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From: TSS ()
Subject: BSE TESTING CREEKSTONE VS USDA
Date: November 11, 2006 at 3:00 pm PST

Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 1 of 52

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA
CREEKSTONE FARMS PREMIUM BEEF, LLC, )

Plaintiff, )

vs. ) Civil Action No. 06-544 (JR)

UNITED STATES DEPARTMENT OF AGRICULTURE, )

and MIKE JOHANNS, IN HIS CAPACITY AS THE )

SECRETARY OF AGRICULTURE, )

Defendants. )

_________________________________________________ )

REPLY IN SUPPORT OF PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT AND

OPPOSITION TO DEFENDANTS’ CROSS-MOTION FOR SUMMARY JUDGMENT

Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 2 of 52

TABLE OF CONTENTS

SUMMARY OF
ARGUMENT.........................................................................................1

ARGUMENT......................................................................................................................4

I. THIS COURT HAS JURISDICTION TO HEAR CREEKSTONE’S CLAIMS.4

A. Creekstone’s Claims Are Not Moot.
..............................................................4

B. Creekstone Has Standing To Present Its Claims.
........................................6

II. USDA’S EXPANSIVE INTERPRETATION OF THE VSTA TO APPLY TO

DIAGNOSTIC TESTS AND TO THE USE OF BIOLOGICAL PRODUCTS

IS UNPERSUASIVE AND NOT ENTITLED TO DEFERENCE.....................10

A. The VSTA Is Neither Ambiguous Nor Susceptible to USDA’s

Interpretations...............................................................................................10


1. Regulation of the Use of Biological Products
...............................12

2. Regulation of Diagnostic
Tests.......................................................18

B. USDA’s Expansive Interpretation of the VSTA Is Not Entitled to

Deference.
......................................................................................................21


1. No Deference for Interpretations Expanding the Scope of the Agency’s

Authority.............................................................................................21


2. No deference for Statutory Interpretations Not Accompanied by Further

Explication..........................................................................................22


3. Little Deference for Statutory Interpretations that Were Far from

Contemporaneous or
Consistent.........................................................25

C. The Reenactment Doctrine Does Not Save USDA’s Unsupported

Interpretation of the VSTA
..........................................................................27


III. USDA LACKS STATUTORY AUTHORITY TO REGULATE BSE TEST KITS

IN PARTICULAR
..................................................................................................29


A. BSE Test Kits Are Not “Analogous Products.”
..........................................30


Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 3 of 52

B. BSE Test Kits Are Not, and Would Not Be, Used in the Treatment of

Animal Disease
..............................................................................................33


C. BSE Test Kits Are Not Worthless, Contaminated, Dangerous or Harmful.34

IV. USDA’S RESTRICTIONS ON BSE TEST KITS ON ECONOMIC GROUNDS

ARE OUTSIDE ITS AUTHORITY UNDER THE VSTA
.................................39

V. USDA IS NOT ENTITLED TO SUMMARY JUDGMENT ..............................45

CONCLUSION
................................................................................................................45

EXHIBIT 1 Supplemental Declaration of John D. Stewart

EXHIBIT 2 Declaration of Boyd R. Oase of Kowalski’s Markets

EXHIBIT 3 Declaration of James R. Kiley of Wild by Nature Markets

EXHIBIT 4 Declaration of Darin Parker of Parker International Inc.

EXHIBIT 5 Declaration of Kyu O Kim of NY-SK Trading, LLC

EXHIBIT 6 Declaration of Steve Erdley of Penn Traffic Company

EXHIBIT 7 Hearing before the Committee on Agriculture on the Estimates of

Appropriations for the Fiscal Year Ending June 30, 1914, H.R. 28283, 62d

Cong. 20-32 (1913) (testimony of Dr. A.M. Farrington, Asst. Chief, Bureau

of Animal Indus., Dept. of Agric.)

EXHIBIT 8 Declaration of Paul W. Brown, M.D.

EXHIBIT 9 Report on the Monitoring and Testing of Ruminants for the
Presence of

Transmissible Spongiform Encephalopathy (TSE) in the EU in 2005

EXHIBIT 10 Declaration of Linda A. Detwiler, D.V.M.

EXHIBIT 11 Supervie and Castagliola, “The Unrecognized French BSE
Epidemic,” 35

Vet. Res. 349-362 (2004)

iii

Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 4 of 52

TABLE OF AUTHORITIES 1

FEDERAL CASES

62 Cases of Jam v. United States, 340 U.S. 593 (1951)
....................................................43

AFL-CIO v. Brock, 835 F.2d 912 (D.C. Cir. 1987)
...........................................................28

*Adamo Wrecking Co. v. United States, 434 U.S. 275 (1978)
..............................22, 23, 26

American Fin. Servs. Ass'n v. FTC, 767 F.2d 957 ), cert. denied, 475
U.S. 1011

(1986
............................................................................................................................42

American Petroleum Institute v. EPA, 52 F.3d 1113 (D.C. Cir. 1995)
.............................11

*Animal Health Institute v. USDA, 487 F. Supp. 376 (D. Colo. 1980)
.............................13

Area Transp., Inc. v. Ettinger, 219 F.3d 671 (7th Cir. 2000)
..............................................8

Arnold v. Intervet, Inc., 305 F. Supp. 2d 548 (D. Md.
2003).............................................21

Babbitt v. Sweet Home Chapter of Communities for a Greater Oregon, 515 U.S.

687
(1995)..............................................................................................................15,
28

*Barnett v. Weinberger, 818 F.2d 953 (D.C. Cir. 1987)
...........................23, 24, 26, 27, 28

Better Government Assoc. v. U.S. Dept. of Interior, 780 F.2d 86 (D.C.
Cir. 1986) ............5

*Bowen v. Georgetown Univ. Hospital, 488 U.S. 204
(1988)...........................................25

Burlington Northern R.R. Co. v. Surface Transportation Bd., 75 F.3d 685,
688

(D.C. Cir. 1996)
............................................................................................................6


Central Bank of Denver, N.A. v. First Interstate Bank of Denver, N.A.,
511 U.S.

164
(1994)....................................................................................................................29

Lorillard v. Pons, 434 U.S. 575 (1978)
.............................................................................29

Chevron. Public Citizen, Inc. v. U.S. Dept. of Health and Human
Services, 332

F.3d 654 (D.C. Cir.
2003)....................................................................17,
18, 22, 23, 26

Christensen v. Harris Cty., 529 U.S. 576
(2000)...............................................................25

*City of Chicago v. Environmental Defense Fund, 511 U.S. 328
(1994)....................16, 17

City of New Haven v. HUD, 809 F.2d 900 (D.C. Cir. 1987)
...............................................5

Continental Airlines, Inc. v. U.S. Department of Transportation , 856
F.2d 209

(D.C. Cir. 1988)
...........................................................................................................26


Dolan v. United States Postal Service, 126 S. Ct.1252 (2/22/2006)
.................................14

Edward J. DeBartolo Corp. v. Florida Gulf Coast Building & Constr. Trades

Council, 485 U.S. 568 (1988)
......................................................................................44

Engine Mfrs. Ass'n v. EPA, 88 F.3d 1075 (D.C. Cir.
1996)...............................................22

Ethyl Corp. v. EPA, 51 F.3d 1053 (D.C. Cir. 1995)
....................................................11, 22

*ExxonMobil Gas Marketing Co. v. FERC, 297 F.3d 1071 (D.C. Cir.
2002)...................18

*FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)
.........................13, 29

Federal National Mortgage Ass'n v. United States, 56 Fed. Cl. 228 (Ct.
of Claims

2003)
............................................................................................................................23

*Friends of the Earth, Inc. v. EPA, 446 F.3d 140 (D.C. Cir. 2006)
..................................22

*Friends of the Earth v. Laidlaw, 528 U.S. 167 (2000)
......................................................4

*Garrelts v. Smithkline Beecham Corp., 943 F. Supp. 1023 (N. D. Ia.
1996) ............28, 44

*General American Transp. Corp. v. ICC, 872 F.2d 1048 (DC Circuit 1989)
.................28

1 Asterisk denotes authorities principally relied on.

iv

Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 5 of 52

Gettman v. DEA, 290 F.3d 430 (D.C. Cir.
2002).................................................................8

*Grand Laboratories, Inc. v. Harris, 488 F. Supp. 618, 619 (D.S.D.
1980), rev’d

on other grounds, 660 F.2d 1288 (8th Cir.
1981).........................................................33

Independent Insurance Agents of America, Inc. v. Hawke, 211 F.3d 638
(2000) .............15

International Union, UAW v. Brock, 816 F.2d 761 (D.C. Cir.
1987)................................28

Investment Co. Inst. v. Camp, 401 U.S. 617 (1971)
..........................................................23

*John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510 U.S. 86

(1993)..........................................................................................................................22


Kelley v. U.S. EPA, 15 F.3d 1100 (D.C. Cir. 1994), cert. denied, 513
U.S. 1110

(1995)].........................................................................................................................17

Koszola v. F.D.I.C., 393 F.3d 1294 (D.C. Cir.
2005)........................................................28

Lorillard v. Pons, 434 U.S. 575 (1978)
.............................................................................29

*Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992)
....................................................7, 8

Lynn Martin v. Occupational Safety and Health Review Commission, 499 U.S.

144
(1991)....................................................................................................................26


McBryde v. Committee To Review Circuit Counsel and Disability Orders, 264

F.3d 52 (D.C. Cir.
2001)............................................................................................7,
8

*Michigan Citizens for an Independent Press v. Thornburgh, 868 F.2d 1285

(D.C. Cir. 1989)
...........................................................................................................17

Michigan v. EPA, 268 F.3d 1075 (D.C. Cir.
2001)............................................................11

Miller v. AT&T Corp., 250 F.3d 820 (4th Cir. 2001)
........................................................19

*Natural Resources Defense Council v. Reilly, 983 F.2d 259 (D.C. Cir.
1993) ...............22

Pacific Power & Light Co. v. FPC, 184 F.2d 272 (D.C. Cir.
1950)..................................28

PanAmSat Corp. v. F.C.C., 198 F.3d 890 (D.C. Cir. 1999)
..............................................25

Pegram v. Herdrich, 530 U.S. 211
(2000).........................................................................19

Public Citizen, Inc. v. U.S. Dept. of Health and Human Services, 332
F.3d 654,

662 (D.C. Cir. 2003)
...................................................................................................23


*Railway Labor Executives' Ass'n v. National Mediation Bd., 29 F.3d 655,
cert.

denied, 514 U.S. 1032 (1995)
................................................................................21,
26

*Railway Labor Executives' Ass'n v. National Mediation Bd., 988 F.2d 133
(D.C.

Cir. 1993), aff'd on rehearing en banc, 29 F.3d 655 (1994), cert.
denied, 514

U.S. 1032
(1995)..............................................................................................17,
18, 42

Reno v. Flores, 507 U.S. 292 (1993)
.................................................................................11

Rodriguez v. United States, 480 U.S. 522 (1987)
........................................................12, 42

*SEC v. Sloan, 436 U.S. 103
(1978)..................................................................................23

Sea-Land Serv., Inc. v. Dep't of Transp., 137 F.3d 640 (D.C. Cir.
1998)..........................11

Sea Robin Pipeline Co. v. FERC, 127 F.3d 365 (5th Cir. 1997)
.......................................14

*Sierra Club v. Morton, 405 U.S. 727 (1972)
.....................................................................7

Solid Waste Agency of Northern Cook County v. U.S. Army Corps of Engineers,

531 U.S. 159
(2001).....................................................................................................29

Texas & Pacific Railway Co. v. Pottorff, 291 U.S. 245
(1934).........................................15

United States v. Mead, 533 U.S. 218 (2001)
.....................................................................23

*Whitman v. American Trucking Ass'ns, 531 U.S. 457
(2001)..........................................13

Whitmore v. Arkansas, 495 U.S. 149 (1990)
.......................................................................8

STATE CASES

v

Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 6 of 52

*Hall v. Nebraska, 100 Neb. 84, 158 N.W. 362 (1916)
....................................................16

STATUTES

Administrative Procedure Act, 5 U.S.C. § 706(2)
.....................................30, 38, 39, 40, 42

Act of July 1, 1902, ch. 1378, 32 Stat.
728..................................................................13, 31

Agricultural Bioterrorism Protection Act of 2002, 7 U.S.C. § 8401
...........................15, 29

Virus Serum Toxin Act, 21 U.S.C. §§
151-154......................................................... passim

21 U.S.C. §
151..........................................................................................11,
19, 29, 35, 43

21 U.S.C. §
152................................................................................................11,
19, 25, 29

21 U.S.C. §
153..................................................................................................................25

21 U.S.C. §
154....................................................................................12,
13, 18, 19, 29, 38

28 U.S.C. § 2680(b)
...........................................................................................................14

29 U.S.C. § 2611(11)
.........................................................................................................19

P.L. 99-198, 99 Stat.
1654-56............................................................................................27

Sections 211-213 of the Public Health Security and Bioterrorism
Preparedness

and Response Act of 2002, P.L. 107-188, 116 Stat. 647
.............................................29

REGULATORY MATERIALS

9 C.F.R. Chapter I Subchapter
E........................................................................................25

9 C.F.R. § 101.2(2)
..........................................................................................20,
21, 33, 34

9 C.F.R. § 102.5(d)
......................................................................................................12,
39

9 C.F.R. §
104.1...........................................................................................................25,
29

29 C.F.R. § 825.114(b)
......................................................................................................19

62 Fed. Reg. 31,326 (June 9, 1997)
.............................................................................27,
32

70 Fed. Reg. 460, 461 (Jan. 4, 2005)
.................................................................................32

LEGISLATIVE MATERIALS

Hearing before the Committee on Agriculture on the Estimates of
Appropriations

for the Fiscal Year Ending June 30, 1914, H.R. 28283, 62d Cong. 20-32

(1913) (Reply Memo Exh.
7).....................................................................................16

S. Rep. No.
99-145.............................................................................................................28

MISCELLANEOUS

OIE Terrestrial Animal Health Code – 2005, Appendix 3.8.4, Surveillance

for Bovine Spongiform Encephalopathy
.....................................................................37

Report on the Monitoring and Testing of Ruminants for the Presence of

Transmissible Spongiform Encephalopathy (TSE) in the EU in
2005........................35

Supervie and Castagliola, "The Unrecognized French BSE Epidemic," 35 Vet.

Res. 349-362
(2004).....................................................................................................37

2B Sutherland Stat. Constr. §
49.09...................................................................................28

vi

Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 7 of 52

SUMMARY OF ARGUMENT

With hardly a word of analysis (prior to this case), the Department of
Agriculture

(“USDA”) has interpreted a statute designed to keep companies from
producing and marketing

fraudulent vaccines and serums for treatment of diseases in animals as
an almost unlimited grant

of authority to restrict or preclude activities related in any way to
animal diseases. Even if it were

appropriate to uphold such an action on the basis of post hoc
rationalizations of counsel, here

those rationalizations are inconsistent with basic principles of
statutory interpretation, often lack

citation or plausible support, and in some instances simply do not make
sense even on their face.

For example, USDA’s argument that this case is moot is based entirely on
USDA’s

improper characterization of plaintiff Creekstone Farms Premium Beef’s
case as solely an

attempt by Creekstone to export beef to Japan. Neither the Complaint,
Creekstone’s Motion for

Summary Judgment, nor the Declaration filed by Creekstone’s founder and
then-CEO

characterized Creekstone’s claims that narrowly. To the contrary,
Creekstone continues to have

strong, valid reasons for wanting to use BSE test kits.

USDA’s claim that Creekstone lacks standing rests on a similarly narrow
view of what

this case is about and the relief Creekstone is seeking. Clearly
Creekstone, which believes the

benefits to its business of testing all its cattle for BSE warrants the
multi-million-dollar cost of

testing, is suffering both economic and non-economic injuries from
USDA’s unlawful refusal to

allow Creekstone access to BSE test kits, injuries that this Court
obviously could alleviate by

striking down USDA’s restrictions on BSE test kit use.

USDA’s defense of its regulations restricting the use of diagnostic
tests, as well as its

actions concerning BSE test kits in particular, is based on a convoluted
reading of the simple

Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 8 of 52

language of the VSTA and on its observation that Congress did not
specifically prohibit USDA

from regulating BSE test kits. But the Supreme Court and the U.S. Court
of Appeals for the

District of Columbia have consistently rejected such attempts to find
congressional authorization

from the absence of a prohibition. The VSTA on its face does not extend
to restrictions on the

use of biological products, nor the restriction of access to diagnostic
tests (especially diagnostic

tests, like the BSE test kits at issue here, which do not operate
through stimulation of an animal’s

immune system). USDA’s interpretation of the VSTA is not subject to
deference, because (1) it

expands the Department’s authority beyond the literal bounds of the
statute; (2) it is not a

contemporaneous interpretation of the statute but rather one that USDA
invented 60 years later;

(3) USDA’s regulations were not accompanied by any analysis of the
VSTA’s statutory language

or legislative history, or really by any explanation; and (4) at least
with respect to import permits

and to BSE test kits in particular, USDA’s regulations were not
announced in a rulemaking or

any similar formal pronouncement.

But even if USDA’s regulatory authority under the VSTA extended to
controlling who

uses biological products, and for what purpose, and to regulating
diagnostic tests that operate in a

manner analogous to viruses, serums, or toxins, USDA cannot legally ban
all private use of BSE

test kits. First, BSE test kits do not function as “analogous products;”
and second, they are not

used in the treatment of an animal disease. (In fact, USDA claims it can
bar Creekstone from

using BSE test kits precisely because they are not being used in the
treatment of animals.) Third,

using BSE test kits to screen cattle slaughtered for human consumption
for BSE hardly makes

them “worthless.” To the contrary, even USDA’s improperly limited view
of the benefits of BSE

testing admits that testing can identify carcasses infected with this
fatal disease months before the

cattle would have any outward signs of BSE that might keep them out of
the food chain. And

- 2 -


Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 9 of 52

renowned BSE experts submitting declarations in support of this Reply
Memorandum establish

the benefits of more extensive BSE testing, a practice adopted by almost
every country in the

world that has been exposed to BSE.

Finally, even assuming that USDA’s regulations were authorized by the
VSTA, and

assuming also that USDA could, consistent with the VSTA, assert
jurisdiction over the use of

BSE test kits in particular, USDA’s filings in this case now make it
clear that USDA is not

really regulating BSE test kits in order to protect animal health or
even to protect the economic

well-being of farmers and ranchers. Rather, USDA is trying to protect
large meatpackers from

competition that Creekstone and others who want to test will pose. Put
another way, USDA

wants to deprive American consumers of the opportunity to buy beef from
BSE-tested cattle.

This goal not only is far beyond what Congress authorized in the VSTA,
it is contrary to basic

tenets about the role of government to protect competition and foster
this nation’s free-market

economy.

For any one of these reasons, Creekstone is entitled to summary judgment
on its claims

that USDA’s actions preventing Creekstone from conducting BSE tests on
the cattle it

slaughters are beyond USDA’s statutory authority. Moreover, even if the
Court were to

determine that Creekstone has not demonstrated that it is entitled to
summary judgment on

those claims, that still would not mean that USDA has carried its burden
of justifying summary

judgment for USDA on those claims. Nor, of course, would it mean that
USDA is entitled to

summary judgment on Creekstone’s third claim: that USDA acted
arbitrarily and capriciously

even if it was within its statutory authority—a claim that has yet to be
briefed.

- 3 -


Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 10 of 52

ARGUMENT

I. THIS COURT HAS JURISDICTION TO HEAR CREEKSTONE’S CLAIMS.

A. Creekstone’s Claims Are Not Moot.

USDA’s argument that Creekstone’s claims are moot is easily disposed of.
Contrary to

USDA’s misreading of Creekstone’s Complaint, Creekstone’s desire to test
voluntarily for BSE

is not limited to gaining access to Japan’s market. In addition to
expanding its customer base,

voluntary testing would enable Creekstone to enhance its brand and
competitiveness. Creekstone

domestic and international customers will purchase more Creekstone beef,
and at a higher price,

if Creekstone can assure those customers that its products come from
cattle that were tested for

BSE. Moreover, because of lingering concerns over the safety of U.S.
beef, Creekstone and other

U.S beef producers have not been able to recapture market share in the
Japanese and Korean

markets—making BSE testing still relevant for those markets.

USDA mistakenly states that “plaintiff’s primary concern is with its
ability to sell beef in

the Japanese market.” USDA Consolidated Memorandum in Support of
Defendants’ Cross-

Motion for Summary Judgment and in Opposition to Plaintiff’s Motion for
Summary Judgment

(“USDA Memo”) at 15. Creekstone’s Complaint and the Supplement
Declaration of its former

CEO and current consultant John Stewart make clear that Creekstone is
challenging the USDA’s

ban against voluntary testing for BSE, not a foreign government’s trade
policy. See Stewart

Supplemental Declaration, Exhibit 1 to this Reply, ¶¶ 2-3, 5, 8. “It is
well settled that a

defendant’s voluntary cessation of a challenged practice does not
deprive a federal court of its

power to determine the legality of that practice.” Friends of the Earth
v. Laidlaw, 528 U.S. 167,

189 (2000). Here, by contrast, there has been no cessation of USDA’s ban
on voluntary BSE

- 4 -


Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 11 of 52

testing, making mootness not even an issue. By definition, this case is
not moot. See Better

Government Assoc. v. U.S. Dept. of Interior, 780 F.2d 86, 91 (D.C. Cir.
1986) (challenges “to the

legality of the standards utilized” by a government agency were not moot
where “the utilization

of the guidelines and the regulation . . . has continued,” even though
specific claim seeking relief

was moot where agency had granted relief); City of New Haven v. HUD, 809
F.2d 900, 904 (D.C.

Cir. 1987) (same).

Access to the Japanese market is but one component of Creekstone’s
desire to conduct

voluntary BSE testing. In addition to Japan, Creekstone wishes to gain
access to Korean and

other overseas markets as well as to expand its U.S. sales by offering
beef from BSE-tested cattle.

Exh. 1 (Stewart Supp. Decl.) ¶ 2. And beyond access to markets,
Creekstone will be able to sell

more beef at higher prices to both its foreign and domestic customers if
the beef is from cattle

tested for BSE. Id. ¶¶ 2, 6, 7; Creekstone customer declarations,
Exhibits 2-6. Thus, irrespective

of Japan’s lifting its ban, Creekstone could increase the demand for its
beef if it can test for BSE.

In addition, Creekstone’s business model is to sell the finest Angus
beef in the world. By

offering its customers beef from BSE-tested cattle, Creekstone intends
to reinforce its reputation

for excellence, safety, and superior beef products. See Exh. 1 (Stewart
Supp. Decl.) ¶ 8. USDA

concedes this point by admitting that one of its reasons for denying
Creekstone permission to test

for BSE is USDA’s concern that Creekstone’s competitors would feel
obligated to BSE test as

well lest they be at a disadvantage. See USDA Memo at 52 n.30. USDA’s
recognition that

allowing Creekstone to offer customers BSE-tested beef would boost
Creekstone’s brand and

provide a competitive edge alone defeats USDA’s mootness argument.

Moreover, despite Japan and Korea lifting their respective U.S. beef
bans, Creekstone

(and other U.S. beef producers) still cannot sell as much U.S. beef as
before. Exh. 1 (Stewart

- 5 -


Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 12 of 52

Supp. Decl.) ¶¶ 2-6 and attachments. This is because Japanese and Korean
customers remain

concerned about the safety of U.S. beef. Exh. 1 ¶¶ 3, 4, 6 and
attachments. In contrast to U.S.

beef, Japan requires all of its beef to be tested for BSE, and Australia
has never had a case of

BSE, putting Creekstone and other U.S. beef producers at a competitive
disadvantage. Exhibit 1

¶ 3 and Attach. A. Creekstone’s desire to test for BSE is motivated in
part to compete more

effectively for overseas customers, again defeating USDA’s mootness
argument.

In sum, there is absolutely nothing about Japan’s lifting its U.S. beef
ban that “make[s] it

impossible to grant [Creekstone] effective relief.” USDA Memo at 15,
quoting Burlington

Northern R.R. Co. v. Surface Transportation Bd., 75 F.3d 685, 688 (D.C.
Cir. 1996) (emphasis

added). The relief Creekstone seeks from this Court is an order
permitting it to test for BSE, not

to open or keep open Japan’s beef market. Creekstone has set forth a
host of reasons for wanting

to conduct voluntary BSE testing irrespective of Japan resuming U.S.
beef imports. USDA’s

mootness argument that “plaintiff’s alleged injury has disappeared”
(USDA Memo at 16) is best

understood as an Article III standing challenge. But for the reasons set
forth in the next Part, that

challenge also fails.

B. Creekstone Has Standing To Present Its Claims.

USDA claims that Creekstone lacks standing to pursue its claims because
(a) Creekstone

has not made a sufficiently concrete demonstration that Creekstone could
be selling more beef

and/or at a higher price were it not for USDA preventing Creekstone from
testing its cattle for

BSE and (b) Creekstone has not “provided convincing evidence” that being
able to test its cattle

for BSE would remedy that injury. USDA Memo at 17.1 USDA misstates
Creekstone’s basis for

1 The weakness of USDA’s argument is exposed by its facially untenable
claim that Creekstone

“has creatively alleged” this injury in “an attempt to save its case
from mootness as a result of

- 6 -


Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 13 of 52

standing, misstates the legal standards for standing, and attempts to
substitute its own speculation

about consumer demand for Creekstone’s specific information.

Creekstone’s basic injury is that it is prohibited from testing its
cattle for BSE in order to

enhance its brand and distinguish Creekstone beef in the marketplace and
to fulfill the demands

of its customers, many of whom will buy more beef at higher prices if it
is tested for BSE. The

direct cause of that injury is USDA’s unlawful actions, restricting the
licensing and permitting of

BSE test kits, preventing the manufacturers of BSE test kits and the
Kansas State University

laboratory authorized to conduct BSE testing from cooperating with
Creekstone, and refusing to

approve Creekstone’s proposed Hazard Analysis Critical Control Points
(HACCP) program for

voluntary BSE testing. Memorandum of Points and Authorities in Support
of Plaintiff’s Motion

for Summary Judgment (“Pl. Memo”) at 11-14. This Court can redress
Creekstone’s injuries by

invalidating the USDA regulations and actions that prevent Creekstone
from BSE testing and by

ordering USDA not to interfere with Creekstone activities that are
outside USDA’s jurisdiction.

See Pl. Memo at 2.

USDA argues that Creekstone must show a definite economic injury, and a
definite

economic benefit from a ruling in its favor, in order to have standing
to challenge the USDA’s

unlawful action. USDA Memo at 17-23. But the law is very clear that
economic injury is not the

only kind of injury that establishes standing. See, e.g., Sierra Club v.
Morton, 405 U.S. 727, 73445

(1972); Lujan v. Defenders of Wildlife, 504 U.S. 555, 562-63 (1992).
Indeed, the very case

that USDA principally relies upon in its mootness argument, McBryde v.
Committee To Review

Circuit Counsel and Disability Orders…, 264 F.3d 52 (D.C. Cir. 2001),
(cited at USDA Memo at

Japan’s recent lifting of its ban against U.S. beef.” USDA Memo at 17.
In fact, Japan lifted its

ban on U.S. beef 12 days after Creekstone filed its Motion for Summary
Judgment (see USDA

Memo at 16) and four months after Creekstone described this basis for
standing in Paragraph 1718

and 26 of its Complaint.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 14 of 52

16-17) held that Judge McBryde had standing to challenge a reprimand
handed down by the Fifth

Circuit—clearly not an action to remedy an economic injury. Id. at
56-57. USDA makes no

argument, nor could it, that there is anything speculative about
Creekstone’s desire to perform

BSE testing on its cattle, or about USDA’s actions that are preventing
Creekstone from doing so.2

If USDA’s position were the law, then businesses’ fundamental right to
judicial review of

unlawful agency actions would be thwarted. Indeed, in USDA’s view, its
refusal to approve a

new vaccine could not be subjected to judicial review because the
vaccine manufacturer could

not provide “convincing evidence” that it could sell the vaccine if it
were approved!

The law instead, as set down by the Supreme Court, is that a private
party aggrieved by

government action directed at it has standing to challenge that action:
“When the suit is one

challenging the legality of government action or inaction, the nature
and extent of facts that must

be averred (at the summary judgment stage) or proved (at the trial
stage) in order to establish

standing depends considerably upon whether the plaintiff is himself an
object of the action (or

forgone action) at issue. If he is, there is ordinarily little question
that the action or inaction has

caused him injury, and that a judgment preventing or requiring the
action will redress it.” Lujan,

504 U.S. at 561.

2 Creekstone’s assertions of injury and redressability thus are not
dependent on the actions of

third parties, as USDA assumes. USDA Memo at 19, 22. The cases that USDA
cites for its

standing argument all involve indirect claims involving third parties,
not attempts to redress

government action directed at the plaintiff. Whitmore v. Arkansas, 495
U.S. 149 (1990),

considered whether a third party could challenge a death sentence
imposed on a capital murder

defendant. The injury in Area Transp., Inc. v. Ettinger, 219 F.3d 671,
673 (7th Cir. 2000), rested

on whether, if the Federal Transit Agency issued the order to a
competing school bus operator

that the plaintiff sought, the competitor would choose to forego future
federal grants. The

plaintiff in Gettman v. DEA, 290 F.3d 430, 435 (D.C. Cir. 2002) hoped
that he could sell

consulting services to third parties who would use marijuana if the DEA
legalized its use. There

is no comparison at all between Creekstone’s demonstrated interest in
pursuing its business plan

involving BSE testing and Mr. Gettman’s “at best reciting injury to his
philosophical interest.”

Id. at 435.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 15 of 52

But even if economic injury were necessary to demonstrate standing,
there is no question

that Creekstone has suffered and is continuing to suffer economic
injury. See Stewart Decl., Pl.

Memo Exh. 1, at ¶¶ 3, 6, 17 (Creekstone has lost about 35% of its
revenue due to BSE concerns

and is prepared to spend $6,000,000 per year to perform BSE testing
itself to help recover that

lost demand); see also Stewart Supplemental Decl., Exh. 1 to this Reply,
at ¶ 4 (Creekstone’s

average sales to Japan in the past two months have been less than
one-twentieth of what they

were prior to the discovery of BSE in the United States), ¶ 8. USDA’s
purported evidence to the

contrary is both speculative and beside the point. The agency spends
pages in its memorandum

arguing about the accuracy or significance of polls that have
consistently shown Japanese

consumers to be reluctant to purchase U.S.-origin beef, and a poll of
over 75,000 Americans

reporting that more than a third are “very concerned” about BSE. Compare
USDA Memo at 1822

with Pl. Memo Exh. 1 at ¶¶ 4-5. Yet one of USDA’s own exhibits confirms
that “polls show

many Japanese consumers still have some doubts about the safety of the
U.S. product and are

reluctant to buy” U.S. beef. USDA Memo Exh. 12. USDA even asserts,
bizarrely, that a poll

indicating that 75% of Japanese respondents were unwilling to eat
U.S.-origin beef now that BSE

has been found in the United States “does not necessarily suggest that
U.S. beef sales in Japan

will fail to return to the levels they were prior to the Japanese ban.”
USDA Memo at 20.

Creekstone’s standing to bring this lawsuit does not stand or fall on
any poll. The import

of those polls is that they support and confirm Creekstone’s own
information regarding the effect

of BSE on U.S. and foreign markets. Whatever the accuracy of these
polls, they certainly

influence the thinking of the distributors and retail chains to which
Creekstone sells its products,

and they supplement Creekstone’s personal communications with those
distributors and with

consumers (and thus are not hearsay because they are offered to show
their existence, and not the

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 16 of 52

truth of the reported consumer sentiments). Cf. Exhibits 2-6
(declarations of Creekstone’s

brokers and of supermarket chains). USDA’s speculation that demand for
beef will increase

(and, apparently, will be totally unaffected by BSE concerns) cannot
defeat direct information

about the market obtained by Creekstone, which of course is an expert in
factors affecting

demand for its products. See Pl. Memo Exh. 1 (Stewart Decl.) ¶¶ 4-5,
16-17; Exh. 1 (Stewart

Supplemental Decl.) ¶¶ 2-4.3 While Creekstone’s own declaration ought to
suffice, the attached

declarations from Creekstone’s customers that they would purchase more
Creekstone beef, and

would pay a higher price, if Creekstone could provide beef from
BSE-tested cattle, conclusively

defeat USDA’s speculations and arguments that Creekstone is not
suffering injury from the

agency’s test ban. See Exhibits 2 -6.

II. USDA’S EXPANSIVE INTERPRETATION OF THE VSTA TO APPLY TO

DIAGNOSTIC TESTS AND TO THE USE OF BIOLOGICAL PRODUCTS IS

UNPERSUASIVE AND NOT ENTITLED TO DEFERENCE.

A. The VSTA Is Neither Ambiguous Nor Susceptible to USDA’s Interpretations.

USDA claims that the VSTA authorizes it to control not only the
manufacture and sale of

a virus, serum, toxin, or analogous product (which USDA refers to as
“biological products”), but

also who may use such biological products and for what purpose. USDA
also claims that the

“biological products” that it can regulate the use of include
“diagnostic products” like BSE test

kits. But those authorizations cannot be found in the plain language of
the VSTA.

USDA has taken a very simple statute, which gives the Department
authority to regulate

the manufacture and sale of specific products, and transformed it into a
license to control other

products and other kinds of activities. Some of USDA’s ostensible
reasons may appear noble –

USDA’s assertion that information previously provided by Creekstone does
not reflect recent

improvements in the Japanese market is contradicted by Exh. 1 ¶¶ 3-4.
Additionally, it ignores

the fact that access to the Korean market is still highly restricted.
Exh. 1 ¶¶ 2, 5-6 and Attach. E.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 17 of 52

to benefit public health and welfare – but that kind of generic goal
does not give an agency carte

blanche to regulate whatever it wishes.

The law could not be more clear: “Agency authority may not be lightly
presumed. ‘Were

courts to presume a delegation of power absent an express withholding of
such power, agencies

would enjoy virtually limitless hegemony, a result plainly out of
keeping with Chevron and quite

likely with the Constitution as well.’” Michigan v. EPA, 268 F.3d 1075,
1082 (D.C. Cir. 2001)

(quoting Ethyl Corp. v. EPA, 51 F.3d 1053, 1060 (D.C. Cir. 1995).
“‘Thus, we will not presume

a delegation of power based solely on the fact that there is not an
express withholding of such

power.’” Id. (quoting American Petroleum Institute v. EPA, 52 F.3d 1113,
1120 (D.C. Cir.

1995)).4

“Mere ambiguity in a statute is not evidence of congressional delegation
of authority.”

Sea-Land Serv., Inc. v. Dep’t of Transp., 137 F.3d 640, 645 (D.C. Cir.
1998). But in this case,

there is not even ambiguity. The statute states very clearly what
products are covered: a “virus,

serum, toxin or analogous product used in the treatment of domestic
animals.” 21 U.S.C. § 151.

It states clearly what activities are covered: the preparation, sale,
barter, exchange, or importation

of such products. Id. at §§ 151-152. And it states clearly when those
activities may be

prohibited: when such products are “worthless, contaminated, dangerous,
or harmful”; are not

“prepared, under and in compliance with regulations prescribed by the
Secretary of Agriculture,

at an establishment holding an unsuspended and unrevoked license issued
by the Secretary of

Agriculture”; or are imported without a permit. Id.

4 USDA’s reliance on Reno v. Flores, 507 US 292, 300-301 (1993), to say
that Creekstone must

“demonstrate that ‘no set of circumstances exists under which the
regulation[s] would be valid’”

(USDA Memo at 23) is misplaced. In that case, the respondents were not
challenging the

regulation’s application in a specific instance, it had not yet been
applied in a particular instance,

and there was no record concerning the INS’s interpretation of the
regulation. Id. That clearly is

a very different situation than is presented in the instant case.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 18 of 52

The statute simply does not authorize USDA to regulate activities other
than the

preparation, sale, barter, exchange, or importation of biological
products. It does not say that

USDA can prohibit or regulate the use of a biological product—in this
case, who may use it and

for what purpose.5 Nor does the statute authorize regulation of
diagnostic tests—products that

are not analogous to a virus, serum, or toxin—just because they are used
in the treatment of

animals. Ignoring those simple, albeit inconvenient for USDA, truths,
USDA resorts to

(illogical) claims that its actions promote public health and welfare
and protect the interests of

ranchers, encouraging this Court to “simplistically…assume[e] that
whatever furthers the

statute’s primary objective must be the law.” Rodriguez v. United
States, 480 U.S. 522, 526

(1987) (per curiam) (emphasis in original).

1. Regulation of the Use of Biological Products

USDA asserts that its authority in 21 U.S.C. § 154 to issue regulations
“as may be

necessary to prevent the preparation, sale, barter, exchange, or
shipment… of any worthless,

contaminated, dangerous, or harmful virus, serum, toxin, or analogous
product for use in the

treatment of domestic animals” “explicitly authorizes restrictions on
the uses for which viruses,

serum, toxins, or analogous products may be prepared, sold, bartered,
exchanged, or shipped.…”

USDA Memo at 25. This contention is absurd on its face. Saying that USDA
can regulate the

manufacture and sale of products intended for use in the treatment of
domestic animals is not the

same as saying USDA can regulate the use of such products. (And indeed,
Congress knows well

how to regulate the use of products when it wishes to do so. See Pl.
Memo at 24-25, 31-32.)

5 USDA’s assertion that “regulation 102.5(d) is not a direct use
restriction on buyers of biological

products” (USDA Memo at 25) is pure semantics (and irrelevant). Without
congressional

authorization to regulate how and by whom biological products are used,
and for what purpose,

USDA cannot indirectly do so through unlawful limitations in licenses
and permits issued to

biological product manufacturers.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 19 of 52

Under USDA’s theory of how the statutory language should be read, if a
statute authorized DOT

to regulate seat belts, air bags, and other safety devices intended for
use in motor vehicles, DOT

would be authorized to regulate who may drive motor vehicles, and where,
as well!

Not surprisingly, USDA offers no case law in support of its unorthodox
reading of the

VSTA, nor even any formal interpretation previously published by USDA.
The phrase “for use

in the treatment of domestic animals” clearly limits, rather than
expands, “virus, serum, toxin, or

analogous product.” Just as clearly, the phrase must have been used in
the VSTA to distinguish it

from the Act of July 1, 1902, ch. 1378, 32 Stat. 728, which authorized
the Public Health Service

to regulate any “virus, therapeutic serum, toxin, antitoxin, or
analogous product...applicable to the

prevention, treatment, or cure of diseases or injuries of man.” See
Animal Health Institute v.

USDA, 487 F. Supp. 376, 378-79 (D. Colo. 1980) (VSTA modeled after the
1902 Act).

Contrary to USDA’s theory of statutory construction, authority to
regulate a whole new

class of activities, affecting vastly more businesses and individuals,
must be found in a clear

statement of congressional delegation of that authority, not in a
strained and ungrammatical

interpretation offered by the agency in litigation to justify its
desired scope of authority.6

“Congress…does not alter the fundamental details of a regulatory scheme
in vague terms or

ancillary provisions—it does not, one might say, hide elephants in
mouseholes.” Whitman v.

American Trucking Ass’ns, 531 U.S. 457, 468 (2001); see also FDA v.
Brown & Williamson

Tobacco Corp., 529 U.S. 120, 159–160 (2000).

Remarkably, USDA also argues that 21 U.S.C. § 154, because it authorizes
USDA to

issue regulations “as may be necessary to prevent the preparation, sale,
barter, exchange, or

6 Moreover, even if USDA were correct that the phrase “for use in the
treatment of domestic

animals” allowed it to regulate how a biological product is used, that
still would not authorize

USDA to dictate who may use the product and for what purpose.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 20 of 52

shipment” of worthless or dangerous biological products, “also expands
the ability of USDA to

regulate beyond just the ‘preparation, sale, barter, exchange, or
shipment’ of products.” USDA

Memo at 26. Once again, USDA offers no case law, legislative history, or
even its past

statements or rulemaking interpreting the VSTA to support or explain
this contention. USDA

contends that “clearly” restrictions on how a biological products may be
used, by whom, and for

what purpose “may be necessary to close loopholes and remove incentives
to circumvent

regulations directed at the ‘preparation, sale, barter, exchange, or
shipment’ of products.” Id.

Apparently USDA believes that Congress made it a crime not only for a
manufacturer to produce

and sell a dangerous biological product, but for a farmer to continue to
use such a product, as

well. See id. Quite simply, it is not for USDA to decide to “close
loopholes” that Congress

chose not to regulate. Even if there were such a need for this kind of
regulation, this supposed

“[n]eed for regulation cannot alone create authority to regulate.” Sea
Robin Pipeline Co. v.

FERC, 127 F.3d 365, 371 (5th Cir. 1997).

Over and over, courts have rejected interpretations of a series of words
in a statute that go

beyond the scope of the words in the series, as does USDA’s
interpretation here. USDA’s claim

of authority to regulate the use of biological products parallels a
claim that the Supreme Court

rejected earlier this year: The plaintiff in Dolan v. United States
Postal Service, 126 S. Ct. 1252

(Feb. 22, 2006), relied on a provision concerning liability for “loss,
miscarriage, and negligent

transmission” of mail, 28 U.S.C. § 2680(b). The Court observed that,
since both “loss” and

“miscarriage” “refer to failings in the postal obligation to deliver
mail in a timely manner to the

right address, it would be odd if ‘negligent transmission’ swept far
more broadly to include

injuries like those alleged here—injuries that happen to be caused by
postal employees but

involved neither failure to transmit mail nor damage to its contents.”
126 S. Ct. at 1254.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 21 of 52

Similarly, in this case it would be odd indeed if Congress intended, in
authorizing regulation of

the preparation, sale, barter, exchange, or shipment of dangerous or
worthless products used to

stimulate or enhance the immune system of animals, to regulate how such
products may be used,

by whom, and for what purpose—activities carried out by the users of the
products rather than

their manufacturers, and after the products have already been prepared,
sold, and shipped.

Texas & Pacific Railway Co. v. Pottorff, 291 U.S. 245, 257-59 (1934),
also resembles the

instant case, in that the Court both (a) refused to find that a national
bank could expand its

statutory authorization for “banking” to include pledging its assets to
secure a private deposit, and

(b) also reasoned that, if that power had been authorized, there would
have been no need to

amend the banking statute later to provide a limited power to pledge.7
So, too, in this case the

enactment of the Agricultural Bioterrorism Protection Act of 2002, 7
U.S.C. § 8401, which gave

USDA limited authority to regulate the possession and use of dangerous
biological products, is

evidence that the VSTA should not be read to give broad authorization to
regulate who may use

biological products and for what purpose (as is the legislative history
confirming that Congress

did not believe the VSTA empowered USDA to regulate the use of
biological products). Cf. Pl.

Memo at 24-25.8 USDA offers no response to that application of the canon
of statutory

construction, followed in Pottorff, to the history of the VSTA and
related legislation.

7 As the D.C. Circuit observed in Independent Insurance Agents of
America, Inc. v. Hawke, 211

F.3d 638 (2000), “[t]he pre-Chevron vintage of Pottorff is irrelevant,”
since the Supreme Court

had already made clear at that time that decisions of the Comptroller of
the Currency were

generally entitled to deference.

Cf. Babbitt v. Sweet Home Chapter of Communities for a Greater Oregon,
515 U.S. 687, 696701

(1995) (fact that Congress in 1982 authorized the issuance of permits
for “incidental take” of

endangered species is strong evidence that Congress understood the
preexisting statutory

prohibition on “take” of endangered species to include indirect as well
as direct “take”).

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 22 of 52

USDA does offer one reference to legislative history of the VSTA that
mentions use of

biological products. USDA Memo at 31.9 But that mention of use, put into
context, in no way

suggests that Congress meant to include regulatory authority over how a
biological product may

be used or by whom. Rather, the passage refers to “controlling the use”
of dangerous and

worthless viruses, serum, and analogous products “by preventing the
interstate shipment” of such

products that may be manufactured within the United States. The focus of
the passage from the

Senate Report, like the focus of the statutory language that Congress
ultimately adopted, is not on

how biological products are used, or by whom, but on regulating the
manufacture, sale, and

shipment of dangerous or worthless products.10 In any event, this phrase
from the Senate Report

could not endow USDA with authority not set out forth the statute. 11

USDA asks this Court to ignore the venerable principle expressio unius
est exclusio

alterius, on the grounds that the “principle does not contemplate the
expansive phrases ‘for use in

9 USDA also refers to “[s]ubsequent legislative commentary,” by which it
means its own 1997

description of the VSTA. USDA Memo at 31. But it is hard to see how the
passage from a

USDA Federal Register notice that USDA quoted, that the “main purpose of
VSTA is to protect

those who use veterinary products from products which are worthless,
contaminated, dangerous,

or harmful” in any way justifies USDA’s conclusion here that “[c]learly
the use restrictions

contemplated by regulation 102.5(d) are consistent with the purposes of
VSTA.” See USDA

Memo at 31. What should be clear from that passage instead is that the
purpose of the VSTA is

to protect those who use biological products from harmful or worthless
products, not to regulate

and constrain those who use biological products.

10

Cf. Exhibit 7 at 23-25 (USDA official explaining request for authority
over toxins and viruses,

with no mention of restricting who could use toxins and viruses or
regulating diagnostic

products); Hall v. Nebraska, 100 Neb. 84, 88-89, 158 N.W. 362, 363-64
(1916) (“We do not

understand that the federal government undertakes to regulate those who
sell serum after it has

been disposed of by the manufacturer.”)

11

See City of Chicago v. Environmental Defense Fund, 511 U.S. 328, 337
(1994) (where Senate

Committee report included statement that “all waste management
activities of such a facility,

including the generation, transportation, treatment, storage and
disposal of waste shall be covered

by the exclusion,” Court declined to find that waste generation was
excluded, because “it is the

statute, and not the Committee Report, which is the authoritative
expression of the law, and the

statute prominently omits reference to generation.”). Moreover, the
“controlling the use” phrase

in the Senate Report relates only to domestic manufacture of products,
and not to those that are

imported into the United States, like Bio-Rad’s BSE tests. Cf. USDA Memo
at 30-31.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 23 of 52

the treatment of domestic animals’ or ‘as may be necessary to prevent’
modifiers of the list of

items….” USDA Memo at 26-27. USDA offers no authority for this claimed
corollary to the

principle, nor any further explanation why it would be that phrases that
make the list more

specific or otherwise qualify it would suggest that Congress did not
intend the agency’s authority

to be limited to the enumerated list of items or activities. This Court
should reject USDA’s

unsupported attempts to expand its jurisdiction beyond the authorities
enumerated in the VSTA,

just as other courts have consistently rejected agency claims that
authority to regulate one thing

implies authority to regulate something else, because it would be
consistent with or helpful to the

stated or intended purposes of the statute. See, e.g., City of Chicago,
511 U.S. at 329, supra n.11;

Railway Labor Executives’ Ass’n v. National Mediation Bd., 988 F.2d 133,
139 (D.C. Cir. 1993),

aff’d on rehearing en banc, 29 F.3d 655 (1994), cert. denied, 514 U.S.
1032 (1995) (Board

cannot assume duties not given to it by Congress); Michigan Citizens for
an Independent Press v.

Thornburgh, 868 F.2d 1285, 1293 (D.C. Cir. 1989) (canon of expressio
unius est exclusio alterius

can determine whether statute is clear, and therefore no need to resort
to Chevron deference).12

Arrogating to itself regulatory authority over a whole different set of
activities, conducted

by a different group of people, is simply not the kind of necessary
filling of ‘gaps” in a statute’s

regulatory scheme that Chevron contemplated. Cf. USDA Memo at 36. The
“mere existence of

an agency does not give it the power to assert authority that Congress
has not delegated. It is

absurd to suggest that, under the second prong of Chevron, there is a
statutory ‘gap to fill’ or a

12 USDA disputes the relevance of Kelley v. U.S. EPA, 15 F.3d 1100 (D.C.
Cir. 1994), cert.

denied, 513 U.S. 1110 (1995). USDA Memo at 27 n. 13. The citation
Creekstone provided in its

Memo in Support was, unfortunately, incorrectly limited (citing to p.
1108 rather than pp. 11061108).

But the case indeed is relevant as an example of how courts look to the
list of things a

statute has authorized an agency to do and decline to find statutory
authority for the agency to

regulate in additional areas (in that case, specifying who will be
subject to statutory liability for

hazardous waste cleanup).

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 24 of 52

statutory ‘ambiguity’ to cure whenever a statute fails to specify some
authority that an agency

seeks to invoke. This cannot be the meaning of Chevron, for it would
allow federal agencies to

claim limitless authority except in those few circumstances where
Congress has expressly said

‘thou shalt not’ exercise such authority.” Railway Labor Executives’
Ass’n, 988 F.2d at 194

(Edwards, J., concurring).

2. Regulation of Diagnostic Tests

USDA admits that the VSTA says nothing about regulating diagnostic
products (USDA

Memo at 35), but “neither does it specifically exclude such tests from
its purview.” Id. at 36.

The latter is true, but it falls short of authorizing USDA’s regulation
of diagnostic tests. The

Supreme Court and the D.C. Circuit have repeatedly admonished regulatory
agencies that

statutory authority for an agency to act “may not be presumed based
solely on the fact there is not

an express withholding of jurisdiction.” ExxonMobil Gas Marketing Co. v.
FERC, 297 F.3d

1071, 1088 (D.C. Cir. 2002).

The interpretation of the VSTA that USDA advances for purposes of this
lawsuit is that

“diagnostic products are certainly used in the treatment of animals,
which is all that is required

under section 154 of VSTA.” USDA Memo at 37. Again, USDA vastly
overstates the meaning

of the qualifier “intended for use in the treatment of domestic
animals,” appearing to suggest that

anything broadly defined as “treatment” is therefore regulated under the
VSTA. Moreover, even

if Congress had given USDA authority to regulate a product just because
it is used in the

“treatment of domestic animals,” that would not include authority to
regulate products that are

used solely to detect a disease (and especially those, such as BSE test
kits, used solely to detect

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 25 of 52

infection in dead animals).13 The cases USDA cites (USDA Memo at 41)
provide no support for

its position: Pegram v. Herdrich, 530 U.S. 211, 228 (2000) contains a
discussion of two types of

actions by HMO administrators: “eligibility decisions,” which concern
whether a particular

condition or medical procedure for its treatment is covered by the
patient’s health insurance plan,

and “treatment decisions,” which “are choices about how to go about
diagnosing and treating a

patient’s condition: given a patient’s constellation of symptoms, what
is the appropriate medical

response?” Id. Not only to did the Pegram court not define “treatment,”
but it used the terms

“diagnosing” and “treating” as if they are two different types of
activities, joined by the

conjunction “and.” Nor does Miller v. AT&T Corp., 250 F.3d 820, 830-31
(4th Cir. 2001),

contain any independent analysis of the meaning of the word
“treatment”—it merely applies a

Family and Medical Leave Act regulation, 29 C.F.R. § 825.114(b), which
defines “treatment” to

include “examinations to determine if a serious health condition exists
and evaluations of the

condition,” and defers to an agency determination that the statutory
phrase “continuing treatment

by a health care provider,” 29 U.S.C. § 2611(11), is broad enough to
cover such examinations.

This is a far different question than whether Congress meant for “virus,
serum, toxin, or

analogous product used in the treatment of domestic animals” to include
a test procedure and

reagents used to determine whether an animal has (or had) a disease.

Additionally, to be susceptible to regulation under the VSTA, a
diagnostic product would

have to be both a “virus, serum, toxin, or analogous product” and “used
in the treatment of

domestic animals.” 21 U.S.C. §§ 151, 152, 154. Something is not
“analogous” to a virus, serum,

USDA claims its open-ended regulation of diagnostic products is
justified because the VSTA

refers to viruses, serums, toxins, or analogous products “for use in the
treatment of domestic

animals,” rather than “for treatment of domestic animals.” USDA Memo at
37. USDA does not

explain how a biological product that is not “for treatment of domestic
animals” could be “used

in the treatment of domestic animals.” Creekstone suggest that to the
extent there is a distinction,

though it seems unlikely there could be, it is a distinction without a
difference.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 26 of 52

or toxin just because it is “used in the treatment of domestic animals,”
but that is what USDA

seems to assume. In USDA’s expansive view of the VSTA’s targeted
language, presumably

even a thermometer could be regulated under the VSTA, simply because it
is “used in the

treatment of domestic animals.” USDA’s attempt to turn a limiting
qualifier into a very broad

congressional delegation of regulatory authority is simply not borne out
by the language or

legislative history of the VSTA.14

USDA regulations state that “biological products,” include vaccines,
antibodies,

antitoxins, immunostimulants, “and diagnostic components, that are of
natural or synthetic origin,

or that are derived from synthesizing or altering various substances or
components of

substances….” 9 C.F.R. § 101.2. Read literally, a “diagnostic component”
(an undefined term)

need not have anything to do with the defining characteristic of
“viruses, serum, toxins, or

analogous products,” which is that they “act primarily through the
direct stimulation,

supplementation, enhancement, or modulation of the immune system or
immune response.”15

Similarly, USDA defines “analogous products” to include either
“[s]ubstances…which are

similar in function to biological products in that they act, or are
intended to act, through the

stimulation, supplementation, enhancement, or modulation of the immune
system or immune

response, or [s]ubstances… which are intended for use in the treatment
of animals through the

detection or measurement of antigens, antibodies, nucleic acids, or
immunity;…” Id. (emphasis

added). Thus, USDA has explicitly de-coupled these diagnostic tests from
any requirement that

14 It also conflicts with a number of more-specific statutory
authorities over diagnostic tests,

including the Food, Drug and Cosmetic Act, as noted in Pl. Memo at
31-32, 38 n.14.

15 9 C.F.R. § 101.2 (definition of “biological products”). USDA offers
no response to the fact

that USDA has, in other regulations, made a clear distinction between
products that operate

through an immune response—and are subject to regulation under the
VSTA—and those that do

not, even if the same or similar components are involved. See Pl. Memo
at 36, 38.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 27 of 52

they be similar in function to the viruses, serum, toxins, and analogous
products that VSTA by its

terms covers.

Under the interpretation of “analogous product” advanced by USDA’s
counsel, if

Congress authorized the Department of Transportation to regulate the
manufacture and

distribution in commerce of automobiles, motorcycles, trucks, and
analogous products, DOT

could regulate the construction (and use) of highways or racetracks, as
well. The definitions in 9

C.F.R. § 101.2 do not represent “gap-filling” of an ambiguous statute.
Rather USDA’s “position

in this case amounts to the bare suggestion that it possesses plenary
authority to act within a

given area simply because Congress has endowed it with some authority to
act in that area.”16

See Railway Labor Executives’ Ass’n v. National Mediation Bd., 29 F.3d
655, 671 (D.C. Cir.

1994) (en banc), cert. denied, 514 U.S. 1032 (1995). The D.C. Circuit
has “categorically

reject[ed] that suggestion.” Id.

B. USDA’s Expansive Interpretation of the VSTA Is Not Entitled to
Deference.

USDA claims that its interpretations of the VSTA as authorizing it to
regulate types of

products and activities not addressed in the statute are entitled to
great deference. But USDA

cannot overcome the large body of precedent rejecting just such claims
by agencies seeking to

expand the authority granted to them by Congress.

1. No Deference for Interpretations Expanding the Scope of the Agency’s

Authority

16 USDA cites an opinion of the District Court for the District of
Maryland which described

USDA as having “plenary authority granted by Congress to regulate the
field of animal

vaccines.” USDA Memo at 27, quoting Arnold v. Intervet, Inc., 305 F.
Supp. 2d 548, 550 (D.

Md. 2003). But the question there was whether USDA’s regulatory
authority to approve and

regulate the manufacture of animal vaccines preempted state tort law
claims against vaccine

manufacturers, not whether USDA has authority to regulate everything
remotely related to animal

vaccines. Even “plenary authority” to regulate the field of animal
vaccines does not on its face

imply authority to regulate tests for detecting animal diseases.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 28 of 52

USDA virtually ignores the extensive precedent declining to accord any
deference to an

agency interpretation of a statute that gives itself expanded authority.
See Pl. Memo at 27; see

also John Hancock Mut. Life Ins. Co. v. Harris Trust & Sav. Bank, 510
U.S. 86, 108-109, (1993);

Natural Resources Defense Council v. Reilly, 983 F.2d 259, 266 (D.C.
Cir. 1993). An agency

simply “may not ‘avoid the Congressional intent clearly expressed in the
text simply by asserting

that its preferred approach would be better policy.’” Friends of the
Earth, Inc. v. EPA, 446 F.3d

140, 145 (D.C. Cir. 2006), quoting Engine Mfrs. Ass’n v. EPA, 88 F.3d
1075, 1089 (D.C. Cir.

1996); see also Ethyl Corp. v. EPA, 51 F.3d 1053, 1060-61 (D.C. Cir.
1995) (rejecting

interpretation that added factors to a list of factors to be considered,
even though there were

policy justifications for the additional factors, observing “Congress
has neither explicitly or

implicitly delegated discretionary authority to the Agency to consider
other factors ‘in the public

interest’….” Id. at 1060.).

2. No Deference for Statutory Interpretations Not Accompanied by Further

Explication

Creekstone has established that USDA’s interpretations of the VSTA are
entitled to

little or no weight because they were announced with virtually no
explanation of how they were

derived. Pl. Memo at 26-27, 30-31, 41. USDA does not deny this. Rather,
its principal

response is to assert that one of the cases Creekstone cited, Adamo
Wrecking Co. v. United

States, 434 U.S. 275, 287 (1978), was decided before Chevron and is
therefore no longer good

law. USDA Memo at 34 n.16. Unfortunately for USDA’s argument, the
principal for which

Creekstone cited Adamo Wrecking, that an agency’s statutory
interpretation announced without

explanation or analysis is entitled to little weight, has been relied
upon by the Supreme Court

and the D.C. Circuit many times since Chevron.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 29 of 52

For example, Public Citizen, Inc. v. U.S. Dept. of Health and Human
Services, 332 F.3d

654, 662 (D.C. Cir. 2003) discusses the inapplicability of Chevron
deference to situations where

the agency has not provided any explanation for its interpretation.
“Because the manual thus

contains no reasoning that we can evaluate for its reasonableness, the
high level of deference

contemplated in Chevron’s second step is simply inapplicable.” Id.,
citing Adamo Wrecking, as

well as SEC v. Sloan, 436 U.S. 103, 118 (1978) (reaching the same
conclusion “where this Court

can only speculate as to the Commission’s reasons for reaching the
conclusion that it did”

because the agency’s orders did not “address[ ] in any detail the
statutory authorization under

which it took [the] action”).17

Barnett v. Weinberger, 818 F.2d 953, 960-64 (D.C. Cir. 1987), another
post-Chevron

decision, declined to accord Chevron-like deference to the Department of
Defense’s

interpretation of a statute under circumstances quite similar to the
instant case:

In sum, the regulations in question were issued after what appears to

have been cursory consideration, were accompanied by neither explanation
nor

justification, and were given a breadth that does not comport with the
purposes

animating the statute purportedly interpreted. These elements buttress our

conclusion that the regulations are not entitled to significant weight in

delineating the scope of the statute’s “custodial care” provision.

Id. at 963 (footnote omitted). The Court considered it important that
the Department offered no

explanation or discussion of the regulations providing the
interpretation at the time they were

issued, “nor was any attempt made to support the regulations by an
analysis of the legislative

history underlying the statute.” Id., citing Adamo Wrecking, 434 U.S. at
237 n.5, SEC v. Sloan,

436 U.S. at 117-18, and Investment Co. Inst. v. Camp, 401 U.S. 617, 627
(1971) (declining to

See also Federal National Mortgage Ass’n v. United States, 56 Fed. Cl.
228, 236-37 (Ct. of

Claims 2003) (noting that United States v. Mead, 533 U.S. 218 at 228
(2001), held no Chevron

deference is due to an IRS interpretation for which “no reasoning is
given” (citing Adamo

Wrecking)).

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 30 of 52

defer to an agency “in significant part because agency failed to
buttress its interpretation with an

opinion or other supportive statement,” 818 F.2d at 963).

The interpretations of the VSTA USDA relies on to prevent Creekstone
from testing its

cattle for BSE were all announced by USDA with virtually no explanation
of why they

represent permissible and reasonable interpretations of the targeted
language of the VSTA.18

See Pl. Memo at 26-27, 30-31, 41. USDA’s argument now that it has
explained the basis for

those interpretations in subsequent Federal Register notices related to
other provisions of its

VSTA regulations would make no sense even if those explanations were
adequate. See USDA

Memo at 39 (apparently claiming that recent developments in genetic
engineering technology

and other “advances in scientific knowledge” somehow justified USDA
deciding 60 years after

the passage of VSTA that it should regulate the use of biological
products to promote public

health and welfare and that diagnostic tests are analogous to vaccines
and serums). But aside

from the fact that these would be post facto rationalizations in any
event, the passages USDA

cited do not even state, much less purport to explain, that scientific
advances justify expanding

USDA’s regulations under the VSTA to address use of biological products
and regulation of

diagnostic products. If general scientific advancement were sufficient
to justify an agency

regulating outside the terms of a statute, the words and choices of
Congress could be rendered

meaningless with each new discovery or invention.

18 In its opposition to Creekstone’s Motion for Summary Judgment, USDA
relies on opinions

interpreting comprehensive, far-reaching statutes, like the securities
and labor laws, in which

Congress delegated to administrative agencies broad authority to
regulate a whole sector of the

economy or aspect of commerce. USDA Memo at 27, 33. Such statutes
necessarily imply

broader authority for the agency and greater leeway to adopt
implementing regulations than a

statute like the VSTA, enacted to address specific concerns about
particular types of products in

particular uses.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 31 of 52

Moreover, USDA’s interpretation of the VSTA’s provisions for permitting the

importation of biological products, 21 U.S.C. §§ 152-153, as
additionally authorizing

regulation of the use of those products once they have been imported, is
not even contained in

the USDA regulations implementing those provisions, much less supported
by any

explanation.19 See Pl. Memo at 19-20. For that reason, it is entitled to
little or no deference

under Christensen v. Harris Cty., 529 U.S. 576 (2000).

In fact, the only explanation that we have for USDA’s interpretations of
its authority

under the VSTA to regulate the use of diagnostic products like BSE test
kits is that provided by

USDA’s counsel in this litigation. Pursuant to well-established
precedent, this Court should

reject such post hoc rationalizations of counsel. See, e.g., Bowen v.
Georgetown Univ.

Hospital, 488 U.S. 204, 212-13 (1988); PanAmSat Corp. v. F.C.C., 198
F.3d 890, 897 (D.C.

Cir. 1999). This Court also should not accord any deference to USDA’s
interpretations of its

USDA asserts that Creekstone is barred from requesting that the Court
strike down 9 C.F.R. §

104.1—which on its face says nothing of restricting the manner in which
an imported biological

product can be used, or by whom, or for what purpose—if, contrary to
Creekstone’s position, the

Court finds that that particular regulation does authorize such
restrictions, because Creekstone did

not include a demand in its complaint that 9 C.F.R. § 104.1 be
overturned. See USDA Memo at

30; cf. Pl. Memo at 19-20. Creekstone’s Complaint did, however, state
that “If USDA’s

regulations implementing the VSTA, at 9 C.F.R. Chapter I Subchapter E
are broad enough to

cover the BSE test kits as described above, then those regulations are
beyond the scope of the

rulemaking authority granted to USDA in the VSTA.” Complaint Count 1 ¶
31. The USDA

regulation on import permits, 9 C.F.R. § 104.1, is contained in 9 C.F.R.
Chapter I Subchapter E.

The prayer for relief in the Complaint also asks the Court to “Enter
judgment declaring that

USDA lacks authority to restrict the use of BSE rapid test kits or to
issue licenses for the

production of such test kits that limit to whom they may be distributed
or how they may be used”

and to enjoin USDA “from implementing or enforcing any prohibition on
Creekstone acquiring

or using USDA-approved BSE rapid test kits for purposes of routinely
screening for BSE cattle

that Creekstone processes (including any restriction on the sale of such
test kits to Creekstone).”

Creekstone does not believe that 9 C.F.R. § 104.1 authorizes
restrictions on the use of imported

diagnostic tests like the Bio-Rad BSE test kits, and so it does not need
to be vacated, but if the

Court concludes that it does give that authority to USDA, then
Creekstone submits that the

provisions of the Complaint noted here provide a sufficient request for
relief to allow the Court to

hold the regulation ultra vires and vacate it in this summary judgment
proceeding.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 32 of 52

authority under the VSTA, consistent with Adamo Wrecking and subsequent
cases, and should

conduct its own analysis of the breadth of the VSTA provisions, using
the traditional tools of

statutory construction described above and in Creekstone’s Memorandum in
Support.

3. Little Deference for Statutory Interpretations that Were Far from

Contemporaneous or Consistent

As Creekstone established, agency interpretations that are not
contemporaneous with a

statutes’s enactment and that do not reflect long-held positions of the
agency generally are

entitled to less deference than more contemporaneous interpretations.
See Pl. Memo at 30.

USDA’s primary response is to claim—again without any citation—that this
principle of

statutory interpretation no longer applies after the Supreme Court’s
Chevron decision. See

USDA Memo at 38-39. In fact, this principle has been applied repeatedly
and consistently

post-Chevron: “It is well established that the prestige of a statutory
construction by an agency

depends crucially upon whether it was promulgated contemporaneously with
enactment of the

statute and has been adhered to consistently over time.” Barnett v.
Weinberger, 818 F.2d at

961-62 (footnote omitted) (giving little weight to an interpretation
first announced 11 years

after enactment of statute). See also Continental Airlines, Inc. v. U.S.
Department of

Transportation , 856 F.2d 209, 216-217 (D.C. Cir. 1988) (relying on an
agency’s 1979

contemporaneous interpretation of applicable statute rather than a more
recent one); Lynn

Martin v. Occupational Safety and Health Review Commission, 499 U.S. 144
(1991) (stating

that the consistency of application of interpretations bears on the
reasonableness of the

agency’s position under Chevron); Railway Labor Executives, 29 F.3d at
669-70 (finding it

“telling” that the Board had not asserted its claim that it had latent
authority under the statute to

allow carriers or the Board itself to initiate investigations for the
first 50-plus years of the

statute’s 60-year history).

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 33 of 52

USDA has given virtually no explanation for why the Department failed,
for the first

two-thirds of the life of the VSTA, to recognize that it had the
authority it now claims:

authority to regulate who may use biological products and for what
purpose and to regulate

diagnostic tests as well as biological products themselves. In fact, so
far as Creekstone has

been able to determine, the instant case is the first time ever that
USDA has exercised this

purported authority to prevent a company from performing tests on its
own livestock (let alone

on the carcasses of animals it has already slaughtered). See also Exh.
(10 Detwiler Decl.) ¶ 24.

C. The Reenactment Doctrine Does Not Save USDA’s Unsupported
Interpretation of the

VSTA.

Finally, USDA claims that its interpretation of the VSTA as authorizing
USDA to

restrict who may have access to biological products and for what purpose
they may use them

has been blessed by Congress and must be deferred to under the
“reenactment” doctrine.20

USDA Memo at 28 n.14. Under that doctrine, courts “have frequently
considered whether

reenactment of a statute after promulgation of an agency interpretation
that is highly publicized

or otherwise communicated to Congress may be regarded as ratification by
acquiescence.”

Barnett v. Weinberger, 818 F.2d at 963 n.89. But the VSTA was not
reenacted when it was

amended in 1985; rather, Congress simply expanded a few of the
provisions of the VSTA,

primarily to eliminate a dichotomy that had existed between regulation
of biological products

shipped across state lines and those manufactured and used within the
same state. See P.L. 99198,

99 Stat. 1654-56; S. Rep. No. 99-145, Sept. 30, 1985, at 338-39,
reprinted in 1985

20 USDA seems to make that claim only with respect to its asserted
authority over the use of

biological products, and not its claim that diagnostic tests are
“analogous products” subject to

regulation under the VSTA. See USDA Memo at 28 n.14. Presumably that is
because the

expansion of the definition of “analogous product” in 9 C.F.R. § 101.2
to include substances

“which are intended for use in the treatment of animals through the
detection or measurement of

antigens, antibodies, nucleic acids, or immunity” did not occur until
1997. See 62 Fed. Reg.

31,326 (June 9, 1997).

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 34 of 52

U.S.C.C.A.N. 2004-2005; Garrelts v. Smithkline Beecham Corp., 943 F.
Supp. 1023, 1065-66

(N. D. Ia. 1996) (legislative history of 1985 amendments indicates
narrow purpose of

amendments); see also Pl. Memo at 22-23; cf. Babbitt v. Sweet Home, 515
U.S. at 729 (Scalia,

J., dissenting) (subsequently enacted provision authorizing permits for
“incidental take” of

endangered species does not implicate reenactment doctrine for agency
interpretation of the

prohibition on “take” of endangered species).

Moreover, for the reenactment doctrine to apply, Congress must have been
made aware

of the agency interpretation at issue. See, e.g., Barnett v. Weinberger,
818 F.2d at 963 n.89. In

particular, “application of the legislative reenactment doctrine
requires a showing of both

Congressional awareness and ‘express congressional approval of an
administrative

interpretation if it is to be viewed as statutorily mandated.’” General
American Transp. Corp.

v. ICC, 872 F.2d 1048, 1053 (DC Circuit 1989) (quoting AFL-CIO v. Brock,
835 F.2d 912, 915

(D.C. Cir. 1987)); accord, International Union, UAW v. Brock, 816 F.2d
761, 767 (D.C. Cir.

1987) (finding no “affirmative step taken by Congress that indicates an
intent to ratify the

agency’s interpretation” (emphasis in original)); accord, Koszola v.
F.D.I.C., 393 F.3d 1294

(D.C. Cir. 2005); see also Pacific Power & Light Co. v. FPC, 184 F.2d
272, 275 (D.C. Cir.

1950) (“before a mere reenactment can be given conclusive effect as a
congressional adoption

of an administrative interpretation, it must be shown that Congress was
conscious that it was

doing so.”); 2B Sutherland Stat. Constr. § 49.09 (reenactment doctrine
“does not apply when

nothing indicates that the legislature had its attention directed to the
administrative

interpretation upon reenactment.”).21 USDA offers no evidence to this
effect. And in fact, the

Cf. Lorillard v. Pons, 434 U.S. 575, 581–85 (1978), the case relied on
by USDA (detailing

Congress’s familiarity with the statute and judicial interpretations of
it and describing indications

of Congress’s intention to incorporate a contemporaneous construction of
the statute).

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 35 of 52

regulation that USDA claims authorizes restrictions on the use of an
imported biological

product, and which was promulgated prior to the amendment of the VSTA in
1985, does not

make any mention at all of such restrictions. Cf. 9 C.F.R. § 104.1; see
also Pl. Memo at 34

n.11 (no mention of regulating diagnostic tests in legislative history
of 1985 VSTA

amendments).

USDA also implies that its interpretation of the VSTA as authorizing
prohibitions on

private BSE testing must be deferred to because of a vote by the House
Appropriations

Committee not to adopt a rider to an appropriations bill that would have
required USDA to

allow Creekstone and others to conduct private BSE testing. USDA Memo at
10. But even a

negative vote by Congress on a bill is “a particularly dangerous ground
on which to rest an

interpretation of a prior statute.” Solid Waste Agency of Northern Cook
County v. U.S. Army

Corps of Engineers, 531 U.S. 159, 169-70 (2001). Accord, Central Bank of
Denver, N.A. v.

First Interstate Bank of Denver, N.A., 511 U.S. 164, 187 (1994); Brown &
Williamson, 529

U.S. at 155. A failed committee vote on an appropriations rider lacks
any legal significance.22

III. USDA LACKS STATUTORY AUTHORITY TO REGULATE BSE TEST KITS IN

PARTICULAR.

To be subject to USDA’s regulatory authority under the VSTA, something
must be

both a “virus, serum, toxin, or analogous product” and “used in the
treatment of domestic

animals.” 21 U.S.C. §§ 151, 152, 154. And for USDA to “prevent the
preparation, sale, barter,

22 In contrast, USDA offers no response to Creekstone’s demonstration,
from the text and

legislative history of the Agricultural Bioterrorism Protection Act of
2002, sections 211-213 of

the Public Health Security and Bioterrorism Preparedness and Response
Act of 2002, P.L. 107188,

116 Stat. 647, that Congress did not believe USDA’s regulatory authority
extended to who

may use biological products. See Pl. Memo at 24-25; see also Brown &
Williamson, 529 U.S. at

133 (“the meaning of one statute may be affected by other Acts,
particularly where Congress has

spoken subsequently and more specifically to the topic at hand.”)
(citations omitted).

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 36 of 52

exchange, or shipment” of such a product, it must be “worthless,
contaminated, dangerous, or

harmful.” Id. at § 154. As Creekstone showed in its Pl. Memo at 34-40,
test kits used for BSE

screening of apparently healthy cattle at slaughter do not meet any of
those criteria.23

A. BSE Test Kits Are Not “Analogous Products.”

The commonsense meaning of “virus, serum, toxin, or analogous product”
is that

analogous products are other products that, similar to the viruses,
serums, and toxins mentioned

specifically in the VSTA, are given to animals to supplement the
animal’s antibodies or to cause

the animal’s immune system to generate more of its own antibodies, to
prevent or mitigate the

effects of disease. USDA itself has expressed that understanding of what
“analogous product”

means. See Pl. Memo at 29, 38 n.14. Creekstone has demonstrated that
this interpretation of

“analogous products” is also consistent with the legislative history of
the VSTA, is reflected in

USDA’s own regulations contemporaneous with and extending for decades
after enactment of the

VSTA, and is similar to the way courts have interpreted virtually
identical language to “virus,

therapeutic serum, toxin, antitoxin, or analogous product” in the human
version of the VSTA, the

USDA attempts to narrow the scope of this argument by distinguishing
between “whether

USDA’s authority to regulate diagnostic tests extends as a general
matter to BSE test kits” and

“whether USDA was required to make an exception to license restrictions
prohibiting the sale of

BSE test kits for purposes other than government surveillance testing,
in order to permit plaintiff

to conduct private testing for its own marketing purposes.” USDA claims
that the latter is the

subject of Count 3 of the Complaint and therefore not covered by the
current process and motions

for summary judgment. USDA memo at 40 n.21. To the contrary, the issue
Creekstone has

raised is whether the VSTA authorizes USDA to prohibit the sale of BSE
test kits for uses other

than government surveillance testing. That is a question of whether
USDA’s license restrictions

and other actions regarding by whom BSE test kits may be used and for
what purposes are “in

excess of statutory jurisdiction, authority, or limitations, or short of
statutory right,” in violation

of 5 U.S.C. § 706(2)(C)—the subject of Counts 1 and 2 of the Complaint.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 37 of 52

Act of July 1, 1902, ch. 1378, 32 Stat. 728, on which the VSTA was
modeled. Pl. Memo at 23

25, 27-30.24

Even if USDA is correct that “[d]iagnostic test kits frequently rely on
the interaction of

antibodies and antigens to stimulate, modulate, or detect the immune
system of an animal, as do

products made with viruses, serums, or toxins” (USDA Memo at 36), that
would not mean that

such test kits are “analogous products” to vaccines and similar products
used to prevent or cure

diseases. See pp. 19-21, supra. But in any event, as Creekstone has
shown, USDA itself has

recognized that certain products made from microorganisms may be
“analogous products” in

some settings and products unregulated by the VSTA in others. Pl. Memo
at 36-38. So even if

diagnostic test kits “frequently” involve the stimulation or modulation
of the immune system of

an animal, as USDA maintains, that does not suggest that all diagnostic
test kits, including BSE

test kits, must be “analogous products” subject to USDA’s regulatory
authority under the VSTA.

For example, EPA provided this description of substances that may or may
not be

“analogous products,” depending on how they are used:

It is now recognized in the scientific literature that the generation or
stimulation

of an immune response involves both antigens and certain protein regulatory

factors referred to as cytokines. Some cytokines (e.g. interleukins)
serve as an

essential components in the generation and expression of an immune
response,

without which the vaccine would be worthless…. Cytokines are also
produced in

many body tissues and act on cell types other than those of the immune
system.

Cytokines of natural or synthetic origin can be prepared as products for

administration to animals. Because of the diverse biological activity of
the

cytokines, not all products consisting of these substances would be
regulated

under the VSTA. Many of these cytokines intended to be used as drugs
would fall

under the jurisdiction of the Food and Drug Administration. In such
instances,

the VSTA would not apply.

USDA tries to dismiss the cases cited by Creekstone as irrelevant
because they were not

interpreting the VSTA. USDA Memo at 36 n.18. But, as Creekstone
indicated, the language of

the human version of the VSTA is almost identical, and courts have held
that they should be

interpreted similarly. See p. 13, supra; Pl. Memo at 30 n.10

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 38 of 52

Both cytokines and immunomodulators are analogous to biological products

when they are used to stimulate, supplement, enhance, or modulate the
immunity

of animals in the treatment of disease. Products consisting of these
substances

that work through the immune mechanisms in the treatment of specific
disease

appropriately fall within the definition of “biological products.”

62 Fed. Reg. 31,326, 31,327 (June 9, 1997) (emphasis added.) BSE test
kits, which are used to

determine whether an animal carcass is infected with a disease that does
not even involve the

animal’s immune system, are not a product that works through the immune
system to treat a

specific disease, and therefore should not be considered an “analogous
product” under this USDA

rulemaking precedent.

USDA’s declarant, Dr.Rippke (whose declaration provides no information
about his

training and qualifications other than that he has worked at USDA for 20
years and in the

implementation of the VSTA—which addresses hundreds of products besides
the few related to

BSE—for the last 10 years), provides only the barest of analysis to
support his conclusion that

BSE test kits are analogous to viruses, serums, and toxins. Cf. USDA
Memo Exh. 2 ¶¶ 7-8. In

contrast, in Exhibit 8 to this Reply, Paul W. Brown, M.D., a real expert
in neurology and in

transmissible spongiform encephalopathies in particular, explains that
“BSE tests do not involve

the immune system of the animal that is tested. There is a sharp
distinction between using

immunological means to prevent foreign pathogen infections (e.g., active
and passive

immunization) and the use of an immunologic reagent (e.g., an antibody)
to detect infectious

prion proteins obtained from the body of an infected host. The use of
such a test has nothing

whatsoever to do with the immune system of the infected (and now dead)
animal.” Id. ¶ 16. In

fact, USDA has already acknowledged that BSE itself does not even work
through the immune

system of the cattle it afflicts: “The BSE agent does not evoke any
demonstrated immune

response or inflammatory reaction in host animals.” 70 Fed. Reg. 460,
461 (Jan. 4, 2005). As

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 39 of 52

Dr. Brown says, “USDA thinking on this point is very confused.” Exh. 8 ¶
16. Dr. Rippke’s

conclusory statements notwithstanding, there is nothing about BSE test
kits, which do not involve

the immune system of cattle and in fact can only be administered to dead
cattle, that makes them

analogous to vaccines and therapeutic serums administered to animals to
prevent or cure

disease.25

B. BSE Test Kits Are Not, and Would Not Be, Used in the Treatment of Animal

Disease.

USDA sets out a circular argument: BSE test kits are “intended for use
in the treatment of

domestic animals,” even though there is no treatment for BSE and USDA
claims that routine

testing of normal-appearing cattle at slaughter has no BSE mitigation
benefit. USDA Memo at

40-44. USDA then claims authority to prevent access to BSE test kits for
routine testing because,

it alleges, they are worthless for the treatment of domestic animals in
that use. The Court should

reject this attempt to “have it both ways.”

USDA’s claim that a test which is used to determine whether meat from a
slaughtered

animal might be infected is “intended for use in the treatment of
domestic animals” is

nonsensical, especially given that there is no known treatment for the
infection and the test can

USDA also relies on its regulation (which, as Creekstone has already
shown, is inconsistent

with the VSTA in any case, Pl. Memo at 29-31), 9 C.F.R. § 101.2(2)(ii),
which defines

“analogous products” to include substances that do not even act on the
immune system but rather

are used for “the detection or measurement of antigens, antibodies,
nucleic acids, or immunity.”

USDA asserts that BSE test kits fall under that definition and are
therefore analogous products in

any event because they are tests for “antigens.” USDA Memo at 41 n.22.
But USDA’s reference

for that contention, ¶¶ 7-8 of the Rippke declaration, refers to BSE
test kits as acting “through the

immunological detection of specific antigens found in animal tissue
indicative of disease,” even

though it also states that “antigens” are materials “that, as a result
of coming in contact with

appropriate tissues of an animal body, stimulate an immune response.”
Id. ¶ 7. See also Grand

Laboratories, Inc. v. Harris, 488 F. Supp. 618, 619 (D.S.D. 1980), rev’d
on other grounds, 660

F.2d 1288 (8th Cir. 1981) (referring to “antigen” as “the biological
component intended to

produce an immune response”). Given that BSE does not involve an immune
response in cattle

(see text supra), Dr. Rippke’s description of BSE test kits as
identifying “antigens,” meaning the

prion proteins believed to cause BSE, is internally inconsistent and
should be disregarded.

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only be used on cattle that are already dead. See USDA Memo at 41-42.
USDA relies in part on

its regulations that the determination of whether a product is intended
for the use in the treatment

of domestic animals is to be based on objective criteria indicating the
intent of the manufacturer.

9 C.F.R. § 101.2(1); see USDA Memo at 43 n.24. Here, BSE test kit
manufacturers, such as Bio-

Rad, market millions of BSE test kits a year to countries that conduct
BSE tests on the carcasses

of all animals presented for slaughter (mandatory above a certain age in
EU countries). Given

USDA’s assertion that BSE test kits are ineffective for BSE disease
mitigation purposes unless

applied to targeted cattle with symptoms that might be indicative of
BSE, the marketing of BSE

test kits for other purposes provides an incontrovertible objective
indication that BSE test kits, as

the manufacturer intends them to be used and as intended to be used by
Creekstone, are not

“intended for use in the treatment of domestic animals,” despite USDA’s
assertion to the

contrary. Cf. id. Thus, USDA’s actions dictating that BSE test kit
manufacturers and importers

cannot sell the test kits for purposes other than treating BSE in cattle
are ultra vires.

C. BSE Test Kits Are Not Worthless, Contaminated, Dangerous or Harmful.

Having asserted authority to regulate the use of BSE test kits by
Creekstone and other

meat producers because BSE test kits are intended for use in the
diagnosis of BSE in cattle,

USDA turns around and claims (for the first time in writing, cf. Pl.
Memo Exh. 1 Attachments

5, 7, and 10) that BSE test kits are “ineffective…and essentially
worthless as an animal health

measure when used, as proposed by plaintiff, to diagnose the disease in
all slaughter-aged

normally-looking cattle.” USDA Memo at 42. Since Creekstone never
claimed that its planned

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BSE testing would be valuable as an animal human health measure and
never proposed to use it

to diagnose BSE for the purpose of treating animals, this is really a
“straw man” argument.26

In any case, USDA’s claim that the VSTA authorizes it to ban private use
of BSE test kits

because they are worthless when applied to brain tissue from
“slaughter-aged normally-looking

cattle” is contradicted by a wide array of facts and indeed even USDA’s
own assertions. The

countries of the European Union performed BSE tests on almost 9 million
cattle that were

healthy-appearing at slaughter in 2005 alone. Report on the Monitoring
and Testing of

Ruminants for the Presence of Transmissible Spongiform Encephalopathy
(TSE) in the EU in

2005, European Commission, 20 June 2006, p. 12 Table B1, available at

http://ec.europa.eu/food/food/biosafety/bse/annual_reps_en.htm (attached
as Exhibit 9). A

significant portion of the BSE cases found in the EU in 2005 (114 of 491
cases) were in healthy-

looking cattle tested at slaughter. Id. at p. 18 Chart B3. France,
Germany, and Italy currently test

all cattle over 24 months of age, and Germany allows voluntary testing
of cattle 24 months and

younger. Id. at p. 8 Table 2. Japan currently tests cattle of all ages
at slaughter, and Japanese

officials consider BSE testing a measure for “ensuring the safety of
meat.” Pl. Memo at 9-10 and

Exh. 5 at 2-3. While most cattle slaughtered in the U.S. are under 30
months of age, BSE has

been detected in cattle younger than that, although infrequently.
Declaration of Linda A.

Detwiler, D.V.M. (Exh. 10) ¶ 22; Ferguson Decl. (USDA Memo Exh. 1) at ¶
5; Pl. Memo Ex. 5

at 2 (BSE in 21 and 23 month old cattle in Japan). In addition, the
usual method of estimating the

age of cattle, dentition, is inherently inaccurate. Exh. 8 (Brown Decl.)
¶ 11.

USDA does not contend that BSE test kits are “contaminated, dangerous,
or harmful,” 21

U.S.C. § 151. USDA’s claim that BSE test kits as proposed to be used by
Creekstone are

“misleading” (USDA Memo at 42) does not relate directly to any criterion
for regulation under

the VSTA. In any event, USDA does not suggest that BSE test kits are
ineffective at determining

whether concentrations of BSE prions above the detection limit of the
test are found in the tested

tissue. Thus there is nothing inherent about the test itself that is
misleading.

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Under these facts, USDA cannot simply declare that BSE test kits are
worthless when

used on healthy-looking cattle under 30 (or 24) months of age (which
USDA refers to as

“slaughter-age”). USDA’s arguments do not hold up to even cursory
examination. USDA

asserts that BSE test kits applied to healthy-appearing cattle at normal
slaughter age could “miss”

BSE-infected cattle—but only because the BSE infection in the animal has
not progressed far

enough for the BSE tests to detect it. USDA Memo at 43. But if no BSE
testing is performed on

slaughter-aged, healthy-appearing cattle, then 100% of those infected
cattle will enter the food

chain. Catching even a few such cases of this fatal, incurable disease
would obviously be of great

value. Exh. 8 (Brown ) ¶ 11; Exh. 10 (Detwiler) ¶ 21. In fact, neither
of USDA’s declarants say

that BSE testing would be worthless; the closest they come is to say
that USDA’s targeted testing

“is the most efficient method” of monitoring for BSE. USDA Memo Exh. 1 ¶
6.27

USDA asserts that BSE can only be detected ‘two to three months before a
cow would

demonstrate clinical signs of the disease.” USDA Memo at 43. Even that
would be valuable, of

USDA describes its targeted testing of a fraction of the cattle most
likely to test positive for

BSE as testing “to accurately diagnose the presence or absence of the
disease” (USDA Memo at

49), and a negative inference could be made from Dr. Ferguson’s
declaration that USDA’s

targeted testing can “be interpreted to mean that the animal is
necessarily ‘BSE-free’” (Ferguson

Decl. ¶ 6). But in fact, the testing USDA is conducting, just like the
testing Creekstone proposes

for its cattle, will only diagnose the presence of BSE if the disease
has progressed quite far. See

Ferguson Decl. at ¶ 6 (“there is a long period in the life of an
infected animal when current tests

would not detect the disease”). Thus, even USDA’s “targeted” testing can
result in “false

negative” test results, if infected animals that are non-ambulatory or
suspect for other reasons are

BSE-tested at a time when infectious prions are not concentrated enough
in their brain stem to be

identified in available tests. Only if cattle fall into one of the
groups which USDA is testing

(because, e.g., they are having trouble walking, or have died of unknown
causes) and they have

BSE which has spread to the point where the animal will die of BSE
within a few months will the

testing USDA is conducting identify BSE-infected cattle. USDA’s emphasis
on “false negative”

results in tests that Creekstone proposes to perform, when USDA’s own
testing also could result

in false negative results, is additional confirmation that USDA’s claim
that BSE tests are

“worthless” is just that—an assertion unsupported by the facts.

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course, but it seriously understates the value of BSE testing.28 USDA
simply chooses to ignore

information that demonstrates the inaccuracy of its “2-3 months”
argument. For example, on

August 24, 2006 the Canadian Food Inspection Agency (CFIA) issued a
report on a 50-month-old

cow from Alberta, Canada that was confirmed to be BSE-infected on July
13, 2006. See

(Detwiler Decl.) Attach. B. The conclusion of the CFIA (which has dealt
with four times as

many BSE cases as USDA), was that “in this instance, had the cow not
succumbed to an

unrelated disease and had a brain stem sample submitted for BSE testing,
it would probably have

been four to eight months longer before the cow would have displayed
symptoms that might have

caused it to be tested because of suspicion of BSE.” Exh. 8 (Brown
Decl.) ¶ 5.

Moreover, it is undisputed that, when countries have gone from testing
only cattle with

outward signs that might indicate BSE to testing all cattle above a
certain age, they have detected

many more cases of BSE. Analysis of the experience in France as it went
from “passive” testing

only of suspect animals, to testing of all cattle over 30 months of age,
to testing all cattle over 24

months, shows that passive surveillance was picking up only a fraction
of the cases of BSE

infection that were detectable with BSE rapid tests. Supervie and
Castagliola, “The

Unrecognized French BSE Epidemic,” 35 Vet. Res. 349, 351-52, 358, 361
(2004) (attached as

Exhibit 11). This may be in part because the clinical signs of BSE are
“very subtle.” See USDA

Memo Exh. 26 at Article 3.8.4.2 ¶ 1. In fact, both of the indigenous
cases of BSE discovered in

the U.S. were in cattle with ambiguous or no clinical features. Exh. 8
Attach. C at 1817.

28 The OIE Terrestrial Animal Health Code – 2005, Appendix 3.8.4,
Surveillance for Bovine

Spongiform Encephalopathy, on which USDA relies in part (USDA Memo Exh.
26), recognizes

that cattle where BSE is detectable but clinical signs have yet to
appear is a larger group than

those showing clinical signs. Id. at Article 3.8.4.1 ¶ 2.c.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 44 of 52

USDA also ignores the growing data about “atypical” BSE infection, which
usually is

not accompanied by any outward signs even at an advanced state of
infection. See Exh. 8 ¶ 8

and Attach. C. “Thus, some cattle that on visual inspection appear
normal are infected, and this

fact negates any argument about a limited window of ‘pre-clinical’
positivity in BSE tests, as

there are no signs leading to a suspicion of infection. The only way
that these cattle are

identified as BSE-infected is through testing.” Exh. 8 (Brown Decl.) ¶ 8
(citation omitted). Far

from making BSE testing of asymptomatic cattle worthless, it makes such
testing essential for

an understanding of this aspect of the disease. Id. ¶ 14.

In short, “[p]reventing voluntary testing while at the same time
dramatically reducing

government testing does not make any sense for the protection of animal
and human health and

is further indication that voluntary BSE testing is not ‘worthless.’”
Exh. 8 (Brown Decl.) ¶ 15.

USDA’s statutory authority under the VSTA to prevent the sale or
shipment of biological

products extends only to those that are “worthless, contaminated,
dangerous, or harmful.” 21

U.S.C. § 154. When USDA acts to prevent distribution of BSE test kits to
all but USDA

contractors because USDA believes that it is not cost-effective to use
USDA-approved test kits

on all healthy-looking, slaughter-age cattle (or because USDA believes
the use of those test kits

will have economic consequences for beef producers or national and
international consumer

confidence in beef, as discussed in the following section), USDA is not
acting to ban a

“worthless” product, and therefore it is acting outside its statutory
authority in violation of the

Administrative Procedure Act, 5 U.S.C. § 706(2)(C).

Much of the declaration of Lisa Ferguson (USDA Memo Exh. 1) seems to be
aimed at

convincing the Court that BSE is a dwindling, not-very-serious problem.
Although overstated,

that is in any case beside the point, since nothing about the VSTA would
authorize USDA to

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 45 of 52

prevent the sale or shipment of a vaccine or a diagnostic test for a
rare disease.29 If a vaccine

were developed to treat a rare but invariably fatal disease, which only
0.001% of the U.S. cattle

herd of 90 million head may contract, could USDA prohibit the
manufacture and sale of that

vaccine because USDA decided the disease was not important enough to
warrant ranchers’

purchasing the vaccine?

IV. USDA’S RESTRICTIONS ON BSE TEST KITS ON ECONOMIC GROUNDS ARE

OUTSIDE ITS AUTHORITY UNDER THE VSTA.

As Creekstone has explained, USDA acts outside of its statutory
authority, in violation

of section 706(2)(C) of the Administrative Procedure Act when it
prevents access to and use of

BSE test kits for reasons outside of the purposes and criteria expressed
in the VSTA. Pl.

Memo at 41-43. In particular, since USDA is banning access to BSE test
kits for purposes

unrelated to the purposes of the VSTA, such as promoting domestic and
international

confidence in beef, controlling costs of meatpackers, and the like, USDA
is acting outside its

statutory authority. Pl. Memo at 42, 44.30

USDA asserts that this issue goes to whether USDA acted in an arbitrary
and capricious

manner (Count 3 of the Complaint), and not Counts 1 and 2, which are the
subject of

Creekstone’s current Motion for Summary Judgment. But to the extent that
USDA has

promulgated regulations that it now asserts authorize it to restrict the
use of biological products

29 The declarations of Drs. Brown and Detwiler (Exhibits 8 and 10 to
this Reply Memo) make it

very clear that (1) much of what Dr. Ferguson states as unqualified fact
is actually more of an

educated guess and (2) BSE is far from eliminated and indeed recent
developments (ignored by

Dr. Ferguson’s declaration) make voluntary BSE testing even more
important. See also, e.g.,

Exh. 11 at 357 (referring to “animals slaughtered in the late stage of
incubation when it is

hypothesized that infected tissues are infectious” (emphasis added);
Exh. 8 Attach. C at 1820; Pl.

Memo Exh. 3 at 91 (Dr. Prusiner explaining why the feed ban will reduce
but not eliminate BSE.)

30 Creekstone also noted that, if the reference in USDA regulations at 9
C.F.R. § 102.5(d) to “the

protection of domestic animals or the public health, interest, or
safety, or both” could be read to

authorize restrictions on biological products for purposes unrelated to
the efficacy or safety of

such products, then that regulation should be struck down as ultra
vires, as well. Pl. Memo at 43.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 46 of 52

for reasons other than for animal health and has issued product
licenses, advisories, and other

communications concerning BSE tests for purposes that have nothing to do
with its regulatory

authority in the VSTA, USDA has acted “in excess of statutory
jurisdiction, authority, or

limitations, or short of statutory right,” in violation of 5 U.S.C. §
706(2)(C)—the subject of

Counts 1 and 2 of the Complaint.31 (Of course, if the Court believes
that this issue more

appropriately falls under Count 3 of the Complaint, then the Court could
simply defer ruling on

this particular argument until it is briefed in connection with a
summary judgment motion on

Count 3 (should Creekstone be denied summary judgment on both Counts 1
and 2).)

USDA’s substantive response is to assert (1) that its actions preventing
private parties

from BSE testing further the purposes of the VSTA by protecting animal
health and (2) that

regulating BSE test kits to achieve various economic or market ends is
also authorized by the

“purpose” of the VSTA. Neither of these arguments makes sense.

USDA has said or implied numerous times that its policy of preventing
BSE testing of

healthy-appearing cattle at slaughter (i.e., those least likely to have
BSE) promotes animal

health. See, e.g., USDA Memo at 48. But USDA has never explained how
that could be. Just

because BSE testing of healthy-appearing younger cattle is unlikely to
identify a case of BSE

does not mean that such testing would be harmful to animal health. A
“false negative” result

(which USDA in any case would expect to be extremely rare, since it
estimates that there are

seven or fewer BSE-infected cattle in the U.S., Defendants’ Statement of
Undisputed Material

Facts ¶ 5) could not be more “harmful” to animal health than not testing
the animal at all.

31 In contrast, Creekstone would be presenting an argument covered by
Count 3 of the Complaint

if it were arguing here that, even if USDA were authorized by the VSTA
to regulate the use of

biological products for reasons other than to protect domestic animals
(and, indirectly, their

owners) from ineffective or harmful biological products, it was
arbitrary and capricious for

USDA to exercise that authority in order to protect Creekstone’s
competitors from having to test

themselves or for other unreasonable reasons.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 47 of 52

USDA’s illogical pretext for banning private BSE testing is further
exposed by the fact

that virtually every developed country with BSE tests 100% of cattle
over 24 or 30 months of

age, and Japan tests all cattle presented for slaughter. See Section
III.C., supra. The value of

large-scale testing is reinforced by the statements of internationally
recognized experts on BSE

and the management of BSE and similar diseases, Dr. Paul Brown and Dr.
Linda Detweiler

(Exhs. 8 and 10), that it is important to perform a greater amount of
BSE testing in the United

States and that any data on the presence or absence of BSE in cattle
slaughtered in the United

States is of value. Since Creekstone’s proposed voluntary testing would
not prevent any

government testing for BSE, but would only provide supplemental data,
there is simply no

reason to conclude that Creekstone’s proposed use of BSE test kits would
adversely affect

animal health.32 USDA does not even attempt to explain its bald
assertion that Creekstone’s

voluntary testing would interfere with USDA’s efforts “to accurately
diagnose the presence or

absence of the disease” and, “through its surveillance testing, to
manage the disease.” USDA

Memo at 49. Cf. Rippke Decl. (USDA Memo Exh. 2) (stating that current
USDA BSE testing

“will contribute to the knowledge of the disease and may increase the
chances of developing

therapies or potential cures for the disease in the future,” but
omitting any mention of the effect

of voluntary BSE testing as proposed by Creekstone); Ferguson Decl.
(USDA Memo Exh. 1)

(stating that USDA’s testing of targeted animals is “the most efficient
method for detecting the

presence of BSE” (¶ 6), but never even claiming that Creekstone’s
proposed testing would

interfere with USDA’s “surveillance testing” for BSE).

32 Perhaps an argument could be made to that effect if Creekstone’s
testing would use up limited

laboratory capacity or test kit manufacturing capacity that otherwise
could be used for higher-

priority BSE testing. But USDA has not made such an argument, and in
fact Creekstone has

constructed its own laboratory for BSE testing and there is no shortage
of BSE test kit

manufacturing capacity (especially now that USDA has reduced its BSE
testing by 90%).

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If there was any doubt before, it is clear after reading the USDA Memo
that USDA’s

prohibition of the manufacture and sale of BSE test kits, except for use
in USDA’s own BSE

testing program, is an action to further USDA’s views of what is good
for domestic and foreign

markets for beef and for the financial health of U.S. meatpackers,
rather than to prevent the

manufacture and sale of a worthless or harmful biological product as the
VSTA directs. It

therefore is an action “in excess of statutory jurisdiction, authority,
or limitations, or short of

statutory right.” 5 U.S.C. § 706(2)(C). USDA openly acknowledges that it
was acting for

purposes of “maintaining domestic and international confidence in U.S.
cattle and beef

products,” “protecting consumers from paying more for privately BSE
tested beef,” and

“correcting market deficiencies and information asymmetries pertaining
to the effectiveness of

BSE test kits.” USDA Memo at 51-52. Tellingly, for the first time USDA
admits its

motivation that prohibiting private BSE testing “also prevents beef
producers from having to

incur increased costs of conducting the BSE testing, which, although
useless for animal health

and food safety purposes, might otherwise be necessary to remain
competitive if private BSE

testing were permitted.” Id. at 52 n.30.

USDA’s defense of its actions is to claim that, although not directly
authorized by any of

the provisions of the VSTA, they are “consistent with VSTA’s purpose.”
USDA Memo at 52.

Creekstone does not dispute that Congress enacted the VSTA in part to
protect the economic

interests of livestock owners from biological products that would harm
their livestock or would

be worthless. But a regulatory action is not authorized by a statute
just because it is consistent

with the statute’s purposes. A specific grant of authority from Congress
is necessary. Rodriguez

v. United States, 480 U.S. 522, 526 (1987); American Fin. Servs. Ass’n
v. FTC, 767 F.2d 957,

965), cert. denied, 475 U.S. 1011 (1986)); Railway Labor Executives’
Ass’n, 988 F.2d at 141 n.10

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 49 of 52

(“However sensible the Board’s view that stability in labor relations
would be promoted by [the

challenged regulation] …, Congress has not so provided.”) If USDA’s
position were the law,

then USDA could also, for example, dictate to biological products
manufacturers the maximum

amount they could charge for each product, because keeping prices low
would benefit the

economic interests of livestock owners and beef producers. See also 62
Cases of Jam v. United

States, 340 U.S. 593, 600 (1951) (“In our anxiety to effectuate the
congressional purpose of

protecting the public, we must take care not to extend the scope of the
statute beyond the point

where Congress indicated it would stop.”)

A biological product is not “worthless, contaminated, dangerous, or
harmful” for “use

in the treatment of domestic animals,” 21 U.S.C. § 151, because USDA
thinks that its use

would put others at a competitive disadvantage or would interfere with
“maintaining domestic

and international confidence in U.S. cattle and beef products.”33 This
Court should be

particularly cautious about inferring in the VSTA authority to restrict
access to biological

products for purposes of preventing competition among meat
producers—even competition on

grounds that USDA believes would be inappropriate—or consumer access to
information.

Other government agencies are charged with regulating competition and
fraudulent

representations to consumers. Imposing such limitations on speech
carries with it important

Constitutional constraints. And action by USDA—or indeed any government
agency—

specifically designed to favor one set of competitors (large meatpackers
with low margins) over

33 USDA Memo at 51-52. In any event, USDA provides no explanation for
this contention,

which is counterintuitive, especially given that 100% testing (of all
cattle, in Japan, and of cattle

over 24 months in France and Germany, and over 30 months in the
remainder of the EU, see p.

35, supra) is already the norm in many of those international markets,
and consumers in Asia

have been seeking testing for imported beef. This Court should not
simply accept USDA’s

unsupported assertion that more testing for BSE would make consumers
less confident in the

safety of U.S. beef. See also Exhibits 1-6.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 50 of 52

others (Creekstone and other high-end meatpackers with an interest in
BSE testing) is not only

inappropriate as a matter of policy, it likely is unconstitutional. The
Court should refrain from

interpreting the “VSTA’s purpose” as authorizing such potentially
unconstitutional actions.

See Edward J. DeBartolo Corp. v. Florida Gulf Coast Building & Constr.
Trades Council, 485

U. S. 568, 575 (1988) (courts should construe a statute to avoid
constitutional problems “unless

such construction is plainly contrary to the intent of Congress”).

In any event, USDA’s argument is that its restriction of access to BSE
test kits is

consistent with the VSTA’s purpose to protect farmers and ranchers from
economic losses

associated with harmful or ineffective biological products. USDA Memo at
50-51. But even

this broad, vague claimed authority does not support USDA’s claim that
actions to protect

consumers from paying more for BSE-tested beef (USDA Memo at 52) are
consistent with the

VSTA’s purpose “to protect the economic interests of livestock owners
and beef producers”

(id.), since actions to protect consumers of meat do not relate to the
financial well-being of

farmers and ranchers per se at all. (Instead, USDA now makes the
remarkable claim that the

VSTA authorizes it to “regulate the economic condition of [the beef]
market.” Id.) Even if

authorization to ban private use of BSE test kits could be derived
solely from the purposes of

the VSTA, none of those purposes supports USDA actions ostensibly
directed at providing

accurate information to beef consumers or protecting beef producers from
competition.34

Contrary to USDA’s assertion (USDA Memo at 51 n.27), Garrelts v.
Smithkline Beecham

Corp., 943 F. Supp. 1023 (N. D. Ia. 1996), is very relevant to this
case. After an extensive

analysis of the 1913 enactment of the VSTA and its amendment in 1985,
the Garrelts court

concluded that in both instances “Congress’s concern was regulation of
the worthlessness,

contamination, dangerousness, or harmfulness of animal vaccines to
livestock, not the general

duties of product manufacturers…to safeguard human users of their
products….” Id. at 1068

(emphasis in original); see also id. at 1066-67. Obviously, the economic
interests of beef

processors and consumers are even further removed from that
congressional purpose.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 51 of 52

V. USDA IS NOT ENTITLED TO SUMMARY JUDGMENT.

USDA has offered almost no argument directed specifically to its
cross-motion for

summary judgment, apparently believing that, if its arguments against
Creekstone’s summary

judgment motion are successful, then USDA will be entitled to summary
judgment itself. That

is, of course, not the way the law works.

First, as USDA has noted, by agreement Creekstone has only moved for
summary

judgment on Counts 1 and 2 of its Complaint, leaving Count 3 for a
fuller development of the

record if the Court should conclude that Creekstone is not entitled to
summary judgment on

either Count 1 or Count 2.35 See Pl. Memo at 1 n.1; USDA Memo at 13 n.7.
Secondly, the

Court could decide that Creekstone has not qualified for summary
judgment on Counts 1 and 2,

without finding that USDA has met its burden of demonstrating that there
is no genuine issue

as to any material fact and that USDA is entitled to judgment as a
matter of law on those counts

(which USDA certainly has not). See Fed. R. Civ. P. 56(c).

CONCLUSION

For the reasons explained above and in Creekstone’s Memorandum in
Support of its

Motion for Summary Judgment, Creekstone is entitled to summary judgment
on Counts 1 and

2 of its Complaint, and for the relief sought therein.

Dated: November 3, 2006 Respectfully submitted,

__/s/ Russell S. Frye _

Russell S. Frye (D.C. Bar No. 331124)

35 The only argument that USDA has even asserted that could apply to
Count 3 of Creekstone’s

complaint is that the Court lacks jurisdiction to hear Creekstone’s
claims because they are moot

or do not present a redressable injury. As Creekstone has demonstrated
in Section I of this

memorandum, those arguments are misguided and unavailing.

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Case 1:06-cv-00544-JR Document 14-1 Filed 11/03/2006 Page 52 of 52

FryeLaw PLLC

P.O. Box 33195

Washington, DC 20033-0195

(202) 572-8267

rfrye@fryelaw.com

__/s/ William L. Miller ________

William L. Miller (D.C. Bar No. 443191)

The William Miller Group, PLLC

1666 Connecticut Avenue, N.W.

Washington, DC 20009

(202) 256-2306

wmiller@williammillergroup.com

__/s/ Peter C. Choharis ________

Peter C. Choharis (D.C. Bar No. 444787)

2771 Woodley Place, NW

(202) 422-8312

Washington, D.C. 20008

pchoharis@yahoo.com

Attorneys for Plaintiff

CREEKSTONE FARMS PREMIUM BEEF, LLC

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TSS



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