Regulatory Issues: COOL rules finally issued
The country of origin law applies only to commodities, not processed foods.
By By David Joy, Contributing Editor | 10/07/2004
USDA recently issued a long-awaited interim final rule on country of origin labeling for fish and shellfish. In case you have not been closely following all the back-and-forth developments in this area, this may be a good time to review what’s been happening.
Country of origin labeling (often referred to as “COOL”) is by no means a new development. It is required under the Tariff Act of 1930. More specifically, the Tariff Act states “every article of foreign origin... imported into the United States shall be marked in a conspicuous place... to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article.” Regulations issued by the Customs Service (now the Bureau of Customs & Border Protection) have long exempted many food products from the country of origin marking requirement.
The 2002 Farm Bill sought to establish mandatory country of origin labeling for beef, lamb, pork, fish, peanuts and “perishable agricultural commodities.” These are referred to as the “covered commodities.” Under the Farm Bill, retailers
rather than producers of these foods are responsible for informing consumers where the food was produced, i.e.
, the country of origin.
The country of origin must be stated whether the product is domestic or imported. If the country of origin is stated on the label, the retailer’s obligation for that product is met. If not stated on the label (or if there is no label), the retailer must display country of origin information on a placard or sign.
The 2002 Farm Bill directed USDA to issue guidelines for voluntary country of origin labeling no later than September 30, 2002, and to issue regulations to implement the requirement on a mandatory basis by September 30, 2004.
Following enactment of the 2002 Farm Bill and USDA’s issuance of guidelines for voluntary COOL, many in the food industry began to feel that COOL may not be such a great idea. Purely domestic producers of the covered commodities naturally tend to support COOL, while many others oppose it. Opponents of COOL managed to obtain legislative relief in the 2004 Consolidated Appropriations Act. The act delayed the deadline for mandatory COOL from September 30, 2004, to September 30, 2006, for all covered commodities except
wild and farm-raised fish and shellfish. For fish and shellfish, the deadline specified in the legislation has remained September 30, 2004.
Due to the unpopularity of COOL in some quarters, there have been numerous efforts in Congress to modify it. At the time of this writing, one bill, known as the Food Promotion Act of 2004, would repeal the existing mandatory COOL provisions of the 2002 Farm Bill and direct USDA to substitute a voluntary program. The many efforts to repeal or modify COOL have seemingly been influenced in both directions by election-year politics.
Considering the volatility of this situation and the uncertainty about the future of mandatory COOL, USDA should be forgiven for missing by a few days the September 30 deadline for publication of a final rule implementing COOL. USDA published an “interim final rule” in early October. Some things worth highlighting at this stage include:
* Consistent with the 2004 Appropriations Act, the rule USDA has just issued applies only to fish and shellfish. COOL remains voluntary for other covered commodities until September 30, 2006 â€“ subject to any further Congressional modifications.
* USDA states the interim final rule will become effective on April 4, 2005, six months after its publication. It seems reasonable to give affected businesses at least six months to gear up for compliance, but arguably the 2002 Farm Bill established September 30, 2004, as the deadline.
* Only firms licensed as retailers under the Perishable Agricultural Commodities Act of 1930 are subject to the law. According to USDA, this includes 37,000 retail stores, and it excludes butcher shops and fish markets.
* Processed food items are exempted from COOL under the 2002 Farm Bill. USDA’s interim final rule includes a lengthy definition of “processed food item.” If seafood is present in a food that qualifies as “processed” under this definition, there is no need to provide a country of origin information.
* The law includes enforcement provisions applicable to retailers and suppliers featuring civil penalties up to $10,000 for each violation. The law also imposes a recordkeeping obligation on suppliers and retailers so that country of origin information can be substantiated.
USDA’s interim final rule is almost certainly not the last chapter in the COOL saga. Stay tuned to find out whether COOL will become mandatory for the other covered commodities in 2006 or whether the law will be re-written again between now and then. DAVID JOY is a partner at the Washington, D.C. law firm of Keller and Heckman LLP. He specializes in food and drug law with emphasis on the domestic and international regulation of food, food additives, food labeling, antimicrobial pesticides, and medical devices. For more information about Keller and Heckman, visit the firm’s web site at www.khlaw.com.