Category: Ag Law

On June 21, 2024, the United States Supreme Court issued an opinion in the long-running dispute between Texas and New Mexico over the 1938 Rio Grande Compact. The Court, in a 5-4 decision, held that the federal government could block an agreement between Texas and New Mexico to resolve their dispute. Although the compact relates to the river, the dispute centers on groundwater pumping. 

Texas filed suit against New Mexico in 2013, alleging that excessive groundwater pumping in New Mexico deprived Texas of its fair share of Rio Grande water under the compact.  Note that lawsuits between states originate in the United States Supreme Court. The Court appoints a Special Master to hold hearings and make recommendations to the Court, which ultimately decides the issues.

Unlike most compacts, the Rio Grande Compact requires New Mexico to deliver water not to the New Mexico/Texas border, but to Elephant Butte Reservoir, a federal project about 100 miles north of the border. Texas alleged that groundwater pumping along the river between the Elephant Butte Reservoir and the state line took water from the river that rightfully belonged to Texas.  

The federal government filed a motion to intervene in the litigation in 2014, alleging that its interest in the federal project at Elephant Butte allowed intervention to protect the government’s rights and obligations. The federal government, through Downstream Contracts, was required to deliver water to an irrigation district in New Mexico, and one in Texas. The Court allowed the federal government to intervene, a relatively rare occurrence, because of the unique circumstances of the case and the fact that its interests aligned with those of Texas.

Texas’ lawsuit focused on increased groundwater pumping between the Elephant Butte Reservoir and the state line. While the federal government had operated the reservoir based on data from 1951 to 1978 (“D2 data”), a time period where groundwater pumping increased significantly in New Mexico, Texas asked for allocations to be based on 1938 data, when there was much less groundwater pumping in New Mexico. The United States, which had operated based on the later for decades, did not request a change.

After 10 years of hearings and litigation, Texas and New Mexico agreed on a consent decree, settling the issues between the states. The agreement continued water allocations based on the D2 period, which favors New Mexico, but measured the water delivery at El Paso, which favors Texas. Complex accounting measures in the agreement ensured that Texas would receive the state’s fair share of water. 

However, the federal government objected to the agreement, claiming that its interests in administering the water project were threatened. In addition, for the first time, the federal government claimed that the water allocation should be based on 1938 levels of groundwater withdrawals. New Mexico estimates that a forced reduction in groundwater withdrawals to 1938 levels would mean a loss of 50,000 jobs and 10% of the state’s gross domestic product.

Justice Jackson, joined by Chief Justice Roberts and Justices Sotomayor, Kagan, and Kavanaugh wrote the majority opinion. The majority found that the federal government had independent claims that would be resolved by the agreement. Given that the government was now a party, the agreement could not resolve the government’s interests without its consent. Since the government’s interests were aligned with those of Texas, and Texas had requested a 1938 baseline, the government was deemed to make a similar request. Given the close connection between the compact, the federal project and the irrigation contracts, the government must agree to any resolution of the case.

Justice Gorsuch, who also authored the Court’s 2018 unanimous opinion allowing the United States to intervene, wrote the dissenting opinion, and was joined by Justices Thomas, Alito, and Barrett. The dissenters summarized their position as follows:

The Court’s decision … defies 100 years of this Court’s water law jurisprudence. And it represents a serious assault on the power of States to govern, as they always have, the water rights of users in their jurisdictions. The Special Master issued a detailed 115-page report laying all this out. His views were wise, his recommendations sound, and, respectfully, we should have done as he suggested.

The dissenters opine that the Court denied the entry of the consent decree “[b]ecause the federal government demands as much.” In addition, the federal government could not assert these claims alone in the Court but would have to file a lawsuit in the lower court.

Given the number of federal water projects in the United States, and increasing disputes between surface water and groundwater users, this decision could allow the federal government to take control of groundwater allocations in a large number of situations. Groundwater users generally lose these disputes because groundwater withdrawals generally began after surface water withdrawals. Since the surface water users have seniority, surface water withdrawals receive priority. The decision may cause large cuts in groundwater withdrawals in New Mexico, as well as put groundwater users in jeopardy wherever federal water projects exist. As in this case, the competing uses will likely include large agricultural users. New Mexico and Texas will now have to start back at square one.

On June 28, 2024, the United States Supreme Court issued its highly anticipated decision in Loper Bright Enters. v. Raimondo, No. 22-451 (2024). The case focused on the question of federal agency authority, and asked the Court to revisit its decision in the 40-year-old Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837 (1984) which famously established a legal test for judges to use when deciding whether a federal agency had acted outside its statutory authority. In a 6-3 decision, the Supreme Court officially overturned Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., ruling that “courts may not defer to an agency interpretation of the law simply because a statute is ambiguous[.]”

Chevron deference is a legal doctrine established by the Supreme Court to help courts determine when a judge should defer to a federal agency’s statutory interpretation. To apply Chevron deference, courts follow a two-step framework. First, the court should consider “whether Congress has directly spoken to the precise question at issue.” To make that determination, the court will review the relevant statute to see whether the language clearly addresses the issue targeted by the agency’s regulation or whether the statutory language is “ambiguous.” 

If a court finds that the language is ambiguous, it will proceed to step two which requires the court to determine whether the agency’s statutory interpretation is “reasonable.” If the court finds that the interpretation is reasonable, then it must defer to the agency even if the court would have adopted a different interpretation. If the court concludes that the agency’s interpretation is not reasonable, then it may overturn the agency’s regulation. 

In the decades since Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc. was first decided, it has become highly controversial. While some view Chevron deference as another tool of judicial interpretation, others regard it as a limitation on judicial authority.  

At the Supreme Court, the plaintiffs in Loper Bright Enters. v. Raimondo challenged the doctrine of Chevron deference, specifically asking the Court to either overrule the doctrine or clarify its scope. In a majority ruling authored by Chief Justice Roberts, the Supreme Court overruled the doctrine, finding that the Administrative Procedure Act (“APA”) requires courts to “exercise their independent judgment” when determining whether an agency has acted outside of its statutory authority, and that “courts may not defer to an agency interpretation of the law simply because a statute is ambiguous[.]” The majority relied on past Supreme Court cases that address the role of courts and federal agencies in statutory interpretation, and the APA to reach its conclusion.

In overturning Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., the Supreme Court began by noting that Article III of the United States Constitution assigns to the federal judiciary the responsibility to hear and decide all “cases” and “controversies.” The Court then cited the foundational Supreme Court opinion, Marbury v. Madison, 5 U.S. (1 Cranch) 137 (1803). In that early case, which is regarded as establishing the scope of judicial review, the Supreme Court held that it is “the province and duty of the judicial department to say what the law is.” 

 Next, the Court reviewed its pre-Chevron case law on agency deference. The Supreme Court cited United States v. Moore, 95 U.S. 760 (1878) which explains that courts should give “the most respectful consideration” to federal agency interpretations of statutes they are tasked with administering because employees of such agencies are considered “masters of the subject[.]” The Court also cited Skidmore v. Swift & Co., 323 U.S. 134 (1944), where the Supreme Court held that a federal agency’s statutory interpretations “constitute a body of experience and informed judgement to which courts and litigants [could] properly resort for guidance,” but that such interpretations would not control a reviewing court’s own statutory interpretations.  After reviewing these cases, the majority concluded that prior to its ruling in Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., the Supreme Court had consistently held that while a federal agency’s statutory interpretations could be given due respect by a reviewing court, it was ultimately up to the judiciary to determine the proper meaning of the law.

Along with reviewing its own case law, the Supreme Court also examined the text of the APA. The APA is the federal law that governs the way federal administrative agencies develop regulations, and  establishes standards for judicial review of agency actions.  The law states that “[t]o the extent necessary to decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action.” 5 U.S.C. § 706. According to the Court, that statutory language represents Congress’s intent to have reviewing courts, not agencies, “decide all relevant questions of law” and “interpret […] statutory provisions.” The Court concluded that the Chevron doctrine cannot be reconciled with the APA because Chevron deference requires courts to adopt reasonable agency interpretations of statutory language, even if the court would have reached a different interpretation. According to the majority, this does not comply with the APA’s requirement that courts “shall decide all relevant questions of law.”

Based on its review of both previous Supreme Court decisions, and the text of the APA, the majority in Loper Bright Enters. v. Raimondo concluded that “[i]n an agency case as in any other […] there is a best reading [of the law] all the same – ‘the reading the court would have reached’ if no agency were involved.” Following this ruling, when a court is presented with a case that involves statutory interpretation, it may not “defer to an agency interpretation of the law simply because a statute is ambiguous.” Instead, it is the role of the court to apply its own judgement to determine what the law says.

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Rollins, Bridgit. “In Landmark Ruling SCOTUS Overturns ‘Chevron’ Deference.” Southern Ag Today 4(30.5). July 26, 2024. Permalink

Labor is in high demand for agriculture in the United States (“U.S.”) and the H-2A visa program is an important component of this critical issue. Over the last few years, there has been a growing interest in amending regulations related to the H-2A program. On September 15, 2023, DOL issued a notice of proposed rulemaking in the Federal Register to amend its regulations governing the H-2A visa program. The proposed rule went through a sixty-day comment period, and now DOL released its final rule.

The H-2A program is a visa program for temporary and seasonal agricultural workers authorized through the Immigration and Nationality Act. The purpose of this program is to meet the U.S. agricultural labor needs by allowing employers to employ temporary foreign workers. To qualify for the program, an employer must “offer a job that is of a temporary or seasonal nature, demonstrate that there are not enough U.S. workers who are able, willing, qualified, and available to do the temporary work, show that employing H-2A workers will not adversely affect the wages and working conditions of similarly employed U.S. workers, and submit a single valid temporary labor certification from the U.S. Department of Labor with the H-2A petition”. U.S Citizenship and Immigration Services, H-2A Temporary Agricultural Workers.

On April 26, 2024, DOL announced it had finalized its “Improving Protections for Workers in Temporary Agricultural Employment in the United States” rule. The purpose of the rule, as laid out by DOL, is to promote employer accountability and to “ensure farmworkers employed through the H-2A program are treated fairly, have a voice in their workplace, and are able to perform their work safely.” DOL adopted most of the provisions in the proposed rule as they were proposed and modified or added other provisions. The final rule addresses multiple areas – increasing protections for workers who advocate for better working conditions, creating new or clarifying existing definitions critical to the H-2A program, and measures related to transparency in the H-2A program.

The final rule adopted the proposed provisions that will add protections for workers who self-organize to change working conditions. Under the final rule, employees will be protected from intimidation, threats, restraint, coercion, or any forms of discrimination for self-organization. Additionally, the final rule adopted the proposed provision preventing employers from restricting employees from granting access to their living quarters, common areas, and outdoor spaces to guests during nonproductive times. Under the final rule, employers would be able to impose reasonable restrictions on access to living quarters, common areas, and outdoor spaces, for worker safety or enjoyment of housing.

The proposed rule clarified that an H-2A worker may be terminated for cause, for failing to meet productivity standards or failing to comply with employer policies or rules. The final rule adopted this provision and added an additional reason employers may terminate a worker for cause. Under the final rule, an employer may also terminate an H-2A worker for “failing to satisfactorily perform job duties in accordance with reasonable expectations based on criteria listed in the job offer.” The proposed rule outlined six criteria that must be satisfied for an employer to terminate an employee for cause, and the final rule adopted the following five criteria:

1. “The employee has been informed (in a language understood by the worker) of the policy, rule, or productivity standard, or reasonably should have known of the policy, rule, or productivity standard;
2. Compliance with the policy, rule, or performance expectation is within the workers’ control;
3. The policy, rule, or performance expectation is reasonable and applied consistently to the employer’s H-2A workers and workers in corresponding employment; 
4. The employer undertakes a fair and objective investigation into the job performance or misconduct; and
5. The employer corrects the worker’s performance or behavior using progressive discipline, which is a system of graduated and reasonable responses to an employee’s failure to satisfactorily perform job duties or comply with employer policies or rules.”

Lastly, the proposed rule and now the final rule seeks to provide transparency on the wages paid to H-2A employees. First, the proposed rule would require that employers disclose applicable rates in the job order, including any piece rate or the highest applicable hourly rate. This provision was adopted in the final rule. Additionally, the final rule adds a minor change to the proposed provision that requires employers to pay workers daily during a delay. The change adds that employers must pay employees for minor delays, which are identified in the final rule as less than fourteen days. Under the final rule, if the employer does not notify the employee or state workforce agency of a delay within the required timeframe, the employer must pay the highest hourly wage under the offered wage rate regulations. Lastly, the final rule adds provisions amending the job orders and wage rates for herding and range livestock jobs. Under the final rule, all applicable rates of pay must be included in the job order and employers may prorate the wage rate in specified circumstances. 

The rule went into effect on June 28, 2024. However, only applications for H-2A employer certifications submitted to DOL on or after Aug. 29, 2024, will be processed according to the new rules.

Capaldo, Samantha. “Department of Labor Finalizes New H-2A Regulations.” Southern Ag Today 4(29.5). July 19, 2024. Permalink

The Farm Bill proposal by Rep. Glenn “G,T.” Thompson has made it through the initial markup and passed through the House Agricultural Committee. While there is still a long road between now and what is ultimately enacted, there are a few provisions in the proposed bill of particular interest to folks in animal agriculture. 

One proposed provision would prohibit states from setting conditions for sale on products derived from “covered livestock” that are different than those imposed by the state where the animal was raised.  As a reminder, the US Supreme Court recently ruled that states do have the ability to set sales restrictions, allowing California to enforce Proposition 12.  If this proposal is enacted, it would prohibit California (and Massachusetts) from enforcing their current sales restrictions.  Additionally, it would prevent other states (such as New York, which is considering a similar bill), from enforcing any in the future.  Note, however, that the definition of “covered livestock” in the farm bill proposal specifically excludes laying hens.  In other words, the provisions of Prop 12 covering pork and veal products would not be enforceable, but the provisions requiring cage free egg production would be.  Similarly, other states that have passed or are considering laws requiring specified types of production methods for egg laying hens could still enforce those requirements.

Another proposed provision would create a pilot program allowing some custom exempt facilities to sell meat products directly to consumers.  “Custom exempt” does not require continuous inspection by a FSIS or state inspector during the slaughter process.  Currently, “custom exempt” meat cannot be sold, and is instead only available for consumption by the owner of the living animal.  More information on that here.  The proposal would allow participating custom exempt plants or customers who have animals processed at a custom exempt plant to sell the meat to the public, conditioned on the meat not being re-sold past the original buyer.  This pilot program would operate until 2029.

The Farm Bill is still a moving target, and provisions may look very different when/if they are ultimately passed. However, both of these provisions would both have a significant impact for livestock producers and should be watched carefully during the process.  

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Rumley , Elizabeth. “Animal Ag in the “Farm, Food and National Security Act of 2024”. Southern Ag Today 4(25.5). June 21, 2024. Permalink

On May 17, 2024, the USDA’s new “Product of the USA” rule took effect nationwide. At your local meat counter, “Product of the USA” now has a new meaning. Previously, labels using “Product of the USA,” “Made in the USA” and use of the American flag imagery could be used whenever any single part of the processing of meat, poultry and eggs occurred within the U.S. This meant that even where the only processing involved was repackaging on U.S. soil, labels could claim that the product was “Made in the USA.” In a 2022 USDA conducted study, 63% of consumers mostly incorrectly believed that “Product of the USA” meant that all production steps occurred in the U.S., an additional 21% reported not knowing what “Product of the USA” meant, while only 16% of consumers could correctly define this marketing claims.^[i]

On March 11, 2024, USDA Secretary Tom Vilsak announced USDA’s new rule for labeling meat, poultry, and eggs as “Product of the USA” or “Made in the USA,”, as well as the use of the American flag on labels. Under the new rule, these claims may only be used if the product is derived from animals born, raised, slaughtered, and processed in the United States. Meaning, every step from birth to processing must be done in the U.S. in order to use these marketing claims. The same is true whether it is a single-ingredient product, such as ground beef, or a multi-ingredient product such as pork sausage. With the exception for spices and flavorings, which may be of foreign origin, each individual ingredient must be of U.S. origin and entirely processed within the United States. Compliance for those choosing to use these marketing claims is mandated by January 1, 2026. The new rule is intended to better align with consumer understanding of the label claims. In the announcement of the new rule, Vilsak stated that consumers should be able to rely on the packaging claims of meat, poultry and egg products which they are purchasing, without hidden nuances and misleading claims. 

As we saw with country-of-origin labeling (COOL), Mexico and Canada have openly expressed objection to the new Product of the USA rule in terms of compliance with existing trade agreements, suggesting that the rule violates the United States-Mexico-Canada Agreement (USMCA) and U.S. obligations to the World Trade Organization by discriminating against Mexico and Canada exports and ignoring economic integration principles. Further, Mexico alleges that the rule hinders binational production chains, ignores North America’s extensive integration of meat and livestock industries, and may result in food chain disruptions.^[ii] It is anticipated that the countries will consult and work towards a mutually agreeable resolution, as is first required by USMA’s dispute resolution process.

This conflict follows on the heals of a U.S.-Mexico USMCA dispute regarding Mexico’s ban on biotech and genetically modified (GM) corn, initially in tortillas and dough, with the intent to gradually ban the use of biotech and GM corn in all products intended for human and animal consumption. The U.S. alleges that Mexico’s ban is not based in science and undermines market access guaranteed by the USMCA. In August of 2023, the U.S. established a dispute panel under provisions of the USMCA in an effort to ensure that U.S. producers continue to have “full and fair access to the Mexican market.”^[iii] A hearing on this dispute is scheduled for June 2024 with an expected report and decision by the dispute panel in November 2024.

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^[i]https://www.fsis.usda.gov/sites/default/files/media_file/documents/Product_of_USA_Consumer_Survey_Final_Report.pdf

^[ii] Gobierno De Mexico, Press Release form the Ministry of Agriculture. March 11, 2024. https://www.gob.mx/agricultura/prensa/press-release-from-the-ministry-of-agriculture

^[iii] Office of the U.S. Trade Representative, Press Release. August 17, 2023. https://ustr.gov/about-us/policy-offices/press-office/press-releases/2023/august/united-states-establishes-usmca-dispute-panel-mexicos-agricultural-biotechnology-measures

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Friedel, Jennifer. “Product of the U.S.A. Rule and Trade Implications.” Southern Ag Today 4(24.5). June 14, 2024. Permalink