It’s quite natural for states to regulate labeling

By Michaela Oldfield

The Food and Drug Administration’s request for comments on the term ‘natural’ in labeling was in part due to a number of citizens suits that are pending in state courts. This raises an interesting point about U.S. law: state actions can mediate the implementation of federal food law and lead to federal law or policy changes. I think it is important to look at how states can affect issues that are seemingly regulated by the federal government, because these sorts of actions are becoming increasingly significant in U.S. food regulation.

In this post, I am going to introduce preemption doctrine and examine a recent decision in California on the National Organic Program (NOP) and The Grocery Manufacturers Association (GMA’s) challenge to Vermont’s GE labeling bill to explain some ways state laws may mediate and impact federal food policy.  

So for starters, where does preemption come from and what is it? The concept originates with the supremacy clause of the U.S. Constitution, which states “This Constitution, and the laws of the United States which shall be made in pursuance thereof ... shall be the supreme law of the land.” U.S. Const., art. VI, cl. 2.

As a result of this constitutional language, Congress is considered to have authority to preempt or override state laws under certain conditions. (The constitution also sets limits on Congress’s authority and expressly grants other authorities to the states - I’m not going to go into these, because it would require explaining a semester’s worth of constitutional law doctrine).

So how does preemption work? Preemption only occurs when Congress intended to preempt state law. See Medtronic Inc. v. Lohr, 518 U.S. 470 (1996). This intent may be explicitly stated in the law (known as express preemption) or a court may infer that intent (known as implied preemption). See Hillsborough County v. Automated Medical Laboratories, Inc., 471 U.S. 707 (1985).

These two cases represent both types of preemption.

In California, a question of state law and the National Organic Program

Let’s start with the more recent case, Quesada v. Herb Thyme Farms, Inc., No. S216305 (Cal. Dec. 03, 2015). In this case, decided by the California Supreme Court, a woman sued Herb Thyme Farms for false labeling and misrepresentations under California’s consumer protection laws. She alleged that Herb Thyme Farms intentionally mixed non-organic herbs with organic herbs and marketed them as organic. Herb Thyme Farms argued that her claims were preempted by the Organic Foods Act (7 U.S.C. § 6501 et seq.)

The act authorizes the United States Department of Agriculture (USDA) to establish regulations governing the practices a producer must use in order to label food organic and procedures for certifying that a producer has followed these practices. The law expressly prohibits states from establishing requirements that are different or in addition to USDA’s requirements, though states may establish their own certification programs if they obtain USDA approval for the program.

However, the law has no express preemption clause concerning sanctions for misuse of the organic label. In other words, though USDA has preemptive authority to establish the rules for when you can use the organic label and rules about how to demonstrate you follow those rules, there is no express preemption clause about how to enforce those rules when someone violates them.

Herb Thyme tried to claim that the only remedies for mislabeling are those written in the sanctions provisions of the laws. The court refused to extend the express preemption provisions in the labeling and certification portions of the law to the enforcement portions of the law. Since the law is silent on whether preemption applies to state remedies, state remedies are not expressly preempted.

In addition to express preemption, Herb Thyme tried to claim implied preemption. Herb Thyme’s argument was that if consumers can bring misrepresentation claims in state courts, it would create an obstacle to the purpose of the NOP. Unfortunately for Herb Thyme, the first section of the law states “It is the purpose of this chapter – (1) to establish national standards governing the marketing of certain agricultural products as organically produced products; (2) to assure consumers that organically produced products meet a consistent standard; and (3) to facilitate interstate commerce in fresh and processed food that is organically produced.” 7 U.S.C. § 6501.

The California Supreme Court concluded that, far from creating an obstacle to the purpose of the law, allowing state consumer fraud actions promotes the purpose of the law. In the court’s words:

“By all appearances, permitting state consumer fraud actions would advance, not impair, these goals. Substitution fraud, intentionally marketing products as organic that have been grown conventionally, undermines the assurances the USDA Organic label is intended to provide. Conversely, the prosecution of such fraud, whether by public prosecutors where resources and state laws permit, or through civil suits by individuals or groups of consumers, can only serve to deter mislabeling and enhance consumer confidence.” Herb Thyme, No. S216305, at p.19.

In Vermont, a question of state law and Federal food labeling laws

Now turning to GMA’s challenge to Vermont’s GE labeling bill, which was considered in Grocery Mfr. Ass'n v. Sorrell, No. 5:14-cv-117 (D. Vt. Apr. 27, 2015). Vermont’s law mandates that all genetically engineered (GE) foods have affirmative labels stating they contain GE foods and prohibits use of the term ‘natural’ on any GE foods. GMA claimed that the the Food Drug and Cosmetic Act (FDCA) and Nutrition Labeling and Education Act (NLEA) expressly and impliedly preempted the disclosure requirements.[1]

The FDCA and NLEA mandate specific labeling and expressly preempt any labeling requirements that are ‘not identical’ to the federal requirements. However, preemption does not extend beyond those expressly preemptive labeling requirements – so state labeling requirements that are different or in addition to the federal requirements are not preempted. For Vermont’s GE labeling requirements to be preempted through express preemption, the Court required:

• the FDCA must require the labeling information at issue
• the NLEA must indicate that the mandatory federal labeling requirement is entitled to preemptive effect
• Act 120's GE disclosure requirement must govern this same information.

The FDA does not mandate any labeling of GE products, though the agency does have voluntary labeling guidance. Further, the Vermont law was expressly written so as not to mandate any labeling that is impermissible under FDA’s GE labeling guidance. Therefore the court determined the law was not expressly preempted by the FDCA and NLEA.

GMA also failed on their claim that the FDCA and NLEA impliedly preempt Vermont’s law. The GMA tried to claim that complying with Vermont law conflicted with the FDCA and NLEA requirements. There are two ways a conflict could exist and cause preemption:
(1) where it is "impossible for a private party to comply with both state and federal requirements," or (2) where state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress." Freightliner Corp. v. Myrick, 514 U.S. 280, 287 (1995) (citations omitted).

GMA failed the first standard because they did not plausibly allege the physical impossibility of complying with the state and federal requirements. In fact, Vermont introduced as evidence a label showing what a dual-compliant label would look like.

For the second standard, to claim that Vermont's law stood as an obstacle to the purpose of the FDCA and NLEA, GMA argued that FDCA prohibits "false or misleading" labeling, 21 U.S.C. § 343, and the GE disclosure requirement convey a false and misleading opinion regarding the safety of GE food products. The argument failed because Act 120's GE disclosure requirement makes no statement regarding food safety, so the Court concluded any "overall impression" that GE ingredients are "unsafe" did not stem from purely factual information provided by the required labels. Grocery Mfr. Ass'n v. Sorrell, No. 5:14-cv-117 at 36.

GMA also tried to claim that the law was an obstacle to agencies administering their statutes. Their argument relied on the federal Coordinated Framework on GE food, which was established by the White House Office of Science and Technology in 1986. 51 Fed. Reg. 23302 (June 26, 1986), updated by 57 Fed. Reg. 6753 (February 27, 1992).This claim failed for a number of reasons. The coordinated framework is a policy statement, not a binding regulation issued through APA rulemaking, and so is not entitled to preemptive effect. Further, the court noted that the Coordinated Framework does not reflect Congress’s intent regarding GE foods labeling.

Finally, GMA claimed the Vermont bill interferes with the NLEA’s intent of national uniform labeling requirements to make it easier for companies to market in all 50 states. However, preemption is supposed to be analyzed with a presumption against preemption (in other words, courts are supposed to assume Congress did not intend to preempt). While the Court recognized this was potentially a strong argument, because of the presumption, the court determined the claim was too weak to justify preemption. Grocery Mfr. Ass'n v. Sorrell, No. 5:14-cv-117 at 37-38.

The GMA further claimed that the Federal Meat Inspection Act (FMIA) and Poultry Products Inspection Act (PPIA) expressly preempted the disclosure requirements and the restrictions on ‘natural’ labeling. Both acts contain preemption language that prohibit states imposing any marking, labeling, packaging or ingredient requirements that are in addition to, or different from, those mandated by federal law. The disclosure requirements and natural restriction are clearly in addition to and different requirements imposed under the FMIA and PPIA, and are thus preempted under the expansive federal provisions.

The Vermont law, however, contains exemptions that expressly attempt to exclude FMIA or PPIA regulated products from the Vermont labeling requirements. GMA claimed its members produce products that would be subject to the FMIA or PPIA but not exempt from Vermont’s law, and therefore the Vermont law is preempted. At this point in the litigation, GMA had not provided any examples of such products (and has not been required to do so). And so this claim still potentially stands and will be resolved later in the litigation.

States vs Feds: How the states are weighing in on Federal policy

In short, what you can see from these cases is that even where extensive labeling requirements exist under federal law, the possibility of additional state requirements or state enforcement actions is very real. In Quesada v. Herb Thyme, state law creates private causes of action that allow consumers to bring enforcement suits for violation of federal laws, even when an agency is not taking action. In GMA v. Sorrell, we have state legislation that can potentially force massive relabeling or reformulating of nationally marketed products.

U.S. companies have to be aware of regional and state variances in customers’ potential concerns, and consumers’ (and competitors) capacities to redress their concerns through state courts and legislatures.  Conversely, once a state takes action, federal law can be used to effectively nullify those state laws – so consumers and companies concerned with those state efforts must also actively participate in federal policymaking, such as FDA’s call for input on natural labeling or appropriations processes that might preempt state GE labeling laws.

I assume this is not earth-shaking news for anyone reading this blog, since state-level food regulatory actions have been making headlines for years. But I hope also that why this is possible makes a little more sense to a few of you now.

So going back to the FDA’s recent request for comments on the use of the term ‘natural’ in labels. I noted at the beginning of the post that the request is spurred in part by citizens suits in state courts. Experts are expecting FDA’s request to prompt a wave of briefs in the ongoing litigation requesting the courts to stay any action (basically pause the litigation) until FDA has taken a final action on the request.

So one question is: does primary jurisdiction apply when the FDA is considering comments on whether to take action on an issue? This issue likely will be litigated in the various courts where suits are currently pending.

---

[1] GMA did not claim the natural restrictions were preempted by the FDCA and NLEA because other cases have already addressed that claim and found that FDA’s voluntary guidelines on natural labeling are insufficient to preempt state labeling regulations of the use of the term.