Proposed Mandatory Biotech Labeling in California Could Impact Other Processed Food

September 18, 2012

On Election Day, California voters will be asked to decide whether to require labeling of genetically engineered (GE) food sold in California. The GE labeling initiative will appear on the ballot as Proposition 37. If successful, the California Right to Know Genetically Engineered Food Act (the Act) will require clear and conspicuous labeling on GE food. The Act will also prohibit GE foods from bearing labels that imply that the food is "natural," "naturally made," "naturally grown," "all natural," or described in similar terms. The consequences of Proposition 37 may be much broader-reaching, however. For example, the "Official Title and Summary of Proposition 37" (prepared by the Attorney General), the legislative analysis, and other ballot materials state that the Act's natural labeling restrictions could be applied more generally to processed food.

Environmental Law Foundation Legal Director James Wheaton petitioned the California Superior Court to remove the phrase "other processed food" from the ballot label and to strike the passage referencing "all processed foods" from the analysis. The court denied the petition, but ruled that "some processed foods" should be substituted for "all processed foods" in the legislative analysis. Despite the ruling, therefore, "processed foods" remain within the scope of the Act. (Copies of the court order, the legislative analysis of Proposition, the text of the proposed law, and other related material can be accessed from the California Secretary of State website.)

The Act requires, effective July 1, 2014, GE labeling on foods that have been or may have been "entirely or partially produced with genetic engineering." Processed foods that have been genetically engineered would have to bear the statement: "Partially Produced with Genetic Engineering" or "May be Partially Produced with Genetic Engineering." While the presence of GE ingredients triggers labeling of the food, the Act does not require the listing or identification of the particular GE ingredient(s) on the label.

There are several notable exemptions set forth in the Act. Processed foods that contain GE ingredients present at less than 0.5% where there are not more than 10 such ingredients are exempt from GE labeling – but only until July 1, 2019. Processed foods that contain GE processing aids or enzymes are exempt from the GE labeling requirements of the Act. Foods that are intended for immediate human consumption or sold in a restaurant or other similar facility are exempt. Foods from animals (e.g., milk, meat, and cheese) that themselves consumed GE feed are exempt. Finally, alcoholic beverages, organic foods, and medical foods are expressly exempt.

Another significant aspect of the Act is, enforcement would be achieved through private right of action, which would permit citizens to seek injunctions against companies that violate the Act and enable recovery of reasonable attorney's fees and investigatory expenses. It is therefore anticipated that Proposition 37 will result in an increase in private litigation as did its predecessor, California's Safe Drinking Water and Toxic Enforcement Act, or Proposition 65. Proposition 37's reach, however, is far more expansive. Where Proposition 65 addresses some 800 chemicals, Proposition 37 potentially affects all foods sold at retail in California. Proposition 37 initially provides for a de minimis threshold exemption as noted above, but that exemption sunsets after 7 years. After July 1, 2019, therefore, all products that contain even trace amounts of GMO must be labeled in accordance with the Act.

Proposition 37 includes an absolute defense for use of GE seed or food as an ingredient in a finished product, without the express knowledge of such use. To invoke this defense, a defendant must produce a sworn letter from his or her supplier attesting that the ingredients do not include GE. For any given lawsuit, each supplier in the supply chain – the seed supplier, farmer, processor and manufacturer – will need to produce such a letter. Because supply chains typically involve multiple sources and vary frequently, accurate record keeping is essential to asserting a valid defense. To be sure, this will impose a substantial burden on the manufacturer of the finished food. Given the potentially substantial costs of litigating a Proposition 37 claim, defendants may choose to settle the matter for a nominal value rather than trying to assert defenses on the merits.

Products that typically contain GE ingredients include soy, corn, and sugar beets. Proposition 37 will not result in litigation over GE products that are labeled as such. It will instead arise only over products that are not labeled in accordance with the Act. Nevertheless, Proposition 37 may have the unintended effect of forcing manufacturers to simply choose lower cost GM ingredients and label their product as such, rather than continue to use non-GM ingredients at the risk being the target of a Proposition 37 legal action.

Perhaps most troubling is Proposition 37's prohibition against labeling any product as "natural" that involves more than minimum processing. This extends well beyond the legislation's original intent of identifying products containing GMO. If Proposition 37 passes, for example, processed foods such as applesauce made 100% from non-GM, certified organic apples, and peanut butter processed exclusively from all natural, non-GM peanuts could not be labeled as "natural."

Although the Act would only impose obligations on products sold in California, if passed, it is expected to have an impact on food producers throughout the country. Specifically, national food producers would have to either use the same labeling elsewhere or create special labeling for products sold in California.