On February 5, 2020, we blogged about the Kansas so-called “ag gag” law.  The objective of the statute is to discourage undercover scrutiny of agricultural facilities to obtain evidence of cruelty to animals, food safety violations, and other malfeasance and to broadcast that evidence to the public.  The Kansas statute accomplishes this by making it a criminal offence to enter onto the property to take photos or recordings or to remain on the property without the owner’s consent.  Consent induced by fraud is invalid.  The statute also provides a private right of action for damages.

Earlier this year, the District Court held that the Kansas law violated the First Amendment.  The state appealed and the result was a lively oral argument before the Tenth Circuit that could well result in a reversal.  Judge Hartz and Judge McHugh were most active; the third panel member, Judge Murphy, was silent.

Based on her questions, Judge McHugh was clearly sympathetic to the judgment.  She clearly thinks that the purpose of the statute is to silence undercover investigations and that violates the First Amendment.  Judge Hartz seemed much more sympathetic to the state.  He kept pushing the parties as to why the standard, plain vanilla trespass statute would not ban the conduct in question; as a general rule consent induced by misrepresentation is no consent at all.  Plaintiffs’ counsel finally agreed that the general trespass statute could apply to such conduct, which would suggest that the ag gag law is unnecessary.

We expect an opinion in a month or so.

On January 12, 2021, Massachusetts Governor Charlie Baker signed into law Bill S2841 amending Chapter 138 of the General Laws by inserting Sec. 25E 1/2. Under M.G.L.A. 138 § 25E ½ “a brewery may, without good cause, terminate the right of a licensed wholesaler to whom such brewery has made regular sales of malt beverages subject to the provisions of this section.”

  • In order to qualify, breweries must produce less than 240,000 barrels of beverages in a year.
  • Breweries must provide the affected wholesaler no less than 30 days’ written notice and full compensation… the laid-in cost of the merchantable inventory plus the laid-in cost of the current sales and marketing material plus the fair market value of the distribution rights for the brands that are being terminated by the brewery. Nothing prevents a successor wholesaler from paying the compensation to the affected wholesaler directly or from compensating a brewery for any compensation paid by the brewery.
  • Given a dispute between the brewery and the affected wholesaler that cannot be agreed upon within 30 days of notice, the parties may request that the amount be decided upon in arbitration conducted in the Commonwealth.

This new law is already the subject of a pending lawsuit in Massachusetts.

On February 22, 2021, the Hawaii Senate passed SB No. 65, a measure allowing direct-to-consumer shipping of distilled spirits in original containers. The bill was passed in response to the legislature’s finding that the COVID-19 pandemic and the governmental responses to contain the spread of COVID-19 have disproportionately affected certain local liquor producers. With the frequent closure of bars, clubs, and in-person dining, local liquor producers have struggled to find alternative methods of serving their customers, resulting in drastic revenue losses. Continue Reading Hawaii Senate Passes Bill Allowing Direct-To-Consumer Shipping of Distilled Spirits

Recently, the Office of Environmental Health Hazard Assessment (OEHHA) proposed to amend the Proposition 65 regulations related to short form warnings. Proposition 65, also known as the Safe Drinking Water and Toxic Enforcement Act of 1986, requires businesses to provide “clear and reasonable” warnings before knowingly and intentionally exposing Californians to listed chemicals. These warnings are required to appear on a wide range of products, including foods. Continue Reading OEHHA Proposes Changes to Prop 65 Short Form Warnings

On January 21, 2021 at 3:00 PM in Eastern Time, the Centers for Disease Control and Prevention (CDC) will host a joint webinar to provide updates on COVID-19 vaccine implementation for food and agriculture essential workers. The webinar will also cover vaccine safety and confidence as well as recommendations for vaccine prioritization.

The panelists for the webinar include:

  • Janell Routh—Medical Officer, COVID-19 Vaccine Task Force, CDC
  • Michelle Colby—Co-Chair Government Coordinating Council, Food and Agriculture Sector, U.S. Department of Agriculture (USDA)
  • LeeAnne Jackson—Co-Chair Government Coordinating Council, Food and Agriculture Sector, Food and Drug Administration (FDA)
  • Caitlin Boon—Associate Commissioner for Food Policy and Response, FDA
  • Kis Robertson Hale—Deputy Assistant Administrator, Office of Public Health Science, USDA Food Safety and Inspection Service

If you are interested in attending the webinar, you can pre-register here. Pre-registration is required to attend the webinar. Please submit questions in advance by emailing eocevent419@cdc.gov. Additional resources and information on COVID-19 prevention and vaccination in the food and agricultural industry can be found here.

We will continue to monitor developments related to the COVID-19 outbreak and its impact on the food and agricultural sector. Should you have any questions regarding this alert, contact your Husch Blackwell attorney Seth Mailhot, Ryan Glenn, or Emily Lyons.

In December 2020, the US Congress voted to pass, and the President signed, the long-awaited Craft Beverage Modernization and Tax Reform Act (“CMBTRA”), making permanent the reduction in the federal excise tax (“FET”) rate paid by distillers.

The CMBTRA was originally signed into law on January 1, 2018 as a two-year tax break for producers, lowering the FET rate from $13.50 to $2.70 per proof gallon on the first 100,000 proof gallons. This tax break meant that many of the smaller and family-run producers could start investing in their businesses, buying equipment they previously couldn’t afford, taking a paycheck, and hiring additional staff.

Many distillers thought the bill was to be made permanent in 2019. Instead, Congress passed a one-year extension, maintaining the reduced FET rate, but leaving many distillers uncertain about the long-term permanence of the law.  Without a permanent passage, the tax rate on spirits producers would increase by 400%.

Distilleries have lost almost 40% of their workforce due to pandemic. A significant tax hike in the current economic conditions could have been disastrous for the industry. The now permanent reduction in the FET rate will help producers survive the pandemic, and continue to create jobs and fast track their growth in the future.

On December 29, 2020, the Alcohol and Tobacco Tax and Trade Bureau (“TTB”) published a final rule in the Federal register that amends TTB’s regulations that govern wine and distilled spirits. Specially, the final rule adds seven new standards of fill for wine and distilled spirits. The additional container sizes are:

Wine Distilled Spirits
355 mL 1.8 L
250 mL 900 mL
200 mL 720 mL
700 mL

 

The final rule comes after TTB published Notices 182 and 183 on July 1, 2019, which proposed to eliminate all but a minimum standard of fill for wine containers and eliminate all but minimum and maximum standards of fill for distilled spirits, respectively. Both notices also sought comments on alternatives to eliminating standards of fill, included authorizing some or all of the petitioned-for sizes discussed in the notices.

After reviewing the almost 2,000 comments, TTB decided not to eliminate the standard of fill for wine and distilled spirits. Rather, TTB is adding the most petitioned-for sizes. These additions, TTB believes, will result in many of the same benefits intended with eliminating the standard of fill, including providing bottlers with more flexibility, facilitating the movement of goods in domestic and international commerce, and providing additional purchasing option to consumers without causing disruption or confusion.

On December 16, 2020, the U.S. Food and Drug Administration (“FDA”) issued a corporate Warning Letter to Whole Foods Market (“Whole Foods”) following 32 recalls Whole Foods conducted over an approximate one year period for undeclared allergen(s).  FDA reported that investigators found similar patterns of recalls in previous years.  According to a Constituent Update accompanying the Warning Letter, FDA has sent eight Warning Letters to companies that have manufactured and distributed foods with undeclared allergens in 2020.

This Warning Letter is significant because it is the first time that FDA has issued a Warning Letter to a retailer for the labeling of allergens.  According to FDA, its action was warranted because the company allegedly “engaged in a pattern of receiving and offering for sale misbranded food products” that contained undeclared allergens over multiple years.  While retail establishments are excluded from certain requirements under the Federal Food Drug and Cosmetic Act, retailers have a responsibility to ensure that food labeled within a store contain accurate allergen declarations as well as have a responsibility to ensure packaged foods under the retailer’s brand also have accurate allergen declarations.  The Warning Letter highlights that a retailer is “responsible for investigating and determining the causes of the violations . . . and for preventing their recurrence or the occurrence of other violations. It is [a retailer’s] responsibility to ensure [the] firm complies with all requirements of federal law and implementing regulations” including when products are relabeled in store.

Over half of the FDA’s 338 recalls in 2020 were associated with allergen labeling issues, according to an analysis by the Food Industry Association.  The FDA considers foods that contain undisclosed allergens as adulterated, and has the authority to take enforcement actions with respect to such products – unless the offending company voluntarily recalls those products first.  With this Warning Letter, FDA is suggesting that food retailers have the responsibility to take proactive steps to ensure food is appropriately labeled for allergens when consumer labeling occurs in store. Continue Reading FDA Reiterates Importance of Allergen Labeling by Issuing Warning Letter Following Repeated Recalls

farm and barn animal rights, ag-gag lawsFor the past 45 years, California’s Agricultural Labor Relations Board (ALRB) has promulgated a regulation requiring producers of agricultural products to give union organizers access to their property.  Access is limited to four 30-day periods per calendar year.  Organizers can access the property one hour before start of work, one hour after end of work, and one hour over the lunch break.  In 1976, the California Supreme Court held that the regulation did not constitute a taking of producers’ property.

The United States Supreme Court recently granted a petition for certiorari in a case challenging the ALRB’s regulation.  In 2016, two producers sued the ALRB, primarily on the theory that the regulation established an easement over their property for the benefit of union organizers and hence constituted a per se physical taking, requiring compensation.  The District Court dismissed the complaint and a divided panel of the Ninth Circuit affirmed.  Over a strong dissent by eight judges, the Ninth Circuit denied rehearing en banc.

The growers argued that the regulation was a per se taking because it allowed a permanent physical invasion of their property.  The panel opinion rejected that theory, because the alleged invasion was not “permanent and continuous.”  Rather, it was limited to three hours a day for not more than 120 days per year.  The opinion also held that the right to exclude others was merely one strand in the bundle of property rights. Continue Reading Ag Producers Challenge Union Access To Property

On December 29, 2020, the U.S. Food and Drug Administration (FDA) announced in a Federal Register notice the 2021 fee schedule for its Over-the-Counter Monograph Drug User Fee Program.  That user fee program was an addition made in the Coronavirus Aid, Relief, and Economic Security (CARES) Act and authorized FDA to assess and collect user fees from qualifying manufacturers of OTC monograph drugs and submitters of OTC monograph order requests.

These user fees concern over-the-counter (OTC) monograph drugs, which are nonprescription drugs without an approved new drug application which are governed by the provisions of section 505G of the Federal Food Drug and Cosmetic Act (21 U.S.C. 355h).  Under the new fee schedule, FDA will assess a fee for certain facilities registered with FDA and for the submission of an OTC monograph order request (OMOR).  An OMOR is an industry request for an administrative order to add, remove, or change an OTC drug monograph, which is submitted under section 505G(b)(5) of the Federal Food Drug and Cosmetic Act (21 U.S.C. § 355h(b)(5)).

The announcement took some by surprise, particularly those in the craft distilling industry that shifted production to FDA regulated hand sanitizers, a type of OTC monograph drug, during the COVID-19 public health emergency.  By December 31, 2020, the Department of Health and Human Services (HHS) took action over FDA’s fee schedule.  In a post on Twitter, the HHS Chief of Staff, citing the small businesses who stepped up to provide hand sanitizer in the face of the pandemic, announced that HHS had “directed FDA to cease enforcement of these arbitrary, surprise user fees.”  HHS Office of Public Affairs (Dec. 31, 2020), at https://twitter.com/SpoxHHS/status/1344782160084037639. Continue Reading Holiday Confusion for the Over-the-Counter Drug Industry: FDA Announces OTC Fee Schedule That HHS Quickly Withdraws