John Block: “COOL” Isn’t Cool

By John R. Block

As a farmer, we understand that if you have something that doesn’t work, you fix it. It will just cost you money if you ignore the problem. Somehow, the federal government doesn’t seem to understand that common sense fact.

The Country of Origin Labeling (COOL) law was first passed in 2002. Canada and Mexico have been challenging the law now for 13 years. The World Trade Organization (WTO) just this week ruled it to be a violation of U.S. international trade obligations. We are a member of the WTO and therefore should live within the rules. That is our obligation, and we expect other countries to do the same.

This week, for the third time, the WTO ruled against us. That ruling gives Canada and Mexico the legal right to retaliate. Canada already has a list of proposed restrictions, which will result in a dramatic cut in our exports to Canada and Mexico. That is serious. Canada and Mexico are our number 1 and 2 export markets. Besides, they are our closest neighbors.

Senator Pat Roberts (KS) had this to say: “If Congress doesn’t act swiftly, retaliation will wreak havoc on the U.S. economy.” I think we should be aware that if we don’t fix this law, it will cost us millions of dollars in ag exports as well as other exports.

The law today requires that meat from a calf born in Canada and shipped to the U.S. bare a label that reads “Born in Canada, raised and slaughtered in U.S.”  Just imagine the cost and confusion that can cause.  What about the Montana farmer who imports Canadian calves and mixes his own U.S. calves with the Canadian calves?  By law, he would have to keep track of them and market them separately. The U.S. processing plant would then have to process them separately. That would be the only way to ensure the Canadian label was on the Canadian steak.

Consumers say they have the right to know where that animal has been. Why? It isn’t worth the hassle. USDA just released new study results that point out the COOL labeling policy costs consumers nearly 8 billion dollars over 10 years.

We don’t need to try and change COOL. We’ve tried that before. COOL isn’t cool. Just get rid of it.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

FDA Releases Draft Guidance on Compounding Animal Drugs

By Tish Eggleston Pahl

Yesterday, FDA released a Draft Guidance for Industry on Compounding Animal Drugs from Bulk Drug Substances (Draft Guidance).  The Federal Register notice accompanying the Draft Guidance can be found here.  The agency also withdrew its previous Compliance Policy Guide (CPG) 608.400, Compounding of Drugs for Use in Animals.

Though FDA has been actively implementing Title I of the Drug Quality and Security Act (DQSA) and exercising its new, clearer authority over outsourcing facilities and compounding pharmacies, the new §503B and amended §503A of the FD&C Act do not apply to the compounding of animal drugs. Arising from FDA’s recent, vigorous oversight of compounding pharmacies and outsourcing facilities, the Draft Guidance reflects the agency’s current, and more sophisticated, thinking about compounding.

The Draft Guidance describes the conditions under which FDA does not intend to initiate enforcement action against State-licensed pharmacies, licensed veterinarians, and facilities registered as outsourcing facilities under §503B of the FD&C Act that compound animal drugs from bulk drug substances. Outsourcing facilities are new entities created under the DQSA that, if they follow cGMPs and other requirements, are permitted to compound sterile injectable drugs for humans without FDA pre-approving an application under §505 and without the “adequate directions for use” required by §502(f)(1).  The Draft Guidance sets out pre-conditions for the exercise of enforcement discretion for each type of entity – State-licensed pharmacies, licensed veterinarians, and outsourcing facilities.  Unlike pharmacies and veterinarians, outsourcing facilities will only be permitted to compound from bulk substances identified in the to-be-developed Appendix A.

FDA separately seeks comments on the list of acceptable bulk substances to add to the Appendix A list.  The agency also asks for comments on various other issues, including:

  • The significance of drug shortages to animal drug compounding;
  • The appropriate standards for compounding by licensed veterinarians;
  • Possible limitations on total drugs to be compounded and whether they may be transferred or sold to others; and
  • Whether the agency needs to address repackaging of animal drugs, as it did for human drugs.

For compounders of animal drugs, these are significant documents that warrant close inspection.  FDA will be accepting comments for 90 days.

Mike’s Legacy

By Marshall L. Matz, as published in Agri-Pulse

Michael B. Jandreau, the visionary leader of the Lower Brule Sioux Tribe in South Dakota for almost 40 years, passed away last month at the age of 71.  Known to all as “Mike” he believed that Indian Tribes had to establish a private sector economy on the Reservations if they were to participate in the American dream. The historic treaties of the 1800’s between Tribes and the United States, while still very important, were not enough to prepare Indian people for the 21st century.  For rural Tribes, that means a focus on agriculture.

Jandreau testified before Congress and the South Dakota Legislature many times in support of Tribal sovereignty but he also believed that the treaties were not a business plan. The Tribes needed to develop a private sector economy to benefit all Tribal members.   In 2004, he made history as a Tribal Chairman by telling the Senate Committee on Indian Affairs: “Sovereignty is the key to tribal existence.  But, in the long run, for sovereignty to survive, there must be economic sovereignty as well.  We must develop a private sector economy.”

Jandreau again emphasized the importance of the private sector when he addressed the Senate Committee on Indian Affairs a few years later: “It is painful to read The World is Flat and to read that the United States is outsourcing jobs to China and India when many Indian Reservations have an unemployment rate over 80% and a third world standard of living.”

Tribes located in the Missouri River Valley may face the most difficult challenge of all Reservations given their remote locations.  The unemployment rates on rural Reservations, along with social indicators like infant mortality, diabetes, and suicide rates, are closer to those of the third world than those of the United States.  Tribal members face the Hobson’s choice of leaving their families and culture or staying on the Reservation and a life with less potential than other Americans.  Only a private sector economy can solve these problems and agriculture has the best potential in these rural areas.

USDA photo by Ken Hammond.

USDA photo by Ken Hammond.

Mike foresaw the reservation’s agriculture potential not only in growing larger volumes of agricultural commodities on Tribal and Reservation lands, but also in adding value to those commodities on the Reservation itself.  Processing the commodities created good jobs for Tribal members and pride in what was produced in the name of the Tribe.

Under Jandreau’s leadership, Lower Brule established a successful Farm Corporation and one of the most diverse and innovative economies of any Reservation in the Nation. The Lower Brule Farm Corporation grows edible beans, has a commercial buffalo herd and is the largest producer of popcorn in the country.  The farm has expanded to some 40,000 acres with 10,000 acres under irrigation. They sell popcorn nationwide to the major brands and also market under their own brand name “Lakota Foods.”

As important as agriculture is to Lower Brule, Mike also understood that agriculture alone could not raise the standard of living for Tribal members to parity with surrounding non-Indian communities. He shrewdly recognized that the Indian Reorganization Act of 1934 empowered tribes to team up with the private sector to develop off-reservation businesses that could supplement on-reservation services.  It took a full decade and trips to the Supreme Court to bring land into trust near the Reservation on Interstate 90 in South Dakota that can be developed into Tribal businesses.

Jandreau successfully urged the Congress to enact the Lower Brule Infrastructure Development Trust Fund Act, the Wildlife Habitat Restoration Act and the Wakpa Sica Reconciliation Place, among other pieces of legislation.  Wakpa Sica seeks to help all Tribes of the Great Sioux Nation by providing support for Tribal Courts in order to attract investment to the Reservations.

His unfulfilled dream was an Indian Agriculture Act (IAA). Upon his motion, the National Congress of American Indians passed a resolution urging the United States Congress to “make the Indian Agriculture Act a title in the 2012 Farm Bill.”

While pieces of an IAA were included in the last Farm Bill, Jandreau always looked to the future. Rural, agriculture-based Tribes need extension services, loan guarantees, irrigation, infrastructure, and better internet, among other things, to underpin a farm economy.  South Dakota State University and Mike were working together to improve extension services on all South Dakota Reservations.

Agriculture Secretary Tom Vilsack has been very responsive to Tribes, but to solve a challenge of this magnitude, it will take a Presidential initiative that brings together all Departments of Government.  The White House Rural Council has established a focus on Tribes for this exact reason.

Jandreau proposed paying for increased services by using a portion of the revenue from the sale of electricity generated by the dams along the Missouri.  His thinking was that the water belonged to Indians (under the Winters Doctrine), the dams flooded Tribal land and, therefore, the revenue should be shared with the Tribes.  The Western Area Power Administration, WAPA, earns a billion dollars a year from the sale of electricity.  The revenue is not shared with the Tribes and, in fact, the Tribes have to pay for electricity.

Mike received many awards and commendations over his life but his true legacy lies not in the past but in his vision for the future: A comprehensive Indian Agriculture Act, completing the Wakpa Sica Reconciliation Place, attracting private capital to the Reservations, and distributing the Keepseagle vs. USDA litigation funds to the farmers who were damaged.  As Mike noted in closing his testimony to Congress, “The Reservations are a part of the United States, but we are not a part of the U.S. economy.”

Marshall Matz started his career with South Dakota Legal Services on the Crow Creek Reservation before moving to the Senate Committee on Agriculture.  He currently specializes in agriculture at OFW Law in Washington, D.C.

May 19 Webinar on the Drug Supply Chain Security Act

Tish Eggleston Pahl will be speaking on May 19 at a webinar on dispenser obligations under the Drug Supply Chain Security Act (DSCSA).  The webinar is sponsored by the Healthcare Distribution Management Association (HDMA).  This “DSCSA Overview for Dispensers” continues HDMA’s education and outreach on the pharmacy and hospital–related implementation requirements under the DSCSA.  Particular focus will be on the data requirements for dispensers that go into effect on July 1 and also will address many of the questions that HDMA received during its previous April 21 webinar for dispensers.

Topics will include:

  • The loan or sale of medication from one dispenser to another;
  • The definition of “dispenser” and whether hospital and clinic pharmacies qualify;
  • Questions pertaining to suspect and illegitimate products;
  • Data that must be provided with the product, including questions about lot number and data pertaining to returned products;
  • Exempt products and transactions;
  • Questions around authorized trading partners and more.

The webinar is free.  More information about the webinar and how to sign up is available here.

John Block: Down on the Farm

By John R. Block

I was on the farm last week and early this week. My timing was right. I wanted to be there for the corn planting. We finished and started on soy beans. I have never seen the seeds go in the ground under better conditions. That rich, black dirt was not cloddy, not too wet. It would crumble in your bare hands. The day I got to the farm, the corn was not up. But when I left this week, I could mow it. To look at those green sprouts peeking up out of that rich earth is a beautiful sight.

Think about all the time and effort and money spent in getting the crop this far. Last fall, we put lime on some fields where the soil tests told us it was needed. We applied phosphate and potash at just the right amount to meet fertility needs. With GPS and accurate soil tests, we can apply the right amount in the right place. That’s precision farming.

We knifed into the soil “honey” from our hog barns. That is powerful fertilizer. Finally, anhydrous ammonia, our source of nitrogen, was put on the fields. We did all of that last fall. We won’t see any return on our investment until this fall.

When the corn gets up a foot high this spring, we will spray for weeds. With genetically engineered seed, we don’t use anywhere near the amount of weed spray that we did 30 years ago. The critics of GE crops are making a big mistake. GE allows us to dramatically reduce the amount of chemicals to grow a crop. We don’t use the energy. In days back, we would have to cultivate the growing crop twice. And, we would still have weeds and grass in the corn rows.

Farmers are better stewards of their land than they have ever been. We have technology that makes it possible. We value our land and livestock. That’s how we make our living.

Of course, there are exceptions, but I can’t imagine a farmer mistreating his animals. I love our pigs. They are beautiful – so healthy. They are gaining weight and growing faster than I have ever seen. Sometimes, I think it may be the feed. It is a balanced ration. Corn, soybean meal and distillers dried grain (DDG). DDG is the high protein feed left over after making ethanol out of corn. It has become a very popular and valuable livestock feed.

Watching the 2015 crop grow this summer will be exciting. I’m sure we will be praying for rain in July. It’s in God’s hands now.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

Spotlight on Compliance of Wood Products

By Elliot Belilos

In the wake of the recent 60 Minutes piece that highlighted alleged elevated formaldehyde in the Chinese-made wood flooring imported by Lumber Liquidators, all manufacturers and importers of consumer products containing compressed wood need to ensure that their products comply with the California Air Resources Board (CARB) limits regarding formaldehyde emissions.  And while the formaldehyde limits now only apply to products sold in California, those limits are soon to become the law nationwide, as EPA is finalizing regulations (expected by the end of the year) that largely parallel the CARB regulations.  The EPA regulations are being promulgated under 2013 amendments to the Toxic Substances Control Act.  All consumer goods that contain hardwood plywood (HWPW), particleboard (PB), medium density fiberboard (MDF) are affected.

Reasonable Prudent Precautions

For importers of HWPW, PB and MDF and finished products containing these materials, the Airborne Toxic Control Measures (ATCM) imposes no obligation to test, but importers must take “reasonable prudent precautions” to ensure that the products are compliant, which at a minimum, requires the importer to instruct (in writing) each supplier that the goods it supplies to the importer comply with the applicable emission standards, and obtain written documentation from each supplier that this is so. ATCM § 93120.6(b). In addition to certification from the supplier that all composite wood components are CARB 2 compliant, it would be advisable to require suppliers of products with composite wood components to provide copies of test reports that demonstrate CARB 2 compliance. Since the manufacturer is required to test for CARB 2 compliance, those test reports should be available – if not available, that should at least raise a red flag.

Recordkeeping Requirements

Importers of finished goods containing composite wood components must maintain records showing the date of purchase and the supplier of each shipment of goods containing HWPW, PB or MDF and document the precautions taken to ensure that the composite wood in the finished goods comply with applicable emission standards. These records must be kept in electronic of hard copy form for a minimum of two years and provided to CARB or local air district personnel upon request. ATCM § 93120.6(b).

Statement of Compliance

For each composite wood product or finished good made with composite wood, the importer must state on the bill of lading or invoice that the composite wood products or components comply with the CARB 2 emission standards.

Facility Inspections

Importers may be inspected by CARB or local air district personnel. In the course of an inspection, the importer may be subject to a records audit and product sampling.

Verification Testing

As noted above, there is no requirement that importers conduct independent testing of composite wood components of finished goods. Nonetheless, an importer of composite wood products or finished goods with composite wood components is still at risk for penalties even if it takes the “reasonable prudent precautions” described above. Those reasonable prudent precautions may serve to mitigate penalties levied by CARB, but penalties could still be levied if CARB were to determine that the composite wood is not compliant despite the certification and test reports provided by the supplier.  As a result, it may help to further mitigate potential liability to conduct some independent testing to confirm compliance.

In addition to the potential liability Lumber Liquidators is facing regarding alleged CARB emissions noncompliance, the Justice Department recently announced that it is investigating whether the Company violated the Lacey Act by importing endangered species of wood and the U.S. Consumer Product Safety Commission (CPSC) is investigating whether the Company’s products run afoul of CPSC regulations.

If you are a manufacturer or importer of consumer products that contain wood, it is important that you understand the laws and regulations that affect your products.  In the wake of the investigations surrounding Lumber Liquidators, your products are in the regulatory spotlight.

Elliot Belilos represents companies in the areas of product safety and compliance.  You can reach him at ebelilos@ofwlaw.com.

John Block: Raisins

By John R. Block

The U.S. Supreme Court decides a lot of very serious, high-profile cases – gay marriage for example. However, recently, they heard one about raisins. Yes – raisins.

The Raisin Program dates back to the Great Depression of the 1930s. President Roosevelt cut the production of many farm products to reduce surplus and raise farm prices. My grandfather told me that they even killed baby pigs.

In the recent case, almost 80 years later, the government came to get raisins from the Marvin Horne farm in California. He said “no.” They fined him $700,000 and now they are in court. Under the Raisin Program, the annual crop is reviewed by the Raisin Administrative Committee. Then, the Department of Agriculture decides what percent of the farmer’s crop must be handed over to the government. The government can then give raisins to the School Lunch Program or maybe sell them and give the farmer some of the money.

Justice Breyer argued, “The government was not taking the raisins and giving the farmer nothing. He benefited from higher prices.”

Conservative Justices consider the Raisin Program to be an unconstitutional taking of private property without just compensation. Justice Roberts complained, “You come up with the truck and you take their raisins – probably in the dark of night.”

Justice Kagan pointed out, “We think this is a ridiculous program, but the ridiculousness or sensibleness of a program is not for us to decide.”

The court verdict should be announced by July. Now, to set the record straight – we have had government production control programs for years and years. Most of those control programs have been eliminated, but not all. A few years ago, the “UglyRipe® tomato,” grown in Florida, was not allowed to be sold out of that state. OFW Law was asked by a company growing the UglyRipe® tomato to help them. The Tomato Marketing Order that they were under would not allow them to sell the UglyRipe® tomato in any other state – just Florida. I did work with the USDA and eventually they lifted the Order. I saw UglyRipe® tomatoes in the supermarket here in Virginia last week.

I am not a big supporter of these government control programs. Maybe they served a purpose in the Great Depression. That’s not today. We have moved beyond that. Let the free market work.

What would your reaction be if the government came and took some of your corn after you harvested it?

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

Hand Washing: A Simple Step

By Barbara J. Masters, D.V.M.

How many of you have ever sat in a public location, such as the airport, and watched the number of people that enter the restroom talking on their cell phone?  Creepy, huh?  Not nearly as creepy as the same number of people that exit a very short time later still talking on their cell phone.  I always question how they washed their hands.

According to the Center for Disease and Prevention (CDC), “Washing hands prevents illnesses and spread of infections to others.”  It is a simple step we can all take before, during, and after preparing food, before eating, after using the toilet or assisting a child use the toilet, after blowing your nose, coughing, or sneezing, after touching animals or animal food or animal waste, and after touching garbage.  Washing hands keeps them clean and prevents the spread of bacteria that can make people sick.

It is especially critical to wash your hands when preparing food to prevent the spread of common foodborne bacteria such as E. coli O157:H7 and Salmonella.  To wash your hands, use soap and warm water and lather your hands for at least twenty seconds.  It is important to get the back of your hands, between fingers and under your nails.  If you are not certain how long twenty seconds is, hum “Happy Birthday” two times while washing.

If you are out on a picnic or do not have access to soap and water, then use of a hand sanitizer can be substituted.  If you must use a sanitizer, first wipe hands with a paper towel or a napkin to remove the visible dirt.  Then apply the sanitizer and rub hands together until the sanitizer dries.

The CDC has promotional materials that can be utilized to encourage hand washing at your work site or in schools.  Clean hands are a simple step we can all take to improve public health.

About Dr. Masters

Mixed in with the attorneys at OFW Law is the former USDA Food Safety Inspection Service’s (FSIS) Administrator, Dr. Barbara Masters.  Dr. Masters is a veterinarian who spent eighteen years with FSIS – the final three years as Acting Administrator and Administrator.  During her rise to the Administrator’s position, Dr. Masters served as the Deputy Assistant Administrator for Office of Field Operations.  While in these key leadership positions at FSIS, Dr. Masters’ primary focus was on the implementation of science-based policies for the protection of public health.

Clearing Up Confusion: The Net Quantity of Contents Declaration on Food Labels

By Robert A. Hahn

The FDA’s food labeling regulations include some traps for the unwary.  A few of those traps have to do with the net quantity of contents declaration.

Here are a couple of points to keep in mind when declaring a food product’s net contents:

  • When the net contents declaration is expressed in terms of weight, FDA requires that the declaration include the words “Net weight” or the abbreviation “Net Wt.” However, when the net contents is expressed in fluid measure or numerical count, use of the words “Net” or “Net Contents” is optional.  21 C.F.R. § 101.105(j)(3), (n).  NOTE: In 1993, FDA proposed to remove the requirement to include the words “Net Weight” or “Net Wt,” but the proposed rule was withdrawn in 2004.  See 58 Fed. Reg. 29716, 29724 (May 21, 1993) and 69 Fed. Reg. 68831 (Nov. 26, 2004).  FDA’s current position is that the prefatory language “Net weight” or “Net Wt” is required when the net contents is expressed in terms of weight.  The abbreviation “Net Wt” is frequently presented in all upper case letters, e., “NET WT.”
  • Although FDA regulations continue to provide that a separate statement of the net contents in metric measure is optional (21 C.F.R. § 101.105(p)), the fact is that the net contents declaration, with very limited exceptions for random weight packages and for foods packaged in a retail store, must be expressed in both avoirdupois measure (g., ounce, pound, fluid ounce, pint, quart) and metric measure (e.g., milligram, gram, milliliter, liter). The Fair Packaging and Labeling Act (FPLA) was amended in 1992 to require use of metric measure (15 U.S.C. § 1453(a)(2)), but FDA has never amended its regulations to implement this statutory change.  Nevertheless, the FPLA is the law.
  • FDA requires that the net contents declaration use the largest appropriate unit of measure.  For example, 24 oz should be expressed as “1.5 lb,” “1 ½ lb,” or “1 lb 8 oz,” and 1,100 mL should be expressed as “1.1 L.”  Again, the FPLA was amended to require use of the largest appropriate unit of measure, but FDA has not amended its own regulations to reflect the statutory change.  NOTE: “Dual avoirdupois” declaration (i.e., expressing the net contents in avoirdupois measure using both the largest appropriate unit of measure and ounces or fluid ounces, as, for example, “1.5 lb (24 oz) 680 g”) is permitted as an option to facilitate value comparisons by consumers.

Recapping Round 1 of the Vermont GMO-Labeling Lawsuit

By John G. Dillard

Millions across the globe tuned into this weekend’s Mayweather-Pacquiao bout, which was billed as “the fight of the century.” However, the pay-per-view event was not the only high stakes fight to report on from last week. Far away from the glitz and glamor of Las Vegas, a federal court in Vermont issued a much-anticipated opinion in what will be one of the true fights of the century for the American food industry – whether state governments can mandate GMO labels.

On April 27, 2015, Chief Judge Christina Reiss of the U.S. District Court for the District of Vermont issued an opinion that mostly favored the State of Vermont and the positions of GMO-labeling advocates. In the case, Grocery Manufacturers Association v. Sorrell (No. 5:14-cv-117), the Grocery Manufacturers Association, Snack Food Association, International Dairy Foods Association, and National Association of Manufacturers (the “Plaintiffs”) are challenging Vermont’s Act 120, which requires that certain foods sold at retail stores in Vermont bear mandatory labeling if they contain genetically-engineered ingredients. Act 120 also prohibits manufacturers from advertising or labeling foods that contain genetically-engineered ingredients as “natural” or “all natural.”

Both supporters and opponents of mandatory GMO-labeling have been keeping a close eye on this lawsuit. This is because Act 120, if it survives litigation, will make Vermont the first state in the country to require that certain foods containing ingredients produced with genetic engineering bear mandatory labels. GMA v. Sorrell is the test case for this issue, which will certainly reach the Second Circuit Court of Appeals and, possibly, the Supreme Court.

The Plaintiffs challenged Act 120 from several angles. First, the Plaintiffs asserted that Act 120’s GMO-labeling mandate was unconstitutional under both the First Amendment and the Constitution’s Commerce Clause. The Plaintiffs also argued that the GMO-labeling mandate was preempted by the Federal Food, Drug, and Cosmetic Act (FFDCA), the Nutritional Labeling and Education Act (NLEA), the Federal Meat Inspection Act (FMIA), and the Poultry Products Inspection Act (PPIA). Furthermore, the Plaintiffs asserted that the ban on “natural” labeling is unconstitutional under the Commerce Clause and the First Amendment.

The State of Vermont filed a motion to dismiss the Plaintiffs’ case on August 8, 2014. Subsequently, the Plaintiffs sought a preliminary injunction that would halt implementation of Act 120 while the Court decides whether to issue a permanent injunction invalidating Act 120. Chief Judge Reiss heard oral arguments on both of these motions on January 7, 2015, and issued an 84-page opinion in the case last Monday.

GMO-Labeling Mandate

The Plaintiffs challenged Act 120’s GMO-labeling mandate under the First Amendment, Commerce Clause, and Supremacy Clause. Here is how the Court addressed these issues:

  • First Amendment. The Plaintiffs alleged that Act 120’s GMO-labeling mandate violated the First Amendment’s protections against unlawfully-compelled speech. The Court held that “strict scrutiny” was not warranted in this case and dismissed the Plaintiffs’ complaint to the extent that it argued strict scrutiny applied. Instead, the Court held that the proper standard is most likely the “reasonable relationship” test. Under this test, also known as the Zauderer test, the Court held that for the purposes of preliminary injunction, the Plaintiffs were not likely to succeed on their First Amendment complaints. The Court reasoned that unless Vermont’s “legislative findings” prove unfounded at the permanent injunction stage of this litigation, the State has demonstrated a reasonable relationship between the state’s interest and the GMO-labeling mandate.
  • Commerce Clause. The Plaintiffs argued that Vermont’s labeling measure violates the Constitution’s Commerce Clause because the state-based labeling measure would create an undue burden on interstate commerce, ultimately resulting in a 50-state patchwork of labeling laws. The Court was not convinced, noting that there were no other states with conflicting labeling laws. The Court dismissed the Plaintiffs’ complaint to the extent that it alleged the GMO-labeling mandate was unconstitutional under the Commerce Clause.
  • Supremacy Clause. The Plaintiffs asserted that the GMO-labeling mandate was preempted by the FFDCA, NLEA, FMIA, and PPIA. The Court was not convinced by the Plaintiffs’ arguments with regards to the FFDCA or the NLEA. However, the Court agreed that the FMIA and PPIA expressly preempted state standards for “[m]arking, labeling, packaging, or ingredient requirements in addition to, or different than, those mandated by federal law.” This means that processed and packaged foods that are subject to USDA inspection, such as canned soups or frozen dinners containing meat or poultry products, cannot be subject to state GMO-labeling mandates. Vermont has already conceded this issue in its final rule, which implements Act 120.

“Natural” Labeling Prohibition

The Plaintiffs also challenged Act 120’s prohibition on advertising and labeling of products containing genetically-engineered ingredients as “natural,” “all natural,” or words of similar import. The Plaintiffs argued that this prohibition violated the First Amendment. The Court sided with the Plaintiffs on the First Amendment argument, reasoning that prohibitions on commercial speech are subject to “intermediate scrutiny” under the Central Hudson test. The Court held that Vermont has failed to demonstrate a “substantial” state interest in prohibiting these labels. The Court also held that the “natural” labeling prohibition violated the Commerce Clause to the extent that it attempted to regulate advertising that occurred outside of Vermont.

Although the Court largely sided with the Plaintiffs on the “natural” labeling prohibition, Chief Judge Reiss did not grant a preliminary injunction on this matter, citing to a lack of proof of “irreparable harm” on the part of the Plaintiffs.

Next Steps

This first round of the litigation is certainly a setback for those in the food industry that oppose state-level GMO-labeling mandates. However, this is only the first round. The Plaintiffs have not announced their next steps. At this point, they may either (1) seek an interlocutory appeal of this decision at the Second Circuit Court of Appeals, or (2) move forward to the permanent injunction stage of this litigation.

In the meantime, support is growing for the proposed Safe and Accurate Food Labeling Act of 2015, which would preempt state GMO-labeling measures and set standards for when GMO labels could and could not be required. However, no votes have been taken on this measure and it is uncertain whether the measure has a chance of being enacted into law.

OFW Law will continue to monitor developments in this case.