Exactly how "organic" does organic food have to be?

This post was written by staff member Derek Leslie.

As one peruses the local grocery store, or spends a Saturday morning at their local farmer’s market, it quickly becomes apparent that foods labeled natural or organic have really taken off. Grocery store chains devoted to the once-niche organic food market have expanded rapidly in the past decade. Indeed, it is hard to grab a bite these days at all without hearing the buzz words associated with this bona fide food phenomenon. And while its success as a brand and a marketing tool seems clear, the word organic may not be as straightforward as you might have hoped.

In 1990 Congress enacted the Organic Foods Production Act (OFPA) in order to provide consistent national standards for producing and marketing organically produced agricultural products. Organic Foods Production Act (OFPA), 7 U.S.C.A. §6501 (West 2009). OFPA requires the Department of Agriculture to promulgate regulations to effectuate its purpose. These regulations, then, provide the legal standard for the certification of foods as “organic”. Specifically, to be sold as organic, a food must “be produced and handled without the use of synthetic substances, such as pesticides, and in accordance with an organic plan agreed to by an accredited certifying agent and the producer and handler of the product.” Harvey v. Veneman, 396 F.3d 28, 32 (1st Cir. 2005) (citing 7 U.S.C. § 6504). An organic plan refers simply to an agreed upon procedure to follow in the care of the agricultural product in order to ensure it meets the standards set forth in the OFPA and the associated regulations. Organic Production and Handling System Plan, 7. C.F.R. 205.201 (2009). This includes plans to make certain synthetic substances as well as products exposed to synthetic substances do not come into contact with the organic product. Id. This, however, is just the beginning of the process.

Surprisingly, all organic foods are not created equal. Labeling and certification are, therefore, not quite as simple as “organic” or “not organic.” Actually, it consists of a four-tier labeling system based upon the percentage of organic ingredients the food contains: products containing 100% organic ingredients may be labeled “100 percent organic,” products containing 94 to 100% organic ingredients may be labeled “organic,” products made from 70 to 94 % organic ingredients may be labeled “made with organic (specified ingredients or food groups),” and finally, foods that contain less than 70% organic ingredients may identify organic ingredients used on its label as “organic.” Product Composition, 7 C.F.R. § 205.301 (2009).

Moreover, products in the first two tiers of the labeling categories may bear both a United States Department of Agriculture seal and the seal of a private certifying agent. 7 C.F.R. §§ 205.303(b)(4)-(5)(2009). Products in the third tier, those made from 70 to 94% organic ingredients, may bear the seal of a private certifying agent, and products in the final tier, those containing less than 70% organic ingredients, may not bear a USDA seal nor that of a private certifier. 7 C.F.R. § 205.304 (2009); 7 C.F.R. § 205.305(b) (2009).

This, still, is not the end of the process. OFPA requires the Secretary of Agriculture to establish a National Organic Standards Board to create a list of synthetic substances recommended as exceptions to OFPA’s general prohibition against their use in the production of organic products. Another series of guidelines within OFPA exists for these exceptions. 7 U.S.C. 6517(a) (West 2009).

With the growth of the organic food industry, these regulations are having a significant impact on the lives of average American citizens, who remain largely oblivious to their operation. If we are to become savvy organic food consumers, it is necessary to familiarize ourselves with the labels and certifications that come with the territory. Only then will we be equipped to truly know what we are eating.

“The Pending Farmers’ Market Fiasco: Small-Time Farmers, Part-Time Shoppers, and a Big-Time Problem”

Written by staff member Brandon Baird, this Note appeared in KJEANRL Vol. 1 No. 1. This abstract is written by staff member Brandon Wells.

The recent growth in farmer’s markets has created increased complexities in dealing with liability for injuries from food sold at these markets. The main focus of this note is on the implications of applying the modern “consumer expectations” test of food liability to the markets, as well as what duties the vendors at these markets may owe to the consumers that visit them.

The analysis begins with a brief discussion of the history of farmer’s markets, noting that farmer’s markets have been around essentially as long as people have been trading for produce. A brief timeline is provided, outlining the shift from early products liability law that applied a strict liability theory to the sellers of food to the modern “consumer expectations” test. The “consumer expectations” test actually provides food purchasers less protection than strict liability, mainly because the “consumer expectations” test allows a jury to decide whether the reasonable consumer should have expected to find the defective aspect of the food.

The legal liability of the farmer’s markets is of significant importance, and there is much concern over whether the mostly uninsured farmer’s markets can continue to thrive while facing inevitable products liability claims for defective food. There is also an interest in the protection of farmer’s market consumers, and how the law can come to their aid. Courts have found manufacturers and restaurants liable for failing to warn of possible contamination in food, and the duty to warn should be applied to farmers in markets as well.

While some markets do require their vendors to carry liability insurance, unfortunately most do not. This opens up vendors to a potentially unlimited amount of liability. Most farmers’ market vendors don’t have many assets, and while this may prevent them from acquiring insurance; it may also prevent them from ever having to defend against a claim. Pursuing a claim against a vendor with little assets to satisfy a judgment may not be practical for injured consumers.

Although growing more prominent with local purchasers trying to save money in a tough economy and those that just want to enjoy local fresh produce; farmer’s markets are not completely safe for consumers. Contamination of food is at great risk with farmer’s markets, especially since farmers are mostly unregulated and are allowed to process foods such as jam, jelly and cake in their own kitchens. A failure to warn combined with uninsured vendors makes claims against farmers more complex and less remedial than those against large food retailers. While farmer’s markets have the ability to be a great part of our future society, the legal liabilities involved are certainly a risk factor we can’t ignore.

World Equestrian Games Bring Tourists (and Transient Tax?)

This post was written by staff member Tanner James.

With the Alltech FEI World Equestrian Games coming to Lexington in September of 2010, masses of spectators will likely descend upon the Commonwealth in record numbers. Local hotels and inns will thrive, but at some point they will almost certainly reach maximum occupancy, and the prospect of cashing in on this problem has come to the attention of local homeowners. Many Lexington residents are willing to rent out their homes to the city’s newest visitors—for a healthy fee, of course. But things may not be so simple.

As of this writing, Lexington officials are engaged in research and deliberation regarding state and municipal laws that may present obstacles to the would-be temporary lessors. Linda Blackford, WEG rentals might face hurdles, LEXINGTON HERALD LEADER, available at http://www.kentucky.com/news/local/story/894703.html. From zoning laws to health department rules, these rentals may be subject to the same legal standards as full-sized hotels. Id. Particularly complex and noteworthy, however, is the potential for tax liability. Id.

Established by the Kentucky Code, there exists a “special transient room tax” that may be levied by an urban-county government upon “all persons, companies, corporations, or other like or similar persons, groups, or organizations doing business as motor courts, motels, hotels, inns, or like or similar accommodations businesses.” Ky. Rev. Stat. Ann. §91A.390(1) (West 2008). Monies collected from this tax are for the benefit of tourist and convention commissions under the theory that hotels, motels, inns, etc. all benefit from the use of this revenue. Lexington v. Motel Developers, Inc., 465 S.W.2d 253, 254 (Ky. 1971).

The amount of the tax is initially restricted to no more than three percent (3%) of the rental price, though additional taxes may be applied dependant upon factors too complicated and numerous to discuss here. Ky. Rev. Stat. Ann. § 91A.390 (West 2008).

This all adds up to substantial source of confusion for those wishing to rent out their homes, as well as for Lexington officials who must research and clarify the issue. Will local homeowners be taxed like hotels? Or, will the state provide for an exemption? The answers to these and related questions stand to have a substantial impact on the atmosphere surrounding the World Equestrian Games.

In a recent decision...

...the United States Supreme Court upheld the authority of the United States Army Corps of Engineers (the Corps) to issue permits for the discharge of slurry, a by-product of the mining technique referred to as “froth flotation.” Coeur Alaska, Inc. v. Southeast Alaska Conservation Council, 129 S.Ct. 2458 (2009). Overturning the Court of Appeals for the Ninth Circuit, the Supreme Court determined that slurry is, in fact, “fill material” as defined by the Clean Water Act (the CWA or the Act), and, in accordance with the CWA, the disposal of such material shall be regulated by the Corps without regard to the strict limitations imposed by the Environmental Protection Agency (the EPA) for the disposal of pollutants. Id. at 2463.

The defendant in the case, Coeur Alaska, Inc. (Coeur Alaska), attempted to revitalize an 80-year-old gold mine in Juneau using the “froth flotation” technique whereby the mine’s crushed rock would be mixed with certain chemicals, resulting in the separation of valuable minerals. Id. at 2463-2464. One of the considerations in developing this plan, as is common in most mining operations, was what to do with the mixture of crushed rock and chemicals, referred to as slurry, once the valuable minerals were extracted. Coeur Alaska determined that the most cost-efficient and environmentally-friendly method of disposal would be to deposit the slurry into a nearby lake. Id. Upon approval by the Corps to implement its plan, several environmental activist groups filed suit against Coeur Alaska alleging that the mining company did not comply with the CWA. Id. at 2463.

The Supreme Court’s decision was not a difficult one as the language of the CWA and the regulations that accompany the Act clearly give the Corps the authority to issue permits for the discharge of slurry. However, the Appalachia Restoration Act, which was introduced in the Senate in March, 2009, proposes to change the definition of “fill material” to exclude slurry. S. 696, 111th Cong. (2009). Although no major congressional action has been taken, the Bill presents another potential challenge for companies like Coeur Alaska in the development of their mining operations.

The following post was written by staff member Meghan Jackson.

Topping v. Commissioner: An Example of How an Equestrian Taxpayer Can Utilize "Single Activity" to PReclude the IRS "Hobby Loss" Challenge

This comment appears in KJEANRL Vol. 1 No. 1 and was written by comments editor Anna Garcia. The abstract was written by staff member Sunni Harris.

Professionals in the equine industry are prone to having their horse-based activities classified as “hobbies” by the IRS. Examples of activities that are considered hobbies by the IRS include, but are not limited to: racing, showing, boarding, and breeding horses. Often professionals in the equine industry utilize these same activities to promote their equine businesses. The equine professional taxpayer suffers non-deductible losses when horse-based activities relating to his or her business are classified as hobbies instead of what they really are: business pursuits. Mrs. Garcia’s comment advises equine professionals on how to avoid hobby loss challenges.

In order for an equine professional to avoid a hobby loss challenge, he or she must prove that the activities the IRS classifies as “hobbies” are in reality business activities. The best way to convince the IRS that horse-based activities are business related is by aggregating the activities together, showing that they are sufficiently interconnected to be considered a single activity. When hoping to avoid a hobby loss by claiming a “single activity,” taxpayers should: (1) develop a written business plan integrating the various business activities, (2) keep and consolidate the records and books of multiple activities, (3) utilize services of the same manager and CPA for all activities, (4) use the same assets for both businesses, (5) file a single Schedule C form for sufficiently related business and hobby activities, (6) employ conventional advertising, unless the industry custom creates an exception, and (7) create “goodwill” by participating in and actually winning public competitions related to the hobby. By employing the aforementioned advice, the taxpayer is often able to show the organizational and economic relationship of their activities, thus improving the taxpayers chance of winning against the IRS.

“Disappearing Acts: How Parens Patriae Makes Private Environmental Suits Vanish in the Blink of an Eye”

Appearing in KJEANRL Vol. 1 No. 1 this comment was written by former Editor-In-Chief Chris Way. The abstract was written by staff member Stephanie Wurdock.

Citizen suits essentially allow private citizens to litigate on behalf of themselves and the general public against entities who violate environmental statutes. However, after those citizens bring suit, the government may assume the role of “parens patriae” in which it acts on their behalf. The result is often a “consent decree,” a settlement agreement between the government and the offender. This action ends in dismissal of the original citizen-suit.

By focusing on a 2004 citizen-suit in which injunctive relief and civil penalties were sought for numerous violations of the Clean Air Act (CAA), one may examine the reasons for the parens patriae policy. This in-depth examination provides a path for exploring the potential implications of barring subsequent private suits brought under citizen provisions.

An important question concerning suits of this nature is when parens patriae applies and whether or not it creates privity between the government agency and the private citizens it represents. The courts have followed a number of different guidelines to make such determinations and to decide when a consent decrees bar further citizen-suits. Looking to the standards developed by the Eighth, Seventh, and Second Circuits presents a comprehensive view of these approaches. Furthermore, an analysis of those courts’ decisions provides a basis for the holding in the 2004 citizen-suit in which the “diligent prosecution test” of the Seventh Circuit was adopted.

The implications of the Court’s holding include the potential for widespread application of the “diligent prosecution” standard in similar suits and the unaffected ability of the government to address environmental violations. The decision also has significant implications for what remedies are available to the individual citizens of the original plaintiff class. Finally, the holding provides additional individual causes of action for persisting environmental violations.

Coexisting: Track Betting and Lottery Prohibitions

This post was written by staff member Alex Torres.

While a great number of states authorize, if not actively run and endorse, lotteries there was a time when such widespread presence was non-existent. Specifically the Supreme Court in Champion v. Ames, 188 U.S. 321 ( 1903) upheld, as within Congress’ powers under the Commerce Clause, the Federal Anti-Lottery Act which prohibited the transport of lottery tickets across state lines. While lotteries have become increasingly prevalent among the several states in the century since the decision in Champion tensions have arisen when this prohibition, which was incorporated into multiple state constitutions in the following years, was alleged to prohibit other types of gambling.

Specifically, the Supreme Court of Michigan was called on in Rohan v. Detroit Racing Ass’n, 314 Mich. 326, 345 (Mich. 1946) to determine whether a state statute authorizing the licensing and “parimutuel betting” violated the Michigan Constitution providing that “the legislature shall not authorize any lottery nor permit the sale of lottery tickets.” MICH. CONST. of 1908, art. V, § 33. Should the court have found that horse betting did qualify as a lottery the import would have been to establish a precedent against horse betting and, by extension, the horse racing industry as a whole as a result of extensive lottery prohibitions in state constitutions across the country.

Thankfully the court held that gambling on horse races did not come within the penumbra of a lottery. The court based this primarily on the logic that lotteries were differentiated from horse races, and presumably other games of ‘chance’, on the premise that the result of a lottery could not be divined by “will… human reason, foresight [or] sagacity.” Rohan, 314 Mich. at 343(citing People v. Elliott, 74 Mich. 264, 267 (Mich. 1889). Chance was further emphasized as a necessary ingredient in the finding that a system was a lottery with the court emphasizing that, “[c]hance is an essential element of a lottery in the sense that, unless a scheme for the awarding of a prize requires that it be awarded by chance, it is not a lottery.” Id. at 344. The court held that betting on horse racing required more than mere chance, specifically that winners were not ones chosen at random but those who, by their own volition, “bet on the winning horse.” Id.

Since the winners were not determined by mere chance, but by exercise of “judgment and discretion” in selecting their entrants, the court found that pari-mutuel betting fell outside the purview of the lottery prohibition and was therefore not unconstitutional in that regard. Id. at 346. This holding is especially relevant as the 6th Circuit is home to our nation’s greatest reserve of equine potential which would have been unfairly stunted should horse betting have been found violate. Further, the court’s holding that horse betting was more than mere chance imparts an air of respectability, and perhaps glamour, to our equine industry, differentiating it from mere lotteries and other games of chance.

No Contest? An Analysis of the Legality of Thoroughbred Handicapping Contests under Conflicting State Law Regimes

Appearing in KJEANRL Vol 1. No.1 this article was written by Laura A. D'Angelo & Daniel Waxman. The abstract was written by staff member J. Anthony Cash.

Gaming and the equine industry have long and profitable history together. However, the rise of viable gaming options has reduced the market share of gaming revenue collected via traditional track betting on horse races. In response the horse racing industry has experimented with a number of tactics, but none have been more successful than the advent of handicapping tournaments.

A handicapping contest holds much of the same appeal as a fantasy sports league or the World Series of Poker. In a handicapping contest, the most popular of which is the National Handicapping Championship, players pay an entry fee to bet set fictional amounts on a set number of specified races. The player who accumulates the largest fictional bankroll wins the contest and a significant share of the initial pool of entry fees. This creative format creates concern about its legality in a number jurisdictions.

Laura A. D’Angelo and Daniel Waxman confront this problem, analyzing the legality of handicapping contests under the state laws of both Kentucky and Florida, states with a significant horse racing industry. While providing a thorough analysis of the law of each jurisdiction, the authors illustrate a number of possible challenges to the legality of handicapping contest and their possible solutions. Ultimately, the authors’ analysis reveals the incompatibility between the gaming laws of Kentucky and Florida, the possible liability to horse racing establishments conducting handicapping contests, and the subsequent need for an industry wide push to enact legislation permitting handicapping contests.

In order to reach this conclusion, the authors investigate the Predominance/Dominant Factor Test and the Any Chance Test, two tests which have been used by Kentucky courts to determine whether an activity qualifies as a game of chance as opposed to a game of skill. Under Kentucky law wagers on games of chance violate the criminal prohibition against gambling, while wagers on games of skill do not. While the authors make a strong argument that handicapping contests qualify as games of skill under the Predominance/Dominant Factor Test and are, therefore, legal in Kentucky, they also point to case law that could indicate the more restrictive Any Chance Test applies in Kentucky. If that were the case, then handicapping contests would violate Kentucky law if they contain any element of chance, which they undoubtedly do.

Handicapping contests’ questionable legality in Kentucky is compared to their questionable legality under Florida law. Florida law has a more stringent restriction on gaming than does Kentucky. Consequently, the authors show that handicapping contests could be legal under Florida law if the Florida courts deem the entry fees paid to enter the handicapping contest to be “bona fide entry fees” for a “purse, prize, or premium” rather than a wager. Again the authors illustrate that this exemption requires handicapping contests to be viewed as a game of skill rather than a game of chance by the Florida courts.

Considering these factors, the authors’ suggested legislative and administrative exemptions for handicapping contests seem to be a logical solution to a pressing problem.

Progress in the Prevention of Soring: Increased Regulation of the Tennessee Walking Horse Industry

The following post was written by staff member Ramsey Groves.

This past Wednesday marked the beginning of the 71st annual Tennessee Walking Horse National Celebration. Larry Taft, Tennessee walking horse Abuse triples in 4 months: But scrutiny may help clean up the sport, The Tennessean, http://www.tennessean.com/article/20090823/SPORTS11/908230371/Tennessee+Walking+Horse+abuse+triples+in+4+months (last visited Aug. 31, 2009).The Celebration is a well-known event that receives a great deal of publicity. However, this year the headlines concern a hotly debated issue: increased regulation of soring in the walking horse industry. Id. Soring involves applying chemicals to a horse’s front feet so that the animal will raise its feet higher and faster. See id. This painful procedure results in the horse having the high-stepping gait characteristic of prize-winning walking horses. See id. Although federal laws were enacted nearly 40 years ago to ban soring, this procedure has remained far too common in the industry. A new agency is hoping to bring about much needed change. Id.

The law demands that the walking horse industry have a regulatory agency to insist on compliance. For years, the commission in charge of compliance basically failed to enforce Soring regulations. Id. The commission’s lack of action can no doubt be attributed to the fact that is comprised of owners and trainers who have conflicting interests. In order for their walking horses to be successful, it was in their best interest to overlook practices of soring. This past April, however, “a new federally sanctioned agency, directed by the Tennessee Walking Horse National Celebration, began examining horses at shows.” Id. Veterinarians, as opposed to people with a more personal interest in the walking horse industry, now comprise the regulatory agency. See id. Consequently, soring has been monitored more closely and inspections have resulted in the exposure of instances of this prohibited practice. Since April, “violations of industry and federal regulations on the humane treatment of horses more than tripled compared with the same period in 2008.” Id. This increased regulation shows that the new agency is serious about cleaning up the industry and ensuring the humane treatment of walking horses.

In Kentucky, legislation regulating walking horses was enacted as far back as 1956. K.R.S. § 436.185 stipulates:

“… (2) No walking horse shall be permitted to compete or exhibit in any exhibition or fair either for profit or pleasure, if said horse's front legs or hoofs show evidence of burns, drugs, lacerations, any sharp pointed instrument, or any pain inflicting device.

(3) It shall be the duty of the assigned ringmaster in charge of any such exhibition or competition to properly inspect the front legs and hoofs of each entry in each class or event. Said inspection shall be for the purpose of determining whether there is any evidence of burns, drugs, lacerations, any sharp pointed instrument, or any pain inflicting device appearing on said animal.

(4) If any such evidence appears to the satisfaction of the ringmaster, he shall immediately bar said horse from competition, and notify the sheriff of said county of said violation. The handler of said horse shall be fined not less than ten dollars ($10) nor more than one hundred dollars ($100) or imprisoned for ten (10) days or both. For the second and each subsequent offense he shall be imprisoned for thirty (30) days.

(5) Any ringmaster who fails to perform these duties, and permits the commission of any of the offenses stated in subsection (2), shall be fined not less than ten dollars ($10) nor more than one hundred dollars ($100) for each offense allowed.” Ky. Rev. Stat. Ann. §436.185(West 2009).

The Kentucky penalties seem rather mild in comparison to those imposed by the new regulatory agency. Since the new agency initiated action in April 2008, three individuals “deemed responsible for the care and control” of a horse received lifetime suspensions due to abuse uncovered during inspections. Larry Taft, Tennessee Walking Horse Abuse triples in 4 months: But scrutiny may help clean up the sport, The Tennessean, http://www.tennessean.com/article/20090823/SPORTS11/908230371/Tennessee+Walking+Horse+abuse+triples+in+4+months (last visited Aug. 31, 2009). Additionally, a trainer and two others received one-year suspensions due to various infractions. See id. This new agency seems to be serious about cracking down on owners and trainers. Hopefully, its actions will continue to bring about positive changes in the walking horse industry.