Canada, Mexico Think U.S. Labeling Requirements are un-COOL

By John G. Dillard

The United States has irked its neighbors with a meat labeling mandate that may have the effect of discriminating against Canadian and Mexican livestock.  The Canadian and Mexican governments believe that USDA’s new mandatory Country-of-Origin-Labeling (mCOOL) Rule is a thinly-veiled technical trade barrier that will be devastating to their respective livestock sectors, which are dependent on U.S. trade.

Sample COOL label, as mandated by USDA.

Sample COOL label, as mandated by USDA.

In an effort to pressure USDA to not implement the new mCOOL rule, Canada and Mexico have requested the World Trade Organization (WTO) to establish a compliance panel to sign off on a number of politically-charged retaliatory tariffs that they can bring to bear if USDA does not scrap the new rule.  This is the latest development in an ongoing controversy that has chilled livestock trade between our neighbors for the last few years.

mCOOL’s Origins

The 2002 Farm Bill contained a provision requiring USDA to develop rules that require certain meat packages to bear a label indicating the country of origin for meat sold at retail establishments.  However, Congress did not authorize funding for USDA to carry out this rulemaking.  The 2008 Farm Bill amended the labeling provision to its current form, which created four COOL categories (Product of US, Multiple Countries of Origin, Imported for Immediate Slaughter, and Foreign Country of Origin).

Based on these new categorizations and a lift on the funding ban, USDA released a final rule in 2009.  The 2009 Rule required labels stating “Product of the U.S” if the packaging contained strictly meat from livestock that were born, raised and slaughtered in the United States.  If the packaging contained meat with commingled origins, the packaging was required to state “Product of the U.S./Canada” or “Product of U.S./Mexico.”

The Canadian and Mexican governments did not take kindly to the 2009 mCOOL Rule.  They filed a complaint with the WTO, arguing that USDA’s rule discriminated against foreign livestock by favoring U.S.-origin meat products.  The WTO panel agreed.  In June 2012, the WTO appellate body issued a report finding that the 2009 rule was not in compliance with the United States’ obligations under the WTO.  They ordered USDA to issue new regulations that would bring it into compliance.

The 2013 mCOOL Rule

USDA followed the order to issue new mCOOL regulations, but it’s not apparent that it took the WTO’s ruling to heart.  The new mCOOL Rule further discriminates against foreign livestock by banning the practice of comingling products with a different country or origin in a single package.  Under the new rule, U.S.-only products must bear a label stating “Born, Raised, and Slaughtered in the United States.”  Packaging containing meat products from Canadian or Mexican cattle that are fed and slaughtered in the U.S. must be labeled “Born in Canada (or Mexico), Raised and Slaughtered in the U.S.”  Foreign fed cattle shipped to the U.S. for slaughter must be labeled “Born and raised in Canada (or Mexico), Slaughtered in the U.S.”

The labeling requirements and the ban on commingling of packaged product is likely to create a logistical nightmare for some packers and retailers.  Packers near our northern and southern borders will be required to segregate livestock and maintain several different production runs based on the COOL label categorizations.  Distributors and retailers will also be required to handle a bevy of new SKUs to accommodate the new labeling requirements.  Many experts believe that the end result of the labeling scheme will be that packers will favor U.S.-origin livestock, and aggressively discount foreign-born livestock to reduce the costs of compliance with the 2013 mCOOL Rule.

In addition to facing scrutiny under the WTO, the logistical difficulties of implementation and compliance with the 2013 mCOOL Rule are also the subject of litigation in the U. S. District Court for the District of Columbia.  In the case, American Meat Institute v. USDA, a group of trade associations representing packers, domestic livestock producers, and Mexican and Canadian livestock producers are seeking to overturn the 2013 mCOOL Rule.  (Disclosure: OFW Law represents a client in this matter).  The groups oppose the new rule on the basis that the law compels commercial speech in violation of the First Amendment and that it is “arbitrary and capricious” under the Administrative Procedure Act.  A federal judge heard oral arguments for a preliminary injunction in this case on August 27th.  We expect to hear a decision on the case within the next two weeks.

WTO: Round 2

Anticipating heavy losses to their respective livestock industries, the Canadian and Mexican governments compiled an extensive list of retaliatory tariffs that they wish to enact.  In addition to instituting tariffs on U.S. livestock and meat products, the Canadian government has identified products from influential legislator’s districts, in hopes of exerting maximum pain on those with the power to repeal mCOOL.  This list includes wheat products, such as cereal, bread and pasta, cheese, sugar, some steel products, jewelry, and wooden furniture.  The Mexican government is expected to announce similar politically-motivated tariffs in the near future.

Before the Canadian and Mexican government can implement these retaliatory measures, they must receive approval by the WTO.  They have requested that the WTO’s Dispute Settlement Body (DSB) form a compliance panel to evaluate their proposed tariffs.  The DSB, which meets this Friday (8/30), will decide whether to form a compliance committee.  If the Canadian and Mexican governments receive approval for retaliatory tariffs, it will likely be 18 to 24 months before they are implemented.

With the proposed tariffs looming in the future, Congress and USDA may begin to question whether mCOOL is more trouble than it is worth.  Or at least that is the hope of our neighbors and trade partners.

PEW Report’s Mischaracterization of GRAS Process Leads to Questionable Conclusions

By Mark L. Itzkoff

As someone who has worked with numerous food companies on food additive and GRAS issues for 25 years, I read with interest the August 7, 2013, article, Conflicts of Interest in Approvals of Additives to Food Determined to Be Generally Recognized as Safe, in JAMA Internal Medicine.  The article reports on a study conducted by the Pew Charitable Trusts (Pew) on conflicts of interest in the determination of GRAS (generally recognized as safe) status of food ingredients.  Pew is currently conducting “a comprehensive assessment of the FDA’s regulatory oversight of chemicals added to food” and has called for a reconsideration of the GRAS process.

The study, which was covered by USA Today and other mass media, raises some important issues regarding the process used to establish GRAS status, such as the over-reliance on a limited number of experts to make GRAS determinations.  However, the study’s conclusion that “there is a lack of independent review in GRAS determinations” appears to be based on a misunderstanding of how GRAS status is established.  The author overestimates the discretion of expert panels who evaluate the information used to make GRAS determinations.

Under the Federal Food, Drug, and Cosmetic Act (FFDCA), a “food additive” may not be used as a food ingredient unless the additive has been cleared by FDA for such use under an applicable food additive regulation.  However, a substance that is “generally recognized, among experts …, as having been adequately shown through scientific procedures … to be safe under the conditions of its intended use” is not a food additive and, therefore, not subject to the mandatory pre-market clearance for food additives.  Such substances are commonly referred to as GRAS (generally recognized as safe).

A GRAS determination made by a food ingredient supplier prior to marketing a new food ingredient or marketing an ingredient for a new application is commonly called a “GRAS self-determination.”  The supplier may market the ingredient based on the self-determination without any interaction with FDA, or may voluntarily submit a GRAS Notification to the agency.  In either case, a GRAS determination will often include the opinion of an “expert panel.”

The PEW study reviewed the 451 GRAS Notifications that have been submitted to the Food and Drug Administration (FDA) under the GRAS Notification Program since the inception of that program in 1997.  Unsurprisingly, the authors found that all of the safety determinations had been made by either an employee of the manufacturer, an employee of a consulting firm hired by the manufacturer, or an expert panel selected by either the manufacturer or the consulting firm.  The authors concluded that this relationship results in a conflict of interest.

It is important to understand the role of the expert panel in preparing the GRAS determination.  The panel has two responsibilities: (1) to determine that published information on the food ingredient and similar compounds, both positive and negative, is sufficient to conclude that the proposed use of the food ingredient is safe, and (2) to determine whether there is a consensus among qualified experts regarding the safety of the ingredient.  See FDA, Substances Generally Recognized as Safe; Proposed Rule (GRAS Proposal), 62 Fed. Reg. 18938 (April 17, 1997). Neither the panel nor its members conduct the actual safety studies or write the articles on which the panel’s determination is based.

The Pew report gives the impression that food manufacturers make GRAS determinations without any independent review.  In the Pew Trusts article, the authors state that “[t]o qualify for a GRAS determination, manufacturers of additives must conclude that the use of the additive is safe.”

What the authors do not take into account is the fact that the safety evaluation in a GRAS determination must be based on peer-reviewed data that has been published in scientific journals.

Before an article is published in a peer-reviewed journal, it is examined by independent experts in the same field.  When the article reports on scientific studies, such as toxicology studies, the experts review the study methodology, test data, and validity of any conclusions reached in the article.  This is similar to the review that would be performed by FDA if the study were submitted to support a food additive petition.  Thus, contrary to Pew, the data used to support a GRAS determination is subject to independent review before it is even considered by the expert panel.

Further, the expert panel has limited discretion when evaluating the sufficiency of the available data.  The minimum data requirements for food ingredient applications are set forth in FDA regulations and guidance documents.  A substance is not GRAS unless there is sufficient published toxicology data to meet these requirements.

The Pew study also concludes that employees of manufacturers or consulting firms selected by the manufacturer have significant discretion “especially if safety data are limited.”  However, under FDA requirements, the expert panel has very limited discretion, particularly when only limited data is available.  FDA regulations require that GRAS status be based on “the same quantity and quality of scientific evidence as is required to obtain approval of a food additive regulation …”  21 C.F.R. § 170.30(b).  For a food additive petition, i.e., a petition asking FDA to approve a new food additive, the requirements are published in Guidance for Industry and Other Stakeholders Toxicological Principles for the Safety Assessment of Food Ingredients, commonly called “The Redbook.”  For added clarity, the minimum toxicology data required to demonstrate the safety of a new food additive, and therefore the GRAS status of a food ingredient, is detailed in Section III of the Redbook and summarized in Guidance for Industry: Summary Table of Recommended Toxicological Testing for Additives Used in Food.  Thus, the toxicology data required before a substance may be deemed to be GRAS are clearly set forth, and the members of the expert panel reviewing the data actually have limited, if any, discretion.

Finally, under the definition of conflict of interest used in the Pew study, any person who works for an ingredient supplier or a consulting firm hired by the ingredient supplier has a conflict of interest.  The only logical conclusion to be drawn from this definition of conflict of interest is that it is necessary to eliminate GRAS “self-determinations,” so that all decisions on the safety of food ingredients would need to be made by FDA.  Not only is this inconsistent with the definition of “food additive” in the FFDCA, it would also place a major new responsibility on an agency with limited resources, and would likely result in a return to the near glacial pace of GRAS affirmations experienced in the late 20th century.

“Gluten-Free” Now Has an Official FDA Definition

By Robert A. Hahn

FDA has published a final rule defining the term “gluten-free” for voluntary use in food labeling.  Food labels will have to comply with the new regulatory definition starting August 5, 2014, roughly ten years after Congress directed FDA to define “gluten-free” in the Food Allergen Labeling and Consumer Protection Act of 2004 (FALCPA).

The “gluten-free” definition is intended to assist consumers with celiac disease who must avoid gluten.  However, “gluten-free” foods have recently become popular with a larger audience, including individuals who are said to be gluten intolerant or gluten sensitive.

The final rule keeps the proposed rule’s requirement that “gluten-free” foods contain less than 20 parts per million (ppm) of gluten.  Here are the main features of the final rule:

  • The “gluten-containing grains” are wheat, barley, and rye, as well as crossbred hybrids of those three grains (e.g., triticale, a cross between wheat and rye).
  • Oats are not a gluten-containing grain.  However, because of the risk of commingling with wheat, barley, and rye, manufacturers of “gluten-free” foods should ensure that any oat-derived ingredients they use contain <20 ppm gluten.  In addition, since some individuals with celiac disease cannot tolerate oats, FDA encourages manufacturers to identify any oat-derived ingredients in “gluten-free” foods that do not use the word “oats” in their name (e.g., beta glucans derived from oats).
  • “Gluten-free” means that either: (1) the food and its ingredients are inherently free of gluten, and any gluten present in the finished food is <20 ppm; or (2) the food contains ingredients derived from gluten-containing grains that have been processed to remove gluten (e.g., wheat starch), and any gluten present in the finished food is <20 ppm.
  • A “gluten-free” claim may not be made if: (1) the food contains a gluten-containing grain (e.g., wheat); (2) the food contains an ingredient derived from a gluten-containing grain that has not been processed to remove gluten (e.g., wheat flour); or (b) the food contains more than 20 ppm gluten, regardless of how it got there.  Thus, FDA will not allow a “gluten-free” claim where the finished food, as opposed to an ingredient, has been processed to remove gluten.
  • FDA strongly prefers that “gluten-free” foods use the claim “gluten-free,” but will accept use of certain equivalent terms (“no gluten,” “free of gluten,” and “without gluten”).  Other truthful and non-misleading statements about gluten may also be made, including:
    • A  statement of the amount (or maximum amount) of gluten in the food;
    • A certifying organization’s seal or logo; and/or
    • A statement such as “not made with gluten-containing ingredients.”

The final rule, unlike the proposed rule, does not require foods that are inherently free of gluten to bear a qualifying statement (e.g., “milk is inherently gluten-free”).

  • Some ingredients derived from wheat (e.g., some modified food starches) that have been processed to remove gluten may still be subject to allergen labeling due to the presence of wheat protein.  If a food labeled “gluten-free” uses the term “wheat” in its ingredients list or allergen label statement (e.g., “Contains wheat”), the word “wheat” must be followed by an asterisk (or other symbol) that refers to the following statement in close proximity: “The wheat has been processed to allow this food to meet the Food and Drug Administration (FDA) requirements for gluten-free foods.”
  • FDA acknowledges there are currently no scientifically valid tests for gluten in fermented or hydrolyzed foods.  FDA intends to issue a separate proposed rule addressing how it will evaluate compliance when such foods bear “gluten-free” claims.
  • The final rule applies to all FDA-regulated human food, including dietary supplements and restaurant foods.  It does not apply to food for animals.  FDA is working with the U.S. Department of Agriculture and the Alcohol and Tobacco Tax and Trade Bureau to ensure consistency among the three agencies’ “gluten-free” definitions.
  • FDA states that there is federal preemption of State and local laws defining “gluten-free” differently than FDA’s final rule.  However, State and local governments are not preempted from establishing labeling requirements for gluten that do not obstruct the federal purpose, such as a requirement for a warning statement about the health effects of gluten for persons with celiac disease.

FDA also promises to issue a guidance document about the testing methods it will use for compliance purposes.

FDA Tells Food Importers How It Wants Them To Verify the Safety of the Foods They Import

By Robert A. Hahn and David L. Durkin

FDA has published two proposed rules to implement to provisions of the Food Safety Modernization Act (FSMA) related to the safety of imported foods.

See our memoranda on these two new proposed rules here and here.

One of the most important aspects of FSMA is the new approach it takes to ensuring the safety of imported foods.  FDA officials have accurately described the change in how FDA regulates imported foods as a paradigm shift.  Instead of relying primarily on inspection of imported foods at the port of entry, FDA will try to ensure the safety of imported foods before they reach U.S. shores.  FSMA does this by requiring foreign producers to implement food safety plans (and requiring foreign farms to meet safety standards for fresh produce).

But, who will verify compliance by foreign manufacturers and food farms that export to the U.S.?  FSMA requires FDA to increase the number of foreign inspections it performs, but FDA inspections will never reach most exporting facilities.  The two proposed rules published this week explain how FDA will ensure compliance by “foreign suppliers”:

  • The FSVP rule will require U.S. importers to verify their foreign suppliers; and
  • The Third-Party Auditor/Certification Body rule will create a system for audits of foreign facilities by private auditors/certification bodies and accreditation of those auditors by FDA-recognized accreditation bodies.   Actual audit standards await the development of FDA guidance documents.  Certification of foreign suppliers by an accredited auditor/certification body may then be used by importers as a verification tool under the FSVP rule.

Below are some noteworthy features of the two proposed rules:

  • The “importer” would be defined as the U.S. owner or consignee of the imported food at time of entry.  If there is no U.S. owner or consignee, the importer would be the designated U.S. agent or representative of the foreign owner or consignee.  Earlier reports that FDA would hold the importer of record responsible for foreign supplier verification turned out to be incorrect.
  • How will FDA know who is the “importer” for each article of imported food?  For each line entry of food, the importer would be required to ensure that its name and DUNS (Dun & Bradstreet Data Universal Numbering System®) number are provided electronically when filing entry with Customs.
  • For most imported foods, the importer would be subject to a host of new requirements, including requirements to:

–         Develop an FSVP;

–         Maintain a written list of all its foreign suppliers;

–         Review the compliance status of each imported food and foreign supplier (e.g., by reviewing FDA Warning Letters and Import Alerts);

–         Conduct a hazard analysis for each imported food to identify hazards reasonably likely to occur in that food;

–         Establish and follow written procedures for conducting foreign supplier verification activities;

–         Review all complaints, investigate instances of adulteration and misbranding, and take corrective actions;

–         Conduct a reassessment of the FSVP every 3 years; and

–         Maintain a long list of required FSVP documents, make them available to FDA upon request, and send them to FDA electronically upon written request.

  • FDA appears to believe that onsite audits are the “gold standard” for supplier verification.  In the FSVP proposed rule, FDA is considering requiring annual onsite audits of foreign suppliers if the food being imported is one involving a hazard that poses a risk of serious adverse health consequences.   In the preamble, FDA even hints that it might revisit the requirements for importers of seafood and juice products in its HACCP regulations and require annual onsite audits of foreign suppliers of those products.
  • In the preamble to the FSVP proposed rule, FDA states that it “intends to align regulations implementing supplier verification under section 419 [preventive controls] and regulations implementing FSVP under section 805 to the fullest extent.”  This suggests that some supplier verification requirements are likely to be included in the final rule on preventive controls for human food, even though they were not in the proposed rule.
  • How will FDA use certifications issued by accredited third-party auditors/certification bodies?  FDA will use them to: (1) establish a foreign facility’s eligibility to participate in the Voluntary Qualified Importer Program (VQIP), participants in which will benefit from expedited import processing; and (2) admit imported foods that require certification as a condition of admission.  In addition, FDA proposes to allow importers to use regulatory audits of foreign suppliers by an accredited auditor/certification body to meet their FSVP requirements.
  • Given these limited uses, foreign companies should not assume they will need to be audited and certified by an accredited auditor/certification body.  In fact, the Third-Party Auditor/Certification Body proposed rule carries no effective date.  It seems the system it creates would only have to come into play if FDA makes a determination that specific food imports require certification by an accredited auditor/certification body as a condition of admission under Federal Food, Drug, and Cosmetic Act (FD&C Act) § 801(q).

When a foreign facility is audited by an accredited auditor/certification body, FDA will receive copies of the audit report (for regulatory audits only) and lab test results, as well as notice of any serious food safety issues. Under the Third-Party Auditor/Certification Body proposed rule, accredited auditors/certification bodies would be required to report to FDA any conditions presenting a serious risk to public health identified during a food safety audit of a foreign entity. Auditors/certification bodies would also be required to send copies of their regulatory audit reports to FDA within 45 days of completing an audit.  FDA says it will “use information from such audits for other related purposes in enforcing the FD&C Act.”  Finally, auditors/certification bodies would be required to use accredited laboratories, and FSMA requires accredited labs to report test results directly to FDA.

Adverse Event Reporting for Medical Devices and the Law: Where Has FDA Gone Wrong?

By Evan P. Phelps and Mason Weeda

On September 27, 2007, President George W. Bush signed into law H.R. 3580, the Food and Drug Administration Amendments Act of 2007 (“FDAAA”).  FDAAA both enhances and curtails FDA’s authority in many respects.  Specifically, FDAAA removes a requirement that  manufacturers of Class I devices and Class II devices that are not permanently implantable, life supporting, or life sustaining submit individual malfunction reports to FDA under 21 C.F.R. Part 803.  To date, FDA has not put as much effort into complying with this element of FDAAA as it has with those portions of the law that enhance its own authority.

Prior to FDAAA’s enactment, the Federal Food, Drug, and Cosmetic Act (FDCA) required manufacturers of all classes of devices to regularly report individual device-related adverse events that meet the definition of a “MDR reportable event.” MDR reportable events include, among others, instances where a device has malfunctioned in a way that would be likely to cause or contribute to a death or serious injury if the malfunction were to recur. 21 C.F.R. § 803.3.  As not all device malfunctions are considered an MDR reportable event, manufacturers must evaluate each malfunction to determine if it is reportable.

To comply with the malfunction event reporting requirement, all medical device manufactures are supposed to establish systems and procedures for monitoring and evaluating product complaints and other forms of device performance feedback from the field on an ongoing basis to identify, investigate, and report device malfunctions meeting the definition of an MDR reportable event. Moreover, this process must be completed within a specific timeframe dictated by the agency, and FDA focuses significant enforcement attention on compliance with these requirements.  As a result, maintaining a compliant MDR system can cause a significant burden on the part of manufacturers.

FDAAA did away with the traditional malfunction event reporting requirement for manufacturers of Class I devices and Class II devices that are not permanently implantable, life supporting, or life sustaining.  Instead, these manufacturers are required to submit summary reports to be made on a quarterly basis.  FDCA § 519(a)(1)(B)(ii).  FDAAA included with the above change a provision to allow FDA to retain regular per-event reporting standard for certain devices only if FDA provides notice that such devices would continue to be subject to 21 C.F.R. Part 803 “in order to protect the public health.” FDCA § 519(a).

If a manufacturer never read § 519, it would have no reason know that anything has changed.  FDA never issued notice contemplated by Congress.  Instead, FDA issued a Federal Register Notice that, until it provides further notice, all classes of devices need to comply with Part 803 “in order to protect the public health.”  See 76 Fed. Reg. 12743 (Mar. 8, 2011).  More recently, FDA still indicated that it will provide such a list, but gave no indication of when such a list will be published.  CDRH, FDA, Draft Guidance For Industry and Staff: Medical Device Reporting for Manufacturers (July 9, 2013).

Although this issue has not drawn much attention, it is questionable whether FDA has authority to enforce its current policy that requires all manufacturers of all device classes to report malfunctions on a per-event basis. Clearly FDA has enforced this broader policy against device manufacturers to which Congress intended to provide relief.  See e.g. FDA Warning Letter to Church & Dwight, Inc. (May 16, 2011). Administrative agencies are allowed deference in certain circumstances in interpreting and administering a statute.  However, a court “must give effect to the unambiguously expressed intent of Congress,” pursuant to Chevron, U.S.A. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 842-43 (1984).  Here it is clear that Congress intended that certain Class I and II device manufacturers would be exempt from reporting malfunctions on a per-event basis.  It is also clear that Congress allowed FDA authority to create an exception for certain devices.  However, FDA’s current policy, which has been in effect for approximately six years, clearly flies in the face of Congressional intent.

It is interesting that FDA has effectively ignored the §519 provision in a time where FDA pleads for more government dollars due to a lack of resources.  Instead, it appears that FDA, for the foreseeable future, will continue to enforce individual malfunction event reporting for all and continue to maintain a burden on itself and the industry that Congress does not believe is necessary.