County of Origin Labeling (COOL):
An Overview
Background
The 2002 Farm Bill, Pub. L. No. 107-171 § 10816, 116 Stat. 134, 533-35, amended the Agricultural Marketing Act of 1946 (AMS), 7 U.S.C. §§ 1621-1637b (codified at 7 U.S.C. §§ 1638-1638d), to require retail level country of origin labeling (COOL) for shellfish, peanuts, fruits, vegetables, and various meats. According to the bill as originally enacted, mandatory COOL was to begin for covered commodities on September 30, 2004. The implementation of mandatory COOL, however, has since been twice delayed. Congress first delayed the implementation of mandatory COOL on all covered commodities, except for farm-raised fish and wild fish, until September 30, 2006. AMS promulgated an interim final rule for the mandatory country of origin labeling of fish and shellfish on October 5, 2004. This interim final rule became effective on April 4, 2005, thus triggering all of the requirements of the COOL law upon suppliers and retailers of fish and shellfish. A second delay was effectuated on November 10, 2005 by Public Law 109-97, which postpones the implementation of mandatory COOL for covered commodities, except wild and farm-raised fish and shellfish, until September 30, 2008.
Notwithstanding the activity around the 2002 Farm Bill COOL provisions, under the Tariff Act of 1930, 19 U.S.C. §§ 1202-1681b, nearly every item imported into the United States must indicate to the ultimate purchaser its country of origin. Many imported agricultural products are either exempted from coverage under the Act or are deemed to have undergone sufficient additional manufacturing or processing so that they become products of the United States and therefore do not require labeling.
Tariff Act regulations issued by the United States Bureau of Customs and Border Protection require that every product imported into the United States be marked with that product's country of origin unless it meets an exception so that the ultimate purchaser in the United States is informed of the imported item's origin. The main exceptions are items that are incapable of being marked, items economically prohibitive of being marked, and items on the "J List." The J List includes classes of goods that were imported for five years after 1932 and were not required to indicate their country of origin during that time. Many agricultural products are on the list, including vegetables, fruits, nuts, berries, and live or dead animals, fish, and birds. See 19 C.F.R. § 134.33 (2003) (listing J List products). To qualify for the J List exception, these agricultural products may only be processed to the extent necessary for transportation. However, the immediate container in which the ultimate purchaser receives these products must be labeled. The labeled container may be a bulk shipping container or a retail-ready package. Generally, consumers will only see the label if the imported goods arrive at the border in retail-ready packaging.
The definition of ultimate purchaser also affects which products will be labeled. The ultimate purchaser is the last person in the United States who will receive the product in the form in which it was imported. If a manufacturer or processor receives the product and substantially transforms it, no origin labeling is required, even though a new or different product is not produced. Only a minor process that leaves the identity of the imported product intact will result in a consumer’s being the ultimate purchaser.
Under the authority of the Federal Meat Inspection Act, 21 U.S.C. §§ 601-695, and the Poultry Products Inspection Act, 21 U.S.C. §§ 451-471, the United States Department of Agriculture (USDA) is charged with ensuring the proper labeling of imported meats and poultry. USDA regulations require COOL on the immediate containers of imported meat. Retail-ready containers of meat and shipping containers of bulk meat must bear country of origin markings. Imported bulk meat is often processed inside a domestic plant. The USDA deems these plants to be the ultimate purchasers of the imported meat, and only minimal processing is required to substantially transform the product so that origin labeling is not required.
COOL Amendments to the Agricultural Marketing Act
The 2002 Farm Bill amended the Agricultural Marketing Act of 1946 by adding requirements for COOL labeling at the final point of sale for various meats, fish, shellfish, peanuts, fruits, and vegetables. The USDA's Agricultural Marketing Service (AMS) must implement these new requirements.
The covered commodities include ground and muscle cuts of beef, lamb, and pork, as well as farm-raised fish, wild fish, shellfish, peanuts, and fresh fruits and vegetables. If these items are ingredients in processed foods, they are not required to be labeled. The Act also exempts food service establishments such as restaurants, cafeterias, and bars that are engaged in selling prepared food to the public. The COOL law adopts the definition of retailer contained in the Perishable Agricultural Commodities Act of 1930, 7 U.S.C. §§ 499a-499t. Thus, retailers that sell less than $230,000.00 of fresh fruits and vegetables in any calendar year are not required to furnish COOL labeling on their products.
The requirements for listing the United States as the country of origin for the covered commodity are outlined specifically in the COOL law. Beef, lamb, and pork must be exclusively born, raised, and slaughtered in the United States. Farm-raised fish must be hatched, raised, harvested, and processed in the United States. Wild fish must be harvested in the waters of the United States and processed in the United States. In addition, wild fish must be distinguished from farm-raised fish on the label. Peanuts, fruits, and vegetables must be exclusively produced in the United States.
The regulations provide direction on how to determine the product’s country of origin. If the product has not undergone a substantial transformation in the United States, its country of origin is the one that was declared to the U.S. Customs and Border Protection. 7 C.F.R. § 60.200(f). If the product underwent a substantial transformation in the United States., the product must be labeled as “product from [the country it was imported from], and processed in the U.S.” 7 C.F.R. § 60.200(g)(2). If commodities are sold together and part of them underwent substantial transformation in the United States and part of them did not, all the countries of origin must be disclosed. 7 C.F.R. § 60.200(h). Similarly, commodities that have different countries of origin and/or methods of production can still be sold together,as long as all the countries and methods are listed, pursuant to 7 C.F.R. § 60.300(d).
Retailers have the primary burden of providing labeling to consumers under the COOL law. Retailers are required to provide the country of origin information on a clear and visible sign on the commodity itself, the package, the display, or the holding bin at the final point of sale to consumers. Retailers may also be required under the law to maintain records sufficient to enable an auditor to determine compliance with the law. Suppliers to the final retailers are required to provide necessary country of origin information to the retailer to ensure compliance with the law.
While having the authority to require a verifiable audit trail for country of origin information, the USDA is specifically prohibited by a provision in the COOL law from using a mandatory identification system to verify the country of origin of a covered commodity.
As for the recordkeeping requirements, upon request by the USDA suppliers and retailers must provide the USDA with documents that will allow substantiation of an origin claim and method of production. 7 C.F.R. § 60.400(a)(2). For pre-labeled products, retailers are expected to be able to keep documentation on the product’s country of origin and method of production for the time they have the product. 7 C.F.R. § 60.400(c)(1). For products not pre-labeled, retailers must keep the documents for one year. 7 C.F.R. § 60.400(c)(2).
Suppliers who deal directly with retailers are responsible for providing them with the documentation relating to country of origin and methods of production. 7 C.F.R. § 60.400(b)(1). Suppliers who are responsible for the country of origin and/or method of production claim(s) are expected to have the documentation to substantiate those claims. 7 C.F.R. § 60.400(b)(1). Nevertheless, all suppliers whose commodities end up being sold to a retailer must keep documents for one year indicating where the product was purchased and where it was sold. 7 C.F.R. § 60.400(b)(3). The initial importer must keep records tracking the commodity from its entry into the United States. to the time it reached its immediate recipient for a period of one year from the date of transaction. 7 C.F.R. § 60.400(b)(4). All those documents must reflect the country of origin and method of production of the commodity.
Seven U.S.C. § 1638b provides that willful violations on the part of a retailer would cost up to $10,000 in fines for each violation. The retailer is entitled to notice and a hearing before the Secretary of Agriculture.