By Howard Fischer
Mail | X: @azcapmedia

PHOENIX — The fate of state rules designed to provide more humane treatment of laying hens could depend on whether a judge believes the owners of some Tucson restaurants has standing to challenge them.

At a hearing Friday, attorney John Thorpe of the Goldwater Institute argued that prohibiting hens from being housed in tiny cages will result in higher costs for Grant Krueger as well as the three restaurants he owns: Union Public House, Reforma Modern Mexican Mezcal + Tequila, and Proof Artisanal Pizza and Pasta. And that, Thorpe said, was enough to entitle his client to seek to overturn the rules.

But Assistant Attorney General Josh Whitaker said any claim of financial harm by Krueger, as the ultimate purchaser, was speculative at best.

Hanging in the balance are rules the state Department of Agriculture enacted in 2022 that now spell out that eggs sold in Arizona must be raised in cages no smaller than one square foot of floor space — 144 square inches — per hen. That is twice as much as prior standard.
Beginning in January, those regulations say all laying hens must be “housed in a cage-free manner.”

In adopting the regulations, the state agency figured the rules would add somewhere between a penny and 3.25 cents per egg. Using an estimate of annual per capita consumption of slightly more than 270 eggs a year, that pencils out to somewhere between $2.71 and $8.79 per person.
Krueger, however, said he purchased 578 cases of eggs in a recent 12-month period, or 104,400 eggs. And, using the higher estimate, that would cost $3,380 a year.

That economic harm, argued Thorpe, gives Krueger the right to challenge the rules.

“This is a case that affects millions of Arizonans,” he told the judge.

“This is an economy-wide regulation of the production of almost universally used products,” Krueger continued. “And certainly, they have standing to challenge that regulation.”

But Whitaker told Maricopa County Superior Court Judge Scott Blaney there’s no hard evidence to show the price of eggs actually has been affected by the rules or whether producers and retailers have simply absorbed the costs.

There’s also the fact those rules affect only entities that have more than 20,000 egg-laying hens.

Whitaker pointed out there are only two firms in Arizona that meet that requirement: Rose Acre Farms and Hickman’s Family Farms. He said the first already has cage-free practices and the other is headed in that direction.
So Kruger’s claim he is being harmed financially by the rules — versus the actions taken by the producers — has no basis, Whitaker said.

Even if there were some identifiable cost from the rules, he said the only entities that could sue would be the affected producers who bear the costs, neither of which have sued. Whitaker any financial burden on Krueger and his restaurants is so attenuated as to provide no legal basis for him — or any other consumer — to challenge the rules.

Nothing was presented in court on Friday to show any actual increase in what Krueger has paid based on the rules. Thorpe said the agency’s own estimates are sufficient to prove financial harm.

Dollars and cents aside, Thorpe advanced a separate legal theory about why his client has the right to sue: The rules interfere with his ability to buy a product he wants.

“People have a right to buy and sell products,” he said. “And when that right is infringed by regulation, when they directly denied the right to sell something, they have the right to challenge that restriction in court.”

He pointed out the rules govern not just Arizona-based producers but also out-of-state operations with more than 20,000 hens that want to sell their eggs here, further restricting the availability of what he said are lower-cost eggs from hens in cages.

“That’s a direct restriction on producers, on consumers, certainly on retailers that sell the eggs,” Thorpe said.

“It simply says you have no right to buy or sell these products unless they conform with this regulation,” he continued. “So Mr. Krueger and his business are both being denied the right to buy and sell something they could previously have bought and sold.”

He said there is precedent for that argument, citing a federal court ruling that found consumers had the right to sue the U.S. Food and Drug Administration after it enacted regulations on the sale of raw milk. Thorpe said the court in that case said they had purchased the product and that it’s sale was being restricted.

Whitaker, however, said there’s a key difference here. He said it’s not like the regulation will keep Krueger from buying eggs.

“What’s happening is that, at most, the options of buying eggs that come from a particular type of housed hen will be less available,” Whitaker said.
And he said there are limits on the rights of consumers to get what they want.

Consider, Whitaker said, a health department rule that requires chefs who prepare sushi to wear hairnets.

“A consumer can’t say, ‘I wanted non-hairnet-served sushi,’” he said.
Ditto, said Whitaker, of the ability of a consumer to demand to be able to purchase a vehicle that has not been through the legally required crash testing.

Thorpe has one other legal argument in his bid to get Blaney to void the rules. He contends nothing in the statutes governing the Department of Agriculture gives it the right to enact specific regulations about things like cage sizes.

Whitaker conceded there is no such specific direction. But he pointed out lawmakers did give the agency the authority 16 years ago to regulate “poultry husbandry.” Whitaker said that is a specific phrase, well understood in the industry, that governs how the animals have to be handled, from rules about trimming their beaks — something to keep them from harming each other — to how they can be housed.

“It advances the goals of both animal welfare, which includes the health of animals, and consumer welfare, which includes consumer health,” he said.
Whitaker told the judge there’s something else he needs to consider on Krueger claim the rules are raising his costs.

He pointed out that in 2021, a group known as World Animal Protection was promoting an initiative in Arizona to require cage-free systems by May 2023. Its proposal would have made violations a crime.

That alarmed the owners of Hickman’s Family Farms, the state’s largest egg producer. So they actually agreed to back legislation that would impose the same mandate — but not until 2025.

The Arizona Farm Bureau Federation managed to kill the bill.
But the Department of Agriculture picked up the issue, reaching the conclusion that, absent state action, voters would approve the harsher initiative. Whitaker said enacting the rules could be seen as actually saving money for producers — and, ultimately, consumers — because the delayed effective date gave more time to comply.

The judge gave no indication of when he will rule.