Update: World Trade Organization Rejects USDA Meat Rule on Country of Origin Labeling

WTOYesterday, a World Trade Organization (WTO) compliance panel publicly released its determination that the United States Department of Agriculture’s (USDA) country of origin labeling rule for certain cuts of muscle meat violated the international Technical Barriers to Trade agreement. Canada had sought such a determination, supported by other nations such as Argentina, Australia, and Japan.

News reports on this decision caught The WLF Legal Pulse‘s attention because U.S. meat producers had challenged the so-called COOL rule under the First Amendment in the U.S. Court of Appeals for the D.C. Circuit.  A number of posts (here and here) assessed the court’s July 29 en banc decision rejecting the producers’ challenge.

As we argued in the August 25 post, the majority improperly assisted the government by identifying the substantial government interests that the USDA rule advanced, including the protection of domestic farmers from foreign competition. Because of the pending proceedings at the WTO, the U.S. government had formally denied that protectionism was one of the goals of its COOL regulation.

The meat producers have asked the D.C. Circuit to reconsider its en banc holding, a motion on which the court has yet to rule. It is uncertain what impact the WTO determination will have on that request.

WLF Web Seminar to Address Lessons of “Stage-Managed” Litigation in Ecuador Vs. Chevron

PodiumPic1Tomorrow morning from 10:00 a.m. to 11:00 a.m., Washington Legal Foundation will be broadcasting a live Web Seminar program entitled Aguinda v. Chevron: The Remarkable Rise and Fall of a Stage-Managed Litigation & PR Crusade. You can register for free viewing by clicking on the program title.

Our speakers will be Paul M. Barrett, Assistant Managing Editor of Bloomberg BusinessWeek and author of the just-released book Law of the Jungle; and Eric G. Lasker, a partner with the Hollingsworth LLP law firm.

Even though the litigation accusing Chevron of environmental harm in Ecuador has been going on for over two decades, the case itself, and Chevron’s counter-litigation alleging the plaintiffs’ lawyers committed fraud, remain unresolved. The U.S. Court of Appeals for the Second Circuit will soon hear the plaintiffs’ lawyers’ appeal of Federal District Court Judge Lewis Kaplan’s RICO ruling. And just yesterday, the U.S. Court of Appeals for the Fourth Circuit affirmed a lower court’s order that two lawyers affiliated with lead plaintiffs’ lawyer Steven Donziger provide documents and computer drives Chevron sought in support of its RICO charges. Paul Barrett’s coverage of that Fourth Circuit ruling can be read here.

In FDA’s Revised Animal Food Safety Proposal, Common Sense Prevails on Brewers’ Spent Grains

spent brewing grains

spent brewing grains

This past spring, we highlighted a provision in the Food and Drug Administration’s (FDA) proposed implementation of the Food Safety and Modernization Act (FSMA) that would effectively stop brewers, distillers, and wine makers from sharing the byproducts of their production with farmers for use as animal feed.  Such a practice has deep roots in the crafting of alcoholic beverages and is substantially beneficial to all parties involved. As we wrote previously:

Farmers have been procuring and feeding their livestock spent brewing grains and grapes for centuries. These livestock happy hour arrangements advance environmental sustainability, engender bonds among local businesses, and financially benefit both parties. Farmers get low-cost whole grain feed packed with fiber, protein, and, of particular importance to livestock in arid climates, moisture. Alcohol makers save millions by not having to landfill the by-products.

The proposal inspired quite an uproar from alcoholic beverage producers of all sizes, from nanobreweries to large distillers, as well as Members of Congress. The reaction inspired second-thinking at FDA, and we were hopeful that the agency would eventually reverse course on this proposal that protected nobody from nothing.

On September 29, FDA will formally publish in the Federal Register and seek comment on revisions to its 2013 Food for Animals proposed rule.

On pages 43-50 in the pre-publication PDF, FDA acknowledged that any hazards that might potentially arise from the production of spent grains and grape pomace could be addressed through compliance with the separate human food rules being promulgated to implement the FSMA. FDA did feel compelled to note in the Animal Food proposal, however, that once the alcohol production byproducts were “separated from the human food,” the facilities “would need to ensure that the animal food is not treated like trash or garbage.”

We must give FDA two cheers for considering the overwhelming public opposition to the spent grain provisions in the 2013 proposal and embracing a common-sense approach. Had the agency acknowledged that its original proposal was directly at odds  with the explicit language of FSMA, we would have offered a third cheer.

Missouri Supreme Court Invalidates State’s Legislative Cap on Punitive Damages

Behrens_MGuest Commentary

by Mark A. Behrens, Shook, Hardy & Bacon L.L.P.*

On September 9, the Supreme Court of Missouri struck down the state’s legislative limit on the amount of punitive damages that can be imposed on defendants. Under the cap, punitive damages could not exceed the greater of $500,000 or five times the net amount of the judgment. Lewellen v. Franklin arose from an unremarkable fraudulent misrepresentation and unlawful merchandising suit. In finding that the statutory damages cap violated Lewellen’s right to a jury trial, the Court followed a 2012 decision invalidating the state’s cap on non-economic damages in medical liability cases, Watts v. Lester E. Cox Medical Centers.

This holding is an extreme outlier.  Virtually every other state court that has considered the constitutionality of punitive damages caps has held that such laws do not violate the jury trial right because the jury’s fact-finding function is preserved.  The jury continues to resolve disputed facts with respect to liability and assessment of legally available remedies.  Once the jury has decided these issues, the constitutional mandate is met—or at least is virtually every other state in the country.  Nationally, both state and federal courts consistently have upheld the constitutionality of punitive damages caps. Continue reading

Federal Appeals Courts Reject Clean Water Act “Permit Shield” Defense

sboxermanFeatured Expert Column – Environmental Law and Policy

by Samuel B. Boxerman, Sidley Austin LLP with Katharine Falahee Newman, Sidley Austin LLP

In the past two months, two federal circuit courts examined the extent of the Clean Water Act’s (“CWA”) “permit shield” defense and reached similar conclusions—the defense cannot be used by a party that does not completely fulfil certain National Pollution Discharge Elimination System (NPDES) permit, or permit application, obligations. Permit holders and applicants should be wary of the risk presented by this emerging case law, as the decisions could open the door to increased enforcement, unless an applicant has provided to the permitting authority a wide range of data regarding its discharge during the application process.

Generally, the CWA shields a permit holder from liability if the party possesses or has applied for an NPDES permit through the appropriate federal and state regulatory framework. The permit shield states that “compliance with a permit issued pursuant to this section shall be deemed compliance,” see 33 U.S.C. § 1342(k). The shield protects permit holders from challenges that their permits are not sufficiently stringent as well as actions to compel the permit holder to change its operations following changes to CWA regulations. Continue reading

FDA’s Legally-Suspect Shift of Clinical Lab Test Regulation Through Guidance Documents

_MG_8707Guest Commentary

by Gail Javitt, Sidley Austin LLP*

The penchant of the Food and Drug Administration (FDA) to use “guidance” documents as a means to effectuate substantive regulatory change may have reached its zenith on July 31, 2014, when FDA’s Center for Devices and Radiological Health announced its intent to issue two new draft guidances. Those draft guidances would fundamentally alter the oversight of clinical laboratory testing in the United States, by regulating clinical laboratories as medical device manufacturers and the laboratory developed tests (LDTs) they perform as medical devices.

As mandated by Congress under the 2012 Food and Drug Administration Safety and Innovation Act (FDASIA), FDA notified the House and Senate committees of jurisdiction that the agency intended to issue draft guidance, and also unveiled advance copies of the guidance documents. These documents announce the agency’s “risk-based” framework for LDTs, which comprise essentially all laboratory testing that is not performed using an in vitro diagnostic test kit in accordance with a manufacturer’s instructions for use.

Under the proposed framework, all clinical laboratories that perform laboratory developed tests will, at a minimum, be required to register with FDA, list the LDTs they perform, and report “adverse events” to FDA. LDTs that FDA classifies as “high” or “moderate” risk will also need to obtain FDA premarket review and authorization. They will additionally be subject to quality system regulatory requirements for medical devices, although the agency has not yet explained how it plans to adapt these to the clinical laboratory context. Continue reading

Supreme Court’s “Executive Benefits” Bankruptcy Ruling Provides a Practical Solution to a “Stern” Problem

supreme courtGuest Commentary

by Dee Wallander, a 2014 Judge K.K. Legett Fellow at the Washington Legal Foundation and a student at Texas Tech University School of Law.

In an overlooked but practically significant decision from its October 2013 term, Executive Benefits Insurance Agency v. Arkison, the U.S. Supreme Court clarified the procedural impact of its 2011 bankruptcy decision, Stern v. Marshall. In Stern (a case that received more fanfare for its underlying facts—which featured the late model Anna Nicole Smith—than for its legal issues), the Court narrowly held that a bankruptcy court can preside over actions arising from bankruptcy, but cannot hear state-law claims independent of the bankruptcy action. More specifically, Stern held that Article III of the U.S. Constitution bars bankruptcy courts from adjudicating counterclaims to proofs of claims, even though such actions are permissible under 28 U.S.C. § 157 as “core” traditional bankruptcy claims. Despite the Court’s attempt to rule narrowly in Stern, lower courts’ varying interpretations of the decision have created confusion in the bankruptcy system.

Justice Thomas, who wrote the unanimous Executive Benefits opinion, carefully avoided a detailed analysis of Stern by discussing only the narrow statutory question of how federal district and bankruptcy courts should procedurally handle so-called Stern claims. Continue reading