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Biotech developers may have duty to prevent export disruptions

Biotech developers may have a duty to prevent export disruptions from GMO crops, even if the products are approved by USDA, according to a court ruling.
Mateusz Perkowski

Capital Press

Published on October 6, 2015 2:56PM

AP Photo/Keystone, Georgios Kefalas, file
In this file photo is the headquarters and logo of Syngenta in Basel, Switzerland. A coalition of farmers is suing the company over genetically modified corn that was rejected by China.

AP Photo/Keystone, Georgios Kefalas, file In this file photo is the headquarters and logo of Syngenta in Basel, Switzerland. A coalition of farmers is suing the company over genetically modified corn that was rejected by China.

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Biotech developers may have a “duty of reasonable care” to ensure new genetically engineered crops don’t disrupt export markets, according to a recent court ruling.

That legal duty may extend beyond the obligation to win clearance from USDA and other regulators for a crop’s commercialization, U.S. District Judge John Lungstrom has ruled in a controversial lawsuit over a transgenic corn variety developed by Syngenta.

Lungstrom said the federal government’s deregulation of the company’s insect-resistant Viptera corn “did not necessarily immunize Syngenta from any liability for wrongful acts connected to the commercialization or sale of those products.”

“More specifically, Syngenta has not shown that the government agencies’ approval extended to the area of the financial impacts in the market” due to commercialization, he said.

The lawsuit comes in reaction to Syngenta selling the new corn traits to U.S. growers before they’d been granted approval in China, which resulted in that country rejecting many U.S. corn shipments.

Farmers filed lawsuits against the company seeking compensation for the resulting drop in corn prices allegedly caused by the export disruption, with the cases getting consolidated in Kansas federal court.

Syngenta asked the court to dismiss the lawsuit, arguing that the corn variety was legal to sell in the U.S., among other allegations.

Lungstrom didn’t agree with that argument, finding that Syngenta may have legal duties beyond obtaining regulatory clearance in the U.S., though he did dismiss some of the plaintiffs’ other legal claims against the company.

The implication that biotech companies have a duty to protect export markets is significant, but the ruling still leaves that standard ambiguous, said Drew Kershen, an agricultural biotechnology law professor at the University of Oklahoma.

“It’s not clear to me how strong that duty is going to be,” Kershen said.

For example, Syngenta could argue that China imposed unreasonable regulatory constraints, he said.

Supporters of biotechnology fear the lawsuit’s progress will prompt biotech developers to rethink commercializing genetically engineered crops, even if the USDA signs off on them.

“We are very concerned when other countries basically have a veto of new technologies going forward,” said Mary Boote, CEO of Truth about Trade and Technology, a nonprofit that favors biotech innovations.

If companies are forced to consider other factors beyond U.S. regulation — such as foreign approvals — it impedes their ability to introduce new products that benefit farmers, she said.

“There’s no clear vision on what that path may be right now,” Boote said.

Critics of biotechnology say the ruling shows that current USDA regulations are insufficient to protect farmers from negative market consequences caused by genetically engineered crops.

“This disruption to the market has caused significant harm to them,” said George Kimbrell, attorney with the Center for Food Safety, which has opposed several USDA deregulations of genetically modified organisms.

Lungstrom’s ruling abides by the traditional legal principle that your property cannot be allowed to harm the property of another, Kimbrell said.

The release of Syngenta’s trait — as well as other instances of GMO products creating trade barriers — show that genetic contamination is a significant economic harm, he said.

Bill Chaney, an attorney representing farmers in the case, said he disagreed with the notion that China or other countries have a “veto” that can stop commercialization of transgenic crops.

Syngenta said it would undertake an extensive program to segregate its new corn variety to prevent exports to China, but failed to do so, he said.

“They didn’t do what they promised to do,” Chaney said, noting that companies can take “reasonable steps” to prevent such disruption.

Capital Press was unable to reach attorneys representing Syngenta as of press time.

At this point, the judge’s ruling does not mean that Syngenta definitely had a duty to prevent such a disruption — or that it failed to live up to that obligation, said Kristine Tidgren, staff attorney for Iowa State University’s Center for Agricultural Law and Taxation.

By refusing to dismiss the claim, the judge simply found that the plaintiffs may have a plausible legal theory, she said.

“Just surviving a motion to dismiss is not the validation of the plaintiff’s case,” Tidgren said.

While the plaintiffs won a key point regarding Syngenta’s duty, other significant claims — such as the company committing nuisance and trespass — were thrown out, said Kershen.

Other unresolved legal questions also cast doubt on how much the plaintiffs could recover in damages, he said.

In sum, the opinion may convince the farmers and Syngenta to pursue a settlement, Kershen said. “I think this ruling says to both sides, ‘You have a lot to win and a lot to lose.’”



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