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From Health Law Daily, February 28, 2017

No cracks in agencies’ refusal to make rules for egg carton labeling

By Bryant Storm, J.D.

Federal agencies acted reasonably in their decision not to initiate rulemaking to require egg carton labeling indicating the living conditions of egg-laying hens, the Ninth Circuit held. Compassion Over Killing, the Animal Legal Defense Fund, and six individual egg consumers challenged the absence of federal action as arbitrary and capricious, however, a district court held, and the Ninth Circuit affirmed, the FDA, Federal Trade Commission (FTC), Agricultural Marketing Service (AMS), and Food Safety and Inspection Service (FSIS) were not obligated to issue egg carton rulemaking (Compassion Over Killing v. U.S. Food & Drug Administration, February 27, 2017, Murguia, M.).

Petitions. The rulemaking petitions filed by Compassion Over Killing, the Animal Legal Defense Fund, and the individual consumers proposed that each agency develop regulations that would require all egg cartons to bear the labels "Free-Range Eggs," "Cage-Free Eggs," or "Eggs from Caged Hens," consistent with the living conditions of the hens. The consumers and animal rights organizations argued that in the absence of such labeling, consumers are being improperly informed about the quality of eggs and misled by other terminology and images on labeling, which suggest hens are living in conditions more favorable than the actual conditions. Specifically, the petitions sought promulgation of new regulations or revision to 21 C.F.R. Secs. 101115, and 160.

Denied. Each agency denied the petitions on the grounds that it either lacked the authority to issue new regulations or it could not conclude based upon the petitions that current labeling was unfair or deceptive. The FDA noted that the petitions failed to identify a "material fact" which was missing from current egg carton labeling as a result of the omission of the living conditions of egg-laying hens. For example, the FDA determined that the petitions failed to provide persuasive evidence that eggs from caged hens are either less nutritious or more likely to be contaminated with Salmonella than eggs from uncaged hens. Additionally, the FDA rejected the proposition that consumer interest alone was sufficient to warrant new regulations.

District court. Compassion Over Killing, the Animal Legal Defense Fund, and the individual consumers filed a lawsuit in federal district court asserting that the federal agencies acted arbitrarily and capriciously in their denial of the rulemaking petitions. The district court granted summary judgment for the agencies, holding that the petitioned agencies either lacked the authority to engage in the requested rulemaking or had a reasonable basis to decline to exercise the authority to engage in the rulemaking and therefore appropriately exercised administrative discretion to deny the petitions (see Egg carton labeling case gets scrambled by APA, December 29, 2014).

Appeal. The Ninth Circuit held, under the Administrative Procedure Act (APA) (5 U.S.C. § 706(2)(A)), FSIS acted reasonably when it determined that it lacked authority over shell eggs. The Ninth Circuit explained, under the Egg Products Inspection Act (EPIA) (21 U.S.C. §§ 1031–56), the authority of FSIS extended only to "egg products" and not shell eggs. With regard to the FDA, the court held, under the federal Food, Drug, and Cosmetic Act (FDC Act) (21 U.S.C. § 371), the agency has discretionary authority to promulgate regulations. The court determined that the FDA acted reasonably in its decision to deny the rulemaking petition because the petition presented insufficient reliable scientific evidence to support claims that living conditions impacted the nutrient value and salmonella-contamination of eggs. Additionally, the Ninth Circuit held that the FDA reasonably decided that to the extent egg cartons affirmatively misrepresented the living conditions of egg-laying hens, the agency could take individual enforcement actions against those labelers. The Ninth Circuit reasoned that the other agencies acted appropriately in denying the petitions either because of a lack of authority to create the type of regulation at issue or because of inadequacy in the rulemaking petition.

The case is No. 15-15107.

Attorneys: Karen Gabrielle Johnson-Mckewan (Orrick, Herrington & Sutcliffe LLP) for Compassion Over Killing and Animal Legal Defense Fund. Ann F. Entwistle, U.S. Department of Justice, for the FDA.

Companies: Compassion Over Killing; Animal Legal Defense Fund

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