National Bioengineered Food Disclosure Standard: Final Rule Presentation for SNAC International - Martin J. Hahn, Partner Veronica Colas, Senior ...
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National Bioengineered Food Disclosure Standard: Final Rule Presentation for SNAC International Martin J. Hahn, Partner Veronica Colas, Senior Associate January 9, 2019
Agenda
• Quick highlights
• Deep dive
– Background
– Scope of the disclosure standard
– Mechanics of disclosure
– Recordkeeping and compliance
Hogan Lovells | 2
Quick highlights of final rule
1. Mandatory compliance date = Jan. 1, 2022
– “Implementation date” of Jan. 1, 2020 for large food manufacturers; Jan. 1, 2021 for small
manufacturers with ≥ $2.5M and < $10M in annual receipts
2. Refined ingredients/foods not subject to mandatory disclosure, provided they
contain no detectable levels of modified DNA
3. Voluntary disclosure permitted for refined ingredients/foods using specific text
(“derived from bioengineering”) or symbol, but narrow in scope
4. Threshold = no disclosure required where the food contains no more than 5%
per ingredient of inadvertent/technically unavoidable presence of BE
substances (No 0.9% threshold for intentionally added BE ingredients)
5. Incidental additives exempt; no other categorical exemptions other than those in
statute (e.g., certified organic foods)
6. Disclosure
– Text = “bioengineered” or “contains [a] bioengineered food ingredient(s)”
– Symbol uses the term “bioengineered” (see image of symbol to the right)
– Digital/electronic link – must provide on-pack telephone number and disclosure must appear on first
screen accessed from link
– Text message disclosure option
Hogan Lovells | 3
Background
Background
• States passed laws mandating food
labels disclose GMO content
– Vermont law became effective June 2016
– Food industry could not label foods for one
state
Hogan Lovells | 5
GMO Labeling: Help Has Arrived!
• Signed into law July 30, 2016
• The law:
– Preempts state and local GE labeling laws
– Provides a mandatory national disclosure standard for
bioengineered foods, to be implemented by USDA
– USDA must establish the mandatory disclosure standard
within 2 years of the bill’s enactment
6
Scope of Rulemaking
• Congress left many key details to be worked out by USDA’s Agricultural
Marketing Service (AMS) in rulemaking
– Which foods are within the scope of the standard?
– Which foods are BE foods requiring a disclosure?
– What process should be established to create exemptions and what considerations apply?
– What threshold of a bioengineered substance makes the food a BE food?
– What are the specifics of how the disclosure will be made?
– What is the compliance date?
• Does not require USDA to define “non-GMO”
• A food will not be considered “not bioengineered,” “non-GMO,” or any
similar term simply because the food is not required to bear a
bioengineering disclosure
7
AMS Implementation of Law
• August 2017: AMS solicited comments from stakeholders on 30 questions
posted on its website
– Over 112,000 responses!
• AMS completed a study on technological challenges related to electronic
or digital disclosure methods
• May 2018: AMS issues proposed rule; comments due July 3
– 14,000 comments received
• August 31, 2018: AMS sends final rule to OMB for review
• Dec. 20, 2018: Final rule released
8
Definition of “Bioengineering” and “Bioengineered food”
• Statutory definition:
• The term “bioengineering” is defined to refer to a food that (A) contains genetic
material that has been modified through in vitro recombinant deoxyribonucleic acid
(DNA) techniques; and (B) for which the modification could not otherwise be obtained
through conventional breeding or found in nature.
• A key issue for AMS to determine: Does the definition cover refined ingredients that are
derived from a BE crop but have been processed and may no longer contain modified DNA?
• e.g., sugar from BE sugar beets, high fructose corn syrup from BE corn
• In July 2016, USDA stated that it interprets the statutory language as providing authority to
require disclosure for such refined ingredients
• In comments to AMS, the food and agriculture industries were split on whether refined
ingredients should require disclosure
9
Scope of Standard
How to Determine Whether Disclosure is Needed
1. Who is responsible for the disclosure?
2. Is the product a “food”?
3. Does the food fall within the scope of the
standard?
4. Is the food a “bioengineered” food requiring
disclosure?
5. Do any exemptions apply?
Hogan Lovells | 111. Who is responsible for the disclosure?
• If food is pre-packaged (before receipt by
a retailer)
– the manufacturer or the importer of
record
• If a retailer packages the food
– the retailer
• Bulk foods
– retailer is responsible for signage
Hogan Lovells | 122. Is the product a “food”?
• “Food” is defined as a “food (as defined in section 201 of the Federal
Food, Drug, and Cosmetic Act (21 U.S.C. 321)) that is intended for human
consumption”
– Pet food and animal feed are not covered
– Dietary supplements, processing aids, and enzymes, are all “food”
Hogan Lovells | 133. Does the food fall within the scope of the standard?
• Law covers:
– Products subject to labeling requirements under the FFDCA
– Meat, poultry, and egg products subject to labeling requirements of
the FMIA, PPIA, and EPIA only if:
– the most predominant ingredient would be subject to FFDCA;
OR
– if the most predominant ingredient is broth, stock, water, or a
similar solution, and the second most predominant
ingredient is subject to the FFDCA
• All other meat, poultry, and egg products are excluded
• AMS defines “predominance” as the order of ingredients
on the label by weight
– “Predominant ingredients are those most abundant by weight in the
product”
Hogan Lovells | 143. Does the food fall within the scope of the standard?
• Examples
– Soup with ingredients of broth, carrots, chicken,
etc.
– Falls within the scope of the standard because
chicken is the third-ingredient – not the second after
broth
– Separate question as to whether it is a BE food
requiring disclosure
– Canned ham with ingredients of pork, corn syrup,
etc.
– Not subject to standard because pork is the most
predominant ingredient
– (Doesn’t matter if corn syrup is from BE corn)
– Pork rinds with first ingredient of pork are exempt
Hogan Lovells | 154. Is the food a “BE food”?
• Bioengineered food means—
– A food that contains genetic material that has been modified
through in vitro recombinant deoxyribonucleic acid (rDNA)
techniques and for which the modification could not otherwise be
obtained through conventional breeding or found in nature;
provided that
– Such a food does not contain modified genetic material if
the genetic material is not detectable pursuant to § 66.9.
• Note, “conventional breeding” and “found in nature” are not
defined
Hogan Lovells | 16Treatment of refined ingredients
• For refined foods or ingredients that are derived from BE sources (e.g., corn
syrup derived from BE corn), no disclosure is required if the food does not
contain detectable modified genetic material
• Final rule sets out how to demonstrate that modified DNA is undetectable
1. Records verifying the food is from a non-BE source
2. Records showing the food has been subject to a refinement process “validated” to render
modified genetic material undetectable
– Once process is validated, additional testing not needed, provided no significant changes to
process
3. COAs or other testing records appropriate to the specific food tested that confirm the absence
of modified genetic material
• Rule includes standards of performance for testing
• AMS states that if testing methodologies evolve so that the modified DNA in a
food becomes detectable in the future, the food would be subject to disclosure
Hogan Lovells | 17Bioengineered foods list • Alfalfa • Apple (Arctic™ varieties) • Canola • Corn • Cotton • Eggplant (BARI Bt Begun varieties) • Papaya (ringspot virus-resistant varieties) • Pineapple (pink flesh) • Potato • Salmon (AquAdvantage®) • Soybean • Squash (summer), and • Sugar beet Hogan Lovells | 18
Bioengineered foods list
• Non-exhaustive!
• The list is just a starting point – a “tool” to help regulated entities
– Even if a food is not on the list, companies with actual knowledge that a food they are
selling is bioengineered are subject to the disclosure requirements
– AMS example: “enzymes, yeasts, and other similar foods produced in controlled
environments”
– Simply because a crop or food is on the list does not necessarily mean it requires
disclosure; if, for example, the regulated entity maintains records that they are using a
non-bioengineered version of the food or the food does not contain
• AMS will maintain more detailed information on its website about each
food/crop on the list to help determine whether disclosure is required
Hogan Lovells | 19Future revisions to the BE foods list
• AMS will review the list of BE foods annually,
and update it as needed via rulemaking
• The final rule provides an 18-month
compliance period from the effective date of
any revisions for regulated entities to revise
labels
• “AMS maintains that the products of
technology, rather than the technology itself,
should determine whether a food meets the
BE food definition”
Hogan Lovells | 214. Is the food a BE food?
Do “other factors or conditions” affect the foods BE status?
• The final rule establishes a process for submitting a request or petition to
limit the scope of the definition of bioengineered food, based on other
“factors or conditions”
• AMS also listed one “factor or condition” in the final rule:
– Incidental additives – i.e., those that are present in food at an insignificant level and
that do not have any technical or functional effect in the food – are not considered BE
foods.
Hogan Lovells | 22Yeasts, enzymes, microorganisms
• If they qualify as incidental additives that
are not required to be labeled as ingredients
on a food label, then they do not require
disclosure as BE foods
• If they do not meet the incidental additive
definition, may require disclosure unless
they are otherwise exempt (e.g., if the
modified DNA is not detectable)
• No categorical exemption for
microorganisms or other fermentation
products, but such an exemption could be
considered through the factors and
conditions petition process
Hogan Lovells | 235. Are there any applicable exemptions?
1. Food served in a restaurant or similar
retail food establishment
– Packaged foods sold by manufacturers to food service
establishments are not exempt
– The portions of grocery stores that prepare food for
immediate consumption (e.g., deli or prepared food section)
are exempt
– AMS suggests in the preamble that unpackaged food in the
produce section would be subject to disclosure if it is a BE
food
– Foods that are packaged by retailers or sold in bulk require
disclosure, although bulk foods may use signage rather than
the label
2. Very small food manufacturers
– Less than $2.5M in annual receipts Hogan Lovells | 24Exemptions, continued
3. A food derived from animals is not
considered a BE food solely because the
animal consumed feed produced from,
containing, or consisting of a BE substance
– Milk, meat, eggs would not be considered “bioengineered”
solely because the cow, animal, or chicken consumed BE
feed
– Insects are considered animals, so honey is exempt
– Rennet and other enzymes derived from animals are also
exempt (but microbial rennet and enzymes are not
categorically exempt)
Hogan Lovells | 25Exemptions, continued – organic foods
4. Foods certified under the National Organic Program
– Covers all NOP certified label categories (‘‘100% Organic,’’ ‘‘Organic,’’ and
‘‘Made with Organic ____’’)
– Does not cover products with less than 70% organic ingredients
– Organic products are also eligible for a “non-GMO” claim (per statute)
Hogan Lovells | 26Exemptions, continued – Threshold
5. Foods with less than a designated amount of BE substances due to
inadvertent presence
– Statute directs AMS to determine the amounts of a “BE substance” that may be present in
order for a food to be considered a BE food
– “BE substance” = substance that contains modified genetic material
– e.g., BE soy in wheat flour would be a “BE substance”
– Final rule establishes a threshold for the inadvertent or technically unavoidable presence
of BE substances of up to 5% for each ingredient, provided that no ingredients are
intentionally used in the food that contain a BE substance
– No threshold for intentionally added BE ingredients unless the ingredient qualifies as an
incidental additive
Hogan Lovells | 27Threshold
• As an example, we interpret the final rule as not
requiring disclosure for a food that contains wheat
flour as an ingredient, when the wheat flour
contains no more than 5% of BE soy and BE corn
due to cross contact
• Only customary business records required:
• “AMS will look to the records to determine
whether a regulated entity intended to purchase
non-BE ingredients and the documentation they
have from their suppliers indicating as much”
Hogan Lovells | 28Mechanics of Disclosure
Disclosure Options
• Disclosure Must Be:
1. A text
2. Symbol
3. An electronic or digital link (can’t use URL), or
4. A text message disclosure
– A new option established by AMS based on the agency’s determination that consumers
would not have sufficient access to the disclosure through only digital means under ordinary
shopping conditions
Small businesses (at least $2.5M but less than $10M in annual receipts) get two more options:
5. A telephone number and language, or
6. A website URL
Additional flexibility for small and very small packages
30Disclosure Options
• Disclosure Must Be:
What does the text say?
1. A text disclosure • “Bioengineered food”
• If the food is a raw agricultural
2. Symbol
commodity or a processed food
3. An electronic or digital link (can’t that contains only BE food
use URL) ingredients
• “Contains a bioengineered food
4. A text message disclosure
ingredient”
• For a multi-ingredient food that
contains one or more BE food
ingredients and does not fall
into the first category above
“May contain” not permitted!
31Disclosure Options
• Disclosure Must Be:
1. A text
2. Symbol
– Incorporates the word “bioengineered”
– No “contains a bioengineered food ingredient” option
– Black and white or specified color versions may be used
– Symbols found on AMS website
3. An electronic or digital link (can’t use URL)
4. A text message disclosure
32Disclosure Options
• Disclosure Must Be:
1. A text
2. Symbol
3. An electronic or digital link (can’t use URL), or
4. A text message disclosure
33Electronic Disclosure Requirements
On package:
1. Scan here statement. On-package language must appear directly
above or below the link: “Scan here for more food information” or
equivalent language that only reflects technological changes
– “Scan anywhere on package for more food information,” “Scan icon for more food information”
2. Link. No specific requirements for how link is to appear (other than
general prominence and placement requirements). Disclosure may not
collect, analyze, or sell any personally identifiable information about
consumers or the devices of consumers.
3. On-package phone number . Must provide access to the disclosure at
any time of day. The following must appear in close proximity to the on-
package link: “Call 1-____________ for more food information”
Disclosure accessed by link:
• Link must provide the disclosure (text or symbol) on the first screen to
appear on the device after the link is accessed
• Page must exclude marketing and promotional material
34Disclosure Options
• Disclosure Must Be:
1. A text
2. Symbol
3. An electronic or digital link (can’t use URL), or
4. A text message and “text [command word] to
[number] for more food information”
– Must include a statement on the package that
instructs consumers to “Text [command word] to
[number] for bioengineered food information”
– Number would be a telephone number or short
code that immediately responds with the disclosure
using the disclosure text required under option 1
35Disclosure Options
• Disclosure Must Be:
1. A text
2. Symbol
3. An electronic or digital link (can’t use URL), or
4. A text message disclosure
• Small businesses (at least $2.5M but less than $10M in annual receipts) get two more
options:
5. A telephone number and language, or
– Number and “Call for more food information”
– Telephone number must provide the disclosure at any time of day
6. A website URL & “Visit [URL] for more food information”
• Additional flexibility for small and very small packages
36Disclosure Options
• Disclosure Must Be:
1. A text
2. Symbol
3. An electronic or digital link (can’t use URL), or
4. A text message disclosure
• Small businesses (at least $2.5M but less than $10M in annual receipts) get two more options:
5. A telephone number and language, or
6. A website URL & “Visit [URL] for more food information”
• Additional flexibility for small and very small packages
– Shortened language on labels: “Call for info”, “Text for info,” “Scan for info”
– For very small packages only may use existing website URL or telephone number to provide disclosure
– Very small package = < 12 sq. in total surface area
– Small package < 40 sq. in total surface area
37General Prominence and Placement Requirements
• Apply to all disclosure methods
• Prominence
– No specific text size requirement
– Sufficient size and clarity to appear prominently and conspicuously on the label, making
it likely to be read and understood by the consumer under ordinary shopping conditions
• Placement – 3 options
1. Information panel, directly adjacent to the statement identifying the name and location
of the handler, distributor, packer, manufacturer, importer, or any statement disclosing
similar information
2. Anywhere on PDP
3. If insufficient space on 1 & 2, on an alternate panel
38Voluntary Disclosure
Voluntary disclosure - scope
• The rule is prescriptive with regard to the foods that qualify for the voluntary disclosure
• The following foods clearly qualify for the voluntary disclosure
– Foods sold by very small food manufacturers (must use same disclosure as BE foods)
– Foods sold by restaurants and similar institutions (must use same disclosure as BE foods)
– Foods that contain a refined ingredient derived from a listed BE crop but do not contain detectable DNA (must use
voluntary disclosure options with distinct language)
• The rule does not authorize a voluntary disclosure for:
– Incidental additives that are bioengineered
– Inadvertent BE substances at no more than 5% per ingredient
– An animal product derived from an animal that consumed BE feed
– Being derived from a bioengineered food not on the bioengineered food list
– Certified organic foods
• AMS states that an FSIS-regulated food that does not fall within the scope of the standard
may not bear the voluntary disclosure regardless of the other ingredients in the product
40Voluntary disclosure
• Final rule allows voluntary disclosures that a food is
derived from a bioengineered source, including when
modified genetic material is not detectable in the food (e.g.,
refined ingredients)
• Using one of same methods as for mandatory disclosure
but using different language
– Text: “derived from bioengineering” or “ingredient(s) derived from a
bioengineered source” or “corn syrup derived from a bioengineered
source”
– Symbol: AMS has established a unique symbol that can be used on
foods derived from BE
– Electronic or Digital Link and phone number
– Text Message must use above language or symbol, as appropriate 41Voluntary disclosure - scope
• If you can’t call them “bioengineered” or “derived
from bioengineering,” what can you say about FSIS-
regulated foods with BE ingredients; foods that are
derived from an animal that consumed BE feed; or
foods that contain BE incidental additives, trace
amounts of BE substances due to adventitious
presence, or refined ingredients derived from foods
not on the BE food list?
– “Nothing in this subpart will prohibit regulated
entities from making other claims regarding
bioengineered foods, provided that such claims
are consistent with applicable Federal law.”
– No similar provision for foods that are not BE
foods
– First Amendment considerations
42Recordkeeping and Compliance
Compliance Date
Jan. 1, 2020
Jan. 1, 2021
Implementation
date for larger Jan. 1, 2022
Implementation
manufacturers (≥ date for larger
$10M annual Mandatory
manufacturers (≥ compliance date
sales) $2.5M and < for all regulated
$10M annual entities
sales)
Hogan Lovells | 44Compliance Date
• Mandatory compliance date
– Beginning Jan. 1, 2022, “all regulated entities must comply with the requirements”
– “Foods entering commerce after this date must be labeled in compliance with the Standard.”
• Implementation period
– “Regulated entities should begin implementing the NBFDS… by identifying the foods
that will need to bear a BE disclosure, the records necessary to meet the recordkeeping
requirements, and the type of BE disclosure they will use on their products”
– Now – Dec. 31, 2021: “voluntary compliance period”
– May also use now-preempted Vermont GMO labeling language during this period
– Stickering and ink-jetting permitted
– Dates align with compliance dates for FDA’s nutrition labeling rules
• No label runout period
Hogan Lovells | 45Compliance dates for NFP and BE food rules – large manufacturers
Continue
Now implementing FDA
nutrition labeling
rules
All FDA-regulated Begin
Jan. 1, products labeled
on or after this date
implementing BE
food disclosure
2020 must bear the new
NFP
rule; may continue
using VT language
Foods entering
Jan. 1, --
commerce on or
after this date must
2022 comply with the BE
food disclosure rule
Hogan Lovells | 46Compliance dates – small manufacturers ($2.5M to < $10M annually)
Continue
Now implementing FDA
nutrition labeling
rules
All FDA-regulated
Jan. 1, products labeled
on or after this date
Begin implementing
BE food disclosure
2021 must bear the new
NFP
rule; may continue
using VT language
Foods entering
Jan. 1, --
commerce on or
after this date must
2022 comply with the BE
food disclosure rule
Hogan Lovells | 47Enforcement
• Law prohibits:
– Knowingly failing to disclose that a food is bioengineered as required by the standard and
USDA’s regulations
– Declaring that a food is bioengineered except in compliance with the federal standard
• Companies must maintain and make available any records required under
USDA regulations to establish compliance with the standard
• USDA authorized to conduct audits of records to demonstrate compliance
with the standard
– USDA must provide notice and an opportunity for a hearing on the results of the audit, after
which USDA must make the results of the audit public
• AMS does not have recall authority based on compliance with disclosure
standard
• “AMS does not intend to test final food products to determine compliance
with the rule”
48Recordkeeping
• Must keep “customary or reasonable” records to demonstrate compliance
– For example: Supply chain records, bills of lading, invoices, supplier attestations, labels,
contracts, brokers’ statements, third party certifications, laboratory testing results, validated
process verifications, and other records generated or maintained by the regulated entity in the
normal course of business
• Records must contain sufficient detail as to be readily understood and audited
• If a food is on the BE foods list, must keep records regarding the food or
ingredient
• If a food bears a disclosure based on actual knowledge and is not on the list,
must maintain records for such food or ingredient
• If records demonstrate that a product originates from a country where BE
food is not commercially grown, those records are sufficient to justify lack of
disclosure and demonstrate compliance with the NBFDS
Hogan Lovells | 49Recordkeeping
• May be in paper or electronic form
• May be maintained at a central location
• Must maintain records at least 2 years after
the date the food is sold or distributed for
retail sale
• Must provide to AMS within 5 days upon
request, unless AMS extends the deadline
• AMS would provide at least 3 days notice if
the agency needs to access records at the
entity’s place of business
Hogan Lovells | 50Audits or Examinations
• Any interested person may file a written statement or complaint with the
agency about a possible violation of the disclosure standard
• If AMS determines that reasonable grounds exist for an investigation of
the complaint, it may conduct an audit or examination of the records of
the entity responsible for the disclosure
– After completing the audit or examination, AMS would make its findings available to the
entity audited
– The entity could then request a hearing objecting to the AMS finding
– After the conclusion of the hearing, or after 30 days from the entity’s receipt of the
finding, if the entity does not request a hearing, AMS would make public a summary of
the final results of the audit or examination
Hogan Lovells | 51A note on “non-GMO”
• No specific exemption for products certified
by third parties as “non-GMO”
• Records created through third-party
certification programs could be used to
support a decision not to disclose, to the
extent the records align with the rule
• Statute and final rule do not address “non-
GMO” claims, other than:
– Certified organic foods may bear a non-GMO claim
– Simply because a food does not require the mandatory
disclosure does not mean it automatically qualifies as
non-GMO
Hogan Lovells | 52Issues to Consider as You Implement the Rule
• Enzymes declared as ingredients: Are the BE
microorganisms incidental additives that are
exempt from disclosure even if rDNA is present in
the enzyme?
• Packaged foods sold to food service: AMS
says the packaged food must bear the disclosure
even though the consumer will never see it
• Truthful Statements: What voluntary
statements are allowed for foods that don’t qualify
for the voluntary disclosure?
• Landing Page: When using the electronic link
option, is your QR code and website set up to
provide the disclosure appear on the first screen?
• Many others: As we examine the rule more
closely many others issues likely will surface
Hogan Lovells | 53Questions?
Hogan Lovells | 54www.hoganlovells.com
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