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United States v. 8,800 Pounds, more or less, of Powdered Egg White Product: AGRICULTURE | IMPORT/EXPORT - food product should not have gotten in; not arbitrary & capricious not to let back out

*The HONORABLE LAWRENCE L. PIERSOL, United States District Judge
for the District of South Dakota, sitting by designation.
United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 07-3671
___________
United States of America, *
*
Plaintiff - Appellee, **
v. **
Appeal from the United States
8,800 Pounds, more or less, of * District Court for the
Powdered Egg White Product, * Eastern District of Missouri.
*
Defendant, *
*
Creative Compounds, LLC, *
*
Appellant. *
___________
Submitted: June 13, 2008
Filed: December 24, 2008
___________
Before LOKEN, Chief Judge, COLLOTON, Circuit Judge, and PIERSOL,* District
Judge.
___________
LOKEN, Chief Judge.
Creative Compounds, LLC, illegally imported 8800 pounds of powdered egg
whites intended for human consumption from Peru. After the product mistakenly
1The HONORABLE RODNEY W. SIPPEL, United States District Judge for
the Eastern District of Missouri.
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cleared U.S. Customs, it was detained by the U.S. Department of Agriculture at a
warehouse in Missouri. When Creative could not obtain a certificate from the
Peruvian government that would permit use of the product as animal feed, the United
States commenced this action seeking condemnation and destruction of the powdered
egg whites under 21 U.S.C. 1049. The district court1 granted the governments
motion for summary judgment. Creative appeals, arguing it should be allowed to
export the shipment back to Peru. We affirm.
I.
The importation of egg products is regulated under two statutes enforced by
distinct divisions of the U.S. Department of Agriculture. The Animal and Plant
Health Inspection Service (APHIS) enforces the Animal Health Protection Act
(AHPA). Enacted in 2002, this statute protects domestic animals by authorizing
USDA to prohibit or restrict the importation of any article to prevent the introduction
into or dissemination within the United States of any pest or disease of livestock. 7
U.S.C. 8303(a)(1). USDA regulations bar the importation of egg products from
countries such as Peru unless the products are accompanied by an APHIS permit
establishing that the eggs have been cooked or processed or will be handled in a
manner that will prevent the introduction of [Exotic Newcastle Disease] into the
United States. 9 C.F.R. 94.6(c)(4).
While the AHPA regulates the importation of egg products that might harm
domestic animals, the Egg Products Inspection Act (EPIA), administered by the Food
Safety and Inspection Service (FSIS), provides for comprehensive inspection and
labeling of egg products capable of use as human food in this country. 21 U.S.C.
1034-36. To complement the inspection and labeling of domestic products, the
-3-
EPIA further provides that no egg products capable of use as human food may be
imported unless they were processed under an approved continuous inspection
system of the government of the foreign country of origin . . . and otherwise comply
with the standards of this chapter. 21 U.S.C. 1046(a)(2). At present, USDA has
approved only Canada and the Netherlands as countries that maintain a continuous
inspection system equivalent to that in the United States. See 9 C.F.R. 590.910(b).
Thus, egg products for human consumption may not be imported from Peru. Once an
imported egg product has entered the United States, it is deemed a domestic article
subject to the EPIA, 21 U.S.C. 1046(a)(4), which means that it may be transported
and sold only if it was processed under a continuous inspection system, 1037(b)(2).
USDA may seek seizure and condemnation of egg products that violate the EPIA. 21
U.S.C. 1049.
II.
Creative is a supplier of raw ingredients for nutritional products. In 2003, a
client was interested in purchasing powdered egg whites, a protein ingredient whose
price was rising in the United States. Creative learned that the product might be
purchased in Peru and obtained an import permit application from an APHIS website.
On July 31, 2003, Creative submitted an application describing the product to be
imported as Egg white powder (albumin) for human consumption. Before receiving
a permit, Creative purchased 8800 pounds of powdered egg whites from a Peruvian
supplier. The product was shipped from Peru to New York and transported under
bond to Chicago, where it awaited clearance by U.S. Customs.
On October 16, APHIS e-mailed an import permit to Creatives chief executive
officer, Gary Haynes, who forwarded it to an import broker with instructions that the
broker seek release of the product from Customs. Because Haynes did not read the
permit, he failed to note two conditions:
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Each shipment must be accompanied by an ORIGINAL certificate
endorsed by a . . . veterinarian . . . of the GOVERNMENT OF PERU
certifying that the egg whites in the imported product [were] pasteurized
at 56N C for 10 minutes.
Importer is responsible for obtaining any required authorization from the
USDA, Food Safety and Inspection Service (FSIS). FSIS has specific
public health requirements concerning egg products apart from USDAs
animal health requirements.
The shipment from Peru was not accompanied by the required Peruvian government
certificate, and Creative did not seek authorization from FSIS.
Customs cleared the powdered egg whites on October 23, and Creative
transported the product to its warehouse in Chaffee, Missouri, for use in nutritional
supplements. On December 5, acting on a complaint, FSIS detained the egg whites
because they were imported in violation of the EPIA. On December 23, FSIS released
the egg whites to APHIS, which issued an Emergency Action Notification restricting
their entry into commerce unless Creative obtained the required pasteurization
certificate from the Peruvian government. When Creative failed to obtain that
certificate, FSIS again detained the shipment and commenced this action for seizure
and destruction of the product under 21 U.S.C. 1049. USDA refused Creatives
request for an export certificate permitting shipment of the powdered egg whites to
Peru even though Creatives Peruvian supplier had agreed to repurchase the product.
As the powdered egg white product is not an inspected product, FSIS explained, it
cannot be exported from the United States.
III.
The district court granted the governments motion for summary judgment,
concluding (i) the powdered egg whites are capable of use for human consumption
and therefore were imported in violation of the EPIA because Peru lacks the required
-5-
inspection system, see 21 U.S.C. 1046(a)(2); 9 C.F.R. 590.910; (ii) when the
shipment cleared Customs and was transported to Creatives storage facility in
Missouri, it became a domestic article subject to the EPIA, 9 C.F.R. 590.900(b); (iii)
as a domestic article that was not properly inspected, the powdered egg whites may
not be transported or sold, 21 U.S.C. 1037(b)(2); and therefore (iv) the powdered
egg whites shall be liable to be proceeded against and seized and condemned, 21
U.S.C. 1049. We review the grant of summary judgment de novo. United States v.
3234 Washington Ave. N., 480 F.3d 841, 842 (8th Cir. 2007).
Creative argues that the EPIA statute and regulations permit the powdered egg
whites to be exported. The statute provides that, when eggs capable of use as human
food are improperly imported, the Secretary may prescribe the terms and conditions
for the destruction of all such articles . . . unless (1) they are exported by the consignee
within the time fixed therefor by the Secretary . . . . 21 U.S.C. 1046(b). Similarly,
the regulations provide that, when egg products for human consumption have been
designated as U.S. Refused Entry, they shall be destroyed [u]nless such products
are exported by the consignee within a time specified by the collector of customs.
9 C.F.R 590.945(a). Therefore, Creative argues, because it was willing to export the
detained product to Peru, and its Peruvian supplier was willing to repurchase the
shipment, the district court erred in granting summary judgment condemning the
product for destruction.
We agree with the district court that 21 U.S.C. 1046(b)(1) and 9 C.F.R
590.945(a) apply only when an imported egg product lacking proper inspection is
refused entry before clearing U.S. Customs. At that point, the product may be
exported within the time fixed by USDA and Customs. However, the statute treats an
imported egg product that has cleared Customs and entered domestic commerce the
same as a product produced in this country without the inspection and labeling
required by the EPIA. Such a product may not be transported or sold in commerce
unless it has been inspected, labeled, and packaged in accordance with the EPIA. 21
-6-
U.S.C. 1037(b)(2). Thus, 1046(b)(1) and 9 C.F.R. 590.945(a) provide Creative
no relief from condemnation and destruction under 1049.
Creative further argues that it is unjust to order the destruction of powdered egg
whites that were lawfully imported pursuant to a Permit issued by the USDA, that
were cleared by Customs, and for which there is a market elsewhere in the world.
Creative does not provide a legal theory supporting this argument. It appears to be an
assertion that USDA was guilty of arbitrary and capricious agency action. See 5
U.S.C. 706(2)(A).
The stated premise for this argument is that USDA misled Creative by referring
its initial inquiry to an APHIS website, and that APHIS erred by issuing an import
permit when Creatives application stated that an egg product was being imported
from Peru for human consumption, which was clearly prohibited by the EPIA
regulations, see 9 C.F.R. 590.910(b). The first part of the premise is unproved.
There is evidence in the record on appeal that Creative had not previously imported
egg products. But there is nothing describing Creatives initial inquiry to USDA or
identifying the USDA official who allegedly referred Creative to the APHIS website.
APHIS administers a statute that permits importation of egg products from Peru
if they are accompanied by a government certificate establishing that the product was
pasteurized to prevent the introduction of Exotic Newcastle Disease into the United
States. 9 C.F.R. 94.6(c)(4). APHIS can be criticized for issuing an import permit
in response to Creatives application for an importation prohibited by the EPIA, a
statute enforced by another regulatory arm of USDA. But the permit clearly warned
that FSIS must be consulted, and that APHIS required a Peruvian government
certificate Creative had not obtained and, as it turned out, could not obtain. Instead
of reading the permit and seeking to comply with its conditions, Creative sent the
permit to an import broker with instructions to have the shipment released by U.S.
Customs. Unfortunately, Customs officials in Chicago improperly released the
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illegally imported shipment into commerce. At that point, the product became no
different than a product manufactured in this country without the inspection and
labeling required by the EPIA. FSIS prohibits the export of such products.
In these circumstances, the record reveals a sequence of errors and oversights
supporting the district courts conclusion that most if not all of the fault for the
powdered egg whites illegal importation into this country lies with Creative
Compounds and its import broker. Even if the EPIA statute and regulations could
be read as granting FSIS discretion in this highly unusual situation to ignore the fact
that an illegally manufactured human food product had entered domestic commerce,
and to permit its export to Peru, the agency was not guilty of arbitrary and capricious
action in strictly enforcing the EPIA. Therefore, when Creative could not obtain a
Peruvian government certificate that would permit the product to be used in this
country as animal feed, USDA lawfully sought its condemnation and destruction.
The judgment of the district court is affirmed.
______________________________
 

 
 
 

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