Managing Agricultural Risks in Biopharming: The Role of Injunctions

John T. Walsh and Thomas P. Redick
jtwalsh@gjn.com and tpredick@gjn.com

With research laboratories turning out a wide variety of new seeds, some of which must be grown separate from other crops, commercial agriculture in the United States has entered an era of segregated production.

In drafting contracts to be used with growers, seed companies can remind the grower about stewardship obligations, and help growers avoid commingling problems with those specialized varieties of crops requiring segregated production. This article will also tell the “tale of two seeds” (the Aventis Liberty Link™ soybean and its corporate sister, Starlink™ Corn, also produced by Aventis), which were each driven from the market by lawyers armed with lawsuits. We will suggest an increasing role for contractual networks enforcing industry standards to avoid commingling, with the threat of injunctions for non-compliance compelling better compliance with those standards (rather than waiting for administrative and possible criminal enforcement action, as is now occurring with ProdiGene).

This article will also discuss the recent commingling of corn intended for pharmaceutical production with soybeans bound for food or feed – and some ideas for preventing similar problems from recurring. While this most recent “near miss” incident with soybeans did not trigger a massive recall like that caused by Starlink™, it certainly sends a message to the biotech industry that it cannot afford any “weak links” in the contracts and industry standards that protect the marketplace from commingling of biotech crops.

Biotech’s Prodigal Son – ProdiGene
During the second week of November, the U.S. Department of Agriculture (USDA) reported compliance violations by ProdiGene, a company that was conducting field trials of pharmaceutical compounds grown in biotech crops that were not destined for food or feed uses. Over 500,000 bushels of soybeans in Nebraska were commingled with about 500 bushels of ProdiGene’s corn. USDA inspectors kept these commingled soybeans out of food. ProdiGene has offered to purchase the suspect soybeans, currently under quarantine, because these soybeans were grown in a field that ProdiGene had used for growing biotech corn that encoded pharmaceutical proteins. After this particular corn crop had failed in some undefined manner, ProdiGene destroyed the plants, plowed the field and allowed food grade soybeans to be grown in the same field.

To anyone who has every rotated crops, it should come as no surprise to hear that a few “volunteer” corn plants grew up among the soybeans, and stood tall (one might say this crop was “outstanding in its field”). The USDA investigation of the incident will probably lead to heavy fines, given an explicit warning about the corn plants that was reportedly delivered to Prodigene during a walk-through USDA inspection. ProdiGene reportedly hopes to settle with the USDA, and is addressing “compliance challenges” according to Prodigene’s president, Anthony Laos. “As with any new industry and new regulatory program, we can always do better,” added Laos. “Working together with USDA, we intend to, now and in the future.”

This incident drove the Grocery Manufacturer’s Association (GMA) to demand that biopharming crops never be grown again in non-food crops. See News Release, GMA URGES THE USE OF NON-FOOD CROPS FOR BIOTECH DRUGS: ProdiGene’s Errors Raise Serious Concerns, Says GMA (Nov. 14, 2002). The leading growers’ associations (the National Corn Growers Association (NCGA), American Soybean Association (ASA), and the American Farm Bureau Federation) reaffirmed their support for developing pharmaceutical and industrial crops through agricultural biotechnology, issuing a more moderate statement than GMA, advocating sound stewardship but not a complete moratorium on the use of food crops for biopharming.

About six weeks before the Prodigene commingling incident hit the press, the Biotechnology Industry Organization (BIO) had announced a controversial initiative in late September that would have its members suspend biopharming operations in the corn belt in crops used for food. (See <www.bio.org> for details.) Upon arrival, this policy was questioned by the governor of Iowa and Sens. Charles Grassley and Thomas Harkin, who have been promoting Iowa as the logical epicenter for biopharming in corn. It remains to be seen how this voluntary BIO moratorium will operate, and whether compliance will be enforced by BIO members (or by potentially offended members of the chain of commerce, who may see a need to enjoin biopharming operations in Iowa). The ProdiGene commingling incident appears to validate the concerns that BIO raised in announcing its voluntary moratorium.

A Snapshot of Biopharming
Biopharming involves the production of “plant-made pharmaceuticals” (“PMPs” in industry parlance) that use innovations in biotechnology to enhance plants genetically so that they yield pharmaceutical proteins. These proteins, once extracted from the plant and purified (and after clearing FDA approval and appropriate clinical trials) will provide the building blocks for drugs targeting cancer, heart disease, HIV, diabetes, Alzheimer’s, and other debilitating diseases. See Experts on Plant-Made Pharmaceuticals Available to Media, Biotechnology Industry Organization Press Release.

The extent to which these biopharming compounds can safely be commingled with food is the subject of considerable scientific debate. Because many of these antibodies or vaccines are designed for delivery directly to the bloodstream, the risk of eating them may be minimal (assuming a protein that readily dissolves in the digestive tract). For other compounds, however, there may be characteristics that lead to health effects (e.g., hormones, which are thought to have impacts at very low levels).

While it would appear that industry stewardship is thriving among some biopharming operations, there is not yet a widely disseminated standard operating procedure for identity preservation in biopharming that is subject to regular third-party audits. A new report from the National Academy of Science’s National Research Council expresses concerns over the level of post-market surveillance that occurs after biotech crops have entered the marketplace. See Committee on Environmental Impacts Associated with Commercialization of Transgenic Plants, Board on Agriculture and Natural Resources, National Research Council, Environmental Effects of Transgenic Plants: The Scope and Adequacy of Regulation, (“NRC Report”) <http://www.nap.edu> (site visited Sept. 3, 2002). While neither the NRC nor BIO has invoked the power of the judicial system to enforce contractual promises to comply with an industry standard (where billion dollar food recalls and even larger export losses loom), this power could be a valuable tool for agricultural management.

The Biopharming Pipeline Begins to Bulge
According to an extensive report prepared by the environmental activist organization, Friends of the Earth (FOE), there are over four hundred biopharming products in the research pipeline, and over three hundred have reportedly appeared in field trials at locations across the United States. See Bill Freese, et al., Executive Summary, Manufacturing Drugs and Chemicals: Biopharming Poses New Risks to Consumers, Farmers, Food Companies and the Environment, Friends of the Earth, <http://www.gefoodalert.org/pages/home.cfm> (site visited Sept. 3, 2002). This site appears to have the most thorough list of possible biopharming events on the Internet.

Many unapproved biotech crop varieties are surfacing from the USDA’s notification system (e.g., ProdiGene’s biotech corn varieties containing trypsin, beta-galacturonidase, avidin, TGEV “piglet-vaccine,” etc. and Stauffer’s various enzymes, vaccines, a protein-based sweetener, a proprietary “Therapeutic Agent,” and other biologically active chemicals). Three of Stauffer’s products, avidin, beta-glucuronidase, and aprotinin (a protease inhibitor commonly used by surgeons), have been produced in large quantities sold by St. Louis-based Sigma Aldrich chemical company. Other companies at the forefront of turning plants into chemical factories include the Virginia-based CropTech, which has produced pharmaceuticals and human enzymes in tobacco, with several products already in clinical trials. San Diego-based Epicyte has partnered with Dow Chemical to develop and produce experimental human antibodies in plants, as well as a topical contraceptive and a microbiocide against HIV.

Monsanto’s Integrated Protein Technologies subsidiary is seeking contracts with various clients to produce commercial quantities of various proteins in corn, tobacco, and soybean plants. They hope to produce several metric tons of any appropriate protein within a three-year period. Several other companies in the United States, Canada, and France are also actively exploring these techniques. While the final testing for human therapeutic use remains to be conducted (since corn proteins may vary in some respects), there is optimism that the typical risks introduced by animals (e.g., common viral pathogens) can be avoided through the use of plants.

National Academy of Sciences Expresses Concern
A recent report from the National Academy of Science’s National Research Council expresses concern over the U.S. Department of Agriculture’s handling of biopharming’s environmental risks, finding that the agency’s Animal and Plant Health Inspection Service (APHIS) should more rigorously review the potential environmental effects of novel biotech crops before approving them for commercial use. The report suggested increased public participation in commenting on proposed regulatory changes, so that concerns are raised and addressed before open-air field tests occur. In particular, post-market surveillance through ecological testing and monitoring should continue after transgenic plants have entered the marketplace. With a typically limited worldview, academics reporting to the government (i.e., the committee) found that academia and government should be funded to monitor biopharming. The prospect of self-policing by the chain of commerce (not just biotech companies, but their customers and the ever-present activists equipped with genetic test kits) did not appear to enter into the committee’s thought process for containment of biopharming operations.

The NRC report suggested that companies’ use of “confidential business information” protection for information submitted to the agency made it difficult to assess the quality of risk management being undertaken for particular biotech crops. In any monitoring program, the decision of whether to disclose information to the public will represent a genuine conundrum. Biotech activists are known for their destruction of test plots, with some activists errantly bombing non-biotech research operations near biotech research facilities.

The FOE report acknowledges the possibility of people stealing biopharming seeds from test plots if the location is publicly known. Ironically enough, it also criticizes the secrecy – creating a true “Catch 22” for biotech companies criticized for their secrecy, but also blamed for third-party actions that result from insufficient secrecy. Since these issues relating to theft of test plot seeds have not been resolved, continued secrecy may be essential to sound risk management. As FOE admits, thefts can occur, and apparently have occurred in one instance, with valuable biopharming products. Even under the veil of industry secrecy, however, ample information can be shared about the proper methodologies for maintaining identity preservation of biopharming crops from planting through final use.

Not all biopharming is occurring in secret, however. One Iowa farmer and NCGA Board member, Bill Horan, has grown two crops of cystic fibrosis treatment in his corn fields in Iowa, apparently with no commingling problems. Mr. Horan has told the press that the processes for avoiding commingling are demanding – involving dedicated machinery, planting restrictions, isolation requirements, and even detasseling the male sterile plants. Mr. Horan’s brother and business partner proudly claims that they were “the first farmers to grow human pharmaceuticals in the United States,” having grown their second transgenic corn crop for France-based Meristem Therapeutics. With at least 350 drugs in the pipeline waiting for production in various crops, the Horan family got in on the ground floor to build expertise in managing these crops.

The cost of maintaining identity preservation makes the Horans view this biopharming project as something like a “loss leader” with a goal of building expertise, not short-term profit. John Howard, chief scientific officer at ProdiGene, College Station, Texas, predicted a dollar a bushel or more for biopharming crops, a price premium that would make intensive compliance with segregation requirements affordable.

The Horans are growers that plan to profit on the processing side through a cooperative, a legal entity formed by the Horans and other farmers, that is planning to build a $40 million processing plant in Ames, Iowa. This will reportedly be the only facility in the world that can process large batches of pharmaceutical grains. Long term, the Horans do not want to be contract growers with a limited price premium to compensate for their trouble and risk.

With vested economic interests forming around biopharming in the corn belt, it is no wonder that Iowa politicians sounded the alarm when the BIO moratorium was announced. While the ProdiGene incident should dampen on some of the criticism BIO was sustaining from these politicians, the answer to biopharming’s agricultural management challenges will probably come more quickly from trade association initiatives like BIO’s, and like the ASA’s five year longcampaign to impose stricter identity preservation standards on the biotech industry.

Update on the Starlink™ Litigation
Starlink™ corn was feed-only biotech corn sold by Aventis Crop Sciences (Aventis), which commingled with food, triggering a massive recall. The Starlink™ litigation is currently working its way through a number of putative class actions. The discovery of Starlink™ “contamination” led to at least 27 class action lawsuits in six states against Aventis CropScience USA LP (Research Triangle Park, North Carolina), which are consolidated in multi-district litigation (MDL” before U.S. District Judge James B. Moran in Chicago. These claims survived a motion to dismiss farmers’ claims for negligence and public and private nuisance alleging economic loss from airborne StarLink™ pollen. The court ruled that the economic damage to the farmers’ corn could be a compensable physical injury. See In re Starlink Corn Prods. Liab. Litig., 212 F. Supp. 2d 828, 2002 U.S. Dist. LEXIS 12791 (N.D. Ill. 2002).

The defense counsel that lost this motion called these claims “very novel tort theories.” See Andrew Harris, Danger Uncertain, but Suits Multiply, National Law Journal (Sept. 9, 2002) (quoting Sheila Birnbaum, attorney for Aventis stating “It’s our tort system running wild again” asserting “very novel tort theories”). Commentators have predicted that nuisance claims would arise from biotech crops since the early 1980s. See Barry Furrow, Governing Science: Public Risks and Private Remedies, 131 U. Pa. L. Rev. 1403, 1439 (1983) (public nuisance law as alternative to precautionary regulatory ban). The commingling of unapproved varieties of biotech crops (those that cannot commingle without causing market disruptions) clearly fits into the broad niche that nuisance law precedents have created over the past century.

Starlink™ corn was approved for animal feed by the EPA, not for human food uses. As a condition of approval, Aventis was asked to maintain an adequate identity preservation program to keep Starlink™ out of the human food supply. Aventis apparently thought that commingling problems, should they arise, would be worked out with food regulators to allow some percentage of unapproved Starlink™ in food.

After Starlink™ corn commingled with other corn bound for food use, the EPA’s scientific advisory panel imposed a near-zero tolerance standard for commingling during the recall. The EPA has admitted that it made a mistake when it approved Starlink™ corn for “feed only” – not human consumption as food – without providing adequate identity preservation measures. This mistake was compounded by subsequent decisions to impose “zero tolerance” for the recall from food supplies. The result was a recall of Starlink™ that will reportedly exceed one billion dollars by many estimates. The litigation will continue to work its way through the courts, and more economic harm may continue to rise if new Starlink™ corn plants sprout and commingle with each growing season.

The health risks of Starlink™ are still being assessed by regulators, who have not confirmed any actual cases of personal injuries. Allegations abound, including one case of anaphylactic shock allegedly caused by Starlink™ in a wrongful death lawsuit pending in California. To date, no scientifically validated personal injuries have been linked to consumption of Starlink™ corn, but consumers are suing in putative class actions pending in various courts. Some uninjured consumers are suing for a refund of money spent on food tainted with Starlink™ corn – which had to be thrown out, like the Starlink™ corn itself (which posed a threat of germinating and had to be landfilled). These cases will delve further into the health effects of Starlink™, while farmers pursue the economic impacts with nuisance and consumer fraud cases.

Starlink™ corn is not the only controversial biotech crop acting as a “litogen” (a safe product that nevertheless triggers litigation). The courts of Canada will resolve a claim by organic farmers for lost revenue after organic canola crops were commingled with biotech canola. An injunction to stop field trials of Monsanto’s Roundup Ready wheat is requested. Monsanto Canada, Inc. and Aventis CropScience Canada Holding Inc. sold Monsanto’s Roundup Ready canola or Aventis CropScience’s Liberty Link canola without adequate stewardship, allowing commingling with other canola. This has led seed suppliers to lose organic certification for their seeds. They allege negligence, nuisance, trespass, pollution under the Saskatchewan Environmental Management Protection Act, and failure to conduct an environmental assessment. Estimates run to millions of dollars in damages for the loss of canola as an organic crop in Saskatchewan. See Litigation in the Wind, April 2002 ISB News Report <http://www.isb.vt.edu/news/2002/apr02.pdf>.

Liberty Link™ Soybeans – Nipping the Billion Dollar Debacle in the Bud
In stark contrast to Starlink™, Aventis Crop Science’s corporate predecessor (Agrevo USA) chose a commendable level of caution when it agreed not to market a soybean that might have caused an economic cataclysm (if it had commingled with export markets). The threat of injunctive relief by soybean growers helped Aventis to see the light and prevented a potential overseas trade loss in excess of two billion dollars per year.

The story begins with an alert growers’ association, the ASA, which realized in late 1997 that the European Union (EU) had no present intention of approving new varieties of biotech crops for import. To prevent commingling of unapproved-in-EU varieties of biotech soybeans, ASA called upon 11 biotech seed companies to refrain from marketing any new variety of biotech soybeans that lacked approval in major overseas markets, in particular the lucrative EU market.

Aventis disregarded this request at first, proceeding with plans in early 1998 to market the Liberty Link™ soybean (which had no approval for export to the EU after harvest). ASA entered into several months of negotiations to educate Aventis (its corporate predecessor AgrEvo USA) about the potential risk of pollen transfer or movement of seeds between fields (a potential private nuisance) and post-harvest commingling in the soybean export market (a potential public nuisance). ASA asked Aventis to follow a detailed identity preservation system, including the contested items of a high premium for growers, dedicated domestic facilities to divert the Liberty Link™ soybeans away from export channels, and an assumption of liability for any nuisances or other liability that growers and Aventis might jointly cause.

Aventis did not market the Liberty Link™ soybean, announcing in press releases that it was serving the public interest by acting to protect export markets. ASA agreed in its own public statements that Aventis had acted responsibly and commended Aventis publicly for its discretion. The business press reported the Aventis had invested millions of dollars in developing Liberty Link™ soybean, which it had to delay for years in deploying.

The threat of injunctive relief was used to restrain the sale of Liberty Link™ soybeans, and it could have easily been used to stop Aventis from selling Starlink™, or to force more strict identity preservation, with third party auditing paid for by Aventis (as ASA would have required for Liberty Link™ soybeans). There are many Starlink™ claims now being made to seek compensation for the losses caused by Starlink™, and a host of claims that will probably never be made, by companies quietly “testing and tossing” corn due to the continued presence of Starlink™ in the system. Fortunately for those irritated companies that do not want a repeat of Starlink™, the fact of the these uncompensated losses, and future predictable losses of the same character, clearly create sufficient factual precedent for a threat of “irreparable harm” to merit an injunction against similar crops prior to sale. Starlink™ corn was clearly sold without a full disclosure to growers of the risks of commingling, creating a consumer fraud that could be actionable under some state statutes protecting consumers. It also may constitute a public nuisance, as the court in the Starlink™ cases decided on the recent motion to dismiss.

Given the magnitude of the economic harm caused by an unapproved variety, an attorney general seeking to apply public nuisance law could persuade a sympathetic state or federal court judge to declare the proposed sale a public nuisance. Given the added element of inadequate disclosure to farmers that may be present, the consumer fraud statutes of many states might also be invoked. Where no consumer fraud statute is on the books, the law of nuisance can adapt to allow a fraud in progress (if against a large enough group) to constitute a public nuisance.

If companies and growers fail in their joint stewardship efforts, growers involved in the program may end up on the receiving end of a nuisance lawsuit. This could lead to a claim for comparative fault against the seed company. See Selma Pressure Treating v. Osmose Wood Preserving Co., 221 Cal. App. 3d 1601 (1990) (negligent chemical disposal practices led to comparative fault for chemical supplier’s failure to warn of improper disposal).

To control this risk for both growers and the companies involved, the ASA has overseen development of identity preservation methodologies that can be adapted to crops other than soybeans. The main features include: (1) securing approval in major markets such as Japan, the EU and other large trading partners for particular grains; (2) controls to ensure “identity preservation”; (3) documented chains of delivery; and (4) compliance with stewardship plans developed by seed companies and growers, who can work together to develop standards for particular grains (like the 11-point plan that the ASA has developed for soybeans).

The ASA’s objections to unapproved-in-EU varieties have not been adopted by the National Corn Growers Association, but there are state-level groups that are calling for biotech companies to stop selling varieties of corn that cannot be exported to the EU. The Illinois Farm Bureau recently took a stand on unapproved-in-EU varieties of corn, echoing ASA’s call for restraint in marketing unapproved-in-EU varieties of soybeans. There appears to be an imminent need for development of standards for identity reservation for varieties of genetically engineered crops that lack overseas approvals and for the few varieties of industrial and pharmaceutical crop production systems that are entering the marketplace. The latter, in particular, appear to present a risk of repeating the food-commingling debacle that led to the Starlink™ recall, as well as cataclysmic economic impacts on export markets, if they are not carefully managed.

Lessons Learned: Seed Company Stewardship
The lessons from Starlink™ and Liberty Link™ for biotech companies are clear. While these seeds were state of the art and would have promoted sustainable reductions in soil loss (through herbicide resistance and “no till” production), they also posed a threat to other crops’ marketability because these newcomers lacked regulatory approval. With the overseas regulatory environment increasingly hostile, the Liberty Link™ scenario (the threat of lost exports) will resurface in various contexts. Biopharming commingling is not just a threat to food recalls domestically, but also a threat to overseas exports.

While growers threatening injunctions can manage risks that elude the attention of seed companies, most risks of biotech crops can be better managed by the seed companies themselves. A seed company can establish “stewardship” programs to ensure that growers understand the need to avoid commingling of certain unapproved crops with food or export supply of other crops.

If a grower signs an agreement dictating the measures that he needs to undertake to prevent post-harvest commingling, that agreement can also include stipulated injunctive relief. This stipulated injunction would allow the parties to recognize the economic threat posed by commingling, lengthy hearings and expert testimony. The mere threat of such an injunction, as a practical matter, would create strong incentives for growers to manage the commingling risks.

While the road from the laboratory to world markets may be lined with lawyers armed with potential lawsuits, a well-managed seed company has legal tools at its disposal to protect everyone in the chain of commerce from economic disasters associated with commingling.

John T. Walsh and Thomas P. Redick are members of the St. Louis Law firm of Gallop, Johnson & Neuman, L.C. This article is based upon a speech by Mr. Walsh at the annual meeting of the National Association of Environmental Law Societies and the Agricultural Management Committee’s “Brown Bag” on Biopharming held Sept. 27, 2002.