Natural Grocers v. Perdue

Background

Congress amended the Agricultural Marketing Act in 2016 to create a national system for disclosing whether food is bioengineered. The United States Department of Agriculture directed its Agricultural Marketing Service to create implementing regulations. The rules allowed four disclosure methods: printed text, a symbol, an electronic or digital link, or text-message instructions. They generally required the disclosures to use “bioengineered.” They also excluded highly refined foods when modified genetic material was not detectable, subject to a list-based presumption and recordkeeping requirements.

The plaintiffs included retail stores and food-safety advocacy organizations. They challenged the regulations under the Administrative Procedure Act, which permits courts to set aside agency action that is unlawful or arbitrary and capricious. They also brought First and Fifth Amendment speech claims and challenged the preemption of state labeling requirements for genetically engineered seeds under the Tenth Amendment.

Standing

The court found that the plaintiffs had standing to bring their Administrative Procedure Act claims. But it found that they lacked standing for their First and Fifth Amendment claims because the regulations did not prohibit them from using terms such as “GE” or “GMO” in additional communications with consumers. The regulations required those terms only in standardized disclosures; they did not prevent additional statements consistent with other law. The plaintiffs also had not shown a credible threat of enforcement or concrete plans to use disputed labels in the future.

The court found standing for the Tenth Amendment challenge because some plaintiffs presented evidence of economic injuries from paying premiums for organic seeds to avoid unlabeled genetically engineered seeds.

Text-message disclosure option

The court granted summary judgment to the plaintiffs on their Administrative Procedure Act challenge to the standalone text-message disclosure option. Congress directed the agency to study whether consumers could access electronic or digital disclosures while shopping and, if access was insufficient, to provide “additional and comparable options” to improve access. The agency’s study found that technological challenges prevented nearly all participants from obtaining the information electronically.

The court concluded that the agency’s standalone text-message option did not improve access to the electronic disclosure. Instead, it merely created another option that regulated entities could choose instead of the electronic link. Because the agency’s interpretation conflicted with the statute’s clear language, the court held that the decision was unlawful under the Administrative Procedure Act.

The court remanded Sections 66.106 and 66.108 to the agency without vacatur for further consideration. In other words, the rules were sent back to the agency but were not set aside while the agency reconsidered them. The court said the government had shown persuasive concerns about disrupting consumer access and the food industry.

Mandatory terminology

The court denied summary judgment on the plaintiffs’ challenge to the requirement that disclosures use “bioengineered.” It rejected the argument that the statute’s reference to “any similar term” required the agency to include terms such as “GE” or “GMO” in the mandatory disclosures. The court determined that the statutory language about similar terms concerned the definition of bioengineering, not the wording of the disclosure requirements.

The court also concluded that the agency reasonably considered the greater familiarity of consumers with “GE” and “GMO” but chose “bioengineered” to avoid inconsistent disclosures and confusion about the regulations’ scope. The plaintiffs therefore had not shown that this decision was arbitrary or capricious.

Highly refined foods

The court denied summary judgment on the challenge to the exclusion of highly refined foods without detectable modified genetic material. It held that the agency had acted within the statute by creating detectability standards and a List of Bioengineered Foods. Highly refined foods made with listed ingredients were presumed to require disclosure unless the regulated entity kept records showing that the food was not bioengineered.

The court concluded that the agency had considered current testing limits, the possibility of improved testing, and studies indicating that refining can remove genetic material. The record did not show that the agency’s approach was arbitrary or capricious.

Tenth Amendment challenge

The court denied summary judgment on the Tenth Amendment challenge to the federal preemption of state genetically engineered seed-labeling requirements. It held that the provision regulated private suppliers of genetically engineered seeds by giving them protection from conflicting state labeling requirements. It did not command states to enact or enforce a federal program.

The court also concluded that the provision was a valid exercise of Congress’s Commerce Clause authority. Federal preemption of state law can be valid without violating the Tenth Amendment when the federal law regulates private actors rather than commandeering state governments.

Disposition

Summary judgment was granted to the plaintiffs on the Administrative Procedure Act claim concerning the text-message regulation. Sections 66.106 and 66.108 were remanded to the USDA without vacatur for reconsideration. Summary judgment was denied in all other respects. Judge James Donato issued the order.