Issues: Country of Origin Labeling

Below is a summary prepared by PMA legal counsel, Keller & Heckman LLP, on the 2003 USDA proposed rule on mandatory country of origin labeling.

What produce items are excluded? The COOL law excludes a covered commodity that is “an ingredient in a processed food item.” Under the proposed rule, COOL is not applicable if: 1) a retail item derived from a covered commodity has undergone a physical or chemical change and has a character that is different from that of the covered commodity (oranges to orange juice); or 2) a covered commodity has been combined with other covered commodities or other substantive food components to produce a distinct retail item that no longer is marketed as a covered commodity (a salad mix containing lettuce and tomatoes).

What produce items are exempted? The COOL law exempts covered commodities sold at “food service establishments” (defined under the proposed rule as a restaurant, cafeteria, lunch room, food stand, saloon, tavern, bar, lounge, or other similar facility operated as an enterprise engaged in the business of selling food to the public, including salad bars, delicatessens, and other food enterprises located within retail establishments that provide ready-to-eat foods that are consumed either on or outside of the retailer's premises).

What if a covered commodity is already individually labeled for retail sale regarding country of origin? Retailers are not required to provide additional notice to consumers if a retail package bears country of origin labeling.

What are the requirements for bulk produce? In the interim final rule for fish and shellfish, USDA permitted covered commodities (in bulk) from different countries to be displayed in the same bin, if information regarding all possible origins is listed. If applied to produce, that method of labeling would be a departure from the proposed rule, which would permit a covered commodity from more than one country of origin to be displayed in the same bin only if there was individual labeling, such as a PLU sticker.

What if a covered retail product contains ingredients from both U.S. and foreign raw material sources? In the proposed rule, USDA interpreted the COOL law as requiring country of origin labeling for each raw material source (foreign and domestic) to be declared by listing each country alphabetically, including the U.S.A.

What if a covered retail product contains ingredients solely of U.S. origin but enters a foreign country during the production process? Under the proposed rule, if a product qualifies for a U.S. country of origin designation (which, for produce, means grown in the U.S.), the product may then be exported for further processing or handling and imported back into the U.S. without losing the U.S.A. country of origin designation, so long as a verifiable recordkeeping audit trail is maintained.

What is the “method of production?” PMA understands that some produce suppliers have received letters from buyers seeking information regarding compliance with COOL, including method of production. Method of production refers to the designation of seafood as wild or farm-raised, which is not applicable to produce.

What are some possible changes to COOL requirements in the pending bills? 1) Macadamia nuts would be added as a covered commodity, 2) A state, region or locality may be used to identify the United States as the country of origin, 3) For purposes of compliance with COOL, USDA may not require businesses to keep records other than those maintained in the normal course of business, and 4) There would be a single enforcement standard for retailers and non-retailers, with penalties lowered from a maximum of $10,000 per violation to a maximum of $1,000 per violation (with no penalties if there was a “good faith” effort to comply, within 30 days of notice of noncompliance).

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