2658 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Parts 60 and 65 

[Docket No. AMS–LS–07–0081] 

RIN 0581–AC26 

Mandatory Country of Origin Labeling 

of Beef, Pork, Lamb, Chicken, Goat 

Meat, Wild and Farm-Raised Fish and 

Shellfish, Perishable Agricultural 

Commodities, Peanuts, Pecans, 

Ginseng, and Macadamia Nuts 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Final rule. 

SUMMARY: The Farm Security and Rural 

Investment Act of 2002 (2002 Farm 

Bill), the 2002 Supplemental 

Appropriations Act (2002 

Appropriations), and the Food, 

Conservation and Energy Act of 2008 

(2008 Farm Bill) amended the 

Agricultural Marketing Act of 1946 (Act) 

to require retailers to notify their 

customers of the country of origin of 

covered commodities. Covered 

commodities include muscle cuts of 

beef (including veal), lamb, chicken, 

goat, and pork; ground beef, ground 

lamb, ground chicken, ground goat, and 

ground pork; wild and farm-raised fish 

and shellfish; perishable agricultural 

commodities; macadamia nuts; pecans; 

ginseng; and peanuts. The 

implementation of mandatory country 

of origin labeling (COOL) for all covered 

commodities, except wild and farmraised fish and shellfish, was delayed 

until September 30, 2008. 

The 2008 Farm Bill contained a 

number of provisions that amended the 

COOL provisions in the Act. These 

changes included the addition of 

chicken, goat, macadamia nuts, pecans, 

and ginseng as covered commodities, 

the addition of provisions for labeling 

products of multiple origins, as well as 

a number of other changes. However, 

the implementation date of September 

30, 2008, was not changed by the 2008 

Farm Bill. Therefore, in order to meet 

the September 30, 2008, implementation 

date and to provide the newly affected 

industries the opportunity to provide 

comments prior to issuing a final rule, 

on August 1, 2008, the Department 

published an interim final rule with a 

request for comments for all of the 

covered commodities other than wild 

and farm-raised fish and shellfish. The 

Agency is issuing this final rule for all 

covered commodities. This final rule 

contains definitions, the requirements 

for consumer notification and product 

marking, and the recordkeeping 

responsibilities of both retailers and 

suppliers for covered commodities. 

DATES: This final rule is effective March 

16, 2009. 

FOR FURTHER INFORMATION CONTACT: Erin 

Morris, Associate Deputy Administrator, 

Poultry Programs, AMS, USDA, by 

telephone on 202–720–5131, or via email at: erin.morris@usda.gov. 

SUPPLEMENTARY INFORMATION: The 

information that follows has been 

divided into three sections. The first 

section provides background 

information about this final rule. The 

second section provides a discussion of 

the rule’s requirements, including a 

summary of changes from the October 5, 

2004, interim final rule for fish and 

shellfish and the August 1, 2008, 

interim final rule for the remaining 

covered commodities as well as a 

summary of the comments received in 

response to the relevant prior requests 

for comments associated with this 

rulemaking and the Agency’s responses 

to these comments. The prior requests 

for comments include: The interim final 

rule for fish and shellfish published in 

the October 5, 2004, Federal Register 

(69 FR 59708); the reopening of the 

comment period (for costs and benefits) 

for the interim final rule that was 

published in the November 27, 2006, 

Federal Register (71 FR 68431); the 

reopening of the comment period for all 

aspects of the interim final rule that was 

published in the June 20, 2007, Federal 

Register (72 FR 33851); and the interim 

final rule for the remaining covered 

commodities that was published in the 

August 1, 2008, Federal Register (73 FR 

45106). The last section provides for the 

required impact analyses including the 

Regulatory Flexibility Act, the 

Paperwork Reduction Act, Civil Rights 

Analysis, and the relevant Executive 

Orders. 

I. Background 

Prior Documents in This Proceeding 

This final rule is issued pursuant to 

the 2002 Farm Bill, the 2002 

Appropriations, and the 2008 Farm Bill, 

which amended the Act to require 

retailers to notify their customers of the 

origin of covered commodities. In 

addition, the FY 2004 Consolidated 

Appropriations Act (Pub. L. 108–199) 

delayed the implementation of 

mandatory COOL for all covered 

commodities except wild and farmraised fish and shellfish until September 

30, 2006. The Agriculture, Rural 

Development, Food and Drug 

Administration, and Related Agencies 

Appropriations Act of 2006 (Pub. L. 

109–97) delayed the applicability of 

mandatory COOL for all covered 

commodities except wild and farmraised fish and shellfish until September 

30, 2008. 

On October 11, 2002, AMS published 

Guidelines for the Interim Voluntary 

Country of Origin Labeling of Beef, 

Lamb, Pork, Fish, Perishable 

Agricultural Commodities, and Peanuts 

(67 FR 63367) providing interested 

parties with 180 days to comment on 

the utility of the voluntary guidelines. 

On November 21, 2002, AMS 

published a notice requesting 

emergency approval of a new 

information collection (67 FR 70205) 

providing interested parties with a 60- 

day period to comment on AMS’ burden 

estimates associated with the 

recordkeeping requirements as required 

by the Paperwork Reduction Act of 1995 

(PRA). On January 22, 2003, AMS 

published a notice extending this 

comment period (68 FR 3006) an 

additional 30 days. 

On October 30, 2003, AMS published 

the proposed rule for the mandatory 

COOL program (68 FR 61944) with a 60- 

day comment period. On December 22, 

2003, AMS published a notice 

extending the comment period (68 FR 

71039) an additional 60 days. On June 

20, 2007, AMS reopened the comment 

period for the proposed rule for all 

covered commodities (72 FR 33917). 

On October 5, 2004, AMS published 

the interim final rule for fish and 

shellfish (69 FR 59708) with a 90-day 

comment period. On December 28, 

2004, AMS published a notice 

extending the comment period (69 FR 

77609) an additional 60 days. On 

November 27, 2006, the comment 

period was reopened on the costs and 

benefits aspects of the interim final rule 

(71 FR 68431). On June 20, 2007, the 

comment period was reopened for all 

aspects of the interim final rule (72 FR 

33851). 

On August 1, 2008, AMS published 

an interim final rule for covered 

commodities other than fish and 

shellfish (73 FR 45106) with a 60-day 

comment period. 

II. Summary of Changes From the 

Interim Final Rules 

Definitions 

In the regulatory text for fish and 

shellfish (7 CFR part 60), a definition for 

‘‘commingled covered commodities’’ 

has been added for clarity and to 

conform to the regulatory text for the 

other covered commodities. 

In the regulatory text for the 

remaining covered commodities (7 CFR 

part 65), the definition of ‘‘ground beef’’ 

has been modified in response to 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2659 

comments. Under this final rule, the 

term ‘‘ground beef’’ has the meaning 

given that term in 9 CFR § 319.15(a), i.e., 

chopped fresh and/or frozen beef with 

or without seasoning and without the 

addition of beef fat as such, and 

containing no more than 30 percent fat, 

and containing no added water, 

phosphates, binders, or extenders, and 

also includes products defined by the 

term ‘‘hamburger’’ in 9 CFR 319.15(b). A 

full explanation of this change is 

discussed in the Comments and 

Responses section. 

In 7 CFR part 65, the definition of 

‘‘lamb’’ has been modified in response 

to comments to include mutton. Under 

this final rule, the term ‘‘lamb’’ means 

meat produced from sheep. 

In 7 CFR part 65, the definition of 

‘‘NAIS-compliant system’’ has been 

deleted in response to comments 

received as it is no longer needed. 

A definition of ‘‘pre-labeled’’ has been 

added to both 7 CFR part 60 and 7 CFR 

part 65 for clarity in response to 

comments received. Under this final 

rule, the term ‘‘pre-labeled’’ means a 

covered commodity that has the 

commodity’s country of origin, and, as 

applicable, method of production 

information, and the name and place of 

business of the manufacturer, packer, or 

distributor on the covered commodity 

itself, on the package in which it is sold 

to the consumer, or on the master 

shipping container. The place of 

business information must include at a 

minimum the city and state or other 

acceptable locale designation. 

In 7 CFR part 65, the definition of 

‘‘produced’’ has been modified for 

clarity in response to comments. Under 

this final rule, the term ‘‘produced’’ in 

the case of perishable agricultural 

commodities, peanuts, ginseng, pecans, 

and macadamia nuts means harvested. 

Country of Origin Notification 

Labeling Covered Commodities of 

United States Origin 

The August 1, 2008, interim final rule 

contained an express provision allowing 

U.S. origin covered commodities to be 

further processed or handled in a 

foreign country and retain their U.S. 

origin. The Agency received numerous 

comments requesting further 

clarification of this provision as well as 

comments requesting that it be deleted. 

Accordingly, under this final rule, this 

provision has been deleted. To the 

extent that it is allowed under existing 

Customs and Border Protection (CBP) 

and Food Safety and Inspection Service 

(FSIS) regulations, U.S. origin covered 

commodities may still be eligible to bear 

a U.S. origin declaration if they are 

processed in another country such that 

a substantial transformation (as 

determined by CBP) does not occur. In 

addition, to the extent that additional 

information about the production steps 

that occurred in the U.S. is permitted 

under existing Federal regulations (e.g., 

CBP, FSIS), nothing in this final rule 

precludes such information from being 

included. A full explanation of this 

change is discussed in the Comments 

and Responses section. 

Country of Origin Notification for 

Muscle Cuts 

Under the August 1, 2008, interim 

final rule, if an animal was born, raised, 

and/or slaughtered in the United States 

and was not imported for immediate 

slaughter as defined in § 65.180, the 

origin of the resulting meat products 

derived from that animal could have 

been designated as Product of the 

United States, Country X, and/or (as 

applicable) Country Y, where Country X 

and Country Y represent the actual or 

possible countries of foreign origin. 

During the comment period, the 

Agency received extensive feedback 

from livestock producers, members of 

Congress, and other interested parties 

expressing concern about the provision 

in the interim final rule that allowed 

U.S. origin product to be labeled with a 

mixed origin label. It was never the 

intent of the Agency for the majority of 

product eligible to bear a U.S. origin 

declaration to bear a multiple origin 

designation. The Agency made 

additional modifications for clarity. 

Under this final rule, for muscle cut 

covered commodities derived from 

animals that were born in Country X or 

(as applicable) Country Y, raised and 

slaughtered in the United States, and 

were not derived from animals imported 

for immediate slaughter as defined in 

§ 65.180, the origin may be designated 

as Product of the U.S., Country X, and 

(as applicable) Country Y. 

For muscle cut covered commodities 

derived from animals born, raised, and 

slaughtered in the U.S. that are 

commingled during a production day 

with muscle cut covered commodities 

derived from animals that were raised 

and slaughtered in the United States, 

and were not derived from animals 

imported for immediate slaughter as 

defined in § 65.180, the origin may be 

designated, for example, as Product of 

the United States, Country X, and (as 

applicable) Country Y. 

For muscle cut covered commodities 

derived from animals that are born in 

Country X or Country Y, raised and 

slaughtered in the United States, that 

are commingled during a production 

day with muscle cut covered 

commodities that are derived from 

animals that are imported into the 

United States for immediate slaughter as 

defined in § 65.180, the origin may be 

designated as Product of the United 

States, Country X, and (as applicable) 

Country Y. 

In all of the cases above, the countries 

of origin may be listed in any order. In 

addition, if animals are raised in 

another country and the United States, 

provided the animals are not imported 

for immediate slaughter as defined in 

§ 65.180, the raising that occurs in the 

United States takes precedence over the 

minimal raising that occurred in the 

animal’s country of birth. 

A full explanation of these changes is 

discussed in the Comments and 

Responses section. 

Markings 

Under the October 5, 2004, interim 

final rule for fish and shellfish and the 

August 1, 2008, interim final rule for the 

remaining covered commodities, only 

those abbreviations approved for use 

under CBP rules, regulations, and 

policies were acceptable. The 2008 

Farm Bill and the August 1, 2008, 

interim final rule expressly authorized 

the use of State, regional, or locality 

label designations in lieu of country of 

origin for perishable agricultural 

commodities, peanuts, pecans, ginseng, 

and macadamia nuts. In response to 

comments received, under this final 

rule, abbreviations may be used for 

state, regional, or locality label 

designations for these commodities 

whether domestically harvested or 

imported using official United States 

Postal Service abbreviations or other 

abbreviations approved by CBP. A full 

explanation of this change is discussed 

in the Comments and Responses 

section. 

Recordkeeping 

The 2008 Farm Bill made changes to 

the recordkeeping provisions of the Act. 

Specifically, the 2008 Farm Bill states 

that records maintained in the course of 

the normal conduct of the business of 

such person, including animal health 

papers, import or customs documents, 

or producer affidavits, may serve as 

such verification. Under the 2008 Farm 

Bill, the Secretary is prohibited from 

requiring the maintenance of additional 

records other than those maintained in 

the normal conduct of business. In 

addition to the changes made as a result 

of the 2008 Farm Bill, other changes 

were made in the August 1, 2008, 

interim final rule to reduce the 

recordkeeping burden. Further changes 

are being made in this final rule in 

response to comments received. 

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2660 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

For retailers, this rule requires records 

and other documentary evidence relied 

upon at the point of sale by the retailer 

to establish a covered commodity’s 

country(ies) of origin and method of 

production (wild and/or farm-raised), as 

applicable, to be either maintained at 

the retail facility or at another location 

for as long as the product is on hand and 

provided to any duly authorized 

representative of USDA, upon request, 

within 5 business days of the request. 

For pre-labeled products, the label itself 

is sufficient information on which the 

retailer may rely to establish the 

product’s origin and method of 

production, as applicable, and no 

additional records documenting origin 

and method of production information 

are necessary. Under the August 1, 

2008, interim final rule, retailers were 

required to maintain these records for a 

period of 1 year. 

Under this final rule, upon request by 

USDA representatives, suppliers and 

retailers shall make available to USDA 

representatives, records maintained in 

the normal course of business that verify 

an origin and method of production 

(wild and/or farm-raised) claim, as 

applicable. Such records shall be 

provided within 5 business days of the 

request and may be kept in any location. 

Under this final rule, producer 

affidavits shall also be considered 

acceptable records that suppliers may 

utilize to initiate origin claims for all 

covered commodities, provided it is 

made by someone having first-hand 

knowledge of the origin of the covered 

commodity and identifies the covered 

commodity unique to the transaction. 

Responsibilities of Retailers and 

Suppliers 

With regard to the ‘‘safe harbor’’ 

language that was contained in the 

October 30, 2003, proposed rule and the 

October 5, 2004, interim final rule, 

which allowed retailers and suppliers to 

rely on the information provided unless 

they could have been reasonably 

expected to have knowledge otherwise, 

based on comments received, similar 

‘‘safe harbor’’ language has been 

included in this final rule. A complete 

discussion is contained in the 

Comments and Responses section of this 

final rule. 

With regard to the recordkeeping 

provision concerning livestock that are 

part of a NAIS-compliant system, in 

response to comments received, the 

Agency has clarified that packers who 

slaughter animals that are tagged with 

an 840 Animal Identification Number 

device without the presence of any 

additional accompanying marking 

indicating the origin as being a country 

other than the U.S. (i.e., ‘‘CAN’’ or ‘‘M’’) 

may use that information as a basis for 

a U.S. origin claim. In addition, packers 

that slaughter animals that are part of 

another country’s recognized official 

system (e.g. Canadian official system, 

Mexico official system) may also rely on 

the presence of an official ear tag or 

other approved device on which to base 

their origin claims. 

Highlights of This Final Rule 

Covered Commodities 

As defined in the statute, the term 

‘‘covered commodity’’ includes: Muscle 

cuts of beef, lamb, pork, chicken, and 

goat; ground beef, ground lamb, ground 

pork, ground chicken, and ground goat; 

wild and farm-raised fish and shellfish; 

perishable agricultural commodities 

(fresh and frozen fruits and vegetables); 

peanuts; pecans; ginseng; and 

macadamia nuts. 

Exemption for Food Service 

Establishments 

Under the statute and therefore this 

final rule, food service establishments 

are exempt from COOL labeling 

requirements. Food service 

establishments are restaurants, 

cafeterias, lunch rooms, food stands, 

saloons, taverns, bars, lounges, or other 

similar facilities operated as an 

enterprise engaged in the business of 

selling food to the public. Similar food 

service facilities include salad bars, 

delicatessens, meal preparation stations 

in which the retailer sets out ingredients 

for different meals and consumers 

assemble the ingredients into meals to 

take home, and other food enterprises 

located within retail establishments that 

provide ready-to-eat foods that are 

consumed either on or outside of the 

retailer’s premises. 

Exclusion for Ingredient in a Processed 

Food Item 

Items are excluded from labeling 

under this regulation when a covered 

commodity is an ingredient in a 

processed food item. Under this final 

rule, a ‘‘processed food item’’ is defined 

as: A retail item derived from a covered 

commodity that has undergone specific 

processing resulting in a change in the 

character of the covered commodity, or 

that has been combined with at least 

one other covered commodity or other 

substantive food component (e.g., 

chocolate, breading, tomato sauce), 

except that the addition of a component 

(such as water, salt, or sugar) that 

enhances or represents a further step in 

the preparation of the product for 

consumption, would not in itself result 

in a processed food item. Specific 

processing that results in a change in 

the character of the covered commodity 

includes cooking (e.g., frying, broiling, 

grilling, boiling, steaming, baking, 

roasting), curing (e.g., salt curing, sugar 

curing, drying), smoking (cold or hot), 

and restructuring (e.g., emulsifying and 

extruding). 

With regard to determining what is 

considered an ‘‘other covered 

commodity’’ with respect to fruits and 

vegetables, the Agency will generally 

rely on U.S. Grade Standards for fruits 

and vegetables to make the distinction 

of whether or not the retail item is a 

combination of ‘‘other covered 

commodities’’. For example, different 

colored sweet peppers combined in a 

package will require country of origin 

notification because there is one U.S. 

Grade Standard for sweet peppers, 

regardless of the color. As another 

example, there are separate U.S. Grade 

Standards for iceberg lettuce and 

romaine lettuce. Therefore, this type of 

salad mix will not be required to be 

labeled with country of origin 

information. While the Agency 

previously used this example in the 

preamble of the August 1, 2008, interim 

final rule and concluded that such a 

salad mix would be subject to COOL, 

the Agency now believes the use of U.S. 

Grade Standards in determining when a 

perishable retail item is considered a 

processed food item provides a bright 

line to the industry and is an easy and 

straightforward approach as regulated 

entities are already familiar with U.S. 

Grade Standards. 

There are limited exceptions to this 

policy. One exception occurs when 

there are different grade standards for 

the same commodity based on the 

region of production. For example, 

although there are separate grade 

standards for oranges from Florida, 

Texas, and California/Arizona, 

combining oranges from these different 

regions would not be considered 

combining ‘‘other covered 

commodities’’ and therefore, a container 

with oranges from Texas and Florida is 

required to be labeled with country of 

origin information. 

As examples of processing steps that 

are considered to further prepare 

product for consumption, meat products 

that have been needle-tenderized or 

chemically tenderized using papain or 

other similar additive are not 

considered processed food items. 

Likewise, meat products that have been 

injected with sodium phosphate or 

other similar solution are also not 

considered processed food items as the 

solution has not changed the character 

of the covered commodity. In contrast, 

meat products that have been marinated 

with a particular flavor such as lemonmstockstill on PROD1PC66 with RULES2

Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2661 

pepper, Cajun, etc. have been changed 

in character and thus are considered 

processed food items. 

While the definition of a processed 

food item does exclude a number of 

products from labeling under the COOL 

program, many imported items are still 

required to be marked with country of 

origin information under the Tariff Act 

of 1930 (19 U.S.C. 1304) (Tariff Act). For 

example, while a bag of frozen peas and 

carrots is considered a processed food 

item under this final rule, if the peas 

and carrots are of foreign origin, the 

Tariff Act requires that the country of 

origin information be marked on the 

bag. Likewise, while roasted peanuts, 

pecans, and macadamia nuts are also 

considered processed food items under 

this final rule, under the Tariff Act, if 

the nuts are of foreign origin, the 

country of origin information must be 

indicated to the ultimate purchaser. 

This also holds true for a variety of fish 

and shellfish items. For example, 

salmon imported from Chile that is 

smoked in the United States as well as 

shrimp imported from Thailand that is 

cooked in the United States are also 

required to be labeled with country of 

origin information under the Tariff Act. 

In addition, items such as marinated 

lamb loins that are imported in 

consumer-ready packages would also be 

required to be labeled with country of 

origin information as both CBP and FSIS 

regulations require meat that is 

imported in consumer-ready packages to 

be labeled with origin information on 

the package. 

Examples of items excluded from 

country of origin labeling include 

teriyaki flavored pork loin, meatloaf, 

roasted peanuts, breaded chicken 

tenders, breaded fish sticks, flank steak 

with portabella stuffing, steakhouse 

sirloin kabobs with vegetables, cooked 

and smoked meats, blue cheese angus 

burgers, cured hams, bacon, corned beef 

briskets, prosciutto rolled in mozzarella 

cheese, a salad that contains iceberg and 

romaine lettuce, a fruit cup that 

contains cantaloupe, watermelon, and 

honeydew, mixed vegetables, and a 

salad mix that contains lettuce and 

carrots and/or salad dressing. 

Labeling Covered Commodities of 

United States Origin 

The law prescribes specific criteria 

that must be met for a covered 

commodity to bear a ‘‘United States 

country of origin’’ declaration. 

Therefore, covered commodities may be 

labeled as having a United States origin 

if the following specific requirements 

are met: 

(a) Beef, pork, lamb, chicken, and 

goat—covered commodities must be 

derived from animals exclusively born, 

raised, and slaughtered in the United 

States; from animals born and raised in 

Alaska or Hawaii and transported for a 

period of time not more than 60 days 

through Canada to the United States and 

slaughtered in the United States; or from 

animals present in the United States on 

or before July 15, 2008, and once 

present in the United States, remained 

continuously in the United States. 

(b) Perishable agricultural 

commodities, peanuts, pecans, ginseng, 

and macadamia nuts—covered 

commodities must be from products 

exclusively produced in the United 

States. 

(c) Farm-raised fish and shellfish— 

covered commodities must be derived 

exclusively from fish or shellfish 

hatched, raised, harvested, and 

processed in the United States, and that 

has not undergone a substantial 

transformation (as established by CBP) 

outside of the United States. 

(d) 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, and that has not 

undergone a substantial transformation 

(as established by CBP) outside of the 

United States. 

Labeling Country of Origin for Imported 

Products 

Under this final rule, a fish or 

shellfish imported covered commodity 

shall retain its origin as declared to CBP 

at the time the product enters the 

United States, through retail sale, 

provided it has not undergone a 

substantial transformation (as 

established by CBP) in the United 

States. Similarly, for the other covered 

commodities, an imported covered 

commodity for which origin has already 

been established as defined by the Act 

(e.g., born, raised, slaughtered or 

harvested) and for which no production 

steps have occurred in the United States 

shall retain its origin as declared to CBP 

at the time the product enters the 

United States, through retail sale. 

Covered commodities imported in 

consumer-ready packages are currently 

required to bear a country of origin 

declaration on each individual package 

under the Tariff Act. This final rule does 

not change these requirements. 

Labeling Fish and Shellfish Imported 

Products That Have Been Substantially 

Transformed in the United States 

Under this final rule, in the case of 

wild fish and shellfish, if a covered 

commodity was imported from country 

X and substantially transformed (as 

established by CBP) in the United States 

or aboard a U.S. flagged vessel, the 

product shall be labeled at retail as 

‘‘From [country X], processed in the 

United States.’’ Alternatively, the 

product may be labeled as ‘‘Product of 

country X and the United States’’. The 

covered commodity must also be 

labeled to indicate that it was derived 

from wild fish or shellfish. 

In the case of farm-raised fish, if a 

covered commodity was imported from 

country X at any stage of production 

and substantially transformed (as 

established by CBP) in the United 

States, the product shall be labeled at 

retail as ‘‘From [country X], processed 

in the United States.’’ Alternatively, the 

product may be labeled as ‘‘Product of 

country X and the United States’’. The 

covered commodity shall also be labeled 

to indicate that it was derived from 

farm-raised fish or shellfish. 

Labeling Muscle Cut Covered 

Commodities of Multiple Countries of 

Origin (That Includes the United States) 

Under this final rule, for muscle cut 

covered commodities derived from 

animals that were born in Country X or 

(as applicable) Country Y, raised and 

slaughtered in the United States, and 

were not derived from animals imported 

for immediate slaughter as defined in 

§ 65.180, the origin may be designated, 

for example, as Product of the U.S., 

County X, and (as applicable) Country 

Y. The countries of origin may be listed 

in any order. 

For muscle cut covered commodities 

derived from animals born, raised, and 

slaughtered in the U.S. that are 

commingled during a production day 

with muscle cut covered commodities 

derived from animals that were raised 

and slaughtered in the United States, 

and were not derived from animals 

imported for immediate slaughter as 

defined in § 65.180, the origin may be 

designated as, for example, Product of 

the United States, Country X, and (as 

applicable) Country Y. The countries of 

origin may be listed in any order. 

If an animal was imported into the 

United States for immediate slaughter as 

defined in § 65.180, the origin of the 

resulting meat products derived from 

that animal shall be designated as 

Product of Country X and the United 

States. 

For muscle cut covered commodities 

derived from animals that are born in 

Country X or Country Y, raised and 

slaughtered in the United States, that 

are commingled during a production 

day with muscle cut covered 

commodities that are derived from 

animals that are imported into the 

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2662 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

United States for immediate slaughter as 

defined in § 65.180, the origin may be 

designated as Product of the United 

States, Country X, and (as applicable) 

Country Y. The countries of origin may 

be listed in any order. 

In all cases above, the origin 

declaration may include more specific 

information related to production steps 

provided records to substantiate the 

claims are maintained and the claim is 

consistent with other applicable Federal 

legal requirements. In addition, if 

animals are raised in another country 

and the United States, provided the 

animals are not imported for immediate 

slaughter as defined in § 65.180, the 

raising that occurs in the United States 

takes precedence over the minimal 

raising that occurred in the animal’s 

country of birth. 

With regard to the commingling of 

meat of different origin categories, the 

Agency has received comments 

requesting that the Agency provide 

additional clarification on how 

commingled meat products can be 

labeled. Under this final rule, it is 

permissible to commingle meat derived 

from animals imported for immediate 

slaughter with meat derived from mixed 

origin animals and label it as Product of 

U.S., Canada. It is also permissible to 

commingle meat derived from animals 

imported for immediate slaughter with 

meat of mixed origin and label it as 

category C (product imported for 

immediate slaughter, i.e., Product of 

Canada, U.S.). Further, the declaration 

for meat derived from mixed origin 

animals may list the countries of origin 

in any order (e.g., Product of U.S., 

Canada or Product of Canada, U.S.). 

Labeling Commingled Covered 

Commodities 

In this final rule, a commingled 

covered commodity is defined as a 

single type of covered commodity (e.g., 

frozen peas, shrimp), presented for retail 

sale in a consumer package, that has 

been prepared from raw material 

sources having different origins. 

Further, a commingled covered 

commodity does not include meat 

products. If the retail product contains 

two different types of covered 

commodities (e.g., peas and carrots), it 

is considered a processed food item and 

is not subject to mandatory COOL. 

In the case of perishable agricultural 

commodities, wild and farm-raised fish 

and shellfish, peanuts, pecans, ginseng, 

and macadamia nuts, for imported 

covered commodities that have not 

subsequently been substantially 

transformed in the United States that are 

commingled with commodities having 

different origins, the declaration shall 

indicate the countries of origin for all 

covered commodities in accordance 

with CBP marking regulations (19 CFR 

part 134). For example, a bag of frozen 

peas that were sourced from France and 

India is currently required under CBP 

regulations to be marked with that 

origin information on the package. 

In the case of wild and farm-raised 

fish and shellfish covered commodities, 

when the retail product contains 

imported covered commodities that 

have subsequently undergone 

substantial transformation in the United 

States are commingled with other 

imported covered commodities that 

have subsequently undergone 

substantial transformation in the United 

States (either prior to or following 

substantial transformation in the United 

States) and/or U.S. origin covered 

commodities, the declaration shall 

indicate the countries of origin 

contained therein or that may be 

contained therein. 

Defining Country of Origin for Ground 

Meat Products 

The law states that the origin 

declaration for ground beef, ground 

pork, ground lamb, ground goat, and 

ground chicken covered commodities 

shall list the countries of origin 

contained therein or shall list the 

reasonably possible countries of origin. 

Therefore, under this final rule, when a 

raw material from a specific origin is not 

in a processor’s inventory for more than 

60 days, the country shall no longer be 

included as a possible country of origin. 

This does not mean that labels must 

change every 60 days. Labels containing 

the applicable countries (e.g., Country x, 

y, z) may extend beyond a given 60-day 

period depending on how long raw 

materials from those countries are 

actually in inventory. If a country of 

origin is utilized as a raw material 

source in the production of ground beef, 

it must be listed on the label. The 60- 

day in inventory allowance speaks only 

to when countries may no longer be 

listed. The 60-day inventory allowance 

is an allowance for the Agency’ 

enforcement purposes for when the 

Agency would deem ground meat 

products as no longer accurately 

labeled. In the event of a supplier audit 

by USDA, records kept in the normal 

course of business should provide the 

information necessary to verify the 

origin claim. 

Remotely Purchased Products 

For sales of a covered commodity in 

which 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 may provide the 

country of origin and method of 

production information (wild and/or 

farm-raised), as applicable, either on the 

sales vehicle or at the time the product 

is delivered to the consumer. 

Markings 

Under this final rule, the country of 

origin declaration and method of 

production (wild and/or farm-raised) 

designation, as applicable, may be 

provided to consumers by means of a 

label, placard, sign, stamp, band, twist 

tie, pin tag, 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. The 

country of origin declaration and 

method of production (wild and/or 

farm-raised) designation may be 

combined or made separately. 

With respect to the production 

designation, various forms of the 

production designation are acceptable, 

including ‘‘wild caught,’’ ‘‘wild,’’ ‘‘farmraised,’’ ‘‘farmed,’’ or a combination of 

these terms for products that contain 

both wild and farm-raised fish or 

shellfish provided it can be readily 

understood by the consumer and is in 

conformance with other Federal labeling 

laws. Designations such as ‘‘ocean 

caught,’’ ‘‘caught at sea’’, ‘‘line caught,’’ 

‘‘cultivated,’’ or ‘‘cultured’’ do not meet 

the requirements of this regulation. 

Alternatively, the method of production 

(wild and/or farm-raised) designation 

may also be in the form of a check box. 

In general, country abbreviations are 

not acceptable. Only those abbreviations 

approved for use under CBP rules, 

regulations, and policies, such as ‘‘U.K.’’ 

for ‘‘The United Kingdom of Great 

Britain and Northern Ireland’’, 

‘‘Luxemb’’ for Luxembourg, and ‘‘U.S.’’ 

or ‘‘USA’’ for the ‘‘United States of 

America’’ are acceptable. The Agency is 

aware of a few additional abbreviations 

allowed by CBP such as ‘‘Holland’’ for 

The Netherlands and has posted this 

information on the COOL Web site. 

The declaration of the country of 

origin of a product may be in the form 

of a statement such as ‘‘Product of 

USA,’’ ‘‘Produce of the USA’’, or 

‘‘Harvested in Mexico’’; may only 

contain the name of the country such as 

‘‘USA’’ or ‘‘Mexico’’; or may be in the 

form of a check box provided it is in 

conformance with CBP marking 

regulations and other Federal labeling 

laws (i.e., FDA, FSIS). For example, CBP 

marking regulations (19 CFR part 134) 

specifically require the use of the words 

‘‘product of’’ in certain circumstances. 

The adjectival form of the name of a 

country may be used as proper 

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notification of the country of origin of 

imported commodities provided the 

adjectival form of the name does not 

appear with other words so as to refer 

to a kind or species of product. Symbols 

or flags alone may not be used to denote 

country of origin. The labeling 

requirements under this rule do not 

supersede any existing Federal legal 

requirements, unless otherwise 

specified, and any country of origin or 

method of production (wild and/or 

farm-raised) designation, as applicable, 

must not obscure or intervene with 

other labeling information required by 

existing regulatory requirements. 

For domestic and imported perishable 

agricultural commodities, macadamia 

nuts, peanuts, pecans, and ginseng, 

State, regional, or locality label 

designations are acceptable in lieu of 

country of origin labeling. Such 

designations must be nationally distinct. 

For example, Rio Grande Valley would 

not be an acceptable designation 

because consumer would not know 

whether the country of origin was the 

U.S. or Mexico. Abbreviations may be 

used for state, regional, or locality label 

designations for these commodities 

whether domestically harvested or 

imported using official United States 

Postal Service abbreviations or other 

abbreviations approved by CBP. 

With regard to the use of established 

State marketing programs such as 

‘‘California Grown’’, ‘‘Go TEXAN’’, 

‘‘Jersey Fresh’’, etc., these programs may 

be used for COOL notification purposes 

provided they meet the requirements to 

bear a U.S. origin declaration as 

specified in this final rule. 

In order to provide the industry with 

as much flexibility as possible, this rule 

does not contain specific requirements 

as to the exact placement or size of the 

country of origin or method of 

production (wild and/or farm-raised) 

declaration. However, such declarations 

must be legible and conspicuous, and 

allow consumers to find the country(ies) 

of origin and method of production, as 

applicable, easily and read them 

without strain when making their 

purchases, and provided that existing 

Federal labeling requirements must be 

followed. For example, the country of 

origin declaration may be located on the 

information panel of a package of frozen 

produce as consumers are familiar with 

such location for displaying nutritional 

and other required information. 

Likewise, in the case of store overwrap 

and other similar type products, which 

is the type of packaging used for fresh 

meat and poultry products, the 

information panel would also be an 

acceptable location for the origin 

declaration and method of production 

(wild and/or farm-raised) designation, 

as applicable, as this is a location that 

is currently utilized for providing other 

Federally-mandated labeling 

information (i.e., safe handling 

instructions, nutrition facts, and 

ingredients statement). However, to the 

extent practicable, the Agency 

encourages retailers and suppliers to 

place this information on the front of 

these types of packages, also known as 

the principal display panel, so it will be 

readily apparent to consumers. 

With respect to the use of signage for 

bulk displays for meat covered 

commodities, the Agency has observed 

that a vast majority of retailers are 

utilizing one sign for either the entire 

meat case or for an entire commodity 

type (i.e., chicken) to provide the 

country of origin notification. While the 

statute and this regulation provide 

flexibility in how country of origin 

information can be provided, the 

Agency believes that the use of such 

signage could potentially be false or 

misleading to consumers. For example, 

frequently display cases also contain 

noncovered meat commodities for 

which no origin information has been 

provided to the retailer. Thus a sign that 

states, ‘‘all of our beef products are of 

U.S. origin’’ may not be completely 

accurate and may be in violation of 

other Federal laws, regulations, and 

policies that have truth in labeling 

provisions such as the Federal Meat 

Inspection Act, the Federal Trade 

Commission’s ‘‘Made in the USA’’ 

policies, and the Federal Food, Drug, 

and Cosmetic Act. The Agency 

encourages retailers to review signage 

that they have used in the 

implementation of the fish and shellfish 

program for alternative acceptable 

methods of providing COOL 

information. 

With regard to the provision in both 

the interim final rule for fish and 

shellfish and the interim final rule for 

the remaining covered commodities 

concerning bulk containers that allows 

the bulk container to contain a covered 

commodity from more than one country 

of origin, under this final rule, it 

remains permissible provided all 

possible origins are listed. For example, 

if a retailer puts apples from the U.S. 

and New Zealand in a bulk bin, the sign 

for the bin should list both the U.S. and 

New Zealand. If the retailer has apples 

in the store from New Zealand, but has 

not added these apples to the bulk bin, 

it would not be permissible to have New 

Zealand on the sign. Likewise in the 

case of fish, if a retailer has salmon from 

both the U.S. and Chile in the back of 

the store, but has only put out for 

display salmon from Chile, the country 

of origin designation should only list 

Chile. It would not be permissible to list 

both the U.S. and Chile at that time 

because it is not possible that the 

display contains salmon of U.S. origin. 

Recordkeeping Requirements and 

Responsibilities 

The law states that the Secretary may 

conduct an audit of any person that 

prepares, stores, handles, or distributes 

a covered commodity for retail sale to 

verify compliance. As such, records 

maintained in the normal course of 

business that verify origin and method 

of production (wild and/or farm-raised) 

declarations, as applicable, are 

necessary in order to provide retailers 

with credible information on which to 

base origin and method of production 

declarations. 

Under this final rule, any person 

engaged in the business of supplying a 

covered commodity to a retailer, 

whether directly or indirectly (i.e., 

growers, distributors, handlers, packers, 

and processors, etc.), must make 

available information to the subsequent 

purchaser about the country(ies) of 

origin and method of production, as 

applicable, of the covered commodity. 

This information may be provided 

either on the product itself, on the 

master shipping container, or in a 

document that accompanies the product 

through retail sale provided it identifies 

the product and its country(ies) of origin 

and method of production, as 

applicable. 

Any person engaged in the business of 

supplying a covered commodity to a 

retailer, whether directly or indirectly, 

must maintain records to establish and 

identify the immediate previous source 

(if applicable) and immediate 

subsequent recipient of a covered 

commodity for a period of 1 year from 

the date of the transaction. 

In addition, the supplier of a covered 

commodity that is responsible for 

initiating a country of origin and, as 

applicable, method of production 

declaration, must possess records that 

are necessary to substantiate that claim 

for a period of 1 year from the date of 

the transaction. In an effort to reduce 

the recordkeeping burden associated 

with COOL, for that purpose, packers 

that slaughter animals that are tagged 

with an 840 Animal Identification 

Number device without the presence of 

any additional accompanying marking 

indicating the origin as being a country 

other than the U.S. (i.e., ‘‘CAN’’ or ‘‘M’’) 

may use that information as a basis for 

a U.S. origin claim. In addition, packers 

that slaughter animals that are part of 

another country’s recognized official 

system (e.g., Canadian official system, 

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Mexico official system) may also rely on 

the presence of an official ear tag or 

other approved device on which to base 

their origin claims. Producer affidavits 

shall also be considered acceptable 

records that suppliers may utilize to 

initiate origin claims, provided it is 

made by someone having first-hand 

knowledge of the origin of the covered 

commodity and identifies the covered 

commodity unique to the transaction. 

Under this final rule, any 

intermediary supplier handling a 

covered commodity that is found to be 

designated incorrectly as to the country 

of origin and/or method of production, 

as applicable, shall not be held liable for 

a violation of the Act by reason of the 

conduct of another if the intermediary 

supplier relied on the designation 

provided by the initiating supplier or 

other intermediary supplier, unless the 

intermediary supplier willfully 

disregarded information establishing 

that the country of origin and/or method 

of production, as applicable, was false. 

For an imported covered commodity, 

the importer of record as determined by 

CBP, must ensure that records: Provide 

clear product tracking from the United 

States port of entry to the immediate 

subsequent recipient and accurately 

reflect the country(ies) of origin of the 

item as identified in relevant CBP entry 

documents and information systems; 

and maintain such records for a period 

of 1 year from the date of the 

transaction. 

Under this final rule, retailers also 

have responsibilities. In providing the 

country of origin notification for a 

covered commodity, retailers are to 

convey the origin and, as applicable, 

method of production information 

provided by their suppliers. Only if the 

retailer physically commingles a 

covered commodity of different origins 

and/or methods of production, as 

applicable, in preparation for retail sale, 

whether in a consumer-ready package or 

in a bulk display (and not discretely 

packaged) (i.e., full service meat case), 

can the retailer initiate a multiple 

country of origin designation that 

reflects the actual countries of origin 

and methods of production, as 

applicable, for the resulting covered 

commodity. 

Records and other documentary 

evidence relied upon at the point of sale 

by the retailer to establish a covered 

commodity’s country(ies) of origin and 

method of production, as applicable, 

must either be maintained at the retail 

facility or at another location for as long 

as the product is on hand and provided 

to any duly authorized representatives 

of USDA within 5 business days of the 

request. For pre-labeled products, the 

label itself is sufficient information on 

which the retailer may rely to establish 

the product’s origin and method of 

production, as applicable, and no 

additional records documenting origin 

and method of production information 

are necessary. A pre-labeled covered 

commodity is a covered commodity that 

has the commodity’s country of origin 

and method of production, as 

applicable, and the name and place of 

business of the manufacturer, packer, or 

distributor on the covered commodity 

itself, on the package in which it is sold 

to the consumer, or on the master 

shipping container. The place of 

business information must include at a 

minimum the city and state or other 

acceptable locale designation. 

Additionally, records that identify the 

covered commodity, the retail supplier, 

and for products that are not prelabeled, the country of origin and 

method of production information, as 

applicable, must be maintained for a 

period of 1 year from the date the origin 

declaration is made at retail. 

Under this final rule, any retailer 

handling a covered commodity that is 

found to be designated incorrectly as to 

the country of origin and/or method of 

production, as applicable, shall not be 

held liable for a violation of the Act by 

reason of the conduct of another if the 

retailer relied on the designation 

provided by the supplier, unless the 

retailer willfully disregarded 

information establishing that the 

declaration of country of origin and/or 

method of production, as applicable, 

was false. 

Enforcement 

The law encourages the Secretary to 

enter into partnerships with States to 

the extent practicable to assist in the 

administration of this program. As such, 

USDA has entered into partnerships 

with States that have enforcement 

infrastructure to conduct retail 

compliance reviews. 

Routine compliance reviews may be 

conducted at retail establishments and 

associated administrative offices, and at 

supplier establishments subject to these 

regulations. USDA will coordinate the 

scheduling and determine the 

procedures for compliance reviews. 

Only USDA will be able to initiate 

enforcement actions against a person 

found to be in violation of the law. 

USDA may also conduct investigations 

of complaints made by any person 

alleging violations of these regulations 

when the Secretary determines that 

reasonable grounds for such 

investigation exist. 

Retailers and suppliers, upon being 

notified of the commencement of a 

compliance review, must make all 

records or other documentary evidence 

material to this review available to 

USDA representatives within 5 business 

days of receiving a request and provide 

any necessary facilities for such 

inspections. 

The law contains enforcement 

provisions for both retailers and 

suppliers that include civil penalties of 

up to $1,000 for each violation. For 

retailers and persons engaged in the 

business of supplying a covered 

commodity to a retailer (suppliers), the 

law states that if the Secretary 

determines that a retailer or supplier is 

in violation of the Act, the Secretary 

must notify the retailer or supplier of 

the determination and provide the 

retailer or supplier with a 30-day period 

during which the retailer or supplier 

may take necessary steps to comply. If 

upon completion of the 30-day period 

the Secretary determines the retailer or 

supplier has (1) not made a good faith 

effort to comply and (2) continues to 

willfully violate the Act, after providing 

notice and an opportunity for a hearing, 

the retailer or supplier may be fined not 

more than $1,000 for each violation. 

In addition to the enforcement 

provisions contained in the Act, 

statements regarding a product’s origin 

and method of production, as 

applicable, must also comply with other 

existing Federal statutes. For example, 

the Federal Food, Drug, and Cosmetic 

Act prohibits labeling that is false or 

misleading. In addition, for perishable 

agricultural commodities, mislabeling 

country of origin is also in violation of 

PACA misbranding provisions. Thus, 

inaccurate country of origin labeling of 

covered commodities may lead to 

additional penalties under these statutes 

as well. 

With regard to the voluntary use of 

840 tags on which to base origin claims, 

9 CFR 71.22 prohibits the removal of 

official identification devices except at 

the time of slaughter. The importation of 

animals and animal health are regulated 

by the Animal and Plant Health 

Inspection Service (APHIS). This 

regulation does not alter any APHIS 

requirements. 

Comments and Responses 

On October 30, 2003, AMS published 

the proposed rule for the mandatory 

COOL program (68 FR 61944) with a 60- 

day comment period. On December 22, 

2003, AMS published a notice 

extending the comment period (68 FR 

71039) an additional 60 days. AMS 

received over 5,600 timely comments 

from consumers, retailers, foreign 

governments, producers, wholesalers, 

manufacturers, distributors, members of 

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Congress, trade associations and other 

interested parties. The majority of the 

comments received were from 

consumers expressing support for the 

requirement to label the method of 

production of fish and shellfish as either 

wild and/or farm-raised. Numerous 

other comments related to the definition 

of a processed food item, the 

recordkeeping requirements for both 

retailers and suppliers, and the 

enforcement of the program. In addition, 

over 100 late comments were received 

that generally reflected the substance of 

the timely comments received. 

On June 20, 2007, AMS reopened the 

comment period for the proposed rule 

for all covered commodities (72 FR 

33917). AMS received over 721 

comments from consumers, retailers, 

foreign governments, producers, 

wholesalers, manufacturers, 

distributors, members of Congress, trade 

associations and other interested 

parties. 

On October 5, 2004, AMS published 

the interim final rule for fish and 

shellfish (69 FR 59708) with a 90-day 

comment period. On December 28, 

2004, AMS published a notice 

extending the comment period (69 FR 

77609) an additional 60 days. AMS 

received approximately 800 comments 

on the interim final rule, the majority of 

which were form letters from consumers 

expressing their support for country of 

origin labeling and requesting that the 

definition of a processed food item be 

narrowed to require labeling of canned, 

breaded, and cooked products. 

On November 27, 2006, the comment 

period was reopened on the cost and 

benefit aspects of the interim final rule 

(71 FR 68431). AMS received over 192 

comments from consumers, retailers, 

foreign governments, producers, 

wholesalers, manufacturers, 

distributors, members of Congress, trade 

associations and other interested 

parties. The majority of the comments 

received were from consumers 

expressing support for the requirement 

to label fish and shellfish with the 

country of origin and method of 

production as either wild and/or farmraised, and to extend mandatory COOL 

to the remaining covered commodities. 

Most of the comments did not address 

the specific question of the rule’s costs 

and benefits. A limited number of the 

comments did relate to the costs and 

benefits of the documentation and 

recordkeeping requirements of the law. 

Some commenters noted no increased 

sales or demand for seafood as a result 

of COOL. Several commenters provided 

evidence regarding the costs of 

compliance with the interim final rule 

covering fish and shellfish. Other 

commenters cited academic and 

Government Accountability Office 

studies to argue that USDA 

overestimated the costs to implement 

systems to meet COOL requirements, 

and that the true costs to industry will 

be much lower than those projected by 

the economic impact analysis contained 

in the interim final rule for fish and 

shellfish. On August 1, 2008, AMS 

published an interim final rule with a 

60-day comment period for the covered 

commodities other than fish and 

shellfish. The Agency received 275 

comments representing the opinions of 

11,798 consumers, retailers, foreign 

governments, producers, wholesalers, 

manufacturers, distributors, members of 

Congress, trade associations and other 

interested parties. The majority of 

comments received were on the 

definition of a processed food item, 

labeling muscle cuts of multiple 

countries of origin, and the 

recordkeeping provisions for both 

retailers and suppliers. 

When the proposed rule was 

published on October 30, 2003, the 

regulatory provisions were all proposed 

to be contained in a new part 60 of Title 

7 of the Code of Federal Regulations. 

Under the August 1, 2008, interim final 

rule, the regulatory provisions for the 

covered commodities other than fish 

and shellfish appeared at 7 CFR part 65. 

For the ease of the reader, the 

discussion of the comments has been 

broken down by issue. To the extent 

that a comment or issue pertains only to 

fish and shellfish covered commodities, 

it is noted in the explanation. 

Definitions 

Covered Commodity 

Summary of Comments: Several 

commenters requested that the Agency 

add products to the list of commodities 

covered by COOL. One commenter 

suggested that almonds should be 

included in mandatory COOL and 

another commenter requested that fresh 

chestnuts be added. A final commenter 

suggested that meat commodities 

derived from beefalo be included as 

covered commodities. Another 

commenter asked that the Agency better 

clarify what is a ‘‘muscle cut.’’ 

Agency Response: The statute 

specifically defines the commodities 

covered by the mandatory COOL 

program. As such, the Agency does not 

have the authority to include additional 

classes of covered commodities. 

Accordingly, recommendations 

regarding covering additional classes of 

commodities cannot be adopted. With 

regard to clarifying what the Agency 

defined to be a muscle cut of beef, pork, 

lamb, chicken, or goat, the Agency has 

provided information on its Web site 

and in written form pertaining to 

specific items and will continue to do 

so as questions arise. In general, the 

Agency views those cuts of meat (with 

or without bone) derived from a carcass 

(e.g., beef steaks, pork chops, chicken 

breasts, etc.) to be covered items. 

However, cuts of meat that are removed 

during the conversion of an animal to a 

carcass (e.g., variety meats such as pork 

hearts, beef tongues, etc.) are not viewed 

to be muscle cuts nor are items sold as 

bones practically free of meat (e.g., lamb 

neck bones, beef femur bones, etc.) or fat 

practically free of meat (e.g., pork clear 

plate, chicken skin, etc.) removed from 

a carcass. 

Ground Beef 

Summary of Comments: One 

commenter noted that fabricated steak is 

not specifically listed as a covered 

commodity in the law and expressed 

their belief that AMS could proactively 

cover a closely related commodity 

rather than limit COOL to only 

statutorily listed commodities. The 

commenter urged the Agency to broaden 

rather than narrow its scope of covered 

commodities to include fabricated steak 

in the definition of ground beef. 

Another commenter noted the rule 

exempts ground beef, hamburger and 

beef patties that have been seasoned 

(unless that seasoning is salt or sugar), 

but does not exempt ground beef, 

hamburger and beef patties that have 

not been seasoned. The commenter 

requested that the definition for ground 

beef be reconsidered and clarified so 

that ground beef, hamburger and beef 

patties where salt or sugar is added are 

recognized as a processed food item and 

therefore exempt under this rule. 

Several commenters did not agree that 

the Agency’s expansion of the definition 

of ground beef to include hamburger 

and beef patties was justified. The 

commenters pointed out that the 

covered product specified by the 2008 

Farm Bill is ‘‘ground beef,’’ which has 

its own regulatory standard of identity 

separate from hamburger and beef 

patties. One commenter also noted that 

the interim final rule’s definitions of 

‘‘ground lamb’’ and other ground meats 

do not similarly specify that patties 

made from such ground meats are 

covered items and suggested that this 

disparity appears to ‘‘favor’’ non-beef 

patties with possible exemption from 

the rule, to the disadvantage of beef 

patties. Another commenter stated that 

had Congress intended a more 

expansive range of processed food 

products to be subject to COOL, it 

would have specifically included them, 

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2666 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

particularly where all other processed 

foods are categorically exempt from 

COOL requirements. The commenter 

urged the Agency to follow the intent of 

Congress and promulgate a rule that 

encompasses products captured in the 

regulatory standard of identity for 

‘‘ground beef’’ and not extend the scope 

to items meeting other definitions. 

Agency Response: The Agency does 

not agree that commodities covered by 

the statute can be construed to cover 

fabricated steaks. Fabricated steaks are 

produced to appear like a whole muscle 

cut of meat but are in fact constructed 

from many different cuts of meat. 

Therefore, they are clearly not a 

‘‘muscle cut’’ and, because the product 

is not ground nor is it sold as ground, 

it is not ground beef either. 

The Agency agrees that a regulatory 

standard of identity for the term 

‘‘ground beef’’ exists, but does not agree 

that it was the intent of Congress to 

limit the mandatory COOL program to 

only those products marketed under 

that standard of identity. Further, the 

Agency believes it is not reasonable that 

consumers would understand why beef 

that is ground and marketed as ‘‘ground 

beef’’ would require labeling and beef 

that is ground and marketed as 

‘‘hamburger’’ would not. The regulatory 

standard of identities for ‘‘ground beef’’ 

and ‘‘hamburger’’ are virtually identical 

with the minor exception of ‘‘added fat’’ 

being allowed in beef that is ground and 

marketed as ‘‘hamburger’’. Both are 

often marketed in bulk form or in patty 

form and can sit side by side in the fresh 

or frozen meat case with only the name 

capable of distinguishing them apart. 

Therefore, ground beef and hamburger 

sold in bulk or patty form are covered 

commodities under this final rule. 

However, in its analysis of the issue 

and the points raised by the 

commenters, the Agency does concur 

with several of the commenters that beef 

that is ground and marketed as 

‘‘imitation ground beef’’, ‘‘imitation 

hamburger’’, and ‘‘beef patty mix’’ 

should be exempt in this final rule. 

Products marketed under these 

standards of identities typically contain 

a number of binders and extenders that 

are not covered commodities and are 

not assumed by the consumer to be 

interchangeable with beef that is ground 

and marketed as ‘‘ground beef’’ or 

‘‘hamburger’’. Because the Agency does 

not view such variety meat items as beef 

heart meat and tongue meat (which are 

not allowed in ‘‘ground beef’’ or 

‘‘hamburger’’) as covered commodities, 

requiring such products as ‘‘beef patty 

mix’’ to carry COOL information would 

also require the beef processing industry 

to identify the country of origin for such 

beef variety meat items in the event they 

would be used as extenders in 

commodities like ‘‘beef patty mix’’, 

which does allow their inclusion. The 

Agency believes that the costs 

associated with this segregation and 

identification of beef variety meats 

would be overly burdensome and that 

these items were not intended to be 

included as covered commodities under 

the statute. Accordingly, these 

recommendations are adopted in part. 

Farm-Raised 

Summary of Comments: Some 

commenters expressed concerns 

regarding the definition of farm-raised 

in the fish and shellfish interim final 

rule. The commenters recommended 

that the Agency exempt molluscan 

shellfish from the COOL requirements. 

Agency Response: As the statute 

defines the term covered commodity to 

expressly include shellfish, the Agency 

does not have the authority to provide 

an exemption for molluscan shellfish. In 

addition, in the Agency’s experience in 

three years of enforcement of the COOL 

program for fish and shellfish, it has 

found good compliance with the 

labeling of this commodity. 

Accordingly, this recommendation is 

not adopted in this final rule. 

Lamb 

Summary of Comments: Several 

commenters requested that the 

regulation be revised to clarify the 

definition of lamb includes mutton. One 

of these commenters stated that because 

there are no common terminology 

differences describing the meat from 

different age groups of species such as 

cattle, swine, goat or chicken, the 

Agency was in error to exclude mutton 

in the definition of lamb in the interim 

final rule. The commenter further stated 

while specific definitional differences 

between lamb and mutton exist for other 

regulatory purposes, it is appropriate to 

cover meat from all ages of sheep in the 

rule as is done for the other livestock 

species. 

Agency Response: The Agency agrees 

that it is appropriate to include mutton 

under the definition of lamb as no 

distinctions describing meat from the 

different age groups of other livestock 

species were made. Accordingly, this 

recommendation has been adopted in 

this final rule. 

NAIS-Compliant System 

Summary of Comments: Two 

commenters recommended that the 

Agency eliminate the definition of a 

‘‘NAIS-compliant system’’ and replace it 

with the existing regulatory definition of 

‘‘Official identification device or 

method’’ that is contained in 9 CFR 

§ 93.400. The commenters contend that 

this modification is necessary so as to 

not mislead the public into believing 

that they must comply with all of the 

requirements of USDA’s NAIS (e.g., 

premises registration) in addition to 

maintaining current compliance with 

existing official identification systems. 

The commenters stated this change 

would be consistent with USDA’s 

assurance that the NAIS ‘‘does not alter 

any regulation in the Code of Federal 

Regulations or any regulations that exist 

at the State level.’’ 

Agency Response: The Agency 

continues to believe that voluntary use 

of the National Animal Identification 

System is an acceptable and easy option 

packers may utilize to obtain origin 

information on livestock. However, the 

Agency believes that the definition of 

NAIS-compliant should be deleted as it 

is not necessary. However, with regard 

to the commenter’s suggestion to replace 

this definition with the definition of 

‘‘Official identification device or 

method’’, because they may be applied 

to imported animals, other 

identification devices or methods alone 

cannot be used to establish the U.S.- 

origin of livestock. Producers’ 

management records will need to be 

used in conjunction with these other 

identification devices and methods to 

establish U.S. origin. Additional 

discussion on the NAIS provision is 

included later in the Comments and 

Responses section. 

Processed Food Item 

Summary of Comments: Numerous 

commenters suggested that the Agency 

should narrow its definition of a 

processed food item so that more food 

items sold at retail are covered 

commodities subject to COOL 

requirements. The commenters 

recommended that roasting, curing, 

smoking and other steps that make raw 

commodities more suitable for 

consumer use should not be the criteria 

for categorizing these commodities 

under the statutory exemption of an 

ingredient in a processed food item and 

therefore exempt from labeling. Many 

commenters stated that USDA’s overly 

expansive definition of a processed food 

item, which comes from the 2004 

interim final rule for fish and shellfish, 

should not be used for the other covered 

commodities. The commenters stated 

that although the definition was 

possibly appropriate for fish and 

shellfish, it resulted in a much more 

substantial percentage of meat and nut 

covered commodities sold at retail being 

exempt. The commenters urged USDA 

to develop different definitions of a 

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processed food item for each specific 

category of covered commodity so that 

as many items as possible would be 

covered by the mandatory COOL 

program. 

One commenter noted that relying on 

a change in character for the definition 

of processed food is fine as long as the 

Agency makes it clear that the change in 

character is such that a consumer would 

not use the items in the same manner as 

they would the original commodity. 

Thus, as spelled out in the 2003 

proposed rule, not all forms of cooking 

(e.g., frying, broiling, grilling, boiling, 

steaming, baking, roasting), as well as 

canning would constitute a change in 

character. This commenter added that 

for muscle cuts of beef, lamb, pork, 

chicken and goat, chilling, freezing, 

cooking, seasoning or breading should 

not render those products as being 

processed food items as defined in the 

interim final rule and therefore exempt 

from mandatory COOL. The commenter 

expressed their support for the 

alternative proposal in the 2003 

proposed rule in which a covered 

commodity that is further processed 

(i.e., cured, restructured, etc.) should 

not be excluded unless the covered 

commodity is mixed with other 

commodities such as a pizza or TV 

dinner. The commenter noted that by 

exempting restructured and cured 

products from COOL, the rule excludes 

bacon, hams and corned beef briskets 

from labeling. The commenter further 

stated that Congress clearly stated that 

pork was included in COOL, but 

exempting bacon and hams would 

exclude a significant portion of the pork 

market. This commenter also 

recommended that orange juice be 

included as a covered commodity since 

orange juice represents a major 

component of orange consumption in 

the U.S. Finally, the commenter noted 

that in a series of decisions, CBP 

determined that roasting of pistachios, 

pecan nuts and coffee beans did not 

constitute substantial transformation. 

Several commenters urged AMS to 

revise the provision in the processed 

food item definition that states that 

combining different covered 

commodities renders those products 

being exempt from mandatory COOL. 

The commenters recommended that if 

covered commodities are combined, yet 

are still recognizable, they should be 

required to be labeled. The commenters 

suggested that broadly exempting all 

mixed vegetables as a processed food 

item is an excessive exclusion because 

most consumers would expect to have 

frozen mixed vegetables labeled. 

Several commenters agreed with the 

Agency’s definition of a processed food 

item. The commenters noted that the 

processed food definition that the 

Agency adopted in the interim final rule 

for fish and shellfish is simple, 

straightforward and provides a bright 

line test retailers and others can use to 

understand which covered commodities 

are subject to mandatory COOL and 

which are not. 

One commenter recommended that 

the Agency designate that items with 

distinct varietal names within a generic 

category of products be deemed 

different products and excluded when 

two or more are combined. Several 

commenters recommended that any 

fresh-cut produce item, even those not 

combined with another substantive food 

item or other covered commodity, be 

included in the definition of a processed 

food item. By taking a raw agricultural 

commodity, washing it, then cutting it, 

the commenters contend that a company 

does change the product from a raw 

agricultural commodity to a ready-to-eat 

food item—similar to the way cooking 

changes a raw meat product to a readyto-eat food, and that cutting fruit for a 

value-added package alters the 

commodity at retail. 

One commenter noted that the interim 

rule provides that ‘‘the addition of a 

component (such as water, salt, or 

sugar) that enhances or represents a 

further step in the preparation of the 

product for consumption would not in 

itself result in a processed food item.’’ 

The commenter stated that as water, salt 

and sugar are used only as examples, it 

is apparent that the Agency assumes 

other ingredients, too, may merely 

enhance or further prepare the product 

for consumption such that they would 

be insufficient to render a product a 

processed food item. 

Several commenters expressed that 

they were unclear when water, salt or 

sugar can be added to a product and still 

be covered and questioned why a 

marinated steak is exempt even though 

‘‘marinated’’ is not defined. These 

commenters urged the Agency to clarify 

what is meant by enhancement steps 

that do not result in a processed food 

item. Some of these commenters further 

urged that the clarification encompass a 

much broader scope of flavorings, 

seasonings, etc., beyond water, salt or 

sugar. 

One commenter expressed support for 

the fact that the addition of a 

component (such as water, salt, or 

sugar) does not represent a processing 

step that changes the character of a 

covered commodity. The commenter 

recommended that USDA also expressly 

state that the addition of water-based or 

other types of flavoring—such as a 

solution containing water, sodium 

phosphate, salt, and natural flavoring 

purportedly injected into meat musclecut commodities by some retailers— 

does not represent a processing step that 

changes the character or identity of a 

covered commodity. Another 

commenter agreed with the provision in 

the 2003 proposed rule in which oil, salt 

and other flavorings were considered 

non-substantive ingredients. In 

addition, the commenter also expressed 

support for the position laid out in the 

2003 proposed rule that ‘‘needletenderized steaks; fully-cooked entrees 

containing beef pot roast with gravy; 

seasoned, vacuum-packaged pork loins; 

and water-enhanced case ready steaks, 

chops, and roasts * * * would not be 

considered processed food items’’. 

One commenter discussed products 

made up of a variety of fresh pork and 

beef muscle cuts that have been injected 

with a patented solution which, beyond 

simple water, salt, or sugar, also 

includes sodium phosphates, potassium 

lactate and sodium diacetate. The 

commenter stated that these products 

should be considered to be ‘‘covered 

commodities’’ and, therefore, subject to 

mandatory COOL requirements on the 

grounds that these products have not 

undergone a change in character and 

that because consumers cannot ascertain 

any difference between such enhanced 

products and those covered 

commodities that do not contain such 

additional ingredients, such an 

exemption would only confuse 

consumers. 

Several commenters asked that the list 

of examples of processed food items be 

expanded. One commenter strongly 

supported inclusion of the following 

examples for the types of meat and other 

covered commodities that should be 

exempt as a processed food item as 

defined under the definition and 

recommended to be included in the 

final rule: flank steak with portabella 

stuffing, steakhouse sirloin kabobs with 

vegetables, meatloaf, meatballs with 

penne pasta, pot roast with roasted 

vegetables, cooked and smoked meats, 

blue cheese angus burgers, cured hams, 

bacon, sugar cured bacon, dry cured 

meats, corned beef briskets, marinated 

pork loin, marinated pork chops, 

marinated London broil, prosciutto 

rolled in mozzarella cheese, fruit salad, 

cooked and canned fruits and 

vegetables, orange juice, fresh apple 

sauce, peanut butter, candy coated 

peanuts, peanut brittle, etc. 

Agency Response: The Agency 

believes that the two-part definition of 

a processed food item defined in the 

final rule is an appropriate 

interpretation of the intent of Congress 

excluding covered commodities that are 

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an ingredient in a processed food item 

and provides a bright line differentiating 

the steps that do and do not result in a 

commodity being covered by mandatory 

COOL. 

Furthermore, the Agency does not 

agree that such processing steps as 

cutting or enhancing render a covered 

commodity a processed food item. The 

definition of a processed food item uses 

examples of the addition of components 

‘‘such as water, salt, or sugar’’; however, 

such further preparation steps would 

also be meant to include other examples 

of enhancements that do not 

fundamentally alter the character of the 

product. For example, dextrose is a 

sugar, phosphate is a salt, and beef stock 

and yeast are flavor ‘‘enhancers’’. In 

addition, the Agency believes that 

enhancement with enzymatic 

tenderizers, such as ficin and bromelain, 

do not by themselves change the 

character of the covered commodity and 

therefore do not result in a processed 

food item. 

The Agency does agree that specific 

examples of products that are and are 

not covered can help the trade and 

consumers understand which products 

are covered by mandatory COOL. 

Therefore, the Agency will work to 

provide interpretive documents on its 

Web site and in print materials 

developed that will provide as many 

examples as necessary. 

Produced 

Summary of Comments: One 

commenter noted that the interim final 

rule defines the term ‘‘produced’’ in the 

case of a perishable agricultural 

commodity, peanuts, ginseng, pecans, 

and macadamia nuts as grown. The 

commenter recommended that since 

some plants may be transplanted across 

national borders, the Agency should 

define the term produced as harvested. 

Agency Response: The Agency agrees 

with the commenter that the term 

‘‘harvested’’ more accurately defines the 

term ‘‘produced’’ in the case of a 

perishable agricultural commodity, 

peanuts, ginseng, pecans, and 

macadamia nuts and has adopted this 

change in this final rule. 

Country of Origin Notification 

Exemption for Food Service 

Establishments 

Summary of Comments: Several 

commenters disagreed with the 

exemption for food service 

establishments from the COOL 

requirements. These commenters 

contend that since items sold in these 

types of establishments represent a 

major segment of the food industry, 

these establishments should not be 

exempt from labeling. 

Agency Response: The statute 

contains an express exemption for food 

service establishments. Therefore, this 

exemption is retained in this final rule. 

Method of Production 

Summary of Comments: Two 

commenters focused on details for the 

designation of method of production for 

fish and shellfish (wild-caught or farmraised). One commenter sought a more 

thorough definition and suggested the 

inclusion of the following additional 

information: for wild fish, the method of 

harvest (i.e., long-line, gillnet, trawl, 

purse seine, line and hook); and for 

farm-raised fish (1) whether it is a 

genetically engineered, and (2) the feed 

conversion ratio (quantity of fish feed 

required for producing the endcommodity). Another commenter 

expressed concern about fraudulent 

labeling of method of production for 

fish and shellfish. The commenter noted 

that there may be an economic incentive 

to mislabel farm-raised fish as wild 

caught fish, and the commenter 

provided evidence from a small sample 

they had investigated in November and 

December 2005 during the off-season for 

wild-caught salmon. They purchased 17 

salmon products labeled as wild-caught, 

tested them for the presence of a 

synthetic coloring agent fed to farmed 

salmon to turn their flesh pink-orange 

and found that 7 of the 17 salmon 

products labeled as wild-caught were 

determined through this analysis to be 

actually farm-raised. The commenter 

noted that supermarkets were more 

likely to label wild-caught salmon 

correctly than fish markets. 

Agency Response: The statute only 

provides the Agency with the authority 

to require that fish and shellfish carry 

notification for country of origin and 

that the covered commodity distinguish 

between wild fish and farm-raised fish. 

Therefore, the additional labeling 

information cannot be required. With 

regards to the mislabeling of method of 

production identified by the 

commenter, in addition to conducting 

retail surveillance enforcement 

activities, the Agency also conducts 

supplier audits that are intended to 

prevent such mislabeling. 

Labeling Covered Commodities of 

United States Origin 

Summary of Comments: Two 

commenters requested that the Agency 

revisit the regulatory requirements for 

labeling products as U.S. origin when 

they have been further processed or 

handled in a foreign country. One 

commenter recommended that USDA 

delete entirely § 65.300(d)(2), and 

include language instead that expressly 

prohibits the retention of a United 

States origin label for any commodity 

that undergoes additional processing or 

handling in a foreign country. Another 

commenter asked that the Agency 

clarify what it means by the terms 

‘‘handled’’ and ‘‘processed’’ in the 

context of this provision. The 

commenter asked USDA to clarify if it 

intends to include meat products in this 

section of the interim final rule, and 

noted that the statute indicates that 

meat product processed in another 

country would need to list that 

particular country on the label. They 

pointed out that the interim final rule 

appears to have no discussion or 

rationale explaining why a U.S. product 

processed in another country would be 

eligible to maintain a U.S. origin label. 

Another commenter requested that a 

fourth option for labeling imported 

products be considered in the final rule. 

This commenter pointed out that there 

are no provisions for labeling product 

that is caught or harvested in the U.S. 

and substantially transformed in 

another country. For example, wild fish 

that is caught in the U.S. and then 

subsequently filleted in ‘‘Country X’’ 

must be marked as a product of 

‘‘Country X’’ with no allowable 

reference to the original U.S. source. 

The commenter suggested an alternative 

would be to label covered commodities 

harvested in the U.S. but substantially 

transformed in another country as 

‘‘Harvested in U.S., processed in 

Country X.’’ The commenter concluded 

that such a label would provide 

complete information for the consumer 

while maintaining the original U.S. 

source of the product. 

Agency Response: With regards to the 

origin determination of United States 

country of origin products that are 

exported to a foreign country for 

processing prior to reimportation back 

into the United States, the Agency has 

deleted the express provision in the 

final rule as the Agency believes that the 

provision may have caused confusion. 

However, to the extent that existing 

regulations, including those of CBP and 

FSIS allow for products that have been 

minimally processed in a foreign 

country to reenter the United States as 

Product of the U.S., nothing in this final 

rule precludes this practice. In addition, 

to the extent that additional information 

about the production steps that occurred 

in the U.S. is permitted under existing 

Federal regulations (e.g., CBP, FSIS), 

nothing in this final rule precludes such 

information from being included. 

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Labeling Imported Products That Have 

Not Undergone Substantial 

Transformation in the United States 

Summary of Comments: Four 

commenters offered suggestions relating 

to labeling imported products that have 

not undergone substantial 

transformation in the United States. One 

commenter contended that COOL was 

illogical, unworkable and misleading. 

Another commenter elaborated on the 

labeling for transshipped fish and 

shellfish. The commenter pointed out 

that many fish and shellfish products 

are imported into the U.S. from 

countries that are not necessarily the 

country where the fish or shellfish were 

harvested. The commenter 

recommended that the final rule for fish 

and shellfish require labeling to identify 

the location where the seafood was 

harvested or raised. Another commenter 

noted that frozen products of ‘‘foreign 

origin,’’ as determined by tariff laws, 

already are subject to country of origin 

labeling under a comprehensive set of 

regulations administered by CBP. 

Agency Response: With regard to the 

origin of imported covered 

commodities, the Agency follows 

existing regulations, including those of 

CBP, regarding the origin of such 

products and requires that such origin 

be retained for retail labeling. 

Labeling Muscle Cut Covered 

Commodities of Multiple Countries of 

Origin That Include the United States 

Summary of Comments: Numerous 

commenters stated that commodities 

derived from animals born, raised, and 

slaughtered in the U.S. should be 

labeled as ‘‘Product of the U.S.’’ and not 

be diluted or commingled with a 

multiple country of origin label such as, 

‘‘Product of the U.S., Canada, and 

Mexico’’. These commenters stated that 

the provision allowing this in the 

interim final rule directly contradicts 

the statute and diminished consumer 

choice and producer benefits that could 

have resulted from this program. 

These commenters stated that the 

statute established four major categories 

for meat labeling to enable consumers to 

have the right to know specifically 

where their food originates. Other 

commenters stated that the regulation 

does not contain specific provisions 

allowing packers to label meat from 

livestock exclusively born, raised, and 

processed in the U.S. as mixed origin 

and that packers doing so were acting in 

violation of the regulation. Several 

members of Congress also commented 

that it was not the intent of Congress 

that all U.S. products or such product 

from large segments of the industry be 

combined with the multiple countries of 

origin category nor was it provided for 

by the statute. The members of Congress 

stated that the purpose of COOL is to 

clearly identify the origin of meat 

products, providing consumers the most 

precise information available. 

One commenter stated that while 

processors claim that segregating U.S. 

meat from foreign meat would be 

burdensome, processors already easily 

segregate meat by grade (e.g. USDA. 

Choice vs. USDA. Prime) and by source 

(e.g., USDA Certified Organic vs. 

nonorganic) and that segregating the 

origin of U.S. and foreign meat is no 

more complicated or burdensome. 

In contrast, several other commenters 

expressed support for a more flexible 

approach to labeling notifications for 

meat products sourced from multiple 

countries of origin. One commenter 

indicated that retailers desperately need 

the flexibility to commingle product in 

the display, especially in a full-service 

display case. The commenter stated that 

disallowing the commingling of meat 

from multiple origins including the U.S. 

is a logistical nightmare for retailers. 

Another commenter stated that the 

interim final rule affords critically 

important flexibility to retailers and the 

entities that provide covered 

commodities to retailers with respect to 

the labeling of covered commodities 

derived from animals of U.S. origin, as 

well as animals with multiple countries 

of origin. Another commenter urged the 

Agency to apply flexibility consistently 

for all sectors of the chain including 

retailers. 

Several commenters stated their belief 

that Congress intended to provide 

flexibility between categories A and B 

afforded in the rule based on the 

permissive language of the statute for 

those two categories, which is 

supported by the absence of that very 

flexibility in subsections 282(a)(2)(C) 

and (D). The commenters noted that in 

subsections 282(a)(2)(C) and (D) of the 

statute, Congress used the word ‘‘shall’’ 

with respect to types of covered 

commodities identified in those 

categories, imported for immediate 

slaughter and foreign country of origin, 

and arguably limited the Agency’s 

discretion to interpret how those 

categories of product should be labeled. 

Another commenter recommended 

the same flexibility given to processors 

to label meat from animals of U.S. origin 

with a mixed origin label should be 

given to the labeling of meat from 

animals imported directly for slaughter. 

The commenter recommended that the 

final rule give processors the flexibility 

to make use of the order of countries 

mandated under this category (Product 

of Country X and the U.S.) when 

processing a production run including 

animals of U.S., mixed origin, or 

imported for immediate slaughter. 

Another commenter noted that little 

attention seems to have been paid to the 

amount of exported meat this rule is 

putting at risk, which is now sold to 

Mexico, compared to the small amount 

of cattle born in Mexico and exported to 

the United States. Another commenter 

added that producers on the border 

States rely on Mexican cattle imports. 

The commenter warned that by 

establishing these categories, the value 

of finished Mexican cattle will be 

discounted at the packing plant because 

they will have to be sorted on the line 

in the plant, which costs the packer 

money. Another commenter stated that 

COOL has effectively cut off U.SMexican cattle trade and that because of 

COOL the packers have advised 

producers that they will not buy 

Mexican cattle. 

One commenter indicated that the 

multiple country label prescribed in the 

rule for product derived from U.S.- 

raised pigs, regardless of their birth 

country, provides packers, processors 

and retailers with flexibility in labeling 

pork products. The commenter further 

stated that this labeling flexibility, in 

turn, gives flexibility to U.S. pork 

producers handling those pigs, which 

will reduce costs associated with label 

changes, product segregation, and 

duplicate stock keeping units at all 

levels of the pork marketing system. 

Several commenters noted that the 

‘‘Product of the U.S.’’ label allows for 

the labeling of pork products 

exclusively from pigs born, raised and 

slaughtered in the U.S. These 

commenters stated it will be effectively 

used for pork products offered to buyers 

who find value in that label. The 

commenters fully support the approach 

taken in the interim final rule. The 

commenters also expressed that 

including U.S.-raised pigs in the mixed 

origin labeling category also meets the 

‘‘common sense’’ test as well as the 

economic reality of today’s U.S. pork 

industry since more than 95 percent of 

the total end weight of a Canadian-born 

weaned pig is actually produced in the 

U.S. using U.S. feed, labor and 

buildings. 

A final commenter wrote that the 

Agency should harmonize the final rule 

with the NAFTA Marking Rule. This 

commenter specifically encouraged the 

Agency to adopt a final rule that uses 

the tariff-shift method to determine the 

country of origin of covered 

commodities that are produced in the 

United States using ingredients or raw 

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2670 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

materials imported from Canada or 

Mexico. 

Agency Response: The Agency 

recognizes that the multitude of 

different production practices and 

possible sales transactions can influence 

the value determinations made 

throughout the supply chain resulting in 

instances of commingling of animals or 

covered commodities, which will have 

an impact when mixing occurs. 

However, the Agency feels it is 

necessary to ensure information 

accurately reflects the origin of any 

group, lot, box, or package in 

accordance with the intent of the statute 

while recognizing that regulated entities 

must still be allowed to operate in a 

manner that does not disrupt the normal 

conduct of business more than is 

necessary. Thus, allowing the 

marketplace to establish the demand of 

categories within the bounds of the 

regulations will provide the needed 

flexibility while maintaining the 

structure needed to enforce these clearly 

defined categories. If an initiator of the 

claim chooses to mix commodities of 

different origins within the parameters 

of a production day, or if the retailer 

mixes product from different categories 

willingly, the resulting classification 

must reflect the broadest possible terms 

of inclusion and be labeled 

appropriately. The initiator may elect to 

segregate and specifically classify each 

different category within a production 

day or mix different sources and 

provide a mixed label as long as 

accurate records are kept. Likewise, if a 

retailer wants to mix product from 

multiple categories, it can only be done 

in multi-product packages and then 

only when product from the different 

categories is represented in each 

package in order to correctly label the 

product. With regard to producer 

benefits, while some U.S. producers 

may hope to receive benefits from the 

COOL program for products of U.S. 

origin, the purpose of the COOL 

program is to provide consumers with 

origin information. 

With regard to the commenter’s 

recommendation that the same 

flexibility given to processors to label 

meat from animals of U.S. origin with a 

mixed origin label should be given to 

the labeling of meat from animals 

imported directly for slaughter, this 

final rule allows muscle cut covered 

commodities derived from animals that 

are born in Country X or Country Y, 

raised and slaughtered in the United 

States, that are commingled during a 

production day with muscle cut covered 

commodities that are derived from 

animals that are imported into the 

United States for immediate slaughter as 

defined in § 65.180, the origin may be 

designated as Product of the United 

States, Country X, and (as applicable) 

Country Y. 

With regard to using the tariff-shift 

method to determine the country of 

origin of covered commodities that are 

produced in the United States using 

ingredients or raw materials imported 

from Canada or Mexico, the Act 

specifically defines the criteria for 

covered commodities to be labeled with 

a U.S. origin declaration. Accordingly, 

this recommendation is not adopted. 

Labeling Commingled Covered 

Commodities 

Summary of Comments: Several 

commenters expressed concerns about 

the notification requirements for 

commingled covered commodities. One 

produce supplier was concerned about 

their liability in the event ready-to-eat 

produce they supplied was commingled 

with other product from multiple 

vendors at retail stores. Another 

commenter voiced opposition to an 

alphabetical listing on a product 

sourced and commingled from multiple 

countries of origin. The commenter 

expressed support for the provision in 

the voluntary COOL guidelines 

published in 2002 (67 FR 63367) that 

would have required country of origin 

for each raw material source of the 

mixed or blended retail item by order of 

predominance by weight. 

Another commenter expressed 

support for the current provision. The 

commenter noted that the current 

interim final rule states that for these 

products, the country of origin must be 

designated in accordance with CBP 

marking regulations, promulgated 

pursuant to the Tariff Act. To the extent 

that this will prevent a conflict between 

the two laws, this commenter supports 

the Agency’s recent approach. 

One commenter asked for clarification 

about the use of the word ‘‘or,’’ the 

phrase ‘‘and/or,’’ commas, slashes or 

spaces to separate the country names in 

a label listing multiple countries of 

origin for commingled commodities. 

The commenter pointed out that a 

comma would be equivalent to ‘‘and,’’ 

which might not be appropriate for 

labeling a single produce item that 

could not physically have been 

produced in two countries. 

Agency Response: As noted in both 

the interim final rule for fish and 

shellfish and the interim final rule for 

the other covered commodities, the 

Agency determined that requiring origin 

notification either by alphabetical 

listings or by listing the countries of 

origin by order of predominance by 

weight was overly burdensome to the 

regulated industries. 

As commingling of the same type of 

products at retail containing different 

origin is permissible under this final 

rule, the Agency cannot prohibit the 

commingling of like products from 

multiple vendors at retail. The COOL 

program is not a food safety program. 

Commingling like products is a 

commercially viable practice that has 

been historically utilized by retailers 

and any decision to continue this 

practice has to be determined by the 

retailer. 

The Agency does not agree that the 

statute allows for the use of terms and 

phrases such as ‘‘or, may contain, and/ 

or’’ that only convey a list of possible 

origins. The intent of the statute is to 

require retailers to provide specific 

origin information to consumers. In 

addition, such disjunctive labeling 

schemes are not allowed under CBP 

regulations except under special 

circumstances. 

For commingled covered 

commodities, each country must be 

listed. The Agency does not agree that 

the regulations should mandate how 

this list of countries be punctuated with 

commas, slashes or spaces. The Agency 

believes that it is best left to individual 

businesses to decide how to convey the 

information in a way that is neither 

confusing nor misleading. 

Labeling Ground Meat Covered 

Commodities 

Summary of Comments: Several 

commenters expressed the opinion that 

the provision in the interim final rule 

that states, ‘‘when a raw material from 

a specific origin is not in a processor’s 

inventory for more than 60 days, the 

country shall no longer be included as 

a possible country of origin’’ is too long. 

The commenters stated that in practical 

terms, this provision appears to allow a 

processor to have 60 days to correct the 

label of a product to delete specific 

country(s), even though that country’s 

product may no longer exist in its 

inventory. The commenters provided 

the example that a processor on day one 

could have product from the U.S. and 

Canada, and then on day 7 run out of 

product from the U.S., and yet could 

continue using the ‘‘Product of U.S. and 

Canada’’ label for another 53 days. 

Commenters feared this provision could 

be easily abused by meat processors. 

Several commenters requested that the 

Agency reconfirm the appropriateness 

of this time-frame and explain the 

rationale and justification for this 

duration. Another commenter urged 

AMS to clarify this issue for the public 

record because in the opinion of the 

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commenter, the wording in this section 

of the rule is confusing and potentially 

misleading. 

Another commenter pointed out this 

provision was intended to reflect the 

sourcing processes of commercial 

grinders and not to require them to 

change their labels simply because the 

market had changed and source product 

was more expensive from one country 

than another. As the statutory language 

that is interpreted here is directed to 

retailers, this commenter understood 

this provision to apply to retailers as 

well, and respectfully requested that the 

Agency confirm the applicable standard 

in the final regulation. 

One commenter was concerned about 

the impact that mandatory country of 

origin labeling will have on imported 

beef, particularly ground beef at retail. 

The commenter stated that mandatory 

origin labeling will add significantly to 

meat production costs at a time of 

rapidly increasing food costs, and 

consumers will have to bear the 

additional expense resulting from the 

labeling regime. The commenter was 

concerned, therefore, that retailers will 

be induced to simplify their labeling 

obligations by excluding imported and 

certain domestic beef from ground beef 

in order to minimize the resulting 

increase in the costs that will be 

associated with compliance. 

Agency Response: As already stated, 

the intent of the authorizing statute was 

for consumers to have available to them 

for the purposes of making purchasing 

decisions accurate information 

pertaining to the country of origin of 

certain covered commodities sold at 

retailers as defined. That said, the 

Agency believes this program should be 

implemented in as least burdensome a 

manner possible while still achieving 

this objective. 

In developing the interim final rule, 

the Agency spent considerable time 

analyzing the current production 

systems of the ground meat supply 

chain and retail industry so that this 

program could be implemented in a 

manner that was least burdensome as 

possible while still providing 

consumers with accurate information to 

base their purchasing decisions on. It 

also must be stressed that if a country 

of origin is utilized as a raw material 

source in the production of ground beef, 

it must be listed on the label. The 60- 

day in inventory allowance speaks only 

to when countries may no longer be 

listed. The 60-day inventory allowance 

is an allowance for the Agency’ 

enforcement purposes for when the 

Agency would deem ground meat 

products as no longer accurately 

labeled. 

The Agency arrived at the 60-day 

allowance during its analysis of the 

ground meat industry. In this analysis, 

the Agency determined that in the 

ground beef industry a common practice 

is to purchase lean beef trimmings from 

foreign countries and mix those with 

domestic beef trimmings before grinding 

into a final product. Often those 

imported beef trimmings are not 

purchased with any particular regard to 

the foreign country, but the cost of the 

trimmings due to currency exchange 

rates or availability due to production 

output capacity of that foreign market at 

any particular time. Because of that, 

over a period of time, the imported beef 

trimmings being utilized in the 

manufacture of ground beef can and 

does change between various foreign 

countries. 

As large scale beef grinders can have 

in inventory at any one time, several 

days worth of beef trimmings (materials 

to be processed into ground beef) from 

several different countries and have 

orders from yet other foreign markets, or 

from domestic importers, trimmings 

from several foreign countries that will 

fulfill several weeks worth of ground 

beef production, the Agency determined 

that it was reasonable to allow the 

industry to utilize labels representing 

that mix of countries that were 

commonly coming through their 

inventory during what was determined 

to be a 60-day product inventory and on 

order supply. To require beef grinders to 

completely change their production 

system into grinding beef based on 

specific batches was determined to be 

overly burdensome and not conducive 

to normal business practices, which the 

Agency believes was not the intent of 

the statute. Further, because beef 

grinders often purchase their labeling 

material in bulk, if a given foreign 

market that a beef grinder is sourcing 

from is no longer capable of supplying 

product, the interim final rule allowed 

that grinder a period of time to obtain 

new labels with that given country of 

origin removed from the label. 

With regard to the commenters’ 

concerns with the potential of ‘‘abuse’’ 

of this allowance by processors, the 

Agency does not believe widespread 

abuses of this provision will occur and 

will address any issues with this 

provision during routine compliance 

reviews. As such and for all the reasons 

stated above, the Agency continues to 

believe that the 60-day inventory 

allowance is appropriate and was 

retained in this final rule. 

With regard to if this 60-day inventory 

allowance is made for retailers or for 

suppliers of covered commodities, the 

Agency has made no distinction in this 

final rule and, as such, the same 

requirements would apply. Other 

concerns raised, including the impact of 

this regulation on the utilization of 

imported meat and consumer food costs 

are addressed in the economic impact 

analysis contained in this action. 

Remotely Purchased Products 

Summary of Comments: Two 

commenters expressed the opinion that 

the provision on remotely purchased 

products is too weak because it allows 

country of origin information to be 

disclosed either on the sales vehicle or 

at the time the product is delivered to 

the consumer. The commenters stated 

that for origin information to be of use 

to consumers, it must be disclosed at the 

time that purchasing decisions are 

made. The commenters recommended 

that the country of origin or the possible 

country(ies) of origin could be listed on 

the sales vehicle (i.e. Internet site, home 

delivery catalog, etc.) as part of the 

information describing the covered 

commodity for sale. Another commenter 

encouraged the Agency to maintain the 

provision for remotely purchased 

products with the additional flexibility 

of permitting the declaration either on 

the sales vehicle or on the product at the 

time of delivery. 

Agency Response: The Agency 

believes that the provision contained in 

the interim final rules, which allows the 

information to be provided either on the 

sales vehicle or on the product itself, 

provides flexibility to suppliers and also 

provides useful information to 

consumers. If a consumer desires to 

purchase a covered commodity of a 

certain origin, they can so specify to the 

retailer. 

Marking 

General 

Summary of Comments: Several 

commenters addressed the question of 

preponderance of stickering and sticker 

efficacy. The commenters recommended 

that the Agency define ‘‘majority’’ as it 

applies to bulk display stickering for 

perishable agricultural commodities. 

The commenters noted that the Agency 

has recognized that when fresh produce 

is stickered with origin information, 

every product may not bear a sticker for 

a variety of reasons, and that a majority 

of the product should have stickers. 

Two commenters recommended that the 

Agency define ‘‘majority’’ as it applies 

to bulk display stickering for perishable 

agricultural commodities as ‘‘50% plus 

one’’ so that the industry has a specific 

understanding for compliance. Another 

commenter agreed with this definition, 

citing that the FDA found 50% product 

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labeling sufficient even in a case of 

human health. The commenter argued 

that such a standard would therefore be 

more than sufficient for adequate 

disclosure of country of origin. Another 

commenter recommended that the 

Agency not require more than a majority 

of produce items in any given bin to 

carry a PLU sticker. The commenter 

added that price look up (PLU) stickers, 

which include information on the 

supplier that initiates the country of 

origin claim, should not only satisfy a 

retailer’s obligation to inform consumers 

of the country of origin of the item, it 

should satisfy the retailer’s country of 

origin recordkeeping obligation as well. 

Another commenter expressed 

concern that the lack of a specific 

minimum labeling requirement could 

ultimately require suppliers to have 

multiple containers and packaging 

inventories available. The commenter 

stated that a producer supplying fruit 

for bulk sale that is not currently 

stickering fruit may now be required by 

retailers to sticker individual pieces of 

fruit because the rule only ‘‘encourages’’ 

retailers to use placards or other 

methods. The commenter recommended 

that the rule establish a specific 

minimum standard to ensure greater 

consistency in compliance. 

As it pertains to fish and shellfish, 

another commenter suggested that the 

Agency allow the use of statements such 

as ‘‘wild and/or farm-raised’’ or ‘‘may 

contain’’ in addition to allowing the use 

of ‘‘check box’’ labeling options to 

minimize the cost of labeling while still 

providing the required information for 

the consumer. 

Agency Response: As stated in the 

preamble of the August 1, 2008, interim 

final rule, the Agency understands that 

stickering efficacy is not 100%. Further, 

the Agency believes that under normal 

conditions of purchase, consumers 

would likely be able to discern the 

country of origin if the majority of items 

were labeled regardless if additional 

placards or other signage was present. 

Accordingly, the Agency does not 

believe it is necessary to modify the 

language with respect to this provision. 

The Agency will address the issue of 

preponderance of stickering in its 

compliance and enforcement 

procedures, as applicable, to ensure 

uniform guidance is provided to 

compliance and enforcement personnel. 

With regard to this use of ‘‘may 

contain’’ and ‘‘and/or’’ statements, as 

previously stated, the Agency does not 

agree that the statute allows for the use 

of terms and phrases such as ‘‘or, may 

contain, and/or’’ that only convey a list 

of possible origins. Rather the Agency 

believes that the intent of the statute is 

to require retailers to provide specific 

origin information to consumers. In 

addition, such disjunctive labeling 

schemes are not allowed under CBP 

regulations except under special 

circumstances. 

Signage Over Bulk Display Cases 

Summary of Comments: Several 

commenters expressed concern that the 

language authorizing a list of ‘‘all 

possible origins’’ on a bulk container 

(such as a meat display case that may 

contain commodities from different 

origins) would inadvertently allow a 

retailer to hang a sign over the entire 

meat display case that stated that the 

entire display contains products from 

the U.S. and one or more countries, 

even if the display case contains only 

commodities from the U.S. The 

commenters contend that nothing in the 

law expressly permits such labels on 

displays, holding units, or bins to 

merely provide information regarding 

‘‘all possible origins’’ of the 

commodities contained therein and 

recommended that the Agency add 

language to require that if a meat 

display case contains commodities from 

more than one country, the commodities 

must be physically separated according 

to their origins within the meat display 

case and a separate origin declaration 

must be associated with each section. 

Another commenter stated that they 

understood that the Agency is 

concerned that a sign such as ‘‘All beef 

is Product of the US’’ might be 

interpreted by consumers to encompass 

beef products that are not covered by 

the statute because they are processed. 

In order to provide clarity, the 

commenter urged the Agency to provide 

‘‘safe harbor’’ standards for language 

and placement in order to ensure that 

retailers are properly meeting their 

obligations. 

One commenter noted that retailers 

have the discretion to use signs, 

placards or other communications to 

convey origin information. Another 

commenter noted that the interim final 

rule allows for a bulk container at retail 

level that contains commingled 

products to be labeled with the country 

or countries of origin. However, the 

commenter also pointed out that the 

rule is silent on whether the individual 

pieces contained in bins must also be 

labeled, which would be difficult for 

certain species (e.g., broccoli, lettuce). 

This commenter requested confirmation 

that, for commingled produce sold in 

bins or trays, individual pieces of 

produce do not need to be labeled 

provided their origins are displayed on 

appropriate signage by the retailer. 

Agency Response: With regard to the 

provision in both interim final rules 

concerning bulk containers that allows 

the bulk container to contain a covered 

commodity from more than one country 

of origin, as previously stated, under 

this final rule it remains permissible 

provided that the notification 

representing a container, display case, 

bin or other form of presentation 

includes all possible country 

designations available for purchase. 

With respect to the use of signage for 

bulk displays for meat covered 

commodities, as previously discussed, 

the Agency has observed that a vast 

majority of retailers are utilizing one 

sign for either the entire meat case or for 

an entire commodity type (i.e., chicken) 

to provide the country of origin 

notification. While the statute and this 

regulation provide flexibility in how the 

country of origin information can be 

provided, the Agency believes that the 

use of such signage could be false or 

misleading to consumers. The Agency 

encourages retailers to review signage 

that they have used in the 

implementation of the fish and shellfish 

program for alternative methods of 

providing COOL information. 

With regard to comment concerning 

the labeling of individual pieces of 

produce, the rule provides flexibility in 

how the country of origin information 

may be conveyed. Thus, this final rule 

does not contain a requirement that 

individual pieces of product must be 

labeled with country of origin 

information. However, retailers may 

request that suppliers use specific 

methods of conveying origin 

information through contractual 

arrangements with their suppliers. 

Abbreviations 

Summary of Comments: Several 

commenters requested additional 

guidance on acceptable abbreviations, 

and they provided a variety of 

recommendations to the Agency about 

specifying approved abbreviations. 

These commenters all favored the use of 

country abbreviations when marking 

country of origin declarations. One 

commenter requested that a select group 

of countries be permitted for 

abbreviation to include New Zealand, 

Guatemala, South Africa, Argentina and 

Australia. Another commenter said that 

abbreviations would serve a useful 

purpose on product labels and 

recommended that a list of reasonable 

abbreviations be developed that could 

be used by processors and retailers (e.g., 

CAN for Canada). 

Other commenters appreciated the 

Agency’s recognition of the need to 

abbreviate the names of some countries 

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using abbreviations from CBP. The 

commenters recommended that the 

language in section (e) be reworded to 

remove the first sentence (‘‘In general, 

abbreviations are not acceptable.’’). The 

commenters reasoned that the available 

space on product labels (e.g., price lookup [PLU] sticker) or bills of lading is 

scarce. The commenters further stated 

that it is important for the industry to 

be able to convey origin information on 

both of those vehicles for several 

reasons. Information on the product 

itself (through a PLU sticker, rubber 

band, twist tie, tag, etc.) is particularly 

important because it informs the 

consumer at point of purchase and 

moves with the product to the home. 

When industry can include the 

information on a bill of lading, it allows 

companies to use existing records as the 

statute requires. The commenters 

suggested that the Agency remove the 

requirement that a key to abbreviations 

be included with documents (each time 

or even once), because the industry is 

well aware of the abbreviations used 

and their meanings. 

Several commenters suggested that 

the Agency rely on the ISO 3166 

country codes maintained by the 

International Standardization 

Organization. One commenter disagreed 

with the Agency’s determination that 

such abbreviations may not be readily 

understood by the majority of 

consumers. One commenter added that 

in addition to the ISO country codes, 

CBP recognizes country codes as do 

other federal agencies such as the 

Bureau of the Census. The commenter 

pointed out that the United Nations also 

recognizes both the two letter and three 

letter ISO country codes. Another 

commenter requested that a list of 3- 

digit country abbreviations be 

developed and allowed to identify the 

countries of origin. The commenter 

noted that these 3-digit codes would not 

be confused with 2-digit codes used in 

the U.S. to identify individual States. 

One commenter indicated that in the 

event the Agency retains its current 

prohibition on abbreviations for 

consumer information, the Agency must 

be clear that origin information in 

records and paperwork can be 

maintained with any acceptable 

abbreviations. The commenter added 

that they strongly support the ability to 

utilize labeling of a U.S. State, region or 

locality in which a product is produced 

to meet label standards as product of 

United States. In addition, the 

commenter stated that they support the 

ability to use State abbreviations, which 

is standard practice in many current 

State labeling programs and is readily 

accepted identification by consumers. 

One commenter described a customer 

who had a requirement to list the State 

name in addition to the U.S. This 

commenter asked if it would be 

permissible to abbreviate State names 

when more than one needs to be listed 

(e.g., WA, CA, AZ). The commenter 

suggested putting the State 

abbreviations in brackets after USA (e.g., 

USA (CA, AZ)). 

Agency Response: As previously 

stated, the Agency believes that the 

limited application of abbreviations that 

unmistakably indicate the country of 

origin is appropriate. CBP has a long 

history of administering the Tariff Act 

and has issued a number of policy 

rulings with respect to the use of 

abbreviations. Because many of the 

covered commodities subject to the 

COOL regulation are also subject to 

country of origin marking under the 

Tariff Act, it would be inconsistent with 

CBP regulations to allow for the use of 

additional country abbreviations under 

the COOL program. With regard to the 

use of ISO codes that many commenters 

made reference to, CBP does allow for 

the use of such codes for statistical and 

other purposes with respect to ecommerce; however, CBP does not 

allow for the use of ISO codes for 

marking purposes. The Agency has 

obtained a more complete list of 

abbreviations from CBP and has posted 

this information to the COOL Web site. 

With regard to State labeling for 

perishable agricultural commodities, 

peanuts, pecans, macadamia nuts, and 

ginseng, the Agency does believe that 

the majority of consumers are familiar 

with the standard State abbreviations 

used by the U.S. Postal Service and 

because the purpose of the COOL 

program is to provide consumers with 

origin information, it is reasonable to 

allow such abbreviations. Allowing this 

flexibility will address industry’s 

concerns about the limited space on 

PLU stickers, twist ties, rubber bands 

and other package labels typically used 

for produce. Under this final rule, 

abbreviations may be used for state, 

regional, or locality label designations 

for perishable agricultural commodities, 

peanuts, pecans, macadamia nuts, and 

ginseng covered commodities whether 

domestically harvested or imported 

using official United States Postal 

Service abbreviations or other 

abbreviations approved by CBP. With 

regard to the use of abbreviations by 

suppliers or retailers in conveying 

origin information in records or 

documentary systems, there are no 

restrictions on the use of abbreviations 

as long as the information can be 

understood by the recipient. 

Accordingly, these recommendations 

are adopted in part. 

State, Regional, and Locality Labeling 

Summary of Comments: Several 

commenters raised issues related to the 

provision for state, regional, and locality 

labeling of covered commodities. Three 

commenters requested that state, 

regional, and locality labeling be 

acceptable for covered meat 

commodities. One commenter sought 

confirmation that the provisions on 

State markings in the interim final rule 

apply also to States, regional and local 

labels of importing countries. This 

commenter understood that 

identification by region and locality is 

acceptable provided it is nationally 

distinct, but requested that this 

provision be clarified in the final rule. 

Another commenter noted that USDA 

is silent on the use of locality labeling, 

and requested that the final rule 

recognize that locality labeling is 

likewise permitted by the statute. The 

commenter stated that many retailers 

source products locally and choose to 

provide this information to consumers 

because it is meaningful to these 

customers. 

Agency Response: With regard to the 

commenters’ recommendation to allow 

State, regional, and locality labeling for 

meat covered commodities, the statute 

contains an express provision for this 

type of labeling for perishable 

agricultural commodities, peanuts, 

pecans, macadamia nuts, and ginseng. 

As such, the Agency does not have the 

authority to extend this provision to any 

other covered commodities. With regard 

to the commenter’s request that the 

Agency clarify that this provision 

applies to imported perishable 

agricultural commodities, nuts, and 

ginseng and that locality labeling is also 

permitted, clarifying language has been 

added to section 65.400(f). Accordingly, 

these recommendations have been 

adopted in part. 

Supplier Responsibilities 

Summary of Comments: Several 

commenters expressed concerns with 

the Agency’s assertion in the interim 

final rule that ‘‘the supplier of a covered 

commodity that is responsible for 

initiating a country of origin claim 

* * * must possess or have legal access 

to records that are necessary to 

substantiate that claim.’’ The 

commenters maintained that the 

Agency’s jurisdiction stops with the 

initiator of the origin claim of a covered 

commodity, which in the case of meat 

products is the slaughter facility. The 

commenters further stated that the 

COOL law authorizes only the Secretary 

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of Agriculture to conduct an audit for 

verification purposes, not the packer, 

and that furthermore, the Secretary may 

not require a person that prepares, 

stores, handles, or distributes a covered 

commodity to maintain a record of the 

country of origin of a covered 

commodity other than those maintained 

in the course of the normal conduct of 

the business of such person. The 

commenters argued that the 2008 Farm 

Bill language states that producer 

affidavits are sufficient in making a 

country of origin claim; therefore, 

packers or processors should not be 

given legal access to producers’ records. 

The commenters recommended that the 

Agency eliminate language referencing 

‘‘legal access’’ from the final regulation 

as they contend it is not authorized by 

the law. 

Two commenters suggested that the 

Agency should require the original 

suppliers of covered products to 

substantiate the chain of custody and 

the accuracy of country of origin 

information. One commenter expressed 

the opinion that it is unreasonable that 

the liability ultimately is placed on the 

meat processor to provide country of 

origin information when they are 

relying on the word of livestock 

producers, who may or may not be 

providing accurate information. 

Another commenter pointed out the 

importance of maintaining origin 

information by all segments of the 

industry to verify origin claims and to 

ensure the integrity of the labeling 

program. This commenter also stated 

that it is important that producers not be 

asked for unreasonable information that 

goes beyond what would be considered 

acceptable or the lack of which is a 

pretext for penalties against a producer 

or producers. The commenter 

recommended that the Agency provide 

a safe harbor of reasonable or acceptable 

information that can be asked of a 

producer to help avoid the possibility of 

unreasonable requests for information 

that would be considered unfair or an 

effort to single out a particular producer. 

One commenter suggested removing 

the provision in the rule regarding 

supply chain traceability in the 

recordkeeping requirement. The 

commenter stated that the purpose of 

COOL is to inform consumers about the 

origin of the covered commodities and 

that the added recordkeeping 

requirement of traceability is not 

necessary and is an added regulatory 

burden. 

One commenter noted that while 

producers are not directly affected by 

the COOL law, Section 282(3) of the 

statute expressly requires that ‘‘anyone 

engaged in the business of supplying a 

covered commodity provide country of 

origin information.’’ The commenter 

further stated that in the case of animals 

imported from Canada, this necessarily 

implicates Canadian producers who 

must present health papers to APHIS at 

the border. The commenter suggested 

further clarification is needed about the 

manner in which that origin will be 

tracked and conveyed to AMS should 

proof of origin be required further down 

the supply chain. 

One commenter noted that Agency 

representatives have repeatedly advised 

the industry of the need for significantly 

more extensive records than are 

currently maintained in order to verify 

COOL. The commenter strongly urged 

the Agency to clarify in the final rule 

that the statutory prohibition of any new 

record requirement is recognized and 

accepted. This commenter also 

encouraged the Agency to provide a 

definitive declaration that suppliers 

may convey COOL information to 

retailers through any method of their 

choosing in order to comply with the 

regulation. The commenter stated that 

in current trade practice, some have 

been confused as to whether supplier 

labeling of COOL on the actual produce 

item is required, or whether multiple 

documents such as invoices or bills of 

lading must contain COOL information. 

The commenter suggested that USDA 

should make clear that COOL 

information may be provided to the 

retailer in any form. The commenter 

further suggested that relationships in 

the marketplace—not the statute—will 

determine in what form that 

communication will take place, 

including whether individual product 

eventually is labeled by a supplier. 

One commenter stated that the most 

practical approach to meeting the COOL 

requirements for most covered 

commodities is for those producers to 

print the country of origin on all retail 

packaging for case and consumer ready, 

and on all case end labels for all 

products destined to be store processed 

or packaged by the retailer. The 

commenter suggested that producers 

will not need to continuously transmit 

country of origin information to the 

retailer on an order by order basis. 

Instead, package and case labeling in 

conjunction with the USDA 

establishment number (used to identify 

producer) and the lot or batch number 

(used to identify the specific lot of live 

animals from which products are 

derived) will already be on prepackaged labels and case end codes. The 

commenter further stated that retailers 

already retain invoices to meet other 

reporting requirements, which identify 

the producers of the product, and can be 

used to satisfy the COOL recordkeeping 

obligation. The commenter also stated 

that there will be no required change in 

business processes for retailers but 

producers will be required to add 

accurate origin information to the retail 

packaging and/or case end labels. 

One commenter identified a business 

process flow they hoped could be 

simplified with the intervention of the 

Agency. In import situations where a 

consolidated shipment could have 

multiple origins covered by one Bill of 

Lading (for example, a combined load of 

Navel Oranges from Australia and South 

Africa, and Clementines and Lemons 

from Chile) the commenter currently 

notes each line item on the 

documentation, which is an added step 

in the paperwork process. The 

commenter requested that the Agency 

provide suggestions in the rule about 

alternative means to comply with COOL 

on Bills of Lading, invoices, or packing 

slips. 

One commenter suggested that the 

Agency consider a longer period, such 

as 10 business days, to provide records 

upon request to any duly authorized 

representatives of USDA for COOL 

compliance purposes. Two commenters 

referenced the statutory prohibition 

against the Agency requiring records 

that are not maintained in the normal 

conduct of business. These commenters 

noted that such records are deemed 

sufficient to satisfy the Bioterrorism 

Act’s mandate to be able to identify 

immediate previous source and 

immediate subsequent recipient of 

foods. The commenters recommended 

that the Agency likewise accept 

multiple sourcing records for purposes 

of the mandatory country of origin 

labeling requirement for intermediary 

suppliers to identify their immediate 

previous source and immediate 

subsequent recipient. 

Agency Response: It is correct to say 

that the Agency’s authority to audit 

ends at the slaughter facility as the 

slaughter facility is the first handler of 

the covered commodity and the Agency 

has deleted the requirement that 

suppliers have legal access to records 

from this final rule. However, as 

initiators of origin claims, packers must 

have records to substantiate those 

claims. With regard to records 

maintained in the course of the normal 

conduct of the business of such person 

and producer affidavits, the final rule 

states that producer affidavits shall be 

considered acceptable records that 

suppliers may utilize to initiate origin 

claims, provided it is made by someone 

having first-hand knowledge of the 

origin of the covered commodity and 

identifies the covered commodity 

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unique to the transaction. With regard to 

the commenter’s assertion that 

producers not be asked for unreasonable 

information that goes beyond what 

would be considered acceptable, the 

Agency has provided examples of 

records kept in the normal course of 

business that may be used to 

substantiate origin claims. As 

previously stated, packers can utilize 

producer affidavits to obtain origin 

information. This final rule has been 

drafted to minimize the recordkeeping 

burden as much as possible while still 

providing the Agency with the 

information necessary to verify origin 

claims. 

With regard to how suppliers may 

provide origin information to retailers, 

this final rule states that the information 

can be provided on the product itself, 

on the master shipping container, or in 

a document that accompanies the 

product through retail sale. It is up to 

the supplier and their retailer customers 

to decide which method is most 

appropriate. The Agency agrees that 

bills of lading, invoices, and packing 

slips may be used to provide origin 

information. Ultimately, retailers must 

ensure that covered commodities 

displayed for retail sale have country of 

origin designations. 

With regard to the recommendation to 

allow a 10 day period to supply 

documentation to USDA officials, the 

Agency believes that the 5 business days 

provided in the August 1, 2008, interim 

final rule provides suppliers and 

retailers reasonable and appropriate 

time to provide records to USDA upon 

request. With regard to the commenters’ 

reference to the statutory prohibition 

against the Agency requiring records 

that are not maintained in the normal 

conduct of business and that such 

records are deemed sufficient to satisfy 

the Bioterrorism Act’s mandate to be 

able to identify immediate previous 

source and immediate subsequent 

recipient of foods, records maintained 

in the normal conduct of business can 

be used to satisfy the COOL 

recordkeeping requirements. However, 

the Agency recognizes that suppliers 

and retailers may need to make 

modifications to their existing records 

in order to provide the necessary 

information to be able to substantiate 

COOL claims as provided for in the 

statute. 

Visual Inspection 

Summary of Comments: Several 

commenters expressed support for the 

Agency policy to accept visual 

inspection as a means to verify the 

origin of livestock during the period 

between July 15, 2008 and July 15, 2009. 

Specifically, the majority of commenters 

supported the Agency’s decision to 

authorize sellers of cattle to conduct a 

visual inspection of their livestock for 

the presence or absence of foreign marks 

of origin, and that such visual 

inspection constitutes firsthand 

knowledge of the origin of their 

livestock for use as a basis for verifying 

origin and to support an affidavit of 

origin. They noted that visual 

inspection for verification of origin is 

particularly important to the trade 

during the period between July 15, 

2008, and whenever the final regulation 

is published. The commenters stated 

that producers now have livestock 

without all of the origin documentation 

that may be necessary and that it would 

be very difficult, and in some cases 

impossible, to recreate the paper trail on 

many of these animals. Other 

commenters noted that the visual 

inspection of animals for import 

markings is a highly reliable, cost 

effective method of verification of origin 

and will significantly reduce 

compliance costs for livestock 

producers. The commenters recommend 

that visual inspection be made a 

permanent method on which to base 

origin claims. 

Agency Response: The Agency 

initially allowed for a transition period 

for the period July 16, 2008, through 

July 15, 2009, during which producers 

may issue affidavits based upon a visual 

inspection at or near the time of sale 

that identifies the origin of livestock for 

a specific transaction. Affidavits based 

on visual inspection may only be issued 

by the producer or owner prior to, and 

including, the sale of the livestock for 

slaughter. The Agency agrees with the 

commenters that affidavits based on 

visual inspection reduce the burden on 

producers. Accordingly, the Agency is 

making the ability to utilize visual 

inspection as the basis for forming an 

affidavit permanent. 

Producer Affidavits 

Summary of Comments: Numerous 

commenters expressed support for the 

‘‘Universal Country of Origin Affidavit/ 

Declaration’’ that was developed by 

consensus across the livestock and 

chicken industry to serve as verification 

from producers to slaughter facilities for 

the country of origin of livestock. 

Several commenters requested that 

these agreed-upon documents be 

incorporated in the final rule. Several 

commenters also argued that producers 

should not be asked for unreasonable 

information. They urged AMS to 

consider a standardized producer 

affidavit that would accompany an 

animal from its first sale throughout the 

chain of custody. 

Several commenters expressed 

support for the Agency’s decision to 

allow composite affidavits where a 

producer can put together lots of cattle 

for sale and have one new affidavit for 

that lot based on the affidavits received 

for each animal, or lot of animals, that 

was combined in the new lot. The 

commenters also expressed support for 

the ability for producers to file an 

‘‘evergreen’’ or ‘‘continuous’’ affidavit 

with the buyers of their livestock saying 

that, until otherwise noticed or revoked, 

all the cattle they will deliver to that 

buyer will be of a specific origin. 

One commenter disagreed that a 

producer affidavit in conjunction with 

animal ID records can be deleted after 

1 year when a majority of breeding stock 

lives beyond 5 years and 95% of cattle 

in the U.S. on July 15, 2008 were not 

close to slaughter age. The commenter 

was of the opinion that documentation 

and retention of affidavits needs to last 

longer if the Agency has to audit and 

trace back meats. 

Agency Response: The Agency 

believes the Universal Country of Origin 

Affidavit/Declaration that was 

developed by consensus across the 

livestock and chicken industry will 

assist the industry in implementing the 

rule in as least burdensome manner as 

possible. While the statute and this final 

rule allow for the use of producer 

affidavits, because the statute does not 

provide the Agency with authority to 

regulate producers, the Agency cannot 

mandate the use of such affidavits. 

The Agency recognizes that animal 

production cycles vary greatly and 

depending upon which records are used 

for origin verification, retention of 

documents should be commensurate 

with the claim being affirmed through 

an affidavit or other means of 

declaration. However, the Agency only 

has the authority to require record 

retention for covered commodities. As 

the initiator of origin claims for meat, 

packers may specify the length of time 

records need to be maintained by 

entities outside the packer’s system. 

National Animal Identification System 

(NAIS) 

Summary of Comments: Commenters 

had mixed opinions about relying on 

NAIS as a safe-harbor for COOL 

compliance. Numerous commenters 

supported the provision in the interim 

final rule stating that voluntary 

participation in NAIS program will 

comply with COOL verification 

requirements. The commenters that 

support the use of NAIS stated that 

official USDA 840-tags can serve as a 

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universal passport for an animal during 

its lifetime indicating the animal is of 

U.S. origin, no matter how many times 

ownership of the animal changes during 

its lifetime. Commenters strongly 

encouraged the Agency to utilize Radio 

Frequency Identification (RFID) tags in 

NAIS to allow verification of country of 

origin at the speed of commerce and 

stated that official NAIS USDA 840– 

RFID tags for livestock represent the 

simplest way for producers to assist in 

the marketing of their animals to ensure 

compliance with COOL. 

One commenter recommended that 

NAIS should be made mandatory. Two 

commenters suggested that the Agency 

could alleviate the record keeping 

burden by simply requiring all foreign 

cattle to bear a permanent mark that 

defines their origin. They suggested that 

this will not only aid commerce by 

reducing paperwork, but it will also 

enhance compliance. 

Three commenters expressed support 

for reliance on other existing animal 

identification systems. One commenter 

noted that USDA/APHIS currently 

operates the National Scrapie 

Eradication Program (NSEP), which 

includes a regulated animal 

identification program. By regulation, 

feeder and slaughter sheep that are 

imported from Canada must carry 

official permanent identification. The 

commenter urged AMS to help 

processors and others recognize the 

relatively straight-forward nature of 

proving animal origin in the sheep 

industry. Two commenters pointed out 

that livestock producers who participate 

in ‘‘Age and Source Verified’’ programs 

administered by USDA should also be 

in compliance with COOL for both 

origin and verification claims. 

Another commenter stated that 

identification of animal origin by ear tag 

is a cause for concern. This commenter 

noted that USDA has not provided 

guidance about what records will suffice 

for imported animals, stating only that 

for animals that are part of an official 

identification system, such as the 

Canadian cattle identification system, 

ear tags will suffice for proving origin at 

the slaughterhouse. The commenter was 

concerned with having requirements 

imposed because of a specific animal 

health concern, such as Canadian ear 

tags on cattle, ensnared in separate 

regulations for an entirely different and 

unrelated purpose. The commenter 

stated that this could restrict Canada’s 

abilities to adapt its national cattle 

identification system to changing 

environments or technologies in the 

future. 

A final commenter warned that the 

acceptance of an ear tattoo does not 

meet the needs of modern industry 

practices. Due to issues associated with 

the speed of commerce, recordkeeping, 

accuracy and overall effectiveness of the 

program, the commenter stated that the 

Agency should only allow a hot iron 

brand on all live foreign cattle. 

Agency Response: The Agency 

believes that voluntary use of the 

National Animal Identification System 

is an easy option packers may utilize to 

obtain origin information on livestock. 

The Agency has also made 

modifications to this provision for 

clarity. The Animal Identification 

Number (AIN) is defined in the Code of 

Federal Regulations as ‘‘A numbering 

system for the official identification of 

individual animals in the United States 

providing a nationally unique 

identification number for each animal. 

The AIN contains 15 digits, with the 

first 3 being the country code (840 for 

the United States), the alpha characters 

USA, or the numeric code assigned to 

the manufacturer of the identification 

device by the International Committee 

on Animal Recording. The AIN 

beginning with the 840 prefix may be 

used only on animals born in the United 

States.’’ As stated in the interim final 

rule published on September 18, 2008, 

(73 FR 54059), the AIN version starting 

with 840 is prohibited for use on 

animals born outside the United States. 

Therefore, under this final rule, packers 

that slaughter animals that are tagged 

with an 840 Animal Identification 

Number device without the presence of 

any additional accompanying marking 

(i.e., ‘‘CAN’’ or ‘‘M’’) may use that 

information as a basis for a U.S. origin 

claim. Packers that slaughter animals 

that are part of another country’s 

recognized official system (e.g. 

Canadian official system, Mexico 

official system) may also rely on the 

presence of an official ear tag or other 

approved device on which to base their 

origin claims. With regard to the 

commenter’s concern regarding having 

requirements imposed because of a 

specific animal health concern, such as 

Canadian ear tags on cattle, in separate 

regulations for an entirely different and 

unrelated purpose, this regulation does 

not impact regulations pertaining to 

animal health or importation. In 

addition, use of official ear tags as the 

basis of origin claims is just one option 

that can be utilized to obtain origin 

information. 

The other comments received relevant 

to making NAIS mandatory and 

allowing only hot iron brands on live 

foreign cattle are outside of the scope of 

this rulemaking. Accordingly, these 

recommendations have been adopted in 

part. 

Retailer Responsibilities 

Summary of Comments: Numerous 

commenters addressed issues relating to 

the retailer recordkeeping provisions of 

COOL. One commenter stated that the 

Agency has offered simple, effective 

rules for recordkeeping by retailers. One 

commenter recommended that in 

§ 65.500(c)(1), the Agency put the last 

sentence of the paragraph first (‘‘For 

pre-labeled products, the label itself is 

sufficient evidence on which the retailer 

may rely to establish the product’s 

origin.’’). The commenter also requested 

that the Agency state specifically that 

retailers need not maintain any new or 

additional records documenting origin 

for those products that are pre-labeled 

on the product itself or on the box/ 

container when the box/container is 

visible to consumers, such as when it is 

used as part of a retail display. 

One commenter suggested sample and 

common technological standards such 

as the portable document format (PDF) 

or use of a common and interoperable 

database file system such as Microsoft 

Excel to enable both industry and the 

Agency to adopt a common computing 

platform. Another commenter suggested 

that the Agency should refer to the two 

different types of documents required to 

be maintained by retailers as 

Verification Records and Supplier 

records. The commenter suggested that 

the Agency should clarify in the final 

regulation that the information to satisfy 

both requirements may be on the same 

or different documents, provided all of 

the requirements are met. Several 

commenters encouraged the Agency to 

permit retailers to rely on the records 

that are currently maintained for 

Bioterrorism Act purposes. 

One commenter strongly supported 

the specific recognition that retailers 

may rely upon pre-labeled products as 

‘‘sufficient evidence’’ of the country of 

origin. The commenter stated that this is 

an important safe harbor for the produce 

and retail industries as an increasing 

share of fresh produce now arrives at 

retail stores pre-labeled with the 

country of origin. The commenter 

expressed concern that the IFR and the 

Agency’s Q&A documents are not 

written in a way that conveys this 

information accurately, which is 

creating significant confusion 

throughout the produce distribution 

chain. The commenter recommended 

that the Agency clearly define prelabeled products to include all produce 

items that bear a COOL declaration, 

regardless of any other information that 

may or may not be affixed directly to the 

produce item. In turn, the Agency must 

then specify that additional 

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recordkeeping at retail is not required 

for pre-labeled products as the vendor 

who supplied the pre-labeled produce 

has the responsibility to verify the 

claim. One commenter recommended 

that the Agency only require retailers to 

maintain the country of origin for 

covered products in the retail store for 

as long as the product is on hand. 

Agency Response: With regard to prelabeled covered commodities, the 

Agency has added a definition of prelabeled in this final rule. In addition, 

the Agency has clarified that for prelabeled products, the label itself is 

sufficient information on which the 

retailer may rely to establish the 

product’s origin and no additional 

records documenting origin information 

are necessary. However, the Agency 

does not agree with the commenter’s 

recommendation to change the order of 

the sentences with respect to the 

provision on pre-labeled products. 

With regard to the recommendation 

that the Agency adopt a common 

computing platform, the Agency does 

not have the authority to mandate a 

specific system. In addition, the Agency 

believes that retailers and suppliers 

should have the flexibility to choose 

whatever system works best in their 

particular operation. Accordingly, this 

recommendation is not adopted. 

With regard to the suggestion that the 

Agency should refer to the two different 

types of documents required to be 

maintained by retailers as Verification 

Records and Supplier records and that 

the Agency should clarify in the final 

regulation that the information to satisfy 

both requirements may be on the same 

or different documents provided all of 

the requirements are met, the Agency 

has added language to the preamble to 

indicate that the supplier and origin 

information needed to satisfy the COOL 

recordkeeping requirements can be in 

the same document or different 

documents. However, the Agency does 

not believe that any changes to how the 

required documents are referenced are 

necessary. Accordingly, these 

recommendations have been adopted in 

part. 

The Agency recognizes that several 

commenters encouraged the Agency to 

permit retailers to rely on the records 

that are currently maintained for 

Bioterrorism Act purposes. To the 

extent that these records contain the 

necessary information to meet the COOL 

recordkeeping requirements, the Agency 

agrees that records currently maintained 

to meet the requirements under the 

Bioterrorism Act can also be used to 

comply with the COOL recordkeeping 

requirements. 

With regard to the recommendation 

that the Agency only require retailers to 

maintain the country of origin for 

covered products in the retail store for 

as long as the product is on hand, under 

this final rule, records and other 

documentary evidence relied upon at 

the point of sale to establish a covered 

commodity’s country(ies) of origin must 

be either maintained at the retail facility 

for as long as the product is on hand or 

provided to any duly authorized 

representative of USDA in accordance 

with § 65.500(a)(2). For pre-labeled 

products, the label itself is sufficient 

information on which the retailer may 

rely to establish the product’s origin and 

no additional records documenting 

origin information are necessary. 

Accordingly, this recommendation has 

been adopted in part. 

Enforcement 

Liability Shield 

Summary of Comments: Several 

commenters discussed the concept of a 

‘‘liability shield’’ found in the interim 

final rule for fish and shellfish, but 

deleted from the interim final rule for 

the remaining covered commodities. 

The commenters noted that the Agency 

had previously contemplated a ‘‘shield’’ 

from liability for entities subject to the 

law on the theory that they should be 

permitted to reasonably rely on 

information provided by their suppliers. 

The commenters recommended that the 

Agency add a clarification to the final 

rule that will assure retailers that they 

will not be penalized when a retailers’ 

non-compliance results from the 

conduct of others. The commenters 

further stated that the interim final rule 

holds suppliers responsible for 

providing retailers with country-oforigin information and that because the 

statutory liability standard only 

penalizes retailers for ‘‘willful’’ 

violations, it follows that a retailer 

should not be held responsible for its 

supplier’s failure to provide COOL 

information or its supplier’s provision 

of inaccurate information. The 

commenters recognized that the Agency 

deleted the safe harbor language from 

the interim final rule for remaining 

covered commodities because that 

language created a negligence standard 

of liability instead of the willfulness 

standard specified in the 2008 Farm 

Bill. These commenters agreed that a 

willfulness standard is required by 

statute. However, they also stated that 

an explicit safe harbor should be 

restored to the rule, in addition to the 

willfulness standard the statute 

requires. Thus, paralleling the language 

that had been used in the safe harbor 

provision for the fish and shellfish 

interim rule, a safe harbor provision one 

commenter suggested new regulatory 

language, ‘‘No retailer shall be held 

liable for a violation of the Act by 

reason of the conduct of another unless 

the retailer acted willfully in the same 

regard’’. Another commenter strongly 

urged the Agency to reinstate the 

liability shield in the final rule, but 

given the change in the liability 

standard as a result of the 2008 Farm 

Bill, recommended alternative language. 

Agency Response: As noted by the 

commenters, the Agency deleted the 

liability shield language from the 

interim final rule for the remaining 

covered commodities because that 

language created a negligence standard 

of liability instead of the willfulness 

standard specified in the 2008 Farm 

Bill. Because of the willfulness standard 

contained in the 2008 Farm Bill, the 

Agency does not agree that the liability 

shield is necessary. However, to the 

extent that the liability shield language 

provides the industry with assurances 

that they will not be held liable for the 

conduct of others, the Agency believes 

that the liability shield is useful. 

Therefore, the Agency has included the 

liability shield provision in this final 

rule and has modified the language to 

reflect the willfulness standard 

contained in the 2008 Farm Bill. 

Accordingly, this recommendation has 

been adopted. 

Assurances Against Meat Recalls for 

COOL Violations 

Summary of Comments: Several 

commenters expressed concerns about 

how FSIS or other federal agency may 

use a country of origin labeling failure 

as a reason to recall pork and other meat 

products. These commenters noted that 

the law does not amend any food safety 

law and that it is not a food safety 

program. The commenters further stated 

since it is a marketing program, failure 

to properly label the origin of products 

in the retail meat case should not force 

a product recall. Many producers 

reported to be confused and fearful that 

this law will be used to assert product 

liability claims. These commenters 

requested clarification regarding the 

scope of the COOL law to eliminate this 

confusion. They asked that USDA 

clarify that any violation of COOL will 

not trigger a recall of meat products. 

Agency Response: As noted by the 

commenter, the intent of the law and 

this rule is to provide consumers with 

additional information on which to base 

their purchasing decisions. COOL is a 

retail labeling program and as such does 

not provide a basis for addressing food 

safety. Food products, both imported 

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and domestic, must meet the food safety 

standards of the FDA and FSIS and are 

subject to any recall requirements 

imposed by those agencies. The Agency 

does note that FSIS did publish an 

interim final rule (73 FR 50701) on 

labeling to address concerns with 

compliance of their voluntary labeling 

approval authority and requirements of 

the COOL program. In addition, FSIS 

provided guidance that inspection 

program personnel are not to take any 

action to enforce the FSIS interim final 

rule until further notice and that during 

the next six months, FSIS will defer to 

the AMS program of outreach and 

education to ensure that there is 

compliance. 

Timeframe for Implementation 

Summary of Comments: Numerous 

commenters provided suggestions about 

the Agency’s informed compliance 

period during which the Department 

will provide education and outreach to 

aid industry in understanding the 

requirements of the COOL program. 

Three commenters expressed 

appreciation for the 6-month phase-in 

period articulated in the rule and stated 

that the Agency must be prepared to 

provide producers, suppliers, retailers, 

and consumers with assistance to 

understand the regulations through 

guidance documents, seminars, and 

other resources that are readily available 

to the public during this period of 

informed compliance. One commenter 

pointed out that it will be critical for the 

AMS to work with officials with FSIS to 

ensure that there is common 

understanding between the two USDA 

agencies regarding questions that meat 

processing plant operators and federal 

meat inspectors may have. One 

commenter urged the Agency to 

withhold publishing a final rule until 

after the conclusion of the 6-month 

period in order to maximize the lessons 

learned under the interim final rule. 

Another commenter encouraged the 

Agency to provide as much time as 

possible to acclimate both retailers and 

those involved within the supply chain 

to the new requirements of the 

regulations prior to any enforcement. 

Several commenters expressed 

support that the requirements of the 

interim final rule do not apply to 

covered commodities produced or 

packaged before September 30, 2008. 

However, these commenters noted that 

many firms in the industry procure 

packaging materials for a year’s worth 

(or more) of production. The 

commenters recommended that given 

the short amount of time between the 

release of the Interim Final Rule and the 

effective date, companies subject to the 

rule be given a year from the effective 

date to use up existing packaging 

inventories, provided those packaging 

inventories were acquired prior to the 

effective date of the rule. One of these 

commenters expressed concern that a 6- 

month grace period will prove 

insufficient to implement a verifiable 

records system. This commenter stated 

that an 18-month implementation 

period will allow current nut products 

in the marketplace to rotate out and 

allow those in the field sufficient time 

to comply with all aspects of COOL. 

Another commenter was concerned 

about ensuring a reasonable phase-in 

period for the rule so that suppliers 

could use existing inventory to the 

greatest extent possible. This 

commenter supported a one-year phasein as opposed to 6 months because the 

shipping season for table grapes and tree 

fruit generally runs from May through 

October. Therefore, a 6-month phase in 

from October through March would be 

of little benefit for this food sector. 

Another commenter noted that retailers, 

processors, and producers have 

expressed their willingness to make a 

good faith effort to comply with COOL; 

however, it is not clear that the 6-month 

industry education and phase-in period 

is sufficient. They strongly encouraged 

USDA to extend this period to 12 

months in order that issues like 

recordkeeping and auditing the supply 

chain can be fully understood. 

Agency Response: In response to the 

commenters’ request that the Agency 

not publish the final rule until after the 

six month period of education and 

outreach, the Agency is moving forward 

in an expeditious manner of publishing 

the final rule in order to provide 

retailers and suppliers as well as all 

other interested parties with the 

requirements for a permanent program. 

The Agency will allow sufficient time 

for the regulated industries to adapt to 

the changes in this final rule and will 

continue to provide for a period of 

education and outreach. The Agency 

believes that the six month period 

provided for in the interim final rule is 

adequate time for retailers and suppliers 

to adapt to the COOL program 

requirements. In addition, the Agency 

will continue to ensure that retailers 

and suppliers are educated on the 

Agency’s compliance and enforcement 

procedures so that the regulated 

industries have clear expectations as to 

how the Agency will enforce this rule. 

With regard to using up existing 

packaging inventories, this final rule 

does not require that covered 

commodities are individually labeled 

with COOL information. Retailers can 

use placards and other signage to 

convey origin information. 

Miscellaneous 

WTO/NAFTA Trade Agreements 

Summary of Comments: Several 

commenters expressed concern that 

COOL may violate U.S. trade 

commitments under the World Trade 

Organization and the North American 

Free Trade Agreement, and that 

provisions of the COOL regulation 

ignore the reality of an integrated North 

American meat and livestock industry. 

Two foreign governments expressed that 

the amendments passed with the 2008 

Farm Bill are still cause for concern, and 

that as they have consistently expressed 

in the past, COOL requirements should 

be consistent with the United States’ 

international trade obligations. One 

commenter pointed out that the Codex 

General Standard for the Labeling of 

Prepackaged Food was considered 

adequate in the U.S. system for a 

number of years and will continue to 

remain the standard for retailers outside 

of the U.S. The commenter further 

stated that it remains the most practical, 

and also the most adaptable, to evolving 

commercial practice and growing 

international trade; and yet it is not the 

standard adopted in the COOL 

regulations. 

One commenter stated that the COOL 

statute and regulation will likely result 

in discrimination against imported 

product, contrary to U.S. obligations 

under the WTO Agreement on 

Technical Barriers to Trade. The 

commenter indicated that despite 

changes in the law and the IFR that have 

made it less onerous for regulated firms 

to comply with the requirements of the 

regulation, COOL will still discriminate 

against imported cattle and beef. This 

commenter warned that the industry 

practice of importing cattle for feeding 

and/or slaughter will be discouraged by 

the increased complexity associated 

with the identification, segregation, and 

labeling requirements mandated for the 

resulting products to be sold at retail. 

This commenter suggested that the 

simplest solution would be to allow 

processors and retailers to label ground 

product with ‘‘May contain U.S. and 

imported meat’’ with the option to list 

the specific countries if the producer or 

its customers so desired. Another 

commenter acknowledged that the IFR 

makes some concessions to earlier 

complaints by trading partners with 

concerns regarding the compatibility of 

COOL with the WTO obligations of the 

United States. 

Agency Response: With respect to the 

commenters’ concern regarding 

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international trade obligations, the 

Agency has considered these obligations 

throughout the rulemaking process and 

concludes that this regulation is 

consistent with U.S. international trade 

obligations. Further, as described more 

fully in the Summary of Changes section 

of this rule, the Agency has made a 

number of modifications in this final 

rule that provide additional labeling 

flexibilities. In addition, the Agency has 

worked closely with USDA’s Foreign 

Agricultural Service to educate U.S. 

trading partners on the requirements of 

COOL and to assist them in complying 

with the regulation. 

In regards to a commenter’s statement 

that when a food undergoes processing 

in a second country that changes its 

nature, the country in which the 

processing is performed shall be 

considered to be the country of origin 

for the purposes of labeling, existing 

CBP rules and regulations with respect 

to determining origin of imported 

products apply to the extent that it is 

permissible under the statute. However, 

it is not permitted under the statute to 

consider imported products that are 

substantially transformed in the U.S. to 

be of U.S. origin as they do not meet the 

definition of U.S. origin provided in the 

Act. 

With regard to the comment to allow 

a label to state ‘‘May contain U.S. and 

imported meats,’’ the Agency does not 

believe this type of labeling meets the 

intent of the statute. Accordingly, this 

recommendation is not adopted. 

COOL as a Food Safety Program 

Summary of Comments: Commenters 

expressed differing opinions regarding 

whether or not COOL serves as a food 

safety program. Several commenters 

expressed the opinion that COOL is a 

retail labeling program that does not 

provide a basis for addressing food 

safety. The commenters argued that the 

U.S. has a safe food safety system; that 

all meat sold at retail, whether grown 

domestically or imported, must be 

inspected and declared safe for human 

consumption; and that country of origin 

labeling is solely a marketing tool. One 

commenter found it particularly 

problematic that mandatory COOL has 

been portrayed by some advocates as 

contributing to efforts to make 

America’s food safe, yet there is no 

provision in the COOL statute or the 

interim final rule that prescribes food 

safety or inspection standards. Another 

noted that the food production, supply 

and retailing industry needs to help 

consumers understand that geography 

cannot become shorthand for food 

safety. Several commenters noted that 

Congressional intent is clear that COOL 

is not intended to be a traceability law, 

but merely to provide country of origin 

information to consumers. These 

commenters urged the Agency to 

implement COOL in a way that is true 

to its goal to inform consumers about 

where produce comes from, not create a 

new regulatory infrastructure. Other 

commenters noted their support for the 

provision of accurate information to 

consumers as required by the law and 

agreed with the Agency’s statement in 

the preamble that this law is not a food 

safety law. 

Two commenters wrote that COOL 

can serve as a risk management 

measure. One commenter suggested that 

developing countries, which may not 

have as stringent food safety regulations 

and/or have not implemented/enforced 

those regulations as rigorously as the 

U.S., may export hazardous food 

products. Another commenter referred 

to a GAO study that reported three 

elements of food-safety systems that 

were critical to respond to outbreaks of 

food borne illness: Traceback 

procedures that allow industry and 

government officials to quickly track 

food products to origin to minimize 

harm to consumers and the impact on 

business; cooperative arrangements 

between veterinarians and public health 

officials to document the names of 

suppliers and customers as well as the 

dates of delivery; and authority to recall 

a product from the market. The 

commenter noted that such food-safety 

systems depend on a verifiable chain of 

custody for food products that the 

COOL program can help institute. The 

commenter further stated that the COOL 

law provides for traceback provisions 

and for cooperative partnerships with 

states. 

Agency Response: As previously 

stated, the COOL program is neither a 

food safety or traceability program, but 

rather a consumer information program. 

Food products, both imported and 

domestic, must meet the food safety 

standards of the FDA and FSIS. Food 

safety and traceability are not the stated 

intent of the rule and the COOL program 

does not replace any other established 

regulatory programs that related to food 

safety or traceability. 

USDA COOL Labeling Surveys 

Summary of Comments: Two 

commenters requested that USDA 

conduct nationwide retail surveys to 

gather information regarding country of 

origin labeling. One commenter 

requested that the Agency conduct a 

‘‘nationwide retail meat labeling 

survey’’ within the year to discern the 

amount of product, the kind of product 

and the locations where exclusively 

U.S. labeled meat is being sold. The 

second commenter suggested that the 

Agency insert additional data entry 

points in the retail survey instrument 

used for existing retail reviews. The 

commenter encouraged the Agency to 

gather information relative to the 

availability and price of meat items by 

origin at the retail stores under review. 

Furthermore, the commenter requested 

this information be reported to the 

House Committee on Agriculture and 

the House Committee on Appropriations 

60 and 90 days after the labeling law 

takes effect. 

Agency Response: The Agency is 

currently reviewing possible methods to 

collect data relative to the availability 

and price of meat items by origin at the 

retail stores under review. The Agency 

will work with members of Congress to 

provide any information collected to the 

appropriate Congressional committees. 

Existing State Programs 

Summary of Comments: One 

commenter agreed that the Agency had 

properly concluded that the COOL law 

preempts conflicting federal and state 

laws. This commenter stated it is 

imperative that companies subject to the 

federal statute be subject to one uniform 

set of regulatory requirements. One 

commenter agreed that it is preferable 

for producers to have one law to govern 

compliance, but suggested it is also 

important that the maximum amount of 

product information be provided to 

consumers as intended by the COOL 

legislation. In the event of conflict, this 

commenter preferred that the Agency 

err on the side of more information to 

the consumer rather than less, and 

asked the Agency to allow the States 

maximum flexibility to enforce their 

own laws, if doing so will provide the 

most information to the consumer. 

Agency Response: This rule has been 

reviewed under Executive Order 13132, 

Federalism. This Order directs agencies 

to construe, in regulations and 

otherwise, a Federal statute to preempt 

State law only where the statute 

contains an express preemption 

provision or there is some other clear 

evidence to conclude that the Congress 

intended preemption of State law, or 

where the exercise of State authority 

conflicts with the exercise of Federal 

authority under the Federal statute. This 

rule is required by the 2002 Farm Bill, 

as amended by the 2008 Farm Bill. 

While this statute does not contain an 

express preemption provision, it is clear 

from the language in the statute that 

Congress intended preemption of State 

law. The law assigns enforcement 

responsibilities to the Secretary and 

encourages the Secretary to enter into 

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partnerships with States with 

enforcement infrastructure to assist in 

the administration of the program. 

Impacts on Livestock Producers and 

Meat Packers 

Summary of Comments: Several 

commenters felt that a large portion of 

the implementation costs will be 

shouldered by the meat production and 

packing industry because there is little 

evidence that consumers are willing to 

pay more for products bearing country 

of origin information and that these 

additional costs will not be successfully 

passed through the supply chain. These 

commenters concluded that the costs of 

COOL implementation and compliance 

will be highly detrimental to the 

livelihood of numerous small meat 

processors. One meat packer observed 

that COOL will require the company to 

incur additional costs due to the 

recordkeeping and labeling 

requirements. Due to the nature of the 

business, the company relies on 

livestock producers to provide and 

verify origin information, yet as the 

originator of covered commodities 

derived from those animals, the burden 

of proof is on the company in the event 

the source information is ever 

questioned. Because there is no 

universal animal identification system 

in place to provide meat processors with 

proper background information, meat 

processors do not have readily available 

information with which to accurately 

label covered products. One commenter 

noted that COOL costs to livestock 

producers will be $9 per head. This 

commenter was concerned that cattle 

owners will end up paying all costs as 

other sectors of the supply chain work 

on margin. This commenter urged 

USDA to consider costs when 

implementing this law since extra costs 

would be detrimental to consumers and 

producers. 

Numerous state and national pork 

producer organizations submitted 

comments contending that the majority 

of program costs would be driven by 

two factors: Disruption of product flow 

through packers caused by 

differentiated labels and record-keeping 

burdens for producers and packers. 

One commenter stated that since the 

true costs of COOL are as yet vague, and 

the burden of who is going to pay for the 

cost of additional recordkeeping 

requirements and labeling is unknown, 

the recordkeeping and documentation 

requirements should be designed so 

American producers do not end up 

paying for COOL. 

Agency Response: The Agency 

believes that firms and establishments 

throughout the supply chain for affected 

commodities will incur costs associated 

with the implementation of COOL. This 

includes producers, intermediaries, and 

retailers. Increased costs are likely to be 

absorbed by all firms and 

establishments throughout the supply 

chain and some costs may be passed on 

to consumers. 

As previously stated, the Agency 

believes that voluntary use of the 

National Animal Identification System 

is a straightforward option packers may 

utilize to obtain origin information on 

livestock. In addition, following the 

implementation of the August 1, 2008, 

interim final rule, a coalition of 

representatives from throughout the 

livestock and meat industries 

established a universal affidavit to 

convey country of origin information. 

This rule provides flexibility in how the 

required country of origin information is 

conveyed along the supply chain, thus 

enabling firms to implement the 

requirements with the least possible 

disruption to cost-efficient production 

methods and trade flows. 

Costs on Affected North American 

Industries 

Summary of Comments: One 

commenter expressed concern that 

COOL will impose unnecessary costs on 

affected North American industries. The 

commenter stated that the substantial 

volume of two-way trade between 

Canada and the United States has been 

a testament to the integrated and 

cooperative nature of many of our 

industries and that trade with Canada 

supports more than 7.1 million jobs in 

the United States. The commenter 

further stated that trade is also vital in 

the agricultural sector where Canada is 

the largest single-country export market 

for the United States with more than 

US$15 billion in sales last year. 

Agency Response: As discussed more 

fully in the Regulatory Impact Analysis, 

the results of the Computable General 

Equilibrium (CGE) model suggest that 

overall impacts on trade in livestock 

and meats will be relatively small. The 

rule allows considerable flexibility, thus 

enabling firms to implement the 

requirements with the least possible 

disruption to cost-efficient production 

methods and trade flows. 

Marketing Exclusion of Imported and 

Certain Domestically Produced Meat 

Summary of Comments: One 

commenter expressed concern about the 

impact that mandatory COOL will have 

on imported beef, particularly ground 

beef at retail. The commenter stated that 

mandatory origin labeling will add 

significantly to meat production costs at 

a time of rapidly increasing food costs, 

and consumers will have to bear the 

additional expense resulting from the 

labeling regime. This commenter was 

therefore concerned that retailers will be 

induced to simplify their labeling 

obligations by excluding imported and 

certain domestic beef from ground beef 

in order to minimize the resulting 

increase in the costs that will be 

associated with compliance. Another 

commenter reported that over the last 

several years, the total number of 

Mexican cattle crossing into the U.S. has 

ranged from 820,000 head to 1,200,000 

per year, and that those numbers per 

year represent less than a two-week kill 

volume on a national basis. The 

commenter concluded that the loss to 

both the Mexican rancher and the U.S. 

producer will be considerable. Another 

commenter indicated that there is no 

question that while a vast majority of 

fresh beef in the retail sector is U.S. 

beef, it remains a huge question as to the 

benefit of identifying U.S. beef and 

adding costs to the producers and to 

consumers. 

One commenter provided a more 

detailed assessment of potential costs 

associated with this legislation and its 

regulations. The commenter noted their 

belief that COOL is already causing 

economic losses and threatening the 

survival of the hog industry in 

Manitoba, Canada. The commenter 

pointed out that hog producers in 

Manitoba have developed an integrated 

supply chain with family hog farms in 

the mid-West U.S. by supplying over 

four million weanlings per year, and 

over one million finished pigs to 

packing plants in this area. Finally, the 

commenter stated that if the changes 

wrought in the marketplace by this 

legislation continue, Manitoba 

producers will lose about $200 million 

in finished hog sales to U.S. packers. 

This commenter reported that it is 

currently preparing an assessment of the 

immediate financial impact on its 

members and provided some examples 

of recent economic setbacks to 

producers. 

Agency Response: The Agency 

believes that there may be some 

adjustment costs as industry adapts to 

the requirements of the rule. Over the 

longer run, however, the Agency 

believes that uncertainty will lessen and 

firms will continue to seek sources of 

livestock and meat products consistent 

with efficient production and marketing 

operations. It is believed that the major 

cost drivers for the rule occur when 

livestock or other covered commodities 

are transferred from one firm to another, 

when livestock or other covered 

commodities are commingled in the 

production or marketing process, and 

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when products are assembled and then 

redistributed to retail stores. In part, 

some requirements of the rule will be 

accomplished by firms using essentially 

the same processes and practices as are 

currently used, but with information on 

country of origin added to the processes. 

This adaptation generally would require 

relatively small marginal costs for 

recordkeeping and identification 

systems. In other cases, however, firms 

may need to revamp current operating 

processes to implement the rule. For 

example, a processing or packing plant 

may need to sort incoming products by 

country of origin and, if applicable, 

method of production in addition to 

weight, grade, color, or other quality 

factors. This may require adjustments to 

plant operations, line processing, 

product handling, and storage. 

Ultimately, it is anticipated that a mix 

of solutions will be implemented by 

industry participants to effectively meet 

the requirements of the rule. 

Quantifying Benefits of COOL 

Summary of Comments: One 

commenter expressed disappointment 

that the Department continues to deny 

any benefits or consumer desire for 

COOL. This commenter stated that since 

the COOL debate began, the number of 

consumers and organizations supporting 

the mandatory program has only 

expanded. The commenter further 

stated that numerous surveys and polls 

have indicated that consumers 

overwhelmingly support COOL and are 

willing to pay a premium for U.S.-origin 

labeled products and cited a June 2007 

Consumer Reports poll, which found 92 

percent of consumers think food should 

be labeled with country of origin 

information. Several other commenters 

noted that all consumers will pay to 

secure these labeling benefits demanded 

by a small minority. 

Agency Response: As stated in the 

Regulatory Impact Analysis, the Agency 

concludes after reviewing many studies 

and comments, the economic benefits 

from COOL will be small and will 

accrue mainly to those consumers who 

desire country of origin information. 

Several analysts concluded that the 

main benefit is the welfare effect 

resulting from removing informational 

distortions associated with not knowing 

the origin of products. Numerous 

comments received during the 

rulemaking process indicate that there 

clearly is interest by some consumers in 

the country of origin of food. The 

mandatory COOL program may provide 

additional benefits to these consumers. 

However, commenters provided no 

additional substantive evidence to alter 

the Agency’s conclusion that the 

measurable economic benefits of 

mandatory COOL will be small. 

Additional information and studies 

cited by commenters were of the same 

type identified in the IRIA—namely, 

consumer surveys and willingness-topay studies, including the most recent 

studies reviewed for this analysis. The 

Agency does not believe that these types 

of studies provide a sufficient basis to 

estimate the quantitative benefits, if any, 

of COOL. 

Improvements That Reduce COOL Costs 

Summary of Comments: One 

commenter noted that USDA has made 

the definition of a ‘‘processed food 

item’’ consistent with the definition 

used in the interim final rule for fish 

and shellfish, thereby reducing the 

number of affected establishments 

significantly. The commenter further 

noted that the estimated first-year 

implementation cost per producer 

operation is an average of $258, 

significantly lower than previously 

stated. This commenter regarded the 

implementation cost estimate as 

generally accurate. Another commenter 

noted that the use of producer affidavits 

and reliance on visual inspection 

should satisfactorily reduce costs of 

program compliance since import 

brands are highly visible. Another 

commenter pointed out that 

Congressional intent regarding the level 

of burden this law should impose on 

industry is clear. In the 2008 Farm Bill, 

Congress included provisions that 

expressly restrict USDA’s ability to 

impact current business practices under 

the mandatory country of origin labeling 

law. 

A final commenter added comments 

related to USDA’s administration of the 

program. This commenter believes the 

final rule should make it clear that it is 

essential that all costs to administer this 

program must be supported by USDA’s 

appropriated budget, and should not be 

paid by an assessment of user fees or 

divert USDA staff time and commitment 

from other AMS programs for which 

user fees are required. 

Agency Response: The Agency is 

implementing COOL in the most costeffective way available while still 

meeting Congressional mandates. The 

Agency currently receives appropriated 

funds for the administration of the 

mandatory COOL program for fish and 

shellfish. As the budget for fiscal year 

2009 has not yet been passed, it is 

unknown at this time whether the 

COOL program will received additional 

appropriated funds to administer the 

program for all covered commodities. 

COOL as an Economic Barrier to Entry 

Summary of Comments: One 

commenter predicted that COOL will 

provide an economic barrier to entry for 

smaller companies that may wish to 

enter the food supply industry. This 

commenter noted that consumers who 

wish to avoid products that do not 

declare the country of origin are already 

free to do so. As a result, this 

commenter predicted that COOL will 

cost all consumers, but particularly 

those consumers who do not demand 

country of origin information. 

Agency Response: The Agency agrees 

that COOL will benefit those consumers 

who are seeking and using country-oforigin information in their purchasing 

decisions. However, the costs will be 

absorbed by all consumers shopping at 

covered retailers. The Agency disagrees 

that COOL will provide a barrier to 

entry for smaller companies that may 

wish to enter the food supply industry. 

These companies may decide to supply 

products to retailers or food service 

companies not covered by COOL. There 

is little evidence to support conclusions 

that complying with COOL is more 

costly for small firms as opposed to 

larger firms. Indeed, the likelihood is 

that smaller-scale operations would 

have more flexibility in implementation 

of COOL requirements compared to 

larger operations. 

Executive Order 12866—Final 

Regulatory Impact Analysis 

USDA has examined the economic 

impact of this final rule as required by 

Executive Order 12866. USDA has 

determined that this regulatory action is 

economically significant, as it is likely 

to result in a rule that would have an 

annual effect on the economy of $100 

million or more in any one year. This 

rule has been reviewed by the Office of 

Management and Budget (OMB). 

Executive Order 12866 and OMB 

Circular A–4 requires that a regulatory 

impact analysis be performed on all 

economically significant regulatory 

actions. 

This final rule defines covered 

commodities as muscle cuts of beef, 

lamb, goat, pork, and chicken; ground 

beef, ground lamb, ground pork, ground 

goat, and ground chicken; wild and 

farm-raised fish and shellfish; 

perishable agricultural commodities; 

ginseng; peanuts; macadamia nuts; and 

pecans. Thus, this regulatory impact 

assessment addresses the economic 

impacts of all covered commodities as 

defined by law. 

This regulatory impact assessment 

reflects revisions to the Interim 

Regulatory Impact Assessment (IRIA) 

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2682 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

(73 FR 45106). Revisions to the IRIA 

were made as a result of changes to the 

rule relative to the August 1, 2008, 

interim final rule, and the interim final 

rule for wild and farm-raised fish and 

shellfish published October 5, 2004, 

Federal Register (69 FR 89708). 

The Comments and Responses section 

includes the comments received and 

provides the Agency’s responses to the 

comments. When substantially 

unchanged, results of the IRIA are 

summarized herein, and revisions are 

described in detail. Interested readers 

are referred to the text of the IRIA for 

a more comprehensive discussion of the 

assumptions, data, methods, and results. 

Summary of the Economic Analysis 

The estimated economic benefits 

associated with this final rule are likely 

to be small. The estimated first-year 

incremental costs for growers, 

producers, processors, wholesalers, and 

retailers are $2.6 billion. The estimated 

cost to the United States economy in 

higher food prices and reduced food 

production in the tenth year after 

implementation of the rule is $211.9 

million. 

Note that this analysis does not 

quantify certain costs of the rule such as 

the cost of the rule after the first year, 

or the cost of any supply disruptions or 

any other ‘‘lead-time’’ issues. Except for 

the recordkeeping requirements, there is 

insufficient information to distinguish 

between first year start up and 

maintenance costs versus ongoing 

maintenance costs for this final rule. 

Maintenance costs beyond the first year 

are expected to be lower than the 

combined start up and maintenance 

costs required in the first year. 

While USDA recognizes that there 

appears to be consumer interest in 

knowing the origin of food based on the 

comments received, USDA finds little 

evidence that private firms are unable to 

provide consumers with country of 

origin labeling (COOL) consistent with 

this regulation, if consumers are willing 

to pay a price premium for it. USDA 

also finds little evidence that consumers 

are likely to increase their purchase of 

food items bearing the United States 

origin label as a result of this 

rulemaking. Current evidence does not 

suggest that United States producers 

will receive sufficiently higher prices 

for United States-labeled products to 

cover the labeling, recordkeeping, and 

other related costs. The lack of 

widespread participation in voluntary 

programs for labeling products of 

United States origin provides evidence 

that consumers do not have strong 

enough preferences for products of 

United States origin to support price 

premiums sufficient to recoup the costs 

of labeling. 

Statement of Need 

Justification for this final rule remains 

unchanged from the IRIA. This rule is 

the direct result of statutory obligations 

to implement the COOL provisions of 

the 2002 and 2008 Farm Bills. There are 

no alternatives to federal regulatory 

intervention for implementing this 

statutory directive. 

The COOL provisions of the Act 

changed federal labeling requirements 

for muscle cuts of beef, pork, lamb, goat, 

and chicken; ground beef, ground pork, 

ground lamb, ground goat, and ground 

chicken; wild and farm-raised fish and 

shellfish; perishable agricultural 

commodities; ginseng; peanuts; 

macadamia nuts; and pecans (hereafter, 

covered commodities). 

As described in the IRIA, the 

conclusion remains that there does not 

appear to be a compelling market failure 

argument regarding the provision of 

country of origin information. 

Comments received on the IRIA and 

previous requests for comments elicited 

no evidence of significant barriers to the 

provision of this information other than 

private costs to firms and low expected 

returns. Thus, from the point of view of 

society, such evidence suggests that 

market mechanisms would ensure that 

the optimal level of country of origin 

information would be provided. 

Alternative Approaches 

The IRIA noted that many aspects of 

the mandatory COOL provisions 

contained in the Act are prescriptive 

and provide little regulatory discretion 

for this rulemaking. As stated 

previously, this final rule provides 

flexibility in implementation to the 

extent allowed by the statute. Some 

commenters suggested that USDA 

explore more opportunities for less 

costly regulatory alternatives. Specific 

suggestions focused on methods for 

identifying country of origin, 

recordkeeping requirements, and the 

scope of products required to be labeled. 

A number of comments on the IRIA 

and previous requests for comment 

suggested that USDA adopt a 

‘‘presumption of United States origin’’ 

standard for identifying commodities of 

United States origin. Under this 

standard, only imported livestock and 

covered commodities would be required 

to be identified and tracked according to 

their respective countries of origin. Any 

livestock or covered commodity not so 

identified would then be considered by 

presumption to be of United States 

origin. As stated in this final rule, the 

Agency is allowing for producers to 

issue affidavits based upon a visual 

inspection at or near the time of sale 

that identifies the origin of livestock for 

a specific transaction. Affidavits based 

on visual inspection may only be issued 

by the producer or owner prior to, and 

including, the sale of the livestock for 

slaughter (i.e., meat packers are not 

permitted to use visual inspection for 

origin verification). 

A number of commenters suggested 

that USDA reduce the recordkeeping 

burden for the rule. For retailers, this 

rule requires records and other 

documentary evidence relied upon at 

the point of sale by the retailer to 

establish a covered commodity’s 

country(ies) of origin and method of 

production (wild and/or farm-raised), as 

applicable, to be either maintained at 

the retail facility or at another location 

for as long as the product is on hand and 

provided to any duly authorized 

representative of USDA, upon request, 

within 5 business days of the request. 

For pre-labeled products, the label itself 

is sufficient information on which the 

retailer may rely to establish the 

product’s origin and method of 

production, as applicable, and no 

additional records documenting origin 

and method of production information 

are necessary. Under the August 1, 

2008, interim final rule, retailers were 

required to maintain these records for a 

period of 1 year. 

These changes in recordkeeping 

requirements should lessen the number 

of changes that entities in the 

distribution chain need to make to their 

recordkeeping systems and should 

lessen the amount of data entry that is 

required. 

As noted in the IRIA, the law stated 

that COOL applies to the retail sale of 

covered commodities other than fish 

and shellfish beginning September 30, 

2008. The implementation date for fish 

and shellfish covered commodities was 

September 30, 2004. 

III. Analysis of Benefits and Costs 

As in the IRIA, the baseline for this 

analysis is the present state of the 

affected industries absent mandatory 

COOL. USDA recognizes that most 

affected firms have already begun to 

implement changes in their operations 

to accommodate the law and the 

requirements of the August 1, 2008, 

interim final rule. Therefore, we will 

also discuss changes in the final rule 

analysis due to regulatory changes 

between the IFR and final rule. 

Because the Act contains an effective 

date of September 30, 2004, for wild and 

farm-raised fish and shellfish and 

September 30, 2008, for all other 

covered commodities, the economic 

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impacts of the rule will be staggered by 

four years. The analysis herein of 

benefits and costs of the rule abstracts 

away from the staggered dates of 

implementation and treats all 

commodities as having the same 

effective date of implementation. Since 

a two-pronged approach was used to 

estimate the costs of this rule, direct fish 

and shellfish costs have been updated 

using more recent data and included to 

estimate the overall impacts of this rule 

on the United States economy even 

though labeling of fish and shellfish was 

implemented in 2004. The results of the 

analysis are not significantly affected by 

this simplifying assumption. 

Benefits: The expected benefits from 

implementation of this rule are difficult 

to quantify. The Agency’s conclusion 

remains unchanged, which is that the 

economic benefits will be small and will 

accrue mainly to those consumers who 

desire country of origin information. 

Several analysts conclude that the main 

benefit is the welfare effect resulting 

from removing informational distortions 

associated with not knowing the origin 

of products (Ref. 1). Numerous 

comments received on previous COOL 

rulemaking actions indicate that there 

clearly is interest by some consumers in 

the country of origin of food. The 

mandatory COOL program may provide 

additional benefits to these consumers. 

However, commenters provided no 

additional substantive evidence to alter 

the Agency’s conclusion that the 

measurable economic benefits of 

mandatory COOL will be small. 

Additional information and studies 

cited by commenters were of the same 

type identified in the IRIA—namely, 

consumer surveys and willingness-topay studies, including the most recent 

studies reviewed for this analysis (Ref. 

2; Ref. 3). The Agency does not believe 

that these types of studies provide a 

sufficient basis to estimate the 

quantitative benefits, if any, of COOL. 

There are several limitations with the 

willingness-to-pay contingent valuation 

studies that call into question the 

appropriateness of using this approach 

to make determinations about the 

benefits to consumers of this rule. First, 

respondents in such studies may 

overstate their willingness to pay for a 

product. This typically happens because 

survey participants are not constrained 

by their normal household budgets 

when they are deciding which product 

or product feature they most value. 

Second, in most of these willingness-topay studies, consumers are not faced 

with the actual or full choices they 

would face at retail outlets, such as all 

of the labeling options allowed under 

this final rule. In practice, this may 

distort valuations obtained from such 

studies, leading to both over and 

underestimation. Finally, the results 

reported from these studies do not take 

into account changes in consumers’ 

preferences for a particular product or 

product attribute over time. 

As was the case in the interim final 

rule for fish and shellfish, a few 

commenters suggested that mandatory 

COOL would provide food safety 

benefits to consumers. As discussed in 

the IRIA, mandatory COOL does not 

address food safety issues. Appropriate 

preventative measures and effective 

mechanisms to recall products in the 

event of contamination incidents are the 

means used to protect the health of the 

consuming public regardless of the form 

in which a product is consumed or 

where it is purchased. In addition, foods 

imported into the United States must 

meet food safety standards equivalent to 

those required of products produced 

domestically. 

Costs: To estimate the costs of this 

rule, a two-pronged approach was 

employed. First, implementation costs 

for firms in the industries directly 

affected by the rule were estimated. The 

implementation costs on directly 

affected firms represent increases in 

capital, labor, and other input costs that 

firms will incur to comply with the 

requirements of the rule. These costs are 

expenses that these particular firms 

must incur, and thus represent the 

opportunity costs of the rulemaking. 

These costs, however, are not 

necessarily dead weight losses to the 

United States economy, as measured by 

the value of goods and services that are 

produced. This is simply because 

increases in capital, labor, and other 

inputs necessary to comply with the 

rule will benefit the providers of such 

inputs. In order to estimate the net 

decrease in economic activity as a result 

of this rulemaking, the implementation 

cost estimates were applied to a general 

equilibrium model to estimate overall 

impacts on the United States economy 

after a 10-year period of economic 

adjustment. The general equilibrium 

model provides a means to estimate the 

change in overall consumer purchasing 

power after the economy has adjusted to 

the requirements of the rule. In 

addition, since the Department has not 

identified a market failure associated 

with this rulemaking and therefore does 

not believe the rule would have 

measurable economic benefits, we 

believe this net decrease in economic 

activity can be considered the overall 

net costs (benefits minus costs) of this 

rulemaking. 

Details of the data, sources, and 

methods underlying the cost estimates 

are provided in the IRIA and the 

previous PRIA’s. This section provides 

the revised cost estimates and describes 

revisions made to the IRIA for this final 

analysis. 

First-year incremental costs for 

directly affected firms are estimated at 

$2.6 billion, an increase of $0.1 billion 

over the IRIA due to the inclusion of 

fish and shellfish. Costs per firm are 

estimated at $370 for producers, $48,219 

for intermediaries (such as handlers, 

importers, processors, and wholesalers), 

and $254,685 for retailers. 

To assess the overall net impacts of 

the higher costs of production resulting 

from the rule, a computational general 

equilibrium (CGE) model of the model 

of the United States economy developed 

by USDA’s Economic Research Service 

(ERS) (Ref 4) was used. The model was 

adjusted by imposing the estimated 

implementation costs on the directly 

impacted segments of the economy. 

That is, the costs of production for 

directly affected firms increase due to 

the costs of implementing the COOL 

program. These increased costs of 

production were imposed on the CGE 

model. The model estimates changes in 

prices, production, exports, and imports 

as the directly impacted industries 

adjust to higher costs of production over 

the longer run (10 years). The CGE 

model covers the whole United States 

economy, and estimates how other 

segments of the economy adjust to 

changes emanating from the directly 

affected segments and the resulting 

change in overall productivity of the 

economy. 

Overall net costs to the United States 

economy in terms of reduced 

purchasing power resulting from a loss 

in productivity after a 10-year period of 

adjustment are estimated at $211.9 

million in the tenth year. Domestic 

production for all of the covered 

commodities at the producer and retail 

levels is estimated to be lower, and 

prices are estimated to be higher, 

compared to the absence of this 

rulemaking. In addition, United States 

exports are estimated to decrease for all 

covered commodities. Compared to the 

baseline of no mandatory COOL, United 

States imports are estimated to increase 

for fruits and vegetables, cattle and 

sheep, hogs, chicken, and fish. United 

States imports of broilers, beef and veal, 

and pork are estimated to decrease. 

The findings indicate that, consistent 

with standard economic theory, directly 

affected industries recover the higher 

costs imposed by the rule through 

slightly higher prices for their products. 

With higher prices, the quantities of 

their products demanded also decline. 

Consumers pay slightly more for the 

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2684 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

products and purchase less of the 

covered commodities. Overall, the 

model indicates that the net loss to 

society, or ‘‘deadweight’’ burden of the 

rule, is considerably smaller than the 

incremental opportunity costs to 

directly affected firms that were 

imposed on the model. The remainder 

of this section describes in greater detail 

how the estimated direct, incremental 

costs and the overall costs to the United 

States economy are developed. 

Cost assumptions: This rule directly 

regulates the activities of retailers (as 

defined by the law) and their suppliers. 

Retailers are required by the rule to 

provide country of origin information 

for the covered commodities that they 

sell, and firms that supply covered 

commodities to these retailers must 

provide them with this information. In 

addition, virtually all other firms in the 

supply chain for the covered 

commodities are potentially affected by 

the rule because country of origin 

information will need to be maintained 

and transferred along the entire supply 

chain. 

Number of firms and number of 

establishments affected: This rule is 

estimated to directly or indirectly affect 

approximately 1,333,000 establishments 

owned by approximately 1,299,000 

firms. Table 1 provides estimates of the 

affected firms and establishments. 

TABLE 1—ESTIMATED NUMBER OF AFFECTED ENTITIES

Type Firms Establishments 

Beef, Lamb, Pork, and Goat 

Cattle and Calves ................................................................................................................................. 971,400 971,400 

Sheep and Lambs ................................................................................................................................ 69,090 69,090 

Hogs and Pigs ...................................................................................................................................... 65,540 65,540 

Goats .................................................................................................................................................... 9,146 9,146 

Stockyards, Dealers & Market Agencies .............................................................................................. 6,807 6,807 

Livestock Processing & Slaughtering ................................................................................................... 2,943 3,207 

Meat & Product Wholesale ................................................................................................................... 2,509 2,706 

Chicken 

Chicken Producer and Processor ........................................................................................................ 38 168 

Chicken Wholesaler/Distributor ............................................................................................................ 510 564 

Fish 

Farm-Raised Fish and Shellfish ........................................................................................................... 3,752 3,752 

Fishing .................................................................................................................................................. 71,128 71,142 

Fresh & Frozen Seafood Processing ................................................................................................... 516 590 

Fish & Seafood Wholesale ................................................................................................................... 2,254 2,330 

Perishable Agricultural Commodities 

Fruits & Vegetables .............................................................................................................................. 79,800 79,800 

Ginseng Farms ..................................................................................................................................... 190 190 

Ginseng Dealers ................................................................................................................................... 46 46 

Frozen fruit, juice & vegetable mfg ...................................................................................................... 155 247 

Fresh fruit & vegetable wholesale ........................................................................................................ 4,654 5,016 

Peanuts, Pecans, & Macadamia Nuts 

Peanut Farming .................................................................................................................................... 650 650 

Macadamia Farming ............................................................................................................................. 53 53 

Pecan Farming ..................................................................................................................................... 1,119 1,119 

Roasted nuts & peanut butter mfg ....................................................................................................... 8 9 

Peanut, Pecan, & Macadamia Wholesalers ......................................................................................... 5 5 

General line grocery wholesalers ................................................................................................................ 3,037 3,436 

Retailers ....................................................................................................................................................... 4,040 36,392 

Totals: 

Producers ...................................................................................................................................... 1,271,906 1,272,050 

Handlers, Processors, & Wholesalers .......................................................................................... 23,444 24,963 

Retailers ........................................................................................................................................ 4,040 36,392 

Grand Total ............................................................................................................................ 1,299,390 1,333,405 

It is assumed that all firms and 

establishments identified in Table 1 will 

be affected by the rule, although some 

may not produce or sell products 

ultimately within the scope of the rule. 

While this assumption likely overstates 

the number of affected firms and 

establishments, it is believed that the 

assumption is reasonable. Detailed data 

are not available on the number of 

entities categorized by the marketing 

channels in which they operate and the 

specific products that they sell. 

Source of cost estimates: To develop 

estimates of the cost of implementing 

this rule, comments on the interim final 

rule for beef, pork, lamb, chicken, goat 

meat, perishable agricultural 

commodities, peanuts, pecans, ginseng, 

and macadamia nuts as well as the 

interim final rule for fish and shellfish 

were reviewed and available economic 

studies were also examined. No single 

source of information, however, 

provided comprehensive coverage of all 

economic benefits and costs associated 

with mandatory COOL for all of the 

covered commodities. Available 

information and knowledge about the 

operation of the supply chains for the 

covered commodities were used to 

synthesize the findings of the available 

studies about the rule’s potential costs. 

Cost drivers: This rule is a retail 

labeling requirement. Retail stores 

subject to this rule will be required to 

inform consumers as to the country of 

origin of the covered commodities that 

they sell. To accomplish this task, 

individual package labels or other pointof-sale materials will be required. If 

products are not already labeled by 

suppliers, the retailer will be 

responsible for labeling the items or 

providing the country of origin and, as 

applicable, method of production 

information through other point-of-sale 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2685 

materials. This may require additional 

retail labor and personnel training. 

Modification of existing recordkeeping 

systems will likely be required to ensure 

that products are labeled accurately and 

to permit compliance and enforcement 

reviews. For most retail firms of the size 

defined by the statute (i.e., those 

retailing fresh and frozen fruits and 

vegetables with an invoice value of at 

least $230,000 annually), it is assumed 

that recordkeeping will be 

accomplished primarily by electronic 

means. Modifications to recordkeeping 

systems will require software 

programming and may entail additional 

computer hardware. Retail stores are 

also expected to undertake efforts to 

ensure that their operations are in 

compliance with the rule. 

Prior to reaching retailers, most 

covered commodities move through 

distribution centers or warehouses. 

Direct store deliveries (such as when a 

local truck farmer delivers fresh 

produce directly to a retail store) are an 

exception. Distribution centers will be 

required to provide retailers with 

country of origin and, as applicable, 

method of production information. This 

likely will require modification of 

existing recordkeeping processes to 

ensure that the information passed from 

suppliers to retail stores permits 

accurate product labeling and permits 

compliance and enforcement reviews. 

Additional labor and training may be 

required to accommodate new processes 

and procedures needed to maintain the 

flow of country of origin and, as 

applicable, method of production 

information through the distribution 

system. There may be a need to further 

separate products within the warehouse, 

add storage slots, and alter product 

stocking, sorting, and picking 

procedures. 

Packers and processors of covered 

commodities will also need to inform 

retailers and wholesalers as to the 

country of origin and, as applicable, 

method of production (wild and/or 

farm-raised) of the products that they 

sell. To do so, their suppliers will need 

to provide documentation regarding the 

country of origin and, as applicable, 

method of production of the products 

that they sell. The efficiency of 

operations may be affected as products 

move through the receiving, storage, 

processing, and shipping operations. 

For packers and processors handling 

products from multiple origins and/or 

methods of production, there may also 

be a need to separate shifts for 

processing products from different 

origins, or to split processing within 

shifts, or to alter labels to correctly 

identify the country or countries of 

origin and method or methods of 

production, as applicable. However, in 

the case of meat covered commodities, 

there is flexibility in labeling covered 

commodities of multiple origins under 

this final rule. In the case where 

products of different origins are 

segregated, our analysis indicates costs 

are likely to increase. The rule requires 

that records be maintained to ensure 

that accurate country of origin 

information is retained throughout the 

process and available to permit 

compliance and enforcement reviews. 

Processors handling only domestic 

origin products or products from a 

single country of origin may have lower 

implementation costs compared with 

processors handling products from 

multiple origins, although such costs 

would likely be mitigated in those cases 

where firms are only using covered 

commodities which are multiple-origin 

labeled. Procurement costs also may be 

unaffected in this case, if the processor 

is able to continue sourcing products 

from the same suppliers. Alternatively it 

is possible that a processor currently 

sourcing products from multiple 

countries may choose to limit its source 

to fewer countries. In this case, such 

cost avoidance may be partially offset by 

additional procurement costs to source 

supplies from a narrower country of 

origin. Additional procurement costs of 

a narrower supply chain may include 

higher transportation costs due to longer 

shipping distances and higher 

acquisition costs due to supply and 

demand conditions for products from a 

particular country of origin, whether 

domestic or foreign. 

At the production level, agricultural 

producers and fish and shellfish 

harvesters need to maintain records to 

establish country of origin and, as 

applicable, method of production 

information for the products they 

produce and sell. Country of origin and, 

as applicable, method of production 

information will need to be transferred 

to the first handler of their products, 

and records sufficient to allow the 

source of the product to be traced back 

will need to be maintained as the 

products move through the supply 

chains. For all covered commodities, 

producer affidavits shall be considered 

acceptable records on which suppliers 

may rely to initiate country of origin 

and, as applicable, method of 

production claims. In general, 

additional producer costs include the 

cost of modifying and maintaining a 

recordkeeping system for country of 

origin information, animal or product 

identification, and labor and training. 

Incremental cost impacts on affected 

entities: To estimate the direct costs of 

this rule, the focus is on those units of 

production that are affected (Table 2). 

TABLE 2—ESTIMATED ANNUAL UNITS OF PRODUCTION AFFECTED BY MANDATORY COUNTRY OF ORIGIN LABELING

Beef Pork Lamb and 

goat Chicken Fish 

Fruit, 

vegetable, 

and ginseng 

Peanuts, 

pecans, and 

macadamia 

nuts 

Million head Million pounds 

Producer ................................................... 33.9 104.8 2.9 45,012.9 7,808.0 120,388.5 212.7 

Million pounds 

Intermediary ............................................. 24,890 6,721 354 27,710 3,024 99,449 11 

Retailer ..................................................... 8,193 2,330 133 17,645 1,104 47,078 5 

For livestock, the relevant unit of 

production is an animal because there 

will be costs associated with 

maintaining country of origin 

information on each animal. These costs 

may include recordkeeping, ear tagging, 

and other related means of 

identification on either an individual 

animal or lot basis. Annual domestic 

slaughter numbers are used to estimate 

the flow of animals through the live 

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animal production segment of the 

supply chain. 

For fish and chicken producers, 

production is measured by round 

weight (live weight) pounds, except 

mollusks, which excludes the weight of 

the shell. Wild caught fish and shellfish 

production is measured by United 

States domestic landings for fresh and 

frozen human food. It is assumed that 

fish harvesters generally know whether 

their catch is destined for fresh and 

frozen markets, canning, or industrial 

use. Fish production also includes farmraised fish. Fish production has been 

updated with 2006 data from the 

regulatory analysis contained in the 

interim final rule for fish and shellfish. 

For fruits and vegetables, it is 

assumed that essentially all production 

is predestined for either fresh or 

processing use. That is, growers know 

before the crop is produced whether it 

will be sold for fresh consumption or for 

processing. However, producers do not 

know whether their products ultimately 

will be sold to retailers, foodservice 

firms, or exporters. Therefore, it is 

assumed that all fresh fruit and 

vegetable production and production 

destined for frozen processors at the 

producer level will be affected by this 

rule. Ginseng production has been 

included with the fruit and vegetable 

production. 

As previously discussed, only green 

and raw peanuts, macadamia nuts, and 

pecans sold at retail are subject to the 

requirements of this rule. Green and raw 

peanuts are specialty items typically 

sold at roadside stands, through mail 

order, and at specialty shops. These 

items frequently are not carried by many 

of the retailers subject to this rule. 

Statistics on the size of this niche 

market are not readily available. It is 

assumed that no more than 5 percent of 

the sales of peanuts at subject retailers 

are sold as green or raw peanuts. 

Macadamia nuts and pecans have been 

included with peanuts. 

It is assumed that all sales by 

intermediaries such as handlers, 

packers, processors, wholesalers, and 

importers will be affected by the rule. 

Although some product is destined 

exclusively for foodservice or other 

channels of distribution not subject to 

the rule, it is assumed that these 

intermediaries will seek to keep their 

marketing options open for possible 

sales to subject retailers. 

Fish production at the intermediary 

level is increased by 505 million pounds 

from the RIA estimate of 2004 in the 

interim final rule for fish and shellfish 

due to more recently available data. 

Information and data on ginseng is 

limited. However, the Wisconsin 

Department of Agriculture reports the 

number of growers at 190, the number 

of dealers at 46, and grower sales at 

282,055 dry root pounds for 2006 (Ref. 

5). While some other regions in the 

country likely produce ginseng, 

information could not be found and it 

is believed that Wisconsin is the largest 

producing state. The information from 

Wisconsin likely underestimates the 

total number of farms, dealers, and 

production of ginseng. However, it is 

believed that Wisconsin represents most 

of the ginseng production and therefore, 

this information is used for this rule. 

Since the number of entities and 

production are likely underestimated 

and the production is relatively small as 

compared to other covered 

commodities, the production was not 

adjusted for retail consumption. 

The Census of Agriculture provides 

an estimate of the number of macadamia 

nut farming operations. The total 

number of macadamia farms is 

estimated at 1,059 [Ref. 6]. Businesses 

that husk and crack macadamia nuts are 

unofficially estimated by the Hawaii 

Field Office of the National Agricultural 

Statistical Service (NASS) at 8 firms and 

establishments. Businesses that 

wholesale macadamia nuts are 

estimated by the Hawaii Department of 

Agriculture at 21 firms and 

establishments. Similar to peanuts, the 

rule exempts most product forms of 

macadamia nuts sold at retail. While 

data on macadamia nuts sold at retail 

that are covered by this rule are not 

available, the volume of sales is 

certainly very small. For purposes of 

estimation, the number of affected 

entities at each level of the macadamia 

nut sector has been reduced to 5 percent 

of the total estimated. The number of 

farms has been reduced from 1059 to 53 

and the number of wholesalers has been 

reduced from 21 to 1. 

The Census of Agriculture provides 

an estimate of 22,371 pecan farming 

operations [Ref. 7]. Similar to peanuts 

and macadamia nuts, the rule exempts 

most product forms of pecans sold at 

retail. For purposes of estimation, the 

number of affected entities at each level 

of the pecan sector has been reduced to 

5 percent of the total 22,371 to 1,119 

farms. 

As with peanut, macadamia nut, and 

pecan production at the producer level, 

peanut, macadamia nut, and pecan 

production at the intermediary level is 

also reduced by 95 percent. The 

estimate of peanut, macadamia nut, and 

pecan production is intended to include 

only green and raw peanuts, macadamia 

nuts, and pecans. 

For retailers, food disappearance 

figures are adjusted to estimate 

consumption through retailers as 

defined by the statute. For each covered 

commodity, disappearance figures are 

multiplied by 0.470, which represents 

the estimated share of production sold 

through retailers covered by this rule. 

To derive this share, the factor of 0.622 

is used to remove the 37.8 percent food 

service quantity share of total food in 

2006 (Ref. 8). This factor is then 

multiplied by 0.756, which was the 

share of sales by supermarkets, 

warehouse clubs and superstores of food 

for home consumption in 2006 (Ref. 9). 

In other words, supermarkets, 

warehouse clubs and superstores 

represent the retailers as defined by 

PACA, and these retailers are estimated 

to account for 75.6 percent of retail sales 

of the covered commodities. 

Table 3 summarizes the direct, 

incremental costs that firms will incur 

during the first year as a result of this 

rule. These estimates are derived 

primarily from the available studies that 

addressed cost impacts of mandatory 

COOL. 

TABLE 3—ESTIMATES OF FIRST-YEAR IMPLEMENTATION COSTS PER AFFECTED INDUSTRY SEGMENT

[Million dollars] 

Beef Pork Lamb & 

goat Chicken Fish 

Fruit, 

vegetable, 

and ginseng 

Peanuts, 

pecans, & 

macadamia 

nuts 

Total 

Producer ........................... 305 105 10 0 20 30 0 470 

Intermediary ..................... 373 101 5 139 15 497 0 1,130 

Retailer ............................. 574 93 5 44 77 235 0 1,029 

Total .......................... 1,252 299 21 183 112 763 0 2,629 

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Assumptions and procedures 

underlying the cost estimates are 

described fully in the discussion of the 

estimates presented in the PRIA and the 

IRIA. 

Considering all producer segments 

together, we have estimated a $9 per 

head cost to cattle producers to 

implement the rule. This estimate 

reflects the expectation of relatively 

small implementation costs at the cowcalf level of production, but relatively 

higher costs each time cattle are resold. 

Typically, fed steers and heifers change 

hands two, three, or more times from 

birth to slaughter, and each exchange 

will require the transfer of country of 

origin information. Thus, total costs for 

beef producers are estimated at $305 

million. 

It is expected that intermediaries will 

face increased costs associated with 

tracking cattle and the covered beef 

commodities produced from these 

animals and then providing this 

information to subsequent purchasers, 

which may be other intermediaries or 

covered retailers. Incremental costs for 

beef packers may include additional 

capital and labor expenditures to enable 

cattle from different origins to be 

tracked for slaughter, fabrication, and 

processing. As previously discussed, 

under this final rule, there is greater 

flexibility for labeling muscle cut 

covered commodities. In addition, the 

rule also provides for flexibility in 

labeling ground products by allowing 

the notice of country of origin to include 

a list of countries contained therein or 

that may reasonably be contained 

therein. Considering the costs likely to 

be faced by intermediaries in the beef 

sector, $0.015 per pound is adopted as 

an estimate of costs, which is consistent 

with estimates from the available 

studies. Total costs are thus estimated at 

$373 million. 

The implementation costs are 

estimated at $0.07 per pound for beef 

retailers, for a total of $574 million. This 

figure reflects the costs for individual 

package labels, meat case segmentation, 

record keeping and information 

technology changes, labor, training, and 

auditing. In addition, there likely will 

be increased costs for in-store butcher 

department operations related to 

cutting, repackaging, and grinding 

operations. 

Total costs for affected entities in the 

beef sector are thus estimated at $1,252 

million. 

Costs for pork producers are estimated 

at $1.00 per head. With annual slaughter 

of 104.8 million head, total costs for 

producers are estimated at $105 million. 

Costs for all pork sector 

intermediaries (including handlers, 

processors, and wholesalers) should be 

similar to costs for beef sector 

intermediaries. These estimated costs 

for pork industry intermediaries are 

$0.015 per pound, for a total of $101 

million. 

Costs for retailers of pork are 

estimated to be $0.04 per pound. The 

per-pound cost estimate for pork is 

lower than for beef primarily to reflect 

the higher costs incurred by in-store 

grinding operations to produce ground 

beef. Although ground pork may also be 

produced in-store, most ground pork is 

processed into sausage and other 

products not covered by the rule. Total 

estimated costs for pork retailers are $93 

million. Total costs for the pork sector 

are estimated at $299 million. 

Costs per head for lamb and goat 

producers are estimated at $3.50 per 

head. Total costs for lamb and goat 

producers are estimated at $10 million. 

Intermediaries in the lamb and goat 

sector will likely face per-pound costs 

similar to costs faced by beef and pork 

sector intermediaries, which are 

estimated at $0.015 per pound. Total 

costs for lamb and goat sector 

intermediaries are thus estimated at $5 

million. 

Costs to retailers for lamb and goat 

should be similar to costs borne for 

pork, which was estimated at $0.04 per 

pound. Total costs for retailers of lamb 

and goat are estimated at $5 million. 

Total costs for producers, 

intermediaries, and retailers in the lamb 

and goat industries are estimated costs 

at $21 million. 

Costs for chicken producers who 

grow-out chicken for an integrator (the 

firm that will slaughter and possibly 

further process the chickens) is $0.00 

because these individuals do not own or 

control the movement of the chickens 

they are raising. All chickens produced 

are owned by the integrator which is the 

main intermediary in the chicken 

supply chain. We do not expect that 

producers will need change any current 

practices and thus will not incur any 

additional costs due to this rule. 

Costs for the intermediaries in the 

chicken supply chain are estimated to 

be $0.005 per pound. Since the 

integrators own their chickens from the 

time they hatch to time they are sold to 

a retailer or distributor, there is no need 

to ‘‘collect’’ country of origin 

information. Costs to the integrator are 

mainly due to system changes to 

incorporate COOL information, 

recordkeeping, and supplying required 

information to the retailers and food 

distributors. Approximately 69 percent 

of chicken covered by COOL is supplied 

directly to the retailer from the 

integrator. The vast majority, if not all, 

of the chicken supplied by the integrator 

is pre-labeled. The bulk of the rest is 

supplied by the distributors whose costs 

will be slightly higher since they are 

receiving product from integrators and 

selling product to retailers. Total costs 

for intermediaries are estimated at $139 

million. 

Costs for retailers are estimated to be 

$0.0025 per pound. As noted above 

most chicken is purchased directly from 

integrators and will have been prelabeled. This will significantly lower the 

retailers’ cost in terms of meeting COOL 

requirements. Most of the costs retailers 

will bear will be from distributors. Total 

cost for retailers are estimated at $44 

million. 

Total estimated costs for chicken 

producers, intermediaries, and retailers 

are $183 million. 

The estimated costs to fish and 

seafood producers are $0.0025 per 

pound. Total costs for fish and seafood 

producers are thus estimated at $20 

million, $1 million more than the RIA 

in the interim final rule for fish and 

shellfish. 

Costs for intermediaries are estimated 

at $0.005 per pound in the fish and 

seafood sector. Processors need to 

collect country of origin and method of 

production information from producers, 

maintain this information, and supply 

this information to other intermediaries 

or directly to retailers. There are also 

labeling costs associated with providing 

country of origin and method of 

production information on consumerready packs of frozen and fresh fish that 

are labeled by processors. Total costs for 

fish and seafood intermediaries are thus 

estimated at $15 million, an increase of 

$2 million from the RIA in the interim 

final rule for fish and shellfish. The 

increase is attributable to using the most 

recently available data, which reflects a 

higher demand for fresh fish and 

shellfish. 

Retailer costs are estimated at $0.07 

per pound for fish and seafood. This 

estimate results in total costs of $77 

million for retailers of fish and seafood, 

an increase of $20 million from the RIA 

in the interim final rule for fish and 

shellfish. 

Total costs for fish and seafood are 

estimated at $112 million, an increase of 

$23 million from the RIA in the interim 

final rule for fish and shellfish. 

Although fruit, vegetable, and ginseng 

producers maintain the types of records 

that will be required to substantiate 

origin claims, it is believed that this 

information is not universally 

transferred by producers to purchasers 

of their products. Producers will have to 

supply this type of information in a 

format that allows handlers and 

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2688 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

processors to maintain country of origin 

information so that it can be accurately 

transferred to retailers. For fruit, 

vegetable, and ginseng producers, costs 

are estimated at $0.00025 per pound to 

make and substantiate COOL claims, 

which equates to $0.01 for a 40 pound 

container. Because fruits and vegetables 

only have a single point of origin, which 

is where they are grown, substantiating 

country of origin claims is substantially 

simpler for fruit and vegetable 

producers than for livestock producers. 

Total costs for fruit, vegetable, and 

ginseng producers are estimated at $30 

million. 

Fruit, vegetable, and ginseng 

intermediaries will shoulder a sizeable 

portion of the burden of tracking and 

substantiating country of origin 

information. Intermediaries will need to 

obtain information to substantiate COOL 

claims by producers and suppliers; 

maintain COOL identity throughout 

handling, processing, and distribution; 

and supply retailers with COOL 

information through product labels and 

records. The estimated cost for these 

activities for fruit and vegetable sector 

intermediaries is $0.005 per pound, 

resulting in total estimated costs of $497 

million. 

Because intermediaries will bear a 

large portion of the burden of COOL 

tracking and labeling, implementation 

costs for retailers will be reduced. It is 

believed that virtually all frozen fruits 

and vegetables will be labeled by 

suppliers, thus imposing minimal 

incremental costs for retailers. In 

addition, over 60 percent of fresh fruits 

and vegetables arrive at retail with 

labels or stickers that may be used to 

provide COOL information. It is 

believed that fresh fruit and vegetable 

suppliers will provide COOL 

information on these labels and stickers, 

again imposing minimal incremental 

costs for retailers. Costs for retailers are 

estimated at $0.005 per pound of fresh 

and frozen fruits and vegetables. For 

pre-labeled products, the label itself is 

sufficient evidence on which the retailer 

may rely to establish a product’s 

country of origin. For these pre-labeled 

products, the product label or sticker 

carries the required country of origin 

information, while the recordkeeping 

system maintains the information 

necessary to track the product back 

through the supply chain. Total costs for 

retailers of fruits, vegetables, and 

ginseng are estimated at $235 million. 

Total costs for producers, 

intermediaries, and retailers of fruit, 

vegetable, and ginseng products are 

estimated at $763 million. 

Costs per pound for each segment of 

the peanut, macadamia nut, and pecan 

industries is estimated at $0.00025 for 

producers, $0.005 for intermediaries 

and $0.015 for retailers. As a result, 

costs for the peanut, macadamia nut, 

and pecan industries are estimated at 

about $400,000, with negligible costs for 

producers and costs of less than 

$200,000 at the intermediary and 

retailer levels. 

Total incremental costs are estimated 

for this rule at $470 million for 

producers, $1,130 million for 

intermediaries and $1,029 million for 

retailers for the first year. Total 

incremental costs for all supply chain 

participants are estimated at $2,629 

million for the first year, an increase of 

$112 million from the IRIA due to the 

inclusion of and updating of data for the 

fish and shellfish industries. 

There are wide differences in average 

estimated implementation costs for 

individual entities in different segments 

of the supply chain (Table 4). With the 

exception of a small number of fishing 

operations and chicken producers, 

producer operations are singleestablishment firms. Thus, average 

estimated costs per firm and per 

establishment are somewhat similar. 

Retailers subject to the rule operate an 

average of just over nine establishments 

per firm. As a result, average estimated 

costs per retail firm also are just over 

nine times larger than average costs per 

establishment. 

TABLE 4—ESTIMATED IMPLEMENTATION COSTS PER FIRM AND ESTABLISHMENT

Cost estimates per 

Firm Establishment 

Producer .............................................................................................................................................................. $370 $369 

Intermediary ......................................................................................................................................................... 48,219 45,285 

Retailer ................................................................................................................................................................. 254,685 28,273 

Average estimated implementation 

costs per producer are relatively small at 

$370 and slightly less than from the 

IRIA due to the inclusion of fish and 

shellfish producers. The slight 

difference between the cost per 

producers for firms and establishments 

is due to the inclusion of fish and 

shellfish and that there are more fishing 

establishments than firms. Estimated 

costs for intermediaries are substantially 

larger, averaging $48,219 per firm and 

$45,285 per establishment. The average 

cost per firm is $5,729 less than the IRIA 

estimated cost, with the lower cost 

attributable to the inclusion of fish and 

shellfish. Similarly, the average cost per 

intermediary establishment is $5,313 

lower than IRIA estimate due to the 

inclusion of fish and shellfish. At an 

average of $254,685 per firm, retailers 

have the highest average estimated costs 

per firm. This is $19,134 higher than the 

IRIA estimate. The higher estimated cost 

per retailer is attributable to the 

inclusion of fish and shellfish. Retailers’ 

average estimated costs per 

establishment are $28,273. This amount 

is $2,124 higher than the IRIA estimate. 

The costs per firm and per 

establishment represent industry 

averages for aggregated segments of the 

supply chain. Large firms and 

establishments likely will incur higher 

costs relative to small operations due to 

the volume of commodities that they 

handle and the increased complexity of 

their operations. In addition, different 

types of businesses within each segment 

are likely to face different costs. Thus, 

the range of costs incurred by individual 

businesses within each segment is 

expected to be large, with some firms 

incurring only a fraction of the average 

costs and other firms incurring costs 

many times larger than the average. 

Average costs per producer operation 

can be calculated according to the 

commodities that they produce (Table 

5). Average estimated costs are lowest 

for lamb and goat producers ($128) and 

highest for hog operations ($1,599). 

Again, chicken ‘‘producers’’ do not own 

or control the movement of the birds 

they are growing-out. We do not expect 

that the rule will result in any changes 

in their current production practices, 

and thus their average cost is zero. 

Because average production volume per 

hog operation is large relative to other 

types of producer 

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TABLE 5—ESTIMATED FIRST-YEAR IMPLEMENTATION COSTS PER PRODUCER OPERATION

Producer Average 

Beef ................................................ $314 

Lamb & Goats ................................ 128 

Pork ................................................ 1,599 

Chicken ........................................... 0 

Fish ................................................. 261 

Fruits, Vegetables, & Ginseng ....... 376 

Peanuts, Pecans, & Macadamia 

Nuts ............................................. 258 

All ............................................. 369 

operations, estimated costs per hog 

operation are large relative to other 

producer operations. These costs are 

unchanged from the IRIA estimates 

except for fish which used more up-todate information. 

It is believed that the major cost 

drivers for the rule occur when livestock 

or other covered commodities are 

transferred from one firm to another, 

when livestock or other covered 

commodities are segregated in the 

production or marketing process when 

firms are not using a multiple-origin 

label, and when products are assembled 

and then redistributed to retail stores. In 

part, some requirements of the rule will 

be accomplished by firms using 

essentially the same processes and 

practices as are currently used, but with 

information on country of origin claims 

added to the processes. This adaptation 

generally would require relatively small 

marginal costs for recordkeeping and 

identification systems. In other cases, 

however, firms may need to revamp 

current operating processes to 

implement the rule. For example, a 

processing or packing plant may need to 

sort incoming products by country of 

origin and, if applicable, method of 

production, in addition to weight, grade, 

color, or other quality factors. This may 

require adjustments to plant operations, 

line processing, product handling, and 

storage. Ultimately, it is anticipated that 

a mix of solutions will be implemented 

by industry participants to effectively 

meet the requirements of the rule. 

Therefore, it is anticipated that direct, 

incremental costs for the rule likely will 

fall within a reasonable range of the 

estimated total of $2.6 billion. 

In the IRIA, one regulatory alternative 

considered by AMS would be to narrow 

the definition of a processed food item, 

thereby increasing the scope of 

commodities covered by the rule. This 

alternative is not adopted in this final 

rule. An increase in the number of 

commodities that would require COOL 

would increase implementation costs of 

the rule with little expected economic 

benefit. Additional labeling 

requirements may also slow some of the 

innovation that is occurring with 

various types of value-added, further 

processed products. 

A different regulatory alternative 

would be to broaden the definition of a 

processed food item, thereby decreasing 

the scope of commodities covered by 

the rule. Accordingly, such an 

alternative would decrease 

implementation costs for the rule. At the 

retail level and to a lesser extent at the 

intermediary level, cost reductions 

would be at least partly proportional to 

the reduction in the volume of 

production requiring retail labeling, 

although if the broader definition 

excluded products for which 

incremental costs are relatively high, the 

impact could be more than proportional. 

Start-up costs for retailers and many 

intermediaries likely would be little 

changed by a narrowing of the scope of 

commodities requiring labeling because 

firms would still need to modify their 

recordkeeping, production, 

warehousing, distribution, and sales 

systems to accommodate the 

requirements of the rule for those 

commodities that would require 

labeling. Ongoing maintenance and 

operational costs, however, likely would 

decrease in some proportion to a 

decrease in the number of items covered 

by the rule. On the other hand, 

implementation costs for the vast 

majority of agricultural producers 

would not be affected by a change in the 

definition of a processed food item. This 

is because it is assumed that virtually all 

affected producers would seek to retain 

the option of selling their products 

through supply channels for retailers 

subject to the rule. Agricultural 

producers generally would have little 

influence on the ultimate product form 

in which their products are sold at 

retail, and thus would be little affected 

by changes in the definition of a 

processed food item. 

The definition of a processed food 

item developed for this rule has taken 

into account comments from affected 

entities and has resulted in excluding 

products that would be more costly and 

troublesome for retailers and suppliers 

to provide country of origin 

information. 

Net Effects on the economy: The 

previous section estimated the direct, 

incremental costs of the rule to the 

affected firms in the supply chains for 

the covered commodities. While these 

costs are important to those directly 

involved in the production, distribution, 

and marketing of covered commodities, 

they do not represent net costs to the 

United States economy or net costs to 

the affected entities for that matter. 

With respect to assessing the effect of 

this rule on the economy as a whole, it 

is important to understand that a 

significant portion of the costs directly 

incurred by the affected entities take the 

form of expenditures for additional 

production inputs, such as payments to 

others whether for increased hours 

worked or for products and services 

provided. As such, these direct, 

incremental costs to affected entities 

represent opportunity costs of the rule, 

but they do not represent losses to the 

economy. As a result, the direct costs 

incurred by the participants in the 

supply chains for the covered 

commodities do not measure the net 

impact of this rule on the economy as 

a whole. Instead, the relevant measure 

is the extent to which the rule reduces 

the amount of goods and services that 

can be produced throughout the United 

States economy from the available 

supply of inputs and resources. 

Even from the perspective of the 

directly affected entities, the direct, 

incremental costs do not present the 

whole picture. Initially, the affected 

entities will have to incur the operation 

adjustments and expenses necessary to 

implement the rule. However, over time 

as the economy adjusts to the 

requirements of the rule, the burden 

facing suppliers will be reduced as their 

production level and the prices they 

receive change. What is critical in 

assessing the net effect of this rule on 

the affected entities over the longer run 

is to determine the extent to which the 

entities are able to pass these costs on 

to others and consequently how the 

demand for their commodities is 

affected. 

Conceptually, suppose that all the 

increases in costs from the rule were 

passed on to consumers in the form of 

higher prices and that consumers 

continued to purchase the same 

quantity of the affected commodities 

from the same marketing channels. 

Under these conditions, the suppliers of 

these commodities would not suffer any 

net loss from the rule even if the 

increases in their operating costs were 

quite substantial. However, other 

industries might face losses as 

consumers may spend less on other 

commodities. It is unlikely, however, 

absent the rule leading to changes in 

consumers’ preferences for the covered 

commodities that consumers will 

maintain their consumption of the 

covered commodities in the face of 

increased prices. Rather, many or most 

consumers will likely reduce their 

consumption of the covered 

commodities. The resulting changes in 

consumption patterns will in turn lead 

to changes in production patterns and 

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2690 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

the allocation of inputs and resources 

throughout the economy. The net result, 

once all these changes have occurred, is 

that the total amount of goods and 

services produced by the United States 

economy will be less than before. 

To analyze the effect of the changes 

resulting from the rule on the total 

amount of goods and services produced 

throughout the United States economy 

in a global context, a computable 

general equilibrium (CGE) model 

developed by Economic Research 

Service (ERS) is utilized (Ref. 4). The 

ERS CGE model includes all the covered 

commodities and the products from 

which they are derived, as well as noncovered commodities that will be 

indirectly affected by the rule, such as 

feed grains. Even though COOL for fish 

was implemented in 2004, the costs for 

fish and shellfish are included to 

account for the cross-commodity effects 

between covered commodities. Peanuts, 

however, are aggregated with oilseeds in 

the model, and there is no meaningful 

way to modify the model to account for 

the impacts of the rule on peanut 

production, processing, and 

consumption. Given the definition of a 

processed food item, almost all peanut 

products are exempt from this rule. As 

a consequence, the peanut sector 

accounts for only a negligible fraction of 

the total estimated incremental costs for 

all directly affected entities. Thus, 

omitting the small direct costs on the 

peanut sector is expected to have 

negligible impacts with respect to 

estimated impacts on the overall United 

States economy. 

The ERS CGE model traces the 

impacts from an economic ‘‘shock,’’ in 

this case an incremental increase in 

costs of production, through the U.S 

agricultural sector and the U.S economy 

to the rest of the world and back 

through the inter-linking of economic 

sectors. By taking into account the 

linkages among the various sectors of 

the United States and world economies, 

a comprehensive assessment can be 

made of the economic impact on the 

United States economy of the rule 

implementing COOL. The model reports 

economic changes resulting after a tenyear period of adjustment. 

The results of this analysis indicate 

that the rule implementing COOL after 

the economy has had a period of ten 

years to adjust will have a smaller net 

impact on the overall United States 

economy than the incremental costs for 

directly affected entities for the first 

year. Under the assumption that COOL 

will not change consumers’ preferences 

for the covered commodities, it is 

estimated that the overall costs to the 

United States economy due to the rule, 

in terms of a reduction in consumers’ 

purchasing power, will be $211.9 

million. This represents the cost to the 

United States economy after all transfers 

and adjustments in consumption and 

production patterns have occurred. 

As noted above, the overall net costs 

to the United States economy after a 

decade of adjustment are significantly 

smaller than the implementation costs 

to directly affected firms. This result 

does not imply that the implementation 

costs for directly affected firms have 

been substantially reduced from the 

initial estimates. While some of the 

increase in their costs will be offset by 

reduced production and higher prices 

over the longer term, the suppliers of 

the covered commodities will still bear 

direct implementation costs. 

The estimates of the overall costs to 

the United States economy are based on 

the estimates of the incremental 

increases in operating costs to the 

affected firms. The model does not 

permit supply channels for covered 

commodities that require country of 

origin information to be separated from 

supply channels for the same 

commodities that do not require COOL. 

Thus, the direct cost impacts must be 

adjusted to accurately reflect changes in 

operating costs for all firms supplying 

covered commodities. Table 6 reports 

these adjusted estimates in terms of 

their percentage of total operating costs 

for each of the directly affected sectors. 

The percentages used are based on the 

estimate of the percentage change in 

operating costs for the entire supply 

channel and are adjusted between the 

various segments of each covered 

commodity’s’’ supply chain (producers, 

processors, importers, and retailers) 

based on the estimate of how the costs 

of the regulation will be distributed 

among them. As a result, the cost 

changes shown in Table 6 only 

approximate the direct cost estimates 

previously described. 

TABLE 6—ESTIMATED INCREASES IN OPERATING COSTS BY SUPPLY CHAIN SEGMENT AND INDUSTRY

Beef, Lamb, & 

Goat Pork Chicken Fish Fresh produce 

Percent change 

Farm Supply .............................................. Domestic ...... 1.30 1.30 0.00 0.60 0.10 

Imported ....... 1.30 1.30 1.00 0.60 0.10 

Processing ................................................. Domestic ...... 2.10 1.00 1.10 n.a. n.a. 

Imported ....... 2.10 1.00 1.10 n.a. n.a. 

Retail ......................................................... Domestic ...... 2.20 0.40 0.60 0.40 0.60 

Imported ....... 2.20 0.40 0.60 0.40 0.60 

n.a.—Not Applicable. 

In addition, it is assumed that 

domestic and foreign suppliers of the 

covered commodities located at the 

same level or segment of the supply 

chain face the same percentage 

increases in their operating costs. In 

reality, the incremental costs for some 

imported covered commodities may be 

lower, as a portion of those products 

already enter the United States with 

country of origin labels. 

As discussed above, consumption and 

production patterns will change as the 

incremental increases in operating costs 

are passed on, at least partially, to 

consumers in the form of higher prices 

by the affected firms. The increases in 

the prices of the covered commodities 

will in turn cause exports and domestic 

consumption and ultimately domestic 

production to fall. The results of our 

analysis indicate that United States 

production of all the covered 

commodities combined will decline 

0.02 percent and that the overall price 

level for these commodities (a weighted 

average index of the prices received by 

suppliers for their commodities) will 

increase by 0.02 percent. 

The structure of the model does not 

enable changes in net revenues to 

suppliers of the covered commodities to 

be determined. Likewise, the model 

cannot be used to determine the extent 

to which the reductions in production 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2691 

arise from some firms going out of 

business or all firms cutting back on 

their production. To provide an 

indication of what effect this will have 

on the suppliers of the covered 

commodities, changes in revenues using 

the model results are estimated. The 

result of this calculation shows that 

revenues to suppliers of the covered 

commodities will decrease by $461 

million. This decrease in revenue is due 

to the decrease in estimated revenues in 

all covered commodities; all affected 

sectors show a small revenue decrease 

due to the increased costs of the rule. 

The costs of the rule will not be 

shared equally by all suppliers of the 

covered commodities. The distribution 

of the costs of the rule will be 

determined by several factors in 

addition to the direct costs of complying 

with the rule. These are the availability 

of substitute products not covered by 

the rule and the relative 

competitiveness of the affected 

suppliers with respect to other sectors of 

the United States and world economies. 

Although the increases in operating 

costs are the initial drivers behind the 

changes in consumption and production 

patterns resulting from this rule, they do 

not, as can be seen by examining Table 

7, determine which commodity sector 

will be most affected. Table 7 contains 

the percentage changes in prices, 

production, exports, and imports for the 

three main segments of the marketing 

chain by covered commodities. The 

estimated increases in operating costs 

reflect anticipated adjustments by 

industry as a result of the rule and 

provide the basis for the CGE analysis. 

However, the analysis does not reflect 

dynamic adjustments that industry will 

undertake to comply with the 

requirements of the rule, such as the 

flexibilities afforded by the use of 

multiple-origin labels. 

TABLE 7—ESTIMATED IMPACT OF RULE ON U.S. PRODUCTION, PRICES AND TRADE OF IMPACTED SECTORS

Commodity Price Production Exports 

(volume) 

Imports 

(volume) 

Percent change from base year 

Fruits and Vegetables ...................................................................................... 0.21 ¥0.20 ¥0.39 0.04 

Cattle and Sheep ............................................................................................. 0.52 ¥0.94 ¥1.18 0.25 

Broilers ............................................................................................................. 0.03 ¥0.57 ¥0.36 ¥0.03 

Hogs ................................................................................................................. 0.26 ¥0.46 ¥0.60 0.16 

Beef and Veal .................................................................................................. 0.99 ¥1.09 ¥1.93 ¥2.32 

Chicken ............................................................................................................ 0.82 ¥0.90 ¥1.54 0.29 

Pork .................................................................................................................. 0.68 ¥0.81 ¥1.37 ¥0.86 

Fish .................................................................................................................. 0.50 ¥0.68 ¥0.06 0.04 

As mentioned previously, peanuts, 

macadamia nuts, and pecans are 

included with oilseed products in the 

ERS CGE model. As a result they are not 

included in this analysis. 

The rule increases operating costs for 

the supply chains of the covered 

commodities. As shown in Table 7, the 

increased costs result in higher prices 

for these products. The quantity 

demanded at these higher prices falls, 

with the result that the production of all 

of the covered commodities decreases. 

Imports of fruits, vegetables, cattle, 

sheep, chicken, fish, and hogs increase 

because the model assumes United 

States domestic suppliers of these 

products respond more to changes in 

their operating costs than do foreign 

suppliers. The resulting gap between the 

supply response of United States and 

foreign producers provides foreign 

suppliers with a cost advantage in 

United States markets that enables them 

to increase their exports to the United 

States even though they face similar 

increases in operating costs. 

To put these impacts in more 

meaningful terms, the percentage 

changes reported in Table 7 were 

converted into changes in current prices 

and quantities produced, imported, and 

exported (Table 8). The base values in 

Table 8 vary from those reported in 

Table 2 above because they are derived 

from projected levels reported in the 

USDA Agricultural Baseline for 2006 

(Ref. 10), while values in Table 2 

represent actual reported values for 

2006 as compiled by USDA’s NASS. 

Baseline values were used to 

accommodate the structure of the 

model. 

Increases in prices for all covered 

commodities are small, less than one 

cent per pound. Production changes are 

similarly small, less than 100 million 

pounds for all covered commodities. 

The declines in the production of beef, 

chicken, and pork mirrors the decline in 

the production of beef, broilers, and 

hogs. 

TABLE 8—ESTIMATED CHANGES IN U.S. PRODUCTION PRICES, AND TRADE FOR AFFECTED COMMODITIES

Indicator Units Base Change from 

base 

U.S. Production: 

Veg. & Fruits ......................................................... Mil. Lbs. Thous ............................................................. 191,523 ¥383 

Cattle ..................................................................... Hd ................................................................................. 32,229 ¥303 

Broilers .................................................................. Mil. Hd .......................................................................... 6,503 ¥36 

Hogs ...................................................................... Thous. Hd ..................................................................... 103,015 ¥474 

Beef ....................................................................... Mil. Lbs ......................................................................... 24,784 ¥270 

Chicken .................................................................. Mil. Lbs ......................................................................... 35,733 ¥322 

Pork ....................................................................... Mil. Lbs ......................................................................... 20,706 ¥168 

Fish ........................................................................ Mil. Lbs ......................................................................... 7,997 ¥54 

U.S. Price: 

Veg. & Fruits ......................................................... $/Lb ............................................................................... 0.25 0.0005 

Cattle and sheep ................................................... $/Cwt ............................................................................. 89.55 0.4657 

Broilers .................................................................. $/Lb ............................................................................... 0.43 0.0001 

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TABLE 8—ESTIMATED CHANGES IN U.S. PRODUCTION PRICES, AND TRADE FOR AFFECTED COMMODITIES—Continued 

Indicator Units Base Change from 

base 

Hogs ...................................................................... $/Cwt ............................................................................. 49.62 0.1290 

Beef and veal ........................................................ $/Lb ............................................................................... 4.09 0.0405 

Chicken .................................................................. $/Lb ............................................................................... 1.74 0.0143 

Pork ....................................................................... $/Lb ............................................................................... 2.83 0.0192 

Fish ........................................................................ $/Lb ............................................................................... 0.93 0.0047 

U.S. Exports (volume): 

Fruits & Vegetables ............................................... Mil Lbs .......................................................................... 19,990 ¥78 

Beef ....................................................................... Mil Lbs .......................................................................... 697 ¥13 

Chicken .................................................................. Mil Lbs .......................................................................... 5,203 ¥80 

Pork ....................................................................... Mil Lbs .......................................................................... 2,498 ¥34 

Fish ........................................................................ Mil Lbs .......................................................................... 6,384 ¥4 

U.S. Imports (volume): 

Fruits & Vegetables ............................................... Mil. Lbs. Thous ............................................................. 37,573 15 

Beef ....................................................................... Hd ................................................................................. 2,502 ¥58 

Chicken .................................................................. Mil. Hd. Thous .............................................................. 0 0 

Pork ....................................................................... Hd ................................................................................. 5,741 ¥49 

Fish ........................................................................ Mil. Lbs ......................................................................... 10,158 4 

SOURCES: Base values for meat and fruits and vegetables come from USDA Agricultural Baseline Projections to 2016, Staff Report WAOB– 

2007–1. USDA, Office of the Chief Economist, 2007. Changes are derived from applying percentage changes obtained from the ERS CGE 

model to the base values. a Live animal estimates derived from baseline values for meat product using 2005 average dress weight for cattle, 

hogs and broilers. bBase values for fish come from Fisheries of the United States, 2005. National Marine Fisheries Service, National Oceanic 

and Atmospheric Administration, U.S. Department of Commerce, 2006. cFruit and vegetable price derived by dividing the total value of fruit and 

vegetable production by total quantity of fruit and vegetables produced as reported in USDA baseline for 2005. dFish price derived by dividing 

total value of commercial and aquaculture production, excluding other, by total commercial and aquaculture production. 

The estimated changes in prices and 

production cause revenues for the fruit 

and vegetable industry to increase an 

estimated $5 million. The small revenue 

increase in the fruit and vegetable 

industry is attributed to the fact that the 

price increase just offsets the production 

decrease. The estimated changes in 

production and prices result in revenues 

decreasing by $94 million for beef cattle 

producers while revenues from 

production and sale of beef decrease by 

an estimated $112 million dollars. 

Revenues for broiler production 

declines by $91 million and revenues 

for the production and sale of chicken 

decrease by $54 million. In addition, 

revenues for hog production decrease by 

$21 million and revenues from 

production and sale of pork decrease by 

$79 million. Finally, revenues to the 

fish industry fall by nearly $14 million. 

The increase in the prices of all 

covered commodities causes exports to 

decline (Table 8). These declines are 

small; they are for the most part smaller 

than the declines in United States 

production of these commodities. 

The ERS CGE model assumes that 

firms behave as though they have no 

influence on either their input or output 

prices. On the other hand, a model that 

assumed that processors could influence 

their input and output prices could find 

that prices received by agricultural 

producers decreased because processors 

passed their cost increases down to their 

suppliers rather than increase the price 

they charged their customers. 

The estimates of the economic impact 

of the rule on the United States are 

based on the assumption that country of 

origin labeling does not shift consumer 

demand toward the covered 

commodities of United States origin. 

This assumption is based on the earlier 

finding that there was no compelling 

evidence to support the view that 

mandatory COOL will increase the 

demand for United States products. 

Despite this lack of evidence, it is 

examined how much of a shift or 

increase in demand for commodities of 

United States origin would need to 

occur to offset the costs imposed on the 

economy by the rule. Consumer demand 

for the covered commodities would 

have to increase 0.90 percent to offset 

the costs to the economy of COOL as 

outlined in the rule. 

The hypothetical 0.90 percent 

increase in demand for covered 

commodities represents the overall 

increase (shift) in demand from all 

outlets. If there were such a demand 

increase for domestically produced 

covered commodities, however, it 

would presumably occur at those 

retailers required to provide country of 

origin information. As previously 

discussed, the percentage share of 

covered commodities sold by retailers 

subject to this rule is estimated at 47.0 

percent of total consumption. This 

suggests that demand at covered 

retailers actually would have to increase 

by 1.9 percent for purposes of this 

hypothetical exercise, assuming no 

change in demand at other domestic 

outlets or in export demand. 

As previously mentioned, the 

estimates of the overall economic effects 

of the rule are derived from a CGE 

model developed by ERS. The results 

from this model show the changes in 

production and consumption patterns 

after the economy has adjusted to the 

incremental increase in costs (medium 

run results). Such changes occur over 

time and the economy does not adjust 

instantaneously. 

The results of this analysis describe 

and compare the old production and 

consumption patterns to the new ones, 

but do not reflect any particular 

adjustment process. The purpose of 

using the ERS CGE model is not to 

forecast what prices and production will 

be over any particular time frame, but to 

explore the implications of COOL on the 

United States economy and capture the 

direction of the changes. 

The ERS CGE model is global in the 

sense that all regions in the world are 

covered. Production and consumption 

decisions in each region are determined 

within the model following behavior 

that is consistent with economic theory. 

Multilateral trade flows and prices are 

determined simultaneously by world 

market clearing conditions. This permits 

prices to adjust to ensure that total 

demand equals total supply for each 

commodity in the world. 

The general equilibrium feature of the 

model means that all economic 

sectors—agricultural and nonagricultural—are included. Hence, 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2693 

resources can move among sectors, 

thereby ensuring that adjustments in the 

feed grains and livestock sectors, for 

example, are consistent with 

adjustments in the processed sectors. 

The model is static and this implies 

that possible gains (or losses) from 

stimulating (or inhibiting) investment 

and productivity growth are not 

captured. The model allows the existing 

resources to move among sectors, 

thereby capturing the effects of reallocation of resources that are the result 

of policy changes. However, because the 

model fixes total available resources, it 

underestimates the long-run effects of 

policies on aggregate output. For 

example, the 10-year average real 

growth of GDP between 1997 and 2007 

was approximately 3.1 percent (Ref. 11). 

If applied to the next 10 years this 

implies an economy approximately 36 

percent larger at the end of this analysis 

than at the beginning of this analysis. 

The ERS CGE model uses data from 

the Global Trade Analysis Project 

(GTAP database, version 7.2). The 

database represents the world as of 2004 

and includes information on 

macroeconomic variables, production, 

consumption, trade, demand and supply 

elasticities, and policy measures. The 

GTAP database includes 57 

commodities and 101 countries/regions. 

For this analysis, the regions were 

represented by the following country/ 

regions: the United States, Canada, 

Mexico, the European Union-25 (EU), 

Oceania, China, Other East Asian 

Countries, India, Other South Asian 

Countries, Brazil, South America 

(including Central America), OPEC 

Countries, Russia, Africa and the Rest of 

the World. The agricultural sector is 

subdivided into the following 7 

commodity aggregations: rice, wheat, 

corn, other feed grains (barley, 

sorghum), soybeans, sugar (cane and 

beets), vegetables and fresh fruits, other 

crops (cotton, peanuts), cattle and 

sheep, hogs and goats, poultry, and fish. 

The food processing sectors are 

subdivided into the following 6 

commodity aggregations, bovine cattle 

and sheep meat, pork meat, chicken 

meat, vegetable oils and fats, other 

processed food products, beverages and 

tobacco, and fish. The remaining sectors 

in the database were represented by 18 

aggregated non-agricultural sectors. 

Regulatory Flexibility Analysis 

This rule has been reviewed under the 

requirements of the Regulatory 

Flexibility Act (RFA) (5 U.S.C. 601 et 

seq.). The purpose of RFA is to consider 

the economic impact of a rule on small 

businesses and evaluate alternatives that 

would accomplish the objectives of the 

rule without unduly burdening small 

entities or erecting barriers that would 

restrict their ability to compete in the 

marketplace. The Agency believes that 

this rule will have a significant 

economic impact on a substantial 

number of small entities. As such, the 

Agency has prepared the following final 

regulatory flexibility analysis of the 

rule’s likely economic impact on small 

businesses pursuant to section 604 of 

the Regulatory Flexibility Act. Section 

604 of the RFA requires the Agency to 

provide a summary of the significant 

issues raised by public comments in 

response to the initial regulatory 

flexibility analysis. The Comments and 

Responses section includes the 

comments received on the interim final 

RFA and provides the Agency’s 

responses to the comments. 

The rule is the direct result of 

statutory obligations to implement the 

COOL provisions of the 2002 and 2008 

Farm Bills. The intent of this law is to 

provide consumers with additional 

information on which to base their 

purchasing decisions. Specifically, the 

law imposes additional Federal labeling 

requirements for covered commodities 

sold by retailers subject to the law. 

Covered commodities include muscle 

cuts of beef (including veal), lamb, pork, 

goat; ground beef, ground lamb, ground 

pork, ground goat, and ground chicken; 

farm-raised fish and shellfish; wild fish 

and shellfish; chicken; perishable 

agricultural commodities; ginseng; 

peanuts; macadamia nuts; and pecans. 

The implementation date for mandatory 

COOL for the fish and shellfish covered 

commodities was September 30, 2004. 

The implementation date for the other 

covered commodities was September 

30, 2008. 

Under preexisting Federal laws and 

regulations, COOL is not universally 

required for the commodities covered by 

this rule. In particular, labeling of 

United States origin is not mandatory, 

and labeling of imported products at the 

consumer level is required only in 

certain circumstances. Thus, the Agency 

has not identified any Federal rules that 

would duplicate or overlap with this 

rule. 

Many aspects of the mandatory COOL 

provisions are prescriptive and provide 

little regulatory discretion in 

rulemaking. The law requires a 

statutorily defined set of food retailers 

to label the country of origin and, if 

applicable, method of production (wild 

and/or farm-raised) of covered 

commodities. The law also prohibits 

USDA from using a mandatory 

identification system to verify the 

country of origin of covered 

commodities. However, the rule 

provides flexibility in allowing market 

participants to decide how best to 

implement mandatory COOL in their 

operations. Market participants other 

than those retailers defined by the 

statute may decide to sell products 

through marketing channels not subject 

to the rule. A complete discussion of the 

information collection and 

recordkeeping requirements and 

associated burdens appears in the 

Paperwork Reduction Act section. 

The objective of the rule is to regulate 

the activities of retailers (as defined by 

the law) and their suppliers so that 

retailers will be able to fulfill their 

statutory obligations. The rule requires 

retailers to provide country of origin 

information for all of the covered 

commodities that they sell. It also 

requires all firms that supply covered 

commodities to these retailers to 

provide the retailers with the 

information needed to correctly label 

the covered commodities. In addition, 

all other firms in the supply chain for 

the covered commodities are potentially 

affected by the rule because country of 

origin information will need to be 

maintained and transferred along the 

entire supply chain. In general, the 

supply chains for the covered 

commodities consist of farms, fishing 

operations, processors, wholesalers, and 

retailers. Section 604 of the RFA 

requires the Agency to provide an 

estimate of the number of small entities 

to which the rule will apply. A listing 

of the number of entities in the supply 

chains for each of the covered 

commodities can be found in Table 1. 

Retailers covered by this rule must 

meet the definition of a retailer as 

defined by Perishable Agricultural 

Commodities Act of 1930 (PACA). The 

PACA definition includes only those 

retailers handling fresh and frozen fruits 

and vegetables with an invoice value of 

at least $230,000 annually. By utilizing 

an existing regulatory definition for a 

retailer, Congress provided a simple and 

straightforward approach to determine 

which retailers are subject to the COOL 

program. In utilizing this definition, the 

number of retailers affected by this rule 

is considerably smaller than the total 

number of retailers nationwide. In 

addition, there is no requirement that 

firms in the supply chain must supply 

their products to retailers subject to the 

rule. 

Because country of origin and, if 

applicable, method of production 

information will have to be passed along 

the supply chain and made available to 

consumers at the retail level, it is 

assumed that each participant in the 

supply chain as identified in Table 1 

will likely encounter recordkeeping 

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2694 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

costs as well as changes or 

modifications to their business 

practices. Absent more detailed 

information about each of the entities 

within each of the marketing channels, 

it is assumed that all such entities will 

be affected to some extent even though 

some producers and suppliers may 

choose to market their products through 

channels not subject to the requirements 

of this rule. Therefore, it is estimated 

that approximately 1,333,000 

establishments owned by approximately 

1,299,000 firms will be either directly or 

indirectly affected by this rule. The only 

change from the Interim Regulatory 

Impact Analysis contained in the 

August 1, 2008, interim final rule is the 

inclusion of affected firms and 

establishments in the fish and shellfish 

sector in this final rule. These changes 

and the use of more up-to-date 

information resulted in the number of 

establishments and firms increasing 

from the IRIA. 

This rule potentially will have an 

impact on all participants in the supply 

chain, although the nature and extent of 

the impact will depend on the 

participant’s function within the 

marketing chain. The rule likely will 

have the greatest impact on retailers and 

intermediaries (handlers, processors, 

wholesalers, and importers), while the 

impact on individual producers is likely 

to be relatively small. 

The direct incremental costs are 

estimated for the rule at approximately 

$2,629 million as noted in Table 3. The 

increase in the direct incremental cost 

in the rule as compared to the IRIA is 

mainly the result of including fish and 

shellfish in this final rule. 

There are two measures used by the 

Small Business Administration (SBA) to 

identify businesses as small: sales 

receipts or number of employees. In 

terms of sales, SBA classifies as small 

those grocery stores with less than $25 

million in annual sales and specialty 

food stores with less than $6.5 million 

in annual sales (13 CFR 121.201). 

Warehouse clubs and superstores with 

less than $25 million in annual sales are 

also defined as small. SBA defines as 

small those agricultural producers with 

less than $750,000 in annual sales and 

fishing operations with less than $3.5 

million in annual sales. Of the other 

businesses potentially affected by the 

rule, SBA classifies as small those 

manufacturing firms with less than 500 

employees and wholesalers with less 

than 100 employees. 

Retailers: While there are many 

potential retail outlets for the covered 

commodities, food stores, warehouse 

clubs, and superstores are the primary 

retail outlets for food consumed at 

home. In fact, food stores, warehouse 

clubs, and superstores account for 75.6 

percent of all food consumed at home 

(Ref. 8). Therefore, the number of these 

stores provides an indicator of the 

number of entities potentially affected 

by this rule. The 2002 Economic Census 

(Ref. 9) shows there were 42,318 food 

stores, warehouse clubs, and superstore 

firms operated for the entire year. Most 

of these firms, however, would not be 

subject to the requirements of this rule. 

The law defines the term retailer as 

that described in section 1(b) of the 

Perishable Agricultural Commodities 

Act of 1930 (PACA) Thus, under this 

final rule, a retailer is defined as any 

person licensed as a retailer under 

PACA. The number of such businesses 

is estimated from PACA data (Ref. 12). 

The PACA definition of a retailer 

includes only those retailers handling 

fresh and frozen fruits and vegetables 

with an invoice value of at least 

$230,000 annually. Therefore, the 

number of retailers affected by this rule 

is considerably smaller than the number 

of food retailers nationwide. USDA data 

indicate that there are 4,040 retail firms 

as defined by PACA that would thus be 

subject to the rule. As explained below, 

most small food store firms have been 

excluded from mandatory COOL based 

on the PACA definition of a retailer. 

The 2002 Economic Census data 

provide information on the number of 

food store firms by sales categories. Of 

the 42,318 food store, warehouse club, 

and superstore firms, an estimated 

41,629 firms had annual sales meeting 

the SBA definition of a small firm plus 

689 other firms that would be classified 

as above the $25 million threshold. 

USDA has no information on the 

identities of these firms, and the PACA 

database does not identify firms by 

North American Industry Classification 

System code that would enable 

matching with Economic Census data. 

USDA assumes, however, that all or 

nearly all of the 689 large firms would 

meet the definition of a PACA retailer 

because most of these larger food 

retailers likely would handle fresh and 

frozen fruits and vegetables with an 

invoice value of at least $230,000 

annually. Thus, an estimated 83 percent 

(3,351 out of 4,040) of the retailers 

subject to the rule are small. However, 

this is only 8.0 percent of the estimated 

total number of small food store 

retailers. In other words, an estimated 

92.0 percent of small food store retailers 

would not be subject to the 

requirements of the rule. 

Retailer costs under the rule are 

estimated at $1,029 million. Costs are 

estimated at $254,685 per retail firm and 

$28,273 per retail establishment. 

Retailers will face recordkeeping costs, 

costs associated with supplying country 

of origin and, if applicable, method of 

production information to consumers 

and possibly additional handling costs. 

These cost increases may result in 

changes to retailer business practices. 

The rule does not specify the systems 

that affected retailers must put in place 

to implement mandatory COOL. Instead, 

retailers will be given flexibility to 

develop or modify their own systems to 

comply with the rule. There are many 

ways in which the rule’s requirements 

may be met and firms will likely choose 

the least cost method in their particular 

situation to comply with the rule. 

Wholesalers: Any establishment that 

supplies retailers with one or more of 

the covered commodities will be 

required by retailers to provide country 

of origin and, if applicable, method of 

production information so that retailers 

can accurately supply that information 

to consumers. Of wholesalers 

potentially affected by the rule, SBA 

defines those having less than 100 

employees as small. Importers of 

covered commodities will also be 

affected by the rule and are categorized 

as wholesalers in the data. 

The 2004 Statistics of United States 

Businesses (Ref. 13) provides 

information on wholesalers by 

employment size. For meat and meat 

products wholesalers there is a total of 

2,509 firms. Of these, 2,401 firms have 

less than 100 employees. This indicates 

that approximately 96 percent of meat 

wholesalers are considered as small 

firms using the SBA definition. 

For fish and seafood wholesalers there 

are a total of 2,254 firms. Of these, 2,199 

firms have less than 100 employees. 

Therefore, approximately 98 percent of 

the fish and seafood wholesalers could 

be considered as small firms. 

There are 510 chicken wholesaler/ 

distributor firms operating 564 facilities. 

Of these, there are 332 firms which have 

less than 100 employees, resulting in 

approximately 65 percent of the chicken 

wholesalers/distributors being classified 

as small businesses. 

For fresh fruit and vegetable 

wholesalers there are a total of 4,654 

firms. Of these, 4,418 firms have less 

than 100 employees, resulting in 

approximately 95 percent of the fresh 

fruit and vegetable wholesalers being 

classified as small businesses. 

While information on ginseng 

wholesalers is not available, 46 dealers 

have been identified and they would all 

be considered as small businesses. 

In addition to specialty wholesalers 

that primarily handle a single covered 

commodity, there are also general-line 

wholesalers that handle a wide range of 

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products. It is assumed that these 

general-line wholesalers likely handle at 

least one and possibly all of the covered 

commodities. Therefore, the number of 

general-line wholesale businesses is 

included among entities affected by the 

rule. 

The 2004 Statistics of United States 

Businesses provides information on 

general-line grocery wholesalers by 

employment size. There were 3,037 

firms in total, and 2,858 firms had less 

than 100 employees. This results in 

approximately 94 percent of the generalline grocery wholesalers being classified 

as small businesses. 

In general, over 94 percent of the 

wholesalers are classified as small 

businesses. This indicates that most of 

the wholesalers affected by mandatory 

COOL may be considered as small 

entities as defined by SBA. 

It is estimated that intermediaries 

(importers and domestic wholesalers, 

handlers, and processors) will incur 

costs under the rule of approximately 

$1,130 million. Costs are estimated at 

$48,219 per intermediary firm and 

$45,285 per establishment. 

Wholesalers will encounter increased 

costs in complying with mandatory 

COOL. Wholesalers will likely face 

increased recordkeeping costs, costs 

associated with supplying country of 

origin and, if applicable, method of 

production information to retailers, 

possibly costs associated with 

segmenting products by country of 

origin and, if applicable, method of 

production and possibly additional 

handling costs. Some of the comments 

received on the proposed rule from 

wholesalers and retailers have indicated 

that retailers may choose to source 

covered commodities from a single 

supplier that procures the covered 

commodity from only one country in an 

attempt to minimize the costs associated 

with complying with mandatory COOL. 

These changes in business practices 

could lead to the further consolidation 

of firms in the wholesaling sector. The 

rule does not specify the systems that 

affected wholesalers must put in place 

to implement mandatory COOL. Instead, 

wholesalers will be given flexibility to 

develop their own systems to comply 

with the rule. There are many ways in 

which the rule’s requirements may be 

met. In addition, wholesalers have the 

option of supplying covered 

commodities to retailers or other 

suppliers that are not covered by the 

rule. 

Manufacturers: Any manufacturer 

that supplies retailers or wholesalers 

with a covered commodity will be 

required to provide country of origin 

information to retailers so that the 

information can be accurately supplied 

to consumers. Most manufacturers of 

covered commodities will likely print 

country of origin and, if applicable, 

method of production information on 

retail packages supplied to retailers. Of 

the manufacturers potentially affected 

by the rule, SBA defines those having 

less than 500 employees as small. 

The 2004 Statistics of United States 

Businesses (Ref. 13) provides 

information on manufacturers by 

employment size. For livestock 

processing and slaughtering there is a 

total of 2,943 firms. Of these, 2,834 

firms have less than 500 employees. 

This suggests that 96 percent of 

livestock processing and slaughtering 

operations would be considered as 

small firms using the SBA definition. 

For chicken processing there are a 

total of 38 firms, only two of which are 

classified as small. Thus, only 5 percent 

of the chicken processors are small 

businesses. 

For fresh and frozen seafood 

processing there is a total of 516 firms. 

Of these, 492 have less than 500 

employees and thus, 95 percent are 

considered to be small firms. 

For frozen fruit, juice, and vegetable 

manufacturers there is a total of 155 

firms. There are 132 of these firms that 

are considered to be small. This suggests 

that 85 percent of the frozen fruit, juice, 

and vegetable manufacturers would be 

considered as small using the SBA 

definition. 

There are a total of 161 roasted nuts 

and peanut butter manufacturers, which 

includes firms that do drying. Because 

only green and raw peanuts, macadamia 

nuts, and pecans will require retail 

country of origin labeling under this 

rule, it is estimated that no more than 

5 percent of peanut, macadamia nut, 

and pecan manufacturing firms will be 

affected. Therefore, 8 peanut, 

macadamia nut, and pecan 

manufacturers are estimated to be 

affected, most if not all of which likely 

could be considered as small. 

In general, approximately 95 percent 

of the manufacturers are classified as 

small businesses. This indicates that 

most of the manufacturers of covered 

commodities impacted by the rule 

would be considered as small entities as 

defined by SBA. 

Manufacturers are included as 

intermediaries and additional costs for 

these firms are discussed in the 

previous section addressing 

wholesalers. Manufacturers of covered 

commodities will encounter increased 

costs in complying with mandatory 

COOL. Manufacturers like wholesalers 

will likely face increased recordkeeping 

costs, costs associated with supplying 

country of origin and, if applicable, 

method of production information to 

retailers, possibly costs associated with 

segmenting products by country of 

origin and, if applicable, method of 

production and possibly additional 

handling costs. Some of the comments 

received on the interim final rule from 

manufacturers have indicated that they 

may limit the number of sources from 

which they procure raw products. These 

changes in business practices could lead 

to the further consolidation of firms in 

the manufacturing sector. The rule does 

not specify the systems that affected 

manufacturers must put in place to 

implement mandatory COOL. Instead, 

manufacturers will be given flexibility 

to develop their own systems to comply 

with the rule. There are many ways in 

which the rule’s requirements may be 

met. 

Producers: Producers of fish, 

perishable agricultural commodities, 

peanuts, macadamia nuts, pecans, and 

ginseng are directly affected by 

mandatory COOL. Producers of cattle, 

hogs, sheep, and goats while not 

directly covered by this rule, will 

nevertheless be affected because 

covered meat commodities are produced 

from livestock. Whether directly or 

indirectly affected, these producers will 

more than likely be required by 

handlers and wholesalers to create and 

maintain country of origin and, if 

applicable, method of production 

information and transfer it to them so 

that they can readily transfer this 

information to retailers. Individuals 

who grow-out chickens for an integrator 

are not expected to be affected by this 

rule. 

SBA defines a small agricultural 

producer as having annual receipts less 

than $750,000. The 2002 United States 

Census of Agriculture (Ref. 7) shows 

there are 1,018,359 farms that raise beef 

cows, and 2,458 are estimated to have 

annual receipts greater than $750,000. 

Thus, at least 99 percent of these beef 

cattle farms would be classified as small 

businesses according to the SBA 

definition. Similarly, an estimated 82 

percent of hog farms would be 

considered as small and an estimated 99 

percent of sheep, lamb, and goat farms 

would be considered as small. 

Based on 2002 United States Census 

of Agriculture information, 92 percent 

of vegetable farms, 94 percent of fruit, 

nut, and berry farms, and 91 percent of 

peanut, macadamia nut, and pecan 

farms could be classified as small. 

Based on 2005 Census of Aquaculture 

data (Ref. 14), it is estimated that at least 

95 percent of fish and shellfish farming 

operations are small. Similar 

information on fishing operations is not 

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2696 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

known to exist. However, it is assumed 

that the majority of these producers 

would be considered small businesses. 

At the production level, agricultural 

producers will need to maintain records 

to establish country of origin and, if 

applicable, method of production 

information for the products they sell. 

This information will need to be 

conveyed as the products move through 

the supply chains. In general, additional 

producer costs include the cost of 

establishing and maintaining a 

recordkeeping system for the country of 

origin and, if applicable, method of 

production information, animal or 

product identification, and labor and 

training. Based on our knowledge of the 

affected industries as well as comments 

received on the interim final rules, the 

proposed rule, and the voluntary 

guidelines, it is believed that producers 

already have much of the information 

available that could be used to 

substantiate country of origin and, if 

applicable, method of production 

claims. Cattle, hog, lamb, sheep, 

chicken, and goat producers may have 

a slightly larger burden for 

recordkeeping than fruit, vegetable, 

ginseng, peanut, macadamia nut, and 

pecan producers because animals can be 

born in one country and fed and 

slaughtered in another country. 

However, this rule provides flexibility 

in labeling meat covered commodities of 

multiple origins. 

The costs for producers are expected 

to be relatively limited and should not 

have a larger impact on small producers 

than large producers. Producer costs are 

estimated at $470 million, or an 

estimated $370 per firm. 

Economic impact on small entities: 

Information on sales or employment is 

not available for all firms or 

establishments shown in Table 1. 

However, it is reasonable to expect that 

this rule will have a substantial impact 

on a number of small businesses. At the 

wholesale and retail levels of the supply 

chain, the efficiency of these operations 

may be affected. For packers and 

processors handling products sourced 

from multiple countries, there may also 

be a desire to operate separate shifts for 

processing products from different 

origins, or to split processing within 

shifts. In either case, costs are likely to 

increase. Records will need to be 

maintained to ensure that accurate 

country of origin and, if applicable, 

method of production information is 

retained throughout the process and to 

permit compliance and enforcement 

reviews. 

Even if only domestic origin products 

or products from a single country of 

origin are handled, there may be 

additional procurement costs to source 

supplies from a single country of origin. 

Additional procurement costs may 

include higher transportation costs due 

to longer shipping distances and higher 

acquisition costs due to supply and 

demand conditions for products from a 

particular country of origin, whether 

domestic or foreign. 

These additional costs may result in 

consolidations within the processor, 

manufacturer, and wholesaler sectors 

for these covered commodities. Also, to 

comply with the rule, retailers may seek 

to limit the number of entities from 

which they purchase covered 

commodities. 

Additional alternatives considered: 

Section 604 of the RFA requires the 

Agency to describe the steps taken to 

minimize the significant economic 

impact on small entities including a 

discussion of alternatives considered. 

As previously mentioned, the COOL 

provisions of the Act leave little 

regulatory discretion in defining who is 

directly covered by this rule. The law 

explicitly identifies those retailers 

required to provide their customers with 

country of origin and, if applicable, 

method of production information for 

covered commodities (namely, retailers 

as defined by PACA). 

The law also requires that any person 

supplying a covered commodity to a 

retailer provide information to the 

retailer indicating the country of origin 

and, if applicable, method of production 

of the covered commodity. Again, the 

law provides no discretion regarding 

this requirement for suppliers of 

covered commodities to provide 

information to retailers. 

The rule has no mandatory 

requirement, however, for any firm 

other than statutorily defined retailers to 

make country of origin and, if 

applicable, method of production 

claims. In other words, no producer, 

processor, wholesaler, or other supplier 

is required to make and substantiate a 

country of origin and, if applicable, 

method of production claim provided 

that the commodity is not ultimately 

sold in the form of a covered commodity 

at the establishment of a retailer subject 

to the rule. Thus, for example, a 

processor and its suppliers may elect 

not to maintain country of origin and, if 

applicable, method of production 

information nor to make country of 

origin and, if applicable, method of 

production claims, but instead sell 

products through marketing channels 

not subject to the rule. Such marketing 

alternatives include foodservice, export, 

and retailers not subject to the rule. It 

is estimated that 47.0 percent of United 

States food sales occur through retailers 

subject to the rule, with the remaining 

53.0 percent sold by retailers not subject 

to the rule or sold as food away from 

home. Additionally, food product sales 

into export markets provide marketing 

opportunities for producers and 

intermediaries that are not subject to the 

provisions of the rule. The majority of 

product sales are not subject to the rule, 

and there are many current examples of 

companies specializing in production of 

commodities for foodservice, export 

markets, and other channels of 

distribution that would not be directly 

affected by the rule. 

The rule does not dictate systems that 

firms will need to put in place to 

implement the requirements. Thus, 

different segments of the affected 

industries will be able to develop their 

own least-cost systems to implement 

COOL requirements. For example, one 

firm may depend primarily on manual 

identification and paper recordkeeping 

systems, while another may adopt 

automated identification and electronic 

recordkeeping systems. 

The rule has no requirements for 

firms to report to USDA. Compliance 

audits will be conducted at firms’ places 

of business. As stated previously, 

required records may be kept by firms 

in the manner most suitable to their 

operations and may be hardcopy 

documents, electronic records, or a 

combination of both. In addition, the 

rule provides flexibility regarding where 

records may be kept. If the product is 

pre-labeled with the necessary country 

of origin and, if applicable, method of 

production information, records 

documenting once-forward and onceback chain of custody information are 

sufficient as long as the source of the 

claim can be tracked and verified. Such 

flexibility should reduce costs for small 

entities to comply with the rule. 

The rule requires that covered 

commodities at subject retailers be 

labeled with country of origin and, as 

applicable, method of production 

information, that suppliers of covered 

commodities provide such information 

to retailers, and that retailers and their 

suppliers maintain records and 

information sufficient to verify all 

country of origin and method of 

production claims. The rule provides 

flexibility regarding the manner in 

which the required information may be 

provided by retailers to consumers. The 

rule provides flexibility in the manner 

in which required country of origin 

information is provided by suppliers to 

retailers, and in the manner in which 

records and information are maintained 

to substantiate country of origin claims. 

Thus, the rule provides the maximum 

flexibility practicable to enable small 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2697 

entities to minimize the costs of the rule 

on their operations. 

Paperwork Reduction Act 

Pursuant to the Paperwork Reduction 

Act (PRA) (44 U.S.C 3501–3520) the 

information collection provisions 

contained in this rule have been 

approved by OMB and have been 

assigned OMB Control Number 0581– 

0250. This revision reflects a 155,464 

increase in the number of annual 

responses and an 861,282 increase in 

the number of annual burden hours 

from the August 1, 2008, interim final 

rule due to the inclusion of fish and 

shellfish data. The Comments and 

Responses section includes the relevant 

comments received and provides the 

Agency’s responses to the comments. A 

description of these provisions is given 

below with an estimate of the annual 

recordkeeping burden. 

Title: Mandatory Country of Origin 

Labeling of Covered Commodities. 

OMB Number: 0581–0250. 

Type of Request: Revision of a 

previously approved collection. 

Expiration Date: November 30, 2011. 

Abstract: The COOL provision in the 

2002 and 2008 Farm Bills requires that 

specified retailers inform consumers as 

to the country of origin and, if 

applicable, method of production (wild 

and/or farm-raised) of covered 

commodities. Covered commodities 

included in this rulemaking are: Muscle 

cuts of beef, lamb, goat, pork, and 

chicken; ground beef, ground lamb, 

ground pork, ground goat, and ground 

chicken; wild and farm-raised fish and 

shellfish; perishable agricultural 

commodities; ginseng; peanuts; 

macadamia nuts; and pecans. Upon 

request by USDA representatives, 

suppliers and retailers subject to this 

subpart shall make available records 

maintained in the normal course of 

business that verify an origin claim. 

Such records shall be provided within 

5 business days of the request and may 

be maintained in any location. Any 

person engaged in the business of 

supplying a covered commodity to a 

retailer (i.e., including but not limited to 

growers, distributors, handlers, packers, 

and processors), whether directly or 

indirectly, must make country of origin 

and, if applicable, method of production 

information available to the retailer and 

must maintain records to establish and 

identify the immediate previous source 

and immediate subsequent recipient of 

a covered commodity for a period of 1 

year from the date of the transaction. In 

addition, the supplier of a covered 

commodity that is responsible for 

initiating a country(ies) of origin claim, 

which in the case of beef, lamb, chicken 

goat, and pork is the slaughter facility, 

must possess records that are necessary 

to substantiate that claim for a period of 

1 year from the date of the transaction. 

In the case of all covered commodities, 

producer affidavits shall also be 

considered acceptable records that 

suppliers may utilize to initiate origin 

claims, provided it is made by someone 

having first-hand knowledge of the 

origin of the covered commodity and 

identifies the covered commodity 

unique to the transaction. 

For an imported covered commodity, 

the importer of record must ensure that 

records provide clear product tracking 

from the port of entry into the United 

States to the immediate subsequent 

recipient. In addition, the records must 

accurately reflect the country of origin 

in relevant United States Customs and 

Border Protection entry documents and 

information systems and must be 

maintained for a period of 1 year from 

the date of the transaction. 

As previously mentioned, upon 

request by USDA representatives, 

suppliers and retailers subject to this 

subpart shall make available to USDA 

representatives, records maintained in 

the normal course of business that verify 

an origin claim. Such records shall be 

provided within 5 business days of the 

request and may be maintained in any 

location. 

Description of Recordkeepers: 

Individuals who supply covered 

commodities, whether directly to 

retailers or indirectly through other 

participants in the marketing chain, are 

required to establish and maintain 

country of origin and, if applicable, 

method of production information for 

the covered commodities and supply 

this information to retailers. As a result, 

producers, handlers, manufacturers, 

wholesalers, importers, and retailers of 

covered commodities will be affected by 

this rule. 

Burden: Approximately 1,333,000 

establishments owned by approximately 

1,299,000 firms are estimated to be 

either directly or indirectly affected by 

this rule. The only changes from the 

IRIA are increases in the numbers of 

affected firms and establishments due to 

including and updating fish and 

shellfish information. 

In general, the supply chain for each 

of the covered commodities includes 

agricultural producers or fish harvesters, 

processors, wholesalers, importers, and 

retailers. Imported products may be 

introduced at any level of the supply 

chain. Other intermediaries, such as 

auction markets, may be involved in 

transferring products from one stage of 

production to the next. The rule’s 

paperwork burden will be incurred by 

the number and types of firms and 

establishments listed in Table 9, which 

follows. 

TABLE 9—COSTS ASSOCIATED WITH PAPERWORK BURDEN

Type Firms Initial costs Establishments Maintenance 

costs Total costs 

Producers: 

Cattle & Calves ......................................... 971,400 75,699,259 971,400 145,651,716 221,350,975 

Sheep & Lambs ........................................ 69,090 5,384,046 69,090 10,359,355 15,743,400 

Hogs & Pigs .............................................. 65,540 5,107,401 65,540 9,827,068 14,934,469 

Goats ........................................................ 9,146 712,745 9,146 1,371,381 2,084,126 

Chicken Producer and Processor ............. 38 2,961 168 25,190 28,151 

Farm-Raised Fish & Shellfish ................... 3,752 292,386 3,752 562,575 854,961 

Fishing ...................................................... 71,128 5,542,863 71,142 3,555,677 9,098,540 

Fruits & Vegetables .................................. 79,800 6,218,654 79,800 3,788,984 10,007,638 

Ginseng ..................................................... 190 14,806 190 9,021 23,828 

Peanuts ..................................................... 650 50,653 650 30,863 81,516 

Pecans ...................................................... 1,119 87,192 1,119 53,130 140,323 

Macadamia ............................................... 53 4,130 53 2,516 6,647 

Handlers, Processors, & Wholesalers: 

Stockyards, Dealers & Market Agencies .. 6,807 8,910,363 6,807 6,589,040 15,499,403 

Livestock Processing & Slaughtering ....... 2,943 3,582,387 3,207 62,086,237 65,938,624 

Meat & Meat Product Wholesale .............. 2,509 3,284,281 2,706 2,619,354 5,903,635 

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2698 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

TABLE 9—COSTS ASSOCIATED WITH PAPERWORK BURDEN—Continued 

Type Firms Initial costs Establishments Maintenance 

costs Total costs 

Chicken Processor and Wholesaler ......... 510 667,590 564 545,941 1,213,531 

Fresh & Frozen Seafood Processing ....... 516 675,444 590 571,108 1,246,552 

Fish & Seafood Wholesale ....................... 2,254 2,950,486 2,330 2,255,393 5,205,879 

Frozen Fruit, Juice & Vegetable Mfg ........ 155 202,895 247 239,091 441,986 

Fresh Fruit & Vegetable Wholesale ......... 4,654 6,092,086 5,016 4,855,388 10,947,474 

Ginseng Dealers ....................................... 46 60,214 46 44,527 104,741 

Roasted Nuts & Peanut Butter Mfg .......... 8 10,472 9 8,712 19,184 

Peanut, Pecans, & Macadamia Nut 

Wholesalers ........................................... 5 6,545 5 4,840 11,385 

General Line Grocery Wholesalers .......... 3,037 3,975,433 3,436 3,325,979 7,301,412 

Retailers ........................................................... 4,040 5,288,360 36,392 247,264,534 252,552,894 

Totals 

Producers ................................... 1,271,906 99,117,097 1,262,050 175,237,476 274,354,573 

Handlers, Processors, & Wholesalers ...................................... 23,444 30,688,196 24,963 83,145,610 113,833,806 

Retailers ..................................... 4,040 5,288,360 36,392 247,264,534 252,552,894 

Grand Total ......................... 1,299,390 135,093,653 1,333,405 505,647,620 640,741,274 

The affected firms and establishments 

will broadly incur two types of costs. 

First, firms will incur initial or start-up 

costs to comply with the rule. Initial 

costs will be borne by each firm, even 

though a single firm may operate more 

than one establishment. Second, 

enterprises will incur additional 

recordkeeping costs associated with 

storing and maintaining records on an 

ongoing basis. These activities will take 

place in each establishment operated by 

each affected business. 

With respect to initial recordkeeping 

costs, it is believed that most producers 

currently maintain many of the types of 

records that would be needed to 

substantiate country of origin and, if 

applicable, method of production 

claims. However, producers do not 

typically record or pass along country of 

origin and, if applicable, method of 

production information to subsequent 

purchasers. Therefore, producers will 

incur some additional incremental costs 

to record, maintain, and transfer country 

of origin and, if applicable, method of 

production information to substantiate 

required claims made at retail. Because 

much of the necessary recordkeeping 

has already been developed during 

typical farm, ranch, and fishing 

operations, it is estimated that the 

incremental costs for producers to 

supplement existing records with 

country of origin and, if applicable, 

method of production information will 

be relatively small per firm. Examples of 

initial or start-up costs would be any 

additional recordkeeping burden 

needed to record the required country of 

origin and, if applicable, method of 

production information and transfer this 

information to handlers, processors, 

wholesalers, or retailers via records 

used in the normal course of business. 

Producers will need an estimated 4 

hours to modify an established system 

for organizing records to carry out the 

purposes of this regulation. This 

additional time would be required to 

modify existing recordkeeping systems 

to incorporate any added information 

needed to substantiate country of origin 

claims. Although not all farm products 

ultimately will be sold at retail 

establishments covered by this rule, it is 

assumed that virtually all producers 

will wish to keep their marketing 

options as flexible as possible. Thus, all 

producers of covered commodities or 

livestock (in the case of the covered 

meat commodities) will establish 

recordkeeping systems sufficient to 

substantiate country of origin claims. It 

is also recognized that some operations 

will require substantially more than 4 

hours modifying their recordkeeping 

systems. In particular, it is believed that 

livestock backgrounders, stockers, and 

feeders will face a greater burden in 

establishing recordkeeping systems. 

These types of operations will need to 

track country of origin information for 

animals brought into the operation as 

well as for animals sold from the 

operation via records used in the normal 

course of business, increasing the 

burden of substantiating country of 

origin claims. Conversely, operations 

such as fruit and vegetable farms that 

produce only United States products 

likely will require little if any change to 

their existing recordkeeping systems in 

order to substantiate country of origin 

claims. Overall, it is believed that 4 

hours represents a reasonable estimate 

of the average additional time that will 

be required per year across all types of 

producers. 

In estimating initial recordkeeping 

costs, 2006 wage rates and benefits 

published by the Bureau of Labor 

statistics from the National 

Compensation Survey are used. 

For producers, it is assumed that the 

added work needed to initially adapt an 

existing recordkeeping system for 

country of origin and, if applicable, 

method of production information is 

primarily a bookkeeping task. This task 

may be performed by independent 

bookkeepers, or in the case of operations 

that perform their own bookkeeping, an 

individual with equivalent skills. The 

Bureau of Labor Statistics (BLS) 

publishes wage rates for bookkeepers, 

accounting, and auditing clerks (Ref. 

15). It is assumed that this wage rate 

represents the cost for producers to hire 

an independent bookkeeper. In the case 

of producers who currently perform 

their own bookkeeping, it is assumed 

that this wage rate represents the 

opportunity cost of the producers’ time 

for performing these tasks. The May 

2006 wage rate is estimated at $15.28 

per hour. For this analysis, an 

additional 27.5 percent is added to the 

wage rate to account for total benefits 

which includes social security, 

unemployment insurance, workers 

compensation, etc. The estimate of this 

additional cost to employers is 

published by the BLS (Ref. 15). At 4 

hours per firm and a cost of $19.48 per 

hour, initial recordkeeping costs to 

producers are estimated at 

approximately $135.1 million to modify 

existing recordkeeping systems in order 

to substantiate country of origin and, if 

applicable, method of production 

claims. 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2699 

The recordkeeping burden on 

handlers, processors, wholesalers, and 

retailers is expected to be more complex 

than the burden most producers face. 

These operations will need to maintain 

country of origin and, if applicable, 

methods of production information on 

the covered commodities purchased and 

subsequently furnish that information to 

the next participant in the supply chain. 

This will require adding additional 

information to a firm’s bills of lading, 

invoices, or other records associated 

with movement of covered commodities 

from purchase to sale. Similar to 

producers, however, it is believed that 

most of these operations already 

maintain many of the types of necessary 

records in their existing systems. Thus, 

it is assumed that country of origin and, 

if applicable, method of production 

information will require only 

modification of existing recordkeeping 

systems rather than development of 

entirely new systems. 

The Label Cost Model Developed for 

FDA by RTI International (Ref. 16; Ref. 

17) is used to estimate the cost of 

including additional country of origin 

and, if applicable, method of production 

information to an operation’s records. It 

is assumed that a limited information, 

one-color redesign of a paper document 

will be sufficient to comply with the 

rule’s recordkeeping requirements. The 

number of hours required to complete 

the redesign is estimated to be 29 with 

an estimated cost at $1,309 per firm. 

While the cost will be much higher for 

some firms and lower for others, it is 

believed that $1,309 represents a 

reasonable estimate of average cost for 

all firms. Based on this, it is estimated 

that the initial recordkeeping costs to 

intermediaries such as handlers, 

processors, and wholesalers (importers 

are included with wholesalers) will be 

approximately $31 million, and initial 

recordkeeping costs at retail will be 

approximately $5 million. The 

recordkeeping cost to producers 

increases due to the inclusion of fish 

and shellfish. 

The total initial recordkeeping costs 

for all firms are thus estimated at 

approximately $135 million. This 

increase in the recordkeeping cost as 

compared to the recordkeeping costs in 

the interim final rule is due to the 

inclusion of fish and shellfish. 

In addition to these one-time costs to 

modify recordkeeping systems, 

enterprises will incur additional 

recordkeeping costs associated with 

storing and maintaining records. These 

costs are referred to as maintenance 

costs in Table 9. Again, the marginal 

cost for producers to maintain and store 

any additional information needed to 

substantiate country of origin and, if 

applicable, method of production claims 

is expected to be relatively small. 

For wild fish harvesters, fruit, 

vegetable, and ginseng producers, and 

peanut, macadamia nut, and pecan 

producers, country of origin and, if 

applicable, method of production 

generally is established at the time that 

the product is harvested, and thus there 

is no need to track country of origin 

and, if applicable, method of production 

information throughout the production 

lifecycle of the product. Likewise, this 

is also the case for chicken as the vast 

majority of chicken products sold by 

covered retailers are from chickens that 

are produced in a controlled 

environment in the United States. This 

group of producers is estimated to 

require an additional 4 hours a year, or 

1 hour per quarter, to maintain country 

of origin and, if applicable, method of 

production information. 

Compared to wild fish harvesters, 

chicken, fruit, vegetable, ginseng, 

peanut, macadamia nut, and pecan 

producers, it is expected that fish 

farmers and livestock producers will 

incur higher costs to maintain country 

of origin and, if applicable, method of 

production information. Wild fish, 

chicken, fruits, vegetables, ginseng, 

peanuts, and macadamia nuts are 

generally harvested once and then 

shipped by the producer to the first 

handler. In contrast, farm-raised fish 

and livestock can and often do move 

through several geographically 

dispersed operations prior to sale for 

processing or slaughter. Cattle, for 

example, typically change ownership 

between 2 to 3 times before they are 

slaughtered and processed. Fish and 

livestock may be acquired from other 

countries by United States producers, 

which may complicate the task of 

tracking country of origin and, if 

applicable, method of production 

information. Because animals are 

frequently sorted and regrouped at 

various stages of production and may 

change ownership several times prior to 

slaughter, country of origin information 

will need to be maintained on animals 

as they move through their lifecycle. 

Thus, it is expected that the 

recordkeeping burden for fish farmers 

and livestock producers will be higher 

than it will be for producers of other 

covered commodities. It is estimated 

that these producers will require an 

additional 12 hours a year, or 1 hour per 

month, to maintain country of origin 

and, if applicable, method of production 

records. Again, this is an average for all 

enterprises. 

It is assumed that farm labor will 

primarily be responsible for maintaining 

country of origin information at 

producers’ enterprises. NASS data (Ref. 

18) are used to estimate average farm 

wage rates—$9.80 per hour for livestock 

workers and $9.31 per hour for other 

crops workers. Applying the rate of 27.5 

percent to account for benefits, this 

results in an hourly rate of $12.50 for 

livestock workers and $11.87 for other 

crops workers. Wage rates for fish 

workers were unavailable, so the 

average wage rate for livestock workers 

is used. Assuming 12 hours of labor per 

year for livestock and farmed fish 

operations and 4 hours per year for all 

other operations, the estimated total 

annual maintenance costs to producers 

is $175 million which is higher than the 

initial maintenance costs in the interim 

final rule. The increase in the estimated 

maintenance cost is due to the inclusion 

of fish and shellfish in this final rule. 

It is expected that intermediaries such 

as handlers, processors, and wholesalers 

will face higher costs per enterprise to 

maintain country of origin and, if 

applicable, method of production 

information compared to costs faced by 

producers. Much of the added cost is 

attributed to the larger average size of 

these enterprises compared to the 

average producer enterprise. In 

addition, these intermediaries will need 

to track products both coming into and 

going out of their businesses. 

With the exception of livestock 

processing and slaughtering 

establishments, the maintenance burden 

hours for country of origin and, if 

applicable, method of production 

recordkeeping is estimated to be 52 

hours per year per establishment. For 

this part of the supply chain, the 

recordkeeping activities are ongoing and 

are estimated to require an additional 

hour a week. It is expected, however, 

that livestock processing and 

slaughtering enterprises will experience 

a more intensive recordkeeping burden. 

These enterprises disassemble carcasses 

into many individual cuts, each of 

which must maintain its country of 

origin identity. In addition, businesses 

that produce ground beef, lamb, goat, 

and pork products may commingle 

product from multiple origins, which 

will require some monitoring and 

recordkeeping to ensure accurate 

labeling and to substantiate the country 

of origin information provided to 

retailers. Maintenance of the 

recordkeeping system at these 

establishments is estimated to total 

1,040 hours per establishment, or 20 

hours per week. 

Maintenance activities will include 

inputting, tracking, and storing country 

of origin and, if applicable, method of 

production information for each covered 

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2700 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

commodity. Since this is mostly an 

administrative task, the cost is estimated 

by using the May 2006 BLS wage rate 

from the National Compensation Survey 

for administrative support occupations 

($14.60 per hour with an additional 27.5 

percent added to cover benefit costs for 

a total of $18.62 per hour). This 

occupation category includes stock and 

inventory clerks and record clerks. 

Coupled with the assumed hours per 

establishment, the resulting total annual 

maintenance costs to handlers, 

processors, and wholesalers and other 

intermediaries are estimated at 

approximately $83 million. 

Retailers will need to supply country 

of origin and, if applicable, method of 

production information for each covered 

commodity sold at each store. 

Therefore, additional recordkeeping 

maintenance costs are believed to affect 

each establishment. Because tracking of 

the covered commodities will be done 

daily, it is believed that an additional 

hour of recordkeeping activities for 

country of origin and, if applicable, 

method of production information will 

be incurred daily at each retail 

establishment. These additional 

activities result in an estimated 365 

additional hours per year per 

establishment. Using the BLS wage rate 

for administrative support occupations 

($14.60 per hour with an additional 27.5 

percent added to cover benefit costs for 

a total of $18.62 per hour) results in 

total estimated annual maintenance 

costs to retailers of $247 million. 

The total maintenance recordkeeping 

costs for all enterprises are thus 

estimated at approximately $506 

million. The increase in the total 

maintenance cost over the maintenance 

cost estimate in the interim final rule is 

due to the inclusion of fish and shellfish 

in this final rule. 

The total first-year recordkeeping 

burden is calculated by summing the 

initial and maintenance costs. The total 

recordkeeping costs are estimated for 

producers at approximately $274 

million; for handlers, processors, and 

wholesalers at approximately $114 

million; and for retailers at 

approximately $253 million. The total 

recordkeeping cost for all participants in 

the supply chain for covered 

commodities is estimated at $641 

million for the first year, with 

subsequent maintenance costs of $506 

million per year. 

Annual Reporting and Recordkeeping 

Burden for the First Year (Initial): Public 

reporting burden for establishing this 

initial recordkeeping is estimated to 

average 4.5 hours per year per 

individual recordkeeper. 

Estimated Number of Firms 

Recordkeepers: 1,299,390. 

Estimated Total Annual Burden: 

5,884,661 hours. 

Annual Reporting and Recordkeeping 

Burden (Maintenance): Public reporting 

burden for recordkeeping storage and 

maintenance is estimated to average 

23.8 hours per year per individual 

recordkeeper. 

Estimated Number of Establishments 

Recordkeepers: 1,333,405. 

Estimated Total Annual Burden: 

31,790,642 hours. 

To the extent possible, the Agency 

complies with the e-Government Act, 

which requires Government agencies in 

general to provide the public the option 

of submitting information or transacting 

business electronically to the maximum 

extent possible. This information 

collection has no forms and is only for 

recordkeeping purposes. Therefore, the 

provisions of an electronic submission 

alternative are not required. 

References 

1. Dinopoulos, Elias, Grigorios Livanis, and 

Carol West. ‘‘How Cool is C.O.O.L.?’’ 

Working Paper WPTC 05–11, University 

of Florida, International Agricultural 

Trade and Policy Center, 2005. 

2. Plastina, Alejandro and Konstantinos 

Giannakas. ‘‘Market and Welfare Effects 

of Mandatory Country-of-Origin Labeling 

in the US Specialty Crops Sector.’’ 

Selected Paper American Agricultural 

Economics Association Annual Meeting, 

Portland, Oregon, July 2007. 

3. Mabiso, Athur, James Sterns, Lisa House, 

and Allen Wysocki. ‘‘Estimating 

Consumers’’ Willingness-To-Pay for 

Country-Of-Origin Labels in Fresh 

Apples and Tomatoes: A Double-Hurdle 

Probit Analysis of American Data Using 

Factor Scores.’’ American Agricultural 

Economics Association Annual Meeting, 

Providence, Rhode Island, July 2005. 

4. Krissoff, Barry, Fred Kuchler, Kenneth 

Nelson, Janet Perry, and Agapi Somwaru. 

‘‘Country of Origin Labeling: Theory and 

Observation. USDA, ERS, WRS–04–02, 

January 2004. 

5. NASS, USDA, Wisconsin Department of 

Agriculture. Wisconsin 2007 

Agricultural Statistics. http:// 

www.nass.usda.gov/Statistics_by_State/ 

Wisconsin/ 

6. NASS, USDA, Hawaii Department of 

Agriculture. Hawaii 2007 Agricultural 

Statistics. http://www.nass.usda.gov/hi/ 

stats/t_of_c.htm 

7. NASS, USDA. 2002 Census of Agriculture. 

8. ERS, USDA. Food CPI, Prices and 

Expenditures: Sales of Food at Home by 

Type of Outlet. http://www.ers.usda.gov/ 

Briefing/CPIFoodAndExpenditures/Data/ 

table16.htm 

9. U.S. Census Bureau. 2002 Economic 

Census. Retail Trade Subject Series. 

Establishment and Firm Size. 

EC97R44S–SZ. Issued September 2004. 

10. Office of the Chief Economist, USDA. 

USDA Agricultural Baseline Projections 

to 2016, Staff Report WAOB–2007–1. 

February 2007. 

11. Bureau of Economic Analysis. http:// 

www.bea.gov/national/index.htm#gdp. 

12. AMS, USDA. Perishable Agricultural 

Commodities Act database. 

13. U.S. Census Bureau. 2004 Statistics of 

U.S. Businesses. 

14. NASS, USDA. 2005 Census of 

Aquaculture. 

15. Bureau of Labor Statistics, Department of 

Labor, National Compensation Survey, 

May 2006, Employer Cost for Employee 

Compensation. 

16. Food and Drug Administration. 

‘‘Establishment and Maintenance of 

Records Under the Public Health 

Security and Bioterrorism Preparedness 

and Response Act of 2002,’’ proposed 

rule. May 9, 2003. 

17. RTI, International 2000. FDA Labeling 

Cost Model: Final Report. Revised April 

2002. 

18. NASS, USDA. Farm Labor, August 17, 

2007. 

Executive Order 12988 

The contents of this rule were 

reviewed under Executive Order 12988, 

Civil Justice Reform. This rule is not 

intended to have a retroactive effect. 

States and local jurisdictions are 

preempted from creating or operating 

country of origin labeling programs for 

the commodities specified in the Act 

and these regulations. With regard to 

other Federal statutes, all labeling 

claims made in conjunction with this 

regulation must be consistent with other 

applicable Federal requirements. There 

are no administrative procedures that 

must be exhausted prior to any judicial 

challenge to the provisions of this rule. 

Civil Rights Review 

AMS considered the potential civil 

rights implications of this rule on 

minorities, women, or persons with 

disabilities to ensure that no person or 

group shall be discriminated against on 

the basis of race, color, national origin, 

gender, religion, age, disability, sexual 

orientation, marital or family status, 

political beliefs, parental status, or 

protected genetic information. This 

review included persons that are 

employees of the entities that are subject 

to these regulations. This final rule does 

not require affected entities to relocate 

or alter their operations in ways that 

could adversely affect such persons or 

groups. Further, this rule will not deny 

any persons or groups the benefits of the 

program or subject any persons or 

groups to discrimination. 

Executive Order 13132 

This rule has been reviewed under 

Executive Order 13132, Federalism. 

This Order directs agencies to construe, 

in regulations and otherwise, a Federal 

statute to preempt State law only where 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2701 

the statute contains an express 

preemption provision or there is some 

other clear evidence to conclude that 

the Congress intended preemption of 

State law, or where the exercise of State 

authority conflicts with the exercise of 

Federal authority under the Federal 

statute. This rule is required by the 2002 

Farm Bill, as amended by the 2008 Farm 

Bill. 

While this statute does not contain an 

express preemption provision, it is clear 

from the language in the statute that 

Congress intended preemption of State 

law. The law assigns enforcement 

responsibilities to the Secretary and 

encourages the Secretary to enter into 

partnerships with States with 

enforcement infrastructure to assist in 

the administration of the program. The 

law provides for a 30-day period in 

which retailers and suppliers may take 

the necessary corrective action after 

receiving notice of a nonconformance. 

The Secretary can impose a civil penalty 

only if the retailer or supplier has not 

made a good faith effort to comply and 

only after the Secretary provides notice 

and an opportunity for a hearing. 

Allowing private rights of actions would 

frustrate the purpose of this 

comprehensive enforcement system in 

which Congress struck a delicate 

balance of imposing a requirement, but 

ensuring that the agency had wide 

latitude in enforcement discretion. 

Thus, it is clear that State laws and 

other actions were intended to be 

preempted. 

Several States have implemented 

mandatory programs for country of 

origin labeling of certain commodities. 

For example, Alabama, Arkansas, 

Mississippi, and Louisiana have origin 

labeling requirements for certain 

seafood products. Other States 

including Wyoming, Idaho, North 

Dakota, South Dakota, Louisiana, 

Kansas, and Mississippi have origin 

labeling requirements for certain meat 

products. In addition, the State of 

Florida and the State of Maine have 

origin labeling requirements for fresh 

produce items. 

To the extent that these State country 

of origin labeling programs encompass 

commodities that are not governed by 

this regulation, the States may continue 

to operate them. For those State country 

of origin labeling programs that 

encompass commodities that are 

governed by this regulation, these 

programs are preempted. In most cases, 

the requirements contained within this 

rule are more stringent and prescriptive 

than the requirements of the State 

programs. With regard to consultation 

with States, as directed by the Executive 

Order 13132, AMS has consulted with 

the States that have country of origin 

labeling programs. 

The effective date of this regulation is 

March 16, 2009. In the August 1, 2008, 

interim final rule for the remaining 

covered commodities, the Agency 

indicated that during the six month 

period following the effective date of 

that regulation, AMS would conduct an 

industry education and outreach 

program concerning the provisions and 

requirements of that rule. AMS will 

continue this period of informed 

compliance for this regulation through 

March 2009. 

List of Subjects 

7 CFR Part 60 

Agricultural commodities, Fish, Food 

labeling, Reporting and recordkeeping 

requirements. 

7 CFR Part 65 

Agricultural commodities, Food 

labeling, Meat and meat products, 

Macadamia nuts, Peanuts, Pecans, 

Reporting and recordkeeping 

requirements. 

■ For the reasons set forth in the 

preamble, 7 CFR chapter I is amended 

as follows: 

■ 1. Part 60 is revised to read as follows: 

PART 60—COUNTRY OF ORIGIN 

LABELING FOR FISH AND SHELLFISH 

Subpart A—General Provisions 

Definitions 

Sec. 

60.101 Act. 

60.102 AMS. 

60.103 Commingled covered commodities. 

60.104 Consumer package. 

60.105 Covered commodity. 

60.106 Farm-raised fish. 

60.107 Food service establishment. 

60.108–60.110 [Reserved] 

60.111 Hatched. 

60.112 Ingredient. 

60.113 [Reserved] 

60.114 Legibly. 

60.115 [Reserved] 

60.116 Person. 

60.117 [Reserved] 

60.118 Pre-labeled. 

60.119 Processed food item. 

60.120 [Reserved] 

60.121 [Reserved] 

60.122 Production step. 

60.123 Raised. 

60.124 Retailer. 

60.125 Secretary. 

60.126 [Reserved] 

60.127 United States. 

60.128 United States country of origin. 

60.129 USDA. 

60.130 U.S. flagged vessel. 

60.131 Vessel flag. 

60.132 Waters of the United States. 

60.133 Wild fish and shellfish. 

Country of Origin Notification 

60.200 Country of origin notification. 

60.300 Labeling. 

Recordkeeping 

60.400 Recordkeeping requirements. 

Appendix A to Subpart A-Exclusive 

Economic Zone and Maritime 

Boundaries; Notice of Limits 

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

Subpart A—General Provisions 

Definitions 

§ 60.101 Act. 

Act means the Agricultural Marketing 

Act of 1946 (7 U.S.C. 1621 et seq.). 

§ 60.102 AMS. 

AMS means the Agricultural 

Marketing Service, United States 

Department of Agriculture. 

§ 60.103 Commingled covered 

commodities. 

Commingled covered commodities 

means covered commodities (of the 

same type) presented for retail sale in a 

consumer package that have been 

prepared from raw material sources 

having different origins. 

§ 60.104 Consumer package. 

Consumer package means any 

container or wrapping in which a 

covered commodity is enclosed for the 

delivery and/or display of such 

commodity to retail purchasers. 

§ 60.105 Covered commodity. 

(a) Covered commodity means: 

(1) [Reserved] 

(2) [Reserved] 

(3) Farm-raised fish and shellfish 

(including fillets, steaks, nuggets, and 

any other flesh); 

(4) Wild fish and shellfish (including 

fillets, steaks, nuggets, and any other 

flesh); 

(5) [Reserved] 

(6) [Reserved] 

(b) Covered commodities are excluded 

from this part if the commodity is an 

ingredient in a processed food item as 

defined in § 60.119. 

§ 60.106 Farm-raised fish. 

Farm-raised fish means fish or 

shellfish that have been harvested in 

controlled environments, including 

ocean-ranched (e.g., penned) fish and 

including shellfish harvested from 

leased beds that have been subjected to 

production enhancements such as 

providing protection from predators, the 

addition of artificial structures, or 

providing nutrients; and fillets, steaks, 

nuggets, and any other flesh from a 

farm-raised fish or shellfish. 

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§ 60.107 Food service establishment. 

Food service establishment means a 

restaurant, cafeteria, lunch room, food 

stand, saloon, tavern, bar, lounge, or 

other similar facility operated as an 

enterprise engaged in the business of 

selling food to the public. Similar food 

service facilities include salad bars, 

delicatessens, and other food enterprises 

located within retail establishments that 

provide ready-to-eat foods that are 

consumed either on or outside of the 

retailer’s premises. 

§ 60.108–60.110 [Reserved] 

§ 60.111 Hatched. 

Hatched means emerged from the egg. 

§ 60.112 Ingredient. 

Ingredient means a component either 

in part or in full, of a finished retail food 

product. 

§ 60.113 [Reserved] 

§ 60.114 Legible. 

Legible means text that can be easily 

read. 

§ 60.115 [Reserved] 

§ 60.116 Person. 

Person means any individual, 

partnership, corporation, association, or 

other legal entity. 

§ 60.117 [Reserved] 

§ 60.118 Pre-labeled. 

Pre-labeled means a covered 

commodity that has the commodity’s 

country of origin and method of 

production and the name and place of 

business of the manufacturer, packer, or 

distributor on the covered commodity 

itself, on the package in which it is sold 

to the consumer, or on the master 

shipping container. The place of 

business information must include at a 

minimum the city and state or other 

acceptable locale designation. 

§ 60.119 Processed food item. 

Processed food item means a retail 

item derived from fish or shellfish that 

has undergone specific processing 

resulting in a change in the character of 

the covered commodity, or that has been 

combined with at least one other 

covered commodity or other substantive 

food component (e.g., breading, tomato 

sauce), except that the addition of a 

component (such as water, salt, or 

sugar) that enhances or represents a 

further step in the preparation of the 

product for consumption, would not in 

itself result in a processed food item. 

Specific processing that results in a 

change in the character of the covered 

commodity includes cooking (e.g., 

frying, broiling, grilling, boiling, 

steaming, baking, roasting), curing (e.g., 

salt curing, sugar curing, drying), 

smoking (hot or cold), and restructuring 

(e.g., emulsifying and extruding, 

compressing into blocks and cutting 

into portions). Examples of items 

excluded include fish sticks, surimi, 

mussels in tomato sauce, seafood 

medley, coconut shrimp, soups, stews, 

and chowders, sauces, pates, smoked 

salmon, marinated fish fillets, canned 

tuna, canned sardines, canned salmon, 

crab salad, shrimp cocktail, gefilte fish, 

sushi, and breaded shrimp. 

§ 60.120 [Reserved] 

§ 60.121 [Reserved] 

§ 60.122 Production step. 

Production step means in the case of: 

(a) [Reserved] 

(b) Farm-raised Fish and Shellfish: 

Hatched, raised, harvested, and 

processed. 

(c) Wild Fish and Shellfish: Harvested 

and processed. 

§ 60.123 Raised. 

Raised means in the case of: 

(a) [Reserved] 

(b) Farm-raised fish and shellfish as it 

relates to the production steps defined 

in § 60.122: The period of time from 

hatched to harvested. 

§ 60.124 Retailer. 

Retailer means any person licensed as 

a retailer under the Perishable 

Agricultural Commodities Act of 1930 

(7 U.S.C. 499a(b)). 

§ 60.125 Secretary. 

Secretary means the Secretary of 

Agriculture of the United States or any 

person to whom the Secretary’s 

authority has been delegated. 

§ 60.126 [Reserved] 

§ 60.127 United States. 

United States means the 50 States, the 

District of Columbia, the 

Commonwealth of Puerto Rico, the U.S. 

Virgin Islands, American Samoa, Guam, 

the Northern Mariana Islands, and any 

other Commonwealth, territory, or 

possession of the United States, and the 

waters of the United States as defined in 

§ 60.132. 

§ 60.128 United States country of origin. 

United States country of origin means 

in the case of: 

(a) [Reserved] 

(b) [Reserved] 

(c) Farm-raised Fish and Shellfish: 

From fish or shellfish hatched, raised, 

harvested, and processed in the United 

States, and that has not undergone a 

substantial transformation (as 

established by U.S. Customs and Border 

Protection) outside of the United States. 

(d) Wild-fish and Shellfish: From fish 

or shellfish 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, 

and that has not undergone a substantial 

transformation (as established by U.S. 

Customs and Border Protection) outside 

of the United States. 

(e) [Reserved] 

(f) [Reserved] 

§ 60.129 USDA. 

USDA means the United States 

Department of Agriculture. 

§ 60.130 U.S. flagged vessel. 

U.S. flagged vessel means: 

(a) Any vessel documented under 

chapter 121 of title 46, United States 

Code; or 

(b) Any vessel numbered in 

accordance with chapter 123 of title 46, 

United States Code. 

§ 60.131 Vessel flag. 

Vessel flag means the country of 

registry for a vessel, ship, or boat. 

§ 60.132 Waters of the United States. 

Waters of the United States means 

those fresh and ocean waters contained 

within the outer limit of the Exclusive 

Economic Zone (EEZ) of the United 

States as described by the Department of 

State Public Notice 2237 published in 

the Federal Register volume 60, No. 

163, August 23, 1995, pages 43825– 

43829. The Department of State notice 

is republished in Appendix A to this 

subpart. 

§ 60.133 Wild fish and shellfish. 

Wild fish and shellfish means 

naturally-born or hatchery-originated 

fish or shellfish released in the wild, 

and caught, taken, or harvested from 

non-controlled waters or beds; and 

fillets, steaks, nuggets, and any other 

flesh from a wild fish or shellfish. 

Country of Origin Notification 

§ 60.200 Country of origin notification. 

In providing notice of the country of 

origin as required by the Act, the 

following requirements shall be 

followed by retailers: 

(a) General. Labeling of covered 

commodities offered for sale whether 

individually, in a bulk bin, display case, 

carton, crate, barrel, cluster, or 

consumer package must contain country 

of origin and method of production 

information (wild and/or farm-raised) as 

set forth in this regulation. 

(b) Exemptions. Food service 

establishments as defined in § 60.107 

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are exempt from labeling under this 

subpart. 

(c) Exclusions. A covered commodity 

is excluded from this subpart if it is an 

ingredient in a processed food item as 

defined in § 60.119. 

(d) Designation of Method of 

Production (Wild and/or Farm-Raised). 

Fish and shellfish covered commodities 

shall also be labeled to indicate whether 

they are wild and/or farm-raised as 

those terms are defined in this 

regulation. 

(e) Labeling Covered Commodities of 

United States Origin. A covered 

commodity may only bear the 

declaration of ‘‘Product of the U.S.’’ at 

retail if it meets the definition of United 

States Country of Origin as defined in 

§ 60.128. 

(f) Labeling Imported Products That 

Have Not Undergone Substantial 

Transformation in the United States. An 

imported covered commodity shall 

retain its origin as declared to U.S. 

Customs and Border Protection at the 

time the product entered the United 

States, through retail sale, provided that 

it has not undergone a substantial 

transformation (as established by U.S. 

Customs and Border Protection) in the 

United States. 

(g) Labeling Imported Products That 

Have Subsequently Been Substantially 

Transformed in the United States. 

(1) [Reserved] 

(2) Wild and Farm-Raised Fish and 

Shellfish: If a covered commodity was 

imported from country X and 

subsequently substantially transformed 

(as established by U.S. Customs and 

Border Protection) in the United States 

or aboard a U.S. flagged vessel, such 

product shall be labeled at retail as 

‘‘From country X, processed in the 

United States.’’ Alternatively, the 

product may be labeled as ‘‘Product of 

country X and the United States’’. 

(h) Labeling Commingled Covered 

Commodities. (1) For imported covered 

commodities that have not subsequently 

been substantially transformed in the 

United States that are commingled with 

other imported covered commodities 

that have not been substantially 

transformed in the United States, and/ 

or covered commodities of U.S. origin 

and/or covered commodities as 

described in § 60.200(g), the declaration 

shall indicate the countries of origin for 

covered commodities in accordance 

with existing Federal legal 

requirements. 

(2) For imported covered commodities 

that have subsequently undergone 

substantial transformation in the United 

States that are commingled with other 

imported covered commodities that 

have subsequently undergone 

substantial transformation in the United 

States (either prior to or following 

substantial transformation in the United 

States) and/or U.S. origin covered 

commodities, the declaration shall 

indicate the countries of origin 

contained therein or that may be 

contained therein. 

(i) Remotely Purchased Products. For 

sales of a covered commodity in which 

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 may provide the 

country of origin notification and 

method of production (wild and/or 

farm-raised) designation either on the 

sales vehicle or at the time the product 

is delivered to the consumer. 

§ 60.300 Labeling. 

(a) Country of origin declarations and 

method of production (wild and/or 

farm-raised) designations can either be 

in the form of a placard, sign, label, 

sticker, band, twist tie, pin tag, or other 

format that provides country of origin 

and method of production information. 

The country of origin declaration and 

method of production (wild and/or 

farm-raised) designation may be 

combined or made separately. Except as 

provided in § 60.200(g) and 60.200(h) of 

this regulation, the declaration of the 

country(ies) of origin of a product shall 

be listed according to applicable Federal 

legal requirements. Country of origin 

declarations may be in the form of a 

check box provided it is in conformance 

with other Federal legal requirements. 

Various forms of the production 

designation are acceptable, including 

‘‘wild caught’’, ‘‘wild’’, ‘‘farm-raised’’, 

‘‘farmed’’, or a combination of these 

terms for blended products that contain 

both wild and farm-raised fish or 

shellfish, provided it can be readily 

understood by the consumer and is in 

conformance with other Federal labeling 

laws. Designations such as ‘‘ocean 

caught’’, ‘‘caught at sea’’, ‘‘line caught’’, 

‘‘cultivated’’, or ‘‘cultured’’ are not 

acceptable substitutes. Alternatively, 

method of production (wild and/or 

farm-raised) designations may be in the 

form of a check box. 

(b) The declaration of the country(ies) 

of origin and method(s) of production 

(wild and/or farm-raised) (e.g., placard, 

sign, label, sticker, band, twist tie, pin 

tag, or other display) must be placed in 

a conspicuous location, so as to render 

it likely to be read and understood by 

a customer under normal conditions of 

purchase. 

(c) The declaration of the country(ies) 

of origin and the method(s) of 

production (wild and/or farm-raised) 

may be typed, printed, or handwritten 

provided it is in conformance with other 

Federal labeling laws and does not 

obscure other labeling information 

required by other Federal regulations. 

(d) A bulk container (e.g., display 

case, shipper, bin, carton, and barrel), 

used at the retail level to present 

product to consumers, may contain a 

covered commodity from more than one 

country of origin and/or more than one 

method of production (wild and farmraised) provided all possible origins 

and/or methods of production are listed. 

(e) In general, country abbreviations 

are not acceptable. Only those 

abbreviations approved for use under 

CBP rules, regulations, and policies, 

such as ‘‘U.K.’’ for ‘‘The United 

Kingdom of Great Britain and Northern 

Ireland’’, ‘‘Luxemb’’ for Luxembourg, 

and ‘‘U.S. or USA’’ for the ‘‘United 

States’’ are acceptable. The adjectival 

form of the name of a country may be 

used as proper notification of the 

country(ies) of origin of imported 

commodities provided the adjectival 

form of the name does not appear with 

other words so as to refer to a kind or 

species of product. Symbols or flags 

alone may not be used to denote country 

of origin. 

(f) State or regional label designations 

are not acceptable in lieu of country of 

origin labeling. 

Recordkeeping 

§ 60.400 Recordkeeping requirements. 

(a) General. (1) All records must be 

legible and may be maintained in either 

electronic or hard copy formats. Due to 

the variation in inventory and 

accounting documentary systems, 

various forms of documentation and 

records will be acceptable. 

(2) Upon request by USDA 

representatives, suppliers and retailers 

subject to this subpart shall make 

available to USDA representatives, 

records maintained in the normal course 

of business that verify an origin claim 

and method of production (wild and/or 

farm-raised). Such records shall be 

provided within 5 business days of the 

request and may be maintained in any 

location. 

(b) Responsibilities of suppliers. (1) 

Any person engaged in the business of 

supplying a covered commodity to a 

retailer, whether directly or indirectly, 

must make available information to the 

buyer about the country(ies) of origin 

and method(s) of production (wild and/ 

or farm-raised), of the covered 

commodity. This information may be 

provided either on the product itself, on 

the master shipping container, or in a 

document that accompanies the product 

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2704 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

through retail sale provided that it 

identifies the product and its 

country(ies) of origin and method(s) of 

production. In addition, the supplier of 

a covered commodity that is responsible 

for initiating a country(ies) of origin and 

method(s) of production (wild and/or 

farm-raised) claim must possess records 

that are necessary to substantiate that 

claim for a period of 1 year from the 

date of the transaction. Producer 

affidavits shall also be considered 

acceptable records that suppliers may 

utilize to initiate origin claims, provided 

it is made by someone having first-hand 

knowledge of the origin of the covered 

commodity and identifies the covered 

commodity unique to the transaction. 

(2) Any intermediary supplier 

handling a covered commodity that is 

found to be designated incorrectly as to 

the country of origin and/or method of 

production (wild and/or farm-raised) 

shall not be held liable for a violation 

of the Act by reason of the conduct of 

another if the intermediary supplier 

relied on the designation provided by 

the initiating supplier or other 

intermediary supplier, unless the 

intermediary supplier willfully 

disregarded information establishing 

that the country of origin and/or method 

of production (wild and/or farm-raised) 

declaration was false. 

(3) Any person engaged in the 

business of supplying a covered 

commodity to a retailer, whether 

directly or indirectly (i.e., including but 

not limited to harvesters, producers, 

distributors, handlers, and processors), 

must maintain records to establish and 

identify the immediate previous source 

(if applicable) and immediate 

subsequent recipient of a covered 

commodity for a period of 1 year from 

the date of the transaction. 

(4) For an imported covered 

commodity (as defined in § 60.200(f)), 

the importer of record as determined by 

U.S. Customs and Border Protection, 

must ensure that records: provide clear 

product tracking from the port of entry 

into the United States to the immediate 

subsequent recipient and accurately 

reflect the country of origin and method 

of production (wild and/or farm-raised) 

of the item as identified in relevant CBP 

entry documents and information 

systems; and must maintain such 

records for a period of 1 year from the 

date of the transaction. 

(c) Responsibilities of retailers. (1) In 

providing the country of origin and 

method of production (wild and/or 

farm-raised) notification for a covered 

commodity, in general, retailers are to 

convey the origin and method of 

production information provided to 

them by their suppliers. Only if the 

retailer physically commingles a 

covered commodity of different origins 

and/or methods of production in 

preparation for retail sale, whether in a 

consumer-ready package or in a bulk 

display (and not discretely packaged) 

(i.e., full service fish case), can the 

retailer initiate a multiple country of 

origin and/or method of production 

designation that reflects the actual 

countries of origin and method of 

production for the resulting covered 

commodity. 

(2) Records and other documentary 

evidence relied upon at the point of sale 

to establish a covered commodity’s 

country(ies) of origin and designation of 

wild and/or farm-raised must either be 

maintained at the retail facility or at 

another location for as long as the 

product is on hand and provided to any 

duly authorized representative of USDA 

in accordance with § 60.400(a)(2). For 

pre-labeled products, the label itself is 

sufficient information on which the 

retailer may rely to establish the 

product’s origin and method(s) of 

production (wild and/or farm-raised) 

and no additional records documenting 

origin and method of production 

information are necessary. 

(3) Records that identify the covered 

commodity, the retail supplier, and for 

products that are not pre-labeled, the 

country of origin information and the 

method(s) of production (wild and/or 

farm-raised) must be maintained for a 

period of 1 year from the date the 

declaration is made at retail. 

(4) Any retailer handling a covered 

commodity that is found to be 

designated incorrectly as to the country 

of origin and/or the method of 

production (wild and/or farm-raised) 

shall not be held liable for a violation 

of the Act by reason of the conduct of 

another if the retailer relied on the 

designation provided by the supplier, 

unless the retailer willfully disregarded 

information establishing that the 

country of origin and/or method of 

production declaration was false. 

Subpart B—[Reserved] 

■ 2. Part 65 is revised to read as follows: 

PART 65—COUNTRY OF ORIGIN 

LABELING OF BEEF, PORK, LAMB, 

CHICKEN, GOAT MEAT, PERISHABLE 

AGRICULTURAL COMMODITIES, 

MACADAMIA NUTS, PECANS, 

PEANUTS, AND GINSENG 

Subpart A—General Provisions 

Definitions 

65.100 Act. 

65.105 AMS. 

65.110 Beef. 

65.115 Born. 

65.120 Chicken. 

65.125 Commingled covered commodities. 

65.130 Consumer package. 

65.135 Covered commodity. 

65.140 Food service establishment. 

65.145 Ginseng. 

65.150 Goat. 

65.155 Ground beef. 

65.160 Ground chicken. 

65.165 Ground goat. 

65.170 Ground lamb. 

65.175 Ground pork. 

65.180 Imported for immediate slaughter. 

65.185 Ingredient. 

65.190 Lamb. 

65.195 Legibly. 

65.205 Perishable agricultural commodity. 

65.210 Person. 

65.215 Pork. 

65.218 Pre-labeled. 

65.220 Processed food item. 

65.225 Produced. 

65.230 Production step. 

65.235 Raised. 

65.240 Retailer. 

65.245 Secretary. 

65.250 Slaughter. 

65.255 United States. 

65.260 United States country of origin. 

65.265 USDA. 

Country of Origin Notification 

65.300 Country of origin notification. 

65.400 Labeling. 

Recordkeeping 

65.500 Recordkeeping requirements. 

Subpart B—[Reserved] 

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

Subpart A—General Provisions 

Definitions 

§ 65.100 Act. 

Act means the Agricultural Marketing 

Act of 1946, (7 U.S.C. 1621 et seq.). 

§ 65.105 AMS. 

AMS means the Agricultural 

Marketing Service, United States 

Department of Agriculture. 

§ 65.110 Beef. 

Beef means meat produced from 

cattle, including veal. 

§ 65.115 Born. 

Born in the case of chicken means 

hatched from the egg. 

§ 65.120 Chicken. 

Chicken has the meaning given the 

term in 9 CFR 381.170(a)(1). 

§ 65.125 Commingled covered 

commodities. 

Commingled covered commodities 

means covered commodities (of the 

same type) presented for retail sale in a 

consumer package that have been 

prepared from raw material sources 

having different origins. 

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§ 65.130 Consumer package. 

Consumer package means any 

container or wrapping in which a 

covered commodity is enclosed for the 

delivery and/or display of such 

commodity to retail purchasers. 

§ 65.135 Covered commodity. 

(a) Covered commodity means: 

(1) Muscle cuts of beef, lamb, chicken, 

goat, and pork; 

(2) Ground beef, ground lamb, ground 

chicken, ground goat, and ground pork; 

(3) Perishable agricultural 

commodities; 

(4) Peanuts; 

(5) Macadamia nuts; 

(6) Pecans; and 

(7) Ginseng. 

(b) Covered commodities are excluded 

from this part if the commodity is an 

ingredient in a processed food item as 

defined in § 65.220. 

§ 65.140 Food service establishment. 

Food service establishment means a 

restaurant, cafeteria, lunch room, food 

stand, saloon, tavern, bar, lounge, or 

other similar facility operated as an 

enterprise engaged in the business of 

selling food to the public. Similar food 

service facilities include salad bars, 

delicatessens, and other food enterprises 

located within retail establishments that 

provide ready-to-eat foods that are 

consumed either on or outside of the 

retailer’s premises. 

§ 65.145 Ginseng. 

Ginseng means ginseng root of the 

genus Panax. 

§ 65.150 Goat. 

Goat means meat produced from 

goats. 

§ 65.155 Ground beef. 

Ground beef has the meaning given 

that term in 9 CFR 319.15(a), i.e., 

chopped fresh and/or frozen beef with 

or without seasoning and without the 

addition of beef fat as such, and 

containing no more than 30 percent fat, 

and containing no added water, 

phosphates, binders, or extenders, and 

also includes products defined by the 

term ‘‘hamburger’’ in 9 CFR 319.15(b). 

§ 65.160 Ground chicken. 

Ground chicken means comminuted 

chicken of skeletal origin that is 

produced in conformance with all 

applicable Food Safety and Inspection 

Service labeling guidelines. 

§ 65.165 Ground goat. 

Ground goat means comminuted goat 

of skeletal origin that is produced in 

conformance with all applicable Food 

Safety and Inspection Service labeling 

guidelines. 

§ 65.170 Ground lamb. 

Ground lamb means comminuted 

lamb of skeletal origin that is produced 

in conformance with all applicable Food 

Safety and Inspection Service labeling 

guidelines. 

§ 65.175 Ground pork. 

Ground pork means comminuted pork 

of skeletal origin that is produced in 

conformance with all applicable Food 

Safety and Inspection Service labeling 

guidelines. 

§ 65.180 Imported for immediate slaughter. 

Imported for immediate slaughter 

means imported into the United States 

for ‘‘immediate slaughter’’ as that term 

is defined in 9 CFR 93.400, i.e., 

consignment directly from the port of 

entry to a recognized slaughtering 

establishment and slaughtered within 2 

weeks from the date of entry. 

§ 65.185 Ingredient. 

Ingredient means a component either 

in part or in full, of a finished retail food 

product. 

§ 65.190 Lamb. 

Lamb means meat produced from 

sheep. 

§ 65.195 Legible. 

Legible means text that can be easily 

read. 

§ 65.205 Perishable agricultural 

commodity. 

Perishable agricultural commodity 

means fresh and frozen fruits and 

vegetables of every kind and character 

that have not been manufactured into 

articles of a different kind or character 

and includes cherries in brine as 

defined by the Secretary in accordance 

with trade usages. 

§ 65.210 Person. 

Person means any individual, 

partnership, corporation, association, or 

other legal entity. 

§ 65.215 Pork. 

Pork means meat produced from hogs. 

§ 65.218 Pre-labeled. 

Pre-labeled means a covered 

commodity that has the commodity’s 

country of origin and the name and 

place of business of the manufacturer, 

packer, or distributor on the covered 

commodity itself, on the package in 

which it is sold to the consumer, or on 

the master shipping container. The 

place of business information must 

include at a minimum the city and state 

or other acceptable locale designation. 

§ 65.220 Processed food item. 

Processed food item means a retail 

item derived from a covered commodity 

that has undergone specific processing 

resulting in a change in the character of 

the covered commodity, or that has been 

combined with at least one other 

covered commodity or other substantive 

food component (e.g., chocolate, 

breading, tomato sauce), except that the 

addition of a component (such as water, 

salt, or sugar) that enhances or 

represents a further step in the 

preparation of the product for 

consumption, would not in itself result 

in a processed food item. Specific 

processing that results in a change in 

the character of the covered commodity 

includes cooking (e.g., frying, broiling, 

grilling, boiling, steaming, baking, 

roasting), curing (e.g., salt curing, sugar 

curing, drying), smoking (hot or cold), 

and restructuring (e.g., emulsifying and 

extruding). Examples of items excluded 

include teriyaki flavored pork loin, 

roasted peanuts, breaded chicken 

tenders, and fruit medley. 

§ 65.225 Produced. 

Produced in the case of a perishable 

agricultural commodity, peanuts, 

ginseng, pecans, and macadamia nuts 

means harvested. 

§ 65.230 Production step. 

Production step means, in the case of 

beef, pork, goat, chicken, and lamb, 

born, raised, or slaughtered. 

§ 65.235 Raised. 

Raised means, in the case of beef, 

pork, chicken, goat, and lamb, the 

period of time from birth until slaughter 

or in the case of animals imported for 

immediate slaughter as defined in 

§ 65.180, the period of time from birth 

until date of entry into the United 

States. 

§ 65.240 Retailer. 

Retailer means any person licensed as 

a retailer under the Perishable 

Agricultural Commodities Act of 1930 

(7 U.S.C. 499a(b)). 

§ 65.245 Secretary. 

Secretary means the Secretary of 

Agriculture of the United States or any 

person to whom the Secretary’s 

authority has been delegated. 

§ 65.250 Slaughter. 

Slaughter means the point in which a 

livestock animal (including chicken) is 

prepared into meat products (covered 

commodities) for human consumption. 

For purposes of labeling under this part, 

the word harvested may be used in lieu 

of slaughtered. 

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2706 Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 

§ 65.255 United States. 

United States means the 50 States, the 

District of Columbia, the 

Commonwealth of Puerto Rico, the U.S. 

Virgin Islands, American Samoa, Guam, 

the Northern Mariana Islands, and any 

other Commonwealth, territory, or 

possession of the United States. 

§ 65.260 United States country of origin. 

United States country of origin means 

in the case of: 

(a) Beef, pork, lamb, chicken, and 

goat: 

(1) From animals exclusively born, 

raised, and slaughtered in the United 

States; 

(2) From animals born and raised in 

Alaska or Hawaii and transported for a 

period of not more than 60 days through 

Canada to the United States and 

slaughtered in the United States; or 

(3) From animals present in the 

United States on or before July 15, 2008, 

and once present in the United States, 

remained continuously in the United 

States. 

(b) Perishable agricultural 

commodities, peanuts, ginseng, pecans, 

and macadamia nuts: from products 

produced in the United States. 

§ 65.265 USDA. 

USDA means the United States 

Department of Agriculture. 

Country of Origin Notification 

§ 65.300 Country of origin notification. 

In providing notice of the country of 

origin as required by the Act, the 

following requirements shall be 

followed by retailers: 

(a) General. Labeling of covered 

commodities offered for sale whether 

individually, in a bulk bin, carton, crate, 

barrel, cluster, or consumer package 

must contain country of origin as set 

forth in this regulation. 

(b) Exemptions. Food service 

establishments as defined in § 65.135 

are exempt from labeling under this 

subpart. 

(c) Exclusions. A covered commodity 

is excluded from this subpart if it is an 

ingredient in a processed food item as 

defined in § 65.220. 

(d) Labeling Covered Commodities of 

United States Origin. A covered 

commodity may bear a declaration that 

identifies the United States as the sole 

country of origin at retail only if it meets 

the definition of United States country 

of origin as defined in § 65.260. 

(e) Labeling Muscle Cut Covered 

Commodities of Multiple Countries of 

Origin that include the United States. 

(1) For muscle cut covered commodities 

derived from animals that were born in 

Country X or (as applicable) Country Y, 

raised and slaughtered in the United 

States, and were not derived from 

animals imported for immediate 

slaughter as defined in § 65.180, the 

origin may be designated as Product of 

the United States, Country X, and (as 

applicable) Country Y. 

(2) For muscle cut covered 

commodities derived from animals 

born, raised, and slaughtered in the U.S. 

that are commingled during a 

production day with muscle cut covered 

commodities described in § 65.300(e)(1), 

the origin may be designated as Product 

of the United States, Country X, and (as 

applicable) Country Y. 

(3) If an animal was imported into the 

United States for immediate slaughter as 

defined in § 65.180, the origin of the 

resulting meat products derived from 

that animal shall be designated as 

Product of Country X and the United 

States. 

(4) For muscle cut covered 

commodities derived from animals that 

are born in Country X or Country Y, 

raised and slaughtered in the United 

States, that are commingled during a 

production day with muscle cut covered 

commodities that are derived from 

animals that are imported into the 

United States for immediate slaughter as 

defined in § 65.180, the origin may be 

designated as Product of the United 

States, Country X, and (as applicable) 

Country Y. In each case of paragraphs 

(e)(1), (e)(2), and (e)(4) of this section, 

the countries may be listed in any order. 

In addition, the origin declaration may 

include more specific information 

related to production steps provided 

records to substantiate the claims are 

maintained and the claim is consistent 

with other applicable Federal legal 

requirements. 

(f) Labeling Imported Covered 

Commodities. Imported covered 

commodities for which origin has 

already been established as defined by 

this law (e.g., born, raised, and 

slaughtered or produced) and for which 

no production steps have occurred in 

the United States, shall retain their 

origin, as declared to U.S. Customs and 

Border Protection at the time the 

product entered the United States, 

through retail sale. 

(g) Labeling Commingled Covered 

Commodities. In the case of perishable 

agricultural commodities; peanuts; 

pecans; ginseng; and macadamia nuts: 

For imported covered commodities that 

have not subsequently been 

substantially transformed in the United 

States that are commingled with 

covered commodities sourced from a 

different origin that have not been 

substantially transformed (as 

established by CBP) in the United 

States, and/or covered commodities of 

United States origin, the declaration 

shall indicate the countries of origin in 

accordance with existing Federal legal 

requirements. 

(h) Labeling Ground Beef, Ground 

Pork, Ground Lamb, Ground Goat, and 

Ground Chicken. The declaration for 

ground beef, ground pork, ground lamb, 

ground goat, and ground chicken 

covered commodities shall list all 

countries of origin contained therein or 

that may be reasonably contained 

therein. In determining what is 

considered reasonable, when a raw 

material from a specific origin is not in 

a processor’s inventory for more than 60 

days, that country shall no longer be 

included as a possible country of origin. 

(i) Remotely Purchased Products. For 

sales of a covered commodity in which 

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 may provide the 

country of origin notification either on 

the sales vehicle or at the time the 

product is delivered to the consumer. 

§ 65.400 Labeling. 

(a) Country of origin declarations can 

either be in the form of a placard, sign, 

label, sticker, band, twist tie, pin tag, or 

other format that allows consumers to 

identify the country of origin. The 

declaration of the country of origin of a 

product may be in the form of a 

statement such as ‘‘Product of USA,’’ 

‘‘Produce of the USA’’, or ‘‘Grown in 

Mexico,’’ may only contain the name of 

the country such as ‘‘USA’’ or 

‘‘Mexico,’’ or may be in the form of a 

check box provided it is in conformance 

with other Federal labeling laws. 

(b) The declaration of the country of 

origin (e.g., placard, sign, label, sticker, 

band, twist tie, pin tag, or other display) 

must be legible and placed in a 

conspicuous location, so as to render it 

likely to be read and understood by a 

customer under normal conditions of 

purchase. 

(c) The declaration of country of 

origin may be typed, printed, or 

handwritten provided it is in 

conformance with other Federal labeling 

laws and does not obscure other 

labeling information required by other 

Federal regulations. 

(d) A bulk container (e.g., display 

case, shipper, bin, carton, and barrel) 

used at the retail level to present 

product to consumers, may contain a 

covered commodity from more than one 

country of origin provided all possible 

origins are listed. 

(e) In general, country abbreviations 

are not acceptable. Only those 

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Federal Register / Vol. 74, No. 10 / Thursday, January 15, 2009 / Rules and Regulations 2707 

abbreviations approved for use under 

Customs and Border Protection rules, 

regulations, and policies, such as ‘‘U.K.’’ 

for ‘‘The United Kingdom of Great 

Britain and Northern Ireland’’, 

‘‘Luxemb’’ for Luxembourg, and ‘‘U.S. 

or USA’’ for the ‘‘United States of 

America’’ are acceptable. The adjectival 

form of the name of a country may be 

used as proper notification of the 

country of origin of imported 

commodities provided the adjectival 

form of the name does not appear with 

other words so as to refer to a kind or 

species of product. Symbols or flags 

alone may not be used to denote country 

of origin. 

(f) Domestic and imported perishable 

agricultural commodities, peanuts, 

pecans, macadamia nuts, and ginseng 

may use State, regional, or locality label 

designations in lieu of country of origin 

labeling. Abbreviations may be used for 

state, regional, or locality label 

designations for these commodities 

whether domestically harvested or 

imported using official United States 

Postal Service abbreviations or other 

abbreviations approved by CBP. 

Recordkeeping 

§ 65.500 Recordkeeping requirements. 

(a) General. (1) All records must be 

legible and may be maintained in either 

electronic or hard copy formats. Due to 

the variation in inventory and 

accounting documentary systems, 

various forms of documentation and 

records will be acceptable. 

(2) Upon request by USDA 

representatives, suppliers and retailers 

subject to this subpart shall make 

available to USDA representatives, 

records maintained in the normal course 

of business that verify an origin claim. 

Such records shall be provided within 

5 business days of the request and may 

be maintained in any location. 

(b) Responsibilities of suppliers. (1) 

Any person engaged in the business of 

supplying a covered commodity to a 

retailer, whether directly or indirectly, 

must make available information to the 

buyer about the country(ies) of origin of 

the covered commodity. This 

information may be provided either on 

the product itself, on the master 

shipping container, or in a document 

that accompanies the product through 

retail sale. In addition, the supplier of 

a covered commodity that is responsible 

for initiating a country(ies) of origin 

claim, which in the case of beef, lamb, 

chicken, goat, and pork is the slaughter 

facility, must possess records that are 

necessary to substantiate that claim for 

a period of 1 year from the date of the 

transaction. For that purpose, packers 

that slaughter animals that are tagged 

with an 840 Animal Identification 

Number device without the presence of 

any additional accompanying marking 

(i.e., ‘‘CAN’’ or ‘‘M’’) may use that 

information as a basis for a U.S. origin 

claim. Packers that slaughter animals 

that are part of another country’s 

recognized official system (e.g., 

Canadian official system, Mexico 

official system) may also rely on the 

presence of an official ear tag or other 

approved device on which to base their 

origin claims. Producer affidavits shall 

also be considered acceptable records 

that suppliers may utilize to initiate 

origin claims, provided it is made by 

someone having first-hand knowledge of 

the origin of the covered commodity 

and identifies the covered commodity 

unique to the transaction. In the case of 

cattle, producer affidavits may be based 

on a visual inspection of the animal to 

verify its origin. If no markings are 

found that would indicate that the 

animal is of foreign origin (i.e., ‘‘CAN’’ 

or ‘‘M’’), the animal may be considered 

to be of U.S. origin. 

(2) Any intermediary supplier 

handling a covered commodity that is 

found to be designated incorrectly as to 

the country of origin shall not be held 

liable for a violation of the Act by 

reason of the conduct of another if the 

intermediary supplier relied on the 

designation provided by the initiating 

supplier or other intermediary supplier, 

unless the intermediary supplier 

willfully disregarded information 

establishing that the country of origin 

declaration was false. 

(3) Any person engaged in the 

business of supplying a covered 

commodity to a retailer, whether 

directly or indirectly (i.e., including but 

not limited to growers, distributors, 

handlers, packers, and processors), must 

maintain records to establish and 

identify the immediate previous source 

(if applicable) and immediate 

subsequent recipient of a covered 

commodity for a period of 1 year from 

the date of the transaction. 

(4) For an imported covered 

commodity (as defined in § 65.300(f)), 

the importer of record as determined by 

CBP, must ensure that records: provide 

clear product tracking from the port of 

entry into the United States to the 

immediate subsequent recipient and 

accurately reflect the country of origin 

of the item as identified in relevant CBP 

entry documents and information 

systems; and must maintain such 

records for a period of 1 year from the 

date of the transaction. 

(c) Responsibilities of retailers. (1) In 

providing the country of origin 

notification for a covered commodity, in 

general, retailers are to convey the 

origin information provided by their 

suppliers. Only if the retailer physically 

commingles a covered commodity of 

different origins in preparation for retail 

sale, whether in a consumer-ready 

package or in a bulk display (and not 

discretely packaged) (i.e., full service 

meat case), can the retailer initiate a 

multiple country of origin designation 

that reflects the actual countries of 

origin for the resulting covered 

commodity. 

(2) Records and other documentary 

evidence relied upon at the point of sale 

to establish a covered commodity’s 

country(ies) of origin must either be 

maintained at the retail facility or at 

another location for as long as the 

product is on hand and provided to any 

duly authorized representative of USDA 

in accordance with § 65.500(a)(2). For 

pre-labeled products, the label itself is 

sufficient information on which the 

retailer may rely to establish the 

product’s origin and no additional 

records documenting origin information 

are necessary. 

(3) Any retailer handling a covered 

commodity that is found to be 

designated incorrectly as to the country 

of origin shall not be held liable for a 

violation of the Act by reason of the 

conduct of another if the retailer relied 

on the designation provided by the 

supplier, unless the retailer willfully 

disregarded information establishing 

that the country of origin declaration 

was false. 

(4) Records that identify the covered 

commodity, the retail supplier, and for 

products that are not pre-labeled, the 

country of origin information must be 

maintained for a period of 1 year from 

the date the origin declaration is made 

at retail. 

Subpart B—[Reserved] 

Dated: January 9, 2009. 

James E. Link, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. E9–600 Filed 1–12–09; 11:15 am] 

BILLING CODE 3410–02–P 

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