Food and Beverage News and Trends - June 23, 2023

This regular publication by DLA Piper lawyers focuses on helping clients navigate the ever-changing business, legal and regulatory landscape.

USDA announces new initiative against Salmonella in meat and poultry. On June 7, the USDA’s Agricultural Research Service announced a new food-safety initiative, the Salmonella Grand Challenge. This initiative will bring together a group of research scientists with different specialties who will integrate their research to learn more about how and where Salmonella causes high risk to meat and poultry products so that salmonellosis can be prevented. The challenge aims to contribute to the department’s “Healthy People” goal of reducing the number of people infected with Salmonella by 25 percent by 2030. “We are optimistic that this team will be successful in developing better tools and information that the meat and poultry industries can use to reduce the risk of salmonellosis from their products,” said Tommy Wheeler, research leader at the US Meat Animal Research Center of the ARS. “We think the broad expertise and new perspectives will facilitate novel thinking and better solutions.”

Canadian government announces investment in bovine tuberculosis research. The Ministry of Health and the Ministry of Agriculture and Agri-Food have announced a $1 million investment in Bioimaging Research Solutions Inc., a company which is developing an artificial intelligence system to improve the efficiency of bovine tuberculosis (bovine TB) surveillance activities in slaughter plants. Bovine TB is a contagious bacterial disease of livestock that can result in production losses, barriers to market access and risks to both animal and public health. All cases must be reported to the Canadian Food Inspection Agency (CFIA) under the Health of Animals Act, If a case is confirmed by the CFIA, disease eradication measures are implemented, sometimes including the destruction of all infected and susceptible exposed animals. Bioimaging Research Solutions Inc. is being tasked with developing a surveillance tool that scans cattle carcasses as they move along a slaughter line. Machine learning algorithms will teach the tool to differentiate between tissues of concern and healthy tissues. Canada has made great strides in protecting its herds from bovine TB; at present, domestic livestock in all its provinces and territories are recognized as free from the disease.

USDA gets tougher on label claims like “grass-fed” and “free-range.” The USDA on June 14 announced that the Food Safety and Inspection Service is tightening its requirements regarding the claims that can be made on food labels about how animals were raised. Terms like “grass-fed” and “free-range,” which are voluntary marketing claims, must now be approved by the agency before appearing on a label. Agriculture Secretary Tom Vilsack said, “Consumers should be able to trust that the label claims they see on products bearing the USDA mark of inspection are truthful and accurate.” The USDA said in a release, “This action builds on the work USDA has already done to protect consumers from false and misleading labels and to implement President Biden’s Executive Order on Promoting Competition in the American Economy.”

FDA will conduct broad study of consumers to test front-of-pack labeling ideas. On June 15, the FDA issued a formal notice saying it is planning to conduct a quantitative study of 9,000 Americans to test which front-of-pack labeling plans will best help consumers understand foods’ nutritional profiles. “Growing numbers of people experience diet-related diseases and health conditions, and the FDA has a critical role to play in helping to turn the tide,” FDA Commissioner Robert Califf said. He added that front-of-pack labels are part of the Biden Administration’s national strategy on hunger, nutrition and health and that the labels “will give consumers additional information to consider when making food selections.”

Canada’s Standing Committee on Agriculture and Agri-Food releases recommendations to combat food inflation. On June 13, the Canadian Standing Committee on Agriculture and Agri-Food published a report presenting 13 recommendations to address the issue of food inflation. The report cites rising food insecurity as a serious problem in Canada, highlighting the rise in food prices for consumers, along with a notable 16.1 percent increase in operating expenses for farmers. The report recommends an array of approaches. First, it calls for greater transparency by publicizing data pertaining to costs throughout the agri-food supply chain. The report suggests providing reimbursements to farmers and retailers who have paid a 35 percent tariff on their imports of Russian fertilizer. To discourage excess profit margins, the report proposes the implementation of a windfall profits tax. Additionally, the report advocates for a mandatory, enforceable grocery code of conduct, established in collaboration with provincial and territorial authorities. Strengthening the mandate and enforcement capabilities of the Competition Bureau to ensure competition in the Canadian grocery sector is also among the recommendations. The Retail Council of Canada expressed optimism in response to the report. However, the council also expressed caution regarding increased government intervention in the operational aspects of the food business.

A second company gets USDA approval for label on cell-cultivated chicken. On June 14, California's Upside Foods said it has received regulatory approval from the USDA for the label it plans to use for its cell-cultivated chicken, making it the second company in the United States to secure that approval. Several companies are seeking approval from US agencies for their cell-cultivated meat and fish products, hoping to appeal to consumers concerned about the environmental impact of raising livestock for food. On June 8, California-based Good Meat became the first company to receive USDA label approval. Both these companies are still awaiting a site inspection from the USDA, the final step in the regulatory approval process before their cultivated chicken can go to market.

Republican governors ask Congress to block California’s Proposition 12. On June 13, a group of Republican state governors signed on to a letter urging Congress to block California’s Proposition 12 animal confinement law – the nation’s strongest farm animal protection law. In May, the US Supreme Court rejected a challenge to Prop 12 from the National Pork Producers Council (NPPC) and the American Farm Bureau Federation. Prop 12, approved by California voters in 2018, bars the sale in that state of eggs, raw pork, or veal sourced from animals housed in ways that do not meet California’s minimum standards regarding animal confinement – for instance, in many states, pregnant pigs are confined in tight “gestation crates” for most of their lives. The letter said, however, “Despite California’s reliance on its fellow states for food, Proposition 12 threatens to disrupt the very system Californians depend on for their pork supply. Its strict, activist-drafted requirements for pig farming sharply depart from the practices which are lawful in our states.” It contended, “America’s pork production system is inherently interstate in its scope and integration. A single State, or handful of States, should not have the power to radically disrupt that system.”

Bill would require FDA to set up a new office of food safety oversight. On June 7, US Representatives Jan Schakowsky (D-IL) and Rosa DeLauro (D-CT) introduced a bill in the House that is intended to add another layer of oversight for food safety at the FDA, as the agency reimagines and tries to repair what many consider a broken review system for the safety and security of the nation’s food supply. The bill would require the FDA to create an Office of Food Safety Reassessment to regularly review the safety of chemicals that entered the food supply chain through legal loopholes or that were reviewed by the agency decades ago and haven’t been looked at since then. For instance, many observers have noted that the FDA’s Generally Recognized as Safe program, created in 1958, allows companies to determine whether a substance is safe and even whether or not to submit a GRAS notification to the Agency - such chemicals would likely face closer scrutiny under the proposed bill.

DeLauro introduces bill to give FDA more power in outbreak investigations. On June 14, Representative Rosa DeLauro (D-CT) reintroduced the Expanded Food Safety Investigation Act, which would give the FDA new authority in its investigations of corporate livestock feedlots and confinement operations implicated in outbreaks of foodborne illnesses. “It is clear that corporate consolidation has negatively impacted the safety of our nation’s food,” DeLauro said. “This is compounded by a weak and disempowered FDA, which has few tools to hold corporations accountable, investigate outbreaks, and get contaminated food off the market. Under current law, multinational corporations have the power to stop an FDA foodborne illness investigation in its tracks. That cannot stand.” DeLauro noted that her legislation has been endorsed by a broad coalition of consumer and food groups, including the Center for Science in the Public Interest, Consumer Reports, the Food Animal Concerns Trust, and the National Sustainable Agriculture Coalition.

Appeals court affirms dismissal of claim over dog food labeling. On June 6, the US Court of Appeals for the Second Circuit, following in the footsteps of the Seventh, Eighth and Tenth Circuits, rejected a complaint against Champion Petfoods USA, Inc. for alleged misleading labeling on its Acana and Orijen dog food brands. In an unpublished summary order, the court affirmed a lower court’s dismissal of a complaint alleging that the dog food package labels contained misleading claims and omissions. The complaint, like others that had been filed against Champion, alleged that its pet food contained, or had the risk of containing, heavy metals. The appeals court ruled, however, that the factual record “establishes that a reasonable consumer could have discovered that Champion’s pet foods had a material risk of containing some measurable amount of heavy metals” and the plaintiff failed to show that “the business alone possesses” this information, as required under the law.

Wisconsin to overhaul liquor laws. On June 21, the Wisconsin State Assembly passed a sweeping measure that aims to overhaul the state’s laws governing the production, distribution and sale of alcohol. The proposal, which passed with broad bipartisan support, would create a new division within the state Department of Revenue which would be in charge of overseeing and enforcing all the state’s alcohol laws. Wisconsin is home to a multibillion-dollar liquor industry, ranging from industry giants to hyperlocal craft breweries. The powerful Tavern League and major brewing companies have indicated they support the measure; small, private event venues, such as so-called wedding barns, have objected that some of its licensing requirements could endanger their businesses. One part of the legislation is attracting some media attention: bars in 14 southwestern Wisconsin counties will be allowed to stay open two hours longer than the usual 2 AM curfew during next summer’s Republican National Convention in Milwaukee. The bill now returns to the state Senate for final approval, and then to the desk of Governor Tony Evers, who is expected to sign it.

Court refuses to dismiss putative class action alleging deception about a product’s sweetening. On June 5, the United States District Court for the Northern District of California declined to dismiss a putative class action lawsuit brought by a consumer against Saraya USA Inc. The plaintiff had alleged that Saraya’s representations that its granola and other products are “sweetened with monk fruit” or “monk fruit sweetened” are false and deceptive because the products use other sweeteners in addition to monk fruit. The judge found that the plaintiff had plausibly alleged that these statements, read alongside the statements “sugar free,” “no sugar added,” or “zero sugar,” which also appear on the products’ front labels, would in fact mislead a reasonable consumer to believe that they were solely or predominantly sweetened with monk fruit.