Fracking’s Dynamic Impact on the Energy Economy: Winners and Losers

By: Jessica Durden, Staff Member

As hydraulic fracturing (“fracking”) gains traction in the American energy economy, the supply of American natural gas has skyrocketed, triggering a downshift of the price of gas.[1] Fracking has opened up vast stores of previously inaccessible gas trapped in shale rock more than a mile underground, particularly in gas-rich areas like the Marcellus Shale.[2] This technological boon has benefited natural gas producers, and in the current competitive economy, the new kid on the block (fracking) is edging in on the old standby’s financial territory (coal).[3] For the short term, that power shift has put the coal industry on its heels, as coal prices out of central Appalachia have tanked 15.4% in the last year.[4] In roughly the same time frame, natural gas producers and drillers have invested more than $4 billion dollars into the Marcellus Shale—which spans the Appalachian Basin.[5]

However, this dynamic swing of interest, which has prompted coal companies like Alpha Natural Resources to back off production in much of central Appalachia,[6] may not be a long-term economic event. Fracking has problems of its own, primarily in the form of intense Environmental Protection Agency (EPA) scrutiny. Hydraulic fracturing is currently state-regulated, but the EPA and the environmental lobby have teamed up to close the loophole that exempts fracking from federal regulation under the Safe Drinking Water Act.[7] If legislation like the FRAC Act (HR 1084) passes in the near future, the entire fracking industry could be subject to much harsher federal regulations that could stymie or even temporarily stop active fracking operations.[8] The EPA’s first section of its forthcoming 2014 study on fracking’s environmental impact has garnered mixed reviews.[9] However, the initial report emerged from Wyoming, while the major players in fracking are eastward in Texas and the Appalachian Basin, and the EPA has indicated Wyoming is not indicative of the rest of the country.[10] So while coal has felt the blow of a burgeoning natural gas industry, the natural gas companies face a tough road ahead to remain state regulated: coal has lost the battle, but not the war, and the long term economic effects of the fracking boom remain unclear. In an unexpected twist, an environmental crackdown could actually salvage the struggling coal industry.

[1]See Liam Denning, Coalface Cracks Under Pressure from Cheap Gas, Wall St. J., Feb. 7, 2012, http://online.wsj.com/article/SB10001424052970203315804577206860331660388.html?mod=WSJ_Energy_leftHeadlines.

[2]See America’s Natural Gas Alliance, Safe & Responsible Development: How We Produce America’s New Natural Gas, anga.us, http://anga.us/media/206825/hydraulic%20fracturing%20101.pdf.

[3]See Denning, supra note 1.

[4]Id.

[5]See Marcellus Shale Coalition, Production Processes, MarcellusCoalition.org, 2011, http://marcelluscoalition.org/marcellus-shale/production-processes/.

[6]See Ian Thomson & Maya Pope-Chappell, MarketBeat: Stocks to Watch: Micron Technology, Hasbro, Alpha Natural Resources and More, Wall St. J., Feb. 6, 2012, http://blogs.wsj.com/marketbeat/2012/02/06/stocks-to-watch-micron-technology-hasbro-alpha-natural-resources-and-more/?mod=WSJ_qtnews_wsjlatest.

[7]See Adam Orford, Hydraulic Fracturing: Legislative and Regulatory Trends, Marten Law, Oct. 4, 2011, http://www.martenlaw.com/newsletter/20111004-fracking-roundup.

[8]Id.

[9]See Mead Gruver, Reps. scrutinize EPA frack-pollution link in Wyo., Washington times/Associated Press, Feb. 1, 2012, http://www.washingtontimes.com/news/2012/feb/1/reps-scrutinize-epa-frack-pollution-link-wyoming/#.TymnOB8wHms.email.

[10]Id.

PROMOTION OF URBAN AGRICULTURE IS IMPORTANT TO THE AMERICAN FOOD SUPPLY

By: Clay Duncan, Staff Member

Typically, the mention of agriculture conjures up images of cornfields and sprawling farms in distant, rural areas. It therefore may come as a surprise to hear that a crucial, yet overlooked, segment of the American agricultural industry exists within and adjacent to metropolitan areas. This “urban agriculture” is “[t]he growing, processing, and distributing of food and other products through intensive plant cultivation and animal husbandry in and around cities.”[1] Despite the smaller scale on which its growers operate, it is a meaningful tool for combatting hunger and achieving food security on a national scale.[2]

As a result of our highly industrialized and “corporate-controlled food system”, the United States suffers from harmful side effects in the form of environmental damage and health costs to the end consumer.[3] Additionally, many poor Americans are food insecure in that they suffer from “hunger in the midst of plenty.”[4] Through the creation of sustainable farms with affordable produce near poverty-ridden cities, the poor are given greater access to the food they need.

In order for urban agricultural activities to endure, they must be resistant to the constant pressures to convert land to commercial uses. A recent study looked at 15 metro-area counties from the Pacific to the Atlantic coasts in an effort to see what can be done to preserve urban farmland and farming.[5] Based upon the research, farmers are more likely to develop and maintain their land if they feel that the local government will side with them on disputes that may arise with non-farmers.[6] In terms of land use, farmers were shown to respond favorably to farm-friendly zoning regulations and the promotion of land transfers to their descendants.[7] Also, it was found that labor shortages in urban agriculture suggest a need to reform worker programs in an effort to increase the labor supply and allow farmers to maintain their operations profitably.[8]

Urban agriculture will never produce the same quantity of food that our current, nationalized system provides. However, it is still very important as it allows for food to reach those suffering from poverty and hunger in a more cost-effective way. Local city governments should make an effort to promote urban farms and prevent their conversion to other commercial uses.

[1]Urban Agriculture and Community Food Security in the United States: Farming from the City Center to the Urban Fringe, Urban Agriculture Committee of the Community Food Security Coalition (Feb. 2002), at 5, available athttp://www.foodsecurity.org/urbanagpaper.pdf.

[2]Id. at 4.

[3]Id. at 6.

[4]Id.

[5] Dick Esseks, Lydia Oberholtzer, Kate Clancy, Mark Lapping, Anita Zurbrugg, Sustaining Agriculture in Urbanizing Counties: Insights from 15 Coordinated Case Studies (Jan. 16, 2009), at 5, available athttp://www.farmland.org/resources/sustaining-agriculture-in-urbanizing-counties/documents/Sustaining-agriculture-in-urbanizing-counties.pdf.

[6]Id. at 179.

[7]Id.

[8]Id. at 181.

Naturally Confusing Consumers: Implied Federal Preemption of State Claims Regarding False and Misleading Food Product Labels

By: Taryn DeVeau, Staff Member

Consumers have become increasingly conscious of eating nutritious food, and food product manufacturers have profited from consumers that confuse foods labeled “Natural” with those labeled “Organic.”[1] “Organic” foods have specific USDA certifying criteria, whereas “Natural” foods do not.[2] Consumers’ health conscience craze has created a $22.3 billion market niche for foods labeled “Natural,” resulting in an increase in class action lawsuits claiming such food labeling is false and misleading.[3]

According to Stephen Gardner, litigation director for the Center for Science in the Public Interest, “Natural” food labeling claims comprise the largest litigation area of food labeling claims, and this trend has been influenced by the failure of courts to find state claims preempted.[4] The failure to find preemption is largely a consequence of the FDA’s refusal to define the term “Natural.”[5] Currently, the FDA’s informal policy is still in place, which allows use of the term unless the food contains added color, artificial flavors, or synthetic substances.[6]

Some foods whose “Natural” status has been questioned include Snapple, Healthy Choice pasta sauce, Skinnygirl Margarita, Ben and Jerry’s, and Wesson cooking oils.[7] A recent lawsuit filed against Kashi claims the labels are intentionally misleading because they contain synthetic and unnaturally processed ingredients.[8] The alleged synthetic substances include “prescription drugs, irradiated substances, pesticides, and federally declared hazardous substances.”[9]

The Nutrition Labeling and Education Act (“NLEA”) of 1990 was added to ensure consistency with a national standard and to preclude states from adopting inconsistent requirements.[10] The NLEA contains an express preemption provision, 21 U.S.C. §343-1, providing that states must not have food labeling requirements that are not “identical” to the FDCA.[11]

“The NLEA states that it ‘shall not be construed to preempt any provision of State law, unless such provision is expressly preempted under [21 U.S.C. §343-1(a)] of the [FDCA].”[12] Courts have analyzed this section in different ways. Some courts have found the statement to mean that only express preemption is possible. The California Supreme Court stated that the “preemptive scope” of §343-1 was only intended to cover “the plain language of the statute itself.”[13] The court in Holk found that it is possible to find implied preemption based on “provisions of federal law other than the NLEA.”[14]

In Holk, the court found the claims against Snapple that its products were not “Natural” because they contained High Fructose Corn Syrup were not impliedly preempted because the FDA has not officially defined the term.[15] However, in Thomas Mason v. Coca-Cola Co., the plaintiff claimed that “Diet Coke Plus” is misleading because “Plus” indicates an added amount of vitamins and minerals.[16] The term “Plus” has been precisely defined in FDA regulations.[17] The court found that in order to find implied conflict preemption, more than just a regulation defining the term is necessary.[18] Here, even if the FDA defined the term “Natural,” it is not guaranteed courts would analyze the issue consistently. It is necessary for courts to resolve the uncertainty regarding implied preemption analysis of food labeling claims in order to benefit both food manufacturers and consumers.

[1] Bruce Silverglade and Ilene Ringel Heller, Food Labeling Chaos, The Case for Reform, Center for Science in the Public Interest, http://cspinet.org/new/pdf/food_labeling_chaos_report.pdfhttp://cspinet.org/new/pdf/food_labeling_chaos_report.pdf (last visited Dec. 29, 2011). Major Agribusiness Competing with Organics on the Cheap,“Natural” Food Products with Toxic Chemicals and GMOs Deceiving Consumers, The Cornucopia Institute, October 12, 2011, http://www.cornucopia.org/2011/10/cerealcrimes-pressrelease/ (last visited Dec. 28, 2011).

[2] Major Agribusiness Competing with Organics on the Cheap supra note 4.

[3]“Natural” Beats Organic in Food Sales According to Nielsen’s Healthy Eating Report, Nielsen Wire, http://blog.nielsen.com/nielsenwire/consumer/“natural”-beats-“organic”-in-food-sales-according-to-nielsen’s-healthy-eating-report/ (January 21, 2009); Ashby Jones, Is Your Dinner ‘All Natural’? Wall Street Journal, http://online.wsj.com/article/SB10001424053111903374004576580671156407598.html. (September 20, 2011).

[4] Julie A. Steinberg, Food Label Lawsuits: Manufactured Litigation or Consumer Protection?, Boomberg BNA, 40 PSLR 83, http://news.bna.com/psln/display/batch_print_display.adp.

[5] Ashby Jones, Is Your Dinner ‘All Natural’?, Wall Street Journal, http://online.wsj.com/article/SB10001424053111903374004576580671156407598.html. See Holk v. Snapple Bev. Corp., 575 F.3d 329, 333(U. S. App. 2009); See also 65 Food Drug L.J. 403 (2010).

[6]What is the meaning of ‘natural’ on the label of food?, U.S. Food and Drug Administration, http://www.fda.gov/AboutFDA/Transparency/Basics/ucm214868.htm (last visited Dec. 27, 2011).

[7]See Holk v. Snapple Bev. Corp., 575 F.3d 329, 333(U. S. App. 2009); See also Lockwood v. Conagra Foods, 597 F. Supp. 2d 1028, 1031 (N.D. Cal. 2009); Ashby Jones, Is Your Dinner ‘All Natural’?, Wall Street Journal, http://online.wsj.com/article/SB10001424053111903374004576580671156407598.html.

[8]Michael Bates v. Kashi, 2011 WL 3821651 at 1 (S.D. Cal. August 24, 2011).

[9]Id. at 2.

[10]Farm Raised Salmon Cases, 175 P.3d 1170, 1175 (Sup. Ct. Cal. 2008).

[11] 21 U.S.C. §343-1(a).

[12] In re FERRERO at 9.

[13] Farm Raised Salmon Cases at 1091.

[14] Holk at 336.

[15]Id. at 339.

[16] Thomas Mason v. Coca-Cola Co., 2010 U.S. Dist. LEXIS 65107, *1.

[17] Thomas Mason v. Coca-Cola Co., 2010 U.S. Dist. LEXIS 65107, *6 (citing 21 C.F.R. §101.54(e)).

[18]Id. at *10.

A Jack of All Trades: The King of Silicon Valley Weighs in on International Agriculture

By: Alex Crawley, Staff Member

Although Bill Gates is probably most famous for being the self-made billionaire who created the powerhouse Microsoft, he has recently made headlines for issues far removed from software.[1] Lately, he has been speaking out about the funding for agricultural research, or rather, the lack thereof.[2] In addition to speaking out on BBC’S Today,[3] he recently devoted nearly his entire annual letter on behalf of the Bill and Melinda Gates Foundation, which was twenty-four pages long, to the issue of world hunger and to encouraging investment into agricultural research.[4]

Gates’ letter focuses mainly on the “15% of the world [just over 1 billion people] in extreme poverty.” [5] He is urging more people to “mak[e] the choice to keep on helping extremely poor people build self-sufficiency,” and emphasizing that, while farming is integral to poor countries, rich countries have largely turned their backs on agriculture.[6] Considering that only $3 billion per year is spent globally on agricultural research, he has a valid point.[7]

The Gates Foundation has spent about $2 billion dollars over the past five years to supplement research that would help to alleviate the global food crisis.[8] Gates is especially focused on the research into genetically modified foods, and has specifically praised the work of Norman Bourlaug, a Nobel Prize winner who helped create new strains of wheat that were resistant to wheat stem rust, a fungus that had previously plagued wheat crops.[9] He is advocating for more innovations like this one, especially considering that new forms of wheat rust have since developed and moved from Uganda to Iran and Yemen.[10]

Gates’ position on agricultural research has created some otherwise unlikely allies and piqued the interest of many. The Crop Protection Association Society has endorsed his view internationally, and has agreed that “high-tech food production systems” are an integral part of the answer to “the food poverty crisis.”[11] Meanwhile, U.S. groups, like the U.S. Farmers & Ranchers Alliance, have also taken an interest.[12]

Gates’ plea comes at a crucial time. The EU’s policies are currently inhibiting innovative agricultural research,[13] and the USDA has recently decreased its research centers in response to congressional budget cuts.[14] The Gates Foundation, however, has given grants to the Food and Agriculture Organization of the United Nations[15] and the International Food Policy Research Institute.[16] Hopefully, the Gate’s Foundation good-will initiative will inspire other organizations to invest in this area “where there is less profit opportunity but where the impact for those in need is very high.”[17] Otherwise, “one in seven people will continue living needlessly on the edge of starvation.”[18]

[1] Logan Hawkes, GMO Crops Get Big Backer in Bill Gates, Western Farm Press, 1 (Feb. 1, 2012, 11:21 AM), http://westernfarmpress.com/government/gmo-crops-get-big-backer-bill-gates?page=1.

[2]Gates Foundation Calls for More Ag Research Funding, The United States Agricultural & Food Law and Policy Blog, http://www.agandfoodlaw.com/2012/02/gates-foundation-calls-for-more-ag.html.

[3]Dan Colombini & Mike Stones, Bill Gates and CPA Urge Support for GM Techniques, Foodmanufacture.co.uk (Jan. 25, 2012), http://www.foodmanufacture.co.uk/World-News/Bill-Gates-and-CPA-urge-support-for-GM-techniques.

[4]Hawkes, supra note 1.

[5]2012 Annual Letter From Bill Gates, Bill & Melinda Gates Foundation, 1 (Jan. 2012), http://www.gatesfoundation.org/annual-letter/2012/Documents/2012-annual-letter-english.pdf.

[6]2012 Annual Letter From Bill Gates, supra note 5 at.

[7]2012 Annual Letter From Bill Gates, supra note 5at 3.

[8] Hawkes, supra note 1.

[9]2012 Annual Letter From Bill Gates, supra note 5 at 5.

[10]2012 Annual Letter From Bill Gates, supra note 5 at 5.

[11] Colombini & Stones, supra note 3.

[12]Bill Gates and CPA Urge Support for GM Techniques, U.S. Farmers & Ranchers Alliance (Jan. 25, 2012) http://usfraonline.org/2012/01/bill-gates-and-cpa-urge-support-for-gm-techniques/.

[13] Colombini & Stones, supra note 3.

[14] Hawkes, supra note 1 at 2.

[15]Food and Agriculture Organization of the United Nations, Bill & Melinda Gates Foundation (Nov. 2011), http://www.gatesfoundation.org/Grants-2011/Pages/Food-and-Agriculture-Organization-of-the-United-Nations-OPP1029955.aspx.

[16]International Food Policy Research Institute, Bill & Melinda Gates Foundation (Nov. 2011), http://www.gatesfoundation.org/Grants-2011/Pages/International-Food-Policy-Research-Institute-OPPGD1451.aspx.

[17]2012 Annual Letter From Bill Gates, supra note 5.

[18]2012 Annual Letter From Bill Gates, supra note 5.

Citrus Canker Compensation

By: Catherine Barrett, Staff Member

Owners of residential trees destroyed during a failed attempt to eradicate citrus canker are still awaiting compensation. The story of citrus canker highlights the sad fact that legal compensation is often slow and inadequate.

Citrus canker is a highly infectious bacterial disease that affects all types of citrus.[1] The condition causes oily brown lesions on leaves and fruit.[2] A serious attempt to eradicate the disease started in 1994.[3] More than 16.5 million trees were destroyed during the campaign.[4] State workers entered private backyards and felled established fruit-bearing trees as distraught owners watched.[5] Feelings against the “canker gestapo” ran high among some Florida residents.[6]

This is not the first time that a battle with citrus canker has outraged tree owners. The first major outbreak of the disease occurred in 1913.[7] A law was passed requiring the destruction of infected trees, and inspectors searched orchards for signs of canker, burning entire groves if any tree showed signs of the illness.[8] Farmers, facing financial ruin if their trees were burned, tried to keep the burn crews off of their lands with shotguns and lawsuits; neither approach was successful.[9] The destruction of orange trees affected by citrus canker was upheld by state courts in 1917.[10]

Destruction of trees in order to halt the spread of arboreal diseases has historically been upheld as constitutional. Courts have reasoned that “the destruction of a tree affected by a disease… is as fully within the police power of a state as the destruction of a house threatened by a spreading conflagration,” even if the destruction is against the owner’s will and no compensation is provided.[11] Stated differently, because the trees were doomed to die, they were worthless. Consequently, no constitutional taking occurs when they are destroyed. This is still the position argued by the Florida Department of Agriculture: trees exposed to citrus canker have no value.[12]

Between 2000 and 2006, the state of Florida destroyed every citrus tree within 1,900 feet of an infected tree, even if the trees appeared healthy.[13] Citrus canker externally disfigures fruit, but does not harm humans, so the fruit can still be consumed.[14] In an apparent change of course, Florida courts have held in class-action lawsuits by tree owners that the trees did have some value and that destroying them was a taking.[15]

Sadly, the only real winner of this legal battle is the canker. A series of hurricanes spread the bacteria so widely that eradication is no longer possible, and efforts to do so have been abandoned within the state.[16] Despite their victories in court, owners have not yet received compensation for the trees that died in vain.[17]

[1] Citrus Canker Fact Sheet, Florida Department of Agriculture & Consumer Services Division of Plant Industry, http://www.freshfromflorida.com/pi/canker/faqs.html.

[2]Id.

[3]State Refusing To Citrus Canker Pay Outs, CBS Miami (September 25, 2011, 12:16 PM) http://miami.cbslocal.com/2011/09/25/state-refusing-to-citrus-canker-pay-outs/.

[4] Susan Salisbury, Citrus canker trial continues for Boca couple seeking compensation, The Palm Beach Post (Nov. 28, 2011, 7:49 PM) http://www.palmbeachpost.com/money/citrus-canker-trial-continues-for-boca-couple-seeking-1274647.html?printArticle=y

[5]Id.

[6]Citrus Canker: A Corporate Love Story, Or Of The Press (Sept. 5, 2011) http://orofthepress.wordpress.com/2011/09/05/citrus-canker-a-corporate-love-story/.

[7] Jean C. Taylor, The Citrus Canker, History Miami http://www.hmsf.org/history/citrus-canker.htm.

[8]Id.

[9]Id.

[10]Louisiana State Board of Agriculture and Immigration v. Tanzmann, 140 La. 756 (1917).

[11]State v. Main, 69 Conn. 123, 84 (1897).

[12] Salisbury, supra note 4.

[13] CBS Miami, supra note 3.

[14]Id.

[15]Department of Agriculture & Consumer Services v. Bogorff, 35 So.3d 84 (2010).

[16] Fact Sheet, supra note 1.

[17] CBS Miami, supra note 3.

Considering the Implications of a New Bourbon Tax

By: Arthur Cook, Staff Member

Any person that has toured (or tasted from) one of Kentucky’s premium Bourbon whiskey distilleries can tell you, no drink would be the same without a water source of superior quality. Kentucky’s abundant supply of limestone, which provides a natural water filter, allows much of the world’s top Bourbon to be produced there.[1] A recent study of Kentucky’s economy revealed that the Bourbon industry contributed $2 billion in gross state product each year for the last decade.[2] Governor Steve Beshear has observed that the industry accounts for 43% of the distilling jobs in the nation.

With a lagging national economy and Kentucky behind the national recovery rate, citizens of the Commonwealth are very interested in maximizing tax revenue from the Bourbon industry. One proposed solution is re-examination of the state’s “barrel tax.[3]” By way of example, the citizens of Moore County, Tennessee recently sought to impose a barrel tax on Lynchburg’s most famous resident, Jack Daniels.[4] The “barrel tax” is an annual ad valorem tax of $.05 per $100 of value for goods “held for sale in the regular course of business, which includes . . . distilled spirits and distilled spirits inventory, and in-process materials, which includes distilled spirits and distilled spirits inventory, held for incorporation in finished goods held for sale in the regular course of business.”[5]

A Kentucky barrel tax would be cumbersome for the distilling industry. Many spirits, such as Bourbon, can take up to 12 years to age in barrels, increasing in value per year. Rep. Linda Belcher of the Kentucky General Assembly has proposed House Bill 418 to take an income tax credit to offset the cost of the tax.[6]

A recent op-ed by industry leaders concedes that the ad valorem tax supports critical needs in multiple fields, but also attempts to undermine concern that the tax credit envisioned by House Bill 418 would denigrate tax coffers by arguing the tax credit would be “reinvested in the commonwealth.”[7]

Kentucky’s natural resources - the climate and limestone bedrock - are ideal for the production of premium spirits like Bourbon. However, without a clearer statement of the “reinvestment” which would offset the loss in tax revenue from the tax credit, forgoing taxes on an industry that has boomed in the last few years would be a stiff drink to swallow.

[1] Buffalo Trace Distillery, Whisky.com, http://www.whisky.com/distilleries/buffalo_trace_distillery.html (last visited Feb. 6, 2012); Woodford Reserve Kentucky Straight Bourbon Whisky, Whisky.com, http://www.whisky.com/brands/woodford_reserve_brand.html (last visited Feb. 6, 2012) Maker's Mark Kentucky Straight Bourbon Whisky, Whisky.com, http://www.whisky.com/brands/makers_mark_brand.html (last visited Feb. 6, 2012).

[2] Kevin Wheatley, State-Journal.com - Bourbon industry booming, study reveals, http://www.state-journal.com/news/article/5153644 (last visited Feb. 6, 2012).

[3]Id.

[4] Tim Ghianni, Jack Daniel's wins battle over whiskey barrel tax, Reuters, http://www.reuters.com/article/2011/11/22/us-tennessee-whiskey-idUSTRE7AL1OR20111122 (last visited Feb. 6, 2012).

[5] Ky. Rev. Stat. §132.020(1)(n)

[6] Barrel tax hobbles bourbon industry, Kentucky.com, http://www.kentucky.com/2011/03/08/1661958/barrel-tax-hobbles-bourbon-industry.html (last visited Feb. 6, 2012).

[7]Id.

Challenging the GMO Giants: OSGATA v. Monsanto Co.

By: Kelly Calder, Staff Member

Transgenic crops[1] have been a point of contention since their introduction, spurring lawsuits, boycotts, and leading numerous groups to publically advocate mandatory labeling of transgenic foods.[2] On March 29, 2011, the Organic Seed Growers and Trade Association (“OSGATA”), spearheaded a lawsuit in the Southern District of New York against transgenic seed giant Monsanto, Inc.[3] OSGATA, along with eighty-two other plaintiffs,[4] have sought a declaratory judgment to prevent Monsanto from bringing suit against them for patent infringement for inadvertently utilizing transgenic seeds.[5] Additionally, the plaintiffs are asking the court to declare that Monsanto’s numerous seed patents are invalid.[6]

It remains to be seen whether the plaintiffs will ever get to argue the merits of the case.[7] Monsanto filed a motion to dismiss in mid-July of last year, stating that the plaintiffs lacked subject matter jurisdiction to maintain their action.[8] The plaintiffs filed a brief in opposition to the motion,[9] which was accompanied by an amici brief further supporting the plaintiffs’ position.[10] Oral argument on the issue was granted, and the case was heard January 31, 2012.[11] As of the time of this post, a decision has not been reached.[12]

The OSGATA plaintiffs, who are mostly organic farmers, should be able to satisfy the relevant criteria for maintaining a declaratory judgment action. The threat of cross-contamination between transgenic and non-transgenic crops is a very real one for farmers. This was acknowledged by the United States Supreme Court in Monsanto Co. v. Geertson Seed Farms.[13] According to the OSGATA complaint, “if an organic farmer wants to determine whether Monsanto’s patented gene is present in her crop, she must conduct genetic testing, which can be extremely expensive.”[14]

The actions that farmers have to take in order to ensure the purity of their crops increases the costs of operation, and due to the fact that Monsanto has sued several farmers for patent infringement, can influence the types of crops that farmers choose to grow, e.g. causing them to be averse to growing crops that may subject them to liability for patent infringement.[15] The fact that the plaintiffs have taken steps to prevent contamination in order to prevent a Monsanto-initiated lawsuit should do nothing to inhibit their cause of action.[16] Additionally, success at this stage could encourage similar suits and would present vehicle for challenging Monsanto’s patents in cases that could ultimately reach the Supreme Court.

[1] Transgenic: “of, pertaining to, or containing a gene or genes transferred from another species.” Dictionary.com, http://dictionary.reference.com/browse/transgenic (last visited February 6, 2012).

[2] One of these groups is the Center for Food Safety, which actively campaigns for the labeling of transgenic foods. Center for Food Safety, http://gefoodlabels.org/ (last visited February 6, 2012).

[3] First Amended Complaint at 2, OSGATA v. Monsanto Co., No. 11-cv-2163-NRB (S.D.N.Y. June 1, 2011), available at http://www.pubpat.org/assets/files/seed/OSGATA-v-Monsanto-Complaint.pdf.

[4]Family Farmers Amplify Complaint Against Monsanto’s GMOs, Reinforcing Their Arguments with Additional Plaintiffs, Public Patent Foundation (June 1, 2011), http://www.pubpat.org/osgatavmonsantoamended.htm.

[5] First Amended Complaint, supra, note 3.

[6]Id.

[7]Farmers and Seed Distributors Defend Right to Protect Themselves from Monsanto Patents, Public Patent Foundation (August 11, 2011), http://www.pubpat.org/mtdoppfiled.htm.

[8]Id.

[9] Brief in Opposition to Defendants’ Motion to Dismiss, OSGATA v. Monsanto Co., No. 11-cv-2163-NRB (S.D.N.Y. August 11, 2011), available athttp://www.pubpat.org/assets/files/seed/OrganicSeedMTDOppositionBrief.pdf.

[10] Brief for Farm & Ranch Freedom Alliance, et al. as Amici Curiae Supporting Plaintiffs, OSGATA v. Monsanto Co., No. 11-cv-2163-NRB (S.D.N.Y. August 10, 2011), available at http://www.pubpat.org/assets/files/seed/OrganicSeedMTDAmiciBrief.pdf.

[11]OSGATA v. Monsanto: Will Farmers Receive Justice?, OSGATA (February 2, 2012), http://archive.constantcontact.com/fs074/1104248386985/archive/1109213017423.html.

[12]Id.

[13]Monsanto Co. v. Geertson Seed Farms, 130 S.Ct. 2743, 2754-55 (2010)(“Respondents also allege that the risk of gene flow will cause them to take certain measures to minimize the likelihood of potential contamination and to ensure an adequate supply of non-genetically engineered alfalfa. . . . [s]uch harms, which the respondents will suffer even if their crops are not actually infected with the Roundup Ready gene, are sufficiently concrete to satisfy the injury-in-fact prong of the constitutional standing analysis.”).

[14] First Amended Complaint, supra, note 3, at 38.

[15]Id. at 50-51.

[16]See supra, note 9; see also MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 130 (2007).

APHIS Announces New Procedures to Regulate Contagious Equine Metritis

By: Jocelyn Arlinghaus, Staff Member

The beginning of 2012 has heralded new developments in the fight to eliminate contagious equine metritis (CEM) in the United States. CEM is a venereal disease common to horses caused by the bacterium Taylorella equigenitalis.[1] It is considered extremely dangerous due to its highly contagious nature.[2] The disease is typically transmitted via sexual intercourse during the mating process, but it may also be transmitted through artificial insemination or contact with hands or instruments that have been contaminated.[3] Common symptoms include vaginal discharge, uterine inflammation, and temporary infertility.[4] Stallions show no physical signs of CEM, which makes detecting and controlling the disease before it spreads extremely difficult.[5] During breeding season, a stallion often infects several mares before the presence of the disease is discovered.[6]

CEM was first diagnosed in England in 1977, but had spread to the United States by 1978 with reports documented in central Kentucky and Missouri.[7] The disease was treated and thought to be eliminated from the United States prior to 2006, when two imported stallions in Wisconsin tested positive for the CEM bacteria.[8] Another outbreak was confirmed in December 2008, when five mares and 23 stallions in eight states tested positive for the CEM bacterium.[9] Although the 28 initially discovered horses were cured of the disease, another 977 horses were exposed to Taylorella equigenitalis in the outbreak, which spanned 48 states.[10] CEM was subsequently discovered in Arabian stallions in May 2010 in California and in July 2011 in Arizona.[11] The USDA’s National Veterinary Service (NVSL) has confirmed that in all cases the infected stallions were contaminated prior to arrival in the United States.[12] Interestingly, the strain of the isolated bacterium in these new cases did not match any strains previously found in the United States, which indicated that the multiple outbreaks were unrelated and therefore developed as a result of separate equine imports from foreign countries.[13] Efforts to eradicate the recent string of outbreaks in the United States continue. Because mares can only be bred during certain times of the year, CEM can substantially impact equine reproductive efficiency.[14] If the disease continues to stabilize in the United States, the equine industry will face great economic losses.[15]

The United States Department of Agriculture Animal and Plant Inspection Service (APHIS) has been taking steps to provide additional safeguards against spreading CEM to horses in United States through importation of infected horses. In 2011, APHIS amended the regulations concerning the importation of horses from countries affected with CEM. The new standards require test mares and imported stallions above a certain age to undergo an additional CEM test to improve the chances of detecting the disease.[16] APHIS has also imposed stricter certification requirements for imported horses 731 days old or less and added new test measures for imported horses more than 731 days old. [17] Yearlings and weanlings require proof that they have not been bread to other horses through artificial insemination in order to be imported.[18]

On January 10, 2012, APHIS announced that it will post lists of states approved to receive imported horses from high-CEM foreign regions to its website rather than including them in the Code of Federal Regulations.[19] This change will not affect the criteria that APHIS uses to determine whether a foreign region should be added or removed from the list or criteria used to approve states to receive horses imported from high-CEM foreign countries.[20] Because these lists will not continue to appear in the Code of Federal Regulations, updates are no longer required to be legislated. [21] This new procedure will enable APHIS to more quickly identify changes in the CEM status of foreign regions and approve states to receive horses from foreign regions where CEM is known to exist.[22] Additionally, this will simplify the process of informing the equine community and the public of any concerns of possible CEM exposure to horses in certain areas of the country. APHIS considers this change to be another step toward eliminating the string of CEM outbreaks and improving the welfare of horses and the equine industry.

[1]Contagious Equine Metritis, United States Department of Agriculture Animal and Plant Health Inspection Service (Mar. 2009), http://www.aphis.usda.gov/publications/animal_health/content/printable_version/fs_CEMrev09.pdf

[2]Id.

[3]Id.

[4]Id.

[5]Id.

[6] United States Department of Agriculture Animal and Plant Health Inspection Service, supra note 1.

[7]Id.

[8]Id.

[9]Contagious Equine Metritis Cases, United States Department of Agriculture Animal and Plant Health Inspection Service, http://www.aphis.usda.gov/newsroom/hot_issues/cem/cem_cases.shtml#december (last modified Jan. 26, 2012).

[10]Id.

[11]Id.

[12]Id.

[13]Id.

[14] United States Department of Agriculture Animal and Plant Health Inspection Service, supra note 1.

[15]Id.

[16]USDA Announces Interim Rule Regarding the Importation of Horses from Contagious Equine Metritis - Affected Countries, United States Department of Agriculture Animal and Plant Health Inspection Service (Mar. 25, 2011), http://www.aphis.usda.gov/newsroom/2011/03/importhorse_cemacountr.shtml

[17] Importation of Horses From Contagious Equine Metritis-Affected Countries, 76 Fed. Reg. 58 (proposed Mar. 25, 2011) (to be codified at 9 C.F.R. pt. 93).

[18] United States Department of Agriculture Animal and Plant Health Inspection Service, supra note 16.

[19] Lists of Regions Classified With Respect to Certain Animal Diseases and States Approved To Receive Certain Imported Horses, 77 Fed. Reg. 1388 (proposed Jan. 10, 2012), (to be codified at 9 C.F.R. pts. 92, 93, 94, 96, 98).

[20]Id.

[21]Id.

[22]Id.

Efficient Compensation of Class Members Suffering from the BP Oil Spill

By: Ashley Addo, Staff Member

On April20, 2010, our country experienced a devastating tragedy, the BP oil spill. This catastrophic event affected thousands of fishermen, business owners, real estate workers, property owners, shareholders, and more. The spill was a result of an explosion and fire at the Deepwater Horizon oil rig, which was located 130 miles southeast of New Orleans and approximately 50 miles from the Mississippi Delta.[1]The burning lasted for approximately two days before the oil rig tipped into the sea. The leak was finally capped on July 15, 2010, but the overwhelming damages remained.[2]Eleven platform workers were killed during the drilling process, and aquatic life was substantially affected. Consequently, these damages induced hundreds of class action lawsuits against BP and Transocean, the company that owned the oil rig.[3]

While the various classes assert different claims against BP and Transocean, one common claim exists amongst the class action complaints: BP was negligent in the design, maintenance, manufacture, and operation of the oil rig.[4]Accordingly, the plaintiffs in these classes desire recovery from the aforementioned defendants. The question is: with hundreds of class action suits pending against these companies, how quickly will these class members be compensated?

Rule 23of the Federal Rules of Civil Procedure governs the different ways in which a class can be certified.[5]One reason a class can be certified is if predominant issues preside amongst the class as a whole.[6]Once a class is certified, Rule 23(a)(5) permits the creation of subclasses amongst a larger class if needed.[7]In the recent Randleman v. Fidelity National Title Insurance Co. case, the court addressed a circuit split regarding bifurcation and the creation of subclasses in order to remedy a lack of predominance amongst a class.[8]The 4th, 5th, and 11th circuit’s state that a class should not be certified with subclasses if predominant issues do not exist amongst the class.[9]Conversely, the 2nd and 9th Circuits hold that subclasses are permissible, despite a lack of predominant issues amongst the class.[10]

If all of the circuits accepted the minority viewpoint towards class certification,the lawsuits against BP could be substantially expedited. There are hundreds of class action lawsuits pending against BP and Transocean and, although the classes are pleading distinct issues, the overarching commonality is BP’s negligence.[11]Several of these classes could be joined together, and multiple subclasses could be created amongst the class. For example, a class of BP shareholders,property owners, and real estate owners could be certified as one class, with multiple subclasses created amongst the class for the disparate claims.

In response to the oil spill, BP implemented many programs to avoid reoccurrence of the oil spill. Specifically, BP has acknowledged that they“ regret the damage caused to the environment and the livelihood of those in the communities affected” and that they are “putting in place measures to help ensure it does not happen again.”[12] While these strides are critical, BP’s ultimate goal should be compensation of the thousands of injured parties. The livelihood of these class members was radically altered by the oil spill; these individuals relied on the preservation of the Gulf of Mexico as a means of survival. BP has discussed its efforts in compensating individual claims,however, the Company has not publicly addressed how it will handle the hundreds of class action suits.[13]Consolidation of classes and the use of subclasses could reduce the amount of pleadings, hearings, discovery review, and trials that would accompany each suit. Additionally, this approach could reduce potential inconsistent judgments and appeals.

[1] Complaint at §2, Cajun Maid, LLC v. B.P., No.1:10-CV-176 HS0-JMR, (S.D.Miss. May 6, 2010).

[2]Id.

[3]Id.

[4]Id.

[5] fed. r.civ. 23.

[6] fed.r. civ. 23(b)(3).

[7] fed. r.civ. 23(a)(5).

[8]Randlemanv. Fidelty, 646 F.3d 347 (6th Cir. 2011).

[9]Id.at 356

[10] Id.

[11] Complaint, supra note 1, at §73

[12] Deepwater Horizon Accident, bp, http://www.bp.com/sectiongenericarticle800.do?categoryId=9036575&contentId=7067541

[13] Compensating the people and communitiesaffected, bp, http://www.bp.com/sectiongenericarticle800.do?categoryId=9036584&contentId=7067605