Food and Beverage News and Trends - June 2017

by DLA Piper

This regular publication by DLA Piper lawyers focuses on helping clients navigate the ever-changing business, legal and regulatory landscape.

  • Nonprofits sue FDA over delay in menu-labeling rule. On June 7, the Center for Science in the Public Interest and the National Consumers League filed suit in the US District Court for the District of Columbia against the FDA’s decision to delay implementation of a rule requiring chain restaurants, supermarkets, convenience stores and other food establishments to post calorie counts for prepared food and beverages. In May, one day before the effective date, the agency delayed the rule one year. “The recent delay in the rule is yet another example of the Trump administration’s willingness to accommodate even unfounded and partial industry opposition to the detriment of the health and welfare of people and families across the country,” said Peter Lehner, the senior attorney from Earthjustice who is representing the two nonprofits. In delaying the rule to May 2018, the FDA opened a new comment period and asked commenters to develop “approaches to reduce regulatory burden or increase flexibility” for calorie postings on buffets and grab-and-go food stations. See our alert about the delay.
  • USDA official says agency is “a little behind” on GMO deadline. At a conference in Washington, DC on June 6, an official from the USDA said the agency is “still on track, but a little behind” in its efforts to develop the rules to implement a new law that requires labeling of food that contains GMOs. Among the tasks of the USDA’s Agricultural Marketing Service are to define the products the labels will apply to, determine the amount of GM ingredients that would require a label, and decide what the labels will look like. The law requires that the act go into effect in July 2018. Andrea Huberty, senior policy analyst for the Livestock, Poultry and Seed Program, told attendees at the Food Policy Conference that the rulemaking project “got a little caught up in the transition” but that the agency still plans to meet the deadline.
  • Two courts, two rulings: almond milk. Two district courts in California have taken different approaches to lawsuits challenging the use of the term “milk” for almond milk. In a case alleging that Silk almond milk was falsely advertised as the nutritional equivalent of cow’s milk, the Eastern District of California chose on June 6 to stay the case on the grounds that the FDA has primary jurisdiction over the issue and ought to decide it. But in the Central District of California, a similar case against Almond Breeze almond milk was tossed out May 24 with the court ruling that it was “patently impossible” that consumers would be confused by the use of the word “milk” for almond milk and would think it had all the benefits of dairy milk. “Even the least sophisticated consumer would know instantly the type of product they were purchasing,” the ruling said.
  • Two courts, two rulings: evaporated cane juice. Two different outcomes in near-identical lawsuits over the use of the term “evaporated cane juice” seem to have turned on the contents of the companies’ websites as much as their packaging labels. In a case involving Late July Snacks, the US District Court for the Northern District of California found that a consumer may pursue a case alleging that use of the term “evaporated cane juice” is misleading because it can be interpreted to mean the product contains something healthier than sugar. The literal meaning of “evaporated cane juice” is sugar. In another case decided three days before Late July, the same court found that Steaz Teas should not be forced to defend a similar lawsuit – since Steaz’s website clearly states that “evaporated cane juice” is “natural sugar.” If consumers looked at the website, the court held, they would be unlikely to be deceived. The cases were decided on May 2 and May 5.
  • Suit brought over New Poultry Inspection System. The nonprofit advocacy organization Food & Water Watch is suing the USDA because it refuses to divulge the names of poultry companies taking part in its New Poultry Inspection System. That system allows companies to switch to a voluntary program that will allow them to use non-government poultry inspectors. Calling the program a privatization deal, the organization says that since 2014 it has filed numerous Freedom of Information Act requests to determine the names of the participating companies, but that USDA refuses to comply. The agency cites federal rules regarding the protection of confidential corporate information to explain its refusal. Food & Water Watch says it only wants the company names. “Consumers deserve to know if the meat they’re serving their families is mostly inspected by the companies themselves,” said Wenonah Hauter, executive director of the watchdog group. The suit was brought in the US District Court for the District of Columbia.
  • Seattle City Council approves new tax on sugary beverages. On June 5, the Seattle City Council approved a tax on soda and other sugary drinks, including energy drinks – but not on diet soda. Seattle thus became the latest US city to impose such a tax for the purpose of improving public health and reducing the rate of obesity. Beverages will be taxed at a rate of 1.75 cents per ounce, which would add $1.18 to the price of a two-liter bottle of soda. The tax is expected to raise about $15 million per year, to be allocated to healthful-eating programs in the city. Opponents are considering putting a referendum on the ballot that ask the voters to decide the issue. “I’m pleased to sign legislation that holds corporations accountable for profiting off products that put people’s health, particularly young people’s health, at risk,” said Seattle Mayor Ed Murray.
  • Philadelphia soda-tax revenues decrease in April. On May 26, the City of Philadelphia reported that revenues from the city’s new beverage tax amounted to $6.5 million in April, a decline from the $7 million reported in March. The money goes to pre-K and other education programs in the city. “These latest numbers highlight the flaws in this failed tax, which is costing jobs, raising prices for working families and hurting local businesses without providing the stable source of revenue the mayor claims the city needs,” said Anthony Campisi, a spokesman for a coalition opposing the tax. Opponents say that the city needs $7.7 million per month, on average, to meet revenue expectations for the tax and that it is falling considerably short.
  • Where will the next taxes on sugary beverages be enacted? On June 12, Food Dive magazine discussed a study by researchers at Harvard and Tufts universities predicting that even more US jurisdictions will decide to impose taxes on sugary beverages. Currently eight US jurisdictions tax sugary drinks. The study concluded that cities and towns controlled by Democrats are more likely to adopt such taxes in the name of public health. According to the study, taxes on sugary beverages are a sign of how much local politics have changed in recent years. Until a soda tax was approved by Berkeley, California, in 2014, at least 40 such efforts had been initiated in various US jurisdictions, and had all failed. Locations that are similar in their politics to those that have already adopted such a tax are the most fertile ground for new taxes, the study concluded.

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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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