Originally published by the Journal of Commerce in November 2012

The 2012 election is over with – thank goodness! It was an election long on attack ads and generalities, short on well-articulated positions, and generally one of the most negative election cycles the country has seen in a very long time. Much hand-wringing will occur regarding the issues facing the lame-duck Congress, including sequestration/budget cuts, entitlements, the debt ceiling, tax rates, Hurricane Sandy relief, appropriations bills (for many governments agencies and departments), infrastructure funding, PNTR (permanent normal trade relations) for Russia, and cybersecurity which are among the most pressing issues, but there are many more which could be added to the list, such as mortgage debt forgiveness, online sales tax, online poker, Foreign Intelligence Surveillance Act reforms and unemployment benefits extension, to name just a few.

There is little reason to think the lame duck Congress will get through but one or two of these significant issues if we are lucky, and is most likely to focus on band aid solutions rather than considered resolution. On top of the constant bickering between the parties, add the final outcome in the House was 242 Republican seats and 193 Democratic seats. The Senate split was 53 (Democrats), 45 (Republicans) and 2 (independents).  The number of seats per party in each Congressional house has not changed much from 2010, although the holders of some of those seats will be different. As such, some old faces will be gone, and some new ones will come into the pictures. The staffs of the losers will be looking to be hired elsewhere and it is the staffers that do much of the serious work. The combination of all this, plus the short time left until the next session of Congress starts on January 3rd, does not portend well for serious discussion or reasoned solutions. Since so many pundits will comment on what is next nationally, including asking when we might see a candidate nominated and confirmed as Commissioner of Customs, it is worth spending a bit of time talking about what is happening at the state level.

No, this will not be a diatribe about whether one party is gaining more gubernatorial seats than the other or which party is exercising the greatest influence in which state legislative house. Rather, just as so many social issues are being brought to the state level for solution, we are also seeing the attempt to have laws enacted at the state level which seem to deal more with commercial issues of national consequence. For example, in 2011, the California State Legislature brought us the California Transparency in Supply Chains Act of 2010, which put the burden on large corporations to police their supply chains so as to combat human trafficking. The just concluded 2012 election brought us Proposition 37 which was entitled the “California Right to Know Genetically Engineered Food Act”. Proponents argued some 50 countries, including Japan and the European Union, require sellers of genetically engineered foods to appropriately label their foods, so why not require that of California sellers? Opponents pointed out the law was poorly written and exempted only selected foods and, frankly, made no sense in how it would be applied.  The measure was defeated by some 550,000 votes (53.1% vs. 46.9%, with about 9,000,000 votes cast). Why talk about a proposition which was defeated? Simply put, because the proponents are already talking about putting similar measures on the ballot in two years in states as diverse as Washington, Oregon, Vermont and Connecticut, and perhaps yet again in California. There is also talk about the opposition seeking to insert language in the Farm Bill to narrowly limit the authority of federal agencies to regulate genetically engineered crops, while proponents seek to pressure FDA to take regulatory action. So, if proponents cannot get what they want at the federal level, why not try the state level?

At this point, FDA has no labeling requirements for genetically engineered food, although if a product contains specific allergens, FDA exercises its jurisdiction. At the same time, the USDA imposes limitations if the genetically engineered crop causes harm to other plants. There are concerns about resistance to pesticides and quality issues with genetically engineered crops, but as far back as 1992, FDA said there is no difference between genetically engineered and natural plants when it comes to quality.

So, why the hullabaloo surrounding this proposal? Regretfully, these types of proposals are typically written so as to favor specific parties within an industry. In the case of Proposition 37, it was clear the organic community got together and flexed its muscles, but in so doing, the short-comings of its proposal became evident. The proposal started by saying if a crop was genetically engineered, it should be so labeled and could not say it is “natural”, “naturally grown”, “naturally made” or “all natural”. So far, that seemed logical. However, when you looked at the exemptions, the biases of the supporters were glaring. Specifically, an animal fed or injected with genetically engineered feed was exempt. Similarly, a crop or raw agricultural commodity or food was exempt if it was not “knowingly or intentionally” genetically engineered, or had not been “knowingly or intentionally” commingled with food that may have been genetically engineered. Alcoholic beverages were also exempt, as were processed foods (at least until July 1, 2019) provided no genetically engineered ingredient accounted for more than 0.5% of the total weight or the processed food did not contain more than 10 such ingredients. Organic foods would be exempt, as would medical food and any food not packaged for retail sale and intended for immediate human consumption or which is served, sold or otherwise provided for in a restaurant or other food facility.  Retailers were given the burden of compliance but could rely on declarations from others in the supply chain, and those others would have record keeping responsibility, but does anyone doubt such a set-up is rife for mischief? Further, anyone, state or local authorities and consumers, could sue for violations, so more class action cases could result and attorneys’ fees and injunctive relief are possible.

What this proposal did was exempt such food as beef, chicken, cheese, beef, wine, liquor and food sold at restaurants, but not pet food. It was estimated as much as 2/3 of the food sold and consumed in California would fall under one of the exemptions. This outcomes leads to the obvious question – what are you regulating and why?

While there may be some merit to proposing that genetically engineered food be so labeled, and assuming a more even-handed proposal were put forth, is this really a topic which a state should regulate? Isn’t this more properly addressed at the national level? If you have a series of patch-work laws which are somewhat different in each state (or even identical), doesn’t that run afoul of the Commerce Clause of the U.S. Constitution which leaves to the federal government the regulation of interstate commerce? Yes, states have a public health interest, but surely, it will not come as a surprise to anyone much of the food sold on the shelves of California grocery stores is imported (whether from China, Chile, Mexico or Florida), so if California (or another state) has its own rules, would sellers avoid that market? What happens if the seller does not meet the state-mandated marking requirement, e.g., a farmer sells his food product intended for sale in say Idaho, but the owner of the Idaho market makes a deal with his buddy in California to sell him that food. Who is going to be responsible for relabeling it? Who will have to satisfy the record keeping requirements? Who bears the cost?

While it may well be that some of the issues facing our country are better left to the states, food labeling is clearly not one of them, so beware of what may be on your ballot next time!