COOL Rules!

Published: February 01, 2004, By Sheila A. Millar, Attorney-at-Law, Keller & Heckman, Washington, DC

In 2002 the Agricultural Marketing Act was amended (7 U.S.C. 1621 et seq) to add a new subtitle requiring country of origin labeling for perishable agricultural commodities.

USDA published a proposed country of origin labeling (COOL) rule last fall, see 68 Fed. Reg. 61944 (Oct. 30, 2003)¹, with the final rule slated to be in effect not later than Sept. 30, 2004.

Congress, however, is considering imposing a two-year moratorium on implementation of the final COOL labeling requirements as a result of industry opposition. The recent first documented case of mad cow disease in the US, however, may fuel efforts to return to the original COOL labeling schedule being debated now under the Omnibus Appropriations Act. Since many converters produce packaging for affected food products, we briefly summarize the requirements of the law below.

COOL requires retailers to inform consumers of the country of origin of “covered commodities,” defined as muscle cuts of beef (including veal), lamb, and pork; ground beef, ground lamb, and ground pork; farm-raised and wild fish and shellfish; perishable agricultural commodities (PACs)² (fresh and frozen fruits and vegetables); and peanuts. Any person engaged in the business of supplying a covered commodity to a retailer must provide the retailer with country of origin information.

Processed foods and ingredients in processed foods are exempt from COOL. These foods are defined using a two-step approach that requires 1) the retail item derived from the covered commodity has undergone a physical or chemical change (like squeezing oranges to make orange juice or grinding peanuts to make peanut butter), or 2) the covered commodity has been combined to produce a distinct retail item that no longer is marketed as a covered commodity (like peanuts in a candy bar, a salad mix containing lettuce and tomatoes, or a fruit platter containing a mixture of fruits and dip).

To make things more confusing, if, despite the combination, the character of the covered commodity is retained (as would be the case in adding a preservative to fresh strawberries), the resulting product is not a processed food item and thus is subject to the COOL requirements.

Many of the covered commodities required to bear country of origin labeling under the law are commingled or blended products prepared from raw material sources having different origins, like bagged mixed lettuce. The law does not specify how these products should be labeled. Under the proposed rule, the country of origin declarations for blended or mixed retail food items comprised of the same covered commodity, like bagged lettuce, prepared from raw material sources from different countries must list — alphabetically — the countries of origin for all the raw materials involved.

Thus, a bag of red and green leaf lettuce from Mexico and Guatemala would be labeled as “product of Guatemala, product of Mexico.” However, items such as a salad mix containing lettuce, tomatoes, carrots, and celery, or a fruit cup, would not be required to bear country of origin labeling because they would be considered processed food items exempt from the regulation.

The COOL declaration can be provided to the consumer by means of a label, stamp, mark, placard, or other clear and visible sign on either the covered commodity or on the package, display, holding unit, or bin containing the commodity at the point of consumer sale. Any person that prepares, stores, handles, or distributes a covered commodity for retail sale must maintain a verifiable recordkeeping audit trail and must have records substantiating country of origin. The US Dept. of Agriculture is responsible for compliance and enforcement; the law does not authorize a private right of action.

Many food processors and retailers have pressed for a moratorium or elimination of COOL requirements via the Omnibus Appropriations Act of 2004, but some domestic ranchers and farmers support country of origin labeling. Although Congressional negotiators have agreed to a labeling moratorium on most agricultural products for two years, mad cow disease has further divided meat industry members and Congressional representatives on COOL.

Converters will have to stay tuned to COOL as new obligations may result in requests for new package labeling by customers required to comply, and the debate is influencing the appropriations bill.

¹The proposed rule is available online at http://a257.g.akamaitech.net/7/257/2422/30oct20030800/edocket.access.gpo.gov/2003/pdf/03-27249.pdf.

²“Perishable agricultural commodity” is defined by the Perishable Agricultural Commodities Act (PACA). The PACA states “the term ‘perishable agricultural commodity’ (A) means any kind of the following, whether or not frozen or packed in ice: fresh fruits and vegetables of every kind and character; and (B) includes cherries in brine as defined by the Secretary in accordance with trade usages.” 7 U.S.C. § 499a(b)(4)).

As a result, frozen fruits and vegetables would be covered commodities subject to the regulation, while cooked and canned fruits and vegetables would be exempt. To maintain consistency with PACA, a frozen fruit or vegetable would be a covered commodity as long as it is not an ingredient in a processed food item and, thus, its “kind or character” has not been altered.

Sheila A. Millar, a partner with Keller and Heckman LLP, counsels both corporate and association clients. Contact her at 202/434-4143; This email address is being protected from spambots. You need JavaScript enabled to view it.; PackagingLaw.com