August 10, 2016 Articles

GMO Labeling and the SAFL Act—Current Status and What the Future May Hold

By Scott K.G. Kozak

As implementation of Vermont’s labeling regulations for genetically modified organisms (GMO) and genetically engineered (GE) foods begin, ongoing legislative developments have broad ramifications for the food and beverage industry following the failure earlier this year of the U.S. Senate to pass a companion bill to the U.S. House of Representatives’ Safe and Accurate Food Labeling Act (SAFL). 

The SAFL, introduced in March of 2015 by Representative Mike Pompeo of Kansas (R-KS), would have amended the Federal Food, Drug, and Cosmetic Act (FDCA) to require the Food and Drug Administration (FDA) to continue its present voluntary consultation process with industry on the use of genetically engineered organisms in food and, ultimately, to give sole authority to the FDA to require mandatory labeling if such foods are found to be unsafe or materially different from foods without genetically modified ingredients. 

The SAFL is, in part, a reaction to various state law initiatives, primarily Vermont’s “Right to Know” Act 120 (Act 120), passed on May 8, 2014, with an implementation date of July 1, 2016, and a compliance deadline of January 1, 2017. The key provision of Act 120 is a new label requirement (with certain, specific exceptions) for foods that are produced entirely or in part from genetic engineering and offered for sale by retailers in Vermont. Vt. Stat. Ann. tit. 9, ch. 82, § 3043(a). The label must, in the case of packaged raw agricultural commodities, include the conspicuous words “produced with genetic engineering” on the package label or, for bulk items displayed for sale, note that same information on the shelf or bin where the commodity is displayed. Id. at § 3043(a). Any other processed food must include explanatory labels with one of the following phrases: (1) “partially produced with genetic engineering”; (2) “may be produced with genetic engineering”; or, (3) “produced with genetic engineering.” Id. at § 3043(c). 

A manufacturer of genetically engineered food is subject to Act 120 if it  

(A) produces a processed food or raw agricultural commodity under its own brand or label for sale in or into Vermont;
(B) sells in or into Vermont under its own brand or label a processed food or raw agricultural commodity produced by another supplier;
(C) owns a brand that it licenses or licensed to another person for use on a processed food or raw commodity sold in or into Vermont;
(D) sells in, sells into, or distributes in Vermont a processed food or raw agricultural commodity that it packaged under a brand or label owned by another person;
(E) imports into the United States for sale in or into Vermont a processed food or raw agricultural commodity produced by a person without a presence in the United States; or,
(F) produces a processed food or raw agricultural commodity for sale in or into Vermont without affixing a brand name.

Vt. Stat. Ann. tit. 9, ch. 82, § 3042(6). 

Manufacturers or retailers can seek exemptions on an individual basis, but civil penalties can be assessed for failure to comply, totaling not more than $1,000 per day, per product, for each “uniquely named, designated, or marketed product.” Vt. Stat. Ann. tit. 9, ch. 82, §§ 3044, 3045, 3048(a). 

A number of industry groups, led by the Grocery Manufacturers Association (GMA), filed suit in the District of Vermont on June 12, 2014, seeking a preliminary injunction with respect to implementation of Act 120. Among other legal arguments advanced (e.g., First Amendment), industry emphasized the high cost of compliance with Vermont’s unique labeling requirements, necessitating changes in distribution networks, revision of labels specific to distribution to Vermont retailers, and modifying or potentially ending various distribution channels and ancillary agreements to guard against unwitting violations of Act 120. The district court denied the preliminary injunction, which led to an appeal with the Second Circuit. Oral argument took place on October 8, 2015, and a decision is pending, as is trial of issues not raised in the appeal.  

The SAFL, as drafted, would expressly preempt laws such as Vermont’s Act 120: “State and local requirements for the labeling of GMO products are preempted unless the state or local government establishes a program that matches the programs described in this Act.” The SAFL passed the House of Representatives on July 23, 2015, with a super-majority, 275 to 150, but stalled in the U.S. Senate’s Agriculture Committee. 

Senator Pat Roberts (R-KS), chair of the Agriculture Committee, led the passage of a bipartisan Senate version of the SAFL—called the Biotechnology Labeling Solutions bill (Senate Bill 2609)—out of the Agriculture Committee on a 14­–6 vote on March 1, 2016. A number of bipartisan senators supported the bill, including Senator Amy Klobuchar (D-MN), who noted earlier this year that state GMO laws are “patchy” and often exclude dairy products based entirely on state-centric concerns, not broad labeling issues. Such is the case for dairy products in Vermont, which are specifically excluded from Act 120’s coverage. Supporters of Senate Bill 2609, consistent with the lawsuit against Act 120, identified costs that manufacturers would incur—and likely pass on to consumers—to comply with Act 120 or similar state acts as a driving factor in pushing for preemption. This approach, while recognizing costs to industry, also has the value of being consumer-friendly, characterizing the SAFL’s preemptive effects as saving consumers from increased food costs. 

The day after the Agriculture Committee moved Senate Bill 2609 out of committee, Senator Jeff Merkley (D-OR), joined by three other Democrats, introduced his own GMO label legislation. Contrary to the Senate bill, Senator Merkley’s Biotechnology Food Labeling and Uniformity Act (Senate Bill 2621) would offer food manufacturers several options for including GMO information on or near the ingredients list and would result in the FDA developing a symbol to “conspicuously disclose” the presence of GMO ingredients. 

Senator Merkley’s introduction of his competing bill ultimately doomed passage of the Agriculture Committee’s bill. A vote in mid-March saw Senator Roberts’s bill (Senate Bill 2609) fail to secure cloture, by a vote of 48–49; as a result, the issue of GMO regulation on the federal level was sent back to the Agriculture Committee for further negotiation.  

Food manufacturers, facing a July 1 deadline to comply with Act 120 in Vermont, began to take steps to review and modify their labels. Mars, General Mills, Kellogg, and Con-Agra announced publicly in late March that they are working to revise their labels on products across the country to identify genetically engineered foods and to ensure they are in compliance with Act 120. Mars, Our Genetically Modified Organisms Policy (n.d.); Jeffrey Harmening, “We Need a National Solution for GMO Labeling,” Taste of General Mills (Mar. 18, 2016); Press Release, Kellogg’s, Statement from Paul Norman, President, Kellogg North America, on GMO Labeling (Mar. 23, 2016) ; Press Release, ConAgra Foods, Statement: GMO Labeling (Aug. 1, 2016). General Mills’s public statement noted the lack of progress in Congress, stating that “[a]s the discussions continue in Washington, one thing is very clear: Vermont state law requires us to start labeling certain grocery store food packages that contain GMO ingredients or face significant fines,” and continuing, “[w]e can’t label our products for only one state without significantly driving up costs for our consumers and we simply will not do that. The result: consumers all over the U.S. will soon begin seeing words legislated by the state of Vermont on the labels of many of their favorite General Mills products.” Other companies, notably Campbell Soup, are voluntarily revising their labels to identify GMOs and are at the vanguard of a corporate (and political) push to make such labeling the industry standard. Press Release, Campbell Soup Co., Why We Support Mandatory National GMO Labeling (Jan. 7, 2016).  

Facing the impending July 1st implementation of Act 120, Senator Roberts and Senator Debbie Stabenow (D-MI), majority and minority ranking members on the Agriculture Committee, engaged in intensive negotiations in June 2016. Those negotiations ultimately resulted in a compromise bill introduced on June 23, 2016. Under the compromise bill, the U.S. Department of Agriculture (USDA) is required to establish a mandatory bioengineered food disclosure standard within two years. The bill, among other provisions, would prohibit identification of food derived from an animal as bioengineered solely because the animal consumed feed produced, containing, or consisting of bioengineered substances. Enacting regulations would further determine the amounts of bioengineered substances that may be present in food to qualify that food as “bioengineered.” The bill also provides food and beverage companies with several options for labeling food, including use of electronic or digital link disclosures, such as the “SmartLabel” advocated by the food and beverage industry, subject to certain requirements regarding the information to be provided.  

Finally, and perhaps most importantly, the bill (section 295) specifically preempts direct or indirect efforts by states or any political subdivision of states to establish any requirement “relating to labeling or disclosure of whether a food is bioengineered or was developed or produced using bioengineering,” to the extent any such requirement is not identical to the mandatory disclosure requirement promulgated by the USDA pursuant to the bill. The federal preemption provision applies to existing regulatory regimes as well, prohibiting states from “contin[uing] in effect” any existing regulation of labels for genetic engineering. The bill thus would serve to abrogate Act 120, even if it goes into effect prior to final passage of the bill, and effectively foreclose the potential patchwork of state GMO-labeling regulatory regimes. 

The question now facing the food manufacturing industry is where do we go from here? The recent compromise bill introduced in the U.S. Senate must be voted out of the Agriculture Committee, passed by the full Senate, and reconciled with SAFL in a conference committee. While the recent compromise bodes well for passage of the bill, vagaries of the legislative process, especially in an election year, could result in further disruption of the legislative process. For example, Bernie Sanders (D-VT) quickly issued a press release, stating that he would do everything he could to “defeat this legislation,” in large part on the basis that it would preempt Act 120. Press Release, Sen. Bernie Sanders, Sanders Statement on GMO Labeling Legislation (June 23, 2016). Beyond Congress, the Second Circuit may yet reverse and remand the district court’s determination on the preliminary injunction issue. For the time being, the food industry remains at the mercy of the Second Circuit and Congress as we head deeper into the calendar year. 

Keywords: litigation, products liability, GMO, genetically modified organisms, genetic engineering, Safe and Accurate Food Labeling Act, Vermont Act 120   

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