“Local” claims could become latest trend in food labeling.

  • For years, food marketers have relied on claims such as “organic” and “natural” to attract consumers in the marketplace.  “Non-GMO” claims also have become more popular of late.  The U.S. Department of Agriculture (USDA) administers the regulatory regime governing “organic” claims, but no consistent or clear regulatory definition exists to govern claims related to the “natural” or “non-GMO” status of foods.  As the food industry is well aware, such claims have been the subject of significant scrutiny and class action lawsuits in California and other states.
  • A marketing analytics firm has predicted that “local” claims may gain more traction in the marketplace in the near future.  The firm notes the relatively “broader spectrum of appeals” associated with the term, “local,” as it may connote freshness, economics, taste, transparency, and perhaps even nutritional quality.
  • New Jersey is in the process of developing a rule to define the terms, “local” and “locally grown” as they apply to farm products sold within the state.  Thus far, the definition is state-oriented, such that a “local” product must originate in New Jersey or otherwise bear a qualified claim that specifies the origin state, e.g,. “Locally grown in California.”  A revised proposed rule is expected to be published soon, and if adopted, New Jersey’s definition would be a national first in this claim arena.  In the meantime, however — as is the case with “natural” and “non-GMO” claims — entrants into the “local” claim market will face both the benefits and drawbacks associated with the use of undefined terminology on food labels and in advertising.

FDA announces FSMA-related fees for FY 2016.

  • The FDA Food Safety Modernization Act (FSMA) authorizes FDA to collect fees associated with domestic and foreign facility reinspections, recall order noncompliance, and reinspections of importers.  Regarding facility reinspection, FDA plans to assess a fee where it reinspects a facility to evaluate corrective actions taken in the wake of a prior inspection that revealed noncompliance materially related to food safety requirements of the Federal Food, Drug, and Cosmetic Act (FD&C Act).  Regarding recall noncompliance, FDA plans to assess a fee where a firm fails to initiate or implement a recall in a manner consistent with the Agency’s order.  FDA has not yet determined how it will assess fees related to importer reinspection.
  • FDA has announced the fiscal year (FY) 2016 fee rates applicable to the activities above based on its estimate of 100% of the costs associated with each activity for the year.  Fees will be assessed based on the number of direct hours spent on reinspections or on taking action in response to a firm’s failure to comply with a recall order.  The hourly fee rates for FY 2016 are $221 (where domestic travel is required) and $315 (where foreign travel is required).
  • To date, FDA has not yet assessed any fees under the circumstances described above.  In a FSMA FAQ, FDA has indicated that it “does not intend to issues invoices for reinspection or recall order fees” until it has published guidance on various issues related to the assessment of fees (e.g., the types of noncompliance that will trigger fees, fee reduction procedures for small businesses, issues related to importer reinspections).  Although FDA has not yet begun to collect fees under FSMA, and the Agency has not yet exercised its mandatory recall authority, FSMA implementation is well underway and major rules are due to be published in the very near future.  In the meantime, the food industry should remain aware of FDA’s authority to assess fees under certain circumstances and should stay tuned for Agency guidance and future developments in this area.

New York City considers adoption of sodium warning requirement for chain restaurants.

  • In June 2015, New York City’s Department of Health proposed to require chain restaurants (with more than 15 locations across the U.S.) to add a sodium warning (such as a salt shaker symbol) to menus and menu boards next to items containing more than the recommended daily intake of 2,300 mg of sodium.  If adopted, the proposal would take effect as soon as December 2015.
  • On July 29, 2015, the Department of Health held a public hearing at which the sodium warning proposal was the subject of debate.  Industry groups and restaurants challenged the measure as onerous and explained that sodium warnings could be misleading or confusing if they must appear next to items that contain multiple serving sizes, e.g., pizza.  Nutritionists and consumer safety groups generally support the measure, although some assert that it does not go far enough and suggest lowering the sodium threshold that would trigger a warning.
  • New York City remains a forerunner in proposing initiatives to promote healthier eating habits.  The sodium proposal follows the city’s successful ban on trans fats and adoption of calorie counts on menus (prior to the federal requirement), as well as the unsuccessful attempt to limit the size of sodas.  In light of the fact that new federal menu labeling standards are set to take effect in the future — with FDA recently having extended the compliance date to December 1, 2016 — the adoption of New York City’s proposal and its implementation timeline could create logistical difficulties for chain restaurants that may need to redesign or reprint menus and menu boards.  Further, although city officials claim that the sodium warning would be a “warning label” and not nutrition information, the warning ultimately could be preempted by federal menu labeling requirements.  The Board of Health is set to vote on the measure in September.

Trade associations sue San Francisco over sugar-sweetened beverage legislation.

  • In June 2015, the City and County of San Francisco passed legislation that requires health warnings to be placed on advertising for sugar-sweetened beverages (i.e., nonalcoholic beverages with caloric sweeteners that contain more than 25 calories per 12 oz.).  Specifically, the warning will read:  “WARNING: Drinking beverages with added sugar(s) contributes to obesity, diabetes, and tooth decay. This is a message from the City and County of San Francisco.”  The legislation also prohibits the advertising of sugar-sweetened beverages on city property and bans city spending on such beverages.
  • On July 24, 2015, the American Beverage Association (ABA), California Retailers Association, and California State Outdoor Advertising Association sued the City and County of San Francisco, asserting that the legislation violates core First Amendment principles.  In their complaint, plaintiffs challenge two facets of the legislation, which they characterize as the “Speech Ban” and the “Warning Mandate.”  They do not challenge the ban on city spending on sugar-sweetened beverages.  Plaintiffs point out that the legislation targets only sugar-sweetened beverages, and no other sugar-containing food products.  Further, the legislation prohibits advertising on city property that would promote the consumption of sugar-sweetened beverages in moderation, as part of a healthy diet.  Plaintiffs seek declaratory relief and an injunction to prevent enforcement of the challenged provisions.
  • Particularly in light of FDA’s recent proposal to amend the nutrition labeling requirements related to “added sugars,” it seems that sugar is the subject of intensely renewed scrutiny by regulators and legislators alike.  The long-term efficacy of legislative and regulatory measures on Americans’ overall sugar intake remains to be seen.

Consumer research survey reveals significant knowledge gaps related to gluten.

  • In August 2013, FDA published a final rule defining the term “gluten-free” for the purpose of food labeling.  Naturally, many food manufacturers sought to capitalize on the newly-defined term in the marketplace.
  • A recent consumer research survey conducted on behalf of NSF International suggests that many American consumers harbor fundamental misunderstandings about gluten and its presence in the food supply.  For example, many participants believed that rice (47%) and potatoes (34%) contain gluten.  Many (41%) were unaware that beer might contain gluten.  One-quarter of the participants equated “wheat-free” with “gluten-free.”  A majority of participants were unaware that spices, flavorings, and dietary supplements may contain gluten.  Finally, more than half of the participants believed that “gluten-free” labeling meant that products were verified to be free of all gluten (despite FDA’s tolerance of up to 20 ppm gluten in “gluten-free” foods).
  • The survey results indicate that the average American consumer may be less knowledgeable about gluten than one might anticipate.  Data such as these are particularly relevant to companies that manufacture and market “gluten-free” foods or that hope to capitalize on consumer understanding about gluten in the food supply.  Despite FDA’s definition of the term, it appears that “gluten-free” labeling may not necessarily be conveying the message that the food industry, or even the Agency, intends.

Senate introduces voluntary COOL bill.

  • As previously covered on this blog, Congress has been working to resolve the controversy surrounding country of origin labeling (COOL) requirements for meat products.  In the wake of a World Trade Organization (WTO) ruling that mandatory COOL requirements unfairly discriminate against meat imports — and the WTO’s subsequent rejection of the U.S. appeal of that decision — Congress must repeal or significantly amend the COOL requirements to mitigate exposure to trade sanctions from Canada and Mexico.  In June, the House of Representatives passed a bill to repeal the COOL requirements, but the Senate has not taken further action.
  • On July 23, 2015, Senators Debbie Stabenow (D-Michigan) and John Hoeven (R-North Dakota) introduced a bill that would institute a voluntary COOL regime in place of the mandatory requirements.  The bill, S.1844, would establish a voluntary “Product of the U.S.” label for meat and poultry products from animals that are born, raised, and harvested in the United States.
  • At a recent Senate Agriculture Committee hearing on the COOL requirements, various stakeholders appeared to support voluntary labeling as long as it is “WTO-compliant.”  Now it remains to be seen whether, and how quickly, Congress will act on this legislation.

FDA proposes adding the percent daily value for added sugars to the nutrition/supplement facts panel.

  • In March 2014, FDA proposed major revisions to the nutrition and supplement facts labels for foods and dietary supplements.  Among many other changes, FDA proposed requiring the declaration of “added sugars” on the label.
  • On July 27, 2015, FDA issued a supplement to the proposed rule that would require inclusion of the percent daily value (% DV) for added sugars in nutrition labeling.  FDA developed a % DV for added sugars based on the 2015 Dietary Guidelines Advisory Committee (DGAC) recommendation that daily intake of calories from added sugars not exceed 10% of total calories.  FDA proposes a Daily Reference Value (DRV) for added sugars of 50 g for adults and children older than 4; and 25 g for children aged 1 through 3.
  • FDA’s decision to highlight added sugars in nutrition labeling has elicited mixed reactions from the food industry, with many asserting the lack of a scientific distinction between naturally-occurring sugars and added sugars and others questioning the strength of the scientific evidence regarding a specific limit on sugar intake.  Notably, FDA has not proposed a % DV for total sugars.  The Agency will accept comments on the supplemental proposed rule until October 13, 2015.

U.S. House of Representatives passes Safe and Accurate Food Labeling Act of 2015.

  • As covered recently on this blog, the House of Representatives was set to vote on a bill that would — among other elements — establish federal regulatory control over the labeling of genetically modified (GM) foods.  Crucially, the bill would block inconsistent state requirements, such as the mandatory GM labeling law set to take effect in Vermont in 2016.
  • On July 23, 2015, the Safe and Accurate Food Labeling Act of 2015 (H.R. 1599) was passed by the House in a 275-150 vote.  As passed, the bill would:
    1. require the submission of a premarket biotechnology notification to FDA for any new GM organism intended to be used in food applications (akin to FDA’s current voluntary consultation process);
    2. permit FDA to require “GM labeling” only where there is a “material difference” between the GM food and its conventional counterpart (in terms of functional, nutritional, compositional, allergenic, or other properties), and where the “disclosure of such material difference is necessary to protect public health and safety or to prevent the label or labeling of the food so produced from being false or misleading in any particular”;
    3. require USDA to maintain and publish an Internet registry of all GM crops permitted for use in food applications;
    4. establish a certification program administered by USDA to permit voluntary “non-GM” claims on food labels (akin to the current USDA organic labeling regime);
    5. require FDA to promulgate regulations defining the term “natural” for use on food labels; and
    6. preempt state and local restrictions on GM crops and GM foods and any labeling requirements related to “GM” claims or “natural” claims.
  • As part of the vote, the House considered and rejected four amendments that would have:
    1. prohibited the use of the term “natural” on foods containing GM components (Rosa DeLauro, D-Connecticut);
    2. struck and replaced the entire bill with only the section creating a voluntary “non-GM” claim program administered by USDA (Chellie Pingree, D-Maine);
    3. required any U.S. company that labels foods as containing GM components for foreign markets to label its products in the same way for the domestic market (Peter DeFazio, D-Oregon); and
    4. preserved tribal sovereignty to restrict the cultivation of GM crops on tribal lands (Jared Huffman, D-California).
  • As anticipated, major industry stakeholders have lauded the House’s action.  It now is up to the Senate to move quickly to pass a companion bill.

FDA issues a proposed rule and draft guidance to implement its third-party accreditation program under FSMA.

  • The FDA Food Safety Modernization Act (FSMA) directs FDA to establish a program for accrediting third parties to conduct food safety audits and issue certifications for facilities and food.  The Agency may use certifications:  (1) as a condition of entry for certain imported foods that FDA has determined to pose a food safety risk; and (2) to facilitate participation in the Voluntary Qualified Importer Program (VQIP), previously covered on this blog.  Participation in the accredited third-party audit/certification program is voluntary.  FDA issued a proposed rule to implement the program on July 29, 2013.  A final rule is anticipated in Fall 2015.  FSMA directs FDA to establish user fees to implement the third-party accreditation program and to develop Model Accreditation Standards that recognized accreditation bodies must use to qualify third-party auditors/certification bodies.
  • On July 23, 2015, FDA released a proposed rule to establish user fees to fund the Agency’s work in implementing the new third-party accreditation program.  The proposal indicates that four parties would be subject to user fees:
    1. Accreditation bodies submitting applications or renewal applications for recognition in the third-party accreditation program;
    2. Recognized accreditation bodies participating in the third-party accreditation program;
    3. Auditors/certification bodies submitting applications or renewal applications for direct accreditation; and
    4. Accredited auditors/certification bodies (whether accredited by recognized accreditation bodies or by FDA through direct accreditation) participating in the third-party accreditation program.
  • The proposal would establish both application fees and annual fees to cover FDA’s costs in implementing the program.  FDA proposes to notify the public of the fee schedule annually prior to the beginning of the fiscal year for which the fees apply, and each fee schedule would be adjusted to account for inflation and improved estimates of the cost to FDA of performing relevant work for the upcoming year.  User fees would be non-refundable and no exemption or reduced fee exists for small businesses.  Non-payment of application fees would result in FDA deeming the applications to be incomplete.  Non-payment of annual fees would result in the suspension, and ultimately, revocation, of recognition/accreditation of previously recognized/accredited bodies.
  • Also on July 23, 2015, FDA released a draft guidance document intended to serve as the Model Accreditation Standards for the third-party accreditation program.  FDA considered various voluntary consensus standards and ultimately drew guidance from International Organization for Standardization (ISO)/International Electrotechnical Commission (IEC) ISO/IEC 17021:  Conformity Assessment — Requirements for bodies providing audit and certification management systems (2011) (ISO/IEC 17021:2011).  The draft guidance addresses topics such as capacity and competence; conflicts of interest; quality assurance; records procedures; and regulatory audit reports, and provides the Agency’s recommendations in each area.
  • Both the proposed rule and the notice of availability of the draft guidance are scheduled for publication in the Federal Register on July 24, 2015.  FDA will accept comments for 75 days after publication, i.e., until October 7, 2015.   Stakeholder comments will influence FDA’s implementation of the third-party accreditation program, which, in turn, will affect implementation of the VQIP and the Agency’s efforts to ensure the safety of the imported food supply.

U.S. food recalls have nearly doubled over the past decade.

  • Food recalls occur with relative frequency in the United States, with the reasons for such recalls ranging from labeling issues to food safety concerns, such as potential contamination with pathogens like Salmonella, Listeria, or E. coli.  FDA posts up-to-date information regarding food recalls on its website.
  • A recent analysis published by a prominent reinsurance company, Swiss Re, indicates that both the number and the costs associated with U.S. food recalls have almost doubled since 2002.  According to the analysis, 52% of all food recalls cost the affected companies more than $10 million, a figure that does not include costs associated with any reputational damage resulting from the recall.
  • These statistics serve as a reminder of the importance of good risk/crisis management strategies and the potentially significant value of a robust recall insurance policy.