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From: Food Quality & Safety magazine, December/January 2014

GM Foods: Can We Afford for States to Set Their Own Regulations?

by Don Butte and Jeffrey Whitesell

GM Foods: Can We Afford for States to Set Their Own Regulations?

Food quality and safety managers have their necks on the line daily when it comes to managing their companies’ food quality and safety programs, including their product labeling. Should any of the current state initiatives to establish unique state standards for genetically modified organisms (GMO) and non-genetically modified organisms (NGMO) products become effective, their jobs will instantly become significantly more complicated.

Various ballot initiatives seeking to impose increased labeling requirements on GMO foods are being proposed in over 20 different states. In June 2013, Connecticut became the first state to pass legislation (House Bill 6527) requiring that genetically modified foods and foods containing GMOs be labeled as “produced with genetic engineering.” Because of concerns about potential negative consequences (including increased food prices in the state, economic and competitive harm to local food producers and businesses, and the expected litigation costs of defending these regulations in the courtroom), the bill includes a “trigger” provision that the labeling requirements would go into effect only after at least four other Northeastern states (including at least one bordering state) with a combined aggregate population of at least 20 million adopt similar requirements. Shortly thereafter, the Maine legislature passed a similar bill (LD 718), also containing a “trigger” provision requiring such labeling only if at least five neighboring states pass similar GMO legislation.

As evinced by the “trigger” provisions in the Connecticut and Maine bills, the impact of proposed state legislation is likely to soar beyond that being mentioned by the advocates of these regulations. Consumers all across the country, regardless of where they reside, will have to live with the unintended consequences of such legislation. In addition to the impact on consumers and producers, the legislation itself will face numerous legal challenges, making it very possible that these proposed regulations will never take effect.

Motivation Behind State Legislation

The Oregonian, an Oregon newspaper, recently reported that state lawmakers are studying eight bills focused on labeling genetically modified foods, fish, and crops. One proposal bans the farming of such fish outright.

Oregon State Representative Paul Holvey, a sponsor of several GMO bills, told the newspaper, “I think consumers have a right to know and make their own decisions about these foods.” Holvey said he became concerned about the issue after visiting Atlantic salmon fish farms in Washington and British Columbia. “Our fisheries are extremely important to the economy,” he said. “If we allow the Pacific Northwest to become a mixed bag of Atlantic salmon and genetically engineered salmon, I think consumer confidence in Pacific salmon will be undermined and damage the industry.” No mention of health concerns there.

FDA = No GMO Labeling

Although FDA regulations require the labeling of hundreds of food ingredients, additives, and processes, they do not currently contain any GMO labeling requirements. In fact, the FDA’s position on GMOs, as stated in a 1992 policy statement, is that products containing GMOs do not differ in any meaningful or material way from other foods, do not present any different or greater safety concerns, and do not differ in taste or smell from other food products. Specifically, the FDA stated that it “has no basis for concluding that bioengineered foods differ from other foods in any meaningful or uniform way, or that, as a class, foods developed by the new techniques present any different or greater safety concern than foods developed by traditional plant breeding.” In a January 2001 Guidance document, the FDA reiterated that it “is not aware of any data or other information that would form a basis for concluding that the fact that a food or its ingredients was produced using bioengineering is a material fact that must be disclosed . . . FDA is therefore reaffirming its decision to not require special labeling of all bioengineered foods.” The FDA’s position is consistent with a French court decision in August 2013 overturning the French agricultural ministry’s ban on genetically modified corn, finding that the government failed to provide proof that the food posed a risk to human health or the environment.

So what is on the horizon for GMOs if state legislation is enacted before federal legislation? Despite the recent increase in demand for these products and state efforts to regulate them, the road to legislation may be more difficult and challenging than anticipated. It will go far beyond merely passing these initiatives, and the battle will continue long after the votes are counted.

Federal Preemption

Any state legislation seeking to impose labeling requirements on GMOs will undoubtedly face litigation from various parties, primarily the food and agriculture industries. The first expected challenge to any such legislation is preemption by federal regulations. In other words, any state legislation is trumped by existing federal food labeling regulations, including the Federal Food, Drug, and Cosmetic Act (FDCA). Under the Supremacy Clause of the U.S. Constitution, state laws are invalidated if they “interfere with, or are contrary to, federal law.”

Generally, state labeling requirements contradictory to federal regulations are preempted by federal regulations. But what if there are no contradictory federal regulations? Neither the FDCA nor the FDA currently have labeling requirements in place for these foods. FDCA prohibits only state labeling requirements that are “not identical” to federal regulations, and courts have upheld state labeling requirements that address areas not regulated by the FDA. The federal government, including both Congress and the FDA, has the power to silence the preemption issue once and for all and to halt all current and future state efforts to label GMO products. Regardless, no such federal bill has been passed and the FDA has shown no interest in becoming involved in this GMO labeling issue.

The food industry would prefer federal legislation for the labeling of GMO food products rather than having to satisfy 50 different sets of regulations and incurring the incredible expense of fighting these state regulations in courts across the country. Federal food labeling legislation would give the food industry one uniform standard to follow, and would permit one single label to be used in every state.

Would the FDCA, FDA, or other federal regulations preempt new state labeling requirements? Arguments exist on both sides of the preemption issue. Several California federal court judges found that claims challenging the use of the term “all-natural” are not preempted because the FDA has refused to define this term or regulate its use. Will other courts follow? Or will the federal government step up and end the debate?

Labeling and Right to Free Speech

Another significant obstacle state GMO legislation may face is infringement on food producers’ First Amendment rights. No Constitutional “right to know” exists in the U.S. Any legislation either compelling food producers to include certain language on their products or banning certain language from being used could be vulnerable to a First Amendment challenge. The freedom of expression protects not only the right to speak, but also the right to abstain from speaking.

In order to survive a First Amendment challenge, a state legislative restriction on commercial speech (i.e., labeling requirements) must strike a balance between the new regulations and the producers’ right to free speech while showing that the state’s interest in passing the legislation is substantial.

The U.S. Court of Appeals, Second Circuit applied this analysis in its 1996 decision in International Dairy Foods Association v. Amestoy, finding that a Vermont statute imposing new mandatory labeling requirements on milk treated with artificial growth hormones was unconstitutional under the First Amendment. The court concluded that the statute compelled the milk producers to speak rather than remain silent, violating their First Amendment rights. Several other courts have followed, finding similar compelled speech without a public health or safety interest to be unconstitutional.

These cases suggest that proposed legislation requiring food labeling to contain certain terms such as “genetically modified” or “produced with genetic engineering” (per the Connecticut GMO bill), absent a compelling state interest, may not survive a First Amendment challenge. Proponents of these new labeling standards assert that they are necessary to protect consumers’ right to know the content of their food products (i.e., to satisfy consumers’ curiosity). They do not claim that such labeling will protect any health or safety interest, likely because there is no scientific evidence that genetically modified foods materially differ from other food products.

In defending these initiatives, states and advocates could alternatively argue that we need GMO labeling regulations to serve more substantial interests, such as to prevent consumer deception or protect human health. But opponents will argue that since the FDA does not consider GMO foods materially different from traditional foods, consumers cannot be deceived if such products are not labeled as GMO. And, with no scientific evidence that GMO products are a health risk, the asserted interest of protecting human health likewise lacks proof. Since it would be difficult to argue that these proposed labeling regulations serve these interests, we are left with only consumer curiosity. But according to the Amestoy court, “consumer curiosity alone is not a strong enough state interest to sustain the compulsion of even an accurate, factual statement.” This court further recognized the slippery slope lying ahead, stating that “[w]ere consumer interest alone sufficient, there is no end to the information that states could require manufacturers to disclose about their production methods.” Eventually the courts will decide if this right to know is compelling enough to impose increased labeling requirements and the accompanying financial and other burdens on food producers. But many believe that, absent scientific proof of harm or some other safety issue caused by GM products, merely satisfying consumer curiosity will not be enough.

Interstate Commerce Clause

Another major potential constitutional hurdle facing individual state GMO regulations is the impact they may have on interstate commerce—the free exchange of products between citizens of different states across state lines. Under the Commerce Clause of the U.S. Constitution, congress has the exclusive power “to regulate commerce with foreign nations, and among the several states” to ensure the free flow of commerce without local or state restrictions.

Generally, areas of national importance requiring uniform federal regulation fall within the federal government’s exclusive power. But other areas lacking federal regulation or powers not enumerated to the federal government fall to the individual states pursuant to the Tenth Amendment. Thus, states have the right to regulate their own domestic commerce where there is no federal legislation in that area. But the exercise of that right cannot impede, discriminate against, or burden interstate commerce. If it does, the state and national interests fuelling the legislation must be weighed and a determination must be made as to whether the legislation oversteps the federal government’s exclusive power. Legislation violates the Commerce Clause if either the alleged state interest served by the law is outweighed by the burden imposed on interstate commerce or if its discriminatory effect on out-of-state producers burdens interstate commerce.

Similar to the First Amendment analysis, in order for such regulations to survive an interstate commerce challenge, a legitimate state interest must be shown. As U.S. Supreme Court cases reflect, a state can regulate intrastate commerce where there is no federal regulation as long as the legislation seeks to protect a compelling and legitimate state interest and imposes no unreasonable burden on interstate commerce. But courts have repeatedly found that, absent a legitimate health or safety concern, a state may not burden interstate commerce. Is consumer curiosity enough?

Costs of State Legislation

The advocates of state legislation claim that consumers have a “right to know” what is in their food, despite the fact that only 3 percent of Americans mention GMOs when asked what additional information they would like to see on food labels. However, the unexpected costs of states passing their own GMO food labeling requirements will be significant. Connecticut and Maine, recognizing the substantial burden and expense that would likely be required to defend these regulations in court, seek to share these costs with neighboring states with similar labeling requirements. But, regardless of which states take on this legal fight, the taxpayers will be the ones paying millions in litigation costs and attorney fees with their tax dollars. On the other side, consumers will wind up paying the litigation costs for companies challenging these new labeling regulations in the form of higher food prices.

It is estimated that 70 percent to 80 percent of the processed foods sold in the U.S. contain at least one genetically modified ingredient, and according to the USDA, 88 percent of corn acreage, 94 percent of soybean acreage, and 95% of sugar beet acreage in the U.S. is genetically modified. It will be virtually impossible for food quality and safety managers to successfully manage a massive NGMO transition—assuming there are enough NGMO ingredients available. Major retailers in five European countries have already recognized that currently there is not sufficient soy bean farming capacity within Europe for growing non-genetically modified soybeans and have urged greater governmental support for soybean harvesting in Brazil as increased demand for lower cost genetically modified soy from China risks diminishing NGMO supply worldwide.

What does all of this mean to food growers, manufacturers, marketers, and sellers? To small companies with sales contained primarily in one state, then this may well be a boon to their top and bottom lines since it may limit competition. At the same time, if nearby states have different regulations, it will inhibit their growth beyond their state boundaries. State by state labeling laws and definitions will result in a food quality and safety management nightmare. It will also have a major negative impact on both the top and bottom lines of medium and large food operations that will be forced to pass their increased costs on to consumers and even remove popular brands from the shelves. 

Deciding to place a “GMO” label on every package would likewise be virtually impossible as each state requires its own unique GMO language to be used on labels for food sold in their states.

According to one report, had California passed Proposition 37 last fall, the average California family’s grocery costs would have increased by an estimated $400 per year, amounting to a total annual consumer cost of between $4.5 and $5.2 billion statewide. Another report estimated that Prop 37 would have imposed approximately $1.2 billion in additional costs on California food processors in order to meet the bill’s onerous requirements and would have resulted in higher prices on many of the foods consumed by Californians. Asked if they are in favor of labeling GMO products, most people will answer “yes” or claim to be neutral. When asked the same question in the context of higher prices or compromised product availability, most people answer with a resounding “no!”

As a nation, can we really afford the unintended consequences of letting 50 states go their own way on regulating our food supply? A select group of consumers comprising less than 5 percent of the population have the money and are willing to pay the increased price for organic and NGMOs even though the USDA states that there is no proof that these choices lead to better health. While they should remain free to make these choices, to impose the increased costs on the rest of the citizenry is unjust, begging the real question: Why are so many state governments and politicians spending political capital on GMO food regulations when over 95 percent of the population is indifferent? It appears that the Oregonian article about GMO salmon tells the whole story. The GMO effort is primarily about economics—with the “health” claim used when convenient.

Americans are not indifferent because they don’t care about natural or GMO products; they are indifferent because they are simply not willing to pay substantially more for NGMOs and/or natural foods when studies show there are no health benefits to be gained.

The natural and GMO movements are primarily about political and economic benefits for a few at the cost of the many. Less than 5 percent of the population is interested in purchasing natural products or NGMOs if they cost more than conventional products currently available—and according to all sources, they clearly do.

What was started by a few serious-minded people with the clear intent of improving our quality of food and health appears to have been hijacked by self interest groups, politicians, and profiteers. Food quality and safety managers are in the right spot at the right time to steer the agenda away from politics and back toward food quality and safety. 


Butte is a senior food executive and expert in supply chain management and efficiency with more than 30 years of experience. Reach him at dabpolo@aol.com. Whitesell, an attorney in Tucker Ellis LLP’s Cleveland office, focuses on products liability, medical and legal malpractice, toxic torts, and securities and business litigation. Reach him at jeffrey.whitesell@tuckerellis.com.

 

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