Illinois Cook County Soda Tax Becomes Effective Aug. 2

  • As previously reported on this blog, a Cook County Ordinance that imposes a $0.01 per ounce tax on the retail sale of sweetened beverage was temporarily blocked after the Illinois Retail Merchants Association and others filed a lawsuit to block the tax. On July 28, 2017, Cook County Circuit Judge Daniel Kubasiak dissolved the temporary restraining order and dismissed the lawsuit.
  • The tax applies to bottled sweetened beverages, including soda, sports drinks, flavored water, energy drinks, and pre-made sweetened coffee and tea with less than 50% milk content. Infant formula, unsweetened drinks to which a purchaser can add or request that a retailer add sugar at the point or sale, 100% fruit juices, and beverages for medical uses are among the products exempted from the tax.
  • In an article on the Cook County soda tax, Illinois Policy said that the tax makes soda sold in Chicago among the most expensive in the country. As an example, the organization pointed out that that the Chicago soft drink sale tax of $0.12 combined with the Chicago sales tax of $0.41, along with the Cook County sugary drink tax of $1.44, will increase the cost of a 12-pack of 12-ounce cans of soda from $4.00 to $5.97.
  • Cook County expects to receive $200 million annually from the tax. After the lawsuit was dismissed, Cook County Board President Toni Preckwinkle explained in a statement, “The delay in implementing the tax caused by the merchants’ lawsuit forced us to put into motion cost-saving measures to cope with this revenue loss, which currently is at least $17 million.”
  • The Illinois Retail Merchants Association responded to the ruling in a July 28 tweet, stating, “We are disappointed with the judge’s ruling on Cook County’s sweetened beverage tax. We are exploring our legal options.” Stay tuned for further developments concerning beverage taxes imposed by Cook County and other jurisdictions.

GM Labeling Rule Update – USDA Extends Deadline for Stakeholder Input

  • As previously reported on this blog, legislation requiring labeling of genetically modified (GM) foods and food ingredients was signed into law on July 29, 2016.  This law directs the U.S. Department of Agriculture (USDA) to develop regulations and standards to create mandatory disclosure requirements for bio-engineered foods by July 2018.  Under the new law, food companies would have three options to disclose GMO ingredients: the use of on-package text, a USDA-created symbol, or an internet link — i.e., a QR code printed on the package that directs customers to GMO information.
  • On June 28, 2017, USDA’s Agricultural Marketing Service (AMS) posted a list of 30 questions to obtain stakeholder input to facilitate the drafting of mandatory disclosure requirements to implement the National Bioengineered Food Disclosure Law.  Many of the questions are open-ended in nature and request stakeholder feedback on how to best define certain terms, how to determine if a product requires a GMO label and what on-package symbol should be used to denote GMO ingredients.  See our client alert for a comprehensive review of USDA’s 30 questions.
  • Stakeholder feedback was originally due to USDA by July 17, 2017, but was recently extended to August 25, 2017.
  • Keller and Heckman lawyers stand ready to assist interested parties in submitting comments to provide USDA with expert industry insight on GMO labeling – one of the most controversial areas of food labeling and manufacturing today.

USDA Nutrition Facts Rule Placed on “Inactive” List

  • On January 19, 2017, USDA’s Food Safety & Inspection Service (FSIS) released a proposed rule to revise its nutrition labeling requirements for meat and poultry products to reflect current scientific research and dietary recommendations. FSIS indicates that the changes parallel FDA’s recently revised nutrition labeling requirements (see our previous blog coverage regarding FDA’s revised nutrition facts requirements here).  On, February 22, 2017, FSIS announced that it had extended the comment period by 30 days, and the comment period finally closed on April 19, 2017.  Notable comments by the meat and poultry industry included a request to remove cholesterol from the label, stearic acid from the saturated fat content and the requirement to label naturally occurring trans fat.
  • Last week, the Trump administration released its first Unified Agenda listing USDA’s nutrition facts rule as inactive.  According to USDA, this means that the rule will not be a priority for at least six months.
  • This latest action follows on the heels of the compliance date for the FDA Nutrition Facts final rule – originally scheduled for July 26, 2018 – being delayed for an indefinite period of time.  Many leading food companies have started to transition their FDA-regulated product labels to the new format required by the FDA Nutrition Facts final rule.  But because USDA has not finalized its nutrition facts rulemaking, USDA regulated products do not bear the new USDA format – except to the extent that manufacturers of USDA-regulated foods are voluntarily using the new FDA format consistent with a USDA notice (from late last year) stating that until the USDA proposed rule is finalized, meat and poultry manufacturers may voluntarily use FDA guidelines on nutrition labeling.
  • The key implication for industry and consumers alike going forward is the potential for inconsistency between nutrition labeling of meat and poultry products and nutrition labeling of FDA-regulated products.  We will continue to monitor developments on this issue as they unfold and report them to you here.

Senators Press for Reopening of China to U.S. Poultry

  • As previously covered on this blog, as part of a deal to resume U.S. beef exports to China, the U.S. pledged that it would remove obstacles to importing cooked Chinese poultry meat.  In support of this pledge, on June 16, 2017, USDA’s Food Safety and Inspection Service (FSIS) published a proposed rule (82 FR 27625) amending its inspection regulations to list China as eligible to export poultry products derived from birds slaughtered in that country to the U.S.  Notwithstanding USDA’s recent move to facilitate cooked Chinese chicken imports, China continues to ban U.S. poultry.
  • Yesterday, a bipartisan group of 37 U.S. senators led by Senator Thad Cochran (R-Miss.) and Senator Mark Warner (D-Va.) called on Secretary of Agriculture Sonny Perdue to press for the swift reopening of the Chinese market to U.S. chicken and turkey exports.  In a July 26, 2017 letter to Secretary Perdue, the Senators challenged the ban, instituted by China in 2015 after the detection of a wild duck with Highly Pathogenic Avian Influenza (HPAI).  The ban, which contradicts World Health Organization for Animal Health standards, prevents U.S. poultry products from being exported to Chinese markets.  The letter notes that China has begun an animal audit of the U.S. poultry industry and urges USDA “to remain diligent in seeking final Chinese approval for U.S. poultry’s first successful shipment as quickly as possible.”
  • The restoration of U.S. poultry access to China would represent a financial win for American poultry producers as the Chinese market for American poultry exports – at its peak – stood at $71 million for turkey and $722 million for chicken.  We will continue to monitor developments on this issue as they unfold and report them to you here.

GE Salmon Labeling Mandate Included in Senate Appropriations Bill

  • As previously reported on this blogSenate Bill 764, which requires the labeling of genetically modified (GM) foods and food ingredients, was signed into law on July 29, 2016. The National Bioengineered Food Disclosure Law directs the U.S. Department of Agriculture (USDA) to develop regulations and standards to create mandatory disclosure requirements for bio-engineered foods by July 2018. Under the law, food companies have three options to disclose GMO ingredients: on-package text, a USDA-created symbol, or an Internet link.
  • A labeling mandate for GE salmon for human consumption is included in the Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Fiscal Year 2018 appropriations bill (S.1603), which was passed by the Senate Committee on Appropriations and introduced in the full Senate on July 20, 2017. Senator Lisa Murkowski (R-AK), who opposed S.764, announced in a press release that she “secured language [in the appropriations bill] that requires the Food and Drug Administration (FDA) to mandate labeling of GE salmon and that continues the current import ban until final labeling guidelines have been set by the FDA.”
  • Concerning the import ban of GE salmon, Sec. 757(c) of S.1603 states, “During fiscal year 2018, the Food and Drug Administration shall not allow the introduction or delivery for introduction into interstate commerce of any food that contains genetically engineered salmon until the Food and Drug Administration publishes final labeling guidelines for informing consumers of such content.”
  • USDA is currently conducting a study to determine the challenges of GMO disclosure through a smartphone-scannable digital code, and has posted a list of 30 questions to obtain stakeholder input to facilitate the drafting of mandatory disclosure requirements to implement the National Bioengineered Food Disclosure Law. If the provision requiring FDA to mandate labeling of GE Salmon remains in the final agricultural FY2018 appropriations bill, it remains to be seen how GE labeling requirements will be coordinated between FDA and USDA.​

FDA Authorizes Qualified Health Claim for Macadamia Nuts

  • A health claim characterizes the relationship between a substance and its ability to reduce the risk of a disease or health-related condition (see 21 CFR 101.14).  A health claim must contain the elements of a substance and a disease or health-related condition.  In addition, health claims are limited to claims about disease risk reduction, and cannot be claims about the diagnosis, cure, mitigation, or treatment of disease.  Health claims are required to be reviewed and evaluated by FDA prior to use via a petition process. There are two types of health claims: (1) health claims that meet the standard of significant scientific agreement (SSA) and (2) qualified health claims.
  • A qualified health claim does not meet the “significant scientific agreement” standard.  Therefore, the FDA requires qualified health claims to be accompanied by qualifying language or a disclaimer communicating the level of scientific evidence supporting the claim. Qualified health claims are currently evaluated under FDA’s interim guidance for such claims.  FDA issues letters of enforcement discretion when there is credible evidence to support a qualified health claim.  For a food to bear a qualified health claim, it is required to be low in fat and contain 10% or more of the Reference Daily Intake or the Daily Reference Value of the nutrients specified in 21 C.F.R. 101.14(e)(6) (i.e. vitamin A, vitamin C, iron, calcium, protein, or fiber per RACC).
  • On July 24, 2017, the FDA announced that the Agency would permit the use of a qualified health claim regarding the relationship between consumption of macadamia nuts and a reduced risk of coronary heart disease (CHD) despite the nuts being above the typically permitted level of fat and below the typically required levels of nutrients.  FDA has typically required foods bearing CHD-related health claims to be low in saturated fat and low in cholesterol, and to meet the definition of a “low fat” food as defined under FDA’s labeling requirements.  In this case, however, citing to macadamia nuts’ favorable (5:1) unsaturated to saturated fat ratio, and the fact that these nuts contain potentially beneficial substances such as dietary fiber and phytosterols, FDA found that a qualified health claim about macadamia nuts and reduced risk of CHD might assist consumers in maintaining a healthy diet.  The claim permitted for use by the FDA is:
    • “Supportive but not conclusive research shows that eating 1.5 ounces per day of macadamia nuts, as part of a diet low in saturated fat and cholesterol and not resulting in increased intake of saturated fat or calories may reduce the risk of coronary heart disease. See nutrition information for fat [and calorie] content.”
  • FDA’s decision to permit a qualified health claim for macadamia nuts follows on the Agency’s interim final rule (81 FR 91716) published in December 2016 (previously discussed on this blog) to amend 21 C.F.R. 101.75 to expand the use of heath claims concerning the relationship between dietary saturated fat and cholesterol and risk of CHD to certain raw fruits and vegetables that were previously ineligible to make the claim.  The December 2016 interim final rule together with FDA’s response to the macadamia nut petition could signal the Agency’s willingness, going forward, to exercise its enforcement decision to permit qualified health claims for foods with similar nutrition profiles.

Pew Study Assesses Food Safety Efforts from Farm to Fork

  • A Pew Charitable Trusts study released this month examines “preharvest” food safety control measures currently used on farms and feedlots and concludes that efforts to reduce contamination of meat and poultry products from harmful pathogens requires a comprehensive “farm to fork” approach.
  • The study specifically examined food safety control measures designed to limit exposure on farms and feedlots to pathogens such as SalmonellaColi and Campylobacter that can affect cattle, swine and poultry.  According to the study, these pathogens accounted for a substantial portion of foodborne illnesses linked to meat and poultry consumption.  The study also reports that the annual cost of foodborne illnesses (i.e., medical costs, lost income and productivity) attributable to the consumption of such foods is estimated at $1.4 billion for beef, $2.5 billion for poultry and $1.9 billion for pork.
  • The study highlights the key characteristics shared by effective pre-harvest programs, including, but not limited to:
    • Reliance on feed safety, biosecurity, and pathogen surveillance, as well as specific pre-harvest interventions.
    • Combining multiple interventions, which improves the efficacy of the programs, makes use of potential synergisms between interventions, and reduces the ability of the pathogen to evolve mechanisms to circumvent an intervention.
    • Targeting interventions to the animal species and production system, allowing implementation when and where they work best and are successful, feasible, and cost-effective.
  • Importantly, the study notes that while identifying potential pre-harvest measures is a key first step in any food safety regiment, a comprehensive “farm to fork” approach is needed.  In other words, to successfully prevent against food safety hazards, it is necessary to control the spread of pathogens at the farm level, adopt consistent and effective measures throughout the animal management, slaughter and processing steps.  The complete study, including details on how several countries have successfully implemented comprehensive “farm to fork” food safety control programs is available here.

FSMA Funds 2017: More Green for Greens

FDA announces FSMA funds to support states’ continued implementation of the produce safety rule.

  • The Food Safety Modernization Act (FSMA) was designed to update and strengthen FDA’s risk-based approach to the oversight of food safety.  The produce safety rule – which establishes science-based minimum standards for the safe growing, harvesting, packing and holding of fruits and vegetables grown for human consumption – is a critical part of FSMA.
  • On July 19, 2017, FDA announced that FDA is awarding $30.9 million in funding to support 43 states in their continued efforts to help implement the produce safety rule. This is the largest allocation of funds to date, made available by the FDA to help state agencies support FSMA produce safety rule implementation and develop state-based produce safety programs.  FDA notes that the funding will ensure that awardees have the resources to formulate a multi-year plan to implement a produce safety system and develop and provide education, outreach and technical assistance.
  • Due to the inherent complexity and breadth of the FSMA requirements, FDA must rely on strong partnerships with state agencies to ensure comprehensive and effective implementation.

BSE Case in AL Prompts S. Korea to Boost Quarantine Checks of U.S. Beef

  • Earlier this week, USDA’s Animal and Plant Health Inspection Service (APHIS) announced an atypical case of Bovine Spongiform Encephalopathy (BSE), a neurologic disease of cattle, in an eleven-year old cow in Alabama (AL).  APHIS reports that this animal never entered slaughter channels and at no time presented a risk to the food supply, or to human health in the United States.  Importantly, APHIS reports that this atypical BSE finding has no impact on America’s “negligible risk” status for BSE as designated by the World Organization for Animal Health (OIE).  Consistent with OIE guidelines for determining this status, atypical BSE cases do not impact official BSE risk status recognition as this form of the disease is believed to occur spontaneously in all cattle populations at a very low rate. As such, and consistent with APHIS’ announcement, this week’s finding of an atypical case will not change the negligible risk status of the United States, and should not lead to any trade issues.
  • Nevertheless, yesterday, South Korea announced that it had increased on-spot quarantine inspections of U.S. beef to 30 percent of imports from 3 percent in light of the BSE report from Alabama and has requested assurances that no beef from Alabama processing facilities enters the country.
  • South Korea’s response appears to be somewhat drastic given the fact that the atypical BSE detected in AL at no time presented a risk to the American food supply or exports to South Korea, and the U.S. continues to maintain a “negligible risk” BSE status. According to the Daily Livestock Report, the AL diagnosis of atypical BSE is expected to have “very little material impact” on domestic or export demand for U.S. beef.  Indeed, a Japanese agriculture official told Bloomberg News earlier this week that Japan currently sees no need to take additional action to prevent entry of BSE from the U.S. because the U.S. already has appropriate measures in place, and the new case is atypical.  It remains to be seen whether other countries will follow the thinking of Japan or South Korea.  We will be sure to report on any developments on this situation as they unfold.

Philly Soda Tax Opponents Appeal To PA Supreme Court

  • As previously covered on this blog, on June 16, 2016, the Philadelphia city council voted 13-4 to approve a 1.5-cent-per-ounce tax on sugar-sweetened beverages.  The tax – which took effect on January 1, 2017 – is levied on distributors and covers a variety of beverages, including soda and diet soda, non-100% fruit drinks; sports drinks; flavored water; energy drinks; pre-sweetened coffee or tea; and non-alcoholic beverages intended to be mixed into alcoholic drinks.  Prior to the January 1, 2017 effective date, the American Beverage Association (ABA) together with retailers, distributors and consumers filed a complaint in September 2016 in the Philadelphia Court of Common Pleas challenging Philadelphia’s soda tax (see previous blog coverage here).  On December 19, 2016, the Philadelphia County Court of Common Pleas issued a decision upholding the Philadelphia Beverage Tax and dismissing the complaint challenging the tax in its entirety.  Last month, the Pennsylvania Commonwealth Court upheld Philadelphia’s beverage tax, dismissing arguments from the American Beverage Association and local retailers that the levy is unlawful.
  • On Thursday, July 13, 2017, the ABA filed a petition with the Pennsylvania Supreme Court asking it to hear the case and to ultimately overturn the 1.5-cent-per-ounce tax on sugary drinks and diet sodas.
  • Observers speculate that the PA Supreme court will likely take up the appeal. It remains to be seen what, if any, impact the outcome of this litigation will have on the appetite of other U.S. jurisdictions to pursue such legislation.
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