USDA Can Block “Mad Cow” Testing

The plaintiff raises and slaughters Black Angus cattle and developed a plan to test for the presence of BSE (an untreatable disease) each of the approximately 300,000 cattle it slaughters each year. The plaintiff claimed to have lost $200,000 per day in revenue as a result of the diminished export market. Japan, the plaintiff’s export market, had placed a ban on U.S. imports upon discovery of BSE-infected cattle in the U.S. Japan required 100% testing, and the plaintiff’s inability to do so cost them the loss of the Japanese export market Privately, the major packers and their state lobby groups complained to USDA that such a practice would provide the plaintiff with a competitive marketing advantage. Publicly, the major packers couched their objection to the plaintiff’s proposal on the basis that the “rapid” BSE test at issue would not likely detect the disease and provide false food safety value. Accordingly, USDA asserted authority under the Virus-Serum-Toxin Act (VSTA) and denied the plaintiff’s request to purchase or use a BSE test kit. The plaintiff then requested that Kansas State University designate the plaintiff’s facility as a satellite laboratory allowed to use a BSE-testing program. USDA denied the request on the basis that BSE testing was an inherently governmental function that must be conducted by Federal and state laboratories. The plaintiff challenged the USDA’s action alleging that two of the USDA’s regulations were ultra vires under the VSTA and that, assuming the regulations were valid, did not authorize the USDA to restrict the use or sale of BSE test kits.

The VSTA, enacted in 1913, makes it unlawful to “prepare, sell, barter, or exchange…or to ship or deliver for shipment…any worthless, contaminated, dangerous, or harmful virus, serum, toxin, or analogous product intended for use in the treatment of domestic animals.” VSTA requires that “any virus, serum, toxin, or analogous product manufactured within the United States and intended for use in the treatment of domestic animals…be prepared under and in compliance with regulations prescribed by the Secretary of Agriculture at an establishment holding [a] license issued by the Secretary of Agriculture. A USDA regulation defines “analogous products” as “substances… which are intended for use in the treatment of animals through the detection or measurement of antigens, antibodies, nucleic acids, or immunity.” “Treatment” is defined as the “prevention, diagnosis, management, or cure of disease of animals.” The purpose of VSTA was to address the problem of ineffective hog-cholera serum being sold to farmers. The trial court ruled that while USDA had the authority to regulate the “use” of products associated with BSE testing and agreed with the USDA’s broad interpretation of “treatment”, the trial court held that “treatment” of cattle was not involved inasmuch as BSE testing can only be done post-mortem.

On appeal, the court noted that the USDA’s regulations were entitled to deference and that the restrictions on the “use” of a product associated with public health were reasonably related to the purposes of the VSTA. That was the case, the court ruled, even though USDA never claimed the authority to regulated biological products until 63 years after enactment of VSTA. The court also upheld the USDA regulation which gave USDA the authority to regulate diagnostic testing related to the “treatment” of domestic animals. The court held that the regulation was valid because it referred to the “diagnosis” of animal diseases. The court viewed it as irrelevant that the “diagnosis” occurred on dead animals and disregarded USDA’s prior acknowledgement that BSE testing of cattle at slaughter was not “meaningful in the context of …animal health” and that surveillance testing for BSE “is not a [disease] mitigation measure.” The court also disregarded the fact that “treatment” was not possible insomuch as if the disease was detected it cannot be “treated.”

A dissent, authored by Justice Sentelle (Reagan appointee) would not have accorded deference to the USDA position, stating that USDA’s position “exceeds the bounds of reasonableness in the interpretation assumed in its regulations.” The dissent opined that USDA went further than it reasonably could in aggregating power to itself. Accordingly, the dissent would have upheld the trial court’s grant of summary judgment for the plaintiff on the USDA’s “use” regulation, and would have reversed the trial court’s grant of summary judgment for USDA on the USDA’s “treatment” regulation.

The dissent also pointed out that all the plaintiff wanted to do was assure foreign buyers that the beef they sell is as well tested as would be the case with beef produced in the home countries of those buyers, rather than (as the major packers and USDA argued) providing buyers with a false assurance of BSE-free beef. Creekstone Farms Premium Beef, L.L.C. v. Department of Agriculture, No. 07-5199, 2008 U.S. App. LEXIS 18535 (D.C. Cir. Aug. 29, 2008).

Note: The case is not over. The court remanded the case to the trial court for ruling on whether the USDA acted arbitrarily and capriciously in refusing to allow the plaintiff to test its cattle in violation of the Administrative Procedures Act.