Agricultural Management Committee Report

Gene Editing in Agriculture

Genetic editing arrived on the agriculture scene just in time to see new U.S. Department of Agriculture (USDA) regulations arrive in May 2020. At the same time, overseas regulatory bodies began erecting barriers to entry for these new plant breeding methods. The lack of overseas approval can cause liability risks here at home in the US. Gene editing in agriculture arrives on the heels of lawsuits filed against Syngenta for disrupting the U.S. corn export market to China. Unfortunately, the existence of overseas regulations and the broad precedent for any “foreseeable major market” could pose a challenge to the future use of agricultural biotechnology in the United States. Start-up level innovators may lack the resources to maintain overseas approvals.

The European Union’s High Court of Justice in July 2018 ruled that crops produced through genetic editing will be regulated as a “GMO” under its long-standing “precautionary approach” to regulatory approval. This means that approval times will take several years, sometimes longer, for crops to be approved in the EU.

The EU’s “precautionary approach” is followed by 173 nations that are parties to the Cartagena Protocol on Biosafety (CPB). At MOP 9 in November 2018 in Egypt, the parties put gene editing under a “synthetic biology” descriptor. The US, Canada, Australia, Argentina and other grain exporting, biotech crop producing nations are not signatories to the CPB. The EU is often a key trading partner and source of foreign aid (e.g., in parts of Africa, where the EU’s influence on GMO policy is notably strong). Nations regulating gene editing are found on the Genetic Literacy Project website with its global regulatory approval database. Many nations that are parties to the Biosafety Protocol enact legislation similar to the European Traceability Directive imposing zero-tolerance for the import of any GMO that lacks regulatory approval. Regulatory approval could prove costly to genetic editing companies, to maintain approval and avoid litigation for disrupting exports.

Environmental, Social and Governance (ESG) Claims

From the foods they eat, to the clothes they wear, to the cars they drive, consumers are increasingly seeking more environmentally sustainable and socially conscious products. In response to growing consumer demand for eco-friendly and responsibly sourced goods, companies across the agricultural supply chain are positioning themselves as more “green,” more humane or more socially responsible than their competitors. In recent years, companies have embraced these environmental, social and governance (commonly referred to as ESG) claims as core to their marketing strategies. However, such claims have become a common target of false advertising suits that attack brands’ lack of substantiation or that call into question their progress toward their stated ESG goals.

One ESG case decided in 2022 of particular interest to agricultural producers was Usler v. Vital Farms, Inc. The Usler plaintiffs brought suit in federal court in the Western District of Texas, challenging egg producer Vital Farms, Inc.’s statements that its hens were “pasture-raised,” that its operations were “ethical” and certified humane, and that the company was “invested in animal welfare and doing things the right way.” Plaintiffs alleged such claims were misleading and inconsistent with Vital Farms’ actual operations, which relied on “inhumane” practices such as beak tipping and the culling of male chicks. Plaintiffs also questioned Vital Farms’ “pasture-raised” claims, alleging that, in reality, Vital Farms’ hens were stocked indoors at “extreme densities,” effectively limiting the birds’ access to the outdoors and precluding them “from engaging in natural behaviors that are key to preventing undue physical and psychological pain .” Vital Farms countered that its operations met third-party standards for “pasture raised” and “humane” claims set by third-party certification organization Humane Farm Animal Care (HFAC). However, the district court denied Vital Farms’ motion to dismiss, noting that conformity to third-party standards does not render a claim non-misleading as a matter of law, particularly where such standards “may not represent a term’s plain meaning as understood by consumers.”

Similar suits have arisen against the aquaculture industry in the past year, with consumers challenging sustainability claims made relating to seafood raised in environmentally destructive or inhumane ways. For example, plaintiffs in Spindel v. Gorton’s, Inc. challenged Gorton’s claims that its seafood was “sustainably sourced” when Gorton’s fish were allegedly raised on poorly regulated foreign farms that utilized “harmful chemicals,” subjected fish to “crowded and unsanitary conditions,” and threatened the health of surrounding natural aquatic ecosystems. The case survived an initial motion to dismiss but was voluntarily dismissed in late 2022. While the Spindel case focused specifically on aquaculture, similar challenges could also be directed at livestock operations that tout sustainability credentials while engaging in practices that could be viewed as inhumane or damaging to the environment.

The National Advertising Division (NAD) of the Better Business Bureau has also initiated recent inquiries against companies making agricultural ESG and sustainability claims. In February 2022, the NAD challenged certain supply chain sustainability claims made by Chipotle Mexican Grill. Advertising claims at issue in the case included Chipotle’s statements that, through implementation of its ingredient sourcing standards, the company had achieved significant reductions in water use and livestock antibiotic use, improvements in soil health, lower carbon emissions, and the conversion of farmland to organic production. While the NAD found that Chipotle provided sufficient substantiation for most of these claims, the regulatory body clearly emphasized the importance of adequately vetting environmental sustainability claims, stating: “[E]nvironmental claims are impactful on consumers, who cannot readily verify the truth and accuracy of such claims. . . . Therefore, advertising self-regulation serves an important role in ensuring that environmental claims are truthful and adequately substantiated.”

As challenges to ESG claims continue to rise, companies should carefully evaluate their ESG and sustainability messaging and assess the adequacy of their substantiation for those claims. While certification by trusted third-party organizations may bolster or lend credibility to ESG claims, such certifications are not dispositive, as demonstrated by Usler, and even “aspirational” statements about a company’s ESG goals may form the basis for a suit if those statements are inadequately supported. The emergence of ESG lawsuits is relatively recent, and “greenwashing” litigation is still filled with gray areas. However, the proliferation of cases in this space should serve as a signal to food and agribusiness companies to evaluate their supply chains and ensure their sustainability messages are sufficiently supported, both on paper and in practice.

The Road to Sustainability: California's Sustainable Groundwater Management Act

Groundwater constitutes 40 to 60% of the California water supply. Despite being a coastal state, extensive groundwater extractions have led California to suffer significant detrimental effects of groundwater overdraft and land subsidence—damages to pre-established well systems, drainage systems, flood protection, and water conveyance.

In an effort to manage California water in a reasonable and beneficial manner, SB 1168 (Pavley), AB 1739 (Dickinson), and SB 1319 (Pavley) were passed in 2014 to form the Sustainable Groundwater Management Act (SGMA). California’s 515 groundwater basins support over 140,000 wells. Since groundwater basins provide a plurality of the state’s total water supply, SGMA establishes a regulatory framework for bringing the most challenged and heavily used basins into balance by 2040—2042 for low priority basins. The Department of Water Resources (DWR) prioritized at-risk groundwater basins and subbasins into the following categories: high, medium, low, or very low priority—94 basins are identified as medium to high priority .

SGMA formed over 260 Groundwater Sustainability Agencies (GSAs) spread throughout more than 140 groundwater basins. Each GSA aims to work with local stakeholder advisory committees to create a localized Groundwater Sustainability Plans (GSPs) or prescribed alternative documentation in accordance with Cal. Water Code § 10733.6. Each GSP shall include:

1. A description of the physical setting and characteristics of the aquifer system underlying the basin;
2. A list of measurable objectives with five year interim milestones and a description of how each objective intends to achieve sustainability for the basin;
3. A planning and implementation horizon;
4. A water budget;
5. A summary of the type of monitoring sites, type of measurements, and the frequency of monitoring for each location;
6. Monitoring protocols; and
7. A description of the consideration given to other plans, adopted water resources-related plans and programs within the basin, and an assessment of how the GSP may affect those plans.

Multiple GSAs can work together on a GSP for a single basin; they are encouraged to communicate with neighboring basins to avoid impeding or adversely affecting the implementation of an adjacent basin’s GSP.

Each basin submits only one GSP to the DWR for review. The DWR then facilitates and evaluates local GSAs in SGMA implementation through regulatory oversight and ongoing assistance—planning, technical, and financial assistance, and publishing best management practices and guidance on its Internet Website. All GSPs for critically overdrafted basins were submitted to the DWR for evaluation in January 2020. All GSPs for medium to high priority basins were submitted in January 2022. The DWR has two years to determine whether the plans are adequate, conditionally adequate, or inadequate. As of January 2023, the DWR SGMA portal identifies 117 GSPs as follows: Eight approved with recommended corrective actions, thirty-nine inadequate, seventy review in progress. The corrective actions identified in approved GSPs must be implemented by their next review date; reviews take place every five years. All deficiencies identified by the DWR in GSPs determined to be inadequate must be corrected before being approved. Many GSAs, such as the Merced subbasin GSP, have developed Data Gap Plans for their revised GSPs.

If the DWR finds a GSP inadequate or circumstances occur that otherwise fall under Cal. Water Code § 10735.2(a)(1), the State Water Resources Control Board (SWRCB) may “make a certain determination” to put that basin on probation. If, after 180 days, the GSA has failed to make substantial progress towards remedying the deficiency, the SWRCB may adopt its own interim plan for the basin after giving notice and a public hearing.

In March 2022, Executive Order N-7-22 Action 9 took effect as a temporary measure to impose further restrictions on the issuance of permits for a new groundwater well or for alterations of an existing well. Action 9a requires a well within a medium to high priority basin to obtain written verification from the local GSA that the proposed action is consistent with the local GSP before action can be taken. Action 9b requires the following two criteria: (1) determination that the proposed action is not likely to interfere with the production and functioning of existing nearby wells, and (2) such action is not likely to cause subsidence that would adversely impact or damage nearby infrastructure. Domestic wells that use less than two acre feet of water per year will not be required to meter their wells. However, farmers and other non-domestic well users must comply with SGMA requirements by installing pump meters. The meters will provide information on the amount and location of pumping. This data will help GSAs better monitor groundwater tables and create a more comprehensive subsidence response in their GSPs.

SGMA is a localized approach intended to attack the groundwater sustainability issue from both a supply and demand perspective—to address uncertainty of the water demand and to augment its supply. While most GSPs have yet to be approved, the goal of sustainability is omnipresent. The implementation of SGMA is an ongoing process and there is no hard line rule for what the right approach is for each GSA. However, the DWR has assured stakeholders that they are here to help assure compliance.

Regulatory Developments

A. Partnerships for Climate-Smart Commodities

In February 2022, USDA announced details of its proposed Partnerships for Climate-Smart Commodities. Utilizing the Commodity Credit Corporation, USDA proposed to invest billions in partnerships for pilot projects that incentivized producers and landowners to:

• Implement certain climate smart production practices, activities, and systems on agricultural and silviculture working lands.
• Measure or quantify, monitor, and verify carbon and greenhouse gas benefits from those practices.
• Work toward market development and promotion of the “climate-smart commodities.”
• USDA’s total investment through the CCC has totaled more than $3.1 billion for 141 projects. USDA expects that the projects will, cumulatively, result in:
• More than 60,000 farms reached and more than 25 million acres of working lands utilizing climate-smart production practices; and more than 60 million metric tons of carbon dioxide equivalent sequestered over project life.

Project summaries can be found on the USDA’s website.

B. National Handbook of Conservation Practices

National Resources Conservation Services gave notice on May 17, 2022, that it “intends to issue a series of revised conservation practice standards,” as found in the National Handbook of Conservation Practices. The notice of availability also provided opportunity for and sought comments on certain specified conservation practice standards. The proposal includes potential changes to twenty-four conservation practice standards, including:

• Constructed Wetland(s);
• Dike and Levee;
• Diversion; and
• Soil Carbon Amendment.

C. Pesticide Registration Review Deadline

On September 26, 2022, EPA released an update on progress toward meeting the October 1, 2022, Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) pesticide registration review deadline for more than 700 pesticides registered prior to October 2007. More than 450 of the total cases are conventional agricultural pesticides. For the conventional pesticide products, EPA has “[c]ompleted 99% of the draft risk assessments, completed more than 90% of the proposed interim decision and issued more than 80% of the final or interim decision.”

Of those decisions, EPA has:

• Cancelled some or all uses in 25% of cases reaching final or interim decisions;
• Required human health and/or ecological risk mitigation for almost 70% of cases with interim or final decisions;
• Instituted requirements to reduce drift in 80% of cases where EPA required mitigation against ecological risk;
• Set requirements to reduce runoff (e.g., no-spray buffers zones, vegetative filter areas, etc.) in more than 20% of cases where EPA required mitigation against ecological risk; and
• Required rate reductions in 60% of cases.

EPA noted that pesticides without final review by the October deadline may remain on the market and may continue to be used according to the product label.

The Agency has made significant progress on this gargantuan task, but much work remains, including compliance with the Endangered Species Act species assessment and consultation with the U.S. Fish and Wildlife Service and National Marine Fisheries Service. To facilitate the process, EPA issued an ESA workplan update on November 16, 2022.