Special Focus

Country of Origin Labeling (COOL) Applied to Food

Apr 2004
Keller and Heckman LLP's Packaging Practice Group

Despite all the recent talk about it, country of origin labeling (COOL) is nothing new. What's new is its possible application to certain food products under the terms of the 2002 Farm Bill (Farm Security and Rural Investment Act of 2002).

The Tariff Act of 1930 requires that "every article of foreign origin . . . imported into the United States shall be marked in a conspicuous place . . . to indicate to an ultimate purchaser in the United States the English name of the country of origin of the article." Regulations issued by the Customs Service (now the Bureau of Customs & Border Protection) and have long exempted many food products from the country of origin marking requirement. Included among these exemptions are "natural products such as vegetables, fruits, nuts, berries, live or dead animals . . . in their natural state."

The 2002 Farm Bill sought to eliminate the COOL exemption for certain agricultural products, namely beef, lamb, pork, fish, peanuts, and "perishable agricultural commodities." Together, these are referred to as the "covered commodities." The law states that retailers must inform consumers of the country of origin of these foods at the point of sale. The law applies to both domestic and imported foods. Thus, it requires all beef and other covered commodities in grocery stores to be identified either as a product of the United States or of some other country.

As required by the Farm Bill, the U.S. Department of Agriculture's Agricultural Marketing Service (AMS) published a proposed COOL rule this past October. See 68 Fed. Reg. 61944 (Oct. 30, 2003). The final rule was intended to be in effect no later than the statutory deadline, Sept. 30, 2004. However, a provision in the Omnibus Appropriations Act of 2004 imposes a two-year moratorium on the implementation of the final COOL labeling requirements. (After asking USDA to implement COOL, Congress changed its mind a bit.) Therefore, the COOL requirements will not go into effect before Sept. 30, 2006, with one exception: labeling for wild and farm-raised shellfish will still go into effect as originally scheduled, by Sept. 30, 2004. This measure was partly due to efforts by Senate Appropriations Committee chairman Ted Stevens (R-Alaska).

Below is a general discussion of USDA's proposed rule. As with any proposed rule, these provisions may change if and when a final rule is issued. In this case, because there is a significant amount of opposition to these requirements within the food industry, it remains possible that the COOL provisions of the 2002 Farm Bill will be modified or repealed before the new 2006 implementation deadline.

COOL requires retailers to inform consumers of the country of origin of "covered commodities," defined as muscle cuts of beef (including veal), lamb, and pork; farm-raised fish and shellfish; wild fish and shellfish; perishable agricultural commodities (PACs) (fresh and frozen fruits and vegetables); and peanuts. Any person engaged in the business of supplying a covered commodity to a retailer must provide the retailer with country of origin information. In addition, any person who prepares, stores, handles or distributes a covered commodity for retail sale must maintain a verifiable recordkeeping audit trail.

Processed foods and ingredients in processed foods are exempt from COOL. A "processed food item" is defined using a two-step approach that requires: (1) the retail item derived from the covered commodity has undergone a physical or chemical change, causing the character to be different from that of the covered commodity; or (2) the retail item from the covered commodity has been combined with other covered commodities or substantive food components to produce a distinct retail item that is no longer marketed as a covered commodity. Examples of processed food items under the first category include oranges that have been squeezed to produce orange juice or peanuts that have been ground to produce peanut butter. Examples that fall under the second category include peanuts in a candy bar or a salad mix containing lettuce and tomatoes.

Please note that if the addition of other ingredients does not affect the character of the covered commodity (as is the case when an antimicrobial is added to fresh strawberries), the retail product is not a processed food item and remains subject to COOL.

If a product consists of a single covered commodity in an unprocessed state, such as bagged lettuce with no other ingredients present, it is subject to COOL. If the lettuce was imported from various countries, they must be identified alphabetically in the country of origin declaration. Note, however, that if a product contains more than one covered commodity, such as bagged salad mix containing both lettuce and tomatoes, it would not require a country of origin statement because it would be considered a processed food.

The COOL declaration can be provided to the consumer by means of a label, stamp, mark, placard, or other clear and 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.

Regarding enforcement, the law provides that USDA may fine retailers not more than $10,000 for each violation, but only after first issuing a warning and allowing the retailer to take necessary steps to come into compliance during a 30-day period.

Predictably, COOL has supporters and detractors. The biggest supporters are purely domestic producers of the covered commodities: beef, lamb, pork, fish, and perishable agricultural commodities. Consumer advocacy organizations such as Public Citizen also support COOL. Detractors include foreign producers of the covered commodities and many in the food industry who handle covered commodities.

The two-year moratorium obviously gives opponents of COOL some time to work toward a permanent repeal of the statutory requirement. Proponents of COOL, on the other hand, have vowed to push for its implementation before the current 2006 deadline.