Creekstone Farms v. USDA:

Today a divided U.S. Court of Appeals for the D.C. Circuit held in Creekstone Farms Premium Beef v. USDA that the USDA may prohibit Creekstone Farms from testing its cows for bovine spongiform encephalopathy (BSE), aka "mad cow disease" with the so-called "rapid" BSE test. At issue was whether the Virus-Serum-Toxin Act (VSTA) authorized the USDA to prohibit Creekstone's use of the test. Judges Henderson and Rogers said "yes." Chief Judge Sentelle, dissenting, said "no." I am inclined to think Sentelle is correct.

The majority accepted the USDA's argument that VSTA, which covers "any . . . virus, serum, toxin, or analogous product" used for "treatment" of animals can be stretched to cover BSE test kits. It further argued that USDA's authority to "prevent the preparation, sale, barter, exchange, or shipment" of such items includes the authority to ban the use of the tests as well. I find neither persuasive. While there may be a good argument that the USDA should have such authority, that's not what VSTA does.

In his dissent, Sentelle stressed these points, but also highlighted the problem of allowing an agency to stretch the scope of its own regulatory authority. As 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." Agencies are constrained to the jurisdiction conferred upon them by Congress, and courts should not lightly defer to agency claims that they can construe the scope of their own power (as Nathan Sales and I argue here).

It is worth noting Creekstone did not maintain that such testing was necessary to ensure the safety of its beef. It was undisputed that the test they sought to use was very unlikely to detect the presence of BSE given the age of the cows at slaughter. Rather, Creekstone sought to test its beef so that it could export its meat to Japan and Korea, which have limited U.S. beef imports due to BSE fears. Again from the Sentelle 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.

To this I would add that I believe the USDA has adequate authority to prevent Creekstone and other producers from making false claims about the relative safety of their products vis-a-vis their competitors. So even if the USDA was justified in worrying that Creekstone would make false claims that their meat was somehow "safer" than others, there are other ways to address this concern.

Was Creekstone Really about Speech?

As I noted last Friday, a divided U.S. Court of Appeals for the D.C. Circuit held in Creekstone Farms Premium Beef v. USDA that the USDA may prohibit Creekstone Farms from testing its cows for bovine spongiform encephalopathy (BSE), aka "mad cow disease" with the so-called "rapid" BSE test. Why, some may wonder, would USDA bar Creekstone from testing its own beef at its own expense? The "rapid" BSE test would not be effective at determining whether Creekstone's cattle were BSE-free before slaughter, but why would the USDA stand in the way of Creekstone's decision to spend its own money in this way?

Creekstone argued it wanted to test so it could export its beef to foreign markets where such testing is required. Why would the USDA stand in the way of that? One possibility is that the Administration feared that allowing Creekstone to test would undermine the United States' argument against Japan's and Korea's limitations on U.S. beef imports. If Creekstone can test, Japan and Korea might argue, all producers can and should test, and this would increase costs for U.S. beef producers. This may have been a factor in the USDA's decision, but I doubt it was the only one.

Another possibility is that the USDA was less concerned about the testing than it was about what Creekstone might say about it. If Creekstone were allowed to test its beef for BSE, the USDA might not be able to prohibit Creekstone from promoting that fact. Under current law, Creekstone could almost certainly make the true claim that it tested its beef, but the USDA did not want Creekstone (or any other producer) to make any claims at all regarding BSE in American beef.

Were Creekstone to advertise its use of the "rapid" BSE test, the government could require that Creekstone qualify such claims. Insofar as advertising the use of the test is misleading — making consumers believe (erroneously) that Creekstone's beef is "safer" than others — the government could require additional speech to cure. So, for instance, the government could require Creekstone to acknowledge that there is no reason to believe its use of the "rapid" BSE test makes its beef any safer than beef from non-testing producers. [This is the sort of qualification the FDA requires milk producers to make if they advertise their milk is made without use of rBST.]

The USDA likely fears such curing language would be insufficient to blunt the impact of Creekstone's initial claims, however. Any mention of the potential threat of BSE in American beef could reduce beef consumption and harm the domestic beef industry. Creekstone might or might not gain market share against its competitors by noting its use of BSE tests, but the overall market would shrink if the potential for BSE contamination were highlighted. Given that the risk of BSE is infinitesimal, this is something the USDA seeks to avoid. So, in an effort to preempt Creekstone from making any claims about BSE, USDA simply barred them from using the test.

Note that I am not defending the USDA's action as much as I am trying to explain it. I think the USDA was wrong here, both because it lacked the authority to bar the use of "rapid" BSE tests under existing statutes and because I do not believe it should be the USDA's responsibility to promote the domestic beef industry. I also believe that a consequence of the USDA's position frustrates the private development of testing protocols and other innovations that could actually improve the safety of the U.S. food supply. But while I think the USDA was wrong, two judges on the D.C. Circuit felt otherwise, and I doubt this case will go upstairs or en banc.