AMS Issues Final Rule on Country of Origin Labeling Effective March 16th

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January 13, 2009

The Department of Agriculture's Agricultural Marketing Service (AMS) has made available its final regulation for the mandatory country of origin labeling (COOL) program, which takes effect March 16, 2009.  The final rule provides for penalties of up to $1,000 per violation for both retailers and suppliers.  As required by the 2002 and 2008 Farm Bills, commodities covered by this regulation include:

• Muscle cuts of beef (including veal), lamb, chicken, goat, and pork;
• Ground beef, ground lamb, ground chicken, ground goat, and ground pork;
• Wild and farm-raised fish and shellfish
• Perishable agricultural commodities;
• Macadamia nuts, pecans, and peanuts; and;
• Ginseng.

Commodities covered under the COOL must be labeled at retail to indicate their country of origin.  For fish and shellfish, the method of production – fresh or farm-raised – must also be specified.  As in the interim final rule published on August 1, 2008, specific labeling rules apply where there are multiple countries of origin.  Labeling of ground products must list all countries of origin contained in the product or that may “reasonably” be contained in the processor (a processor must remove from the labeling a country or origin that is not in inventory for more than 60 days).

The definition of a processed food item remains unchanged in the final rule.  Therefore, excluded from COOL labeling are items derived from a covered commodity that has undergone a physical or chemical change, such as cooking, curing, or smoking, or that has been combined with other covered commodities or other substantive food products.  A commodity is also excluded from mandatory COOL if it is an ingredient in a processed food item.  Nor does the rule cover any product combined with other covered commodities or other substantive food components such as chocolate, breading and tomato sauce.  Food service establishments, such as restaurants and cafeterias, are also exempt from the regulation.

The final rule also contains many substantive changes and previously absent definitions. The provision allowing U.S. origin covered commodity to be further processed or handled in a foreign country has been deleted. Under the final rule, covered commodities may be still eligible to bear a U.S. origin declaration if they are processed in another country such that a substantial transformation (as determined by U.S. Customs and Border Protection) does not occur.

AMS has also provided further clarification as to the labeling of covered muscle cuts commingled during production. Under the final rule, muscle cuts must be labeled as Product of U.S., Country X, and (as applicable) Country Y, if:

• They are derived from animals that were born in Country X or (as applicable) country Y, raised and slaughtered in the U.S., and was not derived from animals imported for immediate slaughter.
• They are derived from animals born, raised, and slaughtered in the U.S. that are commingled during a production day with covered muscle cuts derived from animals that were raised and slaughtered in the U.S., and were not imported for immediate slaughter.
• They are derived from animals born in Country X or Country Y, raised and slaughtered in the U.S., that are commingled during a production day with covered muscle cuts that are derived from animals imported to the U.S. for immediate slaughter.  

The final rule also prescribes specific criteria that must be met for a covered commodity to bear a “U.S. country of origin” declaration.