[Federal Register Volume 67, Number 198 (Friday, October 11, 2002)]
[Notices]
[Pages 63367-63375]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25734]


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 Notices
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  Federal Register / Vol. 67, No. 198 / Friday, October 11, 2002 / 
Notices  

[[Page 63367]]



DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

[Docket Number LS-02-13]


Establishment of Guidelines for the Interim Voluntary Country of 
Origin Labeling of Beef, Lamb, Pork, Fish, Perishable Agricultural 
Commodities, and Peanuts Under the Authority of the Agricultural 
Marketing Act of 1946

AGENCY: Agricultural Marketing Service, USDA.

ACTION: Notice.

-----------------------------------------------------------------------

SUMMARY: The Farm Security and Rural Investment Act of 2002 (Pub. L. 
107-171) amended the Agricultural Marketing Act of 1946 to require the 
Department of Agriculture's Agricultural Marketing Service (AMS) to 
issue country of origin labeling guidelines for voluntary use by 
retailers who wish to notify their customers of the country of origin 
of beef (including veal), lamb, pork, fish, perishable agricultural 
commodities, and peanuts. The guidelines contained within this notice 
include definitions that can be used by retailers and their suppliers 
and understood by other market participants, to facilitate the 
voluntary labeling or identification of commodities covered by this 
program by their respective country of origin. These voluntary 
guidelines also outline what the Agency believes represents the 
framework of a consumer notification, product marking, and 
recordkeeping program that would be required to carry out this program. 
AMS is committed to providing the industry and consumers with a 
workable voluntary program that will carry out the intent of the law. 
Public Law 107-171 also requires the Secretary to promulgate a 
regulation for mandatory labeling by September 30, 2004. Development of 
this mandatory regulation will begin in April 2003 and will likely be 
based on these voluntary guidelines from the current interim period as 
well as related input the Agency receives. AMS encourages submissions 
on the utility of these voluntary guidelines during the next 180 days. 
The forthcoming mandatory regulation will be developed through the 
rulemaking process, which will include a proposal and an opportunity 
for public comment. Although the benefits and costs of the voluntary 
program are difficult to quantify, the Agency believes that retailers 
will choose to participate if the benefits outweigh the costs. However, 
as the Agency moves toward the development of the regulation that will 
implement the mandatory program as required by Public Law 107-171, 
information concerning the benefits and the estimated or actual costs 
of implementing a program in compliance with the voluntary guidelines 
will be of great benefit to the Agency.

DATES: These voluntary guidelines are effective October 11, 2002. 
Submissions must be received by April 9, 2003.

ADDRESSES: Send written submissions to: Country of Origin Labeling 
Program, Agricultural Marketing Service, USDA, Stop 0249, Room 2092-S, 
1400 Independence Avenue, SW, Washington, D.C. 20250-0249, or by fax to 
(202) 720-3499, or by e-mail to [email protected].

FOR FURTHER INFORMATION CONTACT: Eric Forman, Associate Deputy 
Administrator, Fruit and Vegetable Programs, AMS, USDA, by phone at: 
(202) 690-0262, or via e-mail at: [email protected]; or William 
Sessions, Associate Deputy Administrator, Livestock and Seed Program, 
AMS, USDA, by phone at: (202) 720-5705, or via e-mail at: 
[email protected]. Additional information may also be obtained 
over the Agency's website at: www.ams.usda.gov/cool/.

SUPPLEMENTARY INFORMATION:

Background

    Section 10816 of Public Law 107-171 (7 U.S.C. 1638-1638d) amends 
the Agricultural Marketing Act of 1946 (AMA) (7 U.S.C. 1621 et seq.) to 
require retailers to inform consumers of the country of origin for 
covered commodities. The term ``covered commodity'' is defined in the 
law as muscle cuts of beef (including veal), lamb, and pork; ground 
beef, ground lamb, and ground pork; farm-raised fish and shellfish; 
wild fish and shellfish; perishable agricultural commodities (fresh and 
frozen fruits and vegetables); and peanuts. The terms ``retailers'' and 
``perishable agricultural commodities'' are defined in the law as in 
the Perishable Agricultural Commodities Act of 1930 (PACA) (7 U.S.C. 
499a(b)).
    Interest has been expressed in expanding these covered commodities 
to include other commodities, such as pecans. The Department of 
Agriculture (USDA), however, does not have the authority to include 
commodities in this program other than those specified in the statute. 
For agricultural commodities that cannot be covered under these 
guidelines, the Department has different authority to develop voluntary 
user-fee programs to certify that a non-covered commodity is a product 
of the United States. Under such a program, a participating handler or 
processor could label its product as a USDA certified product of the 
United States. Any person interested in such a program should contact 
the Agricultural Marketing Service (AMS).
    In the case of beef, lamb, and pork products, the law states that a 
retailer may use a ``United States Country of Origin'' label only if 
the product is from an animal that was exclusively born, raised, and 
slaughtered in the United States. However, in the case of beef, this 
definition also includes cattle exclusively born and raised in Alaska 
or Hawaii and transported for a period not to exceed 60 days through 
Canada to the United States and slaughtered in the United States. In 
the case of farm-raised fish and shellfish, the product must be fish or 
shellfish hatched, raised, harvested, and processed in the United 
States. For wild fish and shellfish, it must either be harvested in the 
waters of the United States or by a U.S. flagged vessel and processed 
in the United States or aboard a U.S. flagged vessel. In addition, the 
label must distinguish between farm-raised and wild fish products. In 
the case of peanuts and perishable agricultural commodities, they must 
be exclusively produced in the United States to carry that label.
    To convey country of origin information to consumers, the law 
states that retailers may use a label, stamp, mark, placard, or other 
clear and visible sign on the covered commodity, or on the package, 
display, holding unit, or bin containing the commodity at the

[[Page 63368]]

final point of consumption. Food-service establishments--such as 
restaurants, bars, food stands, and similar facilities--are exempt.
    The law makes reference to the definition of ``retailer'' in the 
PACA as the meaning of ``retailer'' for the application of country of 
origin labeling requirements. Under the PACA, a ``retailer'' is any 
person who buys or sells perishable agricultural products solely for 
sale at retail with a cumulative invoice value in any calendar year of 
more than $230,000. This definition excludes butcher shops, fish 
markets, and small grocery stores that either purchase fruit and 
vegetables at a level below this dollar volume threshold or do not 
purchase fruit and vegetables at all.
    The law directs the Secretary to first issue guidelines for 
voluntary labeling and then, by September 30, 2004, to promulgate 
requirements for mandatory labeling. When the mandatory labeling 
program takes effect, the law states that the Secretary may require any 
person who prepares, stores, handles, or distributes a covered 
commodity for retail sale to maintain a verifiable recordkeeping audit 
trail. According to the law, under the mandatory labeling program, 
suppliers are required to provide information to retailers indicating 
the country of origin of the covered commodity. Although the law states 
that the Secretary shall not use a mandatory identification system to 
verify country of origin under the mandatory labeling program, it does 
state that the Secretary may use, as a model, identity verification 
programs already in place. The law also provides enforcement procedures 
for the mandatory labeling program that includes fines, civil 
penalties, and cease and desist orders for retailers, packers, or other 
persons for willful violations.

Key Components of the Law

    These voluntary guidelines describe a program that allows 
retailers, as defined by the law, to label covered commodities by their 
country of origin. It is important to note that industry is not 
required to participate in this voluntary labeling program that will be 
in effect until a mandatory program is implemented. However, for those 
retailers and other market participants who choose to adopt these 
voluntary guidelines, all of the requirements contained within must be 
followed. It also is important to note that retailers and other market 
participants can place country of origin information on labels 
independent of these voluntary guidelines, provided that current 
labeling laws are followed.

Defining a Covered Commodity

    Covered commodities are muscle cuts of beef, lamb, and pork; ground 
beef, ground lamb, and ground pork; farm-raised fish; wild fish; 
perishable agricultural commodities; and peanuts.

Ingredient in a Processed Food Item

    The law excludes food items from country of origin labeling when a 
covered commodity is an ``ingredient in a processed food item.'' 
However, Public Law 107-171 does not define a ``processed food item.'' 
Therefore, the Agency must define what constitutes a ``processed food 
item'' for each covered commodity in the context of Public Law 107-171 
for the purposes of these guidelines.
    In developing the definition of ``processed food item'', the Agency 
considered using existing definitions of processing. For example, the 
National Organic Program defines processing as: cooking, baking, 
curing, heating, drying, mixing, grinding, churning, separating, 
extracting, slaughtering, cutting, fermenting, distilling, 
eviscerating, preserving, dehydrating, freezing, chilling, or otherwise 
manufacturing and includes the packaging, canning, jarring, or 
otherwise enclosing food in a container. While this definition was 
useful as a starting point, the Agency believes that such a definition 
would exempt commodities that Congress clearly intended to be subject 
to these guidelines. For example, with the coverage of muscle products 
of beef, lamb, and pork, Congress clearly intended that the 
slaughtering, cutting, and chilling of these commodities would not 
exempt them from the guidelines.
    The Agency considered defining this exemption to exclude any 
``ingredient'' listed on an ingredient label. Such an interpretation, 
however, would exclude many products that Congress intended to be 
covered by this statute. For example, if such an interpretation would 
be adopted, an item such as bagged lettuce, which lists only lettuce on 
the ingredients statement, could be excluded. The Agency believes that 
the mere listing of an otherwise covered commodity in an ingredient 
statement or list on a packaged covered commodity does not meet the 
threshold set forth in the law.
    To determine when a covered commodity is an ingredient in a 
processed food item and excluded from these guidelines, the Agency has 
chosen to define a ``processed food item'' in two ways. First, a 
processed food item is defined as a combination of ingredients that 
result in a product with an identity that is different from that of the 
covered commodity. Such items include raw salmon when combined with 
other ingredients to produce sushi and peanuts when combined with other 
ingredients to produce a candy bar. However, blended and mixed covered 
commodities, which will be discussed in more detail later in this 
notice, where the covered commodities retain their identity are still 
covered by these guidelines. Such items include mixed vegetables such 
as peas and carrots.
    Second, a commodity that is materially changed to the point that 
its character is substantially different from that of the covered 
commodity is also deemed to be a processed food item. This includes, 
but is not limited to, changes that occur as a result of cooking, 
curing, or restructuring. However, covered commodities that retain 
their identity when combined with other ingredients, such as water 
enhanced case ready steaks, are not considered to be ``processed food 
items'' under these guidelines. To the extent that this applies to 
specific covered commodities, further guidance is provided under the 
particular section for each category of covered commodity.

Whole Muscle Beef, Lamb, and Pork

    All raw fresh and frozen whole muscle beef, lamb, and pork products 
are covered under these guidelines unless they are an ingredient in a 
processed food item or have been materially changed before retail 
marketing.
    Where there are added ingredients, so long as the character of the 
whole muscle beef, lamb or pork is retained, the resulting products are 
covered. This includes such products as needle-tenderized steaks; 
seasoned, vacuum packaged pork loins; and water enhanced case ready 
steaks, chops and roasts. These items would be covered because 
combination of the ingredients and the whole muscle beef, lamb, or pork 
in does not result in a product with an identity that is different from 
that of the covered commodity.
    In situations where the whole muscle beef, lamb, and pork is an 
ingredient in a processed food item and the identity of the processed 
food item is significantly different from that of the covered 
commodity, the processed food item is excluded from country of origin 
labeling. For example, items such as ready-to-cook Beef Wellington 
would be exempt because the combination of ingredients with the covered 
commodity (muscle cut of beef) creates a product with an identity 
different from the covered commodity.

[[Page 63369]]

    When items are materially changed to the point that they do not 
retain their raw, whole muscle character they would also be excluded 
from country of origin labeling. This includes such products as 
restructured steaks and lamb pita meats, which contain pieces of whole 
muscle beef, pork or lamb that are formed back together. The cooking 
and curing of products (e.g., the addition of nitrites) also excludes 
products from labeling. Examples of these products include corned beef 
briskets and bacon. This is because cooked and cured products, 
including raw whole muscle cured products, are functionally different 
products and are not typically marketed with fresh and frozen whole 
muscle meats at a retail establishment, but instead they are marketed 
with other excluded meat products.

Ground Beef, Lamb, and Pork

    Public Law 107-171 specifically covers ``ground beef, ground lamb, 
and ground pork.'' The FSIS Food Standards and Labeling Policy Book 
(1998) defines products labeled as ground meats as not containing added 
water, cereal, soy derivatives, or other extenders. The Policy Book 
also specifically defines ground beef as not being able to have any 
salt, sweetening agents, flavorings, spices, or other seasonings added.
    Using the FSIS standards for ground meat and ground beef as a 
guide, the Agency does not believe that any added ingredient items or 
further processed products produced from ground beef, ground lamb, or 
ground pork are covered.

Fresh and Frozen Fruits and Vegetables

    The Perishable Agricultural Commodities Act defines perishable 
agricultural commodities as ``any of the following, whether or not 
frozen or packed in ice: Fresh fruits and vegetables of every kind and 
character; and * * * includes cherries in brine as defined by the 
Secretary in accordance with trade usages''. Therefore, frozen fruits 
and vegetables (e.g., a package of frozen strawberries, or frozen 
French fried potatoes made from sliced potatoes) are covered 
commodities and fall under these country of origin labeling guidelines.
    To maintain consistency with PACA, a frozen fruit or vegetable will 
be a covered commodity so long as its ``kind or character'' has not 
been altered. Therefore, for all perishable agricultural commodities, 
an ``ingredient in a processed food item'' is defined to mean an 
otherwise covered commodity that is a constituent in a food item where 
the identity of the food item is different from that of the covered 
commodity (e.g., a frozen prepared pie that includes frozen sliced 
apples) or is included in a package with significant other foods (e.g., 
a frozen entree consisting of a pre-cooked meat item and frozen 
vegetables). Alternatively, when a perishable agricultural commodity is 
processed (i.e., frozen so as to remain subject to the PACA) and 
packaged with only preservatives, seasoning, sweeteners or other minor 
ingredients, the covered commodity would fall under these voluntary 
country of origin labeling guidelines.

Peanuts

    Because the vast majority of peanuts sold at retail are shelled, 
roasted, and salted, the Agency believes these products were intended 
to be covered by the law. Accordingly, shelling, roasting, salting, and 
flavoring of peanuts would not exclude these products from being 
subject to Public Law 107-171. However, further processed peanut 
products, including such items as candy coated peanuts, peanut brittle, 
and peanut butter would not be covered by country of origin labeling 
guidelines. Similarly, where the peanuts are ingredients in other food 
products, such as peanuts in a candy bar, they would be excluded.

Wild and Farm-Raised Fish and Shellfish

    All fresh and frozen fish and shellfish items are covered by these 
country of origin labeling guidelines. All cooked and canned fish 
products, including such items as canned tuna and canned sardines, and 
restructured fish products, such as fish sticks and surimi, are 
excluded. Similarly, processed products where the fish or shellfish is 
an ingredient, such items as sushi, crab salad, and clam chowder, are 
excluded.

Labeling Country of Origin for Products Produced Exclusively in the 
United States

    If following these guidelines, a retailer shall label a covered 
commodity as having a ``United States Country of Origin'' only if the 
following criteria are met:
    1. Beef: Covered commodities must be derived exclusively from 
animals born, raised, and slaughtered in the United States (including 
animals that were born and raised in Alaska or Hawaii and transported 
for a period not to exceed 60 days through Canada to the United States 
and slaughtered in the United States).
    2. Lamb and Pork: Covered commodities must be derived exclusively 
from animals born, raised, and slaughtered in the United States.
    3. Farm-raised Fish and Shellfish: Covered commodities must be 
derived exclusively from fish or shellfish hatched, harvested, and 
processed in the United States.
    4. Wild Fish and Shellfish: Covered commodities must be derived 
exclusively from fish or shellfish either harvested in the waters of 
the United States or by a U.S. flagged vessel and processed in the 
United States or aboard a U.S. flagged vessel.
    5. Fresh and Frozen Fruits and Vegetables, and Peanuts: Covered 
commodities must be derived exclusively from produce or peanuts grown, 
packed and, if applicable, processed in the United States.
    Product otherwise meeting the requirements of ``United States 
Country of Origin'' may retain that designation after export for 
further processing in a foreign country and reentry into the United 
States for retail sale so long as a verifiable recordkeeping audit 
trail is maintained and such labeling is consistent with other Federal 
labeling requirements.

Labeling Country of Origin for Imported Products (i.e., Produced 
Entirely Outside of the United States)

    Currently, Federal law--the Tariff Act of 1930 as amended (19 
U.S.C. 1304), the Federal Meat Inspection Act, the Poultry Products 
Inspection Act as amended (21 U.S.C. 451 et seq.), and other 
legislation requires most imports, including food items, to bear labels 
informing the ``ultimate purchaser'' of their country of origin. 
Ultimate purchaser has been defined as the last U.S. person who will 
receive the article in the form in which it was imported. Containers 
(e.g., cartons and boxes) holding imported fresh fruits and vegetables, 
for example, must be labeled with country of origin information when 
entering the United States. (Note: The PACA requires all labels on 
subject commodities to be accurate, but requires no specific labeling 
information.) Consumer-ready packages, including food products (e.g., a 
vacuum packaged imported lamb leg, a bundle of asparagus, or a package 
of frozen strawberries), although they are packed in a box, currently 
must have country of origin labels on each consumer-ready package. In 
contrast, a retailer may take loose produce out of a container and 
display it in an open bin, selling each individual piece of produce 
that has not been labeled. A placard or other label indicating country 
of origin is not currently required. If the article is destined for a 
U.S. processor or manufacturer where it will undergo ``substantial 
transformation,'' that

[[Page 63370]]

processor or manufacturer is considered the ultimate purchaser. As a 
result, meat and other items have not been required to carry a country 
of origin mark after cutting or processing in the United States and may 
presently be labeled product of the United States.
    Under these guidelines, the country of origin for products produced 
entirely outside of the United States shall be the country as specified 
by the requirements of existing Federal laws at the time the product 
arrives at the U.S. port of entry. For example, an imported lamb 
carcass may have actually resulted from an animal slaughtered in the 
exporting country but born in a country other than the exporting 
country. However, for the purposes of these labeling guidelines, the 
imported lamb carcass may be labeled as the product of the exporting 
country.
    Using this country of origin information for imported products, 
retailers (and their suppliers) will have to maintain the country of 
origin identity of this class of products to the final point of sale of 
a covered commodity. So, for the imported lamb carcass example above, 
under these guidelines if the carcass is fabricated into cuts in the 
United States, a resulting lamb loin marketed at retail would be marked 
as product of the exporting nation as it is not eligible for a United 
States origin claim.

Labeling Country of Origin When the Product Has Entered the United 
States During the Production Process (i.e., Mixed Origin That Includes 
the United States)

    The law explicitly defines the requirements for covered commodities 
to be labeled with a ``United States Country of Origin.'' However, the 
law is considerably less prescriptive for products produced completely 
or in part outside of the United States. In these cases, the law only 
requires that retailers inform consumers at the point of sale of a 
covered commodity of the country of origin.
    A number of animals born in foreign countries are raised and 
slaughtered in the United States. Also, some animals born in the U.S. 
are raised in foreign countries and then may be slaughtered in either 
that foreign country or returned to the United States for slaughter. As 
all three criteria (i.e., born, raised, slaughtered for beef, lamb, and 
pork) are needed for product to be considered ``United States Country 
of Origin,'' the Agency has to define how the products from mixed 
origin animals should most appropriately be labeled. Similarly, the law 
states that peanuts and perishable agricultural commodities must be 
``produced'' in the United States to be labeled ``United States Country 
of Origin.'' Since many such products may be grown, packed, or 
processed in different countries, the Agency must determine how they 
should be labeled.
    The Agency recognizes that the definition provided in the law does 
not allow products that were produced in both the United States and in 
a foreign country to be called ``United States Country of Origin'' or 
even ``Product of the United States and Country X.'' However, the 
Agency also recognizes that products such as pork products derived from 
a pig that was born in a foreign country (e.g., Country X), raised, and 
slaughtered in the United States cannot be labeled as ``Product of 
Country X'' as much of the production of that animal was in the United 
States. Accordingly, these guidelines provide a system where such 
products that were produced in both foreign markets and in the United 
States would be labeled to identify what production processes occurred 
in a foreign market and what production processes occurred in the 
United States, up to the point that the country of origin definition 
was determined. For the pork example above, the product label could 
either read, ``From Country X hogs Raised and Slaughtered in the United 
States,'' or alternatively, ``Born in Country X, Raised and Slaughtered 
in the United States.'' A different example would be vegetables grown 
in the United States, frozen (processed) in a foreign country, and 
imported back into the United States for retail sale. This product 
could be labeled as, ``Grown in the United States, Processed in Country 
X.''
    The Agency is aware that in some cases, a covered commodity will 
undergo production processes in two or more foreign countries prior to 
entering the United States for additional processing or a final process 
such as slaughter. In these cases, verifiable product information will 
not always be available for all points in the production process (i.e., 
born, raised, or grown and packed) prior to the port of entry. In these 
cases, the product label will designate the country of origin as 
specified by existing Federal laws (e.g., requirements of the U.S. 
Customs Service) at the time the product arrives at the U.S. port of 
entry and any additional major processes (e.g., slaughter for beef or 
processing for peanuts) performed in the United States be listed on the 
product label. For example, if a calf was born in Country X and raised 
in Country Y before being imported for slaughter in the United States, 
an acceptable product label under these guidelines for the covered 
commodities derived from this animal would be: ``From Cattle Imported 
from Country Y, Slaughtered in the United States.'' However, 
alternatively, if all of the production process information is known 
for the product that occurred in both Country X and Country Y, it may 
be included on the product label. So, for the previous example, a label 
of, ``Born in Country X, Raised in Country Y, and Slaughtered in the 
United States'' would be acceptable under these guidelines if a 
verifiable recordkeeping trail was available, but it would not be 
required since two or more countries (prior to the product entering the 
United States) are involved.
    The Agency believes this level of detail is required under the 
statute and will be consistent with the law's purpose of providing 
meaningful information to consumers. However, the Agency does have 
concerns that requiring meat products to carry labels that refer to the 
slaughtering of livestock could be viewed negatively by consumers. As a 
result, the Agency will allow the term ``Processed'' to be used in lieu 
of the term ``Slaughtered'' on meat products.

Defining Country of Origin for Blended or Mixed Products

    The law requires the Agency to formulate guidelines for country of 
origin labeling for ground beef (and to a lesser extent ground lamb and 
pork), mixed fruit and vegetables, and blended seafood products that 
are covered commodities. For the purposes of these labeling provisions, 
blended or mixed products are those that contain one or more covered 
commodities from one or more countries. The Agency recognizes that 
these items are often a mixture of raw materials that are derived from 
covered commodities produced both in the United States and in countries 
outside of the United States. Each of the raw material sources for 
mixed or blended items would have a country of origin as defined by 
these guidelines.
    In addition, the Agency recognizes that it could be misleading to 
consumers if only a small percentage of a mixture of a covered 
commodity met the definition of United States origin and yet the 
mixture could list the United States first ahead of other countries in 
a country of origin declaration on the package. Therefore, under these 
guidelines the applicable country of origin labeling for each raw 
material source (as defined in the guidelines) must be reflected in the 
labeling of the mixed or blended retail item by order of prominence by 
weight. This being the case, ground beef would be labeled with

[[Page 63371]]

the applicable country of origin information as required by the 
guidelines for each raw material source in descending order of 
prominence by weight.
    For example, the label ``From Country X Cattle Slaughtered in the 
United States; Product of Country Y; and United States Product'' could 
be the label on a package of ground beef for a mixture of three beef 
raw material sources where the most substantial raw material source was 
from cattle born and raised in Country X and slaughtered in the United 
States, followed by imported Country Y beef trimmings, and then 
followed by trimmings from beef completely of United States origin. 
Likewise, the labeling for a bag of shrimp tails containing shrimp that 
were sourced from multiple countries must, under these guidelines, 
specify the country of origin of each of the sources of the shrimp in 
order of their prominence by weight for those shrimp tails in the bag. 
It is important to note that these guidelines do not require the label 
to list the actual percentage of weight for each constituent ingredient 
(e.g., 50 percent United States, 40 percent Country X, 10 percent 
Country Y).
    In the case of mixed or blended products where the individual 
constituents can be separately identified, the guidelines would require 
the container to be labeled to individually identify the country of 
origin of each constituent. An example of a mixed or blended product 
where the individual constituents can be separately identified is a 
bagged salad. For a bagged salad that contains lettuce, spinach, and 
peppers from three different countries, the package label would list 
the applicable country of origin separately for each constituent 
ingredient.

Method of Notification

    The law states that country of origin notification may be provided 
to consumers by means of a label, stamp, mark, placard, or other clear 
and visible sign on the covered commodity or on the package, display, 
holding unit, or bin containing the commodity at the final point of 
sale to consumers. However, it is important to note that this 
requirement does not supercede any existing labeling requirements and 
any such country of origin notification must not obscure other labeling 
information required by existing regulatory requirements.
    The guidelines allow market participants to utilize a variety of 
different labeling nomenclatures to denote the country of origin of a 
covered commodity. For example, ``U.K.'' and ``United Kingdom of Great 
Britain and Northern Ireland'' are both allowed under the guidelines. 
Similarly, covered commodities meeting the guidelines for a ``United 
States Country of Origin'' may be labeled by any commonly understood 
designations such as:

1. Country of Origin--United States;
2. Product of the United States;
3. Produced in the United States; or
4. Product of USA.

    The Agency kept this portion of the guidelines non-prescriptive to 
provide the industry with the most flexibility in implementing the 
program in the least costly manner possible.

State and Regional Labeling Programs

    Under this voluntary program, the law states that retailers notify 
consumers of the country of origin of covered commodities. The Agency 
has determined that State and regional labeling programs, such as 
``Washington Apples,'' ``Idaho Potatoes,'' and ``California Grown'' do 
not meet this requirement. Therefore, such State and regional labeling 
claims cannot be accepted in lieu of country of origin labeling.

Remotely Purchased Products

    For sales of a covered commodity where the customer purchases a 
covered commodity prior to having an opportunity to observe the final 
package (e.g., Internet sales, home delivery sales, etc.), the 
retailer, as defined by these guidelines, shall provide the country of 
origin information on the sales vehicle (i.e., Internet site, home 
delivery catalog, etc.) as part of the information describing the 
covered commodity being offered for sale. This is because of the 
Agency's belief that consumers must be made aware of the country of 
origin of the covered commodity before the purchase is made.

Verification and Enforcement of Country of Origin Labeling Claims Under 
the Voluntary Program

    A distinction was made by Congress when constructing the 
legislation authorizing this program between the voluntary labeling 
program and the mandatory labeling program. During the voluntary 
labeling timeframe covered by these guidelines, the Agency will not 
perform compliance visits pursuant to Public Law 107-171 and has no 
authority under the law to pursue enforcement action against entities 
participating in this voluntary program. However, it is important to 
note that when retailers and their suppliers choose to adopt the 
guidelines that all of the provisions contained within must be 
followed. Any reference by retailers and their suppliers to the use of 
these guidelines when certain provisions are not being met could be 
considered a labeling claim that is not truthful and therefore may be a 
violation of the PACA and other applicable labeling laws and subject to 
enforcement under these laws.
    The law contains several provisions for the verification of country 
of origin claims. The law states that, ``The Secretary may require that 
any person that * * * distributes a covered commodity for retail sale 
maintain a verifiable record keeping audit trail * * * to verify 
compliance * * *'' However, the law also sets forth that, ``The 
Secretary shall not use a mandatory identification system to verify the 
country of origin of a covered commodity.'' To have a meaningful 
program, retailers and their down-line suppliers will have to maintain 
a verifiable audit trail on covered commodities to substantiate country 
of origin labeling claims. The law states that, ``To certify the 
country of origin of a covered commodity, the Secretary may use as a 
model certification programs in existence on the date of enactment of 
this Act.'' The Agency encourages all retailers who voluntarily choose 
to adopt these guidelines to contact the Agency to gain a better 
understanding of the various verification programs operated by the 
Agency that are already in place in certain market segments that would 
meet the requirements of this program.

Verification and Enforcement of Country of Origin Labeling Claims Under 
the Mandatory Program

    Enforcement of the country of origin labeling provisions of Public 
Law 107-171 relative to the frequency and extent of surveillance 
activities, complaint response, retailer and violation tracking, and 
public disclosure of information obtained by the Agency are all areas 
that will be addressed in the mandatory program. Accordingly, the 
Agency will not perform surveillance activities, investigate 
complaints, prosecute violations, or otherwise enforce the voluntary 
guidelines (except as might normally occur under other program 
authorities). However, as a preparatory measure, retailers and others 
may request that the Agency perform advisory audits on a user-fee basis 
to receive feedback on their application of the voluntary system.

Retention of Records

    These guidelines require a two-year records retention policy. This 
timeframe was chosen because it is consistent with

[[Page 63372]]

the current records retention requirements of the PACA, which govern 
these same retailers.

Economic Implications

    Though the benefits and costs of the voluntary program are 
difficult to quantify, the Agency believes that retailers will only 
choose to participate if the benefits outweigh the costs. As the Agency 
moves toward the development of a regulation to implement the mandatory 
program as required by Public Law 107-171, information concerning the 
benefits and the estimated or actual costs of implementing a program in 
compliance with the voluntary guidelines will be of great benefit to 
the Agency. The Agency is aware that studies have been conducted by 
USDA's Food Safety and Inspection Service (FSIS) and the United States 
General Accounting Office regarding implications of country of origin 
labeling and will use this information accordingly.

Labeling of Covered Commodities Marketed to Others Besides Retailers

    It is important to note that these guidelines do not apply to 
covered commodities marketed to others besides retailers, as defined in 
the law. This includes covered commodities sold to such businesses as 
food service establishments, butcher shops, and foreign outlets. So, 
for example, boxed whole muscle beef cuts sold to an importer in Japan 
would be labeled as they currently are labeled under existing 
regulations.

Paperwork Reduction Act of 1995

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), the Agency has requested emergency approval from the 
Office of Management and Budget for the information collection burden 
imposed by this program.

The Guidelines

    These guidelines include definitions that can be used by retailers 
and their suppliers and understood by other market participants, to 
facilitate the labeling or identification of commodities covered by 
this program by their respective country of origin. These guidelines 
also outline what the Agency believes represents the framework of a 
consumer notification, product marking, and recordkeeping program that 
would be required to carry out this program.

Voluntary Country of Origin Labeling Guidelines

Definitions
    Unless otherwise defined, the following terms should be construed 
as follows:
    ``Act'' means the Agricultural Marketing Act of 1946, (7 U.S.C. 
1621 et seq.).
    ``Agency'' means the Agricultural Marketing Service, United States 
Department of Agriculture.
    ``Beef'' means meat produced from cattle, including veal.
    ``Consumer package'' means any container or wrapping in which any 
covered commodity is enclosed for use in the delivery or display of 
such commodity to retail purchasers.
    ``Covered commodity'' means fresh or frozen muscle cuts of beef 
(including veal), lamb, and pork, ground beef, lamb, and pork, as well 
as farm-raised fish, wild fish, and shellfish (including steaks, 
nuggets, any other flesh from farmed raised fish and shellfish), 
perishable agricultural commodities as defined in the Perishable 
Agricultural Commodities Act of 1930 (7 U.S.C. 499a(b)), and peanuts. 
Covered commodities are excluded from these guidelines if the commodity 
is an ingredient in a processed food item.
    ``Department'' means the United States Department of Agriculture.
    ``Farm-raised fish'' means net-pen aquaculture or other farm-raised 
fish or shellfish; and fillets, steaks, nuggets, and any other flesh 
from a farm-raised fish or shellfish.
    ``Food service establishment'' means a restaurant, cafeteria, 
lunchroom, food stand, saloon, tavern, bar, lounge, or other similar 
facility operated as an enterprise engaged in the business of selling 
food to the public. Food service establishments include salad bars, 
delicatessens, and other prepared food enterprises that provide ready-
to-eat foods that are consumed either on or outside of the retailer's 
premises.
    ``Ground beef'' means ground beef of skeletal origin produced in 
conformance with all applicable Food Safety and Inspection Service 
labeling guidelines. This product contains no added ingredients.
    ``Ground lamb'' means ground lamb of skeletal origin produced in 
conformance with all applicable Food Safety and Inspection Service 
labeling guidelines. This product contains no added ingredients.
    ``Ground pork'' means ground pork of skeletal origin produced in 
conformance with all applicable Food Safety and Inspection Service 
labeling guidelines. This product contains no added ingredients.
    ``Ingredient'' means the component, either in part or in full, of a 
finished food product.
    ``Lamb'' means meat, other than mutton, produced from sheep.
    ``Legibly'' means English language text that can be easily read.
    ``Material change'' means altered prior to retail to the extent 
that the product does not meet the definition of covered commodity. To 
be considered ``materially changed,'' changes to a commodity must be of 
such magnitude that its character is substantially different from that 
of the covered commodity. Specifically, for the following:
    1. Whole muscle beef, lamb, and pork: Altered to the point that its 
character is no longer that of the covered commodity; such as through 
restructuring, cooking, and curing. Examples include ham, raw corned 
beef brisket, and restructured beef steaks.
    2. Ground beef, lamb, and pork: The addition of any ingredients or 
cooking. Examples include ground beef with vegetable protein, cooked 
ground beef crumbles, bratwurst, fresh pork sausage, and lamb sausage.
    3. Fresh and frozen fruits and vegetables: Altered to the point 
that its character is no longer that of the covered commodity. Examples 
include orange and other fruit juices.
    4. Peanuts: Altered to the point that its character is no longer 
that of the covered commodity. An example is peanut butter.
    5. Wild fish and farm-raised fish: Altered to the point that its 
character is no longer that of the covered commodity. Includes the 
cooking and canning of fish and shellfish. Examples include canned tuna 
and canned sardines as well as surimi and restructured fish sticks.
    ``Perishable agricultural commodity'' means fresh and frozen fruits 
and vegetables of every kind and character where the original character 
has not been changed (for example, frozen green beans would be 
included, but frozen concentrated orange juice would be excluded) and 
includes cherries in brine as defined by the Secretary in accordance 
with trade usages.
    ``Person'' means any individual, partnership, corporation, 
association, or other legal entity.
    `` Pork'' means meat produced from hogs.
    ``Processed food item'' means either:
    1. A combination of ingredients that may include a covered 
commodity but the identity of the processed food item

[[Page 63373]]

is different from that of the covered commodity; or
    2. A covered commodity that has undergone a material change.
    ``Produced in any country other than the United States'' means 
born, raised, slaughtered, grown, packed, processed, or harvested (as 
applicable to the covered commodity), outside the fifty U.S states, the 
District of Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin 
Islands, the Trust Territories of the Pacific Islands, and the waters 
of the United States (as defined in these guidelines), or by a vessel 
not registered in the United States.
    ``Raised'' means, in the case of beef, lamb, and pork, the period 
of time following weaning until slaughter.
    ``Retailer'' has the meaning given the term in section 1(b) of the 
Perishable Agricultural Commodities Act of 1930 (7 U.S.C. 499a(b)), 
i.e., a person who is a dealer engaged in the business of selling any 
perishable agricultural commodity solely at retail with an invoice 
value in any calendar year of more than $230,000.
    ``Secretary'' means the Secretary of Agriculture of the United 
States or any person to whom the Secretary's authority has been 
delegated.
    ``Slaughter'' means the point in which a livestock animal 
(including cattle, swine, and sheep) is prepared into meat products fit 
for human consumption. For labeling purposes, the term ``slaughtered'' 
is interchangeable with the term ``processed.''
    ``United States'' means the fifty U.S states, the District of 
Columbia, the Commonwealth of Puerto Rico, the U.S. Virgin Islands, the 
Trust Territories of the Pacific Islands, and the waters of the United 
States (as defined in these guidelines).
    United States country of origin'' means in the case of:
    1. Beef: From animals born, raised, and slaughtered in the United 
States (including animals born and raised in Alaska and Hawaii and 
transported for a period not to exceed 60 days through Canada to the 
United States and slaughtered in the United States).
    2. Lamb and pork: From animals born, raised, and slaughtered in the 
United States.
    3. Farm-raised fish: From fish hatched, raised, harvested, and 
processed in the United States.
    4. Wild-fish: From fish either harvested in the waters of the 
United States or by a U.S. flagged vessel and processed in the United 
States or aboard a U.S. flagged vessel.
    5. Fresh and frozen fruits and vegetables, and peanuts: From 
products produced in the United States.
    ``U.S. flagged vessel'' means a ship or boat registered in the 
United States or documented under chapter 121 of title 46, United 
States Code.
    ``Vessel flag'' means the country of registry for a vessel, ship, 
or boat.
    ``Waters of the United States'' means those fresh and ocean waters 
contained within the 200-mile boundary of the Exclusive Economic Zone 
(EEZ) surrounding the United States.
    ``Wild fish'' means fish and shellfish, regardless of origin, 
harvested in the wild; and fillets, steaks, nuggets, and any other 
flesh from a wild fish or shellfish.
Country of Origin Notification
    In voluntarily providing notice of the country of origin as covered 
by this statute, the following guidelines shall be followed:

1. Consumer Notification

A. General

    I. All covered commodities offered for sale individually, in bulk 
bins, cartons, crates, barrels, clusters, or consumer packages shall be 
legibly marked with the country of origin.
    II. Country of origin labeling may be applied prior to or after 
delivery to the United States.

B. Exemptions

    I. Food service establishments are exempted from the country of 
origin guidelines.

C. Exclusions

    I. Covered commodities are excluded from country of origin labeling 
if they are an ingredient in a processed food item. Examples include:
    i. Whole muscle beef, lamb, and pork: Ready-to-cook Beef 
Wellington.
    ii. Ground beef, ground lamb, ground pork: A meal kit that includes 
ground beef and other ingredients.
    iii. Fresh and frozen fruit and vegetables: Frozen prepared pie 
that includes frozen sliced apples.
    iv. Peanuts: Peanuts in a candy bar.
    v. Wild and farm-raised fish and shellfish: Salmon sushi.

D. Designation of Wild Fish and Farm-Raised Fish

    I. The notice of country of origin for wild fish and farm-raised 
fish shall specify and distinguish between wild fish and farm-raised 
fish.

E. Labeling Covered Commodities of United States Country of Origin

    I. They must fully meet the definition of United States Country of 
Origin as put forth in the Definitions section of these guidelines.
    II. Products further processed or handled in foreign countries 
after reaching the threshold point in which the country of origin of 
the covered commodity is determined may still qualify for ``United 
States Country of Origin'' under these guidelines if the product's 
identity is maintained under a verifiable recordkeeping system. 
Otherwise, such products shall be labeled with the country from which 
it was exported in conformance with existing Federal laws. An example 
is a beef carcass meeting the definition of ``Product of United States 
Origin'' exported to another country for cutting into steaks. The 
resulting steaks from this carcass that are imported back into the 
United States may either be marked as product of ``Country X'' or, 
alternatively, if a verifiable recordkeeping system is in place, 
``Product of United States Origin.''

F. Labeling Imported Products

    I. Shall be labeled with the country from which it was exported in 
conformance with existing Federal laws.
    II. For covered commodities that undergo different phases of 
preparation, production or processing in various countries prior to 
export to the United States, the label may also include additional 
country of origin information if the product's identity is maintained 
under a verifiable recordkeeping system. This includes referencing 
production processes which may have occurred in the United States prior 
to export to a foreign country and ultimate import back into the United 
States.

G. Labeling Covered Commodities From Multiple Countries That Include 
the United States

    I. Beef, Lamb, Pork:
    i. If an animal was born or raised in a foreign country prior to 
slaughter in the United States, the resulting meat products shall be 
labeled to show the processing steps that occurred in a foreign country 
prior to slaughter in the United States consistent with existing 
Federal law at the time the animal entered the United States. For 
example, if a calf is born and raised in a foreign country, and then 
exported for further raising and slaughtering in the United States, the 
label could either read, ``From Country X'' cattle Raised and 
Slaughtered in the United States,'' or, alternatively, ``Born and 
Raised in Country X and Raised and Slaughtered in the United States.''
    ii. If the animal was born or raised in two or more foreign 
countries prior to slaughter in the United States, the resulting meat 
products shall be labeled as originating from animals from the

[[Page 63374]]

country as determined under existing Federal law at the time they 
entered the United States and for the process(es) occurring in the 
United States. For example, a steer born in Country X, exported to 
Country Y for raising, and then exported to the United States for 
slaughter could have the label, ``From Country Y cattle Slaughtered in 
the United States.'' However, such products may instead be labeled to 
identify each specific country (e.g., ``Born in Country X, Raised in 
Country Y, and Slaughtered in the United States'') if the animal's 
identity was maintained under a verifiable recordkeeping system.
    II. Fresh and Frozen Fruits and Vegetables, and Peanuts
    i. In the case where a covered commodity was grown and packed in a 
foreign country prior to processing in the United States, the product 
shall be labeled with the foreign country where it was grown and/or 
packed in accordance with existing Federal law at the time when the 
product entered the United States. For example, the product label could 
be applied as: ``Grown and packed in Country X and Processed in the 
United States.''
    ii. In the case where a covered commodity was grown and packed in 
two or more foreign countries prior to processing in the United States, 
the product shall be labeled with the foreign country it was grown and/
or packed in accordance with existing Federal law at the time when the 
product entered the United States. For example, product may have been 
grown in Country X, packed in Country Y, and processed in the United 
States. When the product entered the United States, under existing 
Federal law it would be identified as product of Country Y and could 
carry the label ``Product of Country Y, Processed in the United 
States.'' However, such products may instead be labeled to identify 
each specific country and in applicable chronological order by country 
if the product's identity was maintained under a verifiable 
recordkeeping system.
    III. Wild Fish and Farm-raised Fish: In the case where a covered 
commodity was harvested in the waters of or by a flagged vessel of one 
country and processed in another country or onboard a vessel with a 
different flag, the product label shall be applied as: ``Harvested in 
(Country X, as applicable) and Processed in (Country Y, as 
applicable).''

H. Blended Products

    I. For commingled, blended, or mixed covered commodities offered 
for retail sale that are prepared from raw materials originating from 
different countries (e.g., ground beef, salads, or fresh or frozen 
mixed fruits or vegetables) the label shall indicate the country of 
origin information of each constituent or component covered commodity 
raw material source in accordance with these guidelines by order of 
prominence by weight.
    II. The product label shall be applied as: ``Produced from covered 
commodities with the following countries of origin: (Raw material 
source A, with born, raised, slaughtered, grown, packed, harvested, or 
processed information as applicable to the commodity as defined by 
these guidelines), (Raw material source B, with born, raised, 
slaughtered, grown, packed, harvested, or processed as applicable to 
the commodity as defined by these guidelines),'' and so forth until all 
covered commodity raw material sources are accounted for by order of 
prominence by weight.
    III. Products made from commingled, blended, or mixed covered 
commodities where processing has altered the commodity's character 
(e.g., cooked vegetables in a soup), do not have to be labeled as to 
the country of origin of the constituent items.

I. Remotely Purchased Products

    I. For sales of a covered commodity where the customer purchases a 
covered commodity prior to having an opportunity to observe the final 
package (e.g., Internet sales, home delivery sales, etc.), the 
retailer, as defined by these guidelines, shall provide the country of 
origin information on the sales vehicle (i.e., Internet site, home 
delivery catalog, etc.) as part of the information describing the 
covered commodity being offered for sale.

2. Markings

    A. Country of origin notification markings can either be in the 
form of a placard, sign, label, sticker, or other format that allows 
consumers to identify the country of origin of particular covered 
items. The placard, sign, label, sticker or other display must be 
placed in a conspicuous location. Country of origin information may be 
typed, printed, or handwritten. Labels must be written in English; 
additional accompanying languages are permissible. Country of origin 
notification shall be written in a form that allows the consumer to 
read them when selecting items to be purchased.
    B. Abbreviations and variant spellings, which unmistakably indicate 
the country such as: ``U.K.'' for ``The United Kingdom of Great Britain 
and Northern Ireland'' and ``Brasil'' for ``Brazil'' are acceptable. 
The adjectival form of the name of a country or region/city within a 
country may not be used as proper indication of the country of origin 
of imported commodities. For example, product names such as ``Spanish 
peanuts'' which are most commonly used to designate a product variety 
and not the actual origin of the product, would, without a further 
designation of country of origin, be unacceptable even if the products 
did actually originate from that country. Symbols (flags, national 
symbols, etc.) may not be used to denote a country of origin, but may 
be used in conjunction with an acceptable country of origin label.
    C. State or regional labeling programs will not be accepted in lieu 
of country of origin labeling.
    D. The phrases ``Product of Country X,'' and/or ``Grown in Country 
X,'' and/or ``Imported from Country X,'' can be used to denote the 
country of origin for products produced entirely in any country other 
than the United States.

3. Recordkeeping

    A. Every person that prepares, stores, handles, or distributes a 
covered commodity for retail sale must keep records on the country of 
origin for a period of at least two years.
    B. Any person engaged in the business of supplying a covered 
commodity to a retailer must make available information to the retailer 
indicating the country of origin of the covered commodity. Such 
persons, which include but are not limited to, producers, growers, 
handlers, packers, processors, and importers, must maintain auditable 
records documenting the origin of covered commodities. Self-
certification by such persons is not sufficient.
    C. Retailers must ensure that a verifiable audit trail is 
maintained through contracts or other means, recognizing that suppliers 
throughout the production/marketing chain have a responsibility to 
maintain the necessary supporting records.
    D. All records must be legible and written in English, and may be 
maintained in either electronic or hard copy formats. To ensure 
accurate labeling and provide an auditable document trail, retailers 
must have records at the place of final sale that identify the country 
of origin of all covered commodities sold at that facility. In 
addition, records of any person who prepares, stores, handles, or 
distributes a covered commodity and/or comprehensive records maintained 
by the retailer may be located at points of distribution and sale, 
warehouses, or at central offices. Wherever maintained

[[Page 63375]]

and in whatever format, these records must be readily accessible to 
review by the retailer and the Department.
    E. Records for domestically produced and/or processed products must 
clearly identify the location of the growers and production facilities. 
When similar covered commodities may be present from more than one 
country or different production regimes, a verifiable segregation plan 
must be in place. For imported commodities, records must provide clear 
product tracking from the port of entry into the United States.
    F. Recognizing retailers and their suppliers may have different 
accounting and inventory documentary systems; various forms of 
documentation will be acceptable provided the necessary tracking 
information is available.

4. Enforcement

    A. The Secretary will not perform surveillance of retailers, 
investigate complaints, prosecute violations, or otherwise enforce the 
provisions of the voluntary guidelines.
    B. The voluntary guidelines will not interfere with or supercede 
any other statutory requirement for country of origin labeling for the 
covered commodities. (i.e., all other Federal and/or state labeling 
requirements remain in force).
    C. As a preparatory measure, retailers and any other person that 
prepares, stores, handles, or distributes a covered commodity for 
retail sale may request that the Agency perform advisory audits on a 
user-fee basis to receive feedback on their application of the 
voluntary system.

    Authority: 7 U.S.C. 1621 et seq.

A.J. Yates,
Administrator.
[FR Doc. 02-25734 Filed 10-8-02; 3:00 pm]
BILLING CODE 3410-02-P