Thursday’s U.S. House committee hearing on genetically engineered foods.
[A] food industry trade group has appealed to Gov. Peter Shumlin to limit their members’ liability under Vermont’s GMO labeling law.
The Grocery Manufacturers Association, which is among a number of industry groups challenging the Vermont law in court, said in a letter to Shumlin dated Wednesday that companies could pay as much as $10 million a day in fines when the law takes effect in July 2016.
“A $10 million per day fine to comply with the labeling law of the second smallest state in the Union is hugely problematic for an industry that employs 14 million U.S. workers and represents the largest sector of manufacturing,” GMA President Pamela G. Bailey said in the letter to Shumlin.
The letter says GMA has repeatedly offered to work with the state on its concerns over liability for supply chain errors and other liability issues since the law was passed, but has not received a response. GMA has also said the expense of labeling products specifically for Vermont could cause some manufacturers not to do business here.
Bailey’s letter says that, as the law is written, a manufacturer would be held 100 percent liable if an independent distributor sends an improperly labeled product to a Vermont retailer.
“The problem with holding the manufacturer liable for an item they don’t distribute is especially acute when you consider there is only one major food wholesaler located in Vermont and that wholesaler accounts for only 10% of retail food sales in the State of Vermont. This means that 90% of hundreds of retail grocery and convenience stores located in Vermont are supplied from warehouses and distribution centers located outside Vermont,” Bailey’s letter says.
Shumlin responded to the letter Thursday, saying the industry’s real concern was with Vermont’s law spreading to other states.
“Here’s an idea for the industry: Just label your products. All of them, nationwide. 64 countries already do it. I’m sure the food industry in America could summon the moral imagination to be the 65th,” Shumlin said in a statement. “Plain and simple Vermont’s law is about giving consumers the right to know what is in their food.”
A spokesman for GMA said Thursday that it was impractical for each state to have its own labeling law and said the industry prefers a uniform labeling law on the federal level.
The U.S. House Energy and Commerce Committee heard testimony on such a bill Thursday. HR1599, known as the Safe and Accurate Food Labeling Act of 2015, would establish federal guidelines for the labeling of genetically engineered and natural foods.
Vermont Assistant Attorney General Todd Daloz testified before the committee Thursday, urging lawmakers not to preempt Vermont’s legislation.
“What is important to Vermonters is the ability to have accurate, factual information in front of them in order to make informed decisions about their food purchases,” Daloz testified.
Bailey’s letter to Shumlin detailed ways in which companies might be held liable even if it elected not to sell their product in Vermont.
“Even with the best of intentions, excellent supply chain logistics and herculean efforts, product will be in the wrong place at any given time, resulting in millions upon millions of dollars in potential fines. For example, assume a 90-95% success rate that the properly labeled products are on shelves. This means that 5% to 10% of products will be mislabeled, or have “slipped” through the supply chain (i.e., slippage rate). Vermont’s law imposes a $1,000 daily fine for each item that does not bear the legally designated label. For a company that has 2,500 items that require the Vermont label, that slippage rate of products would translate to a $125,000 to $250,000 daily fine. We estimate that industry wide, there could be over 100,000 items sold in Vermont that would require Vermont-specific labels. That means our industry could be facing fines as much as $10 million per day,” the letter reads.
The Attorney General’s Office downplayed GMA’s cost estimate.
“While the idea that the industry would face $10 million dollars a day in fines based on products that inadvertently slipped through the supply chain is far-fetched, we would expect that sophisticated industry groups could take steps to manage any potential liability for such mistakes through arrangements with their suppliers and retailers,” Assistant Attorney General Megan Shafritz said in an email. “The letter strikes us as a last-ditch lobbying effort that coincides with the industry’s scheme to advance a bill in Congress that would impose federal preemption of all state labeling requirements.”