USDA Publishes Final Rule on U.S.-Origin Claims for FSIS-Regulated Products

USDA Publishes Final Rule on U.S.-Origin Claims for FSIS-Regulated Products

March 20, 2024, Covington Alert

On March 18, 2024, the United States Department of Agriculture (USDA) Food Safety and Inspection Service (FSIS) published in the Federal Register a final ruleupdating its requirements for U.S.-origin claims on labels for FSIS-regulated products. Under the final rule, FSIS-regulated products that bear voluntary U.S.-origin claims must now come from animals born, raised, slaughtered, and processed in the U.S.; all other ingredients must be of domestic origin, except for spices and flavorings; and all preparation and processing steps must occur in the U.S. The final rule applies to the labeling of meat, poultry, and egg products under mandatory FSIS inspection, as well as products under FSIS's voluntary inspection program, that will be sold domestically. Although the final rule applies only to FSIS-regulated food products, the rule may have wider-reaching implications as evidence of consumer expectations for U.S.-origin claims on FDA-regulated and other consumer products.

Under USDA's previous policy, FSIS-regulated products could include a "Product of USA" or similar claim if the product underwent some processing in the U.S. Thus, products derived from animals that may have been born, raised, and slaughtered in a foreign country could be labeled as "Product of USA" as long as they were "minimally processed" in the U.S.

Following receipt of three petitions from industry requesting that FSIS update its standards for U.S.-origin claims, FSIS began reviewing its policy, including by conducting a consumer survey. Further, a 2021 executive orderfrom the Biden administration called for rulemaking on voluntary "Product of USA" labeling for meat products. FSIS released a proposed ruleon the topic on March 13, 2023, on which the agency received over 3,000 comments.

The final rule provides that two specific voluntary U.S.-origin claims, "Product of USA" and "Made in the USA," will be generically approved[1]for use on the labels of FSIS-regulated, multi-ingredient products if the following conditions are met:

1. All FSIS-regulated products in the multi-ingredient product are derived from an animal born, raised, slaughtered, and processed in the U.S.;
2. All other ingredients are of domestic origin, other than spices and flavorings; and
3. The preparation and processing steps for the multi-ingredient product have occurred in the U.S.

For single-ingredient products, "Product of USA" and "Made in the USA" claims can be used if the product is derived from animals born, raised, slaughtered, and processed in the U.S. Claims other than "Product of USA" and "Made in the USA" that "indicate that a preparation or processing step of a FSIS-regulated product is of U.S. origin" can also be generically approved so long as the claim accurately identifies the particular preparation and processing step(s) that occurred in the U.S. (e.g., slaughter).

Additionally, claims designating a product as coming from a particular U.S. state, territory, or locality must comply with the requirements described above with regard to the state, territory, or locality. Use of the U.S. flag image, or a U.S. state or territory flag, will be treated as a U.S.-origin claim and must comply with the requirements described above. Finally, entities making U.S.-origin claims must maintain appropriate records to support those claims.

The preamble to the final rule addresses how it applies to cell-cultured meat and poultry products. While these products are not currently eligible for generic approval, FSIS indicated that the "criteria for use of voluntary U.S.-origin claims" stated in the "final rule will apply to cell-cultured product under FSIS jurisdiction," and that the agency will approve the claims "Product of USA" and "Made in the USA" if "all the preparation and processing steps for the cells occurred in the [U.S.]" The preamble does not explicitly address which particular steps are covered by the "preparation" of the cells, including whether the original cells must be of U.S.-origin.

The rule brings FSIS's practices into alignment with the Federal Trade Commission's (FTC) "Made in the USA" rule, which went into effect in August 2021. FTC prohibits marketers from including unqualified U.S.-origin claims on labels unless (1) final assembly or processing occurs in the U.S., (2) all significant processes for the product occur in the U.S., and (3) all or virtually all of the product's ingredients or components are made and sourced in the U.S. The term "all or virtually all" ingredients or components is not explicitly defined by FTC. FSIS appears to interpret this prong to mean all ingredients in the product are of domestic origin, except for spices and flavorings.

U.S.-origin claims have been a popular target for consumer deception litigation and National Advertising Division challenges in recent years and have been a priority for FTC. Although FSIS's rule applies only to FSIS-regulated products, plaintiff's lawyers may cite to FSIS's rule as alleged evidence that consumers expect all ingredients other than spices and flavorings to be domestically sourced in FDA-regulated and other consumer products. On the other hand, FSIS's approach could also be deemed more permissive than stakeholders have previously understood FTC's "all or virtually all" standard by allowing the use of foreign spices and flavorings on products labeled as "Product of USA" and "Made in the USA."

The compliance date for the new regulatory requirements is January 1, 2026.

If you have any questions concerning the material discussed in this client alert, please contact the members of our Food, Beverage, and Dietary Supplements practice.

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