45106 Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Rules and Regulations 

DEPARTMENT OF AGRICULTURE 

Agricultural Marketing Service 

7 CFR Part 65 

[Docket No. AMS–LS–07–0081] 

RIN 0581–AC26 

Mandatory Country of Origin Labeling 

of Beef, Pork, Lamb, Chicken, Goat 

Meat, Perishable Agricultural 

Commodities, Peanuts, Pecans, 

Ginseng, and Macadamia Nuts 

AGENCY: Agricultural Marketing Service, 

USDA. 

ACTION: Interim final rule with request 

for comments. 

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 contains a number 

of provisions that amended the COOL 

provisions in the Act. These changes 

include the addition of chicken, goat, 

macadamia nuts, pecans, and ginseng as 

covered commodities, the addition of 

provisions for labeling products of 

multiple origin, as well as a number of 

other changes that are discussed more 

fully in the Supplementary Information 

portion of this rule. 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, 

the Department is issuing this interim 

final rule. This interim final rule 

contains definitions, the requirements 

for consumer notification and product 

marking, and the recordkeeping 

responsibilities of both retailers and 

suppliers for covered commodities. The 

provisions in this interim final rule do 

not affect the regulatory requirements 

for fish and shellfish that were 

published in the October 5, 2004, 

Federal Register. 

DATES: This interim final rule is 

effective September 30, 2008. Comments 

must be submitted on or before 

September 30, 2008 to be assured of 

consideration. The requirements of this 

rule do not apply to covered 

commodities produced or packaged 

before September 30, 2008. 

ADDRESSES: Comments should be 

submitted through the Internet at http:// 

www.regulations.gov. Send written 

comments to: Country of Origin 

Labeling Program, Room 2607–S; 

Agricultural Marketing Service (AMS), 

USDA; STOP 0254; 1400 Independence 

Avenue, SW., Washington, DC 20250– 

0254, or by facsimile to 202/354–4693. 

All comments received will be posted 

on the Web site at: http:// 

www.regulations.gov. Comments sent to 

the above location that specifically 

pertain to the information collection 

and recordkeeping requirements of this 

action should also be sent to the Desk 

Officer for Agriculture, Office of 

Information and Regulatory Affairs, 

Office of Management and Budget 

(OMB), New Executive Office Building, 

725 17th Street, NW., Room 725, 

Washington, DC 20503. 

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 including questions and 

answers about this interim final rule, a 

summary of the history of this 

rulemaking, and a general overview of 

the law, including the changes 

contained in the 2008 Farm Bill. The 

second section provides a discussion of 

the rule’s requirements, including a 

summary of changes from the October 

30, 2003, proposed rule 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 proposed 

rule published in the October 30, 2003, 

Federal Register (68 FR 61944); 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 reopening of the 

comment period for the proposed rule 

for all covered commodities that was 

published in the June 20, 2007, Federal 

Register (72 FR 33917). 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 

Questions and Answers Concerning This 

Interim Final Rule 

What are the general requirements of 

Country of Origin Labeling? 

The 2002 and 2008 Farm Bills 

amended the Act to require retailers to 

notify their customers of the country of 

origin of beef (including veal), lamb, 

pork, chicken, goat, wild and farmraised fish and shellfish, perishable 

agricultural commodities, peanuts, 

pecans, ginseng, and macadamia nuts. 

The implementation of mandatory 

COOL for all covered commodities 

except wild and farm-raised fish and 

shellfish was delayed until September 

30, 2008. The law defines the terms 

‘‘retailer’’ and ‘‘perishable agricultural 

commodity’’ as having the meanings 

given those terms in section 1(b) of the 

Perishable Agricultural Commodities 

Act of 1930 (PACA) (7 U.S.C. 499 et 

seq.). Under PACA, a retailer is any 

person engaged in the business of 

selling any perishable agricultural 

commodity at retail. Retailers are 

required to be licensed when the 

invoice cost of all purchases of 

perishable agricultural commodities 

exceeds $230,000 during a calendar 

year. The term perishable agricultural 

commodity means fresh and frozen 

fruits and vegetables. 

Food service establishments are 

specifically exempted as are covered 

commodities that are ingredients in a 

processed food item. In addition, the 

law specifically outlines the criteria a 

covered commodity must meet to bear a 

‘‘United States country of origin’’ 

designation. 

How do I find out if my product is 

considered a covered commodity or if it 

is labeled accurately under the COOL 

law? 

This regulation contains the 

requirements for labeling covered 

commodities and for determining 

whether a product is subject to this rule. 

However, additional questions regarding 


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whether a product is considered a 

covered commodity or is labeled 

accurately under this regulation may be 

e-mailed to cool@usda.gov. 

Given that the law exempts covered 

commodities from mandatory COOL if 

they are an ingredient in a processed 

food item, what is the definition of a 

processed food item and what types of 

products are considered processed food 

items? 

A processed food item is 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: Meatloaf, meatballs, fabricated 

steak, breaded veal cutlets, corned beef, 

sausage, breaded chicken tenders, and 

teriyaki flavored pork loin; a salad mix 

that contains lettuce and a dressing 

packet, a salad mix that contains lettuce 

and carrots, a fruit cup that contains 

melons, bananas, and strawberries; a bag 

of mixed vegetables that contains peas 

and carrots; and roasted peanuts. 

What requirements must be met for a 

retailer to label a covered commodity as 

being 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. The 

specific requirements for covered 

commodities are as follows: Perishable 

agricultural commodities, pecans, 

ginseng, peanuts, and macadamia 

nuts—covered commodities must be 

produced in the United States; beef, 

lamb, pork, chicken, and goat—covered 

commodities must be derived 

exclusively from animals (1) born, 

raised, and slaughtered in the United 

States (including animals born and 

raised in Alaska and 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 (2) present in the 

United States on or before July 15, 2008, 

and once present in the United States, 

remained continuously in the United 

States. 

How should I label a retail product that 

contains a single type of covered 

commodity (such as a bag of frozen 

strawberries) prepared from raw 

material sources having different 

origins? 

In this interim final rule, a single type 

of covered commodity (e.g., frozen 

peas), presented for retail sale in a 

consumer package, that has been 

prepared from raw material sources 

having different origins is referred to as 

a commingled covered commodity. 

Further, a commingled covered 

commodity does not include ground 

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, 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 imported and/or 

United States origin commodities, the 

declaration shall indicate the countries 

of origin for all covered commodities in 

accordance with Customs and Border 

Protection (CBP) marking regulations 

(19 CFR part 134). 

What are the requirements for labeling 

ground meat products, which often 

contain raw material sources from 

multiple countries? 

The 2008 Farm Bill specifies that the 

notice of country of origin for ground 

beef, ground lamb, ground pork, ground 

goat, and ground chicken shall include 

a list of all of the countries of origin 

contained therein or reasonably 

contained therein. This interim final 

provides that 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. 

Why can’t the Department of 

Agriculture (USDA) track only imported 

products and consider all other 

products to be of ‘‘United States 

Origin?’’

The COOL provision of the Farm Bill 

applies to all covered commodities. 

Moreover, the law specifically identifies 

the criteria that products of United 

States origin must meet. The law further 

states that ‘‘Any person engaged in the 

business of supplying a covered 

commodity to a retailer shall provide 

information to the retailer indicating the 

country of origin of the covered 

commodity.’’ And, the law does not 

provide authority to control the 

movement of product. In fact, the use of 

a mandatory identification system that 

would be required to track controlled 

product through the entire chain of 

commerce is specifically prohibited. 

When will the requirements of this 

regulation take effect? 

The effective date of this regulation is 

September 30, 2008, because the statute 

provides for a September 30, 2008, 

implementation date. However, because 

some of the affected industries (goat, 

chicken, pecans, ginseng, and 

macadamia nuts) did not have prior 

opportunities to comment on this 

rulemaking and because the 2008 Farm 

Bill made changes to several of the 

labeling provisions for meat covered 

commodities, it is reasonable to allow 

time for covered commodities that are 

already in the chain of commerce and 

for which no origin information is 

known or been provided to clear the 

system. Therefore, the requirements of 

this rule do not apply to covered 

commodities produced or packaged 

before September 30, 2008. In addition, 

during the six month period following 

the effective date of the regulation, AMS 

will conduct an industry education and 

outreach program concerning the 

provisions and requirements of this 

rule. AMS has determined that this 

allocation of enforcement resources will 

ensure that the rule is effectively and 

rationally implemented. This AMS plan 

of outreach and education should 

significantly aid the industry in 

achieving compliance with the 

requirements of this rule. 

How will the requirements of this 

regulation be enforced? 

USDA has entered into agreements 

with States having existing enforcement 

infrastructure to assist in compliance 

reviews for fish and shellfish covered 

commodities. These agreements will be 

expanded to encompass all covered 

commodities. USDA determines the 

number of reviews to be conducted and 

has developed comprehensive 

procedures for the compliance reviews. 

Only USDA is able to initiate 

enforcement actions against a person 

found to be in violation of the law. The 

COOL statute does not provide for a 

private right of action. 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. 


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What are the recordkeeping 

requirements of this regulation? 

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(ies) of origin claim, which in 

the case of beef, lamb, chicken, goat, 

and pork is the slaughter facility, must 

possess or have legal access to records 

that are necessary to substantiate that 

claim. In the case of beef, lamb, chicken, 

goat, and pork, a producer affidavit shall 

be considered acceptable evidence on 

which the slaughter facility may rely to 

initiate the origin claim, provided it is 

made by someone having first-hand 

knowledge of the origin of the animal(s) 

and identifies the animal(s) unique to 

the transaction. 

USDA continues to look for ways to 

minimize the burden associated with 

this rule. Therefore, under this interim 

final rule, slaughter facilities that 

slaughter animals that are part of a 

National Animal Identification System 

(NAIS) compliant system or other 

recognized official identification system 

(e.g., Canadian official system, Mexico 

official system) may also rely on the 

presence of an official ear tag and/or the 

presence of any accompanying animal 

markings (i.e., ‘‘Can’’, ‘‘M’’), as 

applicable, on which to base their origin 

claims. This provision also applies to 

such animals officially identified as a 

group lot. 

For retailers, 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 must be 

maintained for one year from the date 

the origin declaration is made at retail 

and, upon request, provided to any duly 

authorized representatives of USDA 

within 5 business days of the request. 

For pre-labeled products, the label 

itself is sufficient evidence on which the 

retailer may rely to establish a product’s 

origin. Pre-labeled products are those 

covered commodities that are labeled 

for country of origin by the firm or 

entity responsible for making the initial 

claim or by a further processor or 

repacker (i.e., firms that receive bulk 

products and package the products as 

covered commodities in a form suitable 

for the retailer). The country of origin 

information of pre-labeled covered 

commodities must be legibly printed on 

the shipping container, immediate 

container, or consumer ready package. 

In addition to indicating country of 

origin information, pre-labeled products 

must contain sufficient supplier 

information to allow USDA to traceback the product to the supplier 

initiating the claim. Records that 

identify the covered commodity, the 

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. Retailer 

and supplier records may be maintained 

in any location. 

How does this regulation impact 

existing State country of origin labeling 

programs? 

To the extent that 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. However, this 

preemption does not apply to State 

marketing programs for commodities 

such as Washington apples, Idaho 

potatoes, etc. 

While the COOL 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. 

Prior Documents in This Proceeding 

This interim 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 country of origin labeling 

(COOL) for all covered commodities 

except wild and farm-raised 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 

farm-raised 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). 

Overview of the Law 

Section 10816 of Public Law 107–171 

(7 U.S.C. 1638–1638d) and Section 

11002 of Public Law 110–234 amended 

the Act (7 U.S.C. 1621 et seq.) to require 

retailers to inform consumers of the 


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Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Rules and Regulations 45109 

country of origin of covered 

commodities. 

The intent of this law 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 and domestic, 

must meet the food safety standards of 

the Food and Drug Administration 

(FDA) and the Food Safety and 

Inspection Service (FSIS). 

Under the 2002 Farm Bill, the term 

‘‘covered commodity’’ was defined as 

muscle cuts of beef (including veal), 

lamb, pork; ground beef, ground lamb, 

ground pork; farm-raised fish and 

shellfish; wild fish and shellfish; 

perishable agricultural commodities; 

and peanuts. The 2008 Farm Bill added 

muscle cuts and ground chicken and 

goat; pecans; ginseng; and macadamia 

nuts as covered commodities. The law 

excludes items from needing to bear a 

country of origin declaration when a 

covered commodity is an ‘‘ingredient in 

a processed food item.’’ The law defines 

the terms ‘‘retailer’’ and ‘‘perishable 

agricultural commodity’’ as having the 

meanings given those terms in PACA. 

The law specifically outlines the 

criteria a covered commodity must meet 

in order to bear a ‘‘United States country 

of origin’’ declaration. In the case of 

perishable agricultural commodities, 

peanuts, pecans, ginseng, and 

macadamia nuts, the covered 

commodity must be exclusively 

produced in the United States. In 

addition, under the 2008 Farm Bill, for 

perishable agricultural commodities, 

peanuts, pecans, macadamia nuts, and 

ginseng produced in the United States, 

designation of the State, region, or 

locality of the United States where such 

commodity was produced shall be 

sufficient to identify the country of 

origin. 

In the case of beef, lamb, pork, 

chicken, and goat, covered 

commodities, the law states that they 

may bear a U.S. origin declaration only 

if they are derived exclusively from 

animals born, raised, and slaughtered in 

the United States (including animals 

born and raised in Alaska and 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). In addition, under the 

2008 Farm Bill, 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, are also eligible to bear a United 

States origin declaration. 

The 2008 Farm Bill provided further 

direction on country of origin labeling 

for meat covered commodities. These 

changes include additional provisions 

concerning labeling meat covered 

commodities that have multiple 

countries of origin and specify that a 

retailer of a covered commodity derived 

from an animal that is imported into the 

United States for immediate slaughter 

shall designate the origin of such 

covered commodity as the country from 

which the animal was imported and the 

United States. In addition, the 2008 

Farm Bill specifies that meat covered 

commodities derived from an animal 

that was not born, raised, or slaughtered 

in the United States shall designate a 

country other than the United States as 

the country of origin. 

The 2008 Farm Bill also specifies how 

ground meat products shall be labeled. 

The notice of country of origin for 

ground beef, ground pork, ground lamb, 

ground chicken, or ground goat shall 

include a list of all countries of origin 

contained therein or a list of all 

reasonably possible countries of origin 

contained therein. 

To convey the country of origin 

information, the law states that retailers 

may use a label, stamp, mark, placard, 

or other clear and visible sign on the 

covered commodity or on the package, 

display, holding unit, or bin containing 

the commodity at the final point of sale 

to consumers. Food service 

establishments, such as restaurants, 

cafeterias, food stands, and other similar 

facilities are exempt from these labeling 

requirements. 

The law makes reference to the 

definition of ‘‘retailer’’ in section 1(b) of 

PACA as the meaning of ‘‘retailer’’ for 

the application of the labeling 

requirements under the COOL law. 

Under PACA and thus this interim final 

rule, a retailer is any person engaged in 

the business of selling any perishable 

agricultural commodity at retail. 

Retailers are required to be licensed 

when the invoice cost of all purchases 

of perishable agricultural commodities 

exceeds $230,000 during a calendar 

year. Therefore, retail establishments, 

such as butcher shops, which do not 

generally sell fruits and vegetables, do 

not meet the PACA definition of a 

retailer and therefore are not subject to 

this rule. 

The law requires any person engaged 

in the business of supplying a covered 

commodity to a retailer to provide the 

retailer with the product’s country of 

origin information. In addition, the law 

states the Secretary of Agriculture may 

conduct an audit of any person that 

prepares, stores, handles, or distributes 

a covered commodity for retail sale to 

verify compliance with the law and this 

regulation. Any person subject to such 

an audit shall provide the Secretary 

with verification of the country of origin 

of covered commodities. 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. The law 

prohibits the Secretary from using a 

mandatory identification system to 

verify the country of origin of a covered 

commodity. 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. The law 

provides examples of existing 

certification programs that may be used 

to certify the country of origin of a 

covered commodity. 

The 2008 Farm Bill also modified the 

enforcement provisions for both 

retailers and suppliers. Under the 2002 

Farm Bill, civil penalties up to $10,000 

per violation were specified for retailers 

and suppliers. Under the 2008 Farm 

Bill, civil penalties have been reduced 

to up to $1,000 for each violation. In 

addition, the 2008 Farm Bill specifies 

that the Secretary must provide retailers 

and suppliers with a 30-day period 

during which the retailer or supplier 

can take the necessary steps to comply 

with the law after receiving notice from 

the Secretary. Under the 2002 Farm Bill, 

only retailers were provided with this 

30-day period. In addition, the 2008 

Farm Bill states that the Secretary may 

fine a retailer or supplier, after 

providing notice and an opportunity for 

a hearing, only if the retailer or supplier 

has not made a good faith effort to 

comply with the law and continues to 

willfully violate the law. The law also 

encourages the Secretary to enter into 

partnerships with States with 

enforcement infrastructure to the extent 

possible to assist in the program’s 

administration. 

II. Summary of Changes From the 

Proposed Rule 

As previously mentioned, the 2008 

Farm Bill made a number of changes to 

the COOL provisions contained in the 

Act. These changes have been 

incorporated into this interim final rule 

as appropriate. In addition, the Agency 

has made other modifications for clarity 

and to reduce the burden on regulated 

parties where practicable as the added 

costs of implementing this rule will 

likely be passed on to consumers. Many 

of these changes were incorporated in 

the interim final rule for fish and 

shellfish that was published in the 

October 5, 2004, Federal Register (69 FR 

89708). Thus, readers may find it 


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helpful to review the interim final rule 

for fish and shellfish for further 

discussions of some of the changes that 

were made from the proposed rule such 

as those changes made to the definition 

of a processed food item and to the 

recordkeeping provisions. 

Further, enforcement of the interim 

final rule for fish and shellfish will be 

consistent with the statute as amended 

by the 2008 Farm Bill. Comments are 

specifically requested concerning the 

revisions to recordkeeping provisions 

made herein. Any comments received 

pursuant to this rulemaking, to the 

extent relevant, will be reviewed in 

connection with the continuing 

regulatory action on the mandatory 

COOL program for fish and shellfish. A 

summary of the changes made in this 

interim final rule is discussed below. 

Definitions 

The 2008 Farm Bill added muscle 

cuts and ground chicken and goat; 

pecans; macadamia nuts; and ginseng as 

covered commodities. Therefore, a 

definition for born in reference to 

chicken as well as definitions for 

chicken, ginseng, goat, ground chicken, 

and ground goat have been added for 

clarity. In addition, the definition of 

‘‘covered commodity’’ has also been 

modified accordingly to include muscle 

cuts of beef (including veal), lamb, 

chicken, goat, and pork; ground beef, 

ground lamb, ground chicken, ground 

goat, and ground pork; perishable 

agricultural commodities; macadamia 

nuts; pecans; ginseng; and peanuts. 

The definitions of ‘‘canned’’ and 

‘‘produced in any other country other 

than the United States’’ have been 

deleted as they have been determined to 

be unnecessary. 

A definition for ‘‘commingled covered 

commodities’’ and ‘‘imported for 

immediate slaughter’’ have been added 

for clarity. 

The following definitions have been 

deleted as the requirements for labeling 

wild and farm-raised fish and shellfish 

covered commodities were promulgated 

in a separate action: ‘‘farm-raised fish’’, 

‘‘hatched’’, ‘‘processed (for fish and 

shellfish’’, ‘‘U.S. flagged vessel’’, ‘‘vessel 

flag’’, ‘‘waters of the United States’’, and 

‘‘wild fish and shellfish’’. In addition, 

other definitions such as ‘‘covered 

commodity’’, ‘‘production step’’, 

‘‘raised’’, and ‘‘United States country of 

origin’’ have been modified to remove 

references to fish and shellfish. 

The definition of ‘‘ground beef’’ has 

been modified to provide clarity and to 

expand the scope of ground beef items 

covered by this rule. Under this interim 

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 terms ‘‘hamburger’’ in 9 

CFR 319.15(b) and ‘‘beef patties’’ in 9 

CFR 319.15(c). A full explanation of this 

change is discussed in the Comments 

and Responses section. 

The definition of ‘‘processed food 

item’’ has been modified to provide 

additional clarity as to the types of retail 

items that are considered processed 

food items and are therefore exempt 

from labeling under this interim final 

rule. Based on the comments received 

on the proposed rule in which 

numerous commenters suggested that 

the scope of what is considered a 

covered commodity should be narrowed 

and because the Department was 

concerned about the burden of this rule 

on affected entities as the added costs of 

implementing this rule will likely be 

passed on to consumers, AMS is 

adopting the definition of a processed 

food item in this interim final rule that 

was promulgated in the interim final 

rule for fish and shellfish. Thus, under 

this interim final rule, items that are 

cooked, cured, smoked, and 

restructured would all be considered 

processed food items. Under the 

proposed rule, items that were cooked 

would have been required to be labeled. 

A full explanation of this change is 

discussed in the Comments and 

Responses section. 

The definition of ‘‘raised’’ has also 

been modified to provide clarity. The 

term ‘‘raised’’ is defined in this interim 

final rule for the purpose of providing 

clarity with respect to the specific 

production steps specified in the law, 

born, raised, and slaughtered, and how 

the origin of covered commodities shall 

be labeled. This definition does not 

impact any other labeling claims subject 

to approval by FSIS. 

Pursuant to the 2008 Farm Bill, the 

definition of ‘‘United States country of 

origin’’ has also been modified. Under 

this interim final rule, beef, pork, lamb, 

chicken, and goat derived 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, shall be considered of 

United States origin. The 2002 Farm Bill 

and thus the October 30, 2003, proposed 

rule, did not contain such a provision. 

This provision will help address the 

issue of the lack of origin information 

on some animals currently residing in 

the United States. 

Country of Origin Notification for 

Muscle Cuts and Ground Meat 

The October 30, 2003, proposed rule 

contained provisions for labeling 

covered commodities when the product 

entered the United States during the 

production process. In general, animals 

that were born and/or raised in country 

X and slaughtered in the United States 

were to be labeled as being imported 

from country X and identifying the 

production steps that occurred in the 

United States. The 2008 Farm Bill 

contains provisions on labeling covered 

commodities of multiple countries of 

origin. Under this 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 may be 

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. 

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. 

In both 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. 

Labeling Ground Meat Covered 

Commodities 

The proposed rule contained 

provisions for labeling commingled 

products—including ground beef. 

However, the 2008 Farm Bill specifies 

how ground meat items shall be labeled. 

Under this interim final rule, 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. Further, 

this interim final rule provides that 

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. Under the proposed 

rule, the label for these products was 

required to include an alphabetical 

listing of the countries of origin for all 

raw materials contained therein. 


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Labeling Comingled Covered 

Commodities 

For covered commodities other than 

meat items, this interim final rule, to a 

great extent, includes the labeling 

provisions for commingled covered 

commodities that were developed in the 

interim final rule for fish and shellfish 

based on comments received on the 

proposed rule. Most of the commenters 

requested greater flexibility in labeling 

these types of products. Other 

commenters expressed concern as to 

whether listing the countries in 

alphabetical order is acceptable under 

FDA and CBP regulations. For a more 

complete discussion of the rationale for 

this change, readers are invited to 

review the interim final rule for fish and 

shellfish (69 FR 59708), which is posted 

on the AMS Web site at http:// 

www.ams.usda.gov/AMSv1.0/. Further, 

changes are made in this regulation to 

make clear that in those instances in 

which CBP marking regulations apply 

pursuant to 19 CFR part 134, this 

regulation does not impose any 

additional marking requirements. 

Accordingly, under this interim final 

rule, for imported covered commodities 

that are commingled with covered 

commodities (of the same type) sourced 

from a different origin the declaration 

shall indicate the countries of origin in 

accordance with existing CBP marking 

regulations (19 CFR part 134). 

Markings 

With regard to markings, in addition 

to the change made by the 2008 Farm 

Bill with respect to State, region, and 

locality labels, which is further 

discussed below, the Agency has made 

several changes to provide for increased 

flexibility in labeling. In general, these 

changes mirror the changes that were 

made to the marking provisions 

contained in the interim final rule for 

fish and shellfish as a result of 

comments received on the proposed 

rule. Many commenters requested the 

use of check boxes to convey origin 

information. Other commenters 

requested that bulk commodities should 

be allowed to be commingled in bins as 

long as the signage indicates the 

countries of origin of the contents of the 

bin. Numerous other commenters 

recommended that State and regional 

designations should be accepted in lieu 

of country of origin. For a more 

complete discussion of the relevant 

comments, readers are invited to review 

the interim final rule for fish and 

shellfish. 

Accordingly, under this interim final 

rule, the declaration of the country of 

origin of a product may be in the form 

of a check box provided it is in 

conformance with other Federal labeling 

laws. Also, under this final rule, 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. Under the proposed rule, the 

use of check boxes was not expressly 

allowed and covered commodities from 

more than one origin that were offered 

for sale in a bulk container were 

required to be individually labeled. 

Under the proposed rule, State or 

regional label designations were not 

permitted in lieu of country of origin. 

However, the 2008 Farm Bill, and thus 

this interim final rule, expressly 

authorize 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. 

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 

have been made to reduce the 

recordkeeping burden. In general, these 

changes, to a great extent, include the 

changes that were made to the 

recordkeeping provisions contained in 

the interim final rule for fish and 

shellfish as a result of comments 

received on the proposed rule. The 

majority of the commenters 

recommended shorter retention times 

for both retailer and supplier records. 

Other commenters expressed concern 

that the preamble for the proposed rule 

provided no explanation of the records 

that would be necessary to establish the 

chain of custody of a product. For a 

more complete discussion of the 

relevant comments, readers are invited 

to review the interim final rule for fish 

and shellfish. These changes include the 

removal of the store-level recordkeeping 

requirement, a reduction in the length of 

time that records must be maintained, 

the removal of the requirement for a 

unique identifier, and revisions to the 

recordkeeping requirements for prelabeled products. 

With respect to establishing the chain 

of custody of a product, in response to 

comments received, the Agency has 

deleted this language from the rule. 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 

and immediate subsequent recipient of 

a covered commodity for a period of 1 

year from the date of the transaction. 

Under the proposed rule, records would 

have been required to be kept for 2 

years. 

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 must be 

maintained for one year from the date 

the origin declaration is made at retail 

and, upon request, provided to any duly 

authorized representatives of USDA 

within 5 business days of the request. 

Under the proposed rule, retailers were 

required to have maintained these 

records at the retail store for 7 days 

following the sale of the product. For 

pre-labeled products, the rule provides 

that the label itself is sufficient evidence 

on which the retailer may rely to 

establish a product’s origin. The 

proposed rule would not have provided 

for this method of substantiation. The 

rule now requires that records identify 

the covered commodity, the supplier, 

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

information. This information must be 

maintained for a period of 1 year from 

the date the origin designations are 

made at retail. Under the proposed rule, 

these records would have been required 

to be maintained for 2 years. 

Accordingly, under this interim final 

rule, 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 kept in any location. 

USDA continues to look for ways to 

minimize the burden associated with 

this rule. Therefore, under this interim 

final rule, in addition to relying on 

producer affidavits to initiate an origin 

claim, slaughter facilities that slaughter 

animals that are part of a National 

Animal Identification System (NAIS) 

compliant system or other recognized 

official identification system (e.g., 

Canadian official system, Mexico 

official system) may also rely on the 

presence of an official ear tag and/or the 

presence of any accompanying animal 


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markings (i.e., ‘‘Can’’, ‘‘M’’), as 

applicable, on which to base their origin 

claims. This provision also applies to 

such animals officially identified as a 

group lot. 

Responsibilities of Retailers and 

Suppliers 

With regard to the ‘‘safe harbor’’

language contained in the proposed 

rule, which allows retailers and 

suppliers to rely on the information 

provided unless they could have been 

reasonably expected to have knowledge 

otherwise, based on comments received, 

this ‘‘safe harbor’’ language has been 

removed from this interim final rule. 

The commenters contend that because 

the statute states that retailers are not 

subject to fines unless the Secretary 

determines they have willfully violated 

the statute, the standard of willfulness 

is a higher bar to liability than the 

standard of negligence that is 

encompassed in the reasonable reliance 

standard utilized in the ‘‘liability 

shield.’’ A complete discussion is 

contained in the Comments and 

Responses section of this interim final 

rule. 

Highlights of This Interim Final Rule 

Covered Commodities 

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; perishable 

agricultural commodities (fresh and 

frozen fruits and vegetables); peanuts; 

pecans; ginseng; and macadamia nuts. 

Exemption for Food Service 

Establishments 

Under this interim 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 interim 

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). 

Examples of items excluded from 

country of origin labeling include 

teriyaki flavored pork loin, meatloaf, 

roasted peanuts, breaded chicken 

tenders, fruit medley, 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. 

Labeling Muscle Cut Covered 

Commodities of Multiple Countries of 

Origin (That Includes the United States) 

Under this 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 may be 

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. 

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. 

In both 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. 

Labeling Imported Covered 

Commodities 

Under this interim final rule, an 

imported covered commodity for which 

origin has already been established as 

defined by this law (e.g., born, raised, 

slaughtered or grown) and for which no 

production steps have occurred in the 

United States shall retain its origin as 

declared to U.S. Customs and Border 

Protection (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 of 1930 (Tariff Act). 

This interim final rule does not change 

these requirements. 

Labeling Commingled Covered 

Commodities 

In this interim final rule, a 

commingled covered commodity is 

defined as a single type of covered 

commodity (e.g., frozen peas), 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 ground 

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, 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 imported and/or 

United States origin commodities, the 

declaration shall indicate the countries 


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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. 

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 interim 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. 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 notification either on 

the sales vehicle or at the time the 

product is delivered to the consumer. 

Markings 

Under this interim final rule, the 

country of origin declaration 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. In 

general, 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.’’

for the ‘‘United States’’ are acceptable. 

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 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 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 designation 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. 

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 declaration. However, 

such declarations must be legible and 

conspicuous, and allow consumers to 

find the country(ies) of origin easily and 

read it 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 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. 

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 declarations 

are necessary in order to provide 

retailers with credible information on 

which to base origin declarations. 

Under this interim 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 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. 

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 

declaration, which in the case of beef, 

lamb, pork, chicken, and goat is the 

slaughter facility, must possess or have 

legal access to records that are necessary 

to substantiate that claim. In the case of 

beef, lamb, chicken, goat, and pork, a 

producer affidavit shall be considered 

acceptable evidence on which the 

slaughter facility may rely to initiate the 

origin claim, provided it is made by 

someone having first-hand knowledge of 

the origin of the animal(s) and identifies 

the animal(s) unique to the transaction. 

USDA continues to look for ways to 

minimize the burden associated with 

this rulemaking. Therefore, slaughter 

facilities that slaughter animals that are 

part of a National Animal Identification 

System (NAIS) compliant system or 

other recognized official identification 

system (e.g., Canadian official system, 

Mexico official system) may also rely on 

the presence of an official ear tag and/ 

or the presence of any accompanying 

animal markings (i.e., ‘‘Can’’, ‘‘M’’), as 

applicable, on which to base their origin 

claims. This would also include such 


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animals officially identified as a group 

lot. 

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 interim final rule, retailers 

also have recordkeeping 

responsibilities. 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 must be 

maintained for one year from the date 

the origin declaration is made at retail. 

Upon request, these records must be 

provided to any duly authorized 

representatives of USDA within 5 

business days of the request and may be 

maintained in any location. For prelabeled products (i.e., labeled by the 

manufacturer/first handler) the label 

itself is sufficient evidence on which the 

retailer may rely to establish the 

product’s origin. Pre-labeled products 

are those covered commodities that are 

labeled for country of origin by the firm 

or entity responsible for making the 

initial claim or by a further processor or 

repacker (i.e., firms that receive bulk 

products and package the products as 

covered commodities in a form suitable 

for the retailer). The country of origin 

information of pre-labeled covered 

commodities must be legibly printed on 

the shipping container, immediate 

container, or consumer ready package. 

In addition to indicating country of 

origin information, pre-labeled products 

must contain sufficient supplier 

information to allow USDA to traceback the product to the supplier 

initiating the claim. Records that 

identify the covered commodity, the 

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. 

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 

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 

NAIS compliant tags on which to base 

origin claims, 9 CFR 71.22 prohibits the 

removal of official identification devices 

except at the time of slaughter. 

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 

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. To the 

extent that these comments applied to 

fish and shellfish covered commodities, 

these comments have already been 

addressed in the interim final rule for 

fish and shellfish (69 FR 59708). 

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. The majority of the comments 

received were from consumers 

expressing support for mandatory COOL 

for the remaining covered commodities. 

Numerous comments were received that 

provided insights and suggestions 

relating to the definitions for ‘‘processed 

food item,’’ ‘‘blended products,’’

‘‘retailer,’’ and ‘‘ground beef.’’ Several 

foreign governments expressed concern 

that the law itself may not be consistent 

with the World Trade Organization or 

North American Free Trade Agreement 

obligations of the United States. Other 

commenters pointed out that COOL 

provides no food safety benefit to 

consumers. Some commenters 

expressed concerns that poultry and 

food service establishments are exempt 

from COOL regulations. Several 

commenters discussed the challenges 

and possible solutions for labeling 

country of origin when products have 

entered the United States during the 

production process. Many commenters 

requested an implementation period to 

allow clearing from channels of 


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commerce those preexisting animals 

and commodities for which accurate 

labeling would be difficult. 

Any comments received on the 

October 30, 2003, proposed rule that 

were not addressed previously in the 

interim final rule for fish and shellfish, 

as well as any new comments received 

in response to the June 20, 2007, 

comment reopening, will be addressed 

in this rule. 

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 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. To the extent that these 

comments apply to the overall costs and 

benefits of mandatory COOL for the 

remaining covered commodities, they 

will be addressed herein. 

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 this interim final rule, the 

regulatory provisions for the covered 

commodities other than fish and 

shellfish will appear at 7 CFR part 65. 

For the ease of the reader, the 

discussion of the comments will refer to 

the initial regulatory numbering 

scheme. The numbering scheme for the 

regulatory provisions in this interim 

final rule is different and therefore may 

not align with the proposed rule. 

Definitions 

Born 

Summary of Comments: One 

commenter recommended that a new 

definition be added that would define 

the term ‘‘born’’ in the case of: 

(a) Beef, pork, and lamb: The country 

in which cattle, hogs, and sheep were 

birthed on or after September 30, 2004. 

(b) Cattle, hogs, and sheep: All cattle, 

hogs, and sheep birthed prior to 

September 30, 2004, and residing within 

the United States on September 30, 

2004, shall be deemed to be born in the 

United States, except those identified as 

foreign (through various means). 

Agency Response: The 

implementation date for covered 

commodities other than fish and 

shellfish was delayed until September 

30, 2008. The 2008 Farm Bill amended 

section 282(a)(2) of the Act such that 

beef, lamb, pork, chicken, and goat can 

be designated as having a United States 

origin if derived from an animal that 

was present in the United States on or 

before July 15, 2008, and once present 

in the United States, remained 

continuously in the United States. 

Accordingly, the issue raised in the 

comment has been addressed by the 

2008 Farm Bill amendment, and this 

rule reflects that statutory change. 

Covered Commodity 

Summary of Comments: Numerous 

commenters suggested that the 

definition of covered commodity should 

be amended to include poultry. 

Agency Response: The 2008 Farm Bill 

amended section 281(2)(A) of the Act to 

include chicken as a covered 

commodity as well as goat, pecans, 

ginseng, and macadamia nuts. 

Therefore, the term ‘‘covered 

commodity’’ has been defined in this 

interim final rule as ‘‘muscle cuts of 

beef, lamb, chicken, goat, and pork; 

ground beef, ground lamb, ground 

chicken, ground goat, and ground pork; 

perishable agricultural commodities; 

peanuts; pecans; ginseng; and 

macadamia nuts.’’ Accordingly, the 

commenters’ concerns regarding adding 

poultry as a covered commodity have 

been addressed by the 2008 Farm Bill. 

Food Service Establishment 

Summary of Comments: Several 

commenters stated their opposition to 

the labeling exemption for food service 

establishments and pointed out that this 

provision will result in a substantial 

amount of product being unlabeled for 

country of origin. One commenter 

encouraged USDA to retain the food 

service establishment definition and to 

add meal preparation services as 

another example. 

Agency Response: Section 282(b) of 

the Act provides for an exemption for 

food service establishments. Therefore, 

this interim final rule retains the 

provision for an exemption for food 

service establishments. In addition, 

language describing meal preparation 

stations as another example of a food 

service establishment has been added to 

the preamble. Accordingly, these 

recommendations have been adopted in 

part. 

Ground Beef 

Summary of Comments: Several 

commenters suggested that the 

definition of ground beef be modified so 

that all beef products that are ground 

would be covered regardless of the 

amount of beef fat, and regardless of 

whether it contains added water, 

phosphates, binders, or extenders. 

Agency Response: In the October 30, 

2003, proposed rule, the Agency defined 

the term ‘‘ground beef’’ as having the 

meaning given the 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. The Agency has considered 

the comments received and agrees that 

the definition of ground beef contained 

within the proposed rule was too 

narrow as it would have excluded 

products such as hamburger and 

potentially beef patties. Consumers 

likely would have been confused as to 

why certain ground beef products were 

labeled with country of origin while 

others were not. Accordingly, AMS has 

revised the definition of ground beef 

such that ‘‘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 terms ‘‘hamburger’’ in 9 

CFR 319.15(b) and ‘‘beef patties’’ in 9 

CFR 319.15(c). This revised definition 

will result in the inclusion of hamburger 

and beef patties by allowing for the 

addition of beef fat and water. However, 

ground beef, hamburger, and beef 


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patties that contain seasonings and/or 

other ingredients such as binders or 

extenders would meet the definition of 

a processed food item and would 

therefore not be covered under this rule. 

Processed Food Item 

Summary of Comments: AMS 

received numerous comments on the 

definition of a processed food item. 

Several commenters expressed the 

opinion that the number of exemptions 

allowed under the processed food item 

definition should be substantially 

limited so as to allow for labeling of the 

maximum number of commodities as 

possible. Some commenters offered 

specific recommendations as to what 

should not be included as a processing 

step such as marinating, breading, 

canning, smoking, curing, cooking, 

dividing into portions, etc. Some 

commenters offered specific 

recommendations as to what should be 

included as a processing step such as 

freezing, removing inedible portions 

(such as peeling, coring, and chopping 

a fresh pineapple), restructuring, 

cooking, curing, and smoking. With 

respect to recognizing freezing as a 

processing step, one commenter 

provided examples of other regulations 

administered by AMS that recognize 

freezing as a processing step. The 

commenter contends that these 

regulations have established an 

administrative precedent and a 

departure from such precedent would 

not be legally supported. The 

commenter also contends that imported 

frozen products are already required to 

be labeled with the country of origin 

under the Tariff Act and that requiring 

the labeling of these products under 

COOL would be duplicative. Finally, 

the commenter contends that there was 

no legislative intent for frozen foods to 

fall under the COOL labeling 

requirements. 

Several commenters requested that 

USDA clarify the types of products that 

would be considered processed food 

items under the second part of the 

definition. Some commenters stated that 

products such as hamburger, beef 

patties, meatballs, meat loaves, and 

fabricated steak should be defined as 

processed food items. Another 

commenter suggested that ground beef, 

ground lamb, and ground pork should 

be defined as processed food items. 

Several commenters suggested that 

roasted, dry roasted, and honey roasted 

peanuts should be defined as processed 

food items. Several commenters 

concurred with the agency’s definition 

as published in the interim final rule for 

fish and shellfish. 

One commenter encouraged USDA to 

retain the definition as published in the 

fish and shellfish rule, but recognize 

that processing for perishable 

agricultural commodities is different 

than for the other covered commodities. 

The commenter pointed out that much 

value added processing occurs with 

respect to produce and stated that 

peeling, coring, chopping, and 

packaging a fresh pineapple for 

consumers changes the character of the 

covered commodity from a bristly fruit 

to a ready-to-eat product. The 

commenter recommended that USDA 

should recognize that perishable 

agricultural commodities that retailers 

prepare and package for consumers 

immediate consumption should be 

considered processed food items. 

Other commenters expressed general 

concern about the proposed definition, 

but did not offer any alternatives. Other 

commenters expressed concern that the 

concept of substantial transformation, 

which is the basis for determining origin 

under CBP regulations, the World Trade 

Organization’s Rules of Origin, and the 

Codex General Standard for the Labeling 

of Prepackaged Food, is being 

overwritten. Another commenter 

expressed their opinion that the 

addition of salt or sugar represents a 

change in nutritional properties and 

therefore should represent a processing 

step thereby creating a processed food 

item. 

Agency Response: In the October 30, 

2003, proposed rule, the term 

‘‘processed food item’’ was defined as a 

retail item derived from a covered 

commodity that has undergone a 

physical or chemical change, and has a 

character that is different from that of 

the covered commodity; or a retail item 

derived from a covered commodity that 

has been combined with other covered 

commodities or other substantive food 

components. The Agency also 

contemplated a number of alternative 

definitions. In promulgating the 

definition of a processed food item in 

the interim final rule for fish and 

shellfish, the Agency reviewed and 

responded to all of the comments 

received on the October 30, 2003, 

proposed rule. The majority of the 

comments received argued for a broader 

definition of a processed food item such 

that more products would be excluded 

from labeling. Accordingly, under the 

interim final rule for fish and shellfish, 

the definition of a processed food item 

was modified such that cooked 

products, breaded products, and items 

that have been imparted with a 

particular flavor are all considered 

processed food items. For a more 

complete discussion of these comments 

and the Agency’s responses, readers are 

invited to review the interim final rule 

for fish and shellfish. 

The Agency believes the definition of 

a processed food item contained in the 

interim final rule for fish and shellfish 

has established a bright line standard in 

terms of what products are covered by 

the regulation. Therefore, under this 

interim final rule, the definition of a 

processed food item is the same as that 

which was published in the interim 

final rule for fish and shellfish (69 FR 

89708). Further, to provide additional 

guidance to the industry, the Agency 

has added additional examples of the 

types of products that would be 

excluded in the Questions and Answers 

section of this rule. 

With respect to the issue of 

substantial transformation, the law 

specifically defines the criteria for a 

covered commodity to be labeled as 

having a United States country of origin. 

Imported covered commodities do not 

generally meet this criteria and, 

therefore, may not bear a declaration 

that identifies the United States as the 

sole country of origin. 

With regard to excluding ground meat 

products, the Act defines the term 

‘‘covered commodity’’ to specifically 

include ground beef, ground pork, 

ground lamb, ground goat as well as 

ground chicken. Thus, these 

commodities must be labeled under this 

regulation. However, items such as 

meatballs, meat loaf, and similar items 

that contain seasonings and/or binders, 

would not meet the definition of 

‘‘ground beef’’ as defined in this 

regulation. With regard to fabricated 

steak, this product is restructured and 

therefore would be considered a 

processed food item under this interim 

final rule. 

With respect to considering freezing 

as a processing step, freezing is clearly 

a method of preservation and does not 

change the character of the product. In 

addition, in defining the term perishable 

agricultural commodity, Congress 

referenced the definition for this term 

under the Perishable Agricultural 

Commodities Act of 1930 (PACA). 

Under PACA, the term perishable 

agricultural commodity means ‘‘any of 

the following, whether or not frozen or 

packed in ice * * *’’ Therefore, it is 

clear that frozen fruits and vegetables 

are specifically included as covered 

commodities under the statute. As the 

commenter points out, many imported 

products (in consumer-ready packages) 

are already required to be labeled under 

the Tariff Act. This interim final rule 

does not change these requirements. 

With respect to the recommendation 

to recognize that perishable agricultural 


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commodities that retailers prepare and 

package for consumers’ immediate 

consumption should be considered 

processed food items, many of these 

preparations must be done prior to a 

product being ready for consumption. 

For example, a consumer would not eat 

a pineapple that wasn’t peeled, cored, 

and sliced and/or chopped. Such 

processing thus does not change the 

character of the product but rather 

prepares it for consumption. This is 

similar to the process of peeling shrimp. 

A consumer would not eat shrimp prior 

to it being peeled and accordingly, 

peeling shrimp is not considered a 

processing step under the interim final 

rule for fish and shellfish. 

With respect to roasted, dry roasted, 

and honey roasted peanuts, because 

these items are all cooked, under the 

definition of a processed food item in 

this interim final rule, these products 

are excluded from labeling. With regard 

to excluding items that contain added 

salt or sugar, the Agency believes the 

addition of these ingredients merely 

represent a further step in the 

preparation of the product for 

consumption and do not result in a 

change of character of the covered 

commodity. Therefore, this 

recommendation is not adopted. 

Retailer 

Summary of comments: Several 

commenters were concerned that the 

definition of a retailer in the proposed 

rule does not conform to what the 

average consumer thinks of as a retailer 

because it excludes stores that do not 

sell fruits and vegetables such as fish 

markets, meat markets, small green 

grocers, and convenience stores. These 

commenters urged USDA to resolve any 

ambiguities surrounding the definition 

in a way that maximizes the number of 

food items and establishments subject to 

mandatory COOL. Another commenter 

noted that Congress intended to impose 

the new labeling requirements on sales 

conducted by a certain class of business 

entities (i.e., PACA retailers) but not on 

all retail sales of covered commodities. 

They further stated that any person that 

primarily sells food in wholesale or in 

bulk to independent businesses (e.g., 

restaurants and other food service 

establishments) should be exempt from 

COOL. 

Agency Response: The law 

specifically defines the term retailer as 

having the meaning given that term in 

section 1(b) of PACA. Accordingly, fish 

markets or any other retail entities that 

either invoice fruits and vegetables at a 

level below the $230,000 threshold or 

do not sell any fruits and vegetables at 

all are not included. Likewise, the 

Agency believes this definition clearly 

indicates that covered commodities sold 

by wholesalers to restaurants and other 

food service establishments are not 

covered by COOL. Accordingly, no 

modification to the definition of a 

retailer has been made. 

Slaughter 

Summary of Comments: In the 

proposed rule, the Agency specifically 

invited comments on the use of 

alternative terms for the term 

‘‘slaughtered.’’ Numerous commenters 

suggested alternatives including 

abattoired, processed, harvested, 

prepared, and initial processing. 

Agency Response: The Agency 

believes that the alternative term 

‘‘harvested’’ as suggested by several of 

the commenters is an acceptable 

alternative for the term ‘‘slaughtered’’

that will be readily understood by 

consumers. Accordingly, this rule has 

been modified to allow the use of this 

term in lieu of the term ‘‘slaughtered’’. 

Country of Origin Notification 

Exemption for Food Service 

Establishments 

Summary of Comments: Several 

commenters were not in favor of the 

exemption for food service 

establishments as it would limit the 

information available to consumers. 

Agency Response: The Act expressly 

states the exemption of food service 

establishments. Therefore, this 

exemption is retained in this regulation. 

Labeling Covered Commodities of 

United States Origin 

Summary of Comments: One 

commenter supported labeling only 

those products derived from animals 

specifically born, raised, and processed 

in the United States as eligible for the 

‘‘product of the United States’’

designation. This commenter opposed 

an all-inclusive label such as ‘‘product 

of the United States, Canada, or 

Mexico’’ when the commodity meets the 

specific qualifications for the ‘‘product 

of the United States’’ label. Another 

commenter advocated that the ‘‘United 

States origin’’ designation should only 

be available for peanut products in 

which the peanuts have been grown and 

harvested in the United States and have 

not been substantially transformed 

outside the United States. Other 

commenters supported a presumption of 

United States origin in which the 

absence of foreign import markings 

should be used to identify livestock 

exclusively born, raised, and processed 

in the United States. One commenter 

suggested that in the case of the covered 

commodities beef, pork, lamb, ground 

beef, ground pork, and ground lamb, the 

retail product should be labeled as 

‘‘product of the United States’’ if in fact 

that product was produced in the 

United States. 

Agency Response: The law expressly 

states the criteria for products to be 

considered of United States origin, 

which are included in the definition of 

this term as stated in § 65.260 of this 

interim final rule. The specific 

requirements for covered commodities 

are as follows: Perishable agricultural 

commodities, pecans, ginseng, peanuts, 

and macadamia nuts—covered 

commodities must be produced in the 

United States; beef, lamb, pork, chicken, 

and goat—covered commodities must be 

derived exclusively from animals (1) 

born, raised, and slaughtered in the 

United States (including animals born 

and raised in Alaska and 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 (2) present in the 

United States on or before July 15, 2008, 

and once present in the United States, 

remained continuously in the United 

States. The regulation also states that 

covered commodities further processed 

or handled in a foreign country after 

meeting the requirements to be labeled 

as United States origin (as defined in 

§ 65.260) may bear the declaration that 

identifies the United States as the sole 

country of origin at retail provided the 

identity of the product is maintained 

along with records to substantiate the 

origin claims and the claim is consistent 

with other applicable Federal legal 

requirements. Thus, peanuts grown in 

the United States and processed in 

another country such that a substantial 

transformation does not occur are still 

eligible to bear a United States origin 

declaration. 

In the case of all inclusive labels such 

as ‘‘Product of the United States, 

Canada, or Mexico’’, the 2008 Farm Bill 

provided further direction on country of 

origin labeling for meat covered 

commodities. These changes include 

additional provisions concerning 

labeling meat covered commodities that 

have multiple countries of origin. Under 

this 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 may 

be 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. In 

addition, the origin declaration may 

include more specific information 


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related to production steps provided 

records to substantiate the claims are 

maintained and the claim is consistent 

with other applicable Federal legal 

requirements. 

With regard to allowing for 

presumption of United States origin, the 

law also states that ‘‘Any person 

engaged in the business of supplying a 

covered commodity to a retailer shall 

provide information to the retailer 

indicating the country of origin of the 

covered commodity.’’ Accordingly, 

presumption of United States origin is 

not authorized under the statute. 

Labeling Imported Covered 

Commodities That Have Been 

Substantially Transformed in the United 

States 

Summary of Comments: Two 

commenters supported the provisions 

contained in the interim final rule for 

fish and shellfish for labeling products 

that have been imported from country x 

and substantially transformed in the 

United States to be labeled as ‘‘from 

country x, processed in the United 

States’’ and recommended this 

provision also be used for other covered 

commodities. One commenter opposed 

requiring further itemization of exact 

production steps that occurred in the 

United States or in the foreign country. 

One commenter supported a label that 

expresses each country’s specific role in 

the production of a product. 

Agency Response: The 2008 Farm Bill 

contains labeling provisions for the 

following categories: United States 

country of origin, multiple countries of 

origin, imported for immediate 

slaughter, foreign country of origin, as 

well as for labeling ground products. 

Accordingly, this interim final rule 

contains labeling provisions for these 

categories in accordance with the law. A 

complete discussion on how covered 

commodities should be labeled is 

contained in this regulation in the 

section entitled ‘‘Highlights of this 

Regulation’’. 

Blended Products 

Summary of Comments: Several 

commenters stated that the provision for 

labeling blended products under the 

proposed rule, which required an 

alphabetical listing of countries 

contained therein and required facilities 

to document the origin of a product was 

separately tracked, was excessively 

costly. Commenters supported language 

in the interim final rule for fish and 

shellfish, which stated ‘‘the declaration 

shall indicate the countries of origin 

contained therein or that may be 

contained therein.’’ Several commenters 

supported labeling that indicates several 

countries may be represented in the 

finished product. As an example, the 

commenters suggested an all-inclusive 

label stating ‘‘product of the United 

States, Canada, or Mexico.’’ The 

commenters contend that such a label 

will provide consumers with a 

reasonable indication of likely origin 

while reducing implementation costs. 

One commenter requested that USDA 

clarify what constitutes the ‘‘same 

covered commodity’’. The commenter 

stated that the example in the proposed 

rule referred to green and red leaf 

lettuce as if they are a single commodity 

and that the produce industry would 

consider those two different items. The 

commenter noted this would render a 

bag containing red and green leaf lettuce 

as a processed food item. The 

commenter recommended that if a 

commodity has a unique identifier such 

as a unique price look up code (PLU) 

related to anything but size or region, it 

should be considered a unique item. 

Other commenters appeared to be 

confused as to labeling ‘‘blended’’

covered commodities and instead 

provided comments on labeling 

commodities of mixed origin. The 

relevant comments have been addressed 

in the appropriate sections. 

Agency Response: In an effort to 

clarify the labeling requirements for this 

type of product, the Agency has 

removed references to the term 

‘‘blended’’ covered commodities and 

has added a definition of ‘‘commingled’’

covered commodities. Under this 

interim final rule, commingled covered 

commodities are defined as a single type 

of covered commodity (e.g., frozen 

peas), presented for retail sale in a 

consumer package, that has been 

prepared from raw material sources 

having different origins. 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. Further, a 

commingled covered commodity does 

not include ground meat products. 

However, because labeling of ground 

meat products was included in the 

blended (commingled) provisions of the 

proposed rule, for purposes of 

discussing the comments, they are 

included under this subheading. 

USDA is concerned about the burden 

imposed by the rule on facilities that 

produce a commingled retail product as 

the added costs of implementing this 

rule will likely be passed on to 

consumers. The proposed rule would 

have required such facilities to 

document that the origin of a product 

was separately tracked, while in their 

control, during production and 

packaging. The proposed rule also 

would have required that the labeling of 

all blended products specify precisely 

the countries of origin represented 

within each individually-packaged 

retail product. 

The Department believes that the 

statutory language makes clear that the 

purpose of the COOL law is to provide 

for a retail labeling program for covered 

commodities—not to impose economic 

inefficiencies and disrupt the orderly 

production, processing, and retailing of 

covered commodities. Therefore, in this 

interim final rule, the provision to 

separately track the product has been 

removed, and the labeling requirements 

have been made consistent with other 

Federal labeling requirements (i.e., CBP 

marking regulations). This interim final 

rule does not impose any additional 

burden with respect to the labeling of 

commingled products for which 

labeling is also required under CBP 

regulations. 

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 imported and/or 

United States origin commodities, the 

declaration shall indicate the countries 

of origin for all covered commodities in 

accordance with CBP marking 

regulations (19 CFR part 134). 

The 2008 Farm Bill 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. 

This interim final provides that 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. 

In reference to the comment about 

clarifying the language ‘‘the same 

covered commodity’’, the Agency has 

added additional language describing 

the types of products this labeling 

provision covers in the preamble. In 

response to the commenter’s 

recommendation regarding red and 

green leaf lettuce, the Agency disagrees 

with the commenter’s recommendation 

to use price lookup codes as the 

standard for whether or not a covered 

commodity is considered ‘‘the same’’. 

While green leaf and red leaf lettuce are 

different varieties of lettuce, they are 

both still leaf lettuce and thus would 

not meet the definition of a processed 

food item. This is also the case with 

different varieties of apples or onions as 

each variety—red delicious, fuji, or 


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granny smith in the case of apples and 

red, yellow, and white in the case of 

onions—has its own PLU code. Thus, 

the provision for labeling commingled 

covered commodities apples to products 

such as a bag that contains frozen 

strawberries originating from the United 

States and Mexico, a bag that contains 

bananas originating from Ecuador and 

Costa Rica, and a bag of lettuce that 

contains romaine and iceberg lettuce 

originating from the United States and 

Mexico. 

Remotely Purchased Products 

Summary of comments: One 

commenter recommended that suppliers 

should list the country of origin on the 

sales vehicle. Another commenter 

recommended that the country of origin 

notification should be allowed to be 

made either on the sales vehicle or at 

the time the product is delivered to the 

consumer. 

Agency Response: The Agency agrees 

that companies should be allowed 

flexibility in providing the notice of 

country of origin. As such, under this 

interim final rule, companies can 

provide the required notification either 

on the sales vehicle or at the time the 

product is delivered to the consumer. 

Markings 

Section 60.300(a) 

Summary of Comments: Several 

commenters stated that flexibility is 

critically important to help minimize 

costs in complying with the law. These 

commenters urged AMS to permit the 

use of the numerous declaration options 

as listed in the interim final rule for fish 

and shellfish. Commenters also 

supported the use of a check box to 

declare country of origin information on 

covered commodities. Several 

commenters recommended that the 

country of origin declaration be allowed 

to be made in the form of a statement 

such as ‘‘product of the U.S.’’ or as 

simply the country name such as 

‘‘USA’’. The commenters pointed out 

that this provision was contained within 

the proposed rule, but was deleted from 

the interim final rule for fish and 

shellfish. 

Agency Response: The Agency 

believes that the law provides flexibility 

in providing the country of origin 

notification and this interim final rule 

has been drafted accordingly. As such, 

§ 65.400(a) allows for the same 

flexibility in providing the origin 

information as allowed in the interim 

final rule for fish and shellfish, 

including allowing for the use of a 

check box. In addition, the use of the 

name of the country only is permitted 

under this interim final rule, provided 

it is in accordance with other Federal 

labeling laws. For example, in certain 

circumstances CBP regulations require 

the words ‘‘product of’’ or ‘‘made in’’ to 

precede the name of the country. 

Section 60.300(b) 

Summary of Comments: Several 

commenters recommended that the 

conspicuous location requirement 

should include any place on the 

package or product. Several commenters 

supported the current application of this 

requirement under the interim final rule 

for fish and shellfish and recommended 

that USDA further explain the 

conspicuous standard to ensure a 

common understanding across all 

regulated communities as well as among 

compliance and enforcement personnel. 

Agency Response: At the request of 

the commenters, the Agency has 

included an additional discussion of 

this requirement in the preamble of this 

rule. Declarations must be legible and 

placed in a conspicuous location as to 

allow consumers to find the country(ies) 

of origin easily and read it without 

strain when making their purchases, 

and provided that existing Federal 

labeling requirements must be followed. 

For example, the country of origin 

information 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 of the 

package is also considered an acceptable 

location for the origin declaration 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, also 

known as the principal display panel, of 

these types of packages so it will be 

readily apparent to consumers. 

Section 60.300(d) 

Summary of Comments: Several 

commenters expressed support for the 

provision in both the proposed rule and 

the interim final rule for fish and 

shellfish that allows for commingling 

like items in the same bulk bin even if 

they are from different origins. Several 

commenters asserted that it is 

impossible to label every single item in 

a bulk bin, that stickering efficacy is not 

100%, and that it is likely that some 

stickers will fall off during transport and 

display. These commenters contend that 

the country of origin notification 

requirement should be met if the 

majority of perishable agricultural 

commodities in a bulk bin have labels 

as consumers will be able to determine 

the country of origin. 

Agency Response: The Agency agrees 

that flexibility should be provided to 

retailers to commingle like items from 

different origins in bulk bins. Thus, 

under this interim final rule, 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. The Agency also understands 

that stickering efficacy is not 100%. The 

Agency agrees that consumers would 

likely be able to discern the country of 

origin if the majority of items were 

labeled; however, the Agency 

encourages retailers to use placards and 

other signage as a way to more clearly 

indicate information to consumers as to 

the origin of the covered commodity. 

Accordingly, the Agency does not 

believe it is necessary to change the 

language for 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. 

Section 60.300(e) 

Summary of Comments: Several 

commenters recommended that the 

Agency allow for the use of 

abbreviations for country names as long 

as the abbreviation clearly indicates the 

origin of a covered commodity. The 

commenters made reference to the 

Agency’s policy to follow CBP’s 

interpretation of the Tariff Act with 

regard to abbreviations and stated their 

belief that the Agency is not bound by 

CBP’s interpretation. Some commenters 

recommended that the Agency utilize 

the country abbreviations established by 

the International Organization for 

Standardization. One commenter 

pointed out the USDA accepts 

abbreviations from intermediary 

suppliers and others on records. 

Agency Response: The Agency 

believes that the limited application of 

abbreviations that unmistakably 

indicate the country of origin is 

appropriate. The CBP has a long history 

of administering the Tariff Act and has 

issued numerous policy rulings with 

regard to this subject. The Agency 

concurs with CBP’s interpretation that 

most abbreviations may not be readily 


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understood by the majority of 

consumers. The Agency does permit the 

use of abbreviations in supplier records 

as long as a key or other similar 

document explaining what the 

abbreviations represent is provided. 

However, the Agency does not believe 

that providing a key in the store for 

consumers to have to locate and 

decipher is appropriate or reasonable. 

Accordingly, these recommendations 

are not adopted. However, the Agency 

has added clarifying language to 

§ 65.400(e). 

Section 60.300(f) 

Summary of Comments: Numerous 

commenters recommended that the 

Agency accept State and regional label 

designations in lieu of country of origin 

labeling for commodities produced in 

the United States. Two commenters 

recommended that retailers be 

permitted to substitute more visually 

appealing and consumer-targeted labels, 

such as ones with American flags, in 

lieu of a standard or commodity label. 

Agency Response: The 2008 Farm Bill 

modified the Act to allow for the use of 

State, region, or locality label 

designations to meet the country of 

origin notification requirements of the 

statute for perishable agricultural 

commodities, peanuts, pecans, 

macadamia nuts, and ginseng that are 

produced in the United States. The 

Department believes it is appropriate to 

expand this provision to also allow 

State, regional, or locality labels for 

imported products. Therefore, under 

this interim final rule, for perishable 

agricultural commodities, peanuts, 

pecans, macadamia nuts, and ginseng 

covered commodities, State or regional 

label designations are acceptable in lieu 

of country of origin for both domestic 

and imported products. Accordingly, 

this recommendation is adopted in part. 

With regard to substituting more 

visually appealing labels, as long as 

country of origin information is 

provided in accordance with this 

regulation, additional labels can be 

applied to the package that are more eye 

appealing. In addition, there is no 

standardized format for labels under 

this regulation, so suppliers and 

retailers have flexibility in designing the 

appearance of the label provided the 

origin declaration is legible and placed 

in a conspicuous location. 

Recordkeeping 

General 

Summary of Comments: Numerous 

commenters supported the acceptance 

of existing records used in the normal 

course of business. These commenters 

stated that the rule does not need to 

establish new document or 

recordkeeping burdens to verify country 

of origin claims and that existing 

records should be sufficient. Several 

commenters recommended that the 

Agency provide a list of example 

documents that would illustrate 

acceptable normal business records. 

Some of these commenters offered the 

following examples of documents: 

Animal health papers, import or 

Customs documents, producer 

affidavits, and records maintained in 

compliance with assessments and 

remittances for Federally legislated 

promotion and research programs. 

Several commenters supported the use 

of producer affidavits. 

Agency Response: The Agency agrees 

that records kept in the normal course 

of business likely contain sufficient 

information to verify origin claims. The 

Act, as amended by the 2008 Farm Bill, 

states that records maintained in the 

course of the normal conduct of 

business, including animal health 

papers, import or customs documents, 

or producer affidavits may serve for 

verification purposes. The Act, as 

amended, further states that 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 the 

covered commodity other than those 

maintained in the course of the normal 

conduct of the business of such person. 

Therefore, under this interim final 

rule, 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. In the 

case of beef, lamb, chicken, goat, and 

pork, a producer affidavit shall be 

considered acceptable evidence on 

which the slaughter facility may rely to 

initiate the origin claim, provided it is 

made by someone having first-hand 

knowledge of the origin of the animal(s) 

and identifies the animal(s) unique to 

the transaction. In addition, to further 

reduce the burden associated with 

labeling meat covered commodities with 

origin information, under this interim 

final rule, slaughter facilities that 

slaughter animals that are part of a 

National Animal Identification System 

(NAIS) compliant system or other 

recognized official identification system 

(e.g., Canadian official system, Mexico 

official system) may choose to rely on 

the presence of an official ear tag and/ 

or the presence of any accompanying 

animal markings (i.e., ‘‘Can’’, ‘‘M’’), as 

applicable, on which to base their origin 

claims. This provision also applies to 

such animals officially identified as a 

group lot. 

With regard to providing examples of 

normal business records that may be 

useful in verifying origin claims, the 

Agency has included some examples of 

records in the regulation and additional 

examples have been posted on the AMS 

Web site. 

Location of Records 

Summary of Comments: Several 

commenters requested flexibility in the 

regulation for establishing the manner 

and location in which regulated firms 

maintain records. Commenters noted 

that firms with multiple locations or a 

corporate headquarters might choose to 

centralize supplier records. Commenters 

requested that the rule permit firms to 

maintain records centrally, provided the 

information is readily available and that 

the firm has the capability to transfer it 

to the specific retail outlet if requested 

by USDA. The commenters stated that 

retailers and suppliers could make 

records available to USDA either 

electronically by transferring computer 

files or by facsimiles of paper 

documents. Some commenters 

requested that retailers and suppliers be 

given a reasonable period of time to 

produce records requested by the 

Agency. 

Agency Response: The regulation 

provides flexibility by allowing 

electronic or hard copy formats, by not 

requiring specific records, and by 

providing flexibility in where the 

records can be kept. The Agency agrees 

that retailers and suppliers could make 

records available to USDA 

representatives either electronically by 

transferring computer files or by 

providing facsimiles of paper 

documents. The Agency also agrees that 

retailers and suppliers should be 

allowed a reasonable amount of time to 

provide records to USDA 

representatives upon request. Under this 

interim final rule, the requirement to 

maintain records at the retail facility has 

been removed. Accordingly, the 

recommendation to allow retailers to 

provide records to the USDA 

representative within some reasonable 

period of time is adopted. 

Recordkeeping Retention 

Summary of Comments: The Agency 

received numerous comments regarding 

the recordkeeping retention 

requirements. One commenter was in 

favor of the retention period contained 

in the proposed rule. Several 

commenters recommended the one-year 


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retention period contained in the 

interim final rule for fish and shellfish. 

Several commenters recommended that 

the COOL rule harmonize the record 

retention requirements with the FDA 

regulations on Bioterrorism. Several 

commenters recommended a retention 

period as short as possible and pointed 

out that many of the covered 

commodities are purchased by 

consumers within a matter of weeks, 

and in the case of fresh meat products, 

within 40 to 60 days of production. 

Another commenter added that even for 

the minimal amount of frozen meat 

covered commodities that are sold at 

retail, the time from production through 

retail sale would be less than 6 months. 

Another commenter recommended a 

retention period of 180 days. Another 

commenter recommended that the 

Agency consider a similar 

recordkeeping retention period as that 

required by FSIS with respect to HACCP 

documents for fresh products. 

Agency Response: Based on the 

comments received, the Agency agrees 

that it is appropriate to reduce the 

record retention requirements contained 

in the proposed rule. Many of these 

comments are similar to those that the 

Agency considered in promulgating the 

interim final rule for fish and shellfish. 

Thus, the Agency believes that the 

recordkeeping provisions in the interim 

final rule for fish and shellfish, which 

require a 1-year record retention 

requirement for suppliers and centrally 

located retail records, as opposed to the 

2-year requirement contained in the 

proposed rule, is appropriate. In 

addition, as discussed in more detail in 

the preamble of this regulation and the 

preceding responses to comments, the 

requirement to maintain records at the 

retail store has been removed. Under 

this interim final rule, these records 

may now be kept in any location and 

must be provided to USDA upon request 

within 5 business days of the request. 

With regard to the recordkeeping 

retention time implemented by FDA 

under the Bioterrorism Act, the 

recordkeeping retention requirements 

under the final rule (69 FR 71561) 

issued by FDA vary based on the type 

of product from six months to two years. 

Thus, the recordkeeping requirements 

contained in this interim final rule are 

similar to those in the FDA regulation 

and in some cases, are less burdensome. 

For a more complete discussion of the 

comments the Agency considered in 

promulgating the interim final rule for 

fish and shellfish, readers are invited to 

review that document. 

As to the recommendation for 

allowing for a shorter record retention 

period for supplier and centrally-located 

retail records, the Agency believes a 1- 

year period is necessary to provide the 

Agency with sufficient time to conduct 

supplier compliance reviews. These 

reviews often do not commence until 

several months after the product in 

question was displayed for retail sale. 

Accordingly, this recommendation is 

not adopted. 

With regard to the comment that the 

Agency should adopt the recordkeeping 

provisions required by FSIS with 

respect to HACCP documents, the 

record retention requirements contained 

in this interim final rule are shorter than 

those required by FSIS with relation to 

HACCP. Accordingly, this 

recommendation is not adopted. 

Responsibilities of Suppliers and 

Retailers 

Summary of Comments: Several 

commenters pointed out that in the case 

of beef, lamb, and pork, most of the 

records necessary to verify the origin of 

the livestock used to produce the 

covered commodity will not be 

generated by the supplier of the covered 

commodity. The commenters contend 

that it is therefore important that the 

regulation allow the supplier to either 

have the records or have access to the 

records as the records to verify the birth 

country of the livestock will reside with 

the livestock producer that sold the 

livestock months or years earlier, and 

the animal may have changed hands 

several times before harvest. Several 

commenters expressed concern with 

placing undue recordkeeping and 

liability burdens on livestock producers. 

Other commenters noted that only 

livestock producers have first-hand 

knowledge of the origin of their animals. 

One commenter recommended that 

USDA distinguish between suppliers 

with first-hand knowledge and 

intermediary suppliers. The commenter 

suggested that intermediary suppliers 

should not be required to keep records 

beyond those necessary to identify their 

immediate suppliers and subsequent 

corporate recipients. Another 

commenter recommended that 

importers be required to maintain 

adequate records to reconcile purchase, 

inventories, and sales of imported and 

domestic commodities. 

One commenter suggested that the 

‘‘liability shield’’ that entitles retailers 

and others handling covered 

commodities to rely on the information 

provided to them should be amended to 

reflect the statutory standard for liability 

that applies to retailers under the 

statute. The commenter contends that 

because the statute states that retailers 

are not subject to fines unless the 

Secretary determines they have willfully 

violated the statute, the standard of 

willfulness is a higher bar to liability 

than the standard of negligence that is 

encompassed in the reasonable reliance 

standard utilized in the ‘‘liability 

shield.’’

Agency Response: The Agency agrees 

that the provision allowing a supplier of 

a covered commodity that is responsible 

for initiating a country(ies) of origin 

claim to possess or have legal access to 

records that are necessary to 

substantiate that claim is necessary. 

Accordingly, this provision is included 

in section 65.500(b)(1) of this interim 

final rule. 

With regard to the recommendation 

that intermediary suppliers be required 

to keep only those records that identify 

their immediate suppliers and 

subsequent recipients, this is the case 

with products that are pre-labeled with 

origin information. However, for 

products that are not pre-labeled, the 

intermediary supplier must provide the 

origin information (and identify the 

product unique to the transaction) in a 

document that accompanies the product 

through retail sale. Therefore, the 

Agency believes it is necessary for 

intermediary suppliers to also possess 

records that identify the origin 

information for compliance verification 

purposes for products that are not prelabeled. 

With respect to the recommendation 

to require importers to maintain 

adequate records to reconcile purchases, 

inventories, and sales of imported and 

domestic commodities, the law does not 

provide the Agency with the authority 

to require such detailed information nor 

is such information necessary to 

substantiate origin claims. 

With respect to the safe harbor 

provision, the 2008 Farm Bill modified 

the enforcement provisions of the Act 

such that retailers and suppliers can 

only be fined if after 30-days of 

receiving a notice from the Secretary 

that they are in violation of the Act, the 

retailer or supplier has not made a good 

faith effort to comply and continues to 

willfully violate the Act. Thus, the 

Agency agrees with the commenter’s 

suggestion that the ‘‘liability shield’’

provides less protection for retailers and 

suppliers than the statute itself. 

Accordingly, the ‘‘liability shield’’

language has been deleted from this 

interim final rule. 

Enforcement 

Summary of Comments: The Agency 

received numerous comments on the 

issue of enforcement. Numerous 

commenters recommended that the 

Agency incorporate a transition period 

prior to the rule taking effect to allow 


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industries producing, processing, and 

retailing covered commodities time to 

clear the channels of commerce before 

enforcing the rule. Two commenters 

recommended that AMS implement 

COOL for all covered commodities no 

later than January 1, 2009. Several 

commenters did not offer a specific 

implementation timeframe other than to 

request that the Agency establish a 

‘‘reasonable’’ period to carry out 

education and outreach activities. 

Several commenters referenced the 

language contained in the House version 

of the 2008 Farm Bill that states that all 

animals present in the United States on 

or before January 1, 2008, shall be 

considered of United States origin. 

Other commenters recommended that 

AMS should presume any meat product 

or animals in the channels of commerce 

prior to the rule’s implementation date 

to be of United States origin. 

Several commenters urged AMS to 

establish commodity specific 

timeframes for the rule’s 

implementation due to unique 

commercial life-cycle attributes. One 

commenter suggested an 18-month 

implementation timeframe for peanuts. 

One commenter suggested a six to 

twelve month implementation period 

and another commenter suggested a 

one-year timeframe. One commenter 

suggested timeframes based on the 

average age of animals at time of 

harvest. Specifically, the commenter 

suggested: For imported beef, pork, 

lamb, ground beef, ground pork and 

ground lamb, a delayed effective date by 

at least six months; for beef, pork, lamb, 

ground beef, ground pork, and ground 

lamb produced from animals imported 

for direct harvest, a delayed effective 

date by at least six months; for beef 

produced from animals harvested from 

the United States herd, a delayed 

effective date by at least 30 months; for 

ground beef, which is traditionally 

produced from cull dairy and breeding 

stock, a delayed effective date of at least 

8 years; for pork produced from animals 

harvested from the United States herd, 

a delayed effective date by six months; 

for ground pork, which is traditionally 

produced from cull breeding stock, a 

delayed effective date by at least 2 years; 

and for lamb and ground lamb produced 

from animals harvested from the United 

States herd, a delayed effective date by 

at least 12 months. The commenter 

further suggested that during the time 

allowed to clear the channels of 

commerce, the Agency could encourage 

retailers to voluntarily label products 

when the necessary information is 

available. 

Another commenter encouraged the 

Agency to utilize a similar approach for 

implementation as that used in the 

interim final rule for fish and shellfish. 

The commenter pointed out that frozen 

perishable agricultural commodities 

have a long shelf life and that many 

such products will have been harvested 

and frozen well before the rule is issued. 

The commenter recommended that the 

Agency allow these products to enter 

the chain of commerce and only require 

country of origin information on frozen 

produce that was harvested and 

processed after the final rule takes 

effect. The commenter pointed out that 

the timing for covered meat 

commodities is also complicated 

because of the lifecycle of animals. The 

commenter recommended that the 

Agency employ a uniform compliance 

date policy that is used by both FDA 

and FSIS for frozen perishable 

agricultural commodities and meat 

products, if not for all covered 

commodities. 

One commenter requested that the 

Agency recognize that a willful 

violation does not occur where a party 

is exercising good faith efforts to comply 

with the statute. The commenter further 

stated their belief that good faith efforts 

would include a clear program for 

providing comprehensive labeling of all 

covered commodities at the store level, 

recognizing that for various reasons, 

some small percentage (perhaps 10 or 

15%) of covered commodities might not 

bear labeling on any given day. 

Agency Response: The effective date 

of this regulation is September 30, 2008, 

because the statute provides for a 

September 30, 2008, implementation 

date. However, because some of the 

affected industries (goat, chicken, 

pecans, ginseng, and macadamia nuts) 

did not have prior opportunities to 

comment on this rulemaking, and the 

2008 Farm Bill made changes to several 

of the labeling provisions for meat 

covered commodities, it is reasonable to 

allow time for covered commodities that 

are already in the chain of commerce 

and for which no origin information is 

known or been provided to clear the 

system. Therefore, the requirements of 

this rule do not apply to covered 

commodities produced or packaged 

before September 30, 2008. In addition, 

during the six month period following 

the effective date of the regulation, AMS 

will conduct an industry education and 

outreach program concerning the 

provisions and requirements of this 

rule. AMS has determined that this 

allocation of enforcement resources will 

ensure that the rule is effectively and 

rationally implemented. This AMS plan 

of outreach and education should 

significantly aid the industry in 

achieving compliance with the 

requirements of this rule. 

Existing State Programs 

Summary of Comments: The Agency 

invited comment on the proposed rule 

as it relates to existing State programs. 

One commenter recommended that 

USDA clarify the preemption language 

contained in both the proposed rule and 

the interim final rule for fish and 

shellfish. Specifically, the commenter 

stated that USDA should recognize that 

the Federal law ‘‘occupies the field’’ and 

hence, preempts State country of origin 

labeling laws for all products that are in 

the ambit of covered commodities. The 

commenter stated that States should not 

be able to impose country of origin 

labeling requirements on covered 

commodities that are ingredients in 

processed food items or on those 

prepared in food service establishments. 

The commenter believes that Congress 

has clearly spoken and concluded that 

labeling shall not apply to these items. 

Agency Response: In accordance with 

Executive Order 13132, the Agency does 

not believe there is basis to allow for 

preemption of State laws that would 

encompass commodities that are not 

regulated under this regulation either 

because they meet the definition of a 

processed food item or because they 

were prepared in food service 

establishments. No comments from 

States were received. Accordingly, this 

recommendation is not adopted. 

Miscellaneous 

Summary of Comments: Many 

commenters discussed the use of import 

markings to differentiate cattle of 

foreign origin from cattle born and 

raised in the United States. These 

commenters noted that current APHIS 

regulations require live cattle imported 

from Canada to be branded with the 

letters ‘‘CAN’’ and live cattle imported 

from Mexico to be branded with the 

letter ‘‘M.’’ Commenters argued that 

processors could rely on these brands 

and other import markings to segregate 

animals and ensure accurate country of 

origin notification. Many of these 

commenters argued that the absence of 

import markings should indicate a 

‘‘presumption of United States origin.’’

AMS also received numerous comments 

expressing concern about the potential 

for COOL to create obstacles to 

international trade and possible 

conflicts with regard to United States 

trade agreements under the World Trade 

Organization, the North American Free 

Trade Agreement, and General 

Agreements on Tariffs and Trade. 

Several other commenters expressed 

their opinions regarding the justification 


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for COOL as a food safety or animal 

health measure. Several other 

commenters asserted that COOL will not 

ensure food safety or animal health. 

Agency Response: With respect to 

using import markings to segregate 

animals, the Agency believes the 

labeling provisions contained in 

§ 65.300 of this interim final rule 

provide flexibility such that the need to 

segregate animals will be limited to 

those suppliers that want to provide 

more specific origin information. 

However, in an effort to further reduce 

the burden associated with labeling 

meat covered commodities with origin 

information, under this interim final 

rule, slaughter facilities that slaughter 

animals that are part of a National 

Animal Identification System (NAIS) 

compliant system or other recognized 

official identification system (e.g., 

Canadian official system, Mexico 

official system) may also rely on the 

presence of an official ear tag and/or the 

presence of any accompanying animal 

markings (i.e., ‘‘Can’’, ‘‘M’’), as 

applicable, on which to base their origin 

claims. This provision also includes 

such animals officially identified as a 

group lot. 

With regard to presumption of United 

States origin, the 2008 Farm Bill 

amended the Act such that 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 will be considered of 

United States origin. 

With respect to the commenters’

concern regarding 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. 

With regard to the comments on 

COOL serving as a food safety or animal 

health measure, as stated in the 

preamble, the purpose of COOL is to 

provide additional information to 

consumers 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 

and domestic, must meet the food safety 

standards of FDA and FSIS. 

Preliminary Paperwork Reduction Act 

Summary of Comments: USDA 

received conflicting comments 

regarding liability burdens and the 

maintenance of records throughout 

supply channels between retailers, 

suppliers and producers. Generally, 

cattle, pork and lamb producers and 

their trade associations provided 

comments supporting protections for 

livestock producers from undue 

recordkeeping and liability burdens 

placed on them by retailers and packers. 

On the other hand, meat packers and 

retailers expressed that the rule should 

grant them the ability to pass liability 

for noncompliance with labeling or 

verification of country of origin back 

down the supply chain to product 

sources. Two commenters noted that the 

interim final rule for fish and shellfish 

deletes the requirement for chain of 

custody documentation. One 

commenter concluded that the rule 

should not require intermediary 

suppliers to maintain records beyond 

those necessary to identify their 

immediate suppliers and subsequent 

business customers. 

Four commenters advocated that 

USDA should require importers of 

designated commodities to maintain 

adequate records to reconcile purchases, 

inventories and sales of imported and 

domestic commodities in order to 

reduce the need for expensive and 

burdensome affidavits or audits on 

United States livestock producers. One 

commenter noted that the beef industry 

is more segmented than any other 

industry affected by COOL and that this 

segmentation complicates the transfer of 

origin information for United States beef 

producers. 

Another commenter warned that the 

requirement to document the country of 

birth, raising and slaughter of livestock 

will create a tremendous recordkeeping 

burden on both packers and producers; 

and in some cases, it may not even be 

possible to achieve. This commenter 

contended that those packers harvesting 

older animals might find it nearly 

impossible to find adequate supplies of 

livestock for which records exist 

regarding the location of the animal’s 

birth. The commenter added that the 

recordkeeping burden placed on 

domestic processors might create a 

disadvantage relative to imported 

products, which will have no such 

requirements to document the animal’s 

origin back to birth. 

Two commenters further illuminated 

this point. One of these noted that it 

would be more efficient in the lamb 

industry to focus on tracking the one to 

three percent of United States slaughter 

representing Canadian lambs imported 

by a handful of individuals or firms. 

The commenter also pointed out that 

due to recordkeeping requirements for 

assessments and remittances for the 

Lamb Promotion Research and 

Information (check-off) order, a current 

audit trail exists for country of origin of 

domestic sheep. The other commenter 

contended that imported meat, by its 

nature, is likely to have passed through 

more handling stages than domestic 

product by the time it reaches the point 

of final United States retail sale. The 

commenter stated that because imported 

beef, lamb and pork passes through at 

least two countries, and through 

handling by ranchers, exporters, 

importers, processors, and distributors, 

imported products will require a longer 

audit trail that demands more, and 

potentially more detailed, 

recordkeeping. 

Agency Response: The Agency has 

already addressed many of these 

comments earlier in this Comment and 

Response section. In general, the 

Agency has reduced the recordkeeping 

burden to the extent possible while still 

maintaining a verifiable audit trail. 

Compared to the proposed rule, this 

interim final rule reduces the length of 

time that records must be kept, revises 

the recordkeeping requirements for prelabeled products, and removes the 

requirement to maintain records at the 

retail store. 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 and 

immediate subsequent recipient of a 

covered commodity for a period of 1 

year from the date of the transaction. 

Under the proposed rule, records would 

have been required to be kept for 2 

years. 

For retailers, 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 must be 

maintained for one year from the date 

the origin declaration is made at retail 

and, upon request, provided to any duly 

authorized representatives of USDA 

within 5 business days of the request. 

Under the proposed rule, retailers were 

required to maintain these records at the 

retail store for 7 days following the sale 

of the product. 

For pre-labeled products, the interim 

final rule provides that the label itself is 

sufficient evidence on which the retailer 

may rely to establish a product’s origin. 

The proposed rule did not provide for 

this method of substantiation. Under the 

interim final rule, records that identify 

the covered commodity, the supplier, 

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

information must be maintained for a 

period of 1 year from the date the origin 

designations are made at retail. Under 

the proposed rule, these records would 

have been required to be maintained for 

2 years. 

In addition to these burden reducing 

changes made by the Agency, the 2008 


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Farm Bill also made several burden 

reducing changes. Accordingly, some of 

the concerns expressed by the 

commenters have been addressed by the 

2008 Farm Bill and by this interim final 

rule. For example, the statute expressly 

allows for the use of producer affidavits, 

so packers will be able to rely on 

affidavits to base the origin claims for 

covered commodities. This will 

alleviate many of the concerns 

expressed by producers. Likewise, 

under the 2008 Farm Bill, the Secretary 

is prohibiting from requiring the 

creation of records not already 

maintained in the normal course of 

business, which will also reduce the 

recordkeeping burden. In addition, the 

2008 Farm Bill contains a provision 

such that all animals present in the 

United States on or before July 15, 2008, 

will be considered of United States 

origin, which addresses the concerns of 

commenters regarding adequate 

supplies of livestock for which origin is 

documented back to birth. A complete 

discussion of the changes made as a 

result of the 2008 Farm Bill can be 

found earlier in this document. 

Preliminary Regulator Impact Analysis 

Summary of Comments: Numerous 

comments were submitted stating that 

USDA underestimated the 

implementation and maintenance costs 

of the COOL program. One commenter 

stated that the implementation costs 

plus two years of maintenance costs 

totaled $49 million. Another commenter 

provided an estimated total 

implementation cost of $236,000 for 

planning, software, training, and capital. 

It provided an estimated annual 

maintenance cost of $279,300 for 

maintenance of hardware/software, 

operation costs, and packaging. Their 

reported net economic impact was 

¥$516,200. A third commenter stated 

that retailers experienced actual first 

year implementation costs of $9,000 to 

$16,500 per store for seafood labeling, 

and intermediary suppliers experienced 

costs between $200,000 and $250,000 

per firm. They reported that one retailer 

saw a $0.07 per pound (less than 2 

percent) increase in cost of goods from 

its suppliers directly attributable to the 

requirements necessary to comply with 

country of origin labeling. A fourth 

commenter discussed the capital 

expenditures necessary to meet the 

product segregation requirements for 

beef and pork slaughter plants. This 

commenter estimated that cost to exceed 

$2 billion. The commenter stated their 

belief that even with those plants that 

can be identified as ‘‘All-American’’ and 

exempt from the segregation 

requirement, the cost still could exceed 

$1 billion. 

Agency Response: While the Agency 

believes its analysis conducted in the 

PRIA in 2003 was accurate for that time, 

the Agency has conducted a new 

economic impact analysis because 

economic conditions have changed, 

updated data are available, and 

additional commodities have been 

added. The commodities to be regulated 

by this regulation are muscle cuts of 

beef, lamb, goat, pork, and chicken; 

ground beef, ground lamb, ground 

chicken, ground goat, and ground pork; 

perishable agricultural commodities; 

ginseng; peanuts; macadamia nuts; and 

pecans. 

The results of this updated analysis 

show estimated first-year incremental 

cost for growers, producers, processors, 

wholesalers, and retailers at $2.5 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. The Agency also reestimated the paperwork costs and 

estimated those to be $126 million in 

initial and startup costs during the first 

year and $499 million per year to store 

and maintain the records thereafter. 

With regard to the commenters’

statements regarding segregation, this 

interim final rule provides flexibility in 

how products of multiple origin can be 

labeled. Thus, the costs associated with 

labeling products of multiple origin will 

likely be less than the upper range 

estimate in the PRIA as the proposed 

rule did not contain this flexibility. A 

complete discussion on labeling 

products of multiple origin is contained 

in the Highlights of this Interim Final 

Rule section earlier in this document. 

Summary of Comments: One 

commenter stated their belief that 

statute is intended to disadvantage 

imported meat. 

Agency Response: Both importers and 

domestic suppliers are required to meet 

the requirements of the rule. The 

Agency believes that firms will find 

efficient ways to comply with the 

requirements of the rule. 

Summary of Comments: One 

commenter stated that the authorizing 

legislation was not a ‘‘Pro-Consumer’’

safety measure. 

Agency Response: As discussed in 

more detail in the preamble and in other 

responses to comments earlier in this 

section, COOL is not a food safety 

measure. COOL provides more 

information to consumers on which to 

base their purchasing decisions. 

Summary of Comments: Several 

commenters believe that COOL will 

have an adverse impact on beef demand. 

Another commenter believes COOL will 

hurt consumers because it will 

discourage the use of imported beef, 

which will result in less ground beef 

being produced and driving up the 

price. Other commenters stated their 

belief that consumers think domestic 

products are superior and are willing to 

pay more for it. One commenter 

included a paper written by an 

economics professor entitled, ‘‘An 

Overview of the Impact of COOL on 

Production Costs for the U.S. Cattle 

Producer and Results of the TFOG 

Experiment’’ who concluded, in part, 

that the impact of COOL on the demand 

for beef in the United States is 

uncertain. The paper referenced 

different opinions expressed by 

economists and others and stated that 

there is really no consensus about the 

impact of COOL on the demand for beef 

in the United States. 

Agency Response: The Agency 

interprets all of these comments as 

discussing COOL’s impact on the 

demand for covered commodities. The 

Agency maintains its position 

concerning the impact of COOL on the 

demand for all the covered products as 

presented in the Regulatory Impact 

Analysis. 

Summary of Comments: One 

commenter stated that COOL 

implementation and maintenance costs 

can be minimized by streamlining 

regulatory requirements. 

Agency Response: As previously 

discussed, the Agency has made 

changes that streamline both the 

regulatory and paperwork burden 

aspects of COOL. For example, the 

definition of a processed food item has 

been changed such that a greater 

number of products are now exempt 

from COOL requirements. The fewer the 

number of products that must be 

labeled, the lower implementation and 

maintenance costs will be for many 

affected entities. Another example is 

that the overall recordkeeping retention 

period for retailers and suppliers is 

reduced from 2 years to 1 year for 

centrally located records and the 

requirement to maintain records at the 

retail store has been removed. These 

records can now be maintained in any 

location. 

In addition to the changes made by 

the Agency in an effort to reduce the 

burden of complying with this rule, 

changes have also been made as a result 

of the 2008 Farm Bill. For example, the 

2008 Farm Bill and this interim final 

rule provide for flexibility in labeling 

products of multiple origin. In addition, 

the 2008 Farm Bill allows for the use of 

producer affidavits and prohibits the 

Secretary from requiring the creation of 


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records that are not already maintained 

as part of the normal course of business. 

A complete discussion of the changes 

made by the Agency, including the 

changes made as a result of the 2008 

Farm Bill, can be found earlier in this 

document. The Agency believes these 

changes as a whole have greatly reduced 

the burden on affected industries and 

the cost estimates for the 

implementation of this rule have been 

lowered significantly as discussed in the 

RIA. 

Summary of Comments: Several 

commenters pointed out that many 

products are already labeled as to 

country of origin pursuant to existing 

laws. One commenter illustrated that 

retailers provide origin labeling on more 

than 60 percent of the top 20 fruits and 

top 20 vegetables (by consumption). 

This commenter added that the industry 

is now providing such labeling and will 

continue to do so. These same 

commenters also contended that 

additional country of origin labeling 

requirements are unnecessary and 

would impose enormous additional 

costs on all segments of the food chain. 

They argued that the cost of mandatory 

country of origin labeling is significant 

and will not provide consumer benefit. 

Agency Response: If 60 percent of the 

top 20 fruits and the top 20 vegetables 

are already labeled with origin 

information as stated by the commenter, 

the Agency would expect that the cost 

of implementing COOL for the 

remaining fruit and vegetable products 

may be less than what the Agency is 

estimating. However, it is difficult to 

quantify the associated cost savings. As 

for the cost of implementing and 

maintaining COOL, these commenters 

did not offer any quantitative data to 

support their claim. 

Summary of Comments: One 

commenter reported that they 

implemented COOL without burden or 

noticeable expense. This commenter is 

a retailer who believed its customers are 

demanding to know the origin of the 

foods they see for sale. They have 

completed labeling the country of origin 

on all of its beef, pork, lamb, peanuts 

and fresh produce (in addition to 

seafood) without any burden or 

noticeable expense. They believe this 

improved traceability reduced their risk. 

Agency Response: The Agency views 

this comment as supporting the 

Agency’s contention that firms will 

adapt their existing infrastructure as 

needed to comply with COOL and that 

firms will find the most cost effective 

way of doing so. 

Summary of Comments: In support of 

the benefits of the mandatory COOL 

program, one commenter noted that 

USDA Economic Research Service (ERS) 

data revealed that United States origin 

lamb enjoyed a $.40 per pound price 

advantage compared to imported lamb 

products. The commenter further stated 

that using ERS retail data released in 

January 2003, the two-year combined 

volume-weighted average price of 

domestic lamb was $4.30 per pound. 

For imported lamb, it was $3.90 per 

pound. 

Agency Response: The Agency has 

determined that the relationship 

between domestic and imported lamb 

prices change over time. In some years 

domestic prices will be higher and in 

other years imported prices will be 

higher. The commenter was examining 

2001 and 2002 data. An examination of 

monthly retail scanner prices provided 

by ERS from January 2004 through 

December 2005 indicates that imported 

lamb prices per pound sold as a 

premium as compared to domestic lamb 

for this time period. Thus, it cannot be 

assumed that origin information 

consistently provides a net benefit in 

the form of higher prices for domestic 

lamb. 

Summary of Comments: One 

commenter cited three studies (surveys) 

that found consumers overwhelmingly 

desire COOL and believe they have a 

right to know such information. One 

study, conducted in early June 2007, 

found that 92 percent thought that 

imported food should be labeled as to 

its country of origin. Another study 

(survey), conducted in March 2007, 

found that 82 percent of the people 

polled supported mandatory COOL. 

Finally, a study (survey) conducted in 

mid-July 1997 found that 88 percent of 

those polled said all retail food should 

have COOL. This study also showed 

that 94 percent believe that consumers 

have a right to know the country of 

origin of the foods they purchase. 

Agency Response: The Agency does 

not believe that these types of studies 

provide a sufficient basis to estimate the 

quantitative benefits, if any, of COOL. 

As discussed in the Regulatory Impact 

Analysis, there are several limitations 

with the willingness-to-pay studies that 

call into question the appropriateness of 

using this approach to make 

determinations about the benefits of this 

rule. First, consumers in such studies 

often overstate their willingness to pay 

for a product. Second, in most of these 

willingness-to-pay studies, consumers 

are not faced with the actual choices 

they would face at retail outlets. Third, 

consumers’ willingness-to-pay as 

elicited from a survey is a function of 

the questions asked. Different 

questionnaires will yield different 

results. 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. 

Summary of Comments: One 

commenter noted that COOL could 

serve as a risk management measure. 

Some 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. 

COOL could allow consumers to avoid 

such food items as the need arose. 

Agency Response: As previously 

discussed in the preamble of this rule 

and in other responses to comments, 

COOL provides consumers with more 

information on which to base their 

purchases. Food products, both 

imported and domestic, must meet the 

food safety standards of FDA and FSIS. 

COOL will permit consumers to choose 

the origin of the foods they purchase. 

Summary of Comments: Two 

commenters asserted their belief that the 

utility of COOL is unsubstantiated and 

that it imposes onerous costs on covered 

commodities with no quantifiable 

benefits. The commenters believe that 

mandatory COOL should thus be 

repealed and replaced with a voluntary 

program. 

Agency Response: While it may be 

difficult to quantify the benefits 

associated with mandatory COOL, the 

COOL program must be implemented on 

September 30, 2008, in accordance with 

the statute. 

Preliminary Regulatory Flexibility 

Analysis 

Summary of Comments: Several 

commenters urged the Agency to ensure 

that small businesses were not burdened 

with unnecessary recordkeeping 

requirements. One commenter noted 

that paperwork and recordkeeping 

burdens continue to be top concerns for 

small businesses. 

Agency Response: In the initial 

regulatory flexibility analysis, the 

Agency noted that costs of 

implementation may be proportionately 

higher for smaller versus larger firms 

given the potential scale of economies 

associated with the operation of systems 

to comply with the requirements of 

mandatory country of origin labeling. In 

particular, larger firms would have the 

ability to spread fixed costs of 

implementation over a greater number 

of units of production, thereby incurring 

lower average costs per unit. 

However, the Agency has drafted this 

rule to provide as much regulatory relief 

for small entities as possible within the 

limits of the discretionary authority 

provided by the law. For example, the 


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Agency has reduced the recordkeeping 

retention period and has provided 

flexibility in labeling commingled 

covered commodities and commodities 

of multiple origin. In addition, the rule 

allows market participants to decide 

how best to implement COOL in their 

operations. And, market participants 

other than those retailers defined by the 

statute can decide to sell products 

through marketing channels not subject 

to the rule. The Agency further assumes 

that in the longer run, higher costs will 

be passed on to consumers in the form 

of higher prices for the covered 

commodities. 

Summary of Comments: Several 

commenters said that recordkeeping and 

other costs of compliance will fall 

disproportionately on smaller, 

independent farmers. One of these 

commenters noted that the position of 

small, independent farmers may be 

weakened due to this additional burden. 

Agency Response: As noted in the 

Agency’s previous response, the initial 

regulatory flexibility analysis showed 

that costs of implementation may be 

proportionately higher for smaller 

versus larger firms. However, the 

Agency believes smaller farmers may 

have some implementation cost 

advantages over larger farms. Smaller 

farms likely have simpler recordkeeping 

systems, and thus would incur lower 

development costs relative to larger 

farms. The rule does not prescribe a 

particular recordkeeping system; so for 

example, a small fruit and vegetables 

operation likely would be able to 

maintain records in hardcopy form 

rather than developing a complicated 

electronic recordkeeping system. 

Summary of Comments: Several 

commenters asserted their belief that 

COOL would provide benefits to small 

producers and consumers at reasonable 

implementation costs. One commenter 

explained that for truly small producers 

(less than 50 animals), mandatory COOL 

will create a niche market. 

Agency Response: The Agency 

believes that the firms within each of 

the industries will competitively adjust 

to the provisions of COOL. Some may 

create niche markets while others may 

provide covered commodities to 

retailers, the food service industry, and 

the away from home food markets 

which are not covered by COOL. 

Executive Order 12866—Regulatory 

Impact Analysis 

USDA has examined the economic 

impact of this interim 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 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 

requires that a regulatory impact 

analysis be performed on all 

economically significant regulatory 

actions. 

This interim 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; 

perishable agricultural commodities; 

ginseng; peanuts; macadamia nuts; and 

pecans. This interim final rule together 

with the interim final rule for fish and 

shellfish that was published in the 

October 5, 2004, Federal Register (69 FR 

89708) define the full scope of covered 

commodities as defined by law. 

This regulatory impact assessment 

reflects revisions to the Preliminary 

Regulatory Impact Assessment 

(PRIA)(68 FR 61944). Revisions to the 

PRIA were made as a result of changes 

to the rule relative to the October 30, 

2003, proposed rule, and comments 

received on the proposed rule for all 

covered commodities. 

The Comments and Responses section 

lists the comments received and 

provides the Agency’s responses to the 

comments. Where substantially 

unchanged, results of the PRIA are 

summarized herein, and revisions are 

described in detail. Interested readers 

are referred to the text of the PRIA for 

a more comprehensive discussion of the 

assumptions, data, methods, and results. 

Summary of the Economic Analysis 

The estimated benefits associated 

with this interim final rule are likely to 

be small. The estimated first-year 

incremental costs for growers, 

producers, processors, wholesalers, and 

retailers are $2.5 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 startup and 

maintenance costs versus ongoing 

maintenance costs for this interim final 

rule. Maintenance costs beyond the first 

year are expected to be lower than the 

combined startup and maintenance 

costs required in the first year. 

USDA finds little evidence that 

consumers are willing to pay a price 

premium for country of origin labeling 

(COOL). 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 interim final rule 

remains unchanged from the PRIA. 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 

change current Federal labeling 

requirements for muscle cuts of beef, 

pork, lamb, goat, and chicken; ground 

beef, ground pork, ground lamb, ground 

goat, and ground chicken; perishable 

agricultural commodities; ginseng; 

peanuts; macadamia nuts; and pecans 

(hereafter, covered commodities). Under 

current Federal laws and regulations, 

COOL is only universally required for 

wild and farm-raised fish and shellfish 

covered commodities. In particular, 

labeling of United States origin is not 

currently mandatory for the other 

commodities and labeling of imported 

products at the consumer level is 

required only in certain circumstances. 

As described in the PRIA, 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 PRIA and 

subsequent requests for comments 

elicited no evidence of significant 

barriers to the provision of this 

information other than private costs to 

firms in the supply chain and low 

expected returns. Thus, from the point 

of view of society, market mechanisms 

would ensure that the optimal level of 

country of origin information would be 

provided. 

Alternative Approaches 

The PRIA noted that many aspects of 

the mandatory COOL provisions 


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contained in the Act are prescriptive 

and provide little regulatory discretion 

for this rulemaking. 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 PRIA 

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. A presumption of origin standard 

would require mandatory identification 

of products not of United States origin. 

The law, however, specifically prohibits 

USDA from using a mandatory 

identification system to verify the 

country of origin of a covered 

commodity. In addition, as discussed in 

the proposed rule, the Agency does not 

believe that a presumption of United 

States origin standard provides a means 

of providing country of origin 

information that is credible and can be 

verified. Comments on the proposed 

rule did not identify how to overcome 

these obstacles. Thus, a presumption of 

United States origin standard is not a 

viable alternative. 

With regard to alternatives for 

recordkeeping, a number of commenters 

suggested that USDA reduce the 

recordkeeping burden for the rule. In 

this interim final rule, the requirement 

to maintain records at the retail store 

has been removed. In addition, the 

overall recordkeeping retention period 

for retailers and suppliers is reduced 

from 2 years to 1 year. 

The interim final rule also 

‘‘streamlines’’ the required 

recordkeeping for items that are prelabeled (i.e., labeled by the 

manufacturer/first handler) with the 

required country of origin information. 

Records that demonstrate the chain of 

custody (immediate previous source and 

subsequent recipient) for all covered 

items must be maintained, but the 

underlying records (e.g., invoices, bills 

of lading, production and sales records, 

etc.) do not need to identify the country 

of origin of these pre-labeled products. 

For example, if a processor labels the 

country of origin on a bag of apples, and 

the apples ultimately are sold in that 

package at retail, then that label may 

serve as sufficient evidence on which 

the retailer may rely to establish the 

product’s origin. Thus, the retailer’s 

records would not need to show country 

of origin information for that bag of 

apples, but the retailer’s records would 

need to include information to allow the 

source of those apples to be tracked 

back through the system to allow the 

country of origin claim to be verified at 

the point in the system at which the 

claim was initiated. Under the proposed 

rule, the retailer would have also been 

required to identify the country of origin 

of the bag of apples within its 

recordkeeping system; the information 

provided on the bag itself would not 

have been sufficient. This change 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. 

This interim final rule changes the 

definition of a processed food item such 

that a greater number of products are 

now exempt from COOL requirements. 

The fewer the number of products that 

must be labeled, the lower 

implementation and maintenance costs 

for many affected entities. 

The 2008 Farm Bill contains a number 

of provisions that amended the COOL 

provisions in the Act. In general, these 

changes provide for greater flexibility in 

labeling by retailers and suppliers and 

reduces the burden on livestock 

producers. For example, the 2008 Farm 

Bill 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. In 

addition, the law provides flexibility in 

labeling meat covered commodities 

derived from animals of multiple 

countries of origin. For example, under 

this 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 may 

be 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. 

The law also provides that meat 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, may 

be labeled as having a United States 

origin. Additionally, the law states that 

producer affidavits shall be considered 

sufficient records documenting animals’

origin. 

The law also states that for perishable 

agricultural commodities, peanuts, 

pecans, macadamia nuts, and ginseng 

produced in the United States, 

designation of the State, region, or 

locality of the United States where such 

commodity was produced shall be 

sufficient to identify the country of 

origin. 

As noted in the PRIA, the law stated 

that COOL applies to the retail sale of 

a covered commodity beginning 

September 30, 2004. Subsequent to the 

publication of the proposed rule, the 

law was amended to change the 

implementation date to September 30, 

2008, for all covered commodities 

except farm-raised and wild fish and 

shellfish. The implementation date for 

fish and shellfish covered commodities 

was September 30, 2004. The delay of 

the effective date of the labeling 

requirements under the law provides 

affected entities with additional time to 

adjust their systems to comply with the 

requirements of the law and this rule. 

Analysis of Benefits and Costs 

As in the PRIA, the baseline for this 

analysis is the present state of the 

affected industries absent mandatory 

COOL. USDA recognizes that some 

affected firms have already begun to 

implement changes in their operations 

to accommodate the law and the 

expected requirements of this interim 

final rule. 

Because the Act contains an 

implementation date of September 30, 

2004, for wild and farm-raised fish and 

September 30, 2008, for all other 

covered commodities, the economic 

impacts of the rule will be staggered by 

four years. The analysis herein of 

economy wide costs of the rule abstracts 

away from the staggered dates of 

implementation and treats all 

commodities as having the same 

effective date of implementation. As 

discussed more fully below, a twopronged approach was used to estimate 

the costs of this rule. While direct fish 

costs are not specifically included and 

discussed in this analysis, they have 

been updated using more recent data 

and used to estimate the overall impacts 

of this rule on the United States 

economy even though labeling of fish 

was implemented in 2004 and no new 

regulations for fish are forthcoming from 

this rule. This was done to take into 

account all the cross-commodity effects 

of this rule. 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 


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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 PRIA—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 studies that call into 

question the appropriateness of using 

this approach to make determinations 

about the benefits of this rule. First, 

consumers in such studies often 

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 choices they would face 

at retail outlets. Third, consumers’

willingness-to-pay as elicited from a 

survey is a function of the questions 

asked. Different questionnaires will 

yield different results. 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 number of 

commenters pointed to additional food 

safety incidents that occurred in 2007, 

suggesting that mandatory COOL would 

provide food safety benefits to 

consumers. As discussed in the PRIA, 

however, 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 

entire 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 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 PRIA. This section 

provides the revised cost estimates and 

describes revisions made to the PRIA. 

In the PRIA, a range of estimated 

implementation costs were developed to 

reflect the likely range of first-year costs 

for directly affected firms to comply 

with the proposed rule. The lower range 

of incremental cost estimates reflected 

the costs to modify and maintain 

current recordkeeping systems, while 

the upper range of estimates reflected 

other capital and operational costs to 

comply with the proposed rule. We 

concluded in the PRIA that costs likely 

would fall in the middle to upper end 

of the range of estimated costs. Taking 

into account comments received on the 

proposed rule and the PRIA, as was the 

case in the regulatory impact analysis in 

the interim final rule for fish and 

shellfish, this revised regulatory impact 

assessment presents only a single set of 

anticipated costs. Comments 

representing affected entities clearly 

described that compliance with the rule 

would require changes beyond 

recordkeeping alone. The revised 

incremental cost estimates reflect not 

only the revised definition of a 

processed product but the changes made 

as a result of the 2008 Farm Bill, the 

additional recordkeeping costs and 

additional payments by the directly 

affected firms for capital, labor, and 

other expenses that will be incurred as 

a result of operational changes to 

comply with the rule. 

First-year incremental costs for 

directly affected firms are estimated at 

$2.5 billion, a reduction of $1.4 billion 

or 36 percent from the upper range 

estimate presented in the proposed rule. 

Costs per firm are estimated at $376 for 

producers, $53,948 for intermediaries 

(such as handlers, importers, processors, 

and wholesalers), and $235,551 for 

retailers. 

To assess the overall net impacts of 

the higher costs of production resulting 

from the rule, we used a computational 

general equilibrium (CGE) model of the 

United States economy developed by 

USDA’s Economic Research Service 

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

by imposing the estimated 

implementation costs on the directly 

impacted segments of the economy. 

That is, the costs of implementation 

increase costs of production for directly 

impacted firms, and 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 decade 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, except for fruits and vegetables, 

is estimated to be lower, and prices are 

estimated to be higher, compared to the 

absence of this rulemaking. Fruit and 

vegetable production, exports, and 

imports are estimated to increase even 

though costs increase due to this 

rulemaking, likely due to substitution 


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Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Rules and Regulations 45129 

effects attributable to the differential 

cost impacts of the rule. In addition, 

United States exports are estimated to 

decrease for all covered commodities 

except for fruits and vegetables. 

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 a portion of 

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 products and purchase less 

of the covered commodities. Overall, the 

model indicates that the net loss to 

society, or the ‘‘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 net 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 

along the entire supply chain. 

Number of firms and number of 

establishments affected: This rule is 

estimated to directly or indirectly affect 

approximately 1,256,000 establishments 

owned by approximately 1,222,000 

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

Chicken: 

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

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

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 

Peanuts, Pecans, & Macadamia Wholesalers ..................................................................................... 5 5 

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

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

Totals: 

Producers ...................................................................................................................................... 1,197,026 1,197,156 

Handlers, Processors, & Wholesalers .......................................................................................... 20,674 22,043 

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

Grand Total ............................................................................................................................ 1,221,740 1,255,591 

Information in the PRIA for the 

numbers of affected producers has been 

updated with more recent information. 

Other changes from the PRIA are 

reductions in the numbers of affected 

entities in the peanut sector, and 

consequently, in the totals. In addition, 

affected entities in the chicken, goat, 

ginseng, macadamia nut, and pecan 

industries have been added. The rule 

covers only ginseng root. As previously 

discussed, the rule does not cover most 

product forms of peanuts, macadamia 

nuts, and pecans sold at retail, such as 

roasted and dry-roasted peanuts. Only 

green and raw nuts are required by 

COOL because other product forms are 

not covered by this regulation due to the 

definition of a processed food item. 

Market shares for green and raw nuts 

sold at affected retailers are not 

available, but the volume of sales is 

certainly very small in comparison to 

roasted peanuts. For purposes of 

estimation, the numbers of affected 

entities at each level of the peanut, 

macadamia nuts, and pecan sectors 

were reduced to 5 percent of their totals, 

consistent with levels reported in the 

PRIA (as applicable) due to the large 

percentage of product forms not covered 

by this rule. The number of peanut 

producers is reduced from 13,000 to 

650, the number of macadamia nut 

producers is estimated at 53, the 

number of pecan producers is estimated 

at 1,119, the number of peanut, 

macadamia nut and pecan processing 

(which includes drying) firms is 

estimated at 8, and the number of 

peanut, macadamia nut, and pecan 

wholesaling firms is estimated at 5. 


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The chicken industry is somewhat 

different from the other covered 

commodities. One major difference is 

that chicken firms are highly vertically 

integrated and the integrators own the 

birds from the time they hatch to the 

time they sell the birds directly to 

retailers or to another processor or 

distributor. There are 38 chicken 

companies in the United States 

operating 168 slaughtering plants. The 

integrators dictate all aspects of the 

production process to the growers who 

are under contractual obligation to 

grow-out chickens for one of the 

integrators. All decisions from when to 

populate a grower’s farm, to feed 

formulation, veterinarian services, and 

harvesting the mature chickens are 

made by the integrator. The grower 

supplies the chicken houses and the 

labor. 

Of all the chicken sold to retailers, 

68.9 percent comes directly from the 

integrator, 27.7 percent through a 

distributor, and the remaining from 

brokers and further processors. With 95 

percent of the chickens produced/ 

processed under vertical integration, 

keeping track of the product should be 

less burdensome than for other covered 

commodities. For the vertically 

integrated firms, the main cost will be 

stepping-up their on-going tracking 

system, if they do not have an adequate 

system already, more labeling, and more 

involvement in ensuring the required 

information is sent to retailers for each 

load of product, if the product is not 

already pre-labeled for COOL. 

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 may overstate 

the number of affected firms and 

establishments, we nevertheless believe 

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 proposed 

rule 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 

information through other point-of-sale 

materials. This may require additional 

retail labor and personnel training. 

Modification to existing recordkeeping 

systems likely will 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), we assume 

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 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 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 of the products that 

they sell. To do so, their suppliers will 

need to provide documentation 

regarding the country of origin of the 

products that they sell. Maintaining 

country of origin identity through the 

packing or processing phase may be 

more complex if products are from more 

than one country. 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, there 

may also be a need to separate shifts for 

processing products from different 

origins, to split processing within shifts, 

or to alter labels to correctly identify the 

country or countries of origin. However, 

in the case of meat covered 

commodities, there is flexibility in 

labeling covered commodities of 

multiple origins under this interim final 

rule. In the case where products of 

different origins are segregated, costs are 

likely to increase. Records will need to 

be maintained to ensure that accurate 

country of origin information is retained 

throughout the process and available to 

permit compliance and enforcement 

reviews. In the case of beef, lamb, 

chicken, goat, and pork, a producer 

affidavit shall be considered acceptable 

evidence on which the slaughter facility 

may rely to initiate the country of origin 

claim. 

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. Procurement costs also 

may be unaffected in this case, if the 

processor is able to continue sourcing 

products from the same suppliers. 

Alternatively, a processor that currently 

sources products from multiple 

countries may choose to limit its source 

to fewer countries or a single country. 

In this case, such cost avoidance would 

be partially offset by additional 

procurement costs to source supplies 

from a single or narrower 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. 

At the production level, agricultural 

producers need to maintain information 

in existing records to establish country 

of origin information for the products 

they produce and sell. Country of origin 

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. In the case of beef, lamb, 

chicken, goat, and pork, a producer 

affidavit shall be considered acceptable 

evidence on which the slaughter facility 

may rely to initiate the country of origin 


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claim. 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). 

Relative to the PRIA, estimated 

quantities are reduced for peanut 

producers and for all commodities at the 

intermediary and retailer levels. 

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

Beef Pork Lamb and 

goat Chicken 

Fruit, 

vegetable, 

and ginseng 

Peanuts, 

pecans, and 

macadamia 

nuts 

Million Head Million Pounds 

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

Million Pounds 

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

Retailer ............................................................................. 8,193 2,330 133 17,645 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 and 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 

animal production segment of the 

supply chain. Estimates have changed 

from the PRIA due to the addition of the 

new commodities (chicken, goats, 

macadamia nuts, pecans, and ginseng), 

the use of more up-to-date information 

for previously included commodities, 

the revised definition of a processed 

product and of ground beef, and 

changes made to the COOL provisions 

by the 2008 Farm Bill. 

For chicken producers, production is 

measured by round weight (live weight) 

pounds. 

For fruits and vegetables, we assume 

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. The total fruit and vegetable 

production has been updated with 2006 

data from the PRIA. 

As previously discussed, only green 

and raw peanuts, macadamia nuts, and 

pecans sold at retail are subject to the 

requirements of this rule because of the 

definition of a processed food item. 

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. 

We assume that no more than 5 percent 

of the sales of peanuts at subject 

retailers are sold as green or raw 

peanuts. Therefore, the initial estimates 

of the volume of peanuts affected by this 

rule are reduced to 5 percent of the 

amounts estimated in the PRIA. 

Macadamia nuts and pecans have been 

included with peanuts. 

We assume 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, we believe these intermediaries 

will seek to keep their marketing 

options open for possible sales to 

subject retailers. Estimated units of 

production for most commodities at the 

intermediary level are reduced from the 

PRIA due to the definition of a 

processed food item. 

Beef production at the intermediary 

level is reduced 10 percent from the 

PRIA estimate to account for the change 

in the definition of a processed food 

item. Data are not readily available on 

the sales of beef in different product 

forms. Based on discussions with 

industry experts, it is assumed that 

approximately 10 percent of beef 

products are sold in forms exempt from 

this rule (e.g., cooked products, 

seasoned products). 

Pork production at the intermediary 

level is reduced by 12.2 billion pounds. 

Unlike beef and lamb, much of the pork 

carcass typically is processed into 

products that would not be covered 

under the COOL rule. For example, 

most of the ham and bacon are cured, 

and other cuts such as picnic meat are 

used for sausage and other processed 

products. Thus, a factor of 0.375 is 

applied to pork production at both the 

intermediary and retailer levels, which 

is the estimate of the proportion of the 

retail-weight pork carcass that is used 

for fresh pork cuts that would require 

country of origin labeling under the 

rule. The cuts assumed to be covered 

commodities are fresh ham, all of the 

loin cuts, spareribs, and the entire 

Boston butt. We recognize that some of 

these cuts will be processed into items 

not covered by the rule, while other cuts 

will be sold in unprocessed forms that 

would be covered by the rule. In the 

PRIA, the 37.5 percent adjustment factor 

was applied at the retailer level, but not 

at the intermediary level. In this 

analysis, we have also applied the 

adjustment at intermediary levels, 

because products destined for items 

exempt from the rule would not require 

COOL. In addition to the 37.5 percent 

adjustment factor, a further reduction of 

10 percent is applied to account for the 

increase in the number of items exempt 

from the labeling requirements due to 

the revised definition of a processed 

food item. 

Lamb production at the intermediary 

level is unchanged from the PRIA, as 

there are relatively few of the valueadded types of products that would be 

excluded from labeling. Goat meat has 

been included with lamb. 

Fruit and vegetable production at the 

intermediary level is reduced by 21.2 


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billion pounds to exclude products not 

covered by this rule under the definition 

of a processed food item. The revised 

estimate includes only frozen, plain 

vegetables in the frozen vegetables 

category because items such as mixed 

frozen vegetables and vegetables with 

sauce are not covered by this rule. 

Frozen, plain vegetable sales at retail are 

estimated at 5.5 billion pounds (Ref. 5). 

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. 

6). 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, we 

believe that Wisconsin represents most 

of the ginseng production; 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. 7]. 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 farms 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. 

Estimated beef and pork volumes at 

the retailer level are reduced by 10 

percent from the PRIA to account for the 

larger number of items exempt from 

labeling under the revised definition of 

a processed food item. Lamb volume is 

unchanged from the PRIA estimate. Goat 

meat has been included with lamb. 

Estimated total retailer volume is 

increased by 18.0 billion pounds 

because chicken was not a covered 

commodity in the PRIA. 

Fruit and vegetable retailer volume is 

reduced by 8.5 billion pounds from the 

PRIA estimate because of the exclusion 

of a large volume of frozen vegetable 

products under the revised definition of 

a processed food item. Retailer peanut 

volume is reduced 95 percent from the 

PRIA estimate due to the revised 

definition of a processed food item. 

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 F & V 

Peanuts, 

pecans, & 

macadamia 

nuts 1

Total 

Producer ................................................... 305 105 10 0 30 0 450 

Intermediary ............................................. 373 101 5 139 497 0 1,115 

Retailer ..................................................... 574 93 5 44 235 0 952 

Total .................................................. 1,252 299 21 183 763 0 2,517 

1 Indicates a value greater than zero, but less than 0.5. 

Assumptions and procedures 

underlying the cost estimates are 

described fully in the discussion of the 

‘‘upper range’’ estimates presented in 

the PRIA. Changes from the PRIA 

estimates are highlighted herein. One of 

the major changes is that all the data 

from the PRIA has been updated by 

using more recent data. 

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, a 16 percent reduction from the 

PRIA upper range estimate due to the 

lower level of slaughter in 2006 and the 

slightly lower per head cost estimate. In 


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addition, as provided in the 2008 Farm 

Bill, in the case of livestock, a producer 

affidavit shall be considered acceptable 

evidence on which a packer may rely to 

initiate an origin claim. 

We assume that intermediaries will 

face increased costs associated with 

tracking cattle and the covered beef 

commodities produced from these 

animals and 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 mentioned, under this 

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 may 

be 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. 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. 

However, we believe that some 

segregation will still occur in order to 

provide the marketplace with product 

strictly of United States origin. 

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, a 31 percent reduction 

from the PRIA upper range estimate due 

to the reduced estimate of the volume of 

production affected and the slightly 

lowered per pound cost estimate. The 

cost per pound was lowered due to the 

increasing use of pre-packaged and prelabeled beef products, which lowers 

costs for retailers as well as 

intermediaries. 

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. As with the estimate for 

intermediaries, the estimate for retailers 

is reduced by 10 percent from the PRIA 

upper range estimate. 

Total costs for affected entities in the 

beef sector are thus estimated at $1,252 

million, a 26 percent reduction from the 

PRIA estimate. 

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, 

which is a 30 percent reduction from 

the PRIA estimate due to a slightly 

lower per head slaughter estimate. 

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, a reduction of $267 million 

from the PRIA estimate. The reduction 

is due to the downward revision of the 

volume of pork production estimated to 

be affected at the intermediary level and 

a slightly lower per pound cost estimate. 

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, a 40 percent decrease from the 

PRIA estimate. Total costs for the pork 

sector are estimated at $299 million, 

which is $374 million less than the 

PRIA upper range estimate. 

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, 

which is $5 million less than the PRIA 

estimate even with the addition of goat. 

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, which is $2 million less than 

the PRIA upper range estimate. 

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, 

which is $4 million lower than the PRIA 

upper range estimate. 

Summing the estimates for producers, 

intermediaries, and retailers results in 

estimated costs of $21 million for the 

lamb and goat industries. This total is 

$11 million less than the PRIA upper 

range estimate even with the inclusion 

of goat as a covered commodity. 

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, and their movement is 

controlled, 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 into 

existing recordkeeping systems 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, if not all, chicken is purchased 

directly from integrators and will have 

been pre-labeled. 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 

$44 million. 

Total estimated costs for chicken 

producers, intermediaries, and retailers 

are $183 million. Since chicken costs 

were not included in the PRIA, the total 

estimated costs for chicken is an 

increase in the total cost of covered 

commodities in the PRIA. 

Although fruit, vegetable, and ginseng 

producers maintain the types of records 

that will be required to substantiate 

United States 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 processors to maintain 

country of origin information so that it 

can be accurately transferred to retailers. 


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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, which is $6 million higher than 

the PRIA upper range estimate for fruits 

and vegetables due to higher levels of 

production in 2006. 

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. This amount is $83 million less 

than the PRIA upper range estimate 

because of the lowered estimate of the 

volume of production affected by the 

rule. 

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, $0.005 

less than the amount assumed for the 

PRIA upper range estimates. The lower 

per-unit cost is supported by the revised 

recordkeeping requirements. For prelabeled 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 

fruits, vegetables, and ginseng at retail 

are estimated at $235 million, a 

reduction of $485 million from the 

PRIA. The lowered cost estimate is 

attributable to both a lowered estimate 

of the volume of affected production 

and a lowered estimated cost per unit 

for retailers. 

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 upper range costs 

for all the peanut sectors were estimated 

at $8 million in the PRIA. The reduced 

estimates are due to the drastically 

lowered estimates of the volumes of 

affected peanut, macadamia nut, and 

pecan production. 

Total incremental costs are estimated 

for this rule at $450 million for 

producers, $1,115 million for 

intermediaries and $952 million for 

retailers for the first year. Total 

incremental costs for all supply chain 

participants are estimated at $2,517 

million for the first year, a reduction of 

$1,365 million from the PRIA upper 

range estimate even though a number of 

new commodities have been added for 

COOL coverage. The reduced estimates 

are due to lower volumes of affected 

products at the intermediary as well as 

the retailer level and slightly lower cost 

estimates. 

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 chicken 

producers, producer operations are 

single-establishment 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 ........... $376 $376 

Intermediary ...... 53,948 50,598 

Retailer ............. 235,551 26,149 

Average estimated implementation 

costs per producer are relatively small at 

$376. This is $67 per firm lower than 

the PRIA estimates. The difference is 

attributable to the reduction in the 

number of peanut producers. Estimated 

costs for intermediaries are substantially 

larger, averaging $53,948 per firm and 

$50,598 per establishment. The average 

cost per firm is $3,862 higher than the 

PRIA upper range estimated cost, with 

the higher cost attributable to the lower 

number of estimated firms. Similarly, 

the average cost per intermediary 

establishment is $7,996 higher than 

PRIA the upper range estimate due to 

the lower number of establishments. At 

an average of $235,551 per firm, 

retailers have the highest average 

estimated costs per firm. This is 

$160,538 lower than the PRIA upper 

range estimate. The lower estimated cost 

per retailer is attributable to the 

reduction in the number of retailing 

firms from the PRIA time period and the 

lower total estimated costs. Retailers’

average estimated costs per 

establishment are $26,149. This amount 

is $21,924 lower than the PRIA upper 

range 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 operations, estimated 

costs per hog operation are large relative 

to other producer operations. 


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

Producer Average 

cost 

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

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

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

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

Fruits, Vegetables & Ginseng .. 376 

Peanuts, Pecans, & Macadamia Nuts ............................ 258 

It is believed that the major cost 

drivers for the rule occur when livestock 

or covered commodities are transferred 

from one firm to another, when 

livestock or covered commodities are 

commingled in the production or 

marketing process, 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 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 $2,517 million. 

In the PRIA, 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 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, 

such as beef products, 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. Total incremental costs for 

this rule are estimated at $1,365 million 

less than the upper range costs 

estimated in the PRIA, with much of the 

reduction attributable to the revised 

definition of a processed food item. 

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 net 

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 net 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 

of net impact 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 

operational 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 would 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 

the allocation of inputs and resources 


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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 the 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 here to 

account for the cross-commodity effects 

between covered commodities. Ignoring 

the costs for fish and shellfish would 

result in assuming that COOL did not 

apply to fish and the cross-commodity 

effects may be distorted. 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 revised 

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 net impacts on 

the overall United States economy. 

The ERS CGE model traces the 

impacts from an economic ‘‘shock,’’ in 

this case a permanent 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 net 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 net 

cost to the United States economy after 

all transfers and adjustments in 

consumption and production patterns 

have occurred. 

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 net 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 

commodities’ 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. 


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In addition, it is assumed that 

domestic and foreign suppliers of the 

affected 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. 

The percentage changes in operating 

costs reported in Table 6 differ from the 

percentage changes in operating costs 

reported for the High Cost scenario as 

listed in Table 8 in the PRIA. The 

differences in percentage changes 

reported in the PRIA and those reported 

here are attributable to changes in 

implementation costs of the rule as well 

as recalibration of our estimates of total 

operating costs for the various segments 

of the supply channels of the directly 

affected sectors. Thus, for example, even 

though changes in the rule reduced our 

estimate of the incremental costs 

incurred by intermediaries and retailers 

in the beef and lamb sectors, the 

recalibration of our estimate of their 

operating costs causes the estimated 

percentage change in costs applied to 

processing and retailing segments of 

these sectors to increase. 

As discussed above, consumption and 

production patterns will change as the 

incremental increases in operating costs 

outlined above 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 

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 the 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 U.S. 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. 


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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 ¥0.56 ¥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 United States domestic 

suppliers 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. 18), 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 cattle, 

broilers, and hogs mirrors the declines 

in the production of beef, chicken, and 

pork. 

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 ............................................................................. 191,523 ¥383 

Cattle .......................................................................... Thous. 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 

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 ............................................................................. 37,573 15 

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

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

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


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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 

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. b Base 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. c Fruit 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. d Fish 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 decline 

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 

affected 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 net 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, we 

examine how much of a shift or increase 

in demand for commodities of United 

States origin would have 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 

indicates that demand at covered 

retailers would need 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 net 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 net 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, 

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 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 re-allocation of 

resources that are the result of policy 

changes. However, because the model 

fixes total available resources, it likely 

significantly underestimates the longrun effects of policies on aggregate 

output. For example, the 10-year 

average real growth of GDP between 

1997 and 2007 was approximately 3.1% 

(Ref 8). If applied to the next 10 years, 

this implies an economy approximately 

36% 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, South America and 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 


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45140 Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Rules and Regulations 

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. 

Interim Final 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 

regulatory analysis of the rule’s likely 

economic impact on small entities 

pursuant to the RFA. The Comments 

and Responses section lists the 

comments received on the preliminary 

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 Act requires USDA to 

issue regulations to implement a 

mandatory COOL program for the 

remaining covered commodities not 

later than September 30, 2008. 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, 

chicken, and goat; ground beef, ground 

lamb, ground pork, ground goat, and 

ground chicken; perishable agricultural 

commodities; ginseng; peanuts; 

macadamia nuts; and pecans. 

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 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. Taking into account 

comments received on the proposed 

rule, the rule decreases the length of 

time that records are required to be kept, 

providing some relief to affected entities 

both large and small. A complete 

discussion of the information collection 

and recordkeeping requirements and 

associated burdens appears in the 

Paperwork Reduction Act section. In 

addition, although recent amendments 

have added additional covered 

commodities, the number of products 

required to be labeled is reduced 

because the definition of a processed 

food item has been broadened, thus 

providing additional regulatory relief. 

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, 

processors, wholesalers, and retailers. 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 the 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. Therefore, 

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 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 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 1,256,000 establishments 

owned by approximately 1,222,000 

firms will be either directly or indirectly 

affected by this rule. The only changes 

from the Preliminary Regulatory Impact 

Analysis (PRIA) are reductions in the 

numbers of affected firms and 

establishments in the peanut sector and 

the addition of chicken, goat, ginseng, 

macadamia nuts, and pecans as covered 

commodities. These changes and the 

use of more up-to-date information 

resulted in the number of 

establishments and firms decreasing 

from the PRIA. 

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 

$2,517 million. The decrease in the 

direct incremental cost in the rule as 

compared to the PRIA is mainly the 

result of broadening the definition of a 

processed food item, which exempts 

more products from the labeling 

requirements of the 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 


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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 receipts. 

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. 9). Therefore, the number of these 

stores provides an indicator of the 

number of entities potentially affected 

by this rule. The 2002 Economic Census 

(Ref. 10) shows there were 42,318 food 

store, warehouse club, 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 

having the meaning given that term in 

section 1(b) of the Perishable 

Agricultural Commodities Act of 1930 

(PACA). Thus, under this interim 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. 11). 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 stores, 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 $952 million. Costs are 

estimated at $235,551 per retail firm and 

$26,149 per retail establishment. These 

estimated costs are lower than the PRIA 

upper range estimates. Retailers will 

face recordkeeping costs, costs 

associated with supplying country of 

origin 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 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 U.S. Businesses 

(Ref. 12) 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. 

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 

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 U.S. 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 

$1,115 million. Costs are estimated at 

$53,948 per intermediary firm and 

$50,598 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 information to retailers, and 

possibly costs associated with 

segmenting products by country of 

origin, and 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 use to 

implement mandatory COOL. Instead, 

wholesalers will be given flexibility to 

modify or develop their own systems to 

comply with the rule. There are many 

ways in which the rule’s requirements 


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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 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 U.S. Businesses 

(Ref. 12) 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 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 information to 

retailers, and possibly costs associated 

with segmenting products by country of 

origin and additional handling costs. 

Some of the comments received on the 

proposed 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 use to implement 

mandatory COOL. Instead, 

manufacturers will be given flexibility 

to modify or 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 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 

maintain country of origin 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 U.S. Census of 

Agriculture (Ref. 13) 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 U.S. 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. 

At the production level, agricultural 

producers will need to maintain records 

to establish country of origin 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 modifying and 

maintaining a recordkeeping system for 

the country of origin information, 

animal or product identification, and 

labor and training. Based on our 

knowledge of the affected industries as 

well as comments received on 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 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 $450 million, or an 

estimated $376 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 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 


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which they purchase covered 

commodities. 

Additional 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 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 

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 claims. In other 

words, no producer, processor, 

wholesaler, or other supplier is required 

to make and substantiate a country of 

origin 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 information nor to 

make country of origin 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 modify or 

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 use 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 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 

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 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 

entities to minimize the costs of the rule 

on their operations. 

The recordkeeping burden associated 

with this rule was reduced based on 

public comments. USDA seeks 

comments on whether the regulatory 

impact analysis accurately reflects the 

potential population of impacted small 

entities and the extent to which the 

regulation economically impacts those 

entities. 

Paperwork Reduction Act 

Pursuant to the Paperwork Reduction 

Act (PRA) (44 U.S.C. 3501–3520), the 

information collection provisions 

associated with this interim final rule 

have been submitted to OMB for 

approval as a new collection. The 

Comments and Responses section lists 

the comments received on the 

preliminary PRA analysis contained in 

the October 30, 2003, proposed rule 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: Recordkeeping and Records 

Access Requirements for Producers and 

Food Facilities 

OMB Number: 0581–new 

Type of Request: New collection. 

Expiration Date: Three years from the 

date of approval. 

Abstract: The COOL provisions in the 

2002 and 2008 Farm Bills require that 

specified retailers inform consumers as 

to the country of origin of covered 

commodities. Covered commodities 

included in this rulemaking are: Muscle 

cuts of beef (including veal), lamb, 

chicken, goat, and pork; ground beef, 

ground lamb, ground chicken, ground 

goat, and ground pork; perishable 

agricultural commodities; macadamia 

nuts; pecans; ginseng; and peanuts. 

The key changes from the preliminary 

PRA analysis are reductions in the 

numbers of affected firms and 

establishments in the peanut sector and 

the addition of chicken, goat, ginseng, 

macadamia nuts, and pecans as covered 

commodities. These changes, and the 

use of more recent data for the other 

covered commodities, results in the 

number of establishments and firms 

decreasing from the preliminary PRA. In 

addition, as discussed in more detail 

below, the recordkeeping retention 

period has been reduced for both 

supplier and retailer records. Further, 

the 2008 Farm Bill specifically allows 

for the use of producer affidavits and 

prohibits the Secretary from requiring 

the maintenance of additional records 

not already maintained in the normal 

course of business. 

While the Agency believes there will 

be savings to firms as a result of these 

changes, such savings are difficult to 

quantify. In addition, a number of 

affected firms commented that the 

initial paperwork burden estimates 

published in the proposed rule were too 

low. Therefore, the estimated labor 

hours per firm and per establishment 

remain unchanged in this PRA analysis. 

Comments are specifically invited on 

this issue. 

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. Any 

person engaged in the business of 

supplying a covered commodity to a 

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

producers, distributors, handlers, 

packers, and processors), whether 

directly or indirectly, must make 


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country of origin 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 one 

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 or have legal access to 

records that are necessary to 

substantiate that claim. In the case of 

beef, lamb, chicken, pork, and goat, a 

producer affidavit shall be considered 

acceptable evidence on which the 

slaughter facility may rely to initiate the 

origin claim, provided it is made by 

someone having first-hand knowledge of 

the origin of the animal(s) and identifies 

the animal(s) 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 CBP 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. In addition, 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 one year from the date the 

origin declaration is made at retail. Such 

records may be located at the retailer’s 

point of distribution, or at a warehouse, 

central office or other off-site 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 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 1,255,591 

establishments owned by approximately 

1,221,740 firms are estimated to be 

either directly or indirectly affected by 

this rule. As previously discussed in 

previous sections of this document, 

several changes have been made in this 

interim final rule compared to the 

October 30, 2003, proposed rule. These 

changes are a result of changes made by 

the Agency in an effort to reduce the 

burden on regulated entities as well as 

changes made by the 2008 Farm Bill. 

In general, the supply chain for each 

of the covered commodities includes 

agricultural producers, 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 ............................................................................ 9,146 715,745 9,146 1,371,381 2,084,126 

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

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 3,852,387 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 

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

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 .............................................................. 1,197,026 93,281,849 1,197,156 171,119,224 264,401,073 

Handlers, Processors, & Wholesalers ................... 20,674 27,062,266 22,043 80,319,108 107,381,374 

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

Grand Total .................................................... 1,221,740 125,632,475 1,255,591 498,702,866 624,335,341 

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 


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storing and maintaining records on an 

ongoing basis. These activities will take 

place in each establishment operated by 

each affected business. 

Compared to the proposed rule, this 

rule reduces the length of time that 

records must be kept and revises the 

recordkeeping requirements for prelabeled products. 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 and 

immediate subsequent recipient of a 

covered commodity for a period of 1 

year from the date of the transaction. 

Under the proposed rule, records would 

have been required to be kept for 2 

years. 

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. Under 

the proposed rule, retailers would have 

to have maintained these records at the 

retail store for 7 days following the sale 

of the product. 

For pre-labeled products, the rule 

provides that the label itself is sufficient 

evidence on which the retailer may rely 

to establish a product’s origin. The 

proposed rule did not provided for this 

method of substantiation. The rule now 

requires that records identify the 

covered commodity, the supplier and 

for products that are not pre-labeled, the 

country of origin information. This 

information must be maintained for a 

period of 1 year from the date the origin 

and production designations are made 

at retail. Under the proposed rule, these 

records would have been required to be 

maintained for 2 years. 

With respect to initial recordkeeping 

costs, it is believed that most producers 

currently maintain normal business that 

would contain the information needed 

to substantiate country of origin claims. 

However, producers do not typically 

pass along country of origin information 

to subsequent purchasers. Therefore, 

producers likely will incur some 

additional incremental costs to record, 

maintain, and transfer country of origin 

information to substantiate required 

claims made at retail. Because much of 

the necessary recordkeeping has already 

been developed during typical farm and 

ranch operations, it is estimated that the 

incremental costs for producers to 

supplement existing records with 

country of origin 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 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 modify 

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 

modifying 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, 2001 wage rates and benefits 

published by the Bureau of Labor 

Statistics from the National 

Compensation Survey were used. 

Subsequently, the National 

Compensation Survey has been updated 

and 2006 wage rates and benefits are 

now available. These updated wage 

rates and benefits are used in estimating 

the recordkeeping costs and results in 

an increase in the estimated costs. 

For producers, it is assumed that the 

added work needed to initially adapt an 

existing recordkeeping system for 

country of origin 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, the most recent data 

available, 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 $93.3 million to modify 

existing recordkeeping systems in order 

to substantiate country of origin claims. 

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 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 the types of necessary records 

in their existing systems. Thus, it is 

assumed that country of origin 

information will require only 

modification of existing recordkeeping 

systems rather than development of 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 

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 


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that the initial recordkeeping costs to 

intermediaries such as handlers, 

processors, and wholesalers (importers 

are included with wholesalers) will be 

approximately $27 million, and initial 

recordkeeping costs at retail will be 

approximately $5 million. The 

recordkeeping cost to producers 

increases due to the increase in the 

number of firms from the additional 

covered commodities; goat, chicken, 

macadamia nuts, pecans, and ginseng. 

The recordkeeping cost to 

intermediaries and retailers declines 

slightly from the initial recordkeeping 

cost estimate in the proposed rule due 

to the reduction in the number 

intermediaries and retailers from 

continuing consolidation in those 

sectors. 

The total initial recordkeeping costs 

for all firms are thus estimated at 

approximately $125 million. This 

increase in the recordkeeping cost as 

compared to the initial recordkeeping 

costs in the proposed rule is due to the 

higher estimated wage rates and 

benefits. 

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 claims is 

expected to be relatively small. 

For fruit, vegetable, ginseng, peanut, 

macadamia nut, and pecan producers, 

country of origin generally is 

established at the time that the product 

is harvested, and thus there is no need 

to track country of origin 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 

information. 

Compared to chicken, fruit, vegetable, 

ginseng, peanut, macadamia nut, and 

pecan producers, it is expected that 

livestock producers will incur higher 

costs to maintain country of origin 

information. Chicken, fruits, vegetables, 

ginseng, peanuts, and macadamia nuts 

are generally harvested once and then 

shipped by the producer to the first 

handler. In contrast, 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. 

Livestock may be acquired from other 

countries by United States producers, 

which may complicate the task of 

tracking country of origin 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 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 

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 results in 

an hourly rate of $12.50 for livestock 

workers and $11.87 for other crops 

workers. Assuming 12 hours of labor per 

year for livestock operations and 4 

hours per year for all other operations, 

the estimated total annual maintenance 

costs to producers is $171 million, 

which is higher than the initial 

maintenance costs in the proposed rule. 

The increase in the estimated 

maintenance cost is due to the higher 

estimated wage rates and benefits and 

the increase in the number of producers 

due to the inclusion of chickens, goats, 

ginseng, macadamia nuts, and pecans as 

covered commodities. 

It is expected that intermediaries such 

as handlers, processors, and wholesalers 

will face higher costs per enterprise to 

maintain country of origin 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 

recordkeeping is estimated to be 52 

hours per year per establishment. For 

this part of the supply chain, the 

recordkeeping activities are on-going 

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, which must 

maintain their country of origin 

identity. In addition, businesses that 

produce ground beef, lamb, goat and 

pork 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 information for each covered 

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 overhead 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 $80 million. 

Retailers will need to supply country 

of origin 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 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 overhead costs 

for a total of $18.62 per hour) results in 

total estimated annual maintenance 

costs to retailers of $247 million. This 

estimated cost is higher than the initial 

maintenance cost for retailers in the 

proposed rule due to the higher wage 

rate and benefits from the updated BLS 

information. 

The total maintenance recordkeeping 

costs for all enterprises are thus 

estimated at approximately $499 

million. The increase in the total 

maintenance cost over the initial 


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maintenance cost estimate in the 

proposed rule is due to the higher wage 

rates and benefits which were updated 

with more recent information and the 

addition of more covered commodities. 

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 $264 

million; for handlers, processors, and 

wholesalers at approximately $107 

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 $624 

million for the first year, with 

subsequent maintenance costs of $499 

million per year. 

Annual Reporting and Recordkeeping 

Burden for the First Year (Initial): Public 

reporting burden for this initial 

recordkeeping set up is estimated to 

average 4.5 hours per year per 

individual recordkeeper. 

Estimated Number of Firms 

Recordkeepers: 1,221,740. 

Estimated Total Annual Burden: 

5,504,811 hours. 

Annual Reporting and Recordkeeping 

Burden (Maintenance): Public reporting 

burden for this recordkeeping storage 

and maintenance is estimated to average 

24.9 hours per year per individual 

recordkeeper. 

Estimated Number of Establishments 

Recordkeepers: 1,255,591. 

Estimated Total Annual Burden: 

31,909,210 hours. 

AMS is committed to implementation 

of the Government Paperwork 

Elimination Act (GPEA) to provide the 

public with the option to submit or 

transact business electronically to the 

extent practicable. This new 

information collection has no forms and 

is only for recordkeeping purposes. 

Therefore, the provisions of an 

electronic submission alternative are not 

required by GPEA. 

AMS is soliciting comments from all 

interested parties concerning these 

recordkeeping requirements. Comments 

are specifically invited on: (1) Whether 

the recordkeeping is necessary for the 

proper operation of this program, 

including whether the information 

would have practical utility; (2) the 

accuracy of USDA’s estimate of the 

burden of the recordkeeping 

requirements, including the validity of 

the methodology and assumptions used; 

(3) ways to enhance the quality, utility, 

and clarity of the records to be 

maintained; and (4) ways to minimize 

the burden of the recordkeeping on 

those who are to maintain and/or make 

the records available, including the use 

of appropriate automated, electronic, 

mechanical, or other technological 

recordkeeping techniques or other forms 

of information technology. Comments 

concerning the recordkeeping 

requirements contained in this interim 

final rule should be submitted through 

the Internet at http:// 

www.regulations.gov. Written comments 

should be sent to Country of Origin 

Labeling Program, Room 2607–S; 

Agricultural Marketing Service (AMS), 

USDA; STOP 0254; 1400 Independence 

Avenue, SW.; Washington, DC 20250–

0254, or by facsimile to 202/354–4693. 

Comments sent to the above location 

should also be sent to the Desk Officer 

for Agriculture, Office of Information 

and Regulatory Affairs, Office of 

Management and Budget, New 

Executive Office Building, 725 17th 

Street, NW., Room 725, Washington, DC 

20503. All responses to this action will 

be summarized and included in the 

request for OMB approval. All 

comments will become a matter of 

public record. 

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 U.S. 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. 

‘‘County of Origin Labeling: Theory and 

Observation.’’ USDA, ERS, WRS–04–02, 

January 2004. 

5. Information Resources, Inc. InfoScan 2002. 

6. NASS, USDA, Wisconsin Department of 

Agriculture. Wisconsin 2007 

Agricultural Statistics. http:// 

www.nass.usda.gov/Statistics_by_State/ 

Wisconsin/. 

7. NASS, USDA, Hawaii Department of 

Agriculture. Hawaii 2007 Agricultural 

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

stats/t_of_c.htm. 

8. Bureau of Economic Analysis. http:// 

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

9. 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. 

10. U.S. Census Bureau. 2002 Economic 

Census. Retail Trade Subject Series. 

Establishment and Firm Size. 

EC97R44S–SZ. Issued September 2004. 

11. AMS, USDA. Perishable Agricultural 

Commodities Act database. 

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

U.S. Businesses. 

13. NASS, USDA. 2002 Census of 

Agriculture. 

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. 

19. Office of the Chief Economist, USDA. 

USDA Agricultural Baseline Projections 

to 2016, Staff Report WAOB–2007–1. 

February 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 interim 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. 


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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 

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 law, AMS 

has consulted with the States that have 

country of origin labeling programs. 

Further, States were expressly invited to 

comment on the proposed regulation as 

it related to existing State programs. No 

States submitted any comments 

pertaining to this issue. 

This interim final rule contains those 

provisions of the October 30, 2003 (68 

FR 61944), proposed rule that pertain to 

muscle cuts of beef, lamb and pork; 

ground beef, ground lamb, ground pork; 

perishable agricultural commodities; 

and peanut covered commodities as 

well as the additional commodities that 

were added by the 2008 Farm Bill: 

Chicken, macadamia nuts, pecans, 

ginseng, and goat meat. Modifications to 

these provisions have been made as 

discussed herein. 

This interim final rule is made 

effective on September 30, 2008. The 

requirements of this rule do not apply 

to covered commodities produced or 

packaged before September 30, 2008. 

This will allow existing product to clear 

through the channels of commerce and 

permit AMS to conduct an industry 

education and outreach program 

concerning the provisions contained 

within this rulemaking. 

Further, pursuant to 5 U.S.C. 553, it 

is found and determined upon good 

cause that it is impractical, unnecessary, 

and contrary to the public interest to 

give preliminary notice prior to putting 

this rule into effect. This action is 

authorized under the Agricultural 

Marketing Act of 1946, as amended. 

This interim final rule reflects changes 

made as a result of comments received 

in response to the 2003 proposed rule 

and the 2004 interim final rule on fish 

and shellfish, as well as the changes 

made by the 2008 Farm Bill. After 

issuance of this interim final rule, the 

Department will provide all affected 

persons, including the newly affected 

industries—goat, chicken, macadamia 

nuts, pecans, and ginseng—the 

opportunity to provide additional 

comments prior to issuing a final rule. 

In addition, this action is needed to 

meet the statutory implementation date. 

Further, this rule provides for a 60-day 

comment period. 

List of Subjects in 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 

by adding part 65 to read as follows: 

PART 65—COUNTRY OF ORIGIN 

LABELING OF BEEF, PORK, LAMB, 

CHICKEN, GOAT MEAT, PERISHABLE 

AGRICULTURAL COMMODITIES, 

MACADAMIA NUTS, and PEANUTS 

Subpart A—General Provisions 

Definitions 

Sec. 

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 Legible. 

65.200 NAIS-compliant system. 

65.205 Perishable agricultural commodity. 

65.210 Person. 

65.215 Pork. 

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 Markings. 

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. 


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§ 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 (e.g., bag of 

frozen strawberries). 

§ 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 

terms ‘‘hamburger’’ in 9 CFR 319.15(b) 

and ‘‘beef patties’’ in 9 CFR 319.15(c). 

§ 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, other than mutton 

(or yearling mutton), produced from 

sheep. 

§ 65.195 Legible. 

Legible means text that can be easily 

read. 

§ 65.200 NAIS-compliant system. 

NAIS-compliant system means 

Animal and Plant Health Inspection 

Service (APHIS)/Veterinary Services 

(VS) official animal identification 

numbers, tags, devices, or protocols, and 

location identifiers that are consistent 

with any APHIS/VS official disease 

program or activity, and animal tracking 

databases that have been reviewed and 

approved by APHIS/VS Chief 

Information Officer for utilizing NAIS 

standards regarding animal movement 

information. 

§ 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. 

§ 65.220 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 grown. 

§ 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 


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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. 

§ 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. 

(1) 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. 

(2) Covered commodities further 

processed or handled in a foreign 

country after meeting the requirements 

to be labeled as United States origin as 

defined in § 65.260 (e.g., born, raised, 

and slaughtered or produced) may bear 

a declaration that identifies the United 

States as the sole country of origin at 

retail provided the identity of the 

product is maintained along with 

records to substantiate the origin claims 

and the claim is consistent with other 

applicable Federal legal requirements. 

(e) Labeling muscle cut covered 

commodities of multiple countries of 

origin that include the United States. 

(1)(i) 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 may be 

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. 

(ii) 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. 

(2) In both cases of paragraph (e)(1)(i) 

and (e)(1)(ii) of this section, 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, slaughtered 

or grown) 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 (CBP) 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 Markings. 

(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. 


sroberts on PROD1PC70 with PROPOSALS
Federal Register / Vol. 73, No. 149 / Friday, August 1, 2008 / Rules and Regulations 45151 

(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, 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.’’

for the ‘‘United States’’ 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) With the exception of perishable 

agricultural commodities, peanuts, 

pecans, and ginseng, State or regional 

label designations are not acceptable in 

lieu of country of origin labeling. 

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 or 

have legal access to records that are 

necessary to substantiate that claim. For 

that purpose, in the case of beef, lamb, 

chicken, goat, and pork, a producer 

affidavit shall be considered acceptable 

evidence on which the slaughter facility 

may rely to initiate the origin claim, 

provided it is made by someone having 

first-hand knowledge of the origin of the 

animal(s) and identifies the animal(s) 

unique to the transaction. Packers that 

slaughter animals that are part of a NAIS 

compliant system or other recognized 

official identification system (e.g., 

Canadian official system, Mexico 

official system) may also rely on the 

presence of an official ear tag and/or the 

presence of any accompanying animal 

markings (i.e., ‘‘Can’’, ‘‘M’’), as 

applicable, on which to base their origin 

claims. This provision also applies to 

such animals officially identified as a 

group lot. 

(2) 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. 

(3) 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) Records and other documentary 

evidence relied upon at the point of sale 

to establish a covered commodity’s 

country(ies) of origin must be provided 

to any duly authorized representative of 

USDA in accordance with § 65.500(a)(2), 

and maintained for a period of 1 year 

from the date the origin declaration is 

made at retail. For pre-labeled products, 

the label itself is sufficient evidence on 

which the retailer may rely to establish 

the product’s origin. 

(2) 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: July 28, 2008. 

Lloyd C. Day, 

Administrator, Agricultural Marketing 

Service. 

[FR Doc. E8–17562 Filed 7–28–08; 4:30 pm] 

BILLING CODE 3410–02–P 


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