Fifth Circuit: Hears Arguments in Texas Cultivated Meat Ban Lawsuit

• A Fifth Circuit panel heard arguments regarding Texas's two-year ban on the sale of lab-grown meat, known as Senate Bill 261.
• California-based Wildtype and UPSIDE Foods, producers of federally cleared cultivated salmon and chicken, argue the ban is unconstitutional and causes irreparable harm.
• The companies contend the Texas cell-cultured protein ban violates the Dormant Commerce Clause and is preempted by the federal Poultry Products Inspection Act.
• Texas maintains the ban treats all companies equally and serves as a reasonable pause for further study of novel products.
• The panel, composed of three Trump appointees, has taken the case under advisement, with its decision poised to impact state-level regulation of novel food technologies.

The outcome of this legal challenge will significantly influence the ability of states to restrict the sale of federally approved novel food products, setting a crucial precedent for the burgeoning cultivated meat industry.

A federal appeals court panel in the Fifth Circuit recently heard arguments concerning a proposed two-year ban by Texas on the sale of lab-grown meat within the state. This legal challenge pits the state of Texas against two California-based food technology startups, Wildtype and UPSIDE Foods, who produce cultivated salmon and chicken, respectively. The dispute centers on Senate Bill 261, a Texas law that prohibits the sale of "cell-cultured protein" until September 1, 2027. A lower court had previously declined to block the implementation of SB 261 in January, prompting the current appeal.

Both Wildtype and UPSIDE Foods create their products by cultivating animal stem cells into edible tissue, and both have received federal clearance to sell their products nationwide. Representing the companies, Institute for Justice attorney Marco Vasquez Jr. asserted that the ban constitutes economic protectionism, designed to shield Texas's traditional cattle industry from out-of-state competition. He further argued that the ban inflicts irreparable harm upon his clients, citing lost revenue, diminished business opportunities, damaged goodwill, and valuable time lost in the market.

The central legal arguments advanced by the cultivated meat companies are that the Texas cell-cultured protein ban violates the Dormant Commerce Clause of the U.S. Constitution and is preempted by the federal Poultry Products Inspection Act. Vasquez highlighted statements from the bill's sponsor, who explicitly stated the legislation's objective was "to protect our agriculture industry," and pointed to the law's own statement of intent, which describes its purpose as supporting traditional agriculture. He contended that under Dormant Commerce Clause precedent, neutrality is insufficient when a law's practical effect and purpose are to exclude an entirely out-of-state industry.

Conversely, Texas Assistant Solicitor General Douglass Duncan argued that SB 261 treats both in-state and out-of-state companies equally, drawing a parallel to a previous Texas ban on horse meat that the court had upheld as a blanket prohibition. Duncan also noted that the CEO of an Austin-based cultivated meat company had testified against the bill during legislative hearings, suggesting the statute could not be discriminatory against out-of-state entities if it also threatened an in-state business. He further contended that cultivated meat producers are not similarly situated to traditional meat producers, citing that their products are primarily marketed to consumers avoiding conventional meat for ethical or environmental reasons and noting UPSIDE's chicken sells for $200 per pound, indicating a distinct market.

The Fifth Circuit panel, composed of U.S. Circuit Judges Don R. Willett, Andrew S. Oldham, and Cory T. Wilson, all appointed by Donald Trump, pressed both sides on whether the existing record was sufficiently developed for the appeals court to render a decision on the discrimination question or if the case should be remanded to the federal district court. Duncan characterized the companies' sales in Texas as minimal—one restaurant relationship for Wildtype and a single sale to one resident for UPSIDE more than two years prior—arguing that any claimed harm was speculative and outweighed by the state's interest in protecting its residents from "imperfectly understood risks."

Duncan described the two-year sunset provision of the Texas cultivated meat ban as a reasonable pause designed to allow for further study of these novel products. However, Vasquez countered that Texas had presented no evidence of health risks associated with cultivated meat, emphasizing that federal regulators had already thoroughly reviewed the companies' safety data. The panel ultimately took the complex case under advisement, indicating a forthcoming decision that could have broad implications.

The ongoing legal battle over the Texas cultivated meat ban lawsuit represents a pivotal Fifth Circuit SB 261 challenge for the nascent cultivated meat sector. The outcome of this legal challenge will significantly influence the ability of states to restrict the sale of federally approved novel food products, setting a crucial precedent for the burgeoning cultivated meat industry. For food technology companies, particularly those in the cultivated meat space like Wildtype and UPSIDE Foods, this case will shape future market access strategies and risk assessments.

The court's decision will clarify the boundaries of state regulatory power when confronted with federal approvals, especially regarding arguments centered on the Dormant Commerce Clause lab-grown meat and Poultry Products Inspection Act preemption. The resolution of this Texas cell-cultured protein ban will be closely watched by lawyers advising food technology companies, as it will directly impact how novel food products can navigate state-level regulatory hurdles and access markets across the United States.

Lawyers advising food technology companies, especially those in the cultivated meat sector, should monitor this Fifth Circuit case closely as it will set precedent on state-level regulatory challenges to federally approved products, particularly concerning dormant commerce clause and federal preemption arguments. This outcome will directly impact market access strategies and risk assessments for novel food products.

Source: Original reporting via Associated Press and Courthouse News Service.