Government-mandated gibberish is grinding small businesses to a halt

Imagine you’re shopping in the dairy aisle at your local Whole Foods. As you scan the shelves, your eyes pause on a no-frills, old-fashioned glass bottle of milk from South Mountain Creamery. “Farm Fresh — All Natural,” the sign reads. You’re intrigued. You pull the bottle and flip it over to read a disclaimer: “Imitation milk product.”

“What on earth is ‘imitation milk product’?” you mutter to yourself, eyebrows furrowed, lips pursed in disgust. You replace the bottle and opt for a true all-natural product further down the aisle.

{mosads}The only problem is that the first bottle was all-natural — at least as far as common sense is concerned. Randy Sowers and his wife Karen, who operate South Mountain Creamery in Frederick, Maryland, pride themselves on producing pure, natural skim milk — with no additives. Yet under Food and Drug Administration regulations, the fact that the Sowers refuse to inject artificial vitamins into their skim milk makes it “imitation skim milk product,” and they must label it as such. The couple objects to this demand.

“I just want to sell the purest, most natural skim milk possible without being forced to confuse my customers,” says Randy.

With help from the Institute for Justice — a nonprofit, public interest law firm — Randy and Karen are taking their battle to federal court.

The Sowers are far from alone. Government-mandated labels are putting pressure on businesses large and small, from Maryland to New York to California and states in between. Our lawmakers would do well to review labeling regulations to ensure they are consistent with both the Constitution and the interests of large and small business-owners.

A thousand miles away from South Mountain Creamery, in Calhoun County, Florida, another small family-owned creamery faced similar trouble six years ago. Like South Mountain, Ocheesee Creamery produces pure, all-natural skim milk without added ingredients. And, like the FDA’s current regulations, Florida law required the Creamery’s owner, Mary Lou Wesselhoeft, to inject synthetic vitamins into her skim milk. In 2012, the state demanded she begin labeling it as “imitation milk product,” even though she had been selling her skim milk as “skim milk,” without complaint, for almost three years.

Rather than mislead her customers or undercut OCheesee’s all-natural philosophy, Mary Lou ceased selling skim milk while her lawsuit against Florida’s Department of Agriculture and Consumer Services (DACS) trudged through the courts. With her business in legal limbo for five years, she lost thousands of dollars in potential sales and untold numbers of potential new customers.

Labeling laws, like these skim milk regulations, are a form of “compelled speech” — speech that the government forces individuals to express. Just as the First Amendment protects free expression, it also protects people from laws forcing them to convey messages with which they disagree.

In the commercial context, the government may compel speech under certain circumstances. And to be sure, some government-compelled speech is necessary — nutrition facts and ingredients labels come to mind. But these labels are designed to do more than simply satisfy curiosity or a vague “right to know”; they provide factual information that prevents consumer deception — hurdles that the Supreme Court has held labeling requirements must overcome to pass scrutiny. Without these limits, the government could rationalize just about any labeling requirement, thereby running roughshod over business’s First Amendment rights.

Labeling laws apply to large and small businesses alike. However, their burdens fall especially hard on small businesses. While large businesses with equally-large advertising budgets can afford to offset required disclaimers with alternative messaging, their smaller counterparts may not even have an advertising budget. Instead, small businesses rely overwhelmingly on cost-efficient forms of marketing — think storefront signs and product labels. And government labeling requirements, often jargon-heavy (what is “imitation milk product”?) and unwieldy, undermine these limited marketing efforts.

As further evidence of labeling laws’ disparate impact on small businesses, look no further than the Ocheesee Creamery case. While the case was pending, a national dairy lobbying group filed a brief siding against Mary Lou.

“We see this in many of our cases,” notes Justin Pearson, Mary Lou’s attorney and head of the Institute for Justice’s Florida office. “Whenever there is a ridiculous regulation, there was usually a powerful and politically connected group pushing for it, at the expense of hard-working small-business owners.”

Fortunately for Ocheesee, a unanimous federal appeals court put a stop to the DACS order, but not before Mary Lou was forced to dump thousands of gallons of fresh milk down the drain.

“Government-mandated gibberish almost killed this wonderful, honest, lawful business,” laments Pearson.

The Sowers are hoping to build on Mary Lou’s successful suit to vindicate the rights of business owners to market safe, legal products to customers on a nationwide scale — a right that we, as a nation built on free enterprise, ought to fight to preserve.

 Christina Pesavento is an editorial manager with the R Street Institute, a nonprofit group aimed at promoting limited government.