HOUSTON — The great G.M.O. debate is becoming a bit more complicated as a new Vermont law will require G.M.O. food labeling beginning July 1. At SNAXPO, held March 19-22 in Houston, Martin Hahn, Partner, Hogan Lovells L.L.S., L.L.P., and general counsel for SNAC International, provided insight to conference attendees.
“One of my favorite pastimes is the ‘I hate Vermont banter,’” Mr. Hahn joked. “But the reality is that food manufacturers would have a hard time keeping their products out of Vermont. It’s a really hard thing to do.”
Vermont’s new law will require any food product that contains at least 75% bioengineered content to contain verbiage such as “produced with genetic engineering.” Products with less than 75% can add include “partially” in the wording.
While Vermont’s attorney general has indicated enforcement won’t begin until Jan. 1, 2017, potential implications for non-compliance can be fines up to $1,000 per SKU per day. And if a product is found improperly labeled on Jan. 2, 2017, the state reserves the right to collect $1,000 per stock-keeping unit (s.k.u.) per day dating back to the July 1, 2016, implementation.
“That’s $180,000 per s.k.u.,” Mr. Hahn said, adding that the state of Vermont has not ruled out the possibly of collecting damages on a per-store basis. “If you take that $1,000 per s.k.u. per day, 10 stores in the state of Vermont, you’re now at $1.8 million per s.k.u.,” he said. “If you think the Vermont attorney general is going to give you a break and not charge $1.8 million, trust me, you’re wrong. I don’t expect Vermont to cut anybody any breaks. They’re entitled to $1,000 per day per s.k.u.; they’re going to, in my view, try to get every dime they can.”
Snack manufacturers and bakers are facing the burden of creating separate s.k.u.s for any product that would be sold in Vermont. And in that case, they run the risk of non-Vermont retailers ordering the wrong s.k.u., or smaller Vermont retailers bringing non-labeled product into the state for resale.
“At that point, the only way to abide is to start labeling products that are at least released into a channel of commerce where they may go into the Northeast,” Mr. Hahn explained. “That means you labeling all those products.”
So why not just label all products to comply with Vermont law, regardless of distribution? The problem, according to Mr. Hahn, is that some states, such as California, have other labeling requirements that could place Vermont-labeled products in direct contradiction. California has very specific requirements when it comes to products that contain dairy ingredients, Mr. Hahn explained, adding products sold in California are subject to approval by the California Department of Agriculture. It’s possible that the department would not want some products labeled as bioengineered because, for example, high-fructose corn syrup is derived from bioengineered corn, but that doesn’t necessarily mean it’s bioengineered, which could be misleading on a product label.
“In that case, we’d have one state saying you have to label it, and another saying you can’t label it,” he said.
What’s more, there has not been guidance pertaining to calculating things like yeast that is not bioengineered but was almost always grown on a substrate that was G.M.O.
“Does that make the genetically engineered?” Mr. Hahn asked. Supplier documentation is also an issue, he noted. “I’ve had many instances where the Vermont law says you have to have a tested, signed statement from your supplier that says they didn’t use genetically materials, and the product has never been comingled.”
And then there are the wheat growers.
“Wheat is not genetically engineered, but we can’t sign a sworn statement that it has been farmed without comingling,” he said. “We know some wheat is coming from Ohio, where the same farmers are also growing corn and soy. A manufacturer can’t give that sworn statement because we don’t have that knowledge on the entire supply chain from farm to table.”
A federal Senate bill under review needed 60 votes to move forward, but the cloture motion failed 48 to 49, stalling the bill.
“It would require the U.S.D.A. to define ‘genetically engineered,’” Mr. Hahn said. “We need to have a single, national standard. U.S.D.A. would issue regulations that could establish the standard for genetic engineering. U.S.D.A. would also issue regulations that would identify disclosures to be made either on the label or some other means.”
Mr. Hahn suggested an 800 number, a QR code, web site or even social media. Two years after publishing the standard, the U.S.D.A. would then require substantial compliance. Without substantial voluntary disclosure, then the U.S.D.A. would be forced to issue new regulations that make disclosures mandatory, Mr. Hahn said.
“The advantage of the Senate approach is that we’re talking disclosure, either on the label, your web site or consumer inquiries — the type of information that wouldn’t require a full-board label change,” Mr. Hahn said. “So why can’t we get 60 senators to agree to this? It has been a source of frustration. But recognize the SNAC International team is doing a great job in Washington, despite the fact that this issue is amazingly polarizing.”Mr. Hahn advised that while he’s optimistic that the future holds some sort of resolution, the best thing to do now is prepare for Vermont compliance, sooner rather than later.