Milling & Baking News - April 12, 2016 - 18

Industry Activities X

Snack manufacturers brace for
Vermont G.M.O. law implementation
HOUSTON - The great G.M.O. debate is becoming a bit more complicated as a new Vermont law will require G.M.O. food labeling beginning
July 1. At SNAXPO, held March 19-22
in Houston, Martin Hahn, partner,
Hogan Lovells L.L.S., L.L.P., and general counsel for SNAC International,
provided insight to conference attendees.
"One of my favorite pastimes is the
'I hate Vermont banter,'" Mr. Hahn
joked. "But the reality is that food
manufacturers would have a hard
time keeping their products out of Vermont. It's a really hard thing to do."
Vermont's new law will require any
food product that contains at least
75% bioengineered content to contain verbiage such as "produced with
genetic engineering." Products with
less than 75% can include "partially"
in the wording.
While Vermont's attorney general
has indicated enforcement won't begin until Jan. 1, 2017, potential implications for non-compliance can be
fines up to $1,000 per stock-keeping
unit (s.k.u.) per day. And if a product
is found improperly labeled on Jan.
2, 2017, the state reserves the right to
collect $1,000 per s.k.u. per day dating back to the July 1, 2016, implementation.
"That's $180,000 per s.k.u.," Mr.
Hahn said, adding that the state of
Vermont has not ruled out the possibly of collecting damages on a perstore basis. "If you take that $1,000
per s.k.u. per day, 10 stores in the
state of Vermont, you're now at $1.8
million per s.k.u.," he said. "If you
think the Vermont attorney general
is going to give you a break and not
charge $1.8 million, trust me, you're
wrong. I don't expect Vermont to cut
anybody any breaks. They're entitled
to $1,000 per day per s.k.u.; they're
going to, in my view, try to get every
dime they can."
Snack manufacturers and bakers are facing the burden of creating
separate s.k.u.s for any product that
would be sold in Vermont. And in
that case, they run the risk of nonVermont retailers ordering the wrong
s.k.u., or smaller Vermont retailers
bringing non-labeled product into the
state for resale.
"At that point, the only way to
abide is to start labeling products that
are at least released into a channel of
18 / April 12, 2016 XMilling & Baking News

commerce where they may go into
the Northeast," Mr. Hahn explained.
"That means you labeling all those
products."
So why not just label all products to
comply with Vermont law, regardless
of distribution? The problem, said Mr.
Hahn, is that some states, such as California, have other labeling requirements that could place Vermont-labeled products in direct contradiction.
California has very specific requirements when it comes to products that
contain dairy ingredients, Mr. Hahn
explained, adding products sold in
California are subject to approval by

statement that it has been farmed
without comingling," he said. "We
know some wheat is coming from
Ohio, where the same farmers are
also growing corn and soy. A manufacturer can't give that sworn statement because we don't have that
knowledge on the entire supply chain
from farm to table."
A federal Senate bill under review
needed 60 votes to move forward,
but the cloture motion failed 48 to 49,
stalling the bill.
"It would require the U.S.D.A. to
define 'genetically engineered,'" Mr.
Hahn said. "We need to have a single,
national standard. U.S.D.A. would issue regulations that could establish
the standard for genetic engineering.
U.S.D.A. would also issue regulations

'I've had many instances
where the Vermont law
says you have to have a
tested, signed statement
from your supplier that
says they didn't use
genetically modified
materials, and the product
has never been comingled.'
- Martin Hahn, Hogan Lovells

the California Department of Agriculture. It's possible that the department would not want some products
labeled as bioengineered because, for
example, high-fructose corn syrup is
derived from bioengineered corn, but
that doesn't necessarily mean it's bioengineered, which could be misleading on a product label.
"In that case, we'd have one state
saying you have to label it, and another saying you can't label it," he said.
What's more, there has not been
guidance pertaining to calculating
things like yeast that is not bioengineered but was almost always grown
on a substrate that was G.M.O.
"Does that make the genetically
engineered?" Mr. Hahn asked. Supplier documentation is also an issue,
he noted. "I've had many instances
where the Vermont law says you have
to have a tested, signed statement from
your supplier that says they didn't use
genetically modified materials, and the
product has never been comingled."
And then there are the wheat growers.
"Wheat is not genetically engineered, but we can't sign a sworn

that would identify disclosures to be
made either on the label or some other means."
Mr. Hahn suggested a 1-800 number, a QR code, web site or even social
media. Two years after publishing the
standard, the U.S.D.A. would then require substantial compliance. Without substantial voluntary disclosure,
the U.S.D.A. would be forced to issue
new regulations that make disclosures mandatory, Mr. Hahn said.
"The advantage of the Senate approach is that we're talking disclosure,
either on the label, your web site or
consumer inquiries - the type of information that wouldn't require a fullboard label change," Mr. Hahn said.
"So why can't we get 60 senators to
agree to this? It has been a source of
frustration. But recognize the SNAC
International team is doing a great job
in Washington, despite the fact that
this issue is amazingly polarizing."
Mr. Hahn advised that while he's
optimistic that the future holds some
sort of resolution, the best thing to do
now is prepare for Vermont compliance, sooner rather than later. MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - April 12, 2016

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