AgWeek discussed the concerns of farm groups with the Administration budget proposal.

USAgNet discussed a process to turn chicken waste and weeds into biofuel.

The Guardian reported on the potential impact of Brexit on UK food security.

SF Gate reported on state efforts to reduce food waste.

Purdue University discussed a university study on the impact of insecticides on honey bees.

 

The House of Representatives has passed the Regulatory Accountability Act (RAA) and sent it to the Senate.  If it becomes law, the RAA would result in major changes in administrative procedure for regulations that have a significant impact on the economy.

The bill defines a “major rule” as one likely to impose (1) an annual cost to the economy of $100,000,000 or more; (2) a major increase in the cost of goods or services; (3) significant adverse effects on competitiveness, employment, investment, productivity or innovation; or (4) significant impact on multiple areas of the economy.  It defines a “high impact rule” as one likely to impose annual costs in excess of $1,000,000,000.  The dollar figures are adjusted annually for inflation.

For all rules, agencies must base factual determinations on evidence.  In addition, agencies must identify:

  • The legal authority for the proposed rule, and whether it is mandatory or discretionary.
  • Other statutory provisions that bear on the wisdom of the proposed rule.
  • The risks addressed by the proposed rule and the countervailing risks that it may create.
  • The degree to which existing rules have caused the problem and whether amendments or rescission of those rules can ameliorate it.
  • Reasonable alternatives, such as leaving the matter to state or local authority, providing information to the public, using economic incentives to encourage behavior, or specifying objectives rather than methods of compliance.
  • A comprehensive cost-benefit analysis, direct and indirect, on jobs, wages, economic growth, innovation, competitiveness and incentives to improve efficiency.

For all proposed rules with major or high impact, negative-job-or wage potential, or novel legal or policy issues, the agency must give 90 days’ advanced notice before publication in the Federal Register.  The notice must identify:

  • The nature and significance of the problem the agency proposes to address, together with the evidence on which the agency proposes to rely.
  • The legal authority for the proposed rule.
  • Preliminary information on the factors the agency must consider.
  • For novel potential rules, the reasons why the agency believes it should address them.
  • Achievable objectives and the metrics by which the agency will measure progress toward that objective.

The agency must solicit information about these topics from interested persons and allow them at least 60 days to comment.    Continue Reading The Regulatory Accountability Act of 2017

On February 9, 2017, we posted about legal challenges to designations of endangered species by the U.S. Fish & Wildlife Service, when the specie is confined to a single state. The Tenth Circuit Court of Appeals has reversed the first of these challenges. People for the Ethical Treatment of Property Owners v. U.S. Fish & Wildlife Service, No. 14-4151 (2017).

The court of appeals held that the Endangered Species Act (ESA), taken as a whole, substantially affected interstate commerce. It distinguished Supreme Court decisions striking down the Violence Against Women Act and the Gun-Free School Zones, on the ground that those were small parts of omnibus bills covering a wide variety of disparate subjects. By contrast, the ESA was a comprehensive bill addressed to one particular problem.

The court of appeals reasoned that the ESA as a whole clearly had a substantial effect on interstate commerce. First, prohibiting the taking of endangered species has a clear relationship to economic activity, the very activity which in many cases led to the endangerment finding. Second, Congress believed that by conserving species, it would promote commerce in the long term. Third, there is a multi-billion dollar-a-year illegal trade in endangered species.

The court of appeals also believed that regulation of purely intrastate species was necessary to the ESA’s comprehensive scheme. It found that 68% of endangered species were purely intrastate, so their exclusion would drive a gaping hole in the statute.

Expect a petition for certiorari.

Food Safety News discussed the FDA partnership with states.

The Kansas City Star discussed a new law allowing stronger beer in Kansas grocery stores.

The Kansas City Business Journal reported on a new animal pharmaceutical facility in Kansas City.

The Los Angeles Times reported on efforts in California to conserve water for the next drought.

The Kansas City Business Journal reported on the Kansas City Area Life Sciences Institute’s second bioinformatics conference.

Food Safety News reported on recent FDA warning letters.

USAgNet discussed USDA reminders on safe egg handling during holiday celebrations.

CNN reported on KFC promise to use antibiotic-free chicken.

The Business Insider reported on the impact of illegal marijuana growing in California.

Food Safety News discussed FDA waivers to sanitary transportation rule.

 

On April 5, Husch Blackwell’s Food & Agribusiness industry team presented a seminar in Milwaukee, WI spotlighting industry finance and investment trends and regulatory developments. More than 75 professionals attended the seminar, representing ag processing, food distribution, wholesale baking companies and industry-focused lenders and investors. The morning started off with Jim Ash, Husch Blackwell’s Food & Agribusiness industry team leader, moderating a panel focused on industry trends. The panelists included –

The panel addressed economic trends that are currently and will continue to impact the industry, including the uncertainty of commodity prices, labor challenges particularly in the protein sector, and continued consolidation. The importance of an effective risk management program to mitigate fluctuating commodity prices was noted. Some companies are addressing labor challenges with creative retention and incentive programs. Regarding consolidation, the panel agreed there is significant opportunity for smaller companies and that consolidation will not slow in the foreseeable future. Large food processing companies will likely continue to enter consumer-driven niche markets with acquisitions instead of developing such products internally.

Capital raising was also discussed by the panel. There was agreement that capital is currently abundant. For entrepreneurial companies, it is critically important when raising capital that the company choose a partner with a good fit. This means having a well-defined business plan, with a clearly defined point of differentiation and long-term vision. A somewhat newer phenomenon is for larger companies to form their own venture capital funds as a way to enter the developing niche markets to follow consumer trends.

Current consumer trends include locally and sustainably grown, clean labeling, non-GMO, gluten-free, diverse ethnic flavorings, and convenience packaging. But the point was made food still has to taste good and be offered at an affordable price for the targeted market. An additional point made was that consumer’s preferences change quickly and companies must be nimble to thrive. There was consensus across the panel that food and beverage companies have generally done a poor job of educating their consumers.

Following the morning panel, Kyle Gilster, the managing partner of Husch Blackwell’s Washington D.C. office, spoke for a few minutes regarding federal food and agribusiness policy under the new administration. Kyle said to expect significant funding cuts to the USDA and FDA and a new Farm Bill in 2018. The US withdrawal from the TPP trade deal and potential changes to NAFTA will impact agricultural trade, likely hurting agricultural exports. Another area to watch is immigration. Kyle doesn’t expect congress will take up immigration policy soon, so likely the labor challenges in the industry will continue or worsen. Lastly, Kyle expects changes to Dodd Frank and a reduction in the corporate imcome tax.

Following Kyle’s presentation, a panel of Husch Blackwell attorneys discussed regulatory developments in the industry. The panelists included –

  • Joan Archer, a partner in the Kansas City office practicing in the area of IP and commercial litigation and leader of the Firm’s food safety & labeling team
  • Mark Grider, a partner in the DC office practicing in the area of government compliance, investigations & litigation and formerly with the Department of Justice
  • Marnie Jensen, a partner in the Omaha office practicing in the area of litigation and leader of the Firm’s organic and sustainable team
  • James Mathis, a partner in the St. Louis office practicing in the area of corporate, M&A and commercial contracting and leader of the Firm’s alcohol & beverage practice

Jim Ash moderated this panel as well. The panel discussed trends in 3rd party claims, which included mislabeling and slack fill assertions. James suggested that co-packing companies and those that engage co-packers need to be aware of the impact of these claims to ensure the potential risk is addressed in the co-packing contracts. With respect to organic certification, Marnie pointed out that the USDA authorizes third party organic certifying agencies and that the expected cuts to USDA funding would likely have an impact on the certification process. Joan covered various aspects of the Food Safety Modernization Act (FSMA) and the importance of an effective compliance program. Mark echoed the importance of a compliance program and addressed how a company should go about dealing with an enforcement agency when they come knocking to minimize penalties and the possibility of criminal prosecution. Mark’s opinion is that we will not see de-regulation in the food industry to the same extent as we are seeing de-regulation in other areas.

The seminar ended with a networking lunch that gave the attendees and the panelists a chance to converse informally about industry issues. The Firm is planning additional similar seminars in other locations.