Attack of the Clones?: Fifth Circuit Court of Appeals Allows AQHA to Deny Registration of Cloned Horses

By: Zack Mattioni, Staff Member

The cloning of elite horses may seem like the plot of Hollywood’s latest science fiction film, but in reality it is a legitimate, viable operation, albeit one that now faces a major setback.[i] On January 14, 2015, the United States Court of Appeals for the Fifth Circuit reversed a lower court decision that required the American Quarter Horse Association (AQHA), the largest equine membership organization in the world[ii], to include cloned horses in its breed registry.[iii] The AQHA is now free to enforce “Rule 227(a),” originally enacted by its membership in 2004, which categorically denies registration for all clones and their offspring.[iv] 

The current legal battle demonstrates that, in the twelve years since the first successful cloning of a horse[v], the legitimacy of clones remains stubbornly debated. Proponents of cloning argue that it offers a chance to preserve the DNA of champion horses that are deceased or are otherwise unable to reproduce.[vi] This seemingly addresses the fact that many top competitors are geldings, which are often castrated before their exceptional potential is known.[vii] 

The plaintiffs that filed suit against the AQHA also contend that its policy against cloned horses is motivated by a self-serving economic interest.[viii] Their assertion is that some of the most prominent cloning opponents are their potential business rivals, who are solely interested in keeping prices for their own horses high by avoiding competition with other elite animals.[ix] The end result, the plaintiffs claim, is the perpetuation of a monopoly supported only by greed and sham studies.[x]

The AQHA, unsurprisingly, sees things differently. It stresses that cloning frustrates the DNA testing process employed by the breed registry, making it impossible to discern a horse’s lineage.[xi] The AQHA furthermore firmly insists that breeding, not cloning, is the only way to improve each generation of horses.[xii] It warns that the high price of cloning (on average over $150,000) will ensure that only the most elite horses are included in the process.[xiii] Potentially, the continued cloning of these animals would eventually narrow the existing gene pool and result in the exacerbation of known genetic defects, as well as the creation of new ones.[xiv]

It cannot be ignored that cloning entails serious potential harm. Frequently, cloned animals suffer from diseases and developmental abnormalities that prematurely end their lives.[xv] But supporters of the practice believe the benefits outweigh the risks. The International Federation for Equestrian Sports (Fédération Équestre Internationale, or FEI), the international governing body for equestrian sports, recently reversed its 2007 ban on cloned horses, citing the value of keeping superior genetics in the gene pool and the dropping cost of cloning eventually leveling the playing field.[xvi] However, with the AQHA remaining steadfastly devoted to its anti-cloning policy, and its opponents set on appealing the verdict in its favor[xvii], it is clear that an amicable resolution is unlikely in the near future.

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[i] Pat Raia, Appeals Court Rules AQHA Can Reject Clones, The Horse (Jan. 15, 2015), http://www.thehorse.com/articles/35185/appeals-court-rules-aqha-can-reject-clones.

[ii] Mary W. Craig, Mirror, Mirror in the Stall: Animal Cloning and Its Legal Implications for Equine Registry Associations, 5 Ky. J. Equine, Agric. & Nat. Resources L. 273, 281 (2013).

[iii] Id.; AQHA Prevails in Cloning Lawsuit, American Quarter Horse Association (Jan. 14, 2015), http://www.aqha.com/News/News-Articles/2015/January/01142015-Cloning-Lawsuit-Update.aspx.

[iv] Abraham & Veneklasen Joint Venture v. Am. Quarter Horse Ass'n, No. 2:12-CV-103-J, 2013 WL 2297104, at *1 (N.D. Tex. May 24, 2013).

[v] Craig, supra note ii, at 274.

[vi] Mike Brunker, Judge Orders Quarter Horse Association to Register Clones, CNBC (Aug. 13, 2013, 12:53 PM), http://www.cnbc.com/id/100959513#.

[vii] Ollie Williams, Battle of the Clones: When Will a Replica Horse Win Olympic Gold?, CNN (Feb. 20, 2015), http://edition.cnn.com/2015/02/20/equestrian/horse-cloning-olympics/.

[viii] Abraham & Veneklasen Joint Venture, 2013 WL 2297104, at *1.

[ix] Id.

[x] Id. at *1-2.

[xi] American Quarter Horse Association Position Regarding: Abraham & Veneklasen Joint Venture v. American Quarter Horse Association, American Quarter Horse Association (Jan. 14, 2015), http://www.aqha.com/AQHA-Cloning-Lawsuit-Resources/AQHA-Cloning-Position.aspx.

[xii] Id.

[xiii] Id.

[xiv] Id.

[xv] Craig, supra note ii, at 275-76.

[xvi] Bill Chappell, Equestrian Group Clears Way for Cloned Horses to Compete in the Olympics, NPR (Aug. 7, 2012, 3:09 PM), http://www.npr.org/blogs/thetorch/2012/08/07/158373631/equestrian-group-clears-way-for-cloned-horses-to-compete-in-the-olympics.

[xvii] Jim McBride, Pro-Cloning Plaintiffs Want AQHA Win Overturned, Amarillo Globe News (Jan. 14, 2015, 3:45 PM), http://amarillo.com/news/local-news/2015-01-14/appeals-court-rules-aqha-horse-cloning-appeal.

The Demand for a Supreme Court Response: Electric Power Supply Association v. FERC

By: Sandy Manche, Staff Member

Demand response, a “reduction in the consumption of electric energy by customers . . . in response to an increase in the price of electric energy or to incentive payments,”[i] is good for society because it incentivizes reductions in electricity usage, thereby decreasing the use of natural resources.  Did the Federal Power Act (“FPA”)[ii] grant the authority to regulate demand response pricing to the federal or state government?  The Federal Energy Regulatory Commission (FERC) has asked the Supreme Court to rule on this jurisdictional question. 

On March 15, 2011, the FERC issued Order No. 745, requiring independent system operators and regional transmission organizations to pay “market price,” to “demand response resources participating in an organized wholesale energy market,”[iii] for reductions in consumption.[iv] However, the FERC ruling was vacated on March 23, 2014 by the United States Court of Appeals for the District of Columbia Circuit (“D.C. Circuit”) in Electric Power Supply Ass’n v. FERC.[v] The D.C. Circuit ruled that the FERC had exceeded its powers.[vi]  Noting that the FPA splits the “jurisdiction over sale and delivery of electricity between the federal government and the states on the basis of the type of service being provided and the nature of the energy sale,”[vii] the court ruled that although demand response “affects the wholesale market,”[viii] the states have exclusive jurisdiction over the regulation of the retail market.[ix]  However, in New York v. FERC[x] the Supreme Court recognized that “the landscape of the electric industry has changed since the enactment of the FPA, when the electricity universe was ‘neatly divided into spheres of retail versus wholesale sales’”[xi] Deregulation continues to change the landscape. 

On January 15, 2015, the U.S. Solicitor General filed a writ of certiorari requesting the Supreme Court to review the ruling in Electric Power Supply Ass’n[xii] The FERC contends  it has authority to “regulate the rules used by operators of wholesale- electricity markets to pay for reductions in electricity consumption and to recoup those payments through adjustments to wholesale rates”[xiii] because, under the Chevron doctrine, the correct interpretation of the statutory text is that the FPA does not deny FERC the authority.[xiv] The FERC argues that the FPA grants it the authority to “regulate any rule, regulation, practice, or contract affecting [a wholesale] rate,” [xv] and that “[t]he payments to demand-response providers” do affect wholesale rates because the payments “are recouped directly from the rates paid by purchasers of wholesale electricity.”[xvi]

Although the issue is whether regulation of demand response pricing is a power granted to the federal government or to the states, the FERC noted that “optimal use of demand response in wholesale-electricity markets . . . is likely to produce lower electricity prices”[xvii] and GTM Research has estimated that the D.C. Circuit court’s decision could reduce demand response growth significantly.[xviii]

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[i] 18 C.F.R. § 35.28 (2015).

[ii] 16 U.S.C. § 791a (2014).

[iii] Order No. 745, Demand Response Compensation in Organized Wholesale Energy Markets, 134 F.E.R.C. ¶ 61,187 (2011).

[iv] Id.

[v] 753 F.3d 216 (D.C. Cir. 2014).

[vi] Id. at  225.

[vii] Id. at 219.

[viii] Id. at 221.

[ix] Id.

[x] 535 U.S. 1 (2002).

[xi] Id. at 16.

[xii] Petition for Writ of Certiorari, Elec. Power Ass’n, 753 F.3d 216 (No. 14-840), available at http://www.ferc.gov/legal/court-cases/appellate-briefs.asp.

[xiii] Id. at I.

[xiv] See id. at 19-21.

[xv] Id. at 20.

[xvi] Id. at 21.

[xvii] Id. at 31. 

[xviii] See Gavin Bade, Obama Administration to Appeal to Supreme Court on FERC Order, Utility Drive (Dec. 8, 2014),  http://www.utilitydive.com/news/obama-administration-to-appeal-to-supreme-court-on-ferc-order-745-ruling/341335/

Don’t Wait for Wheat – Actual Production History Yield Exclusion Included in the 2014 Farm Bill

By: Rebecca Price, Staff Member

Drought that plagued Oklahoma farmers in 2010 continues to affect wheat production today.  In 2013-14, wheat crops harvested a yield of 17 bushels per acre, a major decrease from 31 bushels per acre in 2012-13.[i] Oklahoma’s drought conditions are worsening; in September 2014 communities recorded a 1.26-inch to 2-inch reduction in rainfall from previous years.[ii]  Lack of rain reduces wheat yields, which is both a cash and insurance problem.[iii]  Crop production determines farmers’ eligibility for crop insurance and decreasing yields cause a reduction in insurance coverage.[iv] 

Farmers lobbied for the Actual Production History (APH) Yield Exclusion provision in the 2014 Farm Bill.  The provision allows drought and disaster affected growers to adjust crop production yields for up to six years if an average planted acre of a crop harvested a yield less than fifty percent of the county’s ten year yield average.[v] Representative Frank Lucas, chair of the House Agriculture Committee and author of the 2014 Farm Bill, recognized the need to relieve his fellow Oklahomans and growers around the country.  He publicly prioritized amending the Farm Bill to extend insurance coverage to crop yields from spring 2015 by declaring the provision imperative for farmers facing drought because it is “the difference between having a viable crop insurance for the coming year or not.”[vi]

On October 21, 2014, Agriculture Secretary Tom Vilsack announced that the 2014 Farm Bill included the APH Yield Exclusion and growers affected by drought and disaster would receive insurance relief with crop yields in spring 2015 for select spring crops: corn, soybeans, wheat, cotton, grain sorghum, rice, barley, canola, sunflowers, peanuts, and popcorn.[vii] Vilsack reported  this initiative is part of the United States Department of Agriculture’s “commitment to help rural communities grow” by offering growers financial security in the face of drought and disaster and allowing American consumers to enjoy safe, reasonably priced food.[viii]  The APH Yield Exclusion maintains farmers’ insurance coverage but will likely result in higher premiums for participating farmers.[ix]

The legacy of the APH Yield Exclusion remains unclear.  The Oklahoma Wheat Growers Association reports that members are disappointed with the USDA’s exclusion of fall crops in the APH Yield Exclusion Provision.  Wheat growers believed that fall crops should have been included in the provision.  The Association may push further litigation depending upon the 2014-15 wheat yield.[x]  Also, the lasting political viability of this provision is unknown.  Future chairman of the House Agriculture Committee, Representative Mike Conaway, is ready to begin working on the 2019 Farm Bill by doing a “soup-to-nuts” review of the 2014 Farm Bill and determining what is effective and what is ineffective.[xi]  Depending upon its success of the APH Yield Provision, it may not find a permanent home in American farm legislation.  The immediate wait for wheat insurance is over, however the future of the insurance adjustment is uncertain.

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[i] Chris Clayton, Wheat growers to seek inclusion in APH Yield Exclusion for 2015 – DTN, AGFacts.com (Oct. 21, 2014), http://agfax.com/2014/10/21/wheat-growers-seek-inclusion-aph-yield-exclusion-2015-dtn/#sthash.KT2fzOHc.dpuf.

[ii] Silas Allen, Oklahoma wheat farmers call on federal agriculture officials to enact drought relief policy, NewsOK (Oct. 9, 2014, 3:49 PM), http://newsok.com/oklahoma-wheat-farmers-call-on-federal-agriculture-officials-to-enact-drought-relief-policy/article/5349858/?page=2.

[iii] Oklahoma wheat farmers seek drought loss relief from USDA, Insurance Journal (Oct. 13, 2014), http://www.insurancejournal.com/news/southcentral/2014/10/13/343358.htm.

[iv] Id.

[v] Allen, supra note 2.

[vi] Id.;  Clayton, supra note 1.

[vii]USDA to launch new farm bill program to help provide relief to farmers affected by severe weather, United States Department of Agriculture (Oct. 21, 2014), http://www.usda.gov/wps/portal/usda/usdahome?contentid=2014/10/0233.xml&navid=NEWS_RELEASE&navtype=RT&parentnav=LATEST_RELEASES&edeployment_action=retrievecontent.

[viii] Id.

[ix] Clayton, supra note 1. 

[x] Keith Good, Farm bill; ag economy; and, regulations, FarmPolicy.com (Oct. 22, 2014, 4:06 AM), http://farmpolicy.com/2014/10/22/farm-bill-ag-economy-and-regulations-wednesday/.

[xi] Bill Tomson, Conaway: ready to work on next farm bill, immigration, POLITICO (Nov. 19, 2014, 7:36 PM), http://www.politico.com/story/2014/11/conaway-ready-to-work-on-next-farm-bill-immigration-113023.html.

Whiskey Blues: Kentucky Distilleries Face Class-Action Fueled by Fungus

By: Bridget Kenny, Staff Member

The Kentucky Court of Appeals has put bourbon and bacteria back on the docket.[i] The Louisville-based lawsuit, filed against Heaven Hill Distilleries and Brown-Forman Corporations,[ii] claims vapors from whiskey-aging warehouses are responsible for the filmy black fungus aggravating local residents.[iii] Homeowners and businesses in Shively, Kentucky are among the class of plaintiffs charging the fungus is a nuisance and damages property. [iv]

Baudoinia Compniacensis or “whiskey fungus” results from a chemical reaction to ethanol emissions.[v] Often referred to as the “angels share,” distillers produce these emissions when a portion of ethanol evaporates from each bourbon barrel during the aging process.[vi] Naturally slow growing, the fungus thrives in ethanol-rich environments like Western Louisville’s Bourbon Trail. The result is a build-up of sooty, stinky mold on nearby property.[vii]

A Jefferson Circuit Judge dismissed the initial lawsuit in 2012, finding the Federal Clean Air Act does not permit residents to sue in state court over air quality nuisance issues.[viii] On November 14, 2014, the three-judge panel voted unanimously to overturn the dismissal and send the case back to the lower court for resolution. [ix] A joint statement from Brown-Forman and Heaven Hill states the two distillers are disappointed in the decision and considering an appeal to the Kentucky Supreme Court.[x] The Kentucky whiskey companies are not the only entities facing fungus-related litigation, as similar actions have been filed against liquor distillers in the Virgin Islands and Scotland.[xi]

Distillers argue the whiskey-fungus has existed for centuries, with no known hazardous effect on human health.[xii] Furthermore, despite the unappealing aesthetic covering homes and vehicles, the mold’s effect on property appears to be cosmetic, rather than structural.[xiii] Neighbors and business-owners located near the iconic Bourbon Trail disagree. One plaintiff in particular alleges the fungus has covered his inventory of stadium seating so severely that he is unable to use $25,000 worth of samples to clients.[xiv] 

This case will have important implications for one of Kentucky’s signature industries. Attorney Arthur McMurry seems confident about the lawsuit he filed against Heaven Hill and Brown-Forman.[xv] In reference to the recent enforcement action against international distiller Diageo Americas Supply Inc., McMurry asserted, “This is something that could have, would have, and should have been done, but for politics, politics and more politics.” [xvi] In 2013, the Louisville Metro Air Pollution Control District threatened to fine Diageo Americas $10,000 per day for similar fungus-related complaints. [xvii] The company eventually moved nearly 200,000 barrels of whiskey to facilities out of the area.[xviii] The demand for bourbon is booming, but the result of this litigation may leave local distillers with a bad taste.

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[i]  James Bruggers, Appeals Court revives whiskey fungus lawsuit, Courier-Journal (Nov. 15, 2014), http://www.courier-journal.com/story/tech/science/environment/2014/11/14/appeals-court-revives-whiskey-fungus-lawsuit/19028933/.html

[ii] Id.

[iii] Id.

[iv] Id.

[v] Gregory DL Morris, The Devilish Details in the ‘Angels’ Share, Risk & Insurance, Dec. 2013, http://www.riskandinsurance.com/the-devilish-details-in-the-angels-share.html.

[vi] Id.

[vii] Id.

[viii] James Bruggers, Appeals Court revives whiskey fungus lawsuit, Courier-Journal (Nov. 15, 2014), http://www.courier-journal.com/story/tech/science/environment/2014/11/14/appeals-court-revives-whiskey-fungus-lawsuit/19028933/.html

[ix] Id.

[x] Lawsuit over fungus from whiskey vapors revived, Lexington Herald-Leader (Nov. 15, 2014), http://www.kentucky.com/2014/11/15/3540140_lawsuit-over-fungus-from-whiskey.html

[xi] Id.

[xii] Lawsuit over fungus from whiskey vapors revived, Lexington Herald-Leader (Nov. 15, 2014), http://www.kentucky.com/2014/11/15/3540140_lawsuit-over-fungus-from-whiskey.html

[xiii] Id.

[xiv] Id.

[xv] James Bruggers, Appeals Court revives whiskey fungus lawsuit, Courier-Journal (Nov. 15, 2014), http://www.courier journal.com/story/tech/science/environment/2014/11/14/appeals-court-revives-whiskey-fungus-lawsuit/19028933/.html

[xvi] Id.

[xvii] Id.

[xviii] Lawsuit over fungus from whiskey vapors revived, Lexington Herald-Leader (Nov. 15, 2014), http://www.kentucky.com/2014/11/15/3540140_lawsuit-over-fungus-from-whiskey.html

Deductions on Mr. Ed: A Taxpayer’s Struggle to Recover Hobby Losses

By: Juliya Grigoryan, Staff Member

Apparently, one way to ensure an above-the-line (most favorable) deduction on your taxes is to spend an insatiable amount of time, energy, and money at a “trade or business” you don’t enjoy.  Disclaimer—this sentiment is not related verbatim from the tax code. Nevertheless, it is true that a § 162 above-the-line deduction is only available for “ordinary and necessary expenses paid or incurred during the taxable year in carrying on any trade or business [emphasis added].”[i] 

One of the pertinent evaluations in determining whether an expense arose out of a trade or business, rather than a mere hobby, is the taxpayer’s profit-seeking endeavors.[ii] This matters to the IRS because it wants to prevent taxpayers from simply disguising their hobbies (which are largely not deductible) as a trade or business for the purpose of minimizing their taxable income.[iii] 

However, § 183 of the tax code provides for a rebuttable presumption that horse breeding is a for-profit activity if it generates a profit in two or more of the last seven consecutive years.[iv] If a profit is not generated within this time frame, a taxpayer can still make an argument that the activity was for profit.[v] Most recently, a case out of Illinois demonstrates a taxpayer’s attempt show that her horse breeding activity was for profit, despite not actually generating profit.

Estate of Stuller v. United States, concerns a taxpayer who in the mid-1980s decided to breed horses for profit, under the company name “Rockin S Ranch” (LSA).  Unfortunately for her, the law inherently values substance over form.[vi] In other words, it matters little that she “cries profit!” if her actions would lead a court to believe otherwise.  The court in this case looks at a variety of factors and ultimately determines that she was not breeding horses for profit, and thus, was unable to take § 162 deductions.[vii] 

The “most important” factor, according to the court, is the “manner in which the taxpayer carries on the activity.”[viii]  The court emphasizes that despite the taxpayer’s substantial losses, she did nothing to change her methods to yield more favorable results. She did not seek business advice or employ new marketing techniques.[ix]  In fact, she did very little to market her business in the first place.[x] In a period of six years, she spent only $50 in marketing.[xi]  

Another noteworthy factor is a taxpayer’s financial status.[xii] The fact that she was even in a position to claim $34,000 worth of losses per year, yet still be financially secure, would indicate that horse breeding was not her main source of income.[xiii] The court found that her primary source of income resulted from the ownership of three Steak n’ Shake franchises.[xiv]  Although it is common for people to have multiple “trades or businesses” from which they derive income, it is unlikely for a court to find that a taxpayer entered into an endeavor for profit if they are content with constant losses.

What can be learned from this case?  First, if your hobby is getting too expensive, creating a faux “business” for it will not redeem you any of the losses.  Quit while you’re ahead.  Second, the courts will look at many factors to determine whether conduct rises to the level of trade or business, and thus, the Section 183 presumption can be overcome.  Last, apparently fast food franchises are incredibly lucrative businesses. Look into it.

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[i] 26 U.S.C. § 162.

[ii] Estate of Stuller v. United States, No. 11-3080, 2014 WL 3734328, at *4 (C.D. Ill. July 22, 2014 (citing Nickerson v. Commissioner, 700 F.2d 402, 405 (7th Cir. 1983)).

[iii] See Id.

[iv] 26 U.S.C. § 183.

[v] 26 C.F.R. § 1.183-1(c).

[vi] Id. at *2.

[vii] Id. at *22.

[viii] Id.

[ix] Id.

[x] Id.

[xi] Id. at *8.

[xii] Id. at *20.

[xiii] Id. at *12.

[xiv] Id. at *19.

Instant Racing Dealt Instant Blow In Texas

By: Sam Reinhardt, Staff Member

The Texas Racing Commission recently sustained a setback in its efforts to implement Instant Racing machines at the state’s racetracks. Last November, Travis County District Judge Lora Livingston ruled that the Texas Racing Commission lacked the authority to allow the installation of historical racing machines at Texas racetracks.[i] Livingston’s ruling came just months after the Texas Racing Commission amended its rules to allow Instant Racing machines at Texas horse and dog tracks.[ii]

The lawsuit challenging the Racing Commission’s efforts was brought by a coalition representing charitable bingo halls. [iii]  Opponents of Instant Racing fear that this form of gambling would make the charitable bingo halls virtually extinct.[iv] As noted by Steve Bresnen, a spokesman for the coalition, “Had these slot machines been allowed to be implemented bingo would have been devastated.”[v]

However, proponents of this new form of gambling view this as a way to revive the struggling horse racing industry and compete with out-of-state tracks that offer casinos.[vi] It comes as no surprise to learn that Judge Livingston’s ruling disappointed those in favor of Instant Racing. Sam Houston Race Park CEO Andrea Young stated, “Today’s decision is a blow to the Texas horse industry and to the thousands of hardworking horse men and women.”[vii]

In a general sense, Instant Racing is a form of wagering in which the bettor wagers on a horse race that was previously run at an approved racing facility.[viii] Bettors insert money into the Instant Racing terminal and then select a horse identified by a number.[ix] Bettors are not given the time, place, or identity of the horse and are instead restricted to “minimal statistical data.”[x]

Texas isn’t the only state currently entangled in Instant Racing litigation, as Nebraska, Kentucky, Wyoming, and Oregon are all awaiting final orders from their respective courts as to whether this method of gambling is permitted.[xi] In a ruling that contrasts with the Texas District Court, the Supreme Court of Kentucky recently held that the Kentucky Horse Racing Commission does have the statutory authority to regulate the operation of pari-mutuel wagering on historic horse racing.[xii] However, the case is still pending as it was remanded to the Franklin Circuit Court to determine whether or not Instant Racing is a true form of pari-mutuel wagering.[xiii]

The horse industry is experiencing a steady decline in both interest and revenue.[xiv] From 2002 to 2010 wagering revenue on thoroughbred racing in the United States declined from $15 billion to $11 billion.[xv] Instant Racing is a way to remedy this freefall by reviving the interest of old bettors while simultaneously attracting and acquiring new bettors through an innovative form of horse racing.

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[i] Aman Batheja, Judge Strikes Down Plans for “Historical Racing”, TexasTribune.org (Nov. 10, 2014), http://www.texastribune.org/2014/11/10/judge-strikes-down-state-plans-historical-racing/. (last visited Nov. 17, 2014).

[ii] Anna Tinsley, Texas Fight Over Slot-Machine Like Devices Far From Over, Star-Telegram.com (Nov. 11, 2014), http://www.star-telegram.com/2014/11/11/6280316/texas-fight-over-slot-machinelike.html. (last visited Nov. 17, 2014).

[iii] Batheja, supra note i.

[iv] Id.

[v] Tinsley, supra note ii.

[vi] Id.

[vii] Historical Racing Dealt Setback in Texas, Bloodhorse.com (Nov. 11, 2014), http://www.bloodhorse.com/horse-racing/articles/88678/historical-racing-dealt-setback-in-texas. (last visited Nov. 17, 2014).

[viii] See Appalachian Racing, LLC v. Family Trust Found. of Ky., Inc. 423 S.W.3d 726 (Ky. 2014).

[ix]  Id.

[x] Id.

[xi] Charles W. Galbraith, Instant Racing is Catching On, Advance.Lexis.com (Aug. 7, 2014), https://advance.lexis.com/document/?pdmfid=1000516&crid=2d5af04a-c9f3-46a1-ba0c-703a8ad0fb95&pddocfullpath=/shared/document/analytical-materials/urn:contentItem:5CVR-5MX1-F528-G1M6-00000-00&pddocid=urn:contentItem:5CVR-5MX1-F528-G1M6-00000-00&pdcontentcomponentid=122100&ecomp=vhyg&earg=sr0&prid=9c2e02cb-f64d-48dd-9eeb-fdb2387769df.&lnsi=a589bcd3-dbc4-45a0-8dff-ac033fd098b0&aci=la&rmflag=false&sit=1416275614077.505. (last visited Nov. 17, 2014).

[xii] See Appalachian Racing, 423 S.W.3d at 730.

[xiii] Id.

[xiv] Bennett Liebman, Reasons for the Decline of Horse Racing, NYTimes.com (June 6, 2010), http://therail.blogs.nytimes.com/2010/06/06/reasons-for-the-decline-of-horse-racing/?_r=1. (last visited Nov. 17, 2014).

[xv] Compare 2002 Equibase News Release (Jan. 9, 2003) http://www.equibase.com/news/releases/03releases/010903release.cfm. (last visited Nov. 17, 2014) with 2010 Equibase News Release (January 5, 2011) http://www.equibase.com/news/releases/010511release.cfm. (last visited November 17, 2014). 

A Cheesy Dilemma: FDA Regulations Melting Foreign Cheese Manufacturers

By: Alexis Gonzales

​The Food and Drug Administration recently placed harsher restrictions on the importation of cheese.[i] The restrictions are targeted at non-toxigenic E. coli present in the cheese.[ii] More specifically, the permitted amount of non-toxigenic E. coli was lowered from 100 MPN (most probable number) to 10 MPN.[iii]

The new restriction is placing a particularly large strain on foreign raw milk cheese manufacturers.[iv] Cheeses, such as the popular Roquefort, that use age-old recipes are not likely to be altered to comply with regulations.[v]  The recent crackdown by the FDA can be traced back to 2010 and the Food Safety Modernization Act.[vi] The act granted broader powers to the FDA to better manage food safety, including in the area of smaller cheese manufacturers.[vii]

Cheese fans are largely opposed to the stricter guidelines and fear that foreign cheese manufacturers will simply discontinue sending any raw milk cheeses to the United States as a result.[viii] However, the FDA stands by its decision to reduce the permitted amount of non-toxigenic E. coli.[ix] The FDA argues that the presence of a large amount of non-toxigenic bacteria must mean the facility producing the cheese is unclean.[x] The FDA likely fears the risk of foodborne illnesses that can arise from the use of raw, or unpasteurized, milk.

This is also not the first occurrence of the FDA placing stricter regulations on the cheese manufacturing community this year. Many artisan cheese makers took the statements of an FDA branch chief claiming the use of wood aging boards for cheese could lead to the spread of pathogens.[xi] After the outcry from the cheese community, the FDA released a clarifying statement, and emphasized that they did not plan to ban the use of wood aging boards.[xii]

The FDA is exercising its regulatory power of cheese manufacturers in an increasingly controversial manner. While the intentions of the FDA to avoid the spread of foodborne illness and promote healthy manufacturing processes may be legitimate, they also pose the risk of chilling the work of artisan cheese makers. Inconsistencies and rapid changes in regulation may lead to a decrease in availability of some of the world’s best cheeses.

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[i] Janet Fletcher, FDA restrictions keeping some great cheeses out of stores, Los Angeles Times. (Sept. 3, 2014). http://www.latimes.com/food/dailydish/la-dd-new-fda-regulations-cheeses-20140903-story.html.

[ii] Id.

[iii] Id.

[iv] Id.

[v] Sean Kennedy, Foodies beware: The FDA is coming for your French cheese, CNN. (Sept. 8, 2014). http://www.cnn.com/2014/09/05/politics/fda-cheese-rules/.

[vi] Id.

[vii] Id.

[viii] Id.

[ix] Fletcher, supra note i.

[x] Id.

[xi] Gregory S. McNeal, FDA Backs Down in Fight Over Aged Cheese, Forbes. (June 10, 2014). http://www.forbes.com/sites/gregorymcneal/2014/06/10/fda-backs-down-in-fight-over-aged-cheese/.

[xii] Id.