May 9, 2018Client Alert

USDA Issues Proposed Rule Establishing National GMO Labeling Standard

On Thursday, May 3, 2018, the U.S. Department of Agriculture (USDA) released a proposed rule establishing the national bioengineered (BE) food disclosure standard. This represents the first public look at how a uniform federal genetically modified (GM) mandatory labeling standard will be implemented.

In 2016, Congress amended the Agricultural Marketing Act, directing USDA to establish a nationally uniform marketing standard for bioengineered food products. See 7 U.S.C. §§ 1639—1639j. Viewed as a compromise effort, the legislation embraced a mandatory GM disclosure standard for food products intended for human consumption that contain bioengineered ingredients. Responding to food industry concerns that compliance with a patchwork of state laws would be expensive and challenging, the federal legislation preempted state-level genetically modified ingredient (GMO) labeling laws and embraced flexible mechanisms for making the required disclosure.

While the proposed rule provides significant insight into USDA’s current approach, the rule makes clear that USDA’s consideration of many important aspects of the labeling standard is far from over. “This rulemaking presents several possible ways to determine what foods will be covered by the final rule and what the disclosure will include and look like,” explained Agriculture Secretary Sonny Perdue in a USDA news release. “We are looking for public input on a number of these key decisions before a final rule is issued later this year.”

To that end, USDA made more than a dozen explicit requests for comment in the proposed rule and in some instances, proposed two or more potential alternatives for public consideration.

Food Subject to the Disclosure Standard

In general, the disclosure standard applies only to food, as that term is defined under the Federal Food, Drug and Cosmetic Act (FDCA), intended for human consumption and which is subject to labeling requirements under the FDCA. The labeling standard also applies to products subject to the labeling requirements of the Federal Meat Inspection Act, the Poultry Products Inspection Act, or the Egg Products Inspection Act, if the predominant ingredient (excluding broth, stock, water, or a similar solution) would independently be subject to the FDCA.

Bioengineered Food Lists

The Act and proposed rule define “bioengineered food” as food that “(A) contains genetic material that has been modified through in vitro recombinant deoxyribonucleic acid (DNA) techniques; and (B) for which the modification could not otherwise be obtained through conventional breeding or found in nature.”

USDA has applied this definition to generate two lists of bioengineered foods (i.e., crops for which a genetically modified cultivar is available). To facilitate regulatory compliance, only consumer-facing end products which are on one of the two lists, contain ingredients on one of the lists, or are produced using foods on either of the lists would be subject to disclosure requirements. Thus, as USDA explains, “the BE food lists serve as the linchpin in determining whether a regulated entity would need to disclose a BE food” under the standard.

The first list comprises commercially available BE foods which are highly adopted. These crops are those for which a bioengineered cultivar has been adopted at a rate of 85 percent or more in the United States, as determined by USDA. USDA proposes that this list initially include five crops: canola, field corn, cotton, soybeans, and sugar beets. Significantly, foods on this list are presumed to be bioengineered food subject to disclosure requirements, absent documentation to the contrary.

The second list is made up of commercially available BE foods which are not highly adopted. This list includes BE crops for which a bioengineered cultivar is commercially available in the United States, but which have a prevalence of less than 85 percent. This list would initially include apples (non-browning cultivars only), sweet corn, papaya, potato, and squash (summer varieties only). USDA states that the “default presumption” for these foods is that they may be bioengineered. However, because BE cultivars for these crops are less prevalent in the marketplace, regulated entities are permitted to use more flexible disclosure language such as “may contain a bioengineered food ingredient.”

These two lists would be updated periodically to reflect new bioengineered varieties and commercial adoption of GM crops.

Disclosure Mechanics

Under the proposed rule, disclosure is closely tied to whether a food appears on the two lists of commercially available BE foods. For products that contain a food on either list, the regulated entity must make a disclosure or “maintain documented verification that the food is not a BE food or that it does not contain a BE food.”

The 2016 legislation authorized several disclosure methods, including disclosure though text, a symbol included on the food label, or an electronic or digital link (such as a QR code). The final option (use of an electronic or digital link) remains controversial, with some groups calling for USDA to disallow this method by finding that it does not provide sufficient access to required information. In addition to these three methods, USDA is also proposing a text message disclosure option as an additional means of compliance. This method would work similar to an electronic or digital link.

The legislation also directed USDA to provide disclosure options for small food manufacturers (which USDA proposes to define as those manufacturers with less than $10 million in sales) and for small and very small packages. USDA’s proposed rule addresses each of these requirements.

USDA is seeking comment on three potential variations of the bioengineered “BE” symbol. The three variations (designated Alternatives 2-A, 2-B, and 2-C) can be viewed here.

Exemptions from the Disclosure Standard

The proposed rule embraces several exemptions from disclosure.

  • Non-Bioengineered Foods: Food products that appear on one of the “BE foods” lists which do not, in fact, contain bioengineered substances are exempt from making a mandatory disclosure. However, like the predominant voluntary GMO-free or non-GMO labeling standards, USDA recognizes these foods may still contain small amounts of GM crops.

    USDA’s proposed rule does not identify a proposed threshold level or method of evaluating compliance with the threshold (e.g., by ingredient or total weight), but instead seeks comment on three alternatives. Alternative 1-A does not require disclosure if the presence of BE substances in a food ingredient is “inadvertent and technically unavoidable” and does not exceed 5 percent of the specific ingredient by weight.

    Alternative 1-B would not require disclosure if the presence of BE substances in a food ingredient is “inadvertent and technically unavoidable” and does not exceed 0.9 percent of the specific ingredient by weight. This restriction is consistent with the threshold for inputs to human food used in the Non-GMO Project Standard. USDA specifically noted that while this standard is more restrictive, it “may align with some existing industry standards for the separation of BE and non-BE products, as well as the thresholds established by some U.S. trading partners.”

    Finally, Alternative 1-C represents a less restrictive approach. Alternative 1-C would not require disclosure if the total amount of all BE ingredients used in the product is not more than 5 percent of the total weight of the product.

  • Very Small Food Producers: The 2016 legislation exempted “very small food manufacturers” from the disclosure standard. USDA defined “very small food manufacturer” as any food manufacturer with less than $2.5 million in annual receipts, a threshold that would have the effect of exempting 74 percent of food manufacturers from the requirement, but just four percent of food products and one percent of food purchases. USDA seeks comment on whether the “very small food manufacturer” exemption should be reduced to cover firms with receipts of less than $500,000 or expanded to cover firms with less than $5 million in annual receipts.
  • Food Served in Restaurant or Similar Retail Food Establishment. The statute also contains an exemption for “food served in a restaurant or similar retail food establishment.” The proposed rule further defines “similar retail food establishment” to mean “a cafeteria, lunch room, food stand, saloon, tavern, bar, lounge, other similar establishment operated as an enterprise engaged in the business of selling prepared food to the public, or salad bars, delicatessens, and other food enterprises located within retail establishments that provide ready-to-eat foods that are consumed either on or outside of the retailer’s premises.”
  • Food from Animals Fed Bioengineered Feed: The 2016 legislation prohibits animal-based products such as beef, pork, poultry, eggs and milk from being considered bioengineered foods solely because the animal consumed feeds that contain bioengineered feeds or feed ingredients. Consistent with the legislation, USDA has incorporated this statutory exemption into the rule.
  • Certified Organic Foods: Food that is certified organic under USDA’s National Organic Program is also exempt from any disclosure or similar recordkeeping requirements, recognizing that organic standards already prohibit use of GM crops.

Compliance Dates

In general, USDA proposes to require all entities except small food manufacturers to comply with the disclosure standard by January 1, 2020. Small food manufacturers are those food manufacturers with at least $2.5 million in annual receipts but less than $10 million in annual receipts. Small food manufacturers would have an additional year (until January 1, 2021) to comply.

As noted previously, very small food manufacturers (less than $2.5 million in annual receipts) are exempt from the disclosure standard as currently proposed.

Submitting Comments

The proposed rule was published in the Federal Register on Friday, May 4, 2018. Comments on the proposed rule should be submitted by July 3, 2018.

Contact your Michael Best attorney to learn more about how the current proposal may affect your business.

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