What Bioengineered Food Ruling Means for Cos. and USDA

In a Sept. 13 decision, the U.S. District Court for the Northern District of California rejected most of the challenges to the U.S. Department of Agriculture's bioengineered food disclosure regulations in Natural Grocers v. Perdue, but agreed with the plaintiffs that the electronic and text message disclosure options were deficient and ordered the USDA to review these disclosure options on remand.

Both disclosure options remain valid pending the USDA's review.

The lawsuit, filed in 2020 by several nonprofit advocacy organizations and natural and organic retailers, alleged that the regulations did not properly implement U.S. Congress's 2016 National Bioengineered Food Disclosure Act and therefore violated the Administrative Procedure Act by:

• Permitting text messaging as a separate disclosure option while doing nothing to cure the deficiencies in the electronic disclosure option;
• Requiring that disclosures use the term "bioengineered," to the exclusion of common terms such as "genetically modified organisms" and "genetically engineered"; and
• Excluding highly refined foods that do not contain detectable modified genetic material from the definition of bioengineered food.

The plaintiffs also raised constitutional challenges, including the allegation that their First Amendment rights were violated by the regulations' prohibition on other statements regarding the modified genetic material content of their products.

Regarding the challenge to the electronic and text message disclosure options, the court held that the USDA violated the APA by failing to fulfill the bioengineered food law's statutory mandate to ensure that the electronic disclosure option was reasonably accessible to consumers.

The bioengineered food law required the USDA to conduct a study on the accessibility of the electronic disclosure option and to provide additional and comparable disclosure options if the agency concluded that consumers would not have sufficient access to the bioengineered disclosure.

Interpreting "additional" in this context to allow for a separate disclosure, the USDA added a text message disclosure option, but left the electronic disclosure option untouched even after they concluded that it provided insufficient access to consumers.

The court held that this approach was clearly contrary to the statute since it did nothing to cure the deficiencies in the electronic disclosure option and "nothing in the statute permitted [USDA] to expand the disclosure options for manufacturers beyond the 'text, symbol, or electronic or digital link' choices."

Nevertheless, to prevent disruption in access to bioengineered disclosures, the court left the present disclosure options in place pending USDA's review.

The court summarily rejected the other claims, holding that the USDA's decision to only allow the term "bioengineered" was "reasoned and reasonable" and not contrary to the bioengineered food law, and that the related First Amendment challenge misconstrued the bioengineered regulations, which allowed other claims regarding bioengineered foods to be made "provided that such claims are consistent with applicable Federal law."

Regarding the exclusion of highly refined foods, the court held that the bioengineered food law allows the USDA to determine by regulation the threshold amount of bioengineered substance that a food must have for it to be a bioengineered food and that it was reasonable for the USDA to exclude highly refined foods where no modified genetic material is detectable.

The ruling broadly validates the bioengineered regulations, and entities that are covered by them — importers, retailers and food manufacturers responsible for labeling — will continue to be able to avoid making a bioengineered disclosure by demonstrating that their food product does not contain modified genetic material, either by:

• Testing product on a batch-by-batch basis to ensure the absence of modified genetic material;
• Validating that their manufacturing process makes the modified genetic material undetectable; or
• Relying on records to demonstrate that they use a nonbioengineered crop or source.

The regulations do not provide a limit of detection for detectability testing and only provide that testing methodologies should be sufficiently sensitive. Therefore, covered entities should be aware that foods that meet the definition of a bioengineered food may change over time as technology improves and tests become more sensitive.

The court found this aspect of the bioengineered regulations to be a feature, not a bug, since the USDA could hardly "require results impossible to obtain with existing technology." This flexible standard may have implications for the way companies demonstrate that their food does not contain detectable genetic material.

Specifically, if a regulated entity is using a validated refining process, the USDA's FAQ on guidance to ensure acceptable validation of a refining process maintains that detectability is determined at the time of validation and that there is no requirement to revalidate the process as technology changes.

However, since revalidation is required when significant changes to the process are made, this creates another incentive not to make changes to the production process. If, however, a company is using a batch-by-batch testing approach, the USDA provides no comparable guidance.

Its FAQ regarding guidance on testing states only that regulated entities should use their best discretion. How this discretion is to be exercised in the context in which there are commercial pressures to find nondetect results has not been defined.

Entities that rely on source material records to verify that their foods are not bioengineered should be mindful of any updates to the list of commercially available bioengineered foods. Foods on the bioengineered list are presumed to be bioengineered foods, while those that are not are presumed not to be unless a regulated entity has actual knowledge to the contrary.

This past summer, the USDA announced a proposed rule that would update the bioengineered list to add "sugarcane (Bt insect-resistant varieties)" and amend the listing for "squash (summer)" to "squash (summer, mosaic virus-resistant varieties)."

In rejecting the plaintiffs' First Amendment challenge, the court indicated, with the government's agreement, that the bioengineered regulations do not prohibit other claims regarding bioengineered foods from being made, including ones that use other terms like "GMO."

Nevertheless, the bioengineered regulations do not allow a bioengineered disclosure to be made unless the food meets the definition of bioengineered food, and it is not clear if the USDA would agree that a similar disclosure — e.g., a GMO presence claim — could be made where the food does not meet the definition of a bioengineered food.

However, as a practical matter, this issue is unlikely to arise since companies rarely want to make bioengineered or GMO presence claims and are far more likely to make bioengineered or GMO absence claims. Such absence claims are voluntary and fall under U.S. Food and Drug Administration jurisdiction.

While the FDA has not provided a detailed standard by which to judge these claims, in guidance on the topic, the agency stated that such a claim conveys zero or total absence.

In many cases, companies will rely on third-party certifiers like the Non-GMO Project when making such claims, although given the absence of a clear standard from the FDA, some food companies have developed their own internal definitions.

Food companies making absence claims should be aware that just because a food is not bioengineered under USDA standard does not mean that it is appropriate to make a non-GMO, or similar, claim. For example, incidental additives are excluded from the definition of a bioengineered food, and yet foods containing incidental additives with modified genetic material should not be labeled as non-GMO.

Even though the USDA must now reconsider the electronic and text message disclosure options, the court placed no deadline on this review, and these disclosure options are still in place in the meantime.

And, while the APA requires that agencies act within a reasonable time and allows courts to "compel agency action unlawfully withheld or unreasonably delayed,"[1] the application of these principles is on a case-by-case basis, and it can be years before an agency's action is deemed an unreasonable delay.

Indeed, the bioengineered food law requires the USDA to consult with food retailers and manufacturers prior to providing additional and comparable options to the electronic disclosure, a process that could take some time and give credence to the argument that a multiyear review would not be unreasonable.

When the USDA completes this review process, the revised electronic disclosure will have to include an "additional and comparable option" that allows for bioengineered information to be more accessible to consumers. The text message disclosure is one such option.

However, the court's ruling suggests that the USDA has overstepped its statutory authority by including a separate text message disclosure option that is not specifically permitted by the bioengineered food law, suggesting that the text message disclosure could be removed as a stand-alone disclosure option.

The parties have until Nov. 14 to file an appeal.

[1] 5 U.S.C. §§ 555(b), 706(1).