Vermont Act 120 and Beyond: Genetically Engineered Foods, Where Are We Now?

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Introduction
On July 1, 2016, Vermont’s genetically engineered food labeling law is set to become effective. [1]  Act 120 and its implementing rule (Vermont Consumer Protection Rule 121) require food manufacturers to label food products that are offered for retail sale in Vermont if they are entirely or partially produced with genetic engineering (“GE”). [2]  This is the first law to require food manufacturers to identify the presence of GE ingredients on food product labels.  Despite Act 120’s imminent effective date, nationwide debate over GE labeling continues.  The Vermont law remains the subject of pending litigation in federal court.  At the same time, the U.S. Food and Drug Administration (“FDA”) continues to take the position that GE food that is not materially different from non-GE food does not require labeling as such, and the U.S. Congress and several other states are proposing and debating whether to implement laws similar to Act 120.

Vermont Act 120 and Its Implementing Rule
Act 120 provides specific GE labeling requirements for unpackaged and packaged raw agricultural commodities and processed foods containing GE ingredients that are offered for retail sale in Vermont. [3]  Raw agricultural commodities produced with GE [4] must be labeled “conspicuous[ly]” with “Produced with Genetic Engineering.” [5]  In contrast, processed foods produced with GE must be labeled with either (1) “Produced with Genetic Engineering,” (2) “Partially Produced with Genetic Engineering,” or (3) “May be Produced with Genetic Engineering.” [6]  Furthermore, products requiring GE labeling cannot be labeled or advertised as “natural,” “naturally made,” “naturally grown,” “all natural,” or any words of similar import. [7]  The law, however, does not require GE ingredients to be specifically identified or listed or for a GE phrase to precede or follow the product name. [8]

Not all “foods” fall under Act 120’s regulation.  Act 120 and its implementing rule exempt specific types of foods from the GE labeling requirements, including (1) dietary supplements, [9] (2) animal products unless the product requires labeling because of an additional GE ingredient, (3) foods bearing USDA-approved labels, (4) foods certified as not being produced with GE through a sworn statement, (5) food for immediate consumption, (6) processing aids, (7) alcoholic beverages, (8) foods with minimal genetically engineered content, [10] (9) foods verified by a qualifying organization, and (10) medical foods. [11]  

The “sworn statement” exemption may become the most frequently used method for complying with Act 120.  A sworn statement must affirm that the food “(1) was made or grown from food or seed that has not been knowingly or intentionally produced with genetic engineering and (2) has been segregated from and has not been knowingly or intentionally commingled with food or seed that may have been produced with genetic engineering.” [12]  Sworn statements may be incorporated into other documents, e.g., an invoice, and are valid for only the foods directly referenced therein. [13]  Sellers may rely on the sworn statement of the person from whom they purchased the food without making any further inquiries and need not go further up the supply chain to obtain additional sworn statements. [14]  If a sworn statement is not obtained from the party supplying the food or ingredient, the seller cannot claim the non-GE certification exemption.

If a manufacturer falls under Act 120, it must retain records sufficient to demonstrate its compliance with the law for three years from the date the manufacturer sells the food. [15]  Such documents must demonstrate that (1) the product in question was properly labeled when offered for retail sale, (2) an exemption or exception applied to the product or ingredient in question, or (3) the food is otherwise not knowingly and intentionally produced with GE. [16]

Effective Date and Compliance
Act 120 is scheduled to go into effect on July 1, 2016.  Companies who fail to follow Act 120 and its implementing rule may be subject to fines up to $1,000 per day per store per mislabeled SKU. [17]  Although Act 120 and CP Rule 121 are set to become effective on July 1, 2016, CP Rule 121 created a “safe harbor” for foods produced and distributed by the manufacturer before July 1, 2016, and offered for retail sale through December 31, 2016. [18]  In other words, as provided by the Vermont Office of the Attorney General, during the safe harbor period, “unless there is evidence that a manufacturer distributed a mislabeled product after July 1, 2016, [Vermont] will not bring an enforcement action or seek fines for those products.” [19]  After the safe harbor expires on January 1, 2017, all products must be properly labeled regardless of when they were distributed. [20]  That being said, the Vermont Office of the Attorney General has indicated that it intends to exercise its enforcement discretion and focus only on willful violations of the labeling law. [21]  The Vermont Office of the Attorney General clarified that after January 1, 2017, it does not “expect to bring enforcement cases based solely on a company’s failure to remove improperly labeled products that were distributed before July 1, 2016.” [22]

Currently several trade associations, including the Grocery Manufacturers Association (“GMA”), are challenging the constitutionality of Act 120 on the grounds that it imposes burdensome new speech requirements on food manufacturers and retailers and that such requirements would be preempted by federal law, including the Federal Food, Drug, and Cosmetic Act. [23]  A decision in favor of the trade associations prior to July 1, 2016 would enjoin Act 120 and prevent the law from going into effect.     

Conclusion
Although Vermont’s Act 120 may have significant impact on the food industry, the contours of GE food labeling requirements continue to be debated around the country.  From a state perspective, in addition to Vermont’s Act 120, Connecticut and Maine have enacted GE labeling legislation, but with delayed implementation that will take effect only after neighboring states have also adopted GE labeling laws.  Fourteen other states have GE labeling legislation pending. [24]  Federally, the House passed the Safe and Accurate Food Labeling Act in 2015 that would have established a national voluntary GE ingredient labeling program. [25]  The bill, however, stalled earlier this year when the Senate failed to approve its companion bill, but the Senate Agriculture Committee continues to work on a bill to potentially pass before July 1, 2016. [26]  Separately, FDA has continued to maintain its policy of allowing “voluntary” labeling of GE foods, unless the GE foods have characteristics that are “materially different” from the non-GE versions of the foods. [27]

Despite the ongoing debate, and uncertainty as to whether GMA’s challenge of the law will be successful, industry is beginning to make changes to respond to the possibility of mandatory GE food labeling on the state level.  Large manufacturers such as Campbell’s, Mars, General Mills, Con Agra Foods, and Kellogg have publicly announced plans to include GE statements on their food product labels.  As Campbell’s explained, the combination of “no federal regulation requiring labeling that informs consumers about the presence of [genetically modified organisms (‘GMOs’)] in their food” and “this state-by-state patchwork approach” results in confusion to consumers and an “incomplete, impractical, and costly to implement” approach for food manufacturers. [28]  As such, Campbell’s decided to support mandatory federal “GMO” labeling to “set[] a new bar for transparency.” [29]

Even after the July 1, 2016 effective date for Act 120 comes and goes, the GE labeling debate will be far from over.  Until federal and state agencies, Congress, and stakeholders come to some consensus over GE labeling, the tension between federal and state requirements will challenge industry efforts to comply with the differing standards.  We will continue to monitor developments in this area.

Notes:
[1] Vt. Stat. Ann. tit. 9, ch. 82 A, §§ 3041–48 (2014) (effective July 1, 2016) (“Act 120”).

[2] Id. at 3043(a).

[3] Only food offered for retail sale at a physical store in Vermont is subject to the labeling law.  See Vermont Attorney General’s Office Frequently Asked Questions on the GE Food Labeling Rule (last updated Feb. 18, 2016), http://ago.vermont.gov/assets/files/Consumer/GE_Food/GE%20Food%20Labeling%20Rule%20FAQ.pdf.

[4] “Genetic engineering” is broadly defined as “a process by which a food is produced from an organism or organisms in which the genetic material has been changed” through such applications as in vitro nucleic acid techniques and fusion of cells or hybridization techniques that overcome natural physiological, reproductive, or recombination barriers.  Act 120 § 3042(4).  The term “genetic engineering,” however, does not include the application of traditional techniques such as traditional breeding, traditional hybridization, or in vitro fertilization.  Vt. Consumer Protection Rule 121.01(6) (effective July 1, 2016) (“CP Rule”).

[5] Act 120 § 3043(b); CP Rule 121.02(a), (b). 

[6] Act 120 § 3043(b); CP Rule 121.02(a), (b).  Manufacturers should note that “may be” can be used to modify “Produced with Genetic Engineering” only when the food’s manufacturer does not know after reasonable inquiry whether the food is or contains a component that is produced with GE.  CP Rule 121.02(b)(ii)(C).

[7] Act 120 § 3043(c).

[8] CP Rule 121.02(d).

[9] CP Rule 121.01(5).

[10] Processed foods will be considered as containing “minimal genetically engineered content” where the “aggregate weight of the genetically engineered materials in the food is no more than 0.9 percent of the total weight of the food.”  CP Rule 121.03(e).  The weight of the food should be calculated exclusive of added water and salt.  Id. at Comment.

[11] CP Rule 121.03.

[12] CP Rule 121.03(b).

[13] Comment to CP Rule 121.04(a).

[14] Comment to CP Rule 121.03(b). 

[15] CP Rule 121.04(b).  Electronic copies are sufficient to comply with this recordkeeping requirement. CP Rule 121.04(b).

[16] Comment to CP Rule 121.04(b).

[17] Act 120 § 3048; see also CP Rule 121.04(e) (“Civil penalties . . . shall accrue and be assessed per each uniquely named, designated, or marketed product.”).  

[18] CP Rule 121.04(d); Memorandum from Vermont Attorney General William H. Sorrell, “AGO Enforcement Priorities for Act 120 (GE Food Labeling Law)” (Mar. 24, 2016),http://www.ago.vermont.gov/assets/files/Consumer/GE_Food/AGO%  20GE%20Food%20Labeling%20Law%20Enforcement%20Priorities%20Memo.pdf (“Vt. Attorney General Memo”).

[19] Vt. Attorney General Memo.

[20] Id.

[21] Id.

[22] Id.

[23] See Grocery Mfrs. Ass’n, Snack Food Ass’n, Int’l Dairy Foods Ass’n, & Nat’l Ass’n of Mfrs. v. Sorrell,  No. 5:14-cv-117 (D. Vt.).  In April 2015, the District Court denied plaintiffs’ motion for a preliminary injunction to enjoin Act 120 while the case was pending. Grocery Mfrs. Ass’n, No. 5:14-cv-117 (D. Vt. Apr. 27, 2015) (order denying preliminary injunction).   Plaintiffs appealed the denial to the U.S. Court of Appeals for the Second Circuit and are currently awaiting a ruling. See Grocery Mfrs. Ass’n, et al. v. Sorrell, No. 15-1504 (2d Cir.).

[24] According to the Center for Food Safety’s 2016 GE Labeling Map 2016, the following states have GE labeling legislation pending: Alaska, Arizona, Iowa, Illinois, Indiana, Massachusetts, Minnesota, Missouri, New Jersey, New York, Ohio, Oklahoma, Rhode Island, and Tennessee.  See GE Labeling Map 2016 (Center for Food Safety) (last viewed May 9, 2016),http://salsa3.salsalabs.com/o/1881/p/salsa/web/common/public/content?content_item_KEY=14210. 

[25] As passed by the House, the Safe and Accurate Food Labeling Act of 2015 explicitly preempted state and local labeling requirements for foods containing “genetically engineered organisms.”  See H.R. 1599, 114th Cong. (2015).

[26] See Larry Dreiling, GMO labeling bill still stalled in the Senate, High Plains/Midwest AG Journal, May 9, 2016.

[27] See, e.g., FDA Guidance for Industry: Voluntary Labeling Indicating Whether Foods Have or Have Not Been Derived from Genetically Engineered Plants (FDA Nov. 2015),http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocuments  RegulatoryInformation/LabelingNutrition/ucm059098.htm.

[28] Why We Support Mandatory National GMO Labeling (Campbell’s Newsroom Jan. 7, 2016),http://www.campbell  soupcompany.com/newsroom/news/2016/01/07/labeling/.

[29] Id.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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