| M E M O R A N D U M | |
| TO: | Clients and Friends of the Firm |
| FROM: | John M. Peterson Maria E. Celis Neville Peterson LLP |
| RE: | The Farm Security and Rural Investment Act of 2002: New Country of Origin Disclosure Requirements for Certain Food Products Intended for Retail Sale |
The President recently signed into law the Farm Security and Rural Investment Act of 2002 , Pub. L. 107-171 (“the Act”). This major farm bill contains some little-noticed provisions which will impose new country of origin marking and disclosure requirements in respect of certain food products sold at retail. Under the new law, retailers will need to label certain food products, or display point-of-sale information, to show the products’ country of origin. Firms which supply food products to retailers will need to provide retailers with information concerning their products’ country of origin.
This Memorandum describes the new country of origin disclosure and labeling requirements which, in the case of foreign-origin goods, are in addition to any marking requirements imposed by Section 304 of the Tariff Act of 1930, as amended [19 U.S.C. Section 1304].
Country of Origin Labeling for Covered Commodities
Section 10816 of the Act amends sections 201 et seq. of the Agricultural Marketing Act of 1946 (“the Agricultural Marketing Act”) [7 U.S.C. §§ 1621 et seq.] , to establish new country of origin labeling requirements for certain retail ‘covered commodities’, as follows:
However, the term ‘covered commodity’ does not include the named items if they are present as an ingredient in a processed food product.
Origin Labeling/Disclosure by Retailers
Under the Act, a retailer of a “covered commodity” is required to inform consumers of the country of origin of the covered commodity at the final point of sale. However, if the covered commodity is already individually labeled for retail sale in a form or package which shows the country of origin, the retailer shall not be required to provide any additional information at the point of sale.
Furthermore, country of origin labeling is not required for food prepared or served, offered for sale or sold, or served to consumers, in a “food service” establishment, such as a restaurant.
Retailers may inform consumers of the country of origin of a covered commodity by using a label, stamp, mark, placard, or other clear or visible sign on the covered commodity, or on the package, display, holding unit, or bin containing the commodity at the final point of sale to consumers.
Recordkeeping/Origin Certification by Others in the Retail Supply Chain
Moreover, the Secretary of Agriculture may require by regulation that any person who prepares, stores, handles, or distributes a covered commodity for retail sale maintain a verifiable recordkeeping audit trail for verification of compliance with this section. This provision in the new law could be used to impose requirements on food distributors, wholesalers and others to track the origin of the “covered commodities” in which they deal.
In addition, any person engaged in the business of supplying a covered commodity to a retailer shall be required to provide information to the retailer indicating the country of origin of the covered commodity. The Act specifies that the Secretary may not establish or use a mandatory identification system to verify the country of origin of a covered commodity, but may use, as a model, certification programs in existence such as -
Rules of Origin for Covered Commodities: Claims of U.S. Origin
The Act also prescribes rules for determining the origin of certain covered commodities, in particular, when those commodities may be represented as having United States origin.
Covered commodities may only be labeled as having a United States country of origin if -
The Act also requires that the country of origin notice for fish shall distinguish between wild fish and farm-raised fish. § 282(a)(3).
It should be noted that, in some cases, these rules may be stricter than those imposed under the Customs laws, or under the Federal Trade Commission’s “Made in the USA Labeling Guideline”. For example, under the NAFTA Marking Rules, 19 C.F.R. Section 102.20, the creation of dressed cuts of beef from cattle born and raised in another country effects a change in origin, for Customs marking purposes. The beef cuts would be considered NAFTA “originating”, and a product of the United States for marking purposes, if made from a foreign-born and foreign-bred animal which is slaughtered in the United States. The new Act, however, provides a different, stricter rule for “Product of USA” representations at the retail level.
Penalties for Violations
If the Secretary determines that a retailer is in violation of the origin labeling requirements imposed by the Act, then the Secretary shall (1) notify the retailer and (2) provide the retailer with a thirty (30) day period, beginning on the date on which the retailer receives notification, during which the retailer may take the necessary steps to comply with the Act. If upon completion of the thirty day period, the Secretary determines that the retailer has willfully violated the Act, after providing notice and an opportunity for a hearing before the Secretary with respect to a violation, the Secretary may fine the retailer in an amount of not more than $10,000 for each violation.
Implementing Regulations
The Secretary of Agriculture is required to issue guidelines for the voluntary country of origin labeling of covered commodities, based on the requirements of the Act, no later than September 30, 2002. The Act also requires the Secretary to promulgate the necessary regulations to implement the mandatory labeling provisions of the Act no later than September 30, 2004, and authorizes the Secretary shall enter into partnerships with State enforcement agencies and structures to assist in the execution and administration of these amendments.
The new requirements will apply to “the retail sale of a covered commodity beginning September 30, 2004".
A copy of the relevant excerpts of the Farm Security and Rural Investment Act of 2002 is enclosed.
Our firm stands ready to furnish any additional information or assistance which you may require concerning the new labeling requirements, or other country of origin and marking/labeling regimes. Please call if you have any questions. Best regards.
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