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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 1 of 52
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CREEKSTONE FARMS PREMIUM BEEF, LLC, )
Plaintiff, )
vs. ) Civil Action No. 06-544 (JR)
UNITED STATES DEPARTMENT OF AGRICULTURE, )
and MIKE JOHANNS, IN HIS CAPACITY AS THE )
SECRETARY OF AGRICULTURE, )
Defendants. )
_________________________________________________ )
REPLY IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND
OPPOSITION TO DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 2 of 52
TABLE OF CONTENTS
SUMMARY OF
ARGUMENT.........................................................................................1
ARGUMENT......................................................................................................................4
I. THIS COURT HAS JURISDICTION TO HEAR CREEKSTONE’S CLAIMS.4
A. Creekstone’s Claims Are Not Moot.
..............................................................4
B. Creekstone Has Standing To Present Its Claims.
........................................6
II. USDA’S EXPANSIVE INTERPRETATION OF THE VSTA TO APPLY TO
DIAGNOSTIC TESTS AND TO THE USE OF BIOLOGICAL PRODUCTS
IS UNPERSUASIVE AND NOT ENTITLED TO DEFERENCE.....................10
A. The VSTA Is Neither Ambiguous Nor Susceptible to USDA’s
Interpretations...............................................................................................10
1. Regulation of the Use of Biological Products
...............................12
2. Regulation of Diagnostic
Tests.......................................................18
B. USDA’s Expansive Interpretation of the VSTA Is Not Entitled to
Deference.
......................................................................................................21
1. No Deference for Interpretations Expanding the Scope of the Agency’s
Authority.............................................................................................21
2. No deference for Statutory Interpretations Not Accompanied by Further
Explication..........................................................................................22
3. Little Deference for Statutory Interpretations that Were Far from
Contemporaneous or
Consistent.........................................................25
C. The Reenactment Doctrine Does Not Save USDA’s Unsupported
Interpretation of the VSTA
..........................................................................27
III. USDA LACKS STATUTORY AUTHORITY TO REGULATE BSE TEST KITS
IN PARTICULAR
..................................................................................................29
A. BSE Test Kits Are Not “Analogous Products.”
..........................................30
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 3 of 52
B. BSE Test Kits Are Not, and Would Not Be, Used in the Treatment of
Animal Disease
..............................................................................................33
C. BSE Test Kits Are Not Worthless, Contaminated, Dangerous or Harmful.34
IV. USDA’S RESTRICTIONS ON BSE TEST KITS ON ECONOMIC GROUNDS
ARE OUTSIDE ITS AUTHORITY UNDER THE VSTA
.................................39
V. USDA IS NOT ENTITLED TO SUMMARY JUDGMENT ..............................45
CONCLUSION
................................................................................................................45
EXHIBIT 1 Supplemental Declaration of John D. Stewart
EXHIBIT 2 Declaration of Boyd R. Oase of Kowalski’s Markets
EXHIBIT 3 Declaration of James R. Kiley of Wild by Nature Markets
EXHIBIT 4 Declaration of Darin Parker of Parker International Inc.
EXHIBIT 5 Declaration of Kyu O Kim of NY-SK Trading, LLC
EXHIBIT 6 Declaration of Steve Erdley of Penn Traffic Company
EXHIBIT 7 Hearing before the Committee on Agriculture on the Estimates of
Appropriations for the Fiscal Year Ending June 30, 1914, H.R. 28283, 62d
Cong. 20-32 (1913) (testimony of Dr. A.M. Farrington, Asst. Chief, Bureau
of Animal Indus., Dept. of Agric.)
EXHIBIT 8 Declaration of Paul W. Brown, M.D.
EXHIBIT 9 Report on the Monitoring and Testing of Ruminants for the
Presence of
Transmissible Spongiform Encephalopathy (TSE) in the EU in 2005
EXHIBIT 10 Declaration of Linda A. Detwiler, D.V.M.
EXHIBIT 11 Supervie and Castagliola, “The Unrecognized French BSE
Epidemic,” 35
Vet. Res. 349-362 (2004)
iii
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 4 of 52
TABLE OF AUTHORITIES 1
FEDERAL CASES
62 Cases of Jam v. United States, 340 U.S. 593 (1951)
....................................................43
AFL-CIO v. Brock, 835 F.2d 912 (D.C. Cir. 1987)
...........................................................28
*Adamo Wrecking Co. v. United States, 434 U.S. 275 (1978)
..............................22, 23, 26
American Fin. Servs. Ass'n v. FTC, 767 F.2d 957 ), cert. denied, 475
U.S. 1011
(1986
............................................................................................................................42
American Petroleum Institute v. EPA, 52 F.3d 1113 (D.C. Cir. 1995)
.............................11
*Animal Health Institute v. USDA, 487 F. Supp. 376 (D. Colo. 1980)
.............................13
Area Transp., Inc. v. Ettinger, 219 F.3d 671 (7th Cir. 2000)
..............................................8
Arnold v. Intervet, Inc., 305 F. Supp. 2d 548 (D. Md.
2003).............................................21
Babbitt v. Sweet Home Chapter of Communities for a Greater Oregon, 515 U.S.
687
(1995)..............................................................................................................15,
28
*Barnett v. Weinberger, 818 F.2d 953 (D.C. Cir. 1987)
...........................23, 24, 26, 27, 28
Better Government Assoc. v. U.S. Dept. of Interior, 780 F.2d 86 (D.C.
Cir. 1986) ............5
*Bowen v. Georgetown Univ. Hospital, 488 U.S. 204
(1988)...........................................25
Burlington Northern R.R. Co. v. Surface Transportation Bd., 75 F.3d 685,
688
(D.C. Cir. 1996)
............................................................................................................6
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A.,
511 U.S.
164
(1994)....................................................................................................................29
Lorillard v. Pons, 434 U.S. 575 (1978)
.............................................................................29
Chevron. Public Citizen, Inc. v. U.S. Dept. of Health and Human
Services, 332
F.3d 654 (D.C. Cir.
2003)....................................................................17,
18, 22, 23, 26
Christensen v. Harris Cty., 529 U.S. 576
(2000)...............................................................25
*City of Chicago v. Environmental Defense Fund, 511 U.S. 328
(1994)....................16, 17
City of New Haven v. HUD, 809 F.2d 900 (D.C. Cir. 1987)
...............................................5
Continental Airlines, Inc. v. U.S. Department of Transportation , 856
F.2d 209
(D.C. Cir. 1988)
...........................................................................................................26
Dolan v. United States Postal Service, 126 S. Ct.1252 (2/22/2006)
.................................14
Edward J. DeBartolo Corp. v. Florida Gulf Coast Building & Constr. Trades
Council, 485 U.S. 568 (1988)
......................................................................................44
Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075 (D.C. Cir.
1996)...............................................22
Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995)
....................................................11, 22
*ExxonMobil Gas Marketing Co. v. FERC, 297 F.3d 1071 (D.C. Cir.
2002)...................18
*FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)
.........................13, 29
Federal National Mortgage Ass'n v. United States, 56 Fed. Cl. 228 (Ct.
of Claims
2003)
............................................................................................................................23
*Friends of the Earth, Inc. v. EPA, 446 F.3d 140 (D.C. Cir. 2006)
..................................22
*Friends of the Earth v. Laidlaw, 528 U.S. 167 (2000)
......................................................4
*Garrelts v. Smithkline Beecham Corp., 943 F. Supp. 1023 (N. D. Ia.
1996) ............28, 44
*General American Transp. Corp. v. ICC, 872 F.2d 1048 (DC Circuit 1989)
.................28
1 Asterisk denotes authorities principally relied on.
iv
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 5 of 52
Gettman v. DEA, 290 F.3d 430 (D.C. Cir.
2002).................................................................8
*Grand Laboratories, Inc. v. Harris, 488 F. Supp. 618, 619 (D.S.D.
1980), rev’d
on other grounds, 660 F.2d 1288 (8th Cir.
1981).........................................................33
Independent Insurance Agents of America, Inc. v. Hawke, 211 F.3d 638
(2000) .............15
International Union, UAW v. Brock, 816 F.2d 761 (D.C. Cir.
1987)................................28
Investment Co. Inst. v. Camp, 401 U.S. 617 (1971)
..........................................................23
*John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86
(1993)..........................................................................................................................22
Kelley v. U.S. EPA, 15 F.3d 1100 (D.C. Cir. 1994), cert. denied, 513
U.S. 1110
(1995)].........................................................................................................................17
Koszola v. F.D.I.C., 393 F.3d 1294 (D.C. Cir.
2005)........................................................28
Lorillard v. Pons, 434 U.S. 575 (1978)
.............................................................................29
*Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)
....................................................7, 8
Lynn Martin v. Occupational Safety and Health Review Commission, 499 U.S.
144
(1991)....................................................................................................................26
McBryde v. Committee To Review Circuit Counsel and Disability Orders, 264
F.3d 52 (D.C. Cir.
2001)............................................................................................7,
8
*Michigan Citizens for an Independent Press v. Thornburgh, 868 F.2d 1285
(D.C. Cir. 1989)
...........................................................................................................17
Michigan v. EPA, 268 F.3d 1075 (D.C. Cir.
2001)............................................................11
Miller v. AT&T Corp., 250 F.3d 820 (4th Cir. 2001)
........................................................19
*Natural Resources Defense Council v. Reilly, 983 F.2d 259 (D.C. Cir.
1993) ...............22
Pacific Power & Light Co. v. FPC, 184 F.2d 272 (D.C. Cir.
1950)..................................28
PanAmSat Corp. v. F.C.C., 198 F.3d 890 (D.C. Cir. 1999)
..............................................25
Pegram v. Herdrich, 530 U.S. 211
(2000).........................................................................19
Public Citizen, Inc. v. U.S. Dept. of Health and Human Services, 332
F.3d 654,
662 (D.C. Cir. 2003)
...................................................................................................23
*Railway Labor Executives' Ass'n v. National Mediation Bd., 29 F.3d 655,
cert.
denied, 514 U.S. 1032 (1995)
................................................................................21,
26
*Railway Labor Executives' Ass'n v. National Mediation Bd., 988 F.2d 133
(D.C.
Cir. 1993), aff'd on rehearing en banc, 29 F.3d 655 (1994), cert.
denied, 514
U.S. 1032
(1995)..............................................................................................17,
18, 42
Reno v. Flores, 507 U.S. 292 (1993)
.................................................................................11
Rodriguez v. United States, 480 U.S. 522 (1987)
........................................................12, 42
*SEC v. Sloan, 436 U.S. 103
(1978)..................................................................................23
Sea-Land Serv., Inc. v. Dep't of Transp., 137 F.3d 640 (D.C. Cir.
1998)..........................11
Sea Robin Pipeline Co. v. FERC, 127 F.3d 365 (5th Cir. 1997)
.......................................14
*Sierra Club v. Morton, 405 U.S. 727 (1972)
.....................................................................7
Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers,
531 U.S. 159
(2001).....................................................................................................29
Texas & Pacific Railway Co. v. Pottorff, 291 U.S. 245
(1934).........................................15
United States v. Mead, 533 U.S. 218 (2001)
.....................................................................23
*Whitman v. American Trucking Ass'ns, 531 U.S. 457
(2001)..........................................13
Whitmore v. Arkansas, 495 U.S. 149 (1990)
.......................................................................8
STATE CASES
v
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 6 of 52
*Hall v. Nebraska, 100 Neb. 84, 158 N.W. 362 (1916)
....................................................16
STATUTES
Administrative Procedure Act, 5 U.S.C. § 706(2)
.....................................30, 38, 39, 40, 42
Act of July 1, 1902, ch. 1378, 32 Stat.
728..................................................................13, 31
Agricultural Bioterrorism Protection Act of 2002, 7 U.S.C. § 8401
...........................15, 29
Virus Serum Toxin Act, 21 U.S.C. §§
151-154......................................................... passim
21 U.S.C. §
151..........................................................................................11,
19, 29, 35, 43
21 U.S.C. §
152................................................................................................11,
19, 25, 29
21 U.S.C. §
153..................................................................................................................25
21 U.S.C. §
154....................................................................................12,
13, 18, 19, 29, 38
28 U.S.C. § 2680(b)
...........................................................................................................14
29 U.S.C. § 2611(11)
.........................................................................................................19
P.L. 99-198, 99 Stat.
1654-56............................................................................................27
Sections 211-213 of the Public Health Security and Bioterrorism
Preparedness
and Response Act of 2002, P.L. 107-188, 116 Stat. 647
.............................................29
REGULATORY MATERIALS
9 C.F.R. Chapter I Subchapter
E........................................................................................25
9 C.F.R. § 101.2(2)
..........................................................................................20,
21, 33, 34
9 C.F.R. § 102.5(d)
......................................................................................................12,
39
9 C.F.R. §
104.1...........................................................................................................25,
29
29 C.F.R. § 825.114(b)
......................................................................................................19
62 Fed. Reg. 31,326 (June 9, 1997)
.............................................................................27,
32
70 Fed. Reg. 460, 461 (Jan. 4, 2005)
.................................................................................32
LEGISLATIVE MATERIALS
Hearing before the Committee on Agriculture on the Estimates of
Appropriations
for the Fiscal Year Ending June 30, 1914, H.R. 28283, 62d Cong. 20-32
(1913) (Reply Memo Exh.
7).....................................................................................16
S. Rep. No.
99-145.............................................................................................................28
MISCELLANEOUS
OIE Terrestrial Animal Health Code – 2005, Appendix 3.8.4, Surveillance
for Bovine Spongiform Encephalopathy
.....................................................................37
Report on the Monitoring and Testing of Ruminants for the Presence of
Transmissible Spongiform Encephalopathy (TSE) in the EU in
2005........................35
Supervie and Castagliola, "The Unrecognized French BSE Epidemic," 35 Vet.
Res. 349-362
(2004).....................................................................................................37
2B Sutherland Stat. Constr. §
49.09...................................................................................28
vi
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 7 of 52
SUMMARY OF ARGUMENT
With hardly a word of analysis (prior to this case), the Department of
Agriculture
(“USDA”) has interpreted a statute designed to keep companies from
producing and marketing
fraudulent vaccines and serums for treatment of diseases in animals as
an almost unlimited grant
of authority to restrict or preclude activities related in any way to
animal diseases. Even if it were
appropriate to uphold such an action on the basis of post hoc
rationalizations of counsel, here
those rationalizations are inconsistent with basic principles of
statutory interpretation, often lack
citation or plausible support, and in some instances simply do not make
sense even on their face.
For example, USDA’s argument that this case is moot is based entirely on
USDA’s
improper characterization of plaintiff Creekstone Farms Premium Beef’s
case as solely an
attempt by Creekstone to export beef to Japan. Neither the Complaint,
Creekstone’s Motion for
Summary Judgment, nor the Declaration filed by Creekstone’s founder and
then-CEO
characterized Creekstone’s claims that narrowly. To the contrary,
Creekstone continues to have
strong, valid reasons for wanting to use BSE test kits.
USDA’s claim that Creekstone lacks standing rests on a similarly narrow
view of what
this case is about and the relief Creekstone is seeking. Clearly
Creekstone, which believes the
benefits to its business of testing all its cattle for BSE warrants the
multi-million-dollar cost of
testing, is suffering both economic and non-economic injuries from
USDA’s unlawful refusal to
allow Creekstone access to BSE test kits, injuries that this Court
obviously could alleviate by
striking down USDA’s restrictions on BSE test kit use.
USDA’s defense of its regulations restricting the use of diagnostic
tests, as well as its
actions concerning BSE test kits in particular, is based on a convoluted
reading of the simple
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 8 of 52
language of the VSTA and on its observation that Congress did not
specifically prohibit USDA
from regulating BSE test kits. But the Supreme Court and the U.S. Court
of Appeals for the
District of Columbia have consistently rejected such attempts to find
congressional authorization
from the absence of a prohibition. The VSTA on its face does not extend
to restrictions on the
use of biological products, nor the restriction of access to diagnostic
tests (especially diagnostic
tests, like the BSE test kits at issue here, which do not operate
through stimulation of an animal’s
immune system). USDA’s interpretation of the VSTA is not subject to
deference, because (1) it
expands the Department’s authority beyond the literal bounds of the
statute; (2) it is not a
contemporaneous interpretation of the statute but rather one that USDA
invented 60 years later;
(3) USDA’s regulations were not accompanied by any analysis of the
VSTA’s statutory language
or legislative history, or really by any explanation; and (4) at least
with respect to import permits
and to BSE test kits in particular, USDA’s regulations were not
announced in a rulemaking or
any similar formal pronouncement.
But even if USDA’s regulatory authority under the VSTA extended to
controlling who
uses biological products, and for what purpose, and to regulating
diagnostic tests that operate in a
manner analogous to viruses, serums, or toxins, USDA cannot legally ban
all private use of BSE
test kits. First, BSE test kits do not function as “analogous products;”
and second, they are not
used in the treatment of an animal disease. (In fact, USDA claims it can
bar Creekstone from
using BSE test kits precisely because they are not being used in the
treatment of animals.) Third,
using BSE test kits to screen cattle slaughtered for human consumption
for BSE hardly makes
them “worthless.” To the contrary, even USDA’s improperly limited view
of the benefits of BSE
testing admits that testing can identify carcasses infected with this
fatal disease months before the
cattle would have any outward signs of BSE that might keep them out of
the food chain. And
- 2 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 9 of 52
renowned BSE experts submitting declarations in support of this Reply
Memorandum establish
the benefits of more extensive BSE testing, a practice adopted by almost
every country in the
world that has been exposed to BSE.
Finally, even assuming that USDA’s regulations were authorized by the
VSTA, and
assuming also that USDA could, consistent with the VSTA, assert
jurisdiction over the use of
BSE test kits in particular, USDA’s filings in this case now make it
clear that USDA is not
really regulating BSE test kits in order to protect animal health or
even to protect the economic
well-being of farmers and ranchers. Rather, USDA is trying to protect
large meatpackers from
competition that Creekstone and others who want to test will pose. Put
another way, USDA
wants to deprive American consumers of the opportunity to buy beef from
BSE-tested cattle.
This goal not only is far beyond what Congress authorized in the VSTA,
it is contrary to basic
tenets about the role of government to protect competition and foster
this nation’s free-market
economy.
For any one of these reasons, Creekstone is entitled to summary judgment
on its claims
that USDA’s actions preventing Creekstone from conducting BSE tests on
the cattle it
slaughters are beyond USDA’s statutory authority. Moreover, even if the
Court were to
determine that Creekstone has not demonstrated that it is entitled to
summary judgment on
those claims, that still would not mean that USDA has carried its burden
of justifying summary
judgment for USDA on those claims. Nor, of course, would it mean that
USDA is entitled to
summary judgment on Creekstone’s third claim: that USDA acted
arbitrarily and capriciously
even if it was within its statutory authority—a claim that has yet to be
briefed.
- 3 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 10 of 52
ARGUMENT
I. THIS COURT HAS JURISDICTION TO HEAR CREEKSTONE’S CLAIMS.
A. Creekstone’s Claims Are Not Moot.
USDA’s argument that Creekstone’s claims are moot is easily disposed of.
Contrary to
USDA’s misreading of Creekstone’s Complaint, Creekstone’s desire to test
voluntarily for BSE
is not limited to gaining access to Japan’s market. In addition to
expanding its customer base,
voluntary testing would enable Creekstone to enhance its brand and
competitiveness. Creekstone
domestic and international customers will purchase more Creekstone beef,
and at a higher price,
if Creekstone can assure those customers that its products come from
cattle that were tested for
BSE. Moreover, because of lingering concerns over the safety of U.S.
beef, Creekstone and other
U.S beef producers have not been able to recapture market share in the
Japanese and Korean
markets—making BSE testing still relevant for those markets.
USDA mistakenly states that “plaintiff’s primary concern is with its
ability to sell beef in
the Japanese market.” USDA Consolidated Memorandum in Support of
Defendants’ Cross-
Motion for Summary Judgment and in Opposition to Plaintiff’s Motion for
Summary Judgment
(“USDA Memo”) at 15. Creekstone’s Complaint and the Supplement
Declaration of its former
CEO and current consultant John Stewart make clear that Creekstone is
challenging the USDA’s
ban against voluntary testing for BSE, not a foreign government’s trade
policy. See Stewart
Supplemental Declaration, Exhibit 1 to this Reply, ¶¶ 2-3, 5, 8. “It is
well settled that a
defendant’s voluntary cessation of a challenged practice does not
deprive a federal court of its
power to determine the legality of that practice.” Friends of the Earth
v. Laidlaw, 528 U.S. 167,
189 (2000). Here, by contrast, there has been no cessation of USDA’s ban
on voluntary BSE
- 4 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 11 of 52
testing, making mootness not even an issue. By definition, this case is
not moot. See Better
Government Assoc. v. U.S. Dept. of Interior, 780 F.2d 86, 91 (D.C. Cir.
1986) (challenges “to the
legality of the standards utilized” by a government agency were not moot
where “the utilization
of the guidelines and the regulation . . . has continued,” even though
specific claim seeking relief
was moot where agency had granted relief); City of New Haven v. HUD, 809
F.2d 900, 904 (D.C.
Cir. 1987) (same).
Access to the Japanese market is but one component of Creekstone’s
desire to conduct
voluntary BSE testing. In addition to Japan, Creekstone wishes to gain
access to Korean and
other overseas markets as well as to expand its U.S. sales by offering
beef from BSE-tested cattle.
Exh. 1 (Stewart Supp. Decl.) ¶ 2. And beyond access to markets,
Creekstone will be able to sell
more beef at higher prices to both its foreign and domestic customers if
the beef is from cattle
tested for BSE. Id. ¶¶ 2, 6, 7; Creekstone customer declarations,
Exhibits 2-6. Thus, irrespective
of Japan’s lifting its ban, Creekstone could increase the demand for its
beef if it can test for BSE.
In addition, Creekstone’s business model is to sell the finest Angus
beef in the world. By
offering its customers beef from BSE-tested cattle, Creekstone intends
to reinforce its reputation
for excellence, safety, and superior beef products. See Exh. 1 (Stewart
Supp. Decl.) ¶ 8. USDA
concedes this point by admitting that one of its reasons for denying
Creekstone permission to test
for BSE is USDA’s concern that Creekstone’s competitors would feel
obligated to BSE test as
well lest they be at a disadvantage. See USDA Memo at 52 n.30. USDA’s
recognition that
allowing Creekstone to offer customers BSE-tested beef would boost
Creekstone’s brand and
provide a competitive edge alone defeats USDA’s mootness argument.
Moreover, despite Japan and Korea lifting their respective U.S. beef
bans, Creekstone
(and other U.S. beef producers) still cannot sell as much U.S. beef as
before. Exh. 1 (Stewart
- 5 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 12 of 52
Supp. Decl.) ¶¶ 2-6 and attachments. This is because Japanese and Korean
customers remain
concerned about the safety of U.S. beef. Exh. 1 ¶¶ 3, 4, 6 and
attachments. In contrast to U.S.
beef, Japan requires all of its beef to be tested for BSE, and Australia
has never had a case of
BSE, putting Creekstone and other U.S. beef producers at a competitive
disadvantage. Exhibit 1
¶ 3 and Attach. A. Creekstone’s desire to test for BSE is motivated in
part to compete more
effectively for overseas customers, again defeating USDA’s mootness
argument.
In sum, there is absolutely nothing about Japan’s lifting its U.S. beef
ban that “make it
impossible to grant [Creekstone] effective relief.” USDA Memo at 15,
quoting Burlington
Northern R.R. Co. v. Surface Transportation Bd., 75 F.3d 685, 688 (D.C.
Cir. 1996) (emphasis
added). The relief Creekstone seeks from this Court is an order
permitting it to test for BSE, not
to open or keep open Japan’s beef market. Creekstone has set forth a
host of reasons for wanting
to conduct voluntary BSE testing irrespective of Japan resuming U.S.
beef imports. USDA’s
mootness argument that “plaintiff’s alleged injury has disappeared”
(USDA Memo at 16) is best
understood as an Article III standing challenge. But for the reasons set
forth in the next Part, that
challenge also fails.
B. Creekstone Has Standing To Present Its Claims.
USDA claims that Creekstone lacks standing to pursue its claims because
(a) Creekstone
has not made a sufficiently concrete demonstration that Creekstone could
be selling more beef
and/or at a higher price were it not for USDA preventing Creekstone from
testing its cattle for
BSE and (b) Creekstone has not “provided convincing evidence” that being
able to test its cattle
for BSE would remedy that injury. USDA Memo at 17.1 USDA misstates
Creekstone’s basis for
1 The weakness of USDA’s argument is exposed by its facially untenable
claim that Creekstone
“has creatively alleged” this injury in “an attempt to save its case
from mootness as a result of
- 6 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 13 of 52
standing, misstates the legal standards for standing, and attempts to
substitute its own speculation
about consumer demand for Creekstone’s specific information.
Creekstone’s basic injury is that it is prohibited from testing its
cattle for BSE in order to
enhance its brand and distinguish Creekstone beef in the marketplace and
to fulfill the demands
of its customers, many of whom will buy more beef at higher prices if it
is tested for BSE. The
direct cause of that injury is USDA’s unlawful actions, restricting the
licensing and permitting of
BSE test kits, preventing the manufacturers of BSE test kits and the
Kansas State University
laboratory authorized to conduct BSE testing from cooperating with
Creekstone, and refusing to
approve Creekstone’s proposed Hazard Analysis Critical Control Points
(HACCP) program for
voluntary BSE testing. Memorandum of Points and Authorities in Support
of Plaintiff’s Motion
for Summary Judgment (“Pl. Memo”) at 11-14. This Court can redress
Creekstone’s injuries by
invalidating the USDA regulations and actions that prevent Creekstone
from BSE testing and by
ordering USDA not to interfere with Creekstone activities that are
outside USDA’s jurisdiction.
See Pl. Memo at 2.
USDA argues that Creekstone must show a definite economic injury, and a
definite
economic benefit from a ruling in its favor, in order to have standing
to challenge the USDA’s
unlawful action. USDA Memo at 17-23. But the law is very clear that
economic injury is not the
only kind of injury that establishes standing. See, e.g., Sierra Club v.
Morton, 405 U.S. 727, 73445
(1972); Lujan v. Defenders of Wildlife, 504 U.S. 555, 562-63 (1992).
Indeed, the very case
that USDA principally relies upon in its mootness argument, McBryde v.
Committee To Review
Circuit Counsel and Disability Orders…, 264 F.3d 52 (D.C. Cir. 2001),
(cited at USDA Memo at
Japan’s recent lifting of its ban against U.S. beef.” USDA Memo at 17.
In fact, Japan lifted its
ban on U.S. beef 12 days after Creekstone filed its Motion for Summary
Judgment (see USDA
Memo at 16) and four months after Creekstone described this basis for
standing in Paragraph 1718
and 26 of its Complaint.
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16-17) held that Judge McBryde had standing to challenge a reprimand
handed down by the Fifth
Circuit—clearly not an action to remedy an economic injury. Id. at
56-57. USDA makes no
argument, nor could it, that there is anything speculative about
Creekstone’s desire to perform
BSE testing on its cattle, or about USDA’s actions that are preventing
Creekstone from doing so.2
If USDA’s position were the law, then businesses’ fundamental right to
judicial review of
unlawful agency actions would be thwarted. Indeed, in USDA’s view, its
refusal to approve a
new vaccine could not be subjected to judicial review because the
vaccine manufacturer could
not provide “convincing evidence” that it could sell the vaccine if it
were approved!
The law instead, as set down by the Supreme Court, is that a private
party aggrieved by
government action directed at it has standing to challenge that action:
“When the suit is one
challenging the legality of government action or inaction, the nature
and extent of facts that must
be averred (at the summary judgment stage) or proved (at the trial
stage) in order to establish
standing depends considerably upon whether the plaintiff is himself an
object of the action (or
forgone action) at issue. If he is, there is ordinarily little question
that the action or inaction has
caused him injury, and that a judgment preventing or requiring the
action will redress it.” Lujan,
504 U.S. at 561.
2 Creekstone’s assertions of injury and redressability thus are not
dependent on the actions of
third parties, as USDA assumes. USDA Memo at 19, 22. The cases that USDA
cites for its
standing argument all involve indirect claims involving third parties,
not attempts to redress
government action directed at the plaintiff. Whitmore v. Arkansas, 495
U.S. 149 (1990),
considered whether a third party could challenge a death sentence
imposed on a capital murder
defendant. The injury in Area Transp., Inc. v. Ettinger, 219 F.3d 671,
673 (7th Cir. 2000), rested
on whether, if the Federal Transit Agency issued the order to a
competing school bus operator
that the plaintiff sought, the competitor would choose to forego future
federal grants. The
plaintiff in Gettman v. DEA, 290 F.3d 430, 435 (D.C. Cir. 2002) hoped
that he could sell
consulting services to third parties who would use marijuana if the DEA
legalized its use. There
is no comparison at all between Creekstone’s demonstrated interest in
pursuing its business plan
involving BSE testing and Mr. Gettman’s “at best reciting injury to his
philosophical interest.”
Id. at 435.
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But even if economic injury were necessary to demonstrate standing,
there is no question
that Creekstone has suffered and is continuing to suffer economic
injury. See Stewart Decl., Pl.
Memo Exh. 1, at ¶¶ 3, 6, 17 (Creekstone has lost about 35% of its
revenue due to BSE concerns
and is prepared to spend $6,000,000 per year to perform BSE testing
itself to help recover that
lost demand); see also Stewart Supplemental Decl., Exh. 1 to this Reply,
at ¶ 4 (Creekstone’s
average sales to Japan in the past two months have been less than
one-twentieth of what they
were prior to the discovery of BSE in the United States), ¶ 8. USDA’s
purported evidence to the
contrary is both speculative and beside the point. The agency spends
pages in its memorandum
arguing about the accuracy or significance of polls that have
consistently shown Japanese
consumers to be reluctant to purchase U.S.-origin beef, and a poll of
over 75,000 Americans
reporting that more than a third are “very concerned” about BSE. Compare
USDA Memo at 1822
with Pl. Memo Exh. 1 at ¶¶ 4-5. Yet one of USDA’s own exhibits confirms
that “polls show
many Japanese consumers still have some doubts about the safety of the
U.S. product and are
reluctant to buy” U.S. beef. USDA Memo Exh. 12. USDA even asserts,
bizarrely, that a poll
indicating that 75% of Japanese respondents were unwilling to eat
U.S.-origin beef now that BSE
has been found in the United States “does not necessarily suggest that
U.S. beef sales in Japan
will fail to return to the levels they were prior to the Japanese ban.”
USDA Memo at 20.
Creekstone’s standing to bring this lawsuit does not stand or fall on
any poll. The import
of those polls is that they support and confirm Creekstone’s own
information regarding the effect
of BSE on U.S. and foreign markets. Whatever the accuracy of these
polls, they certainly
influence the thinking of the distributors and retail chains to which
Creekstone sells its products,
and they supplement Creekstone’s personal communications with those
distributors and with
consumers (and thus are not hearsay because they are offered to show
their existence, and not the
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truth of the reported consumer sentiments). Cf. Exhibits 2-6
(declarations of Creekstone’s
brokers and of supermarket chains). USDA’s speculation that demand for
beef will increase
(and, apparently, will be totally unaffected by BSE concerns) cannot
defeat direct information
about the market obtained by Creekstone, which of course is an expert in
factors affecting
demand for its products. See Pl. Memo Exh. 1 (Stewart Decl.) ¶¶ 4-5,
16-17; Exh. 1 (Stewart
Supplemental Decl.) ¶¶ 2-4.3 While Creekstone’s own declaration ought to
suffice, the attached
declarations from Creekstone’s customers that they would purchase more
Creekstone beef, and
would pay a higher price, if Creekstone could provide beef from
BSE-tested cattle, conclusively
defeat USDA’s speculations and arguments that Creekstone is not
suffering injury from the
agency’s test ban. See Exhibits 2 -6.
II. USDA’S EXPANSIVE INTERPRETATION OF THE VSTA TO APPLY TO
DIAGNOSTIC TESTS AND TO THE USE OF BIOLOGICAL PRODUCTS IS
UNPERSUASIVE AND NOT ENTITLED TO DEFERENCE.
A. The VSTA Is Neither Ambiguous Nor Susceptible to USDA’s Interpretations.
USDA claims that the VSTA authorizes it to control not only the
manufacture and sale of
a virus, serum, toxin, or analogous product (which USDA refers to as
“biological products”), but
also who may use such biological products and for what purpose. USDA
also claims that the
“biological products” that it can regulate the use of include
“diagnostic products” like BSE test
kits. But those authorizations cannot be found in the plain language of
the VSTA.
USDA has taken a very simple statute, which gives the Department
authority to regulate
the manufacture and sale of specific products, and transformed it into a
license to control other
products and other kinds of activities. Some of USDA’s ostensible
reasons may appear noble –
USDA’s assertion that information previously provided by Creekstone does
not reflect recent
improvements in the Japanese market is contradicted by Exh. 1 ¶¶ 3-4.
Additionally, it ignores
the fact that access to the Korean market is still highly restricted.
Exh. 1 ¶¶ 2, 5-6 and Attach. E.
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to benefit public health and welfare – but that kind of generic goal
does not give an agency carte
blanche to regulate whatever it wishes.
The law could not be more clear: “Agency authority may not be lightly
presumed. ‘Were
courts to presume a delegation of power absent an express withholding of
such power, agencies
would enjoy virtually limitless hegemony, a result plainly out of
keeping with Chevron and quite
likely with the Constitution as well.’” Michigan v. EPA, 268 F.3d 1075,
1082 (D.C. Cir. 2001)
(quoting Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. Cir. 1995).
“‘Thus, we will not presume
a delegation of power based solely on the fact that there is not an
express withholding of such
power.’” Id. (quoting American Petroleum Institute v. EPA, 52 F.3d 1113,
1120 (D.C. Cir.
1995)).4
“Mere ambiguity in a statute is not evidence of congressional delegation
of authority.”
Sea-Land Serv., Inc. v. Dep’t of Transp., 137 F.3d 640, 645 (D.C. Cir.
1998). But in this case,
there is not even ambiguity. The statute states very clearly what
products are covered: a “virus,
serum, toxin or analogous product used in the treatment of domestic
animals.” 21 U.S.C. § 151.
It states clearly what activities are covered: the preparation, sale,
barter, exchange, or importation
of such products. Id. at §§ 151-152. And it states clearly when those
activities may be
prohibited: when such products are “worthless, contaminated, dangerous,
or harmful”; are not
“prepared, under and in compliance with regulations prescribed by the
Secretary of Agriculture,
at an establishment holding an unsuspended and unrevoked license issued
by the Secretary of
Agriculture”; or are imported without a permit. Id.
4 USDA’s reliance on Reno v. Flores, 507 US 292, 300-301 (1993), to say
that Creekstone must
“demonstrate that ‘no set of circumstances exists under which the
regulation would be valid’”
(USDA Memo at 23) is misplaced. In that case, the respondents were not
challenging the
regulation’s application in a specific instance, it had not yet been
applied in a particular instance,
and there was no record concerning the INS’s interpretation of the
regulation. Id. That clearly is
a very different situation than is presented in the instant case.
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The statute simply does not authorize USDA to regulate activities other
than the
preparation, sale, barter, exchange, or importation of biological
products. It does not say that
USDA can prohibit or regulate the use of a biological product—in this
case, who may use it and
for what purpose.5 Nor does the statute authorize regulation of
diagnostic tests—products that
are not analogous to a virus, serum, or toxin—just because they are used
in the treatment of
animals. Ignoring those simple, albeit inconvenient for USDA, truths,
USDA resorts to
(illogical) claims that its actions promote public health and welfare
and protect the interests of
ranchers, encouraging this Court to “simplistically…assume[e] that
whatever furthers the
statute’s primary objective must be the law.” Rodriguez v. United
States, 480 U.S. 522, 526
(1987) (per curiam) (emphasis in original).
1. Regulation of the Use of Biological Products
USDA asserts that its authority in 21 U.S.C. § 154 to issue regulations
“as may be
necessary to prevent the preparation, sale, barter, exchange, or
shipment… of any worthless,
contaminated, dangerous, or harmful virus, serum, toxin, or analogous
product for use in the
treatment of domestic animals” “explicitly authorizes restrictions on
the uses for which viruses,
serum, toxins, or analogous products may be prepared, sold, bartered,
exchanged, or shipped.…”
USDA Memo at 25. This contention is absurd on its face. Saying that USDA
can regulate the
manufacture and sale of products intended for use in the treatment of
domestic animals is not the
same as saying USDA can regulate the use of such products. (And indeed,
Congress knows well
how to regulate the use of products when it wishes to do so. See Pl.
Memo at 24-25, 31-32.)
5 USDA’s assertion that “regulation 102.5(d) is not a direct use
restriction on buyers of biological
products” (USDA Memo at 25) is pure semantics (and irrelevant). Without
congressional
authorization to regulate how and by whom biological products are used,
and for what purpose,
USDA cannot indirectly do so through unlawful limitations in licenses
and permits issued to
biological product manufacturers.
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Under USDA’s theory of how the statutory language should be read, if a
statute authorized DOT
to regulate seat belts, air bags, and other safety devices intended for
use in motor vehicles, DOT
would be authorized to regulate who may drive motor vehicles, and where,
as well!
Not surprisingly, USDA offers no case law in support of its unorthodox
reading of the
VSTA, nor even any formal interpretation previously published by USDA.
The phrase “for use
in the treatment of domestic animals” clearly limits, rather than
expands, “virus, serum, toxin, or
analogous product.” Just as clearly, the phrase must have been used in
the VSTA to distinguish it
from the Act of July 1, 1902, ch. 1378, 32 Stat. 728, which authorized
the Public Health Service
to regulate any “virus, therapeutic serum, toxin, antitoxin, or
analogous product...applicable to the
prevention, treatment, or cure of diseases or injuries of man.” See
Animal Health Institute v.
USDA, 487 F. Supp. 376, 378-79 (D. Colo. 1980) (VSTA modeled after the
1902 Act).
Contrary to USDA’s theory of statutory construction, authority to
regulate a whole new
class of activities, affecting vastly more businesses and individuals,
must be found in a clear
statement of congressional delegation of that authority, not in a
strained and ungrammatical
interpretation offered by the agency in litigation to justify its
desired scope of authority.6
“Congress…does not alter the fundamental details of a regulatory scheme
in vague terms or
ancillary provisions—it does not, one might say, hide elephants in
mouseholes.” Whitman v.
American Trucking Ass’ns, 531 U.S. 457, 468 (2001); see also FDA v.
Brown & Williamson
Tobacco Corp., 529 U.S. 120, 159–160 (2000).
Remarkably, USDA also argues that 21 U.S.C. § 154, because it authorizes
USDA to
issue regulations “as may be necessary to prevent the preparation, sale,
barter, exchange, or
6 Moreover, even if USDA were correct that the phrase “for use in the
treatment of domestic
animals” allowed it to regulate how a biological product is used, that
still would not authorize
USDA to dictate who may use the product and for what purpose.
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shipment” of worthless or dangerous biological products, “also expands
the ability of USDA to
regulate beyond just the ‘preparation, sale, barter, exchange, or
shipment’ of products.” USDA
Memo at 26. Once again, USDA offers no case law, legislative history, or
even its past
statements or rulemaking interpreting the VSTA to support or explain
this contention. USDA
contends that “clearly” restrictions on how a biological products may be
used, by whom, and for
what purpose “may be necessary to close loopholes and remove incentives
to circumvent
regulations directed at the ‘preparation, sale, barter, exchange, or
shipment’ of products.” Id.
Apparently USDA believes that Congress made it a crime not only for a
manufacturer to produce
and sell a dangerous biological product, but for a farmer to continue to
use such a product, as
well. See id. Quite simply, it is not for USDA to decide to “close
loopholes” that Congress
chose not to regulate. Even if there were such a need for this kind of
regulation, this supposed
“[n]eed for regulation cannot alone create authority to regulate.” Sea
Robin Pipeline Co. v.
FERC, 127 F.3d 365, 371 (5th Cir. 1997).
Over and over, courts have rejected interpretations of a series of words
in a statute that go
beyond the scope of the words in the series, as does USDA’s
interpretation here. USDA’s claim
of authority to regulate the use of biological products parallels a
claim that the Supreme Court
rejected earlier this year: The plaintiff in Dolan v. United States
Postal Service, 126 S. Ct. 1252
(Feb. 22, 2006), relied on a provision concerning liability for “loss,
miscarriage, and negligent
transmission” of mail, 28 U.S.C. § 2680(b). The Court observed that,
since both “loss” and
“miscarriage” “refer to failings in the postal obligation to deliver
mail in a timely manner to the
right address, it would be odd if ‘negligent transmission’ swept far
more broadly to include
injuries like those alleged here—injuries that happen to be caused by
postal employees but
involved neither failure to transmit mail nor damage to its contents.”
126 S. Ct. at 1254.
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Similarly, in this case it would be odd indeed if Congress intended, in
authorizing regulation of
the preparation, sale, barter, exchange, or shipment of dangerous or
worthless products used to
stimulate or enhance the immune system of animals, to regulate how such
products may be used,
by whom, and for what purpose—activities carried out by the users of the
products rather than
their manufacturers, and after the products have already been prepared,
sold, and shipped.
Texas & Pacific Railway Co. v. Pottorff, 291 U.S. 245, 257-59 (1934),
also resembles the
instant case, in that the Court both (a) refused to find that a national
bank could expand its
statutory authorization for “banking” to include pledging its assets to
secure a private deposit, and
(b) also reasoned that, if that power had been authorized, there would
have been no need to
amend the banking statute later to provide a limited power to pledge.7
So, too, in this case the
enactment of the Agricultural Bioterrorism Protection Act of 2002, 7
U.S.C. § 8401, which gave
USDA limited authority to regulate the possession and use of dangerous
biological products, is
evidence that the VSTA should not be read to give broad authorization to
regulate who may use
biological products and for what purpose (as is the legislative history
confirming that Congress
did not believe the VSTA empowered USDA to regulate the use of
biological products). Cf. Pl.
Memo at 24-25.8 USDA offers no response to that application of the canon
of statutory
construction, followed in Pottorff, to the history of the VSTA and
related legislation.
7 As the D.C. Circuit observed in Independent Insurance Agents of
America, Inc. v. Hawke, 211
F.3d 638 (2000), “[t]he pre-Chevron vintage of Pottorff is irrelevant,”
since the Supreme Court
had already made clear at that time that decisions of the Comptroller of
the Currency were
generally entitled to deference.
Cf. Babbitt v. Sweet Home Chapter of Communities for a Greater Oregon,
515 U.S. 687, 696701
(1995) (fact that Congress in 1982 authorized the issuance of permits
for “incidental take” of
endangered species is strong evidence that Congress understood the
preexisting statutory
prohibition on “take” of endangered species to include indirect as well
as direct “take”).
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USDA does offer one reference to legislative history of the VSTA that
mentions use of
biological products. USDA Memo at 31.9 But that mention of use, put into
context, in no way
suggests that Congress meant to include regulatory authority over how a
biological product may
be used or by whom. Rather, the passage refers to “controlling the use”
of dangerous and
worthless viruses, serum, and analogous products “by preventing the
interstate shipment” of such
products that may be manufactured within the United States. The focus of
the passage from the
Senate Report, like the focus of the statutory language that Congress
ultimately adopted, is not on
how biological products are used, or by whom, but on regulating the
manufacture, sale, and
shipment of dangerous or worthless products.10 In any event, this phrase
from the Senate Report
could not endow USDA with authority not set out forth the statute. 11
USDA asks this Court to ignore the venerable principle expressio unius
est exclusio
alterius, on the grounds that the “principle does not contemplate the
expansive phrases ‘for use in
9 USDA also refers to “ubsequent legislative commentary,” by which it
means its own 1997
description of the VSTA. USDA Memo at 31. But it is hard to see how the
passage from a
USDA Federal Register notice that USDA quoted, that the “main purpose of
VSTA is to protect
those who use veterinary products from products which are worthless,
contaminated, dangerous,
or harmful” in any way justifies USDA’s conclusion here that “[c]learly
the use restrictions
contemplated by regulation 102.5(d) are consistent with the purposes of
VSTA.” See USDA
Memo at 31. What should be clear from that passage instead is that the
purpose of the VSTA is
to protect those who use biological products from harmful or worthless
products, not to regulate
and constrain those who use biological products.
10
Cf. Exhibit 7 at 23-25 (USDA official explaining request for authority
over toxins and viruses,
with no mention of restricting who could use toxins and viruses or
regulating diagnostic
products); Hall v. Nebraska, 100 Neb. 84, 88-89, 158 N.W. 362, 363-64
(1916) (“We do not
understand that the federal government undertakes to regulate those who
sell serum after it has
been disposed of by the manufacturer.”)
11
See City of Chicago v. Environmental Defense Fund, 511 U.S. 328, 337
(1994) (where Senate
Committee report included statement that “all waste management
activities of such a facility,
including the generation, transportation, treatment, storage and
disposal of waste shall be covered
by the exclusion,” Court declined to find that waste generation was
excluded, because “it is the
statute, and not the Committee Report, which is the authoritative
expression of the law, and the
statute prominently omits reference to generation.”). Moreover, the
“controlling the use” phrase
in the Senate Report relates only to domestic manufacture of products,
and not to those that are
imported into the United States, like Bio-Rad’s BSE tests. Cf. USDA Memo
at 30-31.
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the treatment of domestic animals’ or ‘as may be necessary to prevent’
modifiers of the list of
items….” USDA Memo at 26-27. USDA offers no authority for this claimed
corollary to the
principle, nor any further explanation why it would be that phrases that
make the list more
specific or otherwise qualify it would suggest that Congress did not
intend the agency’s authority
to be limited to the enumerated list of items or activities. This Court
should reject USDA’s
unsupported attempts to expand its jurisdiction beyond the authorities
enumerated in the VSTA,
just as other courts have consistently rejected agency claims that
authority to regulate one thing
implies authority to regulate something else, because it would be
consistent with or helpful to the
stated or intended purposes of the statute. See, e.g., City of Chicago,
511 U.S. at 329, supra n.11;
Railway Labor Executives’ Ass’n v. National Mediation Bd., 988 F.2d 133,
139 (D.C. Cir. 1993),
aff’d on rehearing en banc, 29 F.3d 655 (1994), cert. denied, 514 U.S.
1032 (1995) (Board
cannot assume duties not given to it by Congress); Michigan Citizens for
an Independent Press v.
Thornburgh, 868 F.2d 1285, 1293 (D.C. Cir. 1989) (canon of expressio
unius est exclusio alterius
can determine whether statute is clear, and therefore no need to resort
to Chevron deference).12
Arrogating to itself regulatory authority over a whole different set of
activities, conducted
by a different group of people, is simply not the kind of necessary
filling of ‘gaps” in a statute’s
regulatory scheme that Chevron contemplated. Cf. USDA Memo at 36. The
“mere existence of
an agency does not give it the power to assert authority that Congress
has not delegated. It is
absurd to suggest that, under the second prong of Chevron, there is a
statutory ‘gap to fill’ or a
12 USDA disputes the relevance of Kelley v. U.S. EPA, 15 F.3d 1100 (D.C.
Cir. 1994), cert.
denied, 513 U.S. 1110 (1995). USDA Memo at 27 n. 13. The citation
Creekstone provided in its
Memo in Support was, unfortunately, incorrectly limited (citing to p.
1108 rather than pp. 11061108).
But the case indeed is relevant as an example of how courts look to the
list of things a
statute has authorized an agency to do and decline to find statutory
authority for the agency to
regulate in additional areas (in that case, specifying who will be
subject to statutory liability for
hazardous waste cleanup).
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statutory ‘ambiguity’ to cure whenever a statute fails to specify some
authority that an agency
seeks to invoke. This cannot be the meaning of Chevron, for it would
allow federal agencies to
claim limitless authority except in those few circumstances where
Congress has expressly said
‘thou shalt not’ exercise such authority.” Railway Labor Executives’
Ass’n, 988 F.2d at 194
(Edwards, J., concurring).
2. Regulation of Diagnostic Tests
USDA admits that the VSTA says nothing about regulating diagnostic
products (USDA
Memo at 35), but “neither does it specifically exclude such tests from
its purview.” Id. at 36.
The latter is true, but it falls short of authorizing USDA’s regulation
of diagnostic tests. The
Supreme Court and the D.C. Circuit have repeatedly admonished regulatory
agencies that
statutory authority for an agency to act “may not be presumed based
solely on the fact there is not
an express withholding of jurisdiction.” ExxonMobil Gas Marketing Co. v.
FERC, 297 F.3d
1071, 1088 (D.C. Cir. 2002).
The interpretation of the VSTA that USDA advances for purposes of this
lawsuit is that
“diagnostic products are certainly used in the treatment of animals,
which is all that is required
under section 154 of VSTA.” USDA Memo at 37. Again, USDA vastly
overstates the meaning
of the qualifier “intended for use in the treatment of domestic
animals,” appearing to suggest that
anything broadly defined as “treatment” is therefore regulated under the
VSTA. Moreover, even
if Congress had given USDA authority to regulate a product just because
it is used in the
“treatment of domestic animals,” that would not include authority to
regulate products that are
used solely to detect a disease (and especially those, such as BSE test
kits, used solely to detect
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infection in dead animals).13 The cases USDA cites (USDA Memo at 41)
provide no support for
its position: Pegram v. Herdrich, 530 U.S. 211, 228 (2000) contains a
discussion of two types of
actions by HMO administrators: “eligibility decisions,” which concern
whether a particular
condition or medical procedure for its treatment is covered by the
patient’s health insurance plan,
and “treatment decisions,” which “are choices about how to go about
diagnosing and treating a
patient’s condition: given a patient’s constellation of symptoms, what
is the appropriate medical
response?” Id. Not only to did the Pegram court not define “treatment,”
but it used the terms
“diagnosing” and “treating” as if they are two different types of
activities, joined by the
conjunction “and.” Nor does Miller v. AT&T Corp., 250 F.3d 820, 830-31
(4th Cir. 2001),
contain any independent analysis of the meaning of the word
“treatment”—it merely applies a
Family and Medical Leave Act regulation, 29 C.F.R. § 825.114(b), which
defines “treatment” to
include “examinations to determine if a serious health condition exists
and evaluations of the
condition,” and defers to an agency determination that the statutory
phrase “continuing treatment
by a health care provider,” 29 U.S.C. § 2611(11), is broad enough to
cover such examinations.
This is a far different question than whether Congress meant for “virus,
serum, toxin, or
analogous product used in the treatment of domestic animals” to include
a test procedure and
reagents used to determine whether an animal has (or had) a disease.
Additionally, to be susceptible to regulation under the VSTA, a
diagnostic product would
have to be both a “virus, serum, toxin, or analogous product” and “used
in the treatment of
domestic animals.” 21 U.S.C. §§ 151, 152, 154. Something is not
“analogous” to a virus, serum,
USDA claims its open-ended regulation of diagnostic products is
justified because the VSTA
refers to viruses, serums, toxins, or analogous products “for use in the
treatment of domestic
animals,” rather than “for treatment of domestic animals.” USDA Memo at
37. USDA does not
explain how a biological product that is not “for treatment of domestic
animals” could be “used
in the treatment of domestic animals.” Creekstone suggest that to the
extent there is a distinction,
though it seems unlikely there could be, it is a distinction without a
difference.
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or toxin just because it is “used in the treatment of domestic animals,”
but that is what USDA
seems to assume. In USDA’s expansive view of the VSTA’s targeted
language, presumably
even a thermometer could be regulated under the VSTA, simply because it
is “used in the
treatment of domestic animals.” USDA’s attempt to turn a limiting
qualifier into a very broad
congressional delegation of regulatory authority is simply not borne out
by the language or
legislative history of the VSTA.14
USDA regulations state that “biological products,” include vaccines,
antibodies,
antitoxins, immunostimulants, “and diagnostic components, that are of
natural or synthetic origin,
or that are derived from synthesizing or altering various substances or
components of
substances….” 9 C.F.R. § 101.2. Read literally, a “diagnostic component”
(an undefined term)
need not have anything to do with the defining characteristic of
“viruses, serum, toxins, or
analogous products,” which is that they “act primarily through the
direct stimulation,
supplementation, enhancement, or modulation of the immune system or
immune response.”15
Similarly, USDA defines “analogous products” to include either
“ubstances…which are
similar in function to biological products in that they act, or are
intended to act, through the
stimulation, supplementation, enhancement, or modulation of the immune
system or immune
response, orubstances… which are intended for use in the treatment
of animals through the
detection or measurement of antigens, antibodies, nucleic acids, or
immunity;…” Id. (emphasis
added). Thus, USDA has explicitly de-coupled these diagnostic tests from
any requirement that
14 It also conflicts with a number of more-specific statutory
authorities over diagnostic tests,
including the Food, Drug and Cosmetic Act, as noted in Pl. Memo at
31-32, 38 n.14.
15 9 C.F.R. § 101.2 (definition of “biological products”). USDA offers
no response to the fact
that USDA has, in other regulations, made a clear distinction between
products that operate
through an immune response—and are subject to regulation under the
VSTA—and those that do
not, even if the same or similar components are involved. See Pl. Memo
at 36, 38.
- 20 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 27 of 52
th
i have four different pdfs and wanted to post all in pdf, so as to be much shorter, but there was no way to post pdf file without url. so here is plain text. ...TSS
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 1 of 52
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
CREEKSTONE FARMS PREMIUM BEEF, LLC, )
Plaintiff, )
vs. ) Civil Action No. 06-544 (JR)
UNITED STATES DEPARTMENT OF AGRICULTURE, )
and MIKE JOHANNS, IN HIS CAPACITY AS THE )
SECRETARY OF AGRICULTURE, )
Defendants. )
_________________________________________________ )
REPLY IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND
OPPOSITION TO DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 2 of 52
TABLE OF CONTENTS
SUMMARY OF
ARGUMENT.........................................................................................1
ARGUMENT......................................................................................................................4
I. THIS COURT HAS JURISDICTION TO HEAR CREEKSTONE’S CLAIMS.4
A. Creekstone’s Claims Are Not Moot.
..............................................................4
B. Creekstone Has Standing To Present Its Claims.
........................................6
II. USDA’S EXPANSIVE INTERPRETATION OF THE VSTA TO APPLY TO
DIAGNOSTIC TESTS AND TO THE USE OF BIOLOGICAL PRODUCTS
IS UNPERSUASIVE AND NOT ENTITLED TO DEFERENCE.....................10
A. The VSTA Is Neither Ambiguous Nor Susceptible to USDA’s
Interpretations...............................................................................................10
1. Regulation of the Use of Biological Products
...............................12
2. Regulation of Diagnostic
Tests.......................................................18
B. USDA’s Expansive Interpretation of the VSTA Is Not Entitled to
Deference.
......................................................................................................21
1. No Deference for Interpretations Expanding the Scope of the Agency’s
Authority.............................................................................................21
2. No deference for Statutory Interpretations Not Accompanied by Further
Explication..........................................................................................22
3. Little Deference for Statutory Interpretations that Were Far from
Contemporaneous or
Consistent.........................................................25
C. The Reenactment Doctrine Does Not Save USDA’s Unsupported
Interpretation of the VSTA
..........................................................................27
III. USDA LACKS STATUTORY AUTHORITY TO REGULATE BSE TEST KITS
IN PARTICULAR
..................................................................................................29
A. BSE Test Kits Are Not “Analogous Products.”
..........................................30
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 3 of 52
B. BSE Test Kits Are Not, and Would Not Be, Used in the Treatment of
Animal Disease
..............................................................................................33
C. BSE Test Kits Are Not Worthless, Contaminated, Dangerous or Harmful.34
IV. USDA’S RESTRICTIONS ON BSE TEST KITS ON ECONOMIC GROUNDS
ARE OUTSIDE ITS AUTHORITY UNDER THE VSTA
.................................39
V. USDA IS NOT ENTITLED TO SUMMARY JUDGMENT ..............................45
CONCLUSION
................................................................................................................45
EXHIBIT 1 Supplemental Declaration of John D. Stewart
EXHIBIT 2 Declaration of Boyd R. Oase of Kowalski’s Markets
EXHIBIT 3 Declaration of James R. Kiley of Wild by Nature Markets
EXHIBIT 4 Declaration of Darin Parker of Parker International Inc.
EXHIBIT 5 Declaration of Kyu O Kim of NY-SK Trading, LLC
EXHIBIT 6 Declaration of Steve Erdley of Penn Traffic Company
EXHIBIT 7 Hearing before the Committee on Agriculture on the Estimates of
Appropriations for the Fiscal Year Ending June 30, 1914, H.R. 28283, 62d
Cong. 20-32 (1913) (testimony of Dr. A.M. Farrington, Asst. Chief, Bureau
of Animal Indus., Dept. of Agric.)
EXHIBIT 8 Declaration of Paul W. Brown, M.D.
EXHIBIT 9 Report on the Monitoring and Testing of Ruminants for the
Presence of
Transmissible Spongiform Encephalopathy (TSE) in the EU in 2005
EXHIBIT 10 Declaration of Linda A. Detwiler, D.V.M.
EXHIBIT 11 Supervie and Castagliola, “The Unrecognized French BSE
Epidemic,” 35
Vet. Res. 349-362 (2004)
iii
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 4 of 52
TABLE OF AUTHORITIES 1
FEDERAL CASES
62 Cases of Jam v. United States, 340 U.S. 593 (1951)
....................................................43
AFL-CIO v. Brock, 835 F.2d 912 (D.C. Cir. 1987)
...........................................................28
*Adamo Wrecking Co. v. United States, 434 U.S. 275 (1978)
..............................22, 23, 26
American Fin. Servs. Ass'n v. FTC, 767 F.2d 957 ), cert. denied, 475
U.S. 1011
(1986
............................................................................................................................42
American Petroleum Institute v. EPA, 52 F.3d 1113 (D.C. Cir. 1995)
.............................11
*Animal Health Institute v. USDA, 487 F. Supp. 376 (D. Colo. 1980)
.............................13
Area Transp., Inc. v. Ettinger, 219 F.3d 671 (7th Cir. 2000)
..............................................8
Arnold v. Intervet, Inc., 305 F. Supp. 2d 548 (D. Md.
2003).............................................21
Babbitt v. Sweet Home Chapter of Communities for a Greater Oregon, 515 U.S.
687
(1995)..............................................................................................................15,
28
*Barnett v. Weinberger, 818 F.2d 953 (D.C. Cir. 1987)
...........................23, 24, 26, 27, 28
Better Government Assoc. v. U.S. Dept. of Interior, 780 F.2d 86 (D.C.
Cir. 1986) ............5
*Bowen v. Georgetown Univ. Hospital, 488 U.S. 204
(1988)...........................................25
Burlington Northern R.R. Co. v. Surface Transportation Bd., 75 F.3d 685,
688
(D.C. Cir. 1996)
............................................................................................................6
Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A.,
511 U.S.
164
(1994)....................................................................................................................29
Lorillard v. Pons, 434 U.S. 575 (1978)
.............................................................................29
Chevron. Public Citizen, Inc. v. U.S. Dept. of Health and Human
Services, 332
F.3d 654 (D.C. Cir.
2003)....................................................................17,
18, 22, 23, 26
Christensen v. Harris Cty., 529 U.S. 576
(2000)...............................................................25
*City of Chicago v. Environmental Defense Fund, 511 U.S. 328
(1994)....................16, 17
City of New Haven v. HUD, 809 F.2d 900 (D.C. Cir. 1987)
...............................................5
Continental Airlines, Inc. v. U.S. Department of Transportation , 856
F.2d 209
(D.C. Cir. 1988)
...........................................................................................................26
Dolan v. United States Postal Service, 126 S. Ct.1252 (2/22/2006)
.................................14
Edward J. DeBartolo Corp. v. Florida Gulf Coast Building & Constr. Trades
Council, 485 U.S. 568 (1988)
......................................................................................44
Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075 (D.C. Cir.
1996)...............................................22
Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995)
....................................................11, 22
*ExxonMobil Gas Marketing Co. v. FERC, 297 F.3d 1071 (D.C. Cir.
2002)...................18
*FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)
.........................13, 29
Federal National Mortgage Ass'n v. United States, 56 Fed. Cl. 228 (Ct.
of Claims
2003)
............................................................................................................................23
*Friends of the Earth, Inc. v. EPA, 446 F.3d 140 (D.C. Cir. 2006)
..................................22
*Friends of the Earth v. Laidlaw, 528 U.S. 167 (2000)
......................................................4
*Garrelts v. Smithkline Beecham Corp., 943 F. Supp. 1023 (N. D. Ia.
1996) ............28, 44
*General American Transp. Corp. v. ICC, 872 F.2d 1048 (DC Circuit 1989)
.................28
1 Asterisk denotes authorities principally relied on.
iv
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 5 of 52
Gettman v. DEA, 290 F.3d 430 (D.C. Cir.
2002).................................................................8
*Grand Laboratories, Inc. v. Harris, 488 F. Supp. 618, 619 (D.S.D.
1980), rev’d
on other grounds, 660 F.2d 1288 (8th Cir.
1981).........................................................33
Independent Insurance Agents of America, Inc. v. Hawke, 211 F.3d 638
(2000) .............15
International Union, UAW v. Brock, 816 F.2d 761 (D.C. Cir.
1987)................................28
Investment Co. Inst. v. Camp, 401 U.S. 617 (1971)
..........................................................23
*John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86
(1993)..........................................................................................................................22
Kelley v. U.S. EPA, 15 F.3d 1100 (D.C. Cir. 1994), cert. denied, 513
U.S. 1110
(1995)].........................................................................................................................17
Koszola v. F.D.I.C., 393 F.3d 1294 (D.C. Cir.
2005)........................................................28
Lorillard v. Pons, 434 U.S. 575 (1978)
.............................................................................29
*Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)
....................................................7, 8
Lynn Martin v. Occupational Safety and Health Review Commission, 499 U.S.
144
(1991)....................................................................................................................26
McBryde v. Committee To Review Circuit Counsel and Disability Orders, 264
F.3d 52 (D.C. Cir.
2001)............................................................................................7,
8
*Michigan Citizens for an Independent Press v. Thornburgh, 868 F.2d 1285
(D.C. Cir. 1989)
...........................................................................................................17
Michigan v. EPA, 268 F.3d 1075 (D.C. Cir.
2001)............................................................11
Miller v. AT&T Corp., 250 F.3d 820 (4th Cir. 2001)
........................................................19
*Natural Resources Defense Council v. Reilly, 983 F.2d 259 (D.C. Cir.
1993) ...............22
Pacific Power & Light Co. v. FPC, 184 F.2d 272 (D.C. Cir.
1950)..................................28
PanAmSat Corp. v. F.C.C., 198 F.3d 890 (D.C. Cir. 1999)
..............................................25
Pegram v. Herdrich, 530 U.S. 211
(2000).........................................................................19
Public Citizen, Inc. v. U.S. Dept. of Health and Human Services, 332
F.3d 654,
662 (D.C. Cir. 2003)
...................................................................................................23
*Railway Labor Executives' Ass'n v. National Mediation Bd., 29 F.3d 655,
cert.
denied, 514 U.S. 1032 (1995)
................................................................................21,
26
*Railway Labor Executives' Ass'n v. National Mediation Bd., 988 F.2d 133
(D.C.
Cir. 1993), aff'd on rehearing en banc, 29 F.3d 655 (1994), cert.
denied, 514
U.S. 1032
(1995)..............................................................................................17,
18, 42
Reno v. Flores, 507 U.S. 292 (1993)
.................................................................................11
Rodriguez v. United States, 480 U.S. 522 (1987)
........................................................12, 42
*SEC v. Sloan, 436 U.S. 103
(1978)..................................................................................23
Sea-Land Serv., Inc. v. Dep't of Transp., 137 F.3d 640 (D.C. Cir.
1998)..........................11
Sea Robin Pipeline Co. v. FERC, 127 F.3d 365 (5th Cir. 1997)
.......................................14
*Sierra Club v. Morton, 405 U.S. 727 (1972)
.....................................................................7
Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers,
531 U.S. 159
(2001).....................................................................................................29
Texas & Pacific Railway Co. v. Pottorff, 291 U.S. 245
(1934).........................................15
United States v. Mead, 533 U.S. 218 (2001)
.....................................................................23
*Whitman v. American Trucking Ass'ns, 531 U.S. 457
(2001)..........................................13
Whitmore v. Arkansas, 495 U.S. 149 (1990)
.......................................................................8
STATE CASES
v
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 6 of 52
*Hall v. Nebraska, 100 Neb. 84, 158 N.W. 362 (1916)
....................................................16
STATUTES
Administrative Procedure Act, 5 U.S.C. § 706(2)
.....................................30, 38, 39, 40, 42
Act of July 1, 1902, ch. 1378, 32 Stat.
728..................................................................13, 31
Agricultural Bioterrorism Protection Act of 2002, 7 U.S.C. § 8401
...........................15, 29
Virus Serum Toxin Act, 21 U.S.C. §§
151-154......................................................... passim
21 U.S.C. §
151..........................................................................................11,
19, 29, 35, 43
21 U.S.C. §
152................................................................................................11,
19, 25, 29
21 U.S.C. §
153..................................................................................................................25
21 U.S.C. §
154....................................................................................12,
13, 18, 19, 29, 38
28 U.S.C. § 2680(b)
...........................................................................................................14
29 U.S.C. § 2611(11)
.........................................................................................................19
P.L. 99-198, 99 Stat.
1654-56............................................................................................27
Sections 211-213 of the Public Health Security and Bioterrorism
Preparedness
and Response Act of 2002, P.L. 107-188, 116 Stat. 647
.............................................29
REGULATORY MATERIALS
9 C.F.R. Chapter I Subchapter
E........................................................................................25
9 C.F.R. § 101.2(2)
..........................................................................................20,
21, 33, 34
9 C.F.R. § 102.5(d)
......................................................................................................12,
39
9 C.F.R. §
104.1...........................................................................................................25,
29
29 C.F.R. § 825.114(b)
......................................................................................................19
62 Fed. Reg. 31,326 (June 9, 1997)
.............................................................................27,
32
70 Fed. Reg. 460, 461 (Jan. 4, 2005)
.................................................................................32
LEGISLATIVE MATERIALS
Hearing before the Committee on Agriculture on the Estimates of
Appropriations
for the Fiscal Year Ending June 30, 1914, H.R. 28283, 62d Cong. 20-32
(1913) (Reply Memo Exh.
7).....................................................................................16
S. Rep. No.
99-145.............................................................................................................28
MISCELLANEOUS
OIE Terrestrial Animal Health Code – 2005, Appendix 3.8.4, Surveillance
for Bovine Spongiform Encephalopathy
.....................................................................37
Report on the Monitoring and Testing of Ruminants for the Presence of
Transmissible Spongiform Encephalopathy (TSE) in the EU in
2005........................35
Supervie and Castagliola, "The Unrecognized French BSE Epidemic," 35 Vet.
Res. 349-362
(2004).....................................................................................................37
2B Sutherland Stat. Constr. §
49.09...................................................................................28
vi
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 7 of 52
SUMMARY OF ARGUMENT
With hardly a word of analysis (prior to this case), the Department of
Agriculture
(“USDA”) has interpreted a statute designed to keep companies from
producing and marketing
fraudulent vaccines and serums for treatment of diseases in animals as
an almost unlimited grant
of authority to restrict or preclude activities related in any way to
animal diseases. Even if it were
appropriate to uphold such an action on the basis of post hoc
rationalizations of counsel, here
those rationalizations are inconsistent with basic principles of
statutory interpretation, often lack
citation or plausible support, and in some instances simply do not make
sense even on their face.
For example, USDA’s argument that this case is moot is based entirely on
USDA’s
improper characterization of plaintiff Creekstone Farms Premium Beef’s
case as solely an
attempt by Creekstone to export beef to Japan. Neither the Complaint,
Creekstone’s Motion for
Summary Judgment, nor the Declaration filed by Creekstone’s founder and
then-CEO
characterized Creekstone’s claims that narrowly. To the contrary,
Creekstone continues to have
strong, valid reasons for wanting to use BSE test kits.
USDA’s claim that Creekstone lacks standing rests on a similarly narrow
view of what
this case is about and the relief Creekstone is seeking. Clearly
Creekstone, which believes the
benefits to its business of testing all its cattle for BSE warrants the
multi-million-dollar cost of
testing, is suffering both economic and non-economic injuries from
USDA’s unlawful refusal to
allow Creekstone access to BSE test kits, injuries that this Court
obviously could alleviate by
striking down USDA’s restrictions on BSE test kit use.
USDA’s defense of its regulations restricting the use of diagnostic
tests, as well as its
actions concerning BSE test kits in particular, is based on a convoluted
reading of the simple
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 8 of 52
language of the VSTA and on its observation that Congress did not
specifically prohibit USDA
from regulating BSE test kits. But the Supreme Court and the U.S. Court
of Appeals for the
District of Columbia have consistently rejected such attempts to find
congressional authorization
from the absence of a prohibition. The VSTA on its face does not extend
to restrictions on the
use of biological products, nor the restriction of access to diagnostic
tests (especially diagnostic
tests, like the BSE test kits at issue here, which do not operate
through stimulation of an animal’s
immune system). USDA’s interpretation of the VSTA is not subject to
deference, because (1) it
expands the Department’s authority beyond the literal bounds of the
statute; (2) it is not a
contemporaneous interpretation of the statute but rather one that USDA
invented 60 years later;
(3) USDA’s regulations were not accompanied by any analysis of the
VSTA’s statutory language
or legislative history, or really by any explanation; and (4) at least
with respect to import permits
and to BSE test kits in particular, USDA’s regulations were not
announced in a rulemaking or
any similar formal pronouncement.
But even if USDA’s regulatory authority under the VSTA extended to
controlling who
uses biological products, and for what purpose, and to regulating
diagnostic tests that operate in a
manner analogous to viruses, serums, or toxins, USDA cannot legally ban
all private use of BSE
test kits. First, BSE test kits do not function as “analogous products;”
and second, they are not
used in the treatment of an animal disease. (In fact, USDA claims it can
bar Creekstone from
using BSE test kits precisely because they are not being used in the
treatment of animals.) Third,
using BSE test kits to screen cattle slaughtered for human consumption
for BSE hardly makes
them “worthless.” To the contrary, even USDA’s improperly limited view
of the benefits of BSE
testing admits that testing can identify carcasses infected with this
fatal disease months before the
cattle would have any outward signs of BSE that might keep them out of
the food chain. And
- 2 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 9 of 52
renowned BSE experts submitting declarations in support of this Reply
Memorandum establish
the benefits of more extensive BSE testing, a practice adopted by almost
every country in the
world that has been exposed to BSE.
Finally, even assuming that USDA’s regulations were authorized by the
VSTA, and
assuming also that USDA could, consistent with the VSTA, assert
jurisdiction over the use of
BSE test kits in particular, USDA’s filings in this case now make it
clear that USDA is not
really regulating BSE test kits in order to protect animal health or
even to protect the economic
well-being of farmers and ranchers. Rather, USDA is trying to protect
large meatpackers from
competition that Creekstone and others who want to test will pose. Put
another way, USDA
wants to deprive American consumers of the opportunity to buy beef from
BSE-tested cattle.
This goal not only is far beyond what Congress authorized in the VSTA,
it is contrary to basic
tenets about the role of government to protect competition and foster
this nation’s free-market
economy.
For any one of these reasons, Creekstone is entitled to summary judgment
on its claims
that USDA’s actions preventing Creekstone from conducting BSE tests on
the cattle it
slaughters are beyond USDA’s statutory authority. Moreover, even if the
Court were to
determine that Creekstone has not demonstrated that it is entitled to
summary judgment on
those claims, that still would not mean that USDA has carried its burden
of justifying summary
judgment for USDA on those claims. Nor, of course, would it mean that
USDA is entitled to
summary judgment on Creekstone’s third claim: that USDA acted
arbitrarily and capriciously
even if it was within its statutory authority—a claim that has yet to be
briefed.
- 3 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 10 of 52
ARGUMENT
I. THIS COURT HAS JURISDICTION TO HEAR CREEKSTONE’S CLAIMS.
A. Creekstone’s Claims Are Not Moot.
USDA’s argument that Creekstone’s claims are moot is easily disposed of.
Contrary to
USDA’s misreading of Creekstone’s Complaint, Creekstone’s desire to test
voluntarily for BSE
is not limited to gaining access to Japan’s market. In addition to
expanding its customer base,
voluntary testing would enable Creekstone to enhance its brand and
competitiveness. Creekstone
domestic and international customers will purchase more Creekstone beef,
and at a higher price,
if Creekstone can assure those customers that its products come from
cattle that were tested for
BSE. Moreover, because of lingering concerns over the safety of U.S.
beef, Creekstone and other
U.S beef producers have not been able to recapture market share in the
Japanese and Korean
markets—making BSE testing still relevant for those markets.
USDA mistakenly states that “plaintiff’s primary concern is with its
ability to sell beef in
the Japanese market.” USDA Consolidated Memorandum in Support of
Defendants’ Cross-
Motion for Summary Judgment and in Opposition to Plaintiff’s Motion for
Summary Judgment
(“USDA Memo”) at 15. Creekstone’s Complaint and the Supplement
Declaration of its former
CEO and current consultant John Stewart make clear that Creekstone is
challenging the USDA’s
ban against voluntary testing for BSE, not a foreign government’s trade
policy. See Stewart
Supplemental Declaration, Exhibit 1 to this Reply, ¶¶ 2-3, 5, 8. “It is
well settled that a
defendant’s voluntary cessation of a challenged practice does not
deprive a federal court of its
power to determine the legality of that practice.” Friends of the Earth
v. Laidlaw, 528 U.S. 167,
189 (2000). Here, by contrast, there has been no cessation of USDA’s ban
on voluntary BSE
- 4 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 11 of 52
testing, making mootness not even an issue. By definition, this case is
not moot. See Better
Government Assoc. v. U.S. Dept. of Interior, 780 F.2d 86, 91 (D.C. Cir.
1986) (challenges “to the
legality of the standards utilized” by a government agency were not moot
where “the utilization
of the guidelines and the regulation . . . has continued,” even though
specific claim seeking relief
was moot where agency had granted relief); City of New Haven v. HUD, 809
F.2d 900, 904 (D.C.
Cir. 1987) (same).
Access to the Japanese market is but one component of Creekstone’s
desire to conduct
voluntary BSE testing. In addition to Japan, Creekstone wishes to gain
access to Korean and
other overseas markets as well as to expand its U.S. sales by offering
beef from BSE-tested cattle.
Exh. 1 (Stewart Supp. Decl.) ¶ 2. And beyond access to markets,
Creekstone will be able to sell
more beef at higher prices to both its foreign and domestic customers if
the beef is from cattle
tested for BSE. Id. ¶¶ 2, 6, 7; Creekstone customer declarations,
Exhibits 2-6. Thus, irrespective
of Japan’s lifting its ban, Creekstone could increase the demand for its
beef if it can test for BSE.
In addition, Creekstone’s business model is to sell the finest Angus
beef in the world. By
offering its customers beef from BSE-tested cattle, Creekstone intends
to reinforce its reputation
for excellence, safety, and superior beef products. See Exh. 1 (Stewart
Supp. Decl.) ¶ 8. USDA
concedes this point by admitting that one of its reasons for denying
Creekstone permission to test
for BSE is USDA’s concern that Creekstone’s competitors would feel
obligated to BSE test as
well lest they be at a disadvantage. See USDA Memo at 52 n.30. USDA’s
recognition that
allowing Creekstone to offer customers BSE-tested beef would boost
Creekstone’s brand and
provide a competitive edge alone defeats USDA’s mootness argument.
Moreover, despite Japan and Korea lifting their respective U.S. beef
bans, Creekstone
(and other U.S. beef producers) still cannot sell as much U.S. beef as
before. Exh. 1 (Stewart
- 5 -
Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 12 of 52
Supp. Decl.) ¶¶ 2-6 and attachments. This is because Japanese and Korean
customers remain
concerned about the safety of U.S. beef. Exh. 1 ¶¶ 3, 4, 6 and
attachments. In contrast to U.S.
beef, Japan requires all of its beef to be tested for BSE, and Australia
has never had a case of
BSE, putting Creekstone and other U.S. beef producers at a competitive
disadvantage. Exhibit 1
¶ 3 and Attach. A. Creekstone’s desire to test for BSE is motivated in
part to compete more
effectively for overseas customers, again defeating USDA’s mootness
argument.
In sum, there is absolutely nothing about Japan’s lifting its U.S. beef
ban that “make
impossible to grant [Creekstone] effective relief.” USDA Memo at 15,
quoting Burlington
Northern R.R. Co. v. Surface Transportation Bd., 75 F.3d 685, 688 (D.C.
Cir. 1996) (emphasis
added). The relief Creekstone seeks from this Court is an order
permitting it to test for BSE, not
to open or keep open Japan’s beef market. Creekstone has set forth a
host of reasons for wanting
to conduct voluntary BSE testing irrespective of Japan resuming U.S.
beef imports. USDA’s
mootness argument that “plaintiff’s alleged injury has disappeared”
(USDA Memo at 16) is best
understood as an Article III standing challenge. But for the reasons set
forth in the next Part, that
challenge also fails.
B. Creekstone Has Standing To Present Its Claims.
USDA claims that Creekstone lacks standing to pursue its claims because
(a) Creekstone
has not made a sufficiently concrete demonstration that Creekstone could
be selling more beef
and/or at a higher price were it not for USDA preventing Creekstone from
testing its cattle for
BSE and (b) Creekstone has not “provided convincing evidence” that being
able to test its cattle
for BSE would remedy that injury. USDA Memo at 17.1 USDA misstates
Creekstone’s basis for
1 The weakness of USDA’s argument is exposed by its facially untenable
claim that Creekstone
“has creatively alleged” this injury in “an attempt to save its case
from mootness as a result of
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standing, misstates the legal standards for standing, and attempts to
substitute its own speculation
about consumer demand for Creekstone’s specific information.
Creekstone’s basic injury is that it is prohibited from testing its
cattle for BSE in order to
enhance its brand and distinguish Creekstone beef in the marketplace and
to fulfill the demands
of its customers, many of whom will buy more beef at higher prices if it
is tested for BSE. The
direct cause of that injury is USDA’s unlawful actions, restricting the
licensing and permitting of
BSE test kits, preventing the manufacturers of BSE test kits and the
Kansas State University
laboratory authorized to conduct BSE testing from cooperating with
Creekstone, and refusing to
approve Creekstone’s proposed Hazard Analysis Critical Control Points
(HACCP) program for
voluntary BSE testing. Memorandum of Points and Authorities in Support
of Plaintiff’s Motion
for Summary Judgment (“Pl. Memo”) at 11-14. This Court can redress
Creekstone’s injuries by
invalidating the USDA regulations and actions that prevent Creekstone
from BSE testing and by
ordering USDA not to interfere with Creekstone activities that are
outside USDA’s jurisdiction.
See Pl. Memo at 2.
USDA argues that Creekstone must show a definite economic injury, and a
definite
economic benefit from a ruling in its favor, in order to have standing
to challenge the USDA’s
unlawful action. USDA Memo at 17-23. But the law is very clear that
economic injury is not the
only kind of injury that establishes standing. See, e.g., Sierra Club v.
Morton, 405 U.S. 727, 73445
(1972); Lujan v. Defenders of Wildlife, 504 U.S. 555, 562-63 (1992).
Indeed, the very case
that USDA principally relies upon in its mootness argument, McBryde v.
Committee To Review
Circuit Counsel and Disability Orders…, 264 F.3d 52 (D.C. Cir. 2001),
(cited at USDA Memo at
Japan’s recent lifting of its ban against U.S. beef.” USDA Memo at 17.
In fact, Japan lifted its
ban on U.S. beef 12 days after Creekstone filed its Motion for Summary
Judgment (see USDA
Memo at 16) and four months after Creekstone described this basis for
standing in Paragraph 1718
and 26 of its Complaint.
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16-17) held that Judge McBryde had standing to challenge a reprimand
handed down by the Fifth
Circuit—clearly not an action to remedy an economic injury. Id. at
56-57. USDA makes no
argument, nor could it, that there is anything speculative about
Creekstone’s desire to perform
BSE testing on its cattle, or about USDA’s actions that are preventing
Creekstone from doing so.2
If USDA’s position were the law, then businesses’ fundamental right to
judicial review of
unlawful agency actions would be thwarted. Indeed, in USDA’s view, its
refusal to approve a
new vaccine could not be subjected to judicial review because the
vaccine manufacturer could
not provide “convincing evidence” that it could sell the vaccine if it
were approved!
The law instead, as set down by the Supreme Court, is that a private
party aggrieved by
government action directed at it has standing to challenge that action:
“When the suit is one
challenging the legality of government action or inaction, the nature
and extent of facts that must
be averred (at the summary judgment stage) or proved (at the trial
stage) in order to establish
standing depends considerably upon whether the plaintiff is himself an
object of the action (or
forgone action) at issue. If he is, there is ordinarily little question
that the action or inaction has
caused him injury, and that a judgment preventing or requiring the
action will redress it.” Lujan,
504 U.S. at 561.
2 Creekstone’s assertions of injury and redressability thus are not
dependent on the actions of
third parties, as USDA assumes. USDA Memo at 19, 22. The cases that USDA
cites for its
standing argument all involve indirect claims involving third parties,
not attempts to redress
government action directed at the plaintiff. Whitmore v. Arkansas, 495
U.S. 149 (1990),
considered whether a third party could challenge a death sentence
imposed on a capital murder
defendant. The injury in Area Transp., Inc. v. Ettinger, 219 F.3d 671,
673 (7th Cir. 2000), rested
on whether, if the Federal Transit Agency issued the order to a
competing school bus operator
that the plaintiff sought, the competitor would choose to forego future
federal grants. The
plaintiff in Gettman v. DEA, 290 F.3d 430, 435 (D.C. Cir. 2002) hoped
that he could sell
consulting services to third parties who would use marijuana if the DEA
legalized its use. There
is no comparison at all between Creekstone’s demonstrated interest in
pursuing its business plan
involving BSE testing and Mr. Gettman’s “at best reciting injury to his
philosophical interest.”
Id. at 435.
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But even if economic injury were necessary to demonstrate standing,
there is no question
that Creekstone has suffered and is continuing to suffer economic
injury. See Stewart Decl., Pl.
Memo Exh. 1, at ¶¶ 3, 6, 17 (Creekstone has lost about 35% of its
revenue due to BSE concerns
and is prepared to spend $6,000,000 per year to perform BSE testing
itself to help recover that
lost demand); see also Stewart Supplemental Decl., Exh. 1 to this Reply,
at ¶ 4 (Creekstone’s
average sales to Japan in the past two months have been less than
one-twentieth of what they
were prior to the discovery of BSE in the United States), ¶ 8. USDA’s
purported evidence to the
contrary is both speculative and beside the point. The agency spends
pages in its memorandum
arguing about the accuracy or significance of polls that have
consistently shown Japanese
consumers to be reluctant to purchase U.S.-origin beef, and a poll of
over 75,000 Americans
reporting that more than a third are “very concerned” about BSE. Compare
USDA Memo at 1822
with Pl. Memo Exh. 1 at ¶¶ 4-5. Yet one of USDA’s own exhibits confirms
that “polls show
many Japanese consumers still have some doubts about the safety of the
U.S. product and are
reluctant to buy” U.S. beef. USDA Memo Exh. 12. USDA even asserts,
bizarrely, that a poll
indicating that 75% of Japanese respondents were unwilling to eat
U.S.-origin beef now that BSE
has been found in the United States “does not necessarily suggest that
U.S. beef sales in Japan
will fail to return to the levels they were prior to the Japanese ban.”
USDA Memo at 20.
Creekstone’s standing to bring this lawsuit does not stand or fall on
any poll. The import
of those polls is that they support and confirm Creekstone’s own
information regarding the effect
of BSE on U.S. and foreign markets. Whatever the accuracy of these
polls, they certainly
influence the thinking of the distributors and retail chains to which
Creekstone sells its products,
and they supplement Creekstone’s personal communications with those
distributors and with
consumers (and thus are not hearsay because they are offered to show
their existence, and not the
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truth of the reported consumer sentiments). Cf. Exhibits 2-6
(declarations of Creekstone’s
brokers and of supermarket chains). USDA’s speculation that demand for
beef will increase
(and, apparently, will be totally unaffected by BSE concerns) cannot
defeat direct information
about the market obtained by Creekstone, which of course is an expert in
factors affecting
demand for its products. See Pl. Memo Exh. 1 (Stewart Decl.) ¶¶ 4-5,
16-17; Exh. 1 (Stewart
Supplemental Decl.) ¶¶ 2-4.3 While Creekstone’s own declaration ought to
suffice, the attached
declarations from Creekstone’s customers that they would purchase more
Creekstone beef, and
would pay a higher price, if Creekstone could provide beef from
BSE-tested cattle, conclusively
defeat USDA’s speculations and arguments that Creekstone is not
suffering injury from the
agency’s test ban. See Exhibits 2 -6.
II. USDA’S EXPANSIVE INTERPRETATION OF THE VSTA TO APPLY TO
DIAGNOSTIC TESTS AND TO THE USE OF BIOLOGICAL PRODUCTS IS
UNPERSUASIVE AND NOT ENTITLED TO DEFERENCE.
A. The VSTA Is Neither Ambiguous Nor Susceptible to USDA’s Interpretations.
USDA claims that the VSTA authorizes it to control not only the
manufacture and sale of
a virus, serum, toxin, or analogous product (which USDA refers to as
“biological products”), but
also who may use such biological products and for what purpose. USDA
also claims that the
“biological products” that it can regulate the use of include
“diagnostic products” like BSE test
kits. But those authorizations cannot be found in the plain language of
the VSTA.
USDA has taken a very simple statute, which gives the Department
authority to regulate
the manufacture and sale of specific products, and transformed it into a
license to control other
products and other kinds of activities. Some of USDA’s ostensible
reasons may appear noble –
USDA’s assertion that information previously provided by Creekstone does
not reflect recent
improvements in the Japanese market is contradicted by Exh. 1 ¶¶ 3-4.
Additionally, it ignores
the fact that access to the Korean market is still highly restricted.
Exh. 1 ¶¶ 2, 5-6 and Attach. E.
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to benefit public health and welfare – but that kind of generic goal
does not give an agency carte
blanche to regulate whatever it wishes.
The law could not be more clear: “Agency authority may not be lightly
presumed. ‘Were
courts to presume a delegation of power absent an express withholding of
such power, agencies
would enjoy virtually limitless hegemony, a result plainly out of
keeping with Chevron and quite
likely with the Constitution as well.’” Michigan v. EPA, 268 F.3d 1075,
1082 (D.C. Cir. 2001)
(quoting Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. Cir. 1995).
“‘Thus, we will not presume
a delegation of power based solely on the fact that there is not an
express withholding of such
power.’” Id. (quoting American Petroleum Institute v. EPA, 52 F.3d 1113,
1120 (D.C. Cir.
1995)).4
“Mere ambiguity in a statute is not evidence of congressional delegation
of authority.”
Sea-Land Serv., Inc. v. Dep’t of Transp., 137 F.3d 640, 645 (D.C. Cir.
1998). But in this case,
there is not even ambiguity. The statute states very clearly what
products are covered: a “virus,
serum, toxin or analogous product used in the treatment of domestic
animals.” 21 U.S.C. § 151.
It states clearly what activities are covered: the preparation, sale,
barter, exchange, or importation
of such products. Id. at §§ 151-152. And it states clearly when those
activities may be
prohibited: when such products are “worthless, contaminated, dangerous,
or harmful”; are not
“prepared, under and in compliance with regulations prescribed by the
Secretary of Agriculture,
at an establishment holding an unsuspended and unrevoked license issued
by the Secretary of
Agriculture”; or are imported without a permit. Id.
4 USDA’s reliance on Reno v. Flores, 507 US 292, 300-301 (1993), to say
that Creekstone must
“demonstrate that ‘no set of circumstances exists under which the
regulation
(USDA Memo at 23) is misplaced. In that case, the respondents were not
challenging the
regulation’s application in a specific instance, it had not yet been
applied in a particular instance,
and there was no record concerning the INS’s interpretation of the
regulation. Id. That clearly is
a very different situation than is presented in the instant case.
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The statute simply does not authorize USDA to regulate activities other
than the
preparation, sale, barter, exchange, or importation of biological
products. It does not say that
USDA can prohibit or regulate the use of a biological product—in this
case, who may use it and
for what purpose.5 Nor does the statute authorize regulation of
diagnostic tests—products that
are not analogous to a virus, serum, or toxin—just because they are used
in the treatment of
animals. Ignoring those simple, albeit inconvenient for USDA, truths,
USDA resorts to
(illogical) claims that its actions promote public health and welfare
and protect the interests of
ranchers, encouraging this Court to “simplistically…assume[e] that
whatever furthers the
statute’s primary objective must be the law.” Rodriguez v. United
States, 480 U.S. 522, 526
(1987) (per curiam) (emphasis in original).
1. Regulation of the Use of Biological Products
USDA asserts that its authority in 21 U.S.C. § 154 to issue regulations
“as may be
necessary to prevent the preparation, sale, barter, exchange, or
shipment… of any worthless,
contaminated, dangerous, or harmful virus, serum, toxin, or analogous
product for use in the
treatment of domestic animals” “explicitly authorizes restrictions on
the uses for which viruses,
serum, toxins, or analogous products may be prepared, sold, bartered,
exchanged, or shipped.…”
USDA Memo at 25. This contention is absurd on its face. Saying that USDA
can regulate the
manufacture and sale of products intended for use in the treatment of
domestic animals is not the
same as saying USDA can regulate the use of such products. (And indeed,
Congress knows well
how to regulate the use of products when it wishes to do so. See Pl.
Memo at 24-25, 31-32.)
5 USDA’s assertion that “regulation 102.5(d) is not a direct use
restriction on buyers of biological
products” (USDA Memo at 25) is pure semantics (and irrelevant). Without
congressional
authorization to regulate how and by whom biological products are used,
and for what purpose,
USDA cannot indirectly do so through unlawful limitations in licenses
and permits issued to
biological product manufacturers.
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Under USDA’s theory of how the statutory language should be read, if a
statute authorized DOT
to regulate seat belts, air bags, and other safety devices intended for
use in motor vehicles, DOT
would be authorized to regulate who may drive motor vehicles, and where,
as well!
Not surprisingly, USDA offers no case law in support of its unorthodox
reading of the
VSTA, nor even any formal interpretation previously published by USDA.
The phrase “for use
in the treatment of domestic animals” clearly limits, rather than
expands, “virus, serum, toxin, or
analogous product.” Just as clearly, the phrase must have been used in
the VSTA to distinguish it
from the Act of July 1, 1902, ch. 1378, 32 Stat. 728, which authorized
the Public Health Service
to regulate any “virus, therapeutic serum, toxin, antitoxin, or
analogous product...applicable to the
prevention, treatment, or cure of diseases or injuries of man.” See
Animal Health Institute v.
USDA, 487 F. Supp. 376, 378-79 (D. Colo. 1980) (VSTA modeled after the
1902 Act).
Contrary to USDA’s theory of statutory construction, authority to
regulate a whole new
class of activities, affecting vastly more businesses and individuals,
must be found in a clear
statement of congressional delegation of that authority, not in a
strained and ungrammatical
interpretation offered by the agency in litigation to justify its
desired scope of authority.6
“Congress…does not alter the fundamental details of a regulatory scheme
in vague terms or
ancillary provisions—it does not, one might say, hide elephants in
mouseholes.” Whitman v.
American Trucking Ass’ns, 531 U.S. 457, 468 (2001); see also FDA v.
Brown & Williamson
Tobacco Corp., 529 U.S. 120, 159–160 (2000).
Remarkably, USDA also argues that 21 U.S.C. § 154, because it authorizes
USDA to
issue regulations “as may be necessary to prevent the preparation, sale,
barter, exchange, or
6 Moreover, even if USDA were correct that the phrase “for use in the
treatment of domestic
animals” allowed it to regulate how a biological product is used, that
still would not authorize
USDA to dictate who may use the product and for what purpose.
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shipment” of worthless or dangerous biological products, “also expands
the ability of USDA to
regulate beyond just the ‘preparation, sale, barter, exchange, or
shipment’ of products.” USDA
Memo at 26. Once again, USDA offers no case law, legislative history, or
even its past
statements or rulemaking interpreting the VSTA to support or explain
this contention. USDA
contends that “clearly” restrictions on how a biological products may be
used, by whom, and for
what purpose “may be necessary to close loopholes and remove incentives
to circumvent
regulations directed at the ‘preparation, sale, barter, exchange, or
shipment’ of products.” Id.
Apparently USDA believes that Congress made it a crime not only for a
manufacturer to produce
and sell a dangerous biological product, but for a farmer to continue to
use such a product, as
well. See id. Quite simply, it is not for USDA to decide to “close
loopholes” that Congress
chose not to regulate. Even if there were such a need for this kind of
regulation, this supposed
“[n]eed for regulation cannot alone create authority to regulate.” Sea
Robin Pipeline Co. v.
FERC, 127 F.3d 365, 371 (5th Cir. 1997).
Over and over, courts have rejected interpretations of a series of words
in a statute that go
beyond the scope of the words in the series, as does USDA’s
interpretation here. USDA’s claim
of authority to regulate the use of biological products parallels a
claim that the Supreme Court
rejected earlier this year: The plaintiff in Dolan v. United States
Postal Service, 126 S. Ct. 1252
(Feb. 22, 2006), relied on a provision concerning liability for “loss,
miscarriage, and negligent
transmission” of mail, 28 U.S.C. § 2680(b). The Court observed that,
since both “loss” and
“miscarriage” “refer to failings in the postal obligation to deliver
mail in a timely manner to the
right address, it would be odd if ‘negligent transmission’ swept far
more broadly to include
injuries like those alleged here—injuries that happen to be caused by
postal employees but
involved neither failure to transmit mail nor damage to its contents.”
126 S. Ct. at 1254.
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Similarly, in this case it would be odd indeed if Congress intended, in
authorizing regulation of
the preparation, sale, barter, exchange, or shipment of dangerous or
worthless products used to
stimulate or enhance the immune system of animals, to regulate how such
products may be used,
by whom, and for what purpose—activities carried out by the users of the
products rather than
their manufacturers, and after the products have already been prepared,
sold, and shipped.
Texas & Pacific Railway Co. v. Pottorff, 291 U.S. 245, 257-59 (1934),
also resembles the
instant case, in that the Court both (a) refused to find that a national
bank could expand its
statutory authorization for “banking” to include pledging its assets to
secure a private deposit, and
(b) also reasoned that, if that power had been authorized, there would
have been no need to
amend the banking statute later to provide a limited power to pledge.7
So, too, in this case the
enactment of the Agricultural Bioterrorism Protection Act of 2002, 7
U.S.C. § 8401, which gave
USDA limited authority to regulate the possession and use of dangerous
biological products, is
evidence that the VSTA should not be read to give broad authorization to
regulate who may use
biological products and for what purpose (as is the legislative history
confirming that Congress
did not believe the VSTA empowered USDA to regulate the use of
biological products). Cf. Pl.
Memo at 24-25.8 USDA offers no response to that application of the canon
of statutory
construction, followed in Pottorff, to the history of the VSTA and
related legislation.
7 As the D.C. Circuit observed in Independent Insurance Agents of
America, Inc. v. Hawke, 211
F.3d 638 (2000), “[t]he pre-Chevron vintage of Pottorff is irrelevant,”
since the Supreme Court
had already made clear at that time that decisions of the Comptroller of
the Currency were
generally entitled to deference.
Cf. Babbitt v. Sweet Home Chapter of Communities for a Greater Oregon,
515 U.S. 687, 696701
(1995) (fact that Congress in 1982 authorized the issuance of permits
for “incidental take” of
endangered species is strong evidence that Congress understood the
preexisting statutory
prohibition on “take” of endangered species to include indirect as well
as direct “take”).
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USDA does offer one reference to legislative history of the VSTA that
mentions use of
biological products. USDA Memo at 31.9 But that mention of use, put into
context, in no way
suggests that Congress meant to include regulatory authority over how a
biological product may
be used or by whom. Rather, the passage refers to “controlling the use”
of dangerous and
worthless viruses, serum, and analogous products “by preventing the
interstate shipment” of such
products that may be manufactured within the United States. The focus of
the passage from the
Senate Report, like the focus of the statutory language that Congress
ultimately adopted, is not on
how biological products are used, or by whom, but on regulating the
manufacture, sale, and
shipment of dangerous or worthless products.10 In any event, this phrase
from the Senate Report
could not endow USDA with authority not set out forth the statute. 11
USDA asks this Court to ignore the venerable principle expressio unius
est exclusio
alterius, on the grounds that the “principle does not contemplate the
expansive phrases ‘for use in
9 USDA also refers to “
means its own 1997
description of the VSTA. USDA Memo at 31. But it is hard to see how the
passage from a
USDA Federal Register notice that USDA quoted, that the “main purpose of
VSTA is to protect
those who use veterinary products from products which are worthless,
contaminated, dangerous,
or harmful” in any way justifies USDA’s conclusion here that “[c]learly
the use restrictions
contemplated by regulation 102.5(d) are consistent with the purposes of
VSTA.” See USDA
Memo at 31. What should be clear from that passage instead is that the
purpose of the VSTA is
to protect those who use biological products from harmful or worthless
products, not to regulate
and constrain those who use biological products.
10
Cf. Exhibit 7 at 23-25 (USDA official explaining request for authority
over toxins and viruses,
with no mention of restricting who could use toxins and viruses or
regulating diagnostic
products); Hall v. Nebraska, 100 Neb. 84, 88-89, 158 N.W. 362, 363-64
(1916) (“We do not
understand that the federal government undertakes to regulate those who
sell serum after it has
been disposed of by the manufacturer.”)
11
See City of Chicago v. Environmental Defense Fund, 511 U.S. 328, 337
(1994) (where Senate
Committee report included statement that “all waste management
activities of such a facility,
including the generation, transportation, treatment, storage and
disposal of waste shall be covered
by the exclusion,” Court declined to find that waste generation was
excluded, because “it is the
statute, and not the Committee Report, which is the authoritative
expression of the law, and the
statute prominently omits reference to generation.”). Moreover, the
“controlling the use” phrase
in the Senate Report relates only to domestic manufacture of products,
and not to those that are
imported into the United States, like Bio-Rad’s BSE tests. Cf. USDA Memo
at 30-31.
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the treatment of domestic animals’ or ‘as may be necessary to prevent’
modifiers of the list of
items….” USDA Memo at 26-27. USDA offers no authority for this claimed
corollary to the
principle, nor any further explanation why it would be that phrases that
make the list more
specific or otherwise qualify it would suggest that Congress did not
intend the agency’s authority
to be limited to the enumerated list of items or activities. This Court
should reject USDA’s
unsupported attempts to expand its jurisdiction beyond the authorities
enumerated in the VSTA,
just as other courts have consistently rejected agency claims that
authority to regulate one thing
implies authority to regulate something else, because it would be
consistent with or helpful to the
stated or intended purposes of the statute. See, e.g., City of Chicago,
511 U.S. at 329, supra n.11;
Railway Labor Executives’ Ass’n v. National Mediation Bd., 988 F.2d 133,
139 (D.C. Cir. 1993),
aff’d on rehearing en banc, 29 F.3d 655 (1994), cert. denied, 514 U.S.
1032 (1995) (Board
cannot assume duties not given to it by Congress); Michigan Citizens for
an Independent Press v.
Thornburgh, 868 F.2d 1285, 1293 (D.C. Cir. 1989) (canon of expressio
unius est exclusio alterius
can determine whether statute is clear, and therefore no need to resort
to Chevron deference).12
Arrogating to itself regulatory authority over a whole different set of
activities, conducted
by a different group of people, is simply not the kind of necessary
filling of ‘gaps” in a statute’s
regulatory scheme that Chevron contemplated. Cf. USDA Memo at 36. The
“mere existence of
an agency does not give it the power to assert authority that Congress
has not delegated. It is
absurd to suggest that, under the second prong of Chevron, there is a
statutory ‘gap to fill’ or a
12 USDA disputes the relevance of Kelley v. U.S. EPA, 15 F.3d 1100 (D.C.
Cir. 1994), cert.
denied, 513 U.S. 1110 (1995). USDA Memo at 27 n. 13. The citation
Creekstone provided in its
Memo in Support was, unfortunately, incorrectly limited (citing to p.
1108 rather than pp. 11061108).
But the case indeed is relevant as an example of how courts look to the
list of things a
statute has authorized an agency to do and decline to find statutory
authority for the agency to
regulate in additional areas (in that case, specifying who will be
subject to statutory liability for
hazardous waste cleanup).
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statutory ‘ambiguity’ to cure whenever a statute fails to specify some
authority that an agency
seeks to invoke. This cannot be the meaning of Chevron, for it would
allow federal agencies to
claim limitless authority except in those few circumstances where
Congress has expressly said
‘thou shalt not’ exercise such authority.” Railway Labor Executives’
Ass’n, 988 F.2d at 194
(Edwards, J., concurring).
2. Regulation of Diagnostic Tests
USDA admits that the VSTA says nothing about regulating diagnostic
products (USDA
Memo at 35), but “neither does it specifically exclude such tests from
its purview.” Id. at 36.
The latter is true, but it falls short of authorizing USDA’s regulation
of diagnostic tests. The
Supreme Court and the D.C. Circuit have repeatedly admonished regulatory
agencies that
statutory authority for an agency to act “may not be presumed based
solely on the fact there is not
an express withholding of jurisdiction.” ExxonMobil Gas Marketing Co. v.
FERC, 297 F.3d
1071, 1088 (D.C. Cir. 2002).
The interpretation of the VSTA that USDA advances for purposes of this
lawsuit is that
“diagnostic products are certainly used in the treatment of animals,
which is all that is required
under section 154 of VSTA.” USDA Memo at 37. Again, USDA vastly
overstates the meaning
of the qualifier “intended for use in the treatment of domestic
animals,” appearing to suggest that
anything broadly defined as “treatment” is therefore regulated under the
VSTA. Moreover, even
if Congress had given USDA authority to regulate a product just because
it is used in the
“treatment of domestic animals,” that would not include authority to
regulate products that are
used solely to detect a disease (and especially those, such as BSE test
kits, used solely to detect
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infection in dead animals).13 The cases USDA cites (USDA Memo at 41)
provide no support for
its position: Pegram v. Herdrich, 530 U.S. 211, 228 (2000) contains a
discussion of two types of
actions by HMO administrators: “eligibility decisions,” which concern
whether a particular
condition or medical procedure for its treatment is covered by the
patient’s health insurance plan,
and “treatment decisions,” which “are choices about how to go about
diagnosing and treating a
patient’s condition: given a patient’s constellation of symptoms, what
is the appropriate medical
response?” Id. Not only to did the Pegram court not define “treatment,”
but it used the terms
“diagnosing” and “treating” as if they are two different types of
activities, joined by the
conjunction “and.” Nor does Miller v. AT&T Corp., 250 F.3d 820, 830-31
(4th Cir. 2001),
contain any independent analysis of the meaning of the word
“treatment”—it merely applies a
Family and Medical Leave Act regulation, 29 C.F.R. § 825.114(b), which
defines “treatment” to
include “examinations to determine if a serious health condition exists
and evaluations of the
condition,” and defers to an agency determination that the statutory
phrase “continuing treatment
by a health care provider,” 29 U.S.C. § 2611(11), is broad enough to
cover such examinations.
This is a far different question than whether Congress meant for “virus,
serum, toxin, or
analogous product used in the treatment of domestic animals” to include
a test procedure and
reagents used to determine whether an animal has (or had) a disease.
Additionally, to be susceptible to regulation under the VSTA, a
diagnostic product would
have to be both a “virus, serum, toxin, or analogous product” and “used
in the treatment of
domestic animals.” 21 U.S.C. §§ 151, 152, 154. Something is not
“analogous” to a virus, serum,
USDA claims its open-ended regulation of diagnostic products is
justified because the VSTA
refers to viruses, serums, toxins, or analogous products “for use in the
treatment of domestic
animals,” rather than “for treatment of domestic animals.” USDA Memo at
37. USDA does not
explain how a biological product that is not “for treatment of domestic
animals” could be “used
in the treatment of domestic animals.” Creekstone suggest that to the
extent there is a distinction,
though it seems unlikely there could be, it is a distinction without a
difference.
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or toxin just because it is “used in the treatment of domestic animals,”
but that is what USDA
seems to assume. In USDA’s expansive view of the VSTA’s targeted
language, presumably
even a thermometer could be regulated under the VSTA, simply because it
is “used in the
treatment of domestic animals.” USDA’s attempt to turn a limiting
qualifier into a very broad
congressional delegation of regulatory authority is simply not borne out
by the language or
legislative history of the VSTA.14
USDA regulations state that “biological products,” include vaccines,
antibodies,
antitoxins, immunostimulants, “and diagnostic components, that are of
natural or synthetic origin,
or that are derived from synthesizing or altering various substances or
components of
substances….” 9 C.F.R. § 101.2. Read literally, a “diagnostic component”
(an undefined term)
need not have anything to do with the defining characteristic of
“viruses, serum, toxins, or
analogous products,” which is that they “act primarily through the
direct stimulation,
supplementation, enhancement, or modulation of the immune system or
immune response.”15
Similarly, USDA defines “analogous products” to include either
“
similar in function to biological products in that they act, or are
intended to act, through the
stimulation, supplementation, enhancement, or modulation of the immune
system or immune
response, or
of animals through the
detection or measurement of antigens, antibodies, nucleic acids, or
immunity;…” Id. (emphasis
added). Thus, USDA has explicitly de-coupled these diagnostic tests from
any requirement that
14 It also conflicts with a number of more-specific statutory
authorities over diagnostic tests,
including the Food, Drug and Cosmetic Act, as noted in Pl. Memo at
31-32, 38 n.14.
15 9 C.F.R. § 101.2 (definition of “biological products”). USDA offers
no response to the fact
that USDA has, in other regulations, made a clear distinction between
products that operate
through an immune response—and are subject to regulation under the
VSTA—and those that do
not, even if the same or similar components are involved. See Pl. Memo
at 36, 38.
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th