On May 3, 2018, the U.S. Department of Agriculture (USDA) Agricultural Marketing Service (AMS) published its long-awaited proposed rule implementing the National Bioengineered Food Disclosure Standard, which directs USDA to establish a federal mandatory disclosure regime for “bioengineered food” and “food that may be bioengineered.” The rule, when finalized, could cover a broad scope of products, including fruits and vegetables, dairy products, processed foods and beverages and dietary supplements as well as ingredients within these products.

Despite its potential broad impact and delay in release, the proposal falls short in offering clarity with respect to several key issues, including the scope of coverage, applicability to new and emerging technologies such as genome editing, and procedures for demonstrating compliance. On May 18, Sidley will hold a webinar to provide an in-depth discussion of these and other critical issues relating to the rulemaking. To register for the webinar, please click here. Meanwhile, we outline key issues that warrant stakeholder attention.

As we previously reported, Congress passed the Disclosure Standard in July 2016 largely to establish a uniform nationwide disclosure scheme for bioengineered foods in response to a potential patchwork of varying state requirements. To ensure swift rulemaking, Congress directed USDA to promulgate final regulations within two years of the date of enactment (i.e., by July 29, 2018). Comments on the proposed rule close July 3, and USDA has stated that it will not extend the deadline “[d]ue to the Congressionally mandated timeline.” It therefore is critical for stakeholders to carefully evaluate the proposed rule and develop and submit comments by July 3.

1. Proposed Rule Fails to Clarify the Meaning of “Bioengineering”

The Disclosure Standard states that the term “bioengineering” refers to a food

(A) that contains genetic material that has been modified through in vitro recombinant deoxyribonucleic acid (DNA) techniques; and (B) for which the modification could not otherwise be obtained through conventional breeding or found in nature.

Finally, there is no explanation of what it means for a product to “contain” genetic material; nor does AMS reach a decision on the threshold levels of a bioengineered substance that trigger disclosure. On this last point, AMS again delays a decision by offering three alternative thresholds, ranging from a threshold level which is “inadvertent or technically unavoidable” of up to not greater than 0.9 percent or 5 percent of the product’s total weight, and that which is intentional up to a level of not greater than 5 percent.

Without further explanation of these key terms, it will be challenging for industry to comply with the requirements.

2. AMS Does Not Directly Address Genome Editing

The proposal does not directly discuss genome editing or related technologies. The absence of such discussion is especially surprising given USDA Secretary Sonny Purdue’s March 28, 2018 statement on genome editing, which many interpreted as a preview of AMS’ definition of “bioengineering.” Therein, Secretary Purdue suggests that genome editing is merely a more efficient means to develop plants that could “otherwise have been developed through traditional breeding techniques” and are “indistinguishable” from plants developed through such techniques.

AMS nonetheless appears to open the door to excluding certain technologies, such as genome editing, from the definition of bioengineering, where the regulatory agencies involved in the Coordinated Framework for the Regulation of Biotechnology — that is, USDA, the Environmental Protection Agency and the Food and Drug Administration (FDA) — make such a determination. However, this language is vague and subject to further AMS consultation with these agencies.

3. AMS Presumes Disclosures for Certain Commercially Available Products and Does Not Provide Specificity Regarding Documenting Compliance

In an effort to clarify which foods are bioengineered, AMS proposes to publish and regularly update two lists of plant species that are presumptively “bioengineered” or “may be bioengineered” (e.g., canola, corn, soybean, sugar beet, papaya, potato). While the lists might appear to provide a straightforward approach, they run the risk of being overly simplistic, both under- and over-inclusive and burdensome to maintain.

Under the proposal, plant varieties that have been considered by FDA (as part of its Voluntary Consultation Program) and meet AMS’ definition of “highly adopted” (tallied at less than 85 percent U.S. commercial market) are presumptively “bioengineered” and require such a disclosure, and those that are “not highly adopted” (tallied at less than 85 percent) must presumptively bear a disclosure of “may be bioengineered.”

The lists create further ambiguity around the meaning of bioengineering by, among other things, relying on FDA’s consultation program. While the plant varieties FDA has evaluated to date include varieties modified via rDNA techniques, FDA’s program is not limited to such varieties. In fact, as recently as January 2017, FDA stated that it could consider gene-edited plants under its program. Further, FDA’s program has not considered whether plant varieties could otherwise be obtained through “conventional breeding” or “found in nature,” which means that the program is not limited to plants that could fall within the “bioengineered” definition. In addition, FDA’s program does not consider nonplant substances, such as microorganisms.

AMS acknowledges that its proposed lists are incomplete, noting that the lists exclude certain products that are not yet commercialized (e.g., rice cultivars, pink-fleshed pineapple cultivars and genetically engineered salmon). AMS also recognizes that the lists do not address products such as “enzymes, yeast, and a number of foods produced in controlled environments” and asks whether to add these to its lists.

Importantly, AMS states that a company can overcome a presumption of disclosure if it documents that a listed product is not bioengineered. However, the necessary documentation and grounds for AMS enforcement remain unclear. The proposed rule states merely that entities “must maintain records that include documented verification” that the food is not bioengineered or that it does not contain a bioengineered ingredient. In addition, for entities subject to disclosure, the proposal simply states that the entities “must maintain records that are customary or reasonable to demonstrate compliance” and in “sufficient detail as to be readily understood and audited.”

4. AMS Proposes an Additional Process for Establishing “Factors and Conditions” Under Which a Food Is Considered “Bioengineered”

AMS offers a second process for determining whether a food is bioengineered in an effort to implement the Disclosure Standard’s requirement for “a process for requesting and granting a determination” by USDA “regarding other factors and conditions under which a food is considered” bioengineered. However, unlike USDA’s well-established “Am I Regulated” program, AMS proposes a process that requires rulemaking, and the agency offers little clarity on the “factors and conditions” that will be considered in determining a food’s bioengineered status.

AMS states that it would evaluate the “request or petition” under three standards: (1) whether the requested factor or condition is within the scope of the statutory definition of “bioengineering”; (2) the “difficulty” and “cost” of implementation and compliance; and (3) other relevant information including “compatibility with the food labeling requirements of other Federal agencies or foreign governments.”

Notably, the process, as proposed, is open to anyone. Thus, it is possible for a third party to use this avenue to challenge a regulated entity’s determination of its disclosure obligations under the Disclosure Standard, adding a layer of uncertainty into such determinations.

5. Proposed Rule Appears to Exclude Incidental Additives and Undetectable Recombinant DNA

AMS proposes two factors and conditions relating to whether a food is considered bioengineered that, if adopted, would seem to narrow the scope of “bioengineered food.” These provisions may be particularly relevant for processed food and dietary supplement manufacturers.

First, AMS proposes that the use of incidental additives in a food — which are present at insignificant levels, do not have any technical or functional effect and therefore are exempt from ingredient labeling under FDA’s regulations, such as certain enzymes — would not trigger disclosure.

Second, AMS proposes that if regulated entities can demonstrate that the manufacturing process for a food results in a final product where “modified genetic material cannot be detected and their records prove as such,” such foods “would no longer be considered a bioengineered food.” Thus, if adopted, these “factors and conditions” could exclude many food products, including those that involve the use of incidental additives in the manufacturing process as well as highly refined foods, despite AMS’ otherwise broad definition of bioengineering. It nonetheless remains unclear whether a regulated entity would have to request or petition for such a determination or whether AMS would adopt these exclusions categorically as part of the bioengineering definition.