusive U.S. designation is appropriate, as explained above. In section (a)(2)(B), Congress appears to permit (but does not require) the muscle cuts of an animal that was born raised "or" slaughtered in the United States to be designated as a product of "all of the countries in which the animal may have been born raised or slaughtered," including the United States.
Notably, the legislative history of the COOL statute amply supports this reading of the statutory text. Members of Congress made numerous statements in 2002 when the COOL statute was initially enacted, and again when the statute was amended in 2008, that strongly suggest that Congress's primary intention was to direct retailers regarding the particular circumstances under which it is appropriate to designate meat as being a `product of the U.S.A.' See, e.g., 153 Cong. Rec. S15,116 (daily ed. Dec. 11, 2007) (statement of Sen. John Barasso) ("We raise exceptional beef and exceptional lamb in this country. Our producers deserve the opportunity to label their product `born and raised in the USA.' Consumers demand it, and they will buy it."); see also 153 Cong. Rec. S4229 (daily ed. May 24, 2007) (statement of Sen. Mike Enzi) ("COOL provides customers with important information about the source of food and allows our livestock producers, who hands down produce the highest quality meats in the world, to remain competitive in a growing global market."); 148 Cong. Rec. H1538 (daily ed. Apr. 24, 2002) (statement of Rep. John Thune) ("It is important... that we put in place a mandatory country-of-origin labeling requirement so that the people in this country know where their food is coming from and so that producers in this country have an opportunity to have their product clearly identified as the finest and best in the world.").
Against this backdrop, Plaintiffs' primary counter-reference from the legislative history of the statute is a letter sent on May 9, 2008, from then-General Counsel of the USDA Marc L. Kesselman to Representative Robert Goodlatte, who was, at that time, the Ranking Member of the House Committee on Agriculture (the "Kesselman Letter"). (See Pl. Br., Ex. 12, ECF No. 24-14 (the Kesselman Ltr.); see also Hr'g Tr. at 14:25-15:2.) Plaintiffs tout the Kesselman Letter because it provides an opinion on the question of whether "products eligible for the U.S. Country of Origin label must bear that label, and consequently cannot bear a Multiple Countries of Origin label." (Kesselman Ltr. at 3.) Relying (as Plaintiffs do here) on the distinction between the "may" of Category A and the "shall" of Categories C and D, Mr. Kesselman concluded that the statute cannot be read to mandate a U.S. designation for animals born, raised, and slaughtered in the U.S., and accordingly did not bar commingling. (Id. at 3-4.)
For a number of reasons, the Kesselman Letter does not provide convincing proof that Congress intended commingling to be preserved under the COOL statute. First, the letter was not drafted or adopted by the legislature itself, and as an opinion offered to Congress, rather than something that originated with Congress, it does not necessarily evidence Congress's intent. Furthermore, all that is reflected in the letter is the general counsel of USDA's statement regarding the Secretary's best guess as to what the statute might allow in regards to commingling at the time that the letter was written; it says nothing about what the statute requires. And this is even setting aside the fact that the letter indulges in the same mistakes of statutory interpretation that Plaintiffs' arguments here rely upon and that are detailed above. It is also significant
At the end of the day, the fact that the COOL statute can reasonably be construed as being silent on the commingling question, and that it certainly does not speak unambiguously to the issue, as explained above, means that this Court's analysis of Plaintiffs' statutory argument in regard to commingling would likely proceed to the second step of the Chevron test. As mentioned earlier, at Chevron's step two, the deferential question at issue is whether the agency's interpretation is based on a permissible construction of the statute — an inquiry that is often fatal to regulatory challenges — and there is nothing in the instant case that suggests that the Plaintiffs will be any more successful on the merits of that inquiry here. The agency argues that its commingling ban is permissible because the statute gives the Secretary wide latitude to promulgate regulations to implement the statute. (Def. Br. at 18.) The agency also maintains that the commingling ban is consistent with the statutory purpose because the practice of commingling flies in the face of the express intent of the COOL statute to "provide consumers with additional information regarding the origin of certain covered commodities," given that in most cases commingling results in "potentially misleading labels that do not accurately reflect the actual country of origin" of a covered commodity. (Def. Br. at 17.) Also, the record clearly establishes that there was no other way for the agency to implement a production-step labeling scheme without banning commingling; indeed, at oral argument Plaintiffs all but conceded this point. (Hr'g Tr. at 19:3-14.)
Affording the required deference to the agency's interpretation under Chevron's step two, this Court would most likely conclude that the commingling ban was a permissible way to further the statute's intent for the reasons the agency provides. All that Chevron requires is that an agency action reasonably fills a gap in the statutory framework in a manner that is consistent with Congress's overall goals. See Continental Air Lines, Inc. v. Dep't of Transp., 843 F.2d 1444, 1449 (D.C.Cir. 1988) (noting that "[r]easonableness in this context means ... the compatibility of the agency's interpretation with the policy goals ... or objectives of Congress" (internal quotation marks and citations omitted)). By pursuing a course of action that unquestionably furthers Congress's intent to require retailers to provide accurate origin information about the covered commodities, the AMS is likely to be able to demonstrate that the commingling ban satisfies this standard.
Finally, the Court notes generally that Plaintiffs' statutory arguments are unlikely to succeed on the merits in the overall scheme of things largely because they demand
Moreover, and perhaps most important, if there is anything that is clear about Congress's intent in regard to the COOL statute's disclosure requirement, it is this: that Congress meant to provide consumers with more information about the origins of their meat, not less. Plaintiffs' text-based arguments regarding congressional intent rely on the opposite assumption, i.e., that Congress intended for retailers to provide consumers with some, but not all, of the known information about the history of marketed muscle cuts. This 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.
Consequently, and for all of these reasons, Plaintiffs are unlikely to succeed on the merits of their statutory authority challenges to the Final Rule.
Plaintiffs' final claim on the merits is that the Final Rule is arbitrary and capricious in violation of the APA. (See Compl. ¶¶ 86-91 (citing 5 U.S.C. § 706(a)(2)).) In considering this claim, the Court must decide whether "the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, [or] offered an explanation for its decision that runs counter to the evidence before the agency[] or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Menkes v. U.S. Dep't of Homeland Sec., 637 F.3d 319, 329 (D.C.Cir.2011) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mutual Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)). The Court is mindful that "the `scope of review under the "arbitrary and capricious" standard is narrow and a court is not to substitute its judgment for that of the agency,'" but the Court "must nonetheless be sure the [agency] has `examine[d] the relevant data and articulate[d] a satisfactory explanation for its action including a rational connection between the facts found and the choice made.'" Chamber of Commerce v. SEC, 412 F.3d 133, 140 (D.C.Cir.2005) (second and third alterations added) (quoting Motor Vehicle Mfrs. Ass'n, 463 U.S. at 43, 103 S.Ct. 2856).
Plaintiffs advance several arguments as to why the Final Rule violates the APA. First, Plaintiffs argue that the Final Rule is arbitrary and capricious because "[the agency's] justifications for the Final Rule contradict the evidence before [it]." (Pl. Br. at 33.) In this vein, Plaintiffs contend that the Final Rule fails to achieve its stated goal of providing accurate country-of-origin information to consumers because the Final Rule will not necessarily lead to more accurate labeling. (Id. at 33-34.) Likewise, Plaintiffs maintain that the agency's goal of bringing the U.S. into compliance with its international trade obligations remains elusive because the Final Rule exacerbates, rather than solves, the problems the Appellate Body Report identified with the prior COOL regime. (Id. at 34-36.) Plaintiffs also insist that the AMS acted arbitrarily and capriciously in not delaying the effective date of the Final Rule until after the WTO had a chance to evaluate the rule. (Id. at 36-38.)
For their part, Defendants acknowledge that providing more accurate information to consumers and complying with the Appellate Body Report were the primary justifications for promulgating the Final Rule, but contest Plaintiffs' assertions that there is no rational connection between these aims and the specifics of the Final Rule. (Def. Br. at 19-24.) Moreover, Defendants argue that the AMS had good reasons for its decision to make the Final Rule effective as of May 23, 2013. (Id. at 25-27.)
For reasons explained below, the Court concludes that Plaintiffs have not shown that they have a likelihood of success on the merits of their APA claims.
Plaintiffs argue that, in certain circumstances, the Final Rule might require labels that are inaccurate or misleading, and therefore the Final Rule is arbitrary and
Plaintiffs have done little to show that the Final Rule is irrational in this regard. The Final Rule requires retailers to provide consumers with details regarding the geographical location of each production step for a given covered commodity, which is more information than was provided under the 2009 COOL Rule. And providing this additional information is exactly what the Final Rule purports to do. See, e.g., Final Rule, 78 Fed.Reg. at 31,367 (stating that "[t]he [a]gency is issuing this rule ... to provide consumers with more specific information" regarding the country of origin of muscle cut covered commodities). Plaintiffs provide no reason to believe that the Final Rule was really aimed at something other than this stated goal. Nor do Plaintiffs argue that the Final Rule will provide less accurate information in comparison to the 2009 COOL Rule, which is the relevant benchmark given that the justification for the Final Rule is that it improves the accuracy of the COOL labeling system over what was in place under the
Significantly, Plaintiffs also fail to acknowledge that the potential inaccuracies they have identified are, by and large, a product of the COOL statute itself. For example, Plaintiffs complain that, for Category C muscle cuts, the Final Rule makes retailers equate the country from which an animal was imported with the country in which the animal was "raised" for labeling purposes, even if it spent most of its life elsewhere. (Pl. Br. at 20, 34.) Although Plaintiffs may be correct that a Category C label could, in certain circumstances, mislead a customer who is searching for muscle cuts derived from an animal that was imported into the U.S. for immediate slaughter after being raised in a particular foreign locale other than the importing country, this is not a reason to condemn the Final Rule because it is Congress, not the AMS, that determined that the importing country was the relevant foreign country of origin when an animal is imported into the United States for immediate slaughter. See 7 U.S.C. § 1638a(a)(2)(C). Far from acting arbitrarily, the agency appears to have carefully patterned its labeling rule for a Category C muscle cut commodity after the statutory parameters that Congress enacted to govern country-of-origin designations in this situation.
Similarly, Plaintiffs argue that the Final Rule contradicts its stated purpose of providing more specific information because the rule allows an animal that is imported into the U.S. more than two weeks before slaughter to be designated as "raised in" the U.S., even if most of the animal's life was spent elsewhere. (Pl. Br. at 20, 34.) Again, however, setting aside the particular timeframe, it is the COOL statute itself that draws a distinction between muscle cuts derived from animals imported for "immediate slaughter" (Category C) and muscle cuts derived from animals with a mixed heritage that includes the United States, where such animals were not imported for immediate slaughter (Category B) — the Final Rule merely maintains this statutory distinction. See Final Rule, 78 Fed.Reg. at 31,368.
Plaintiffs' second APA line of attack is to argue that the Final Rule is arbitrary and capricious because it "exacerbates, rather than cures" the issues with the prior COOL regime that the WTO panel and Appellate Body identified. (Pl. Br. at 34-36.) The WTO Panel found, and the Appellate Body Report confirmed, that the COOL regime in place under the 2009 COOL Rule discriminated against foreign livestock by creating incentives for U.S. retailers to favor domestic livestock, and that such discrimination violated the United States's international trade obligations. In so holding, the WTO Panel and Appellate body considered the totality of the prior COOL program, including both the 2009 COOL Rule and the COOL statute.
Plaintiffs argue that the WTO decided that the prior COOL program (and in particular the record-keeping requirements for upstream producers) provided an incentive for retailers to favor domestic livestock and that the Final Rule does nothing to alleviate this discrimination. (Pl. Br. at 34-35.) In fact, according to Plaintiffs, by increasing the labeling requirements further downstream in the chain of production, the agency has made the problems the Appellate Body identified even worse. (Id.) Plaintiffs note that Canada and Mexico apparently share Plaintiffs' view, and have already filed paperwork with the WTO challenging the Final Rule. (Pl. Supp. Reply at 9.) Plaintiffs also contend that the Final Rule does nothing to address two additional problems identified in the Appellate Body Report as sources of discrimination: the possibility that, despite COOL, meat labels will not necessarily be accurate, and the carve-outs under the COOL program for processed food items and food service establishments. (Pl. Br. at 35.) See also 7 U.S.C. § 1638(2)(B); id. § 1638a(b).
Defendants respond that Plaintiffs have misconstrued the gravamen of the WTO decision. In Defendants' view, the WTO Appellate Body found fault mainly with the fact that the labeling requirements for retailers under the old COOL regime were not commensurate with the recordkeeping requirements for upstream producers, because the upstream firms were required to catalogue far more, and to pass along more
At the outset, the Court emphasizes that its role in evaluating the instant motion for a preliminary injunction is not to determine whether the Final Rule actually complies with the Appellate Body's ruling. Compliance with adverse WTO dispute resolution proceedings is delegated by law to the Executive and Legislative branches, see 19 U.S.C. § 3533(g), and whether measures that the Executive and Legislative Branches take to comply with the WTO obligations are sufficient can be addressed only through the WTO dispute resolution system. Moreover, "if U.S. statutory [or regulatory] provisions are inconsistent with [the WTO treaties], it is strictly a matter for Congress." Corus Staal BV v. Dep't of Commerce, 395 F.3d 1343, 1348 (Fed.Cir.2005); see also Koyo Seiko Co. v. United States, 551 F.3d 1286, 1291 (Fed.Cir.2008) ("The determination whether, when, and how to comply with [a] WTO[] decision ... involves delicate and subtle political judgments that are within the authority of the Executive and not the Judicial Branch."). Consequently, the Court's only purpose in considering the Appellate Body Report here is to determine whether Plaintiffs have a shown a likelihood of successfully proving that the agency had no reasonable basis for its statement that one of its goals in promulgating the Final Rule was to bring the United States into compliance with that decision. See Final Rule, 78 Fed.Reg. at 31,367 (the Final Rule will "bring the current mandatory COOL requirements into compliance with U.S. international trade obligations").
On that limited question, the Court finds that Defendants have the better argument. The WTO Appellate Body's conclusion that the COOL scheme unfairly discriminated against foreign goods primarily turned on its view that "the COOL measure does not impose labelling requirements for meat that provide consumers with origin information commensurate with the type of origin information that upstream livestock producers and processors are required to maintain and transmit." Appellate Body Report ¶ 343; see also id. ¶ 349 ("In sum, our examination of the COOL measure ... reveals that its recordkeeping and verification requirements impose a disproportionate burden on upstream producers and processors, because the level of information conveyed to consumers through the mandatory labelling requirements is far less detailed and accurate than the information required to be tracked and transmitted by these processors and producers."). Reading the plain language of the Report and comparing it to the Final Rule, it is clear that the agency increased the labeling requirements for retailers to generally approximate the recordkeeping requirements imposed on upstream producers and processors in an attempt to address the inequity that the Appellate Body identified. While it is conceivable that these measures might not ultimately pass muster in front of the WTO, this Court is satisfied that the production step labeling requirement bears a rational relationship to the agency's stated goal of bringing the United States into compliance with the Appellate Body Report.
It is true, as Plaintiffs point out, that the Appellate Body identified other issues with the previous COOL program that the Final Rule did not address. Specifically,
The Appellate Body Report and the record in this case demonstrate, essentially, that the AMS was stuck between a rock and a hard place after the WTO ruled. In the absence of a legislative solution to what the WTO had identified as problematic, the agency had to attempt to bring the COOL regulations into compliance with the international tribunal's decision without running afoul of the COOL statute. Given these constraints, it is evident to the Court that the agency did the best it could, and responded in a manner that was neither arbitrary nor capricious. Plaintiffs are unlikely to be able to demonstrate otherwise in a challenge to the Final Rule brought under the APA.
Plaintiffs' final argument that the Final Rule is arbitrary and capricious in violation of the APA stems from the fact that the agency made the Final Rule effective on the day that it was published, May 23, 2013. (Pl. Br. at 36-37.) Plaintiffs argue that the AMS should have heeded commenters who warned that the Final Rule would impose severe costs for no reason because the Rule would be unlikely to satisfy the WTO, and thus should have obediently delayed implementation of the Rule until after the WTO had had a chance to review it. (Id.) Plaintiffs also assert that, in the face of calls for suspended implementation, the agency provided no reasonable response or meaningful justification for immediate implementation of the Final Rule. (Id.)
Plaintiffs' contentions in this regard are faulty and are likely to fail primarily because they all but ignore the significance of the date on which the Final Rule was published and made effective. May 23, 2013, is the exact deadline that the WTO arbitrator gave the United States to bring its COOL rules into compliance with the Appellate Body Report. And this date was hardly selected at random — it was the product of a separate arbitration proceeding within the WTO dispute resolution framework that generated a lengthy opinion holding that May 23, 2013, was the
Plaintiffs nevertheless point out that, during the briefing for the instant motion, Canada and Mexico both filed paperwork with the WTO requesting formation of a panel to examine whether the Final Rule complies with international trade obligations. (Pl. Supp. Reply at 9; id. Ex. 1, ECF No. 42-1; id. Ex. 2, ECF No. 42-2.) Plaintiffs argue that these actions show that there is no chance that the feared consequences of delayed implementation (retaliation for non-compliance by Canada or Mexico) would have occurred, and thus that the agency could not reasonably have invoked the threat of sanctions as a justification for making the Final Rule effective immediately. (Pl. Supp. Reply at 9.) But Plaintiffs' logic is flawed. First of all, the fact that Canada and Mexico may not like the solution that the agency implemented to address the WTO decision does not mean those countries would have withheld retaliation if the United States had not implemented any changes at all. In this same vein, while it may be true that Canada and Mexico have now initiated a challenge to the rule the AMS implemented to respond to the Appellate Body Report (presumably because they believe that the Final Rule is even less in their interest than the 2009 COOL Rule was), the fact remains that Canada and Mexico had already challenged the COOL program once — and won. Based on this prior experience, the agency's belief that those countries might seek retaliatory sanctions in the absence of any changes to the COOL program by the given deadline was well founded. In other words, the risk that retaliatory sanctions would follow breach of the duty to respond to the WTO decision in a timely fashion loomed large given the prior WTO litigation, and that well-founded fear provided a sufficient reason for the agency to believe that it needed to act.
To be entitled to a preliminary injunction, even under the sliding scale approach that applies in this circuit, Plaintiffs must make a showing that they will suffer "irreparable harm" absent the extraordinary remedy of injunctive relief. See CFGC, 454 F.3d at 297 ("A movant's failure to show any irreparable harm is therefore grounds for refusing to issue a preliminary injunction, even if the other three factors entering the calculus merit such relief."); see also Sampson v. Murray, 415 U.S. 61, 88, 94 S.Ct. 937, 39 L.Ed.2d 166 (1974) ("[T]he basis of injunctive relief in the federal courts has always been irreparable harm and inadequacy of legal remedies." (citation and quotation marks omitted)); 11 A Wright & Miller, Federal Practice and Procedure § 2948.1 (2d ed. 2013) ("Perhaps the single most important prerequisite for the issuance of a preliminary injunction is a demonstration that if it is not granted the applicant is likely to suffer irreparable harm before a decision on the merits can be rendered."). Although the concept of "irreparable harm" is not easily defined, there is no doubt that "[t]he irreparable injury requirement erects a very high bar for a movant." Coalition for Common Sense in Gov't Procurement v. United States ("Common Sense"), 576 F.Supp.2d 162, 168 (D.D.C.2008).
"[S]everal well-known and indisputable principles" guide the inquiry regarding irreparable injury. Wisconsin Gas Co. v. FERC, 758 F.2d 669, 674 (D.C.Cir.1985). The party seeking injunctive relief must demonstrate that the claimed injury is "both certain and great" and that the alleged harm is "actual and not theoretical." Id. Because "the court must decide whether the harm will in fact occur," a party seeking injunctive relief must "substantiate the claim [of] irreparable injury" and "must show that the alleged harm will directly result from the action which the movant seeks to enjoin." Id. (emphasis in original). In addition, "[i]njunctive relief will not be granted against something merely feared as liable to occur at some indefinite time"; therefore, the movant "must show that [t]he injury complained of is of such imminence that there is a clear and present need for equitable relief to prevent irreparable harm." Id. (citations and internal quotation marks omitted) (second alteration in original).
Significantly for present purposes, the certain and immediate harm that a Plaintiff alleges must also be truly irreparable in the sense that it is "beyond remediation." CFGC, 454 F.3d at 297. This means that "[m]ere injuries, however substantial, in terms of money, time and energy necessarily expended in the absence of a stay are not enough." Id. (quoting Virginia Petroleum Jobbers Ass'n v. Fed. Power Comm'n, 259 F.2d 921, 925 (D.C.Cir.1958)); see also Wisconsin Gas Co., 758 F.2d at 674 ("Recoverable monetary loss may constitute irreparable harm only where the loss threatens the very existence of the movant's business."). Consequently, bearing the irreparable harm burden is an especially heavy lift for movants who claim injury based on potential economic losses; indeed, "[t]o successfully shoehorn potential economic loss into a showing of irreparable harm, a plaintiff
In the instant case, Plaintiffs offer two lines of argument in an attempt to demonstrate that implementation of the Final Rule will cause irreparable harm. First, Plaintiffs argue that if compelled production-step labeling constitutes a violation of the First Amendment, then they have established irreparable harm per se, which Defendants do not dispute. (Pl. Br. at 38-39; Def. Br. at 36; Int. Br. at 30.) Second, Plaintiffs maintain that meat industry participants at all stages of the production process will face crippling "new financial and operational burdens as a result of the Final Rule." (Pl. Br. at 39 (citation and internal quotations omitted).) The Court has considered each of these contentions and finds that neither establishes the harm that is required to warrant a preliminary injunction.
There is no doubt that "[t]he loss of First Amendment freedoms, for even minimal periods of time, unquestionably constitutes irreparable injury." Elrod v. Burns, 427 U.S. 347, 373, 96 S.Ct. 2673, 49 L.Ed.2d 547 (1976). Here, however, the Court has already determined that Plaintiffs do not have a likelihood of success on the merits of their First Amendment claim. See, supra, Section IV.A. Accordingly, the Court concludes that Plaintiffs are unable to base their irreparable harm arguments on this basis. See Edwards v. District of Columbia, 765 F.Supp.2d 3, 19 (D.D.C.2011) (noting that where "[p]laintiffs' irreparable harm argument rests entirely on their First Amendment claim," and "plaintiffs have not shown that the [regulation at issue] violates their rights under the First Amendment," plaintiffs "are `not faced with irreparable harm absent the issuance of an injunction'" (quoting Enten v. District of Columbia, 675 F.Supp.2d 42, 54 (D.D.C.2009))); cf. CFGC, 454 F.3d at 301 (noting that the D.C. Circuit "has construed Elrod to require movants to do more than merely allege a violation of freedom of expression in order to satisfy the irreparable injury prong of the preliminary injunction frame-work").
Plaintiffs second irreparable harm argument is that the Final Rule will impose devastating "new financial and operational burdens" on industry participants. (Pl. Br. at 39 (citation and internal quotations omitted).) Plaintiffs assert this claim with respect to both packers and processors, who are at the downstream end of the production process, and also upstream livestock suppliers, and have offered a number of declarations from individuals involved in both of these aspects of the meat production industry.
With respect to packers and processors, Plaintiffs argue that many packing and processing firms rely on commingling, and the Final Rule's commingling ban will impose "disproportionate burdens on businesses `that currently commingl[e] domestic and foreign-origin cattle or hogs.'" (Id. at 40 (quoting Final Rule, 78 Fed.Reg. at 31,384).)
The Court is not persuaded. As Defendants rightly argue, "bare allegations and fears about what may happen in the future" (Def. Br. at 37 (internal quotation marks and citation omitted)) are not sufficient to support a claim of irreparable injury. To be sure, Plaintiffs have gathered a number of declarants who are willing to speculate about the potential impact of the Final Rule on their business operations and profits, but without more than such blanket, unsubstantiated allegations of harm, there is no strength in these numbers. For example, declarant Alan Rubin, president of Dallas City Packing, states that adopting new segregated production procedures for the cattle that his company processes will increase costs "beyond the point where we would be able to recover those costs," as it will require his company to "build out separate facilities," add employees, and lengthen the workday, which he contends would lead to increased staffing costs, added "warehousing costs," and overall inefficiencies in the production process. (Decl. of Alan Rubin ¶¶ 4, 9, 10, 12, 13, 16.) Rubin even avers that "implementing these new rules could force [his] business to close." (Id. ¶ 8.) But he provides few if any facts that would permit the Court to evaluate the context in which these claims are made — e.g., although declarant
Another Plaintiffs' declarant, Brad McDowell, who is the President of a wholly-owned subsidiary of meat-processing giant Agri Beef, similarly provides some "approximate" costs of implementing segregated production processes, and estimates that the change in the way that his company processes meat "will require Agri Beef to commit an additional $75-$100 million in working capital." (Decl. of Brad McDowell ¶¶ 13-19.) Again, however, what declarant McDowell does not say is that such additional expenditures will so severely impact the company's bottom line that the increased costs that the Final Rule imposes threaten the company's very existence. Indeed, none of the Plaintiffs' declarations adequately alleges and substantiates the kind of immediate and irreparable monetary injury that is required to sustain Plaintiffs' assertions regarding the Final Rule's dire financial effects or the lack of recoverability of the added expenditures. See Nat'l Mining Ass'n v. Jackson, 768 F.Supp.2d 34, 51 (D.D.C.2011) (finding that plaintiff failed to demonstrate irreparable harm where declarant mentioned his company's lost revenues and predicted that he "will be out of business within eighteen months" because the declaration failed to "offer a projection of anticipated future losses, tie that to an accounting of the company's current assets, or explain with any specificity how he arrived at the conclusion that he would be forced out of business in eighteen months"); see also Wisconsin Gas Co., 758 F.2d at 674 ("[M]ovant must provide proof that the harm has occurred in the past and is likely to occur again, or proof indicating that the harm is certain to occur in the near future." (emphasis added)).
Notably, it appears that Plaintiffs' failure to substantiate the harms they assert is not for lack of trying. The packer declarants speak earnestly about what they truly "expect" to happen in the marketplace; what their customers are "likely" to
In addition to highlighting the alleged irreparable harm that packers will purportedly suffer under the Final Rule, Plaintiffs also argue that the Final Rule will irreparably injure firms that supply livestock to packers — that is, livestock producers and feeders — especially those that rely on imported animals in the ordinary course of business. (Pl. Br. at 41.) To advance this argument, Plaintiffs rely on history. They provide declarations to the effect that, after the 2009 COOL Rule was adopted, certain suppliers were forced to accept significant discounts on foreign origin cattle. (See, e.g., id., Decl. of Ed Attebury, ECF No. 24-15, ¶ 2 ("The current []COOL regulations have cost my business approximately $1,347,500 due to discounts on Mexican cattle from packers of $35 per head."); id., Decl. of Jim Peters, ECF No. 24-19, ¶ 2 ("The [2009 COOL Rule] ha[s] cost my business $1,237,415 due to discounts on Mexican cattle from packers ranging from $25-45 per head."); Pl. Reply, Decl. of Ricardo Pena Hinojosa, ECF No. 33-7, ¶ 4 ("When [the 2009 COOL Rule] went into effect ... the American stockyards, feedlots, and packing plants, began discounting [Mexican] cattle because of COOL-compliance costs.").)
Furthermore, Plaintiffs' supplier declarants predict that what happened before will likely happen again; that is, once the Final Rule goes into effect, the suppliers' customers will demand even steeper discounts or stop buying Mexican-origin cattle entirely. (See, e.g., Decl. of Ricardo Pena Hinojosa ¶ 5 ("Based on my experience with the 2009 version of the COOL Rule, I expect the new COOL regulations will make the discounts even greater...."); Pl. Br., Decl. of Andy Rogers, ECF No. 24-20, ¶ 3 ("Recent conversations with a cattle buyer from my packer customer indicated that the 2013 rule could see discounts paid on cattle of Mexican origin increase...."); Decl. of Jim Peters ¶ 10 ("Since we have received discounts due to the existing []COOL regulations, we expect deeper discounts with the new []COOL regulation."); Decl. of Ed Attebury ¶ 10 (same).)
Some of Plaintiffs' supplier declarants even further extrapolate these expected additional discounts into dire consequences for their businesses, asserting that packers may no longer buy foreign livestock at all and that the viability of declarants businesses' may be seriously threatened. (See, e.g., Decl. of Ed Attebury ¶ 10 ("[B]oth packer [sic] and retailers will no longer be willing to process and sell beef from Mexican-origin cattle. This will lead to major
Defendant-Intervenors, who also represent industry professionals, zealously contest the causal relationship that Plaintiffs have attempted to draw between the 2009 COOL regulations and the deep discounts for, and rejection of, foreign-born livestock, noting that average beef prices and total beef imports have risen since 2009 (see Int. Br., Ex. 5.a (USDA data indicating average beef prices and spreads have risen since 2009); id., Ex. 5.b (USDA data indicating that beef imports have risen since 2009)). Defendant-Intervenors also offer their own declarations disputing Plaintiffs' supplier declarants' claims that any discounts for foreign cattle were due to the 2009 COOL Rule. (See Decl. of John Sumption ¶ 9 (lower prices for Mexican cattle "is not a new phenomenon in the last five years" and is "due to the breed of cattle, how the cattle tend to grade (amount of choice), and quality of feed supply in different stages of growth"); Decl. of Paul Symens ¶ 11 ("It has been my experience that cattle from Mexico are known to give a lower yield and lower quality of beef, which results in packinghouses offering a lower price for these cattle.").)
Even without wading into the debate over the effect of the 2009 COOL Rule, what the Court finds most significant about Plaintiffs' supplier declarants' dire predictions for the future based on the purported impact of the 2009 COOL Rule is what they do not say — that any of the declarants (or anyone else for that matter) suffered the kind of extreme hardship as a result of the 2009 COOL Rule that could provide a factual basis for a finding that the Final Rule is likely to cause irreparable harm if it is not enjoined. By using the 2009 COOL Rule as a model for what will happen under the Final Rule but failing to provide any evidence of the extreme consequences of the old rule, Plaintiffs are essentially asking the Court to conclude that, while the Final Rule is the same as the 2009 COOL Rule in kind, the difference between the two is so great in degree that the Final Rule will result in "severe [and] extreme hardship" that "threaten[s] [the] very existence" of the supplier declarants' businesses, Common Sense, 576 F.Supp.2d at 168, even though the 2009 COOL Rule apparently did not. Plaintiffs have not provided any basis for any such finding, however; and without it, the declarations of Plaintiffs' suppliers in regard to the expected impact of the Final Rule are mere speculation, which, as stated above, is not the stuff of which successful irreparable injury claims are ordinarily made. See, e.g., Nat'l Mining Ass'n, 768 F.Supp.2d at 52; see also GEO Specialty Chems., 923 F.Supp.2d at 147-51; Nat'l Tobacco Co., L.P. v. District of Columbia, 11-cv-388 RLW, 2011 WL 4442771, at *6-7 (D.D.C. Sept. 14, 2011); Sterling Commercial Credit-Michigan, LLC v. Phoenix Indus. I, LLC, 762 F.Supp.2d 8, 14-16 (D.D.C.2011); Common Sense, 576 F.Supp.2d at 170; Power Mobility Coal. v. Leavitt, 404 F.Supp.2d 190, 204-05 (D.D.C. 2005).
Finally, and significantly, with respect to both packers and suppliers, Plaintiffs appear to have generally overlooked a critical component of the irreparable injury analysis insofar as it is clear that the harm that the supplier declarants fear does not flow directly from the requirements of the Final
Consequently, and for all of the reasons discussed above, the Court concludes that Plaintiffs have failed to establish the irreparable harm factor as required to warrant injunctive relief.
The third factor to be weighed on the sliding scale in ruling on a preliminary injunction requires the Court to "balance the competing claims of injury," which involves "consider[ing] the effect on each party of the granting or withholding of the requested relief." Winter, 555 U.S. 7, 24, 129 S.Ct. 365 (2008).
Plaintiffs argue that they will suffer the greatest harm because they are potentially subject to serious financial losses if the Final Rule is not enjoined. (See Pl. Br. at 44; see also id., Decl. of Jerry Holbrook, ECF No. 24-16, ¶ 7 (estimating cost of compliance for Tyson Foods as $70 million); Decl. of Brad McDowell ¶¶ 14, 15 (estimating $7 million annual lost opportunity costs and $18 million in additional storage costs under the Final Rule).) Plaintiffs also argue that the delay in implementing the Final Rule if an injunction is granted will cause no harm to the government, which the AMS itself has tacitly admitted by setting up a six-month education
The agency responds that, because Plaintiffs' claims of irreparable harm are largely unsubstantiated, they should be given little weight. (Def. Br. at 39.) The agency also argues that there is inherent harm in enjoining regulatory agencies from enforcing validly promulgated rules. (Id.) Adding to the harm-to-the-government side of the scale, Defendant-Intervenors additionally point out that an injunction would ensure that the United States would be in violation of its WTO obligations, and would thereby put the country at risk for retaliatory sanctions that have been estimated at $1-2 billion. (Int. Br. at 43 (citing Remy Jurenas & Joel L. Greene, Cong. Research Serv., RS22955, Country-of-Origin Labeling for Foods and the WTO Trade Dispute on Meat Labeling 30 (2013)).)
Regardless of whether Plaintiffs have sufficiently shown irreparable harm either in the form of a First Amendment violation or due to severe economic losses, there is no doubt that the Final Rule imposes significant compliance costs on some companies in the meat production industry — costs that the agency itself estimated at between $53.1 and $137.8 million. Final Rule, 78 Fed.Reg. at 31,368. However, it is also true that granting an injunction could cause the United States to be deemed out of compliance with its international trade obligations, which apparently is also a costly proposition. See Appellate Body Report, United States — Import Prohibition of Certain Shrimp and Shrimp Products, WT/DS58/AB/R (Nov. 6, 1998) (a WTO member "bears responsibility for acts of all of its departments of government, including its judiciary"). If Canada and Mexico have agreed not to seek any retaliation until the WTO issues a decision about whether the Final Rule complies with the United States' WTO obligations, as Plaintiffs' counsel represented at oral argument (see Hr'g Tr. at 68:11-18); see also 147 Canada Gazette No. 24, June 15, 2013, 1459, then retaliation due to the issuance of an injunction is unlikely, and the cost to the government of imposing the injunction should be significantly discounted.
Consequently, the Court concludes that the balance of harms swings slightly in favor of Plaintiffs. Nevertheless, in terms of the overall sliding scale, Plaintiffs' advantage on the balance of harms factor is not enough to tip the totality of the injunction scale in their favor given that they have failed to show a likelihood of success on the merits or irreparable harm.
The final factor that the Court must consider is the effect on the public's interest of granting or withholding the requested injunction. "In exercising their sound discretion" when deciding a motion for preliminary injunction, "courts of equity should [have] particular regard for the public consequences in employing the extraordinary remedy of injunction." Winter, 555 U.S. at 24, 129 S.Ct. 365 (internal quotation marks and citations omitted). Here, the parties' arguments regarding the public interest are largely dependent upon their merits arguments. Plaintiffs argue that there is a public interest both in not enforcing unconstitutional laws, particularly where such laws have severe economic effects, and in ensuring that regulatory agencies do not overstep their statutory limits. (Pl. Br. at 45.) The Government responds that the public has an interest in allowing regulatory agencies to function pursuant to their legislatively designated authority, and that there is also a significant public interest in achieving Congress' goal of providing more
Because the parties' public interest arguments are essentially derivative of the parties' arguments on the merits of the case, it follows that the public interest factor of the preliminary injunction test should weigh in favor of whoever has the stronger arguments on the merits — in this case, Defendants. See, e.g., Serono Labs., Inc. v. Shalala, 158 F.3d 1313, 1326 (D.C.Cir.1998) ("The final preliminary injunction factor, the public interest, also offers [plaintiff] no support because it is inextricably linked with the merits of the case. If, as we have held, [plaintiff] is not likely to establish [a likelihood of success in the merits], then public interest considerations weigh against an injunction."); ViroPharma, Inc. v. Hamburg, 898 F.Supp.2d 1, 29-30 (D.D.C.2012) (where plaintiff was unlikely to establish that agency action did not comply with the law, the public interest factor weighed against granting an injunction); Hubbard v. United States, 496 F.Supp.2d 194, 203 (D.D.C. 2007) ("Because it concludes that the plaintiff has not demonstrated a likelihood of success on the merits, the court need not linger long to discuss ... public interest considerations [as] ... [i]t is in the public interest to deny injunctive relief when the relief is not likely deserved under law." (internal quotations marks and citations omitted) (second alteration in original)). Thus, like the likelihood of success and irreparable harm factors, the public interest factor weighs against granting an injunction in the instant case.
The parties' arguments for and against the issuance of a preliminary injunction have focused primarily on the likelihood of success and irreparable harm factors, and the Court rests its conclusion regarding the requested preliminary injunction primarily on its evaluation of those two factors. For the reasons set forth above, and especially Plaintiffs' failure to demonstrate either a likelihood of success on the merits or irreparable injury, Plaintiffs' Motion for a preliminary injunction is
Except as provided in subsection (b) of this section, a retailer of a covered commodity shall inform consumers, at the final point of sale of the covered commodity to consumers, of the country of origin of the covered commodity.
A retailer of a covered commodity that is beef, lamb, pork, chicken, or goat meat may designate the covered commodity as exclusively having a United States country of origin only if the covered commodity is derived from an animal that was —
Nothing in this subparagraph alters the mandatory requirement to inform consumers of the country of origin of covered commodities under paragraph (1).
A retailer of a covered commodity that is beef, lamb, pork, chicken, or goat meat that is derived from an animal that is imported into the United States for immediate slaughter shall designate the origin of such covered commodity as —
A retailer of a covered commodity that is beef, lamb, pork, chicken, or goat meat that is derived from an animal that is not born, raised, or slaughtered in the United States shall designate a country other than the United States as the country of origin of such commodity.
The notice of country of origin for ground beef, ground pork, ground lamb, ground chicken, or ground goat shall include —
* * *
Subsection (a) of this section shall not apply to a covered commodity if the covered commodity is —
The information required by subsection (a) of this section may be provided to consumers by means of a label, stamp, mark, placard, or other clear and visible sign on the covered commodity or on the package, display, holding unit, or bin containing the commodity at the final point of sale to consumers.
If the covered commodity is already individually labeled for retail sale regarding country of origin, the retailer shall not be required to provide any additional information to comply with this section.
The Secretary may conduct an audit of any person that prepares, stores, handles, or distributes a covered commodity for retail sale to verify compliance with this subchapter
A person subject to an audit under paragraph (1) shall provide the Secretary with verification of the country of origin of covered commodities. Records maintained in the course of the normal conduct of the business of such person, including animal health papers, import or customs documents, or producer affidavits, may serve as such verification.
The Secretary may not require a person that prepares, stores, handles, or distributes a covered commodity to maintain a record of the country of origin of a covered commodity other than those maintained in the course of the normal conduct of the business of such person.
* * *
Id. at 113-14 (citations, internal quotation marks, and footnote omitted).
