Ranchers Cattlemen Action Legal Fund v. United States Department Of Agriculture

We must decide whether the district court erred in issuing a preliminary injunction prohibiting the implementation of a regulation of the United States Department of Agriculture ("USDA") permitting the resumption of the importation of Canadian cattle into the United States. We conclude that it did and therefore reverse the district court.

At the heart of this case lies a relatively new cattle disease caused by the practice of feeding cows, herbivores by nature, the brains and other central nervous system tissues of other cows. Technically known as Bovine Spongiform Encephalopathy ("BSE"), this disease, popularly known as mad cow disease, has spread from farms in England to 25 countries around the world since its discovery in 1986.

As BSE spread throughout the globe during the past 20 years, USDA instituted a policy of barring the importation of ruminants1 and ruminant products from countries where BSE was known to exist. In a final rule entitled Bovine Spongiform Encephalopathy: Minimal Risk Regions and Importation of Commodities; Final Rule and Notice, 70 Fed.Reg. 460 (Jan. 4, 2005) (the "Final Rule"), USDA relaxed this longstanding practice, allowing limited ruminant imports from Canada, despite the fact that two cases of BSE had been found in Canada at the time.

Plaintiff-Appellee, Ranchers Cattlemen Action Legal Fund United Stockgrowers of America ("R-CALF"), successfully blocked the implementation of the Final Rule, convincing the court below to find the rule arbitrary and capricious under the Administrative Procedure Act ("APA"), 5 U.S.C. § 706(2), and to issue a preliminary injunction prohibiting its enforcement. See Ranchers Cattlemen Action Legal Fund United Stockgrowers of Am. v. United States Dep't of Agric., 359 F.Supp.2d 1058 (D.Mont.2005) ("R-CALF I"). Because we conclude that the district court applied an incorrect legal standard, we reverse.2

BSE was first diagnosed in England in the late 1980s. This new disease spread rapidly, infecting thousands of English cattle and eventually reaching countries all over the globe. Although the disease has since been largely contained, it continues to persist, and it resides at the center of the current lawsuit.

BSE is a species of Transmissible Spongiform Encephalopathy ("TSE"), a family of degenerative neurological diseases that affects a wide range of animals, including sheep, goats, and deer, as well as humans. Although there remains some dispute, it is widely believed that BSE and other TSEs are caused by prions, abnormally shaped and extremely hardy proteins that were only recently discovered.

TSEs have a debilitating neurological impact on their victims. After an incubation period of months or years, the diseases create myriad tiny holes in the brain, slowly deteriorating their victims' mental and physical abilities until death eventually results. In cattle, BSE has an incubation period of two to eight years, during which time the infected animal shows no outward sign of the illness. Once the disease progresses, however, infected cattle begin showing symptoms within two to three months. These symptoms can include nervousness or aggression, abnormal posture, impaired coordination, decreased milk production, and loss of body condition despite continued appetite.

At the height of the BSE epidemic in the United Kingdom, tens of thousands of cattle were confirmed to have the disease, and by some estimates the number of infected cattle in the United Kingdom may have reached into the millions. All told, there have been more than 187,000 confirmed cases of BSE in cattle worldwide, over 95 percent of which have occurred in the United Kingdom.

Epidemiological investigations in England quickly determined that BSE was likely spread through cattle feed that was infected with the BSE agent. The blame for the contaminated feed fell squarely on the practice, common in Europe at the time, of creating high-protein cattle feed through the "recycling" of otherwise unusable cattle parts. This process is known as "rendering," and involves placing animal protein in large tanks and cooking at temperatures high enough to kill most microorganisms.3 Although the rendering process is able to eliminate most bacterial and viral diseases, the BSE agent is resistant enough to heat and other sterilization processes to withstand the conversion into feed. Infected tissue from a single infected cow, when rendered into cattle feed, could therefore be fed to hundreds of cattle, exposing them all to the possibility of infection.

Several years after the discovery of BSE, the disease became a matter of much more serious concern. In 1996, the British government announced that a new form of TSE in humans, variant Creutzfeldt-Jakob Disease ("vCJD"), was likely caused by human consumption of cattle products that were contaminated with the BSE agent. To date, only approximately 150 cases of vCJD have been identified worldwide, the vast majority of which occurred in England during the height of its BSE epidemic. Although vCJD has been diagnosed in two people in North America, in both cases the disease is believed to have been contracted in England; no case of vCJD has ever been linked to North American beef.4

Because BSE is a relatively new disease, and because prions are a relatively recent scientific discovery, the state of knowledge surrounding BSE is somewhat incomplete. Efforts to understand the disease fully have been hampered because current testing methodology is not particularly effective in identifying it. No live animal test for BSE exists, meaning that cows must be slaughtered before they can be tested. In addition, the tests that do exist are unable to detect the disease during the vast majority of the time a cow is infected. The earliest point at which current tests can detect the disease is two to three months before an animal starts showing clinical signs of infection. BSE has an incubation period that lasts for four to five years on average, however, during which the animal carries the disease but shows no outward symptoms.

Given these testing limitations, there remain a number of open public health questions surrounding BSE, in particular concerning the means through which the disease can be transmitted. The only documented method of BSE transmission is through the consumption of feed contaminated with the BSE agent. Some research involving both BSE and other TSEs, however, suggests that BSE may be transmitted through means other than contaminated feed. For example, in experiments on sheep, mice, and hamsters, both BSE and scrapie, a TSE disease that affects sheep, were transmitted through whole blood transfusion. At least one case of vCJD is also believed to have been transmitted through human blood transfusion. Other studies have suggested that prions can be exchanged through saliva, while still others suggest that BSE may be transmitted maternally.

Despite the highly infectious nature of the BSE agent, evidence suggests that meat from cows infected with BSE may be safely consumed by humans because BSE does not occur in all parts of its host. Specifically, the BSE agent appears not to exist in muscle tissue of cattle. Rather, the disease is generally confined to the central nervous system — the brain, spinal cord, eyes, dorsal root ganglia, and trigeminal ganglia5 — although it has also been found in the tonsils and distal ilium, a part of the small intestine, of cattle. Research on other TSEs, however, calls into question whether the BSE agent is truly limited to these tissues. Specifically, some research has suggested that sheep infected with scrapie may have prions in their muscle tissue.

Despite the fact that it has only been known to exist for 20 years, the geographic range of BSE is substantial. From England, it has spread to cattle in most of Europe, as well as in the Middle East, Japan, and Canada. 9 C.F.R. § 94.18(a)(1) (2003). As of the date of the district court's opinion, however, BSE had never occurred in a cow native to the United States. That changed on June 24, 2005, when the Secretary of Agriculture announced that a cow in Texas had tested positive for BSE. Statement by Dr. John Clifford Regarding the Epidemiological Investigation into the recently confirmed BSE case (June 29, 2005), available at http://www.aphis.usda.gov/lpa/issues/bse/bse.html. A subsequent investigation revealed that the cow was born in the United States approximately 12 years ago.

The federal government has implemented a number of safety measures to minimize the threat of BSE to U.S. citizens and livestock. These precautions consist of an interlocking regulatory framework overseen by three different federal agencies. First and foremost, since 1997, the Food and Drug Administration ("FDA") has overseen a feed ban that prohibits the feeding of ruminant protein to other ruminants. See 21 C.F.R. § 589.2000 (2005). Such feed bans are generally the first line of defense against the spread of BSE, and they have been highly effective in other countries. The prevalence of BSE in the United Kingdom, for example, dropped drastically after it implemented its feed ban.

Critics, however, question whether the FDA feed ban is truly effective. See, e.g., Thomas O. McGarity, Federal Regulation of Mad Cow Disease Risks, 57 Admin. L.Rev. 289, 307 (2005). Given the highly infectious and resilient nature of the BSE agent, these critics argue that the FDA feed ban has "gaps" that could result in the use of feed derived from rendered cattle protein as feed for cattle. For example, cattle are allowed to be fed human "plate waste" from establishments such as amusement parks, despite the fact that this plate waste may contain beef products. In addition, the feed ban allows rendered cattle protein to be fed to non-ruminants, such as pigs and chickens. Thus, BSE could be spread through mislabeled feed or through misfeeding on a farm. Finally, waste from the floor of chicken coops is commonly scooped up and fed to cattle; uneaten chicken feed or chicken droppings that contain the BSE agent could therefore be fed to cattle via this procedure.

An agency within USDA, Food Safety and Inspection Services ("FSIS"), oversees a second line of defense against BSE. FSIS promulgates regulations to ensure that the nation's food supply of meat, eggs, and poultry is safe. See http://www.fsis.usda.gov/About — FSIS/index.asp. These regulations restrict certain cattle parts from being incorporated into the human food supply. For example, FSIS regulations prohibit the use of "downer" cattle6 as human food because inability to stand is a common BSE symptom. 9 C.F.R. § 309.2 (2005). FSIS regulations also prohibit those cattle parts that have demonstrated BSE infectivity, known as specified risk materials ("SRMs"), from being used in human food.7 9 C.F.R. § 310.22 (2005). Finally, FSIS regulations prohibit certain methods of slaughter and butchering thought to increase the risk of contaminating meat with central nervous system tissues.8

Another branch of USDA, Animal and Plant Health Inspection Services ("APHIS"), provides the final link in the regulatory framework. APHIS promulgates regulations designed to protect the United States from the introduction of BSE from other countries. To achieve this goal, until the Final Rule was promulgated, APHIS banned the importation of all ruminants and ruminant products from countries where BSE was known to exist. See 9 C.F.R. §§ 93.401, 94.18 (2003).

APHIS has also been actively involved in the development of international guidelines to fight the spread of BSE. In this role, APHIS works with the Office International des Epizooties ("OIE"), the organization recognized by the World Trade Organization as responsible for the development and periodic review of standards, guidelines, and recommendations with respect to animal health and "zoonoses" (diseases that are transmissible from animals to humans).

Early this year, APHIS announced its decision to relax its ban on the importation of ruminants and ruminant products from countries where BSE was known to exist. The genesis of this policy change occurred on May 20, 2003, when a cow in Alberta was diagnosed with BSE. This represented not only the first case of BSE native to North America, but it wreaked havoc on the highly integrated beef market that exists between the United States and Canada. Shortly after the infected cow was announced, then Secretary of Agriculture Veneman issued an Emergency Order adding Canada to the list of regions where BSE was known to exist. Change in Disease Status of Canada Because of BSE, 68 Fed.Reg. 31,939 (May 29, 2003). Under the regulations then in effect, all imports of live ruminants or ruminant meat products from Canada were prohibited. See 9 C.F.R. §§ 93.401, 94.18 (2003).

Beginning in August 2003, the Secretary incrementally began moving to reopen the border to Canadian ruminants and ruminant products and to reestablish the voluminous North American beef trade. On August 8, 2003, the Secretary announced that she would begin allowing certain "low-risk" ruminant products to be imported into the United States from Canada, the most significant of which was "[b]oneless bovine meat from cattle under 30 months of age." See Final Rule, 70 Fed.Reg. at 536; USDA News Release No. 0281.03 (Aug. 8, 2003), available at http://www.usda.gov/wps/portal.

On November 4, 2003, the Secretary published notice of a proposed rule, seeking to amend the regulations governing the importation of ruminants from countries where BSE is known to exist. Bovine Spongiform Encephalopathy; Minimal Risk Regions and Importation of Commodities, 68 Fed.Reg. 62,386 (Nov. 4, 2003). The proposed rule would have allowed the importation of ruminants from countries in a newly created category — "regions that present a minimal risk of introducing [BSE] into the United States via live ruminants and ruminant products." Id. The new regulation proposed to designate only Canada as a minimal-risk region. Id. The comment period for the proposed rule was set to expire on January 5, 2004. Id.

A month and a half after the Secretary published the notice of proposed rule, on December 23, 2003, a cow in Washington State was diagnosed with BSE. Bovine Spongiform Encephalopathy; Minimal Risk Regions and Importation of Commodities, 69 Fed.Reg. 10,633 (Mar. 8, 2004). An investigation revealed that the cow was born in Canada and was imported into the United States in 2001. Id. at 10,634. Given that the cow was born before Canada's feed ban went into effect in 1997, USDA determined that the likeliest cause of its BSE infection was contaminated feed. Id. Nevertheless, in response to this discovery USDA reopened the comment period for its proposed rule for an additional 30 days, extending it until April 7, 2004. Id. at 10,633.

On April 19, 2004, USDA moved, without public notice, to expand the types of ruminant products eligible to be imported from Canada.9 Ranchers Cattlemen Action Legal Fund United Stockgrowers of Am. v. United States Dep't of Agric., 2004 WL 1047837 (D.Mont.2004) ("R-CALF TRO"). R-CALF sued to prevent this move, and the district court granted a temporary restraining order on April 26, 2004, barring the Secretary from proceeding with that plan. Id.

On January 4, 2005, USDA published its Final Rule. The agency, after having considered 3,379 comments from interested parties, proceeded with its plan to reopen the border to Canadian ruminants and ruminant products. Final Rule, 70 Fed. Reg. at 460, 469. Among other provisions, the Final Rule allowed the importation of Canadian cattle under 30 months of age provided the cattle were immediately slaughtered or fed and then slaughtered.10 Id. at 548. The Final Rule also permitted the importation of beef products from Canadian cattle of all ages. Id. at 461, 465. The rule was scheduled to go into effect on March 7, 2005. Id. at 460.

At roughly the same time that USDA published its Final Rule, two additional cases of BSE were confirmed in Alberta — one on January 2, 2005, and another on January 11. Bovine Spongiform Encephalopathy; Minimal Risk Regions and Importation of Commodities; Finding of No Significant Impact and Affirmation of Final Rule, 70 Fed.Reg. 18,252, 18,254 (Apr. 8, 2005). One of these cows, like the two previous Canadian cattle diagnosed with BSE, was born before Canada's feed ban; the other, however, was born shortly thereafter. Id. at 18,258. Once again, USDA attributed the infections in both cows to contaminated feed manufactured before Canada's feed ban went into effect. Id. at 18,255. Nonetheless, USDA indefinitely suspended the implementation of the portion of its Final Rule that permitted the importation of beef products from cattle over 30 months of age.11 Bovine Spongiform Encephalopathy; Minimal Risk Regions and Importation of Commodities; Partial Delay of Applicability, 70 Fed. Reg. 12,112 (Mar. 11, 2005).

Six days after USDA published the Final Rule, R-CALF filed this action, seeking to enjoin the rule's implementation.12 In its complaint, R-CALF alleged that USDA's rulemaking violated the Administrative Procedure Act ("APA"), the Regulatory Flexibility Act ("RFA"), and the National Environmental Policy Act ("NEPA"). On February 1, 2005, three weeks after filing its complaint, R-CALF filed its application for a preliminary injunction to enjoin the Final Rule pendente lite.

On March 2, 2005, the district court issued a preliminary injunction, barring USDA from implementing its Final Rule. See R-CALF I, 359 F.Supp.2d at 1074. The district court's primary reason for enjoining the Final Rule was its finding that the rule was arbitrary and capricious in violation of the APA. Id. at 1063-69; see also 5 U.S.C. § 706(2). The district court's overarching concern was that USDA, "ignoring its statutory mandate to protect the health and welfare of the people of the United States, established its goal of re-opening the border to the importation of live beef from Canada and thereafter attempted to work backwards to support and justify this goal." R-CALF I, 359 F.Supp.2d at 1066. Given the agency's "preconceived intention, based upon inappropriate considerations, to rush to reopen the border regardless of uncertainties in the agency's knowledge," the district court found the Final Rule to be arbitrary and capricious. Id. at 1074.

The district court specifically based its determination that the Final Rule was arbitrary and capricious under the APA on six independent grounds. First, the court found that USDA failed adequately to quantify the risk of Canadian cattle to humans, instead relying on a qualitative statement that the risk was "low" or "very low." Id. at 1064-65. Without a quantitative assessment, the district court felt that it "ha[d] no way of assessing the merits of the USDA's actions." Id. at 1065.

Second, the district court held that USDA had erroneously calculated the prevalence of BSE in the Canadian herd. Id. at 1065-66. USDA had divided the number of cases in the last 12 months (two) by the total size of the Canadian herd over 24 months of age (5.5 million) to arrive at a prevalence rate of approximately 0.4 cases per million head of adult cattle. Final Rule, 70 Fed.Reg. at 464. The district court rejected this calculation, however, and instead adopted R-CALF's measure of 5.5 cases per million head.13 R-CALF I, 359 F.Supp.2d at 1066.

Third, the district court found that USDA's reliance on the Canadian feed ban was unjustified. Id. at 1066-68. The court found that the science was uncertain in this area and that methods of BSE transmission other than consumption of contaminated feed may exist. Id. at 1066. It also found that the feed ban had not been in place an adequate amount of time, and that it was not fully effective because it allowed both bovine blood and rendered animal fat in cattle feed. Id. at 1067-68.

Fourth, the court found that USDA's reliance on the removal of SRMs to protect human health was also unjustified. Id. at 1068. According to the district court, evidence indicated that "it is no longer reasonable to presume that there is no risk of exposure to BSE infectious agents once an SRM removal requirement is in place." Id.

Fifth, the district court found that USDA's failure to ban the importation of pregnant cows was arbitrary and capricious. Id. at 1069. According to the district court, BSE may be transmitted both maternally and through fetal bovine blood. Id. Thus, because the Final Rule did not require heifers to be pregnancy checked as a condition of entry into the United States, calves born to imported cattle could become "a vector for BSE infection in the U.S." Id.

Finally, the district court found that USDA had failed to respond adequately to comments recommending mandatory BSE testing for Canadian cattle. Id. Because testing can identify a BSE infection up to three months before the cow shows outward signs of the disease, the court found that testing would be useful because it would "detect some cases of BSE that would otherwise go undetected." Id. In light of the "irreparable injury" that it believed a case of BSE would cause, the court viewed USDA's actions as arbitrary and capricious. Id.

In addition to finding the Final Rule arbitrary and capricious under the APA, the district court also relied on two other bases for enjoining its implementation. First, the court held that USDA had failed to satisfy NEPA's procedural requirements, both by failing to make its environmental assessment available for public review and comment before the Final Rule was published, and by failing to prepare an environmental impact statement. Id. at 1069-71. Second, the court concluded that USDA had violated the RFA by failing to consider whether product labeling or voluntary BSE testing would have mitigated the Final Rule's impact on small businesses. Id. at 1071-73.

Based on the above, the district court found that R-CALF had raised "very serious questions on the merits." Id. at 1074. The district court also found that R-CALF, and the American public, would be irreparably harmed by allowing the importation of Canadian beef. Id. at 1073-74. The court specifically found that the introduction of BSE into the United States would cause irreparable harm to the American public because of the increased risk of vCJD to consumers of beef. Id. at 1073. Further, it found that the association with Canadian beef would stigmatize all U.S. meat, causing a "serious, irreparable impact on ranchers in the U.S. and the U.S. economy." Id. Finally, the district court found that the NEPA violation, in and of itself, would cause irreparable harm and warranted preliminary injunctive relief. Id.

In light of its determination that R-CALF was likely to succeed on the merits, and that the balance of hardships tipped in R-CALF's favor, the district court issued a preliminary injunction barring implementation of the Final Rule. Id. at 1074. Two weeks later, USDA filed this timely appeal.

"A district court's order granting a preliminary injunction is subject to limited review." Price v. City of Stockton, 390 F.3d 1105, 1109 (9th Cir.2004). We will reverse "only where the district court abused its discretion or based its decision on an erroneous legal standard or on clearly erroneous findings of fact." Id. A reviewing court should generally refrain from reviewing "the underlying merits of the case." Southwest Voter Registration Educ. Project v. Shelley, 344 F.3d 914, 918 (9th Cir.2003) (en banc). Rather, "[a]s long as the district court got the law right, it will not be reversed simply because the appellate court would have arrived at a different result if it had applied the law to the facts of the case." Earth Island Inst. v. United States Forest Serv., 351 F.3d 1291, 1298 (9th Cir.2003).

"The standard for granting a preliminary injunction balances the plaintiff's likelihood of success against the relative hardship to the parties." Clear Channel Outdoor, Inc. v. City of Los Angeles, 340 F.3d 810, 813 (9th Cir.2003). This circuit has recognized two different sets of criteria for preliminary injunctive relief. Under the traditional test, a plaintiff must show: "(1) a strong likelihood of success on the merits, (2) the possibility of irreparable injury to plaintiff if preliminary relief is not granted, (3) a balance of hardships favoring the plaintiff, and (4) advancement of the public interest (in certain cases)." Save Our Sonoran, Inc. v. Flowers, 408 F.3d 1113, 1120 (9th Cir.2005). The alternative test requires that a plaintiff demonstrate "either a combination of probable success on the merits and the possibility of irreparable injury or that serious questions are raised and the balance of hardships tips sharply in his favor." Id. (emphasis in original). "These two formulations represent two points on a sliding scale in which the required degree of irreparable harm increases as the probability of success decreases. They are not separate tests but rather outer reaches of a single continuum." Id.

As we conclude below, the district court's finding that R-CALF had a strong likelihood of success on the merits was premised on legal error. Further, we disagree with the district court's assessment of the irreparable harm threatened by the Final Rule. Thus, we hold that a preliminary injunction was unwarranted in this case.

The district court identified three distinct grounds for its finding that R-CALF had a strong likelihood of success on the merits: (1) that the Final Rule was arbitrary and capricious under the APA; (2) that USDA had failed to satisfy NEPA's procedural requirements; and (3) that USDA had failed adequately to consider the Final Rule's effect on small businesses, as required by the RFA. None of these grounds withstands scrutiny.

The APA provides that a court, when reviewing agency action, shall "hold unlawful and set aside agency action, findings, and conclusions found to be ... arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706. An agency's action violates this standard if

the agency has relied on factors which Congress has not intended it to consider, entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise.

City of Sausalito v. O'Neill, 386 F.3d 1186, 1206 (9th Cir.2004) (quoting Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983)).

Regulations are presumed to be valid, and therefore review is deferential to the agency. Nat'l Ass'n of Home Builders v. Norton, 340 F.3d 835, 841 (9th Cir.2003). All that is required is that the agency have "considered the relevant factors and articulated a rational connection between the facts found and the choices made." Id. Further, "[t]he court is not empowered to substitute its judgment for that of the agency." Ariz. Cattle Growers' Ass'n v. United States Fish & Wildlife, 273 F.3d 1229, 1236 (9th Cir.2001). Deference to the informed discretion of the responsible federal agencies is especially appropriate, where, as here, the agency's decision involves a high level of technical expertise. Id.

While review is therefore deferential, it is not toothless; courts must conduct a "thorough, probing, in-depth" inquiry into the validity of regulations. Nat'l Ass'n of Home Builders, 340 F.3d at 841. This inquiry must be "searching and careful" to ensure that the agency decision does not contain a clear error of judgment. City of Sausalito, 386 F.3d at 1206; Nat'l Ass'n of Home Builders, 340 F.3d at 841. In performing this inquiry, the court is not allowed to uphold a regulation on grounds other than those relied on by the agency. Ariz. Cattle Growers' Ass'n, 273 F.3d at 1236 ("The reviewing court may not substitute reasons for agency action that are not in the record.").

The district court failed to abide by this deferential standard. Instead, the district court committed legal error by failing to respect the agency's judgment and expertise. Rather than evaluating the Final Rule to determine if USDA had a basis for its conclusions, the district court repeatedly substituted its judgment for the agency's, disagreeing with USDA's determinations even though they had a sound basis in the administrative record, and accepting the scientific judgments of R-CALF's experts over those of the agency. For example, in assessing the prevalence of BSE in the Canadian herd, the district court rejected USDA's calculation and accepted the prevalence rate provided by R-CALF's expert, completely without explanation. R-CALF I, 359 F.Supp.2d at 1066.

The district court's lack of deference may be attributable to its misreading of the Animal Health Protection Act ("AHPA"), 7 U.S.C. § 8301 et seq., the statute under which the Final Rule was promulgated. Based on the AHPA's statement of congressional findings, <