Mandatory Country of Origin Labeling of Beef, Pork, Lamb, Chicken, Goat Meat, Wild and Farm-Raised Fish and Shellfish, Perishable Agricultural Commodities, Peanuts, Pecans, Ginseng, and Macadamia Nuts

DEPARTMENT OF AGRICULTURE

Agricultural Marketing Service

7 CFR Parts 60 and 65

[Docket No. AMS-LS-07-0081]

RIN 0581-AC26

Mandatory Country of Origin Labeling of Beef, Pork, Lamb, Chicken, Goat Meat, Wild and Farm-Raised Fish and Shellfish, Perishable Agricultural Commodities, Peanuts, Pecans, Ginseng, and Macadamia Nuts

AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

The Farm Security and Rural Investment Act of 2002 (2002 Farm Bill), the 2002 Supplemental Appropriations Act (2002 Appropriations), and the Food, Conservation and Energy Act of 2008 (2008 Farm Bill) amended the Agricultural Marketing Act of 1946 (Act) to require retailers to notify their customers of the country of origin of covered commodities. Covered commodities include muscle cuts of beef (including veal), lamb, chicken, goat, and pork; ground beef, ground lamb, ground chicken, ground goat, and ground pork; wild and farm-raised fish and shellfish; perishable agricultural commodities; macadamia nuts; pecans; ginseng; and peanuts. The implementation of mandatory country of origin labeling (COOL) for all covered commodities, except wild and farm-raised fish and shellfish, was delayed until September 30, 2008.

The 2008 Farm Bill contained a number of provisions that amended the COOL provisions in the Act. These changes included the addition of chicken, goat, macadamia nuts, pecans, and ginseng as covered commodities, the addition of provisions for labeling products of multiple origins, as well as a number of other changes. However, the implementation date of September 30, 2008, was not changed by the 2008 Farm Bill. Therefore, in order to meet the September 30, 2008, implementation date and to provide the newly affected industries the opportunity to provide comments prior to issuing a final rule, on August 1, 2008, the Department published an interim final rule with a request for comments for all of the covered commodities other than wild and farm-raised fish and shellfish. The Agency is issuing this final rule for all covered commodities. This final rule contains definitions, the requirements for consumer notification and product marking, and the recordkeeping responsibilities of both retailers and suppliers for covered commodities.

DATES:

This final rule is effective March 16, 2009.

FOR FURTHER INFORMATION CONTACT:

Erin Morris, Associate Deputy Administrator, Poultry Programs, AMS, USDA, by telephone on 202-720-5131, or via e-mail at:

erin.morris@usda.gov.

SUPPLEMENTARY INFORMATION:

The information that follows has been divided into three sections. The first section provides background information about this final rule. The second section provides a discussion of the rule's requirements, including a summary of changes from the October 5, 2004, interim final rule for fish and shellfish and the August 1, 2008, interim final rule for the remaining covered commodities as well as a summary of the comments received in response to the relevant prior requests for comments associated with this rulemaking and the Agency's responses to these comments. The prior requests for comments include: The interim final rule for fish and shellfish published in the October 5, 2004,

Federal Register

(69 FR 59708); the reopening of the comment period (for costs and benefits) for the interim final rule that was published in the November 27, 2006,

Federal Register

(71 FR 68431); the reopening of the comment period for all aspects of the interim final rule that was published in the June 20, 2007,

Federal Register

(72 FR 33851); and the interim final rule for the remaining covered commodities that was published in the August 1, 2008,

Federal Register

(73 FR 45106). The last section provides for the required impact analyses including the Regulatory Flexibility Act, the Paperwork Reduction Act, Civil Rights Analysis, and the relevant Executive Orders.

I. Background

Prior Documents in This Proceeding

This final rule is issued pursuant to the 2002 Farm Bill, the 2002 Appropriations, and the 2008 Farm Bill, which amended the Act to require retailers to notify their customers of the origin of covered commodities. In addition, the FY 2004 Consolidated Appropriations Act (Pub. L. 108-199) delayed the implementation of mandatory COOL for all covered commodities except wild and 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).

On August 1, 2008, AMS published an interim final rule for covered commodities other than fish and shellfish (73 FR 45106) with a 60-day comment period.

II. Summary of Changes From the Interim Final Rules

Definitions

In the regulatory text for fish and shellfish (7 CFR part 60), a definition for “commingled covered commodities” has been added for clarity and to conform to the regulatory text for the other covered commodities.

In the regulatory text for the remaining covered commodities (7 CFR part 65), the definition of “ground beef” has been modified in response to

comments. Under this final rule, the term “ground beef” has the meaning given that term in 9 CFR § 319.15(a), i.e., chopped fresh and/or frozen beef with or without seasoning and without the addition of beef fat as such, and containing no more than 30 percent fat, and containing no added water, phosphates, binders, or extenders, and also includes products defined by the term “hamburger” in 9 CFR 319.15(b). A full explanation of this change is discussed in the Comments and Responses section.

In 7 CFR part 65, the definition of “lamb” has been modified in response to comments to include mutton. Under this final rule, the term “lamb” means meat produced from sheep.

In 7 CFR part 65, the definition of “NAIS-compliant system” has been deleted in response to comments received as it is no longer needed.

A definition of “pre-labeled” has been added to both 7 CFR part 60 and 7 CFR part 65 for clarity in response to comments received. Under this final rule, the term “pre-labeled” means a covered commodity that has the commodity's country of origin, and, as applicable, method of production information, and the name and place of business of the manufacturer, packer, or distributor on the covered commodity itself, on the package in which it is sold to the consumer, or on the master shipping container. The place of business information must include at a minimum the city and state or other acceptable locale designation.

In 7 CFR part 65, the definition of “produced” has been modified for clarity in response to comments. Under this final rule, the term “produced” in the case of perishable agricultural commodities, peanuts, ginseng, pecans, and macadamia nuts means harvested.

Country of Origin Notification

Labeling Covered Commodities of United States Origin

The August 1, 2008, interim final rule contained an express provision allowing U.S. origin covered commodities to be further processed or handled in a foreign country and retain their U.S. origin. The Agency received numerous comments requesting further clarification of this provision as well as comments requesting that it be deleted. Accordingly, under this final rule, this provision has been deleted. To the extent that it is allowed under existing Customs and Border Protection (CBP) and Food Safety and Inspection Service (FSIS) regulations, U.S. origin covered commodities may still be eligible to bear a U.S. origin declaration if they are processed in another country such that a substantial transformation (as determined by CBP) does not occur. In addition, to the extent that additional information about the production steps that occurred in the U.S. is permitted under existing Federal regulations (e.g., CBP, FSIS), nothing in this final rule precludes such information from being included. A full explanation of this change is discussed in the Comments and Responses section.

Country of Origin Notification for Muscle Cuts

Under the August 1, 2008, interim final rule, if an animal was born, raised, and/or slaughtered in the United States and was not imported for immediate slaughter as defined in § 65.180, the origin of the resulting meat products derived from that animal could have been designated as Product of the United States, Country X, and/or (as applicable) Country Y, where Country X and Country Y represent the actual or possible countries of foreign origin.

During the comment period, the Agency received extensive feedback from livestock producers, members of Congress, and other interested parties expressing concern about the provision in the interim final rule that allowed U.S. origin product to be labeled with a mixed origin label. It was never the intent of the Agency for the majority of product eligible to bear a U.S. origin declaration to bear a multiple origin designation. The Agency made additional modifications for clarity.

Under this final rule, for muscle cut covered commodities derived from animals that were born in Country X or (as applicable) Country Y, raised and slaughtered in the United States, and were not derived from animals imported for immediate slaughter as defined in § 65.180, the origin may be designated as Product of the U.S., Country X, and (as applicable) Country Y.

For muscle cut covered commodities derived from animals born, raised, and slaughtered in the U.S. that are commingled during a production day with muscle cut covered commodities derived from animals that were raised and slaughtered in the United States, and were not derived from animals imported for immediate slaughter as defined in § 65.180, the origin may be designated, for example, as Product of the United States, Country X, and (as applicable) Country Y.

For muscle cut covered commodities derived from animals that are born in Country X or Country Y, raised and slaughtered in the United States, that are commingled during a production day with muscle cut covered commodities that are derived from animals that are imported into the United States for immediate slaughter as defined in § 65.180, the origin may be designated as Product of the United States, Country X, and (as applicable) Country Y.

In all of the cases above, the countries of origin may be listed in any order. In addition, if animals are raised in another country and the United States, provided the animals are not imported for immediate slaughter as defined in § 65.180, the raising that occurs in the United States takes precedence over the minimal raising that occurred in the animal's country of birth.

A full explanation of these changes is discussed in the Comments and Responses section.

Markings

Under the October 5, 2004, interim final rule for fish and shellfish and the August 1, 2008, interim final rule for the remaining covered commodities, only those abbreviations approved for use under CBP rules, regulations, and policies were acceptable. The 2008 Farm Bill and the August 1, 2008, interim final rule expressly authorized the use of State, regional, or locality label designations in lieu of country of origin for perishable agricultural commodities, peanuts, pecans, ginseng, and macadamia nuts. In response to comments received, under this final rule, abbreviations may be used for state, regional, or locality label designations for these commodities whether domestically harvested or imported using official United States Postal Service abbreviations or other abbreviations approved by CBP. A full explanation of this change is discussed in the Comments and Responses section.

Recordkeeping

The 2008 Farm Bill made changes to the recordkeeping provisions of the Act. Specifically, the 2008 Farm Bill states that records maintained in the course of the normal conduct of the business of such person, including animal health papers, import or customs documents, or producer affidavits, may serve as such verification. Under the 2008 Farm Bill, the Secretary is prohibited from requiring the maintenance of additional records other than those maintained in the normal conduct of business. In addition to the changes made as a result of the 2008 Farm Bill, other changes were made in the August 1, 2008, interim final rule to reduce the recordkeeping burden. Further changes are being made in this final rule in response to comments received.

For retailers, this rule requires records and other documentary evidence relied upon at the point of sale by the retailer to establish a covered commodity's country(ies) of origin and method of production (wild and/or farm-raised), as applicable, to be either maintained at the retail facility or at another location for as long as the product is on hand and provided to any duly authorized representative of USDA, upon request, within 5 business days of the request. For pre-labeled products, the label itself is sufficient information on which the retailer may rely to establish the product's origin and method of production, as applicable, and no additional records documenting origin and method of production information are necessary. Under the August 1, 2008, interim final rule, retailers were required to maintain these records for a period of 1 year.

Under this final rule, upon request by USDA representatives, suppliers and retailers shall make available to USDA representatives, records maintained in the normal course of business that verify an origin and method of production (wild and/or farm-raised) claim, as applicable. Such records shall be provided within 5 business days of the request and may be kept in any location.

Under this final rule, producer affidavits shall also be considered acceptable records that suppliers may utilize to initiate origin claims for all covered commodities, provided it is made by someone having first-hand knowledge of the origin of the covered commodity and identifies the covered commodity unique to the transaction.

Responsibilities of Retailers and Suppliers

With regard to the “safe harbor” language that was contained in the October 30, 2003, proposed rule and the October 5, 2004, interim final rule, which allowed retailers and suppliers to rely on the information provided unless they could have been reasonably expected to have knowledge otherwise, based on comments received, similar “safe harbor” language has been included in this final rule. A complete discussion is contained in the Comments and Responses section of this final rule.

With regard to the recordkeeping provision concerning livestock that are part of a NAIS-compliant system, in response to comments received, the Agency has clarified that packers who slaughter animals that are tagged with an 840 Animal Identification Number device without the presence of any additional accompanying marking indicating the origin as being a country other than the U.S. (i.e., “CAN” or “M”) may use that information as a basis for a U.S. origin claim. In addition, packers that slaughter animals that are part of another country's recognized official system (e.g. Canadian official system, Mexico official system) may also rely on the presence of an official ear tag or other approved device on which to base their origin claims.

Highlights of This Final Rule

Covered Commodities

As defined in the statute, the term “covered commodity” includes: Muscle cuts of beef, lamb, pork, chicken, and goat; ground beef, ground lamb, ground pork, ground chicken, and ground goat; wild and farm-raised fish and shellfish; perishable agricultural commodities (fresh and frozen fruits and vegetables); peanuts; pecans; ginseng; and macadamia nuts.

Exemption for Food Service Establishments

Under the statute and therefore this final rule, food service establishments are exempt from COOL labeling requirements. Food service establishments are restaurants, cafeterias, lunch rooms, food stands, saloons, taverns, bars, lounges, or other similar facilities operated as an enterprise engaged in the business of selling food to the public. Similar food service facilities include salad bars, delicatessens, meal preparation stations in which the retailer sets out ingredients for different meals and consumers assemble the ingredients into meals to take home, and other food enterprises located within retail establishments that provide ready-to-eat foods that are consumed either on or outside of the retailer's premises.

Exclusion for Ingredient in a Processed Food Item

Items are excluded from labeling under this regulation when a covered commodity is an ingredient in a processed food item. Under this final rule, a “processed food item” is defined as: A retail item derived from a covered commodity that has undergone specific processing resulting in a change in the character of the covered commodity, or that has been combined with at least one other covered commodity or other substantive food component (e.g., chocolate, breading, tomato sauce), except that the addition of a component (such as water, salt, or sugar) that enhances or represents a further step in the preparation of the product for consumption, would not in itself result in a processed food item. Specific processing that results in a change in the character of the covered commodity includes cooking (e.g., frying, broiling, grilling, boiling, steaming, baking, roasting), curing (e.g., salt curing, sugar curing, drying), smoking (cold or hot), and restructuring (e.g., emulsifying and extruding).

With regard to determining what is considered an “other covered commodity” with respect to fruits and vegetables, the Agency will generally rely on U.S. Grade Standards for fruits and vegetables to make the distinction of whether or not the retail item is a combination of “other covered commodities”. For example, different colored sweet peppers combined in a package will require country of origin notification because there is one U.S. Grade Standard for sweet peppers, regardless of the color. As another example, there are separate U.S. Grade Standards for iceberg lettuce and romaine lettuce. Therefore, this type of salad mix will not be required to be labeled with country of origin information. While the Agency previously used this example in the preamble of the August 1, 2008, interim final rule and concluded that such a salad mix would be subject to COOL, the Agency now believes the use of U.S. Grade Standards in determining when a perishable retail item is considered a processed food item provides a bright line to the industry and is an easy and straightforward approach as regulated entities are already familiar with U.S. Grade Standards.

There are limited exceptions to this policy. One exception occurs when there are different grade standards for the same commodity based on the region of production. For example, although there are separate grade standards for oranges from Florida, Texas, and California/Arizona, combining oranges from these different regions would not be considered combining “other covered commodities” and therefore, a container with oranges from Texas and Florida is required to be labeled with country of origin information.

As examples of processing steps that are considered to further prepare product for consumption, meat products that have been needle-tenderized or chemically tenderized using papain or other similar additive are not considered processed food items. Likewise, meat products that have been injected with sodium phosphate or other similar solution are also not considered processed food items as the solution has not changed the character of the covered commodity. In contrast, meat products that have been marinated with a particular flavor such as lemon-

pepper, Cajun, etc. have been changed in character and thus are considered processed food items.

While the definition of a processed food item does exclude a number of products from labeling under the COOL program, many imported items are still required to be marked with country of origin information under the Tariff Act of 1930 (19 U.S.C. 1304) (Tariff Act). For example, while a bag of frozen peas and carrots is considered a processed food item under this final rule, if the peas and carrots are of foreign origin, the Tariff Act requires that the country of origin information be marked on the bag. Likewise, while roasted peanuts, pecans, and macadamia nuts are also considered processed food items under this final rule, under the Tariff Act, if the nuts are of foreign origin, the country of origin information must be indicated to the ultimate purchaser. This also holds true for a variety of fish and shellfish items. For example, salmon imported from Chile that is smoked in the United States as well as shrimp imported from Thailand that is cooked in the United States are also required to be labeled with country of origin information under the Tariff Act. In addition, items such as marinated lamb loins that are imported in consumer-ready packages would also be required to be labeled with country of origin information as both CBP and FSIS regulations require meat that is imported in consumer-ready packages to be labeled with origin information on the package.

Examples of items excluded from country of origin labeling include teriyaki flavored pork loin, meatloaf, roasted peanuts, breaded chicken tenders, breaded fish sticks, flank steak with portabella stuffing, steakhouse sirloin kabobs with vegetables, cooked and smoked meats, blue cheese angus burgers, cured hams, bacon, corned beef briskets, prosciutto rolled in mozzarella cheese, a salad that contains iceberg and romaine lettuce, a fruit cup that contains cantaloupe, watermelon, and honeydew, mixed vegetables, and a salad mix that contains lettuce and carrots and/or salad dressing.

Labeling Covered Commodities of United States Origin

The law prescribes specific criteria that must be met for a covered commodity to bear a “United States country of origin” declaration. Therefore, covered commodities may be labeled as having a United States origin if the following specific requirements are met:

(a) Beef, pork, lamb, chicken, and goat—covered commodities must be derived from animals exclusively born, raised, and slaughtered in the United States; from animals born and raised in Alaska or Hawaii and transported for a period of time not more than 60 days through Canada to the United States and slaughtered in the United States; or from animals present in the United States on or before July 15, 2008, and once present in the United States, remained continuously in the United States.

(b) Perishable agricultural commodities, peanuts, pecans, ginseng, and macadamia nuts—covered commodities must be from products exclusively produced in the United States.

(c) Farm-raised fish and shellfish—covered commodities must be derived exclusively from fish or shellfish hatched, raised, harvested, and processed in the United States, and that has not undergone a substantial transformation (as established by CBP) outside of the United States.

(d) Wild fish and shellfish—covered commodities must be derived exclusively from fish or shellfish either harvested in the waters of the United States or by a U.S. flagged vessel and processed in the United States or aboard a U.S. flagged vessel, and that has not undergone a substantial transformation (as established by CBP) outside of the United States.

Labeling Country of Origin for Imported Products

Under this final rule, a fish or shellfish imported covered commodity shall retain its origin as declared to CBP at the time the product enters the United States, through retail sale, provided it has not undergone a substantial transformation (as established by CBP) in the United States. Similarly, for the other covered commodities, an imported covered commodity for which origin has already been established as defined by the Act (e.g., born, raised, slaughtered or harvested) and for which no production steps have occurred in the United States shall retain its origin as declared to CBP at the time the product enters the United States, through retail sale.

Covered commodities imported in consumer-ready packages are currently required to bear a country of origin declaration on each individual package under the Tariff Act. This final rule does not change these requirements.

Labeling Fish and Shellfish Imported Products That Have Been Substantially Transformed in the United States

Under this final rule, in the case of wild fish and shellfish, if a covered commodity was imported from country X and substantially transformed (as established by CBP) in the United States or aboard a U.S. flagged vessel, the product shall be labeled at retail as “From [country X], processed in the United States.” Alternatively, the product may be labeled as “Product of country X and the United States”. The covered commodity must also be labeled to indicate that it was derived from wild fish or shellfish.

In the case of farm-raised fish, if a covered commodity was imported from country X at any stage of production and substantially transformed (as established by CBP) in the United States, the product shall be labeled at retail as “From [country X], processed in the United States.” Alternatively, the product may be labeled as “Product of country X and the United States”. The covered commodity shall also be labeled to indicate that it was derived from farm-raised fish or shellfish.

Labeling Muscle Cut Covered Commodities of Multiple Countries of Origin (That Includes the United States)

Under this final rule, for muscle cut covered commodities derived from animals that were born in Country X or (as applicable) Country Y, raised and slaughtered in the United States, and were not derived from animals imported for immediate slaughter as defined in § 65.180, the origin may be designated, for example, as Product of the U.S., County X, and (as applicable) Country Y. The countries of origin may be listed in any order.

For muscle cut covered commodities derived from animals born, raised, and slaughtered in the U.S. that are commingled during a production day with muscle cut covered commodities derived from animals that were raised and slaughtered in the United States, and were not derived from animals imported for immediate slaughter as defined in § 65.180, the origin may be designated as, for example, Product of the United States, Country X, and (as applicable) Country Y. The countries of origin may be listed in any order.

If an animal was imported into the United States for immediate slaughter as defined in § 65.180, the origin of the resulting meat products derived from that animal shall be designated as Product of Country X and the United States.

For muscle cut covered commodities derived from animals that are born in Country X or Country Y, raised and slaughtered in the United States, that are commingled during a production day with muscle cut covered commodities that are derived from animals that are imported into the

United States for immediate slaughter as defined in § 65.180, the origin may be designated as Product of the United States, Country X, and (as applicable) Country Y. The countries of origin may be listed in any order.

In all cases above, the origin declaration may include more specific information related to production steps provided records to substantiate the claims are maintained and the claim is consistent with other applicable Federal legal requirements. In addition, if animals are raised in another country and the United States, provided the animals are not imported for immediate slaughter as defined in § 65.180, the raising that occurs in the United States takes precedence over the minimal raising that occurred in the animal's country of birth.

With regard to the commingling of meat of different origin categories, the Agency has received comments requesting that the Agency provide additional clarification on how commingled meat products can be labeled. Under this final rule, it is permissible to commingle meat derived from animals imported for immediate slaughter with meat derived from mixed origin animals and label it as Product of U.S., Canada. It is also permissible to commingle meat derived from animals imported for immediate slaughter with meat of mixed origin and label it as category C (product imported for immediate slaughter, i.e., Product of Canada, U.S.). Further, the declaration for meat derived from mixed origin animals may list the countries of origin in any order (e.g., Product of U.S., Canada or Product of Canada, U.S.).

Labeling Commingled Covered Commodities

In this final rule, a commingled covered commodity is defined as a single type of covered commodity (e.g., frozen peas, shrimp), presented for retail sale in a consumer package, that has been prepared from raw material sources having different origins. Further, a commingled covered commodity does not include meat products. If the retail product contains two different types of covered commodities (e.g., peas and carrots), it is considered a processed food item and is not subject to mandatory COOL.

In the case of perishable agricultural commodities, wild and farm-raised fish and shellfish, peanuts, pecans, ginseng, and macadamia nuts, for imported covered commodities that have not subsequently been substantially transformed in the United States that are commingled with commodities having different origins, the declaration shall indicate the countries of origin for all covered commodities in accordance with CBP marking regulations (19 CFR part 134). For example, a bag of frozen peas that were sourced from France and India is currently required under CBP regulations to be marked with that origin information on the package.

In the case of wild and farm-raised fish and shellfish covered commodities, when the retail product contains imported covered commodities that have subsequently undergone substantial transformation in the United States are commingled with other imported covered commodities that have subsequently undergone substantial transformation in the United States (either prior to or following substantial transformation in the United States) and/or U.S. origin covered commodities, the declaration shall indicate the countries of origin contained therein or that may be contained therein.

Defining Country of Origin for Ground Meat Products

The law states that the origin declaration for ground beef, ground pork, ground lamb, ground goat, and ground chicken covered commodities shall list the countries of origin contained therein or shall list the reasonably possible countries of origin. Therefore, under this final rule, when a raw material from a specific origin is not in a processor's inventory for more than 60 days, the country shall no longer be included as a possible country of origin. This does not mean that labels must change every 60 days. Labels containing the applicable countries (e.g., Country x, y, z) may extend beyond a given 60-day period depending on how long raw materials from those countries are actually in inventory. If a country of origin is utilized as a raw material source in the production of ground beef, it must be listed on the label. The 60-day in inventory allowance speaks only to when countries may no longer be listed. The 60-day inventory allowance is an allowance for the Agency' enforcement purposes for when the Agency would deem ground meat products as no longer accurately labeled. In the event of a supplier audit by USDA, records kept in the normal course of business should provide the information necessary to verify the origin claim.

Remotely Purchased Products

For sales of a covered commodity in which the customer purchases a covered commodity prior to having an opportunity to observe the final package (e.g., Internet sales, home delivery sales, etc.) the retailer may provide the country of origin and method of production information (wild and/or farm-raised), as applicable, either on the sales vehicle or at the time the product is delivered to the consumer.

Markings

Under this final rule, the country of origin declaration and method of production (wild and/or farm-raised) designation, as applicable, may be provided to consumers by means of a label, placard, sign, stamp, band, twist tie, pin tag, or other clear and visible sign on the covered commodity or on the package, display, holding unit, or bin containing the commodity at the final point of sale to consumers. The country of origin declaration and method of production (wild and/or farm-raised) designation may be combined or made separately.

With respect to the production designation, various forms of the production designation are acceptable, including “wild caught,” “wild,” “farm-raised,” “farmed,” or a combination of these terms for products that contain both wild and farm-raised fish or shellfish provided it can be readily understood by the consumer and is in conformance with other Federal labeling laws. Designations such as “ocean caught,” “caught at sea”, “line caught,” “cultivated,” or “cultured” do not meet the requirements of this regulation. Alternatively, the method of production (wild and/or farm-raised) designation may also be in the form of a check box.

In general, country abbreviations are not acceptable. Only those abbreviations approved for use under CBP rules, regulations, and policies, such as “U.K.” for “The United Kingdom of Great Britain and Northern Ireland”, “Luxemb” for Luxembourg, and “U.S.” or “USA” for the “United States of America” are acceptable. The Agency is aware of a few additional abbreviations allowed by CBP such as “Holland” for The Netherlands and has posted this information on the COOL Web site.

The declaration of the country of origin of a product may be in the form of a statement such as “Product of USA,” “Produce of the USA”, or “Harvested in Mexico”; may only contain the name of the country such as “USA” or “Mexico”; or may be in the form of a check box provided it is in conformance with CBP marking regulations and other Federal labeling laws (i.e., FDA, FSIS). For example, CBP marking regulations (19 CFR part 134) specifically require the use of the words “product of” in certain circumstances. The adjectival form of the name of a country may be used as proper

notification of the country of origin of imported commodities provided the adjectival form of the name does not appear with other words so as to refer to a kind or species of product. Symbols or flags alone may not be used to denote country of origin. The labeling requirements under this rule do not supersede any existing Federal legal requirements, unless otherwise specified, and any country of origin or method of production (wild and/or farm-raised) designation, as applicable, must not obscure or intervene with other labeling information required by existing regulatory requirements.

For domestic and imported perishable agricultural commodities, macadamia nuts, peanuts, pecans, and ginseng, State, regional, or locality label designations are acceptable in lieu of country of origin labeling. Such designations must be nationally distinct. For example, Rio Grande Valley would not be an acceptable designation because consumer would not know whether the country of origin was the U.S. or Mexico. Abbreviations may be used for state, regional, or locality label designations for these commodities whether domestically harvested or imported using official United States Postal Service abbreviations or other abbreviations approved by CBP.

With regard to the use of established State marketing programs such as “California Grown”, “Go TEXAN”, “Jersey Fresh”, etc., these programs may be used for COOL notification purposes provided they meet the requirements to bear a U.S. origin declaration as specified in this final rule.

In order to provide the industry with as much flexibility as possible, this rule does not contain specific requirements as to the exact placement or size of the country of origin or method of production (wild and/or farm-raised) declaration. However, such declarations must be legible and conspicuous, and allow consumers to find the country(ies) of origin and method of production, as applicable, easily and read them without strain when making their purchases, and provided that existing Federal labeling requirements must be followed. For example, the country of origin declaration may be located on the information panel of a package of frozen produce as consumers are familiar with such location for displaying nutritional and other required information. Likewise, in the case of store overwrap and other similar type products, which is the type of packaging used for fresh meat and poultry products, the information panel would also be an acceptable location for the origin declaration and method of production (wild and/or farm-raised) designation, as applicable, as this is a location that is currently utilized for providing other Federally-mandated labeling information (i.e., safe handling instructions, nutrition facts, and ingredients statement). However, to the extent practicable, the Agency encourages retailers and suppliers to place this information on the front of these types of packages, also known as the principal display panel, so it will be readily apparent to consumers.

With respect to the use of signage for bulk displays for meat covered commodities, the Agency has observed that a vast majority of retailers are utilizing one sign for either the entire meat case or for an entire commodity type (i.e., chicken) to provide the country of origin notification. While the statute and this regulation provide flexibility in how country of origin information can be provided, the Agency believes that the use of such signage could potentially be false or misleading to consumers. For example, frequently display cases also contain noncovered meat commodities for which no origin information has been provided to the retailer. Thus a sign that states, “all of our beef products are of U.S. origin” may not be completely accurate and may be in violation of other Federal laws, regulations, and policies that have truth in labeling provisions such as the Federal Meat Inspection Act, the Federal Trade Commission's “Made in the USA” policies, and the Federal Food, Drug, and Cosmetic Act. The Agency encourages retailers to review signage that they have used in the implementation of the fish and shellfish program for alternative acceptable methods of providing COOL information.

With regard to the provision in both the interim final rule for fish and shellfish and the interim final rule for the remaining covered commodities concerning bulk containers that allows the bulk container to contain a covered commodity from more than one country of origin, under this final rule, it remains permissible provided all possible origins are listed. For example, if a retailer puts apples from the U.S. and New Zealand in a bulk bin, the sign for the bin should list both the U.S. and New Zealand. If the retailer has apples in the store from New Zealand, but has not added these apples to the bulk bin, it would not be permissible to have New Zealand on the sign. Likewise in the case of fish, if a retailer has salmon from both the U.S. and Chile in the back of the store, but has only put out for display salmon from Chile, the country of origin designation should only list Chile. It would not be permissible to list both the U.S. and Chile at that time because it is not possible that the display contains salmon of U.S. origin.

Recordkeeping Requirements and Responsibilities

The law states that the Secretary may conduct an audit of any person that prepares, stores, handles, or distributes a covered commodity for retail sale to verify compliance. As such, records maintained in the normal course of business that verify origin and method of production (wild and/or farm-raised) declarations, as applicable, are necessary in order to provide retailers with credible information on which to base origin and method of production declarations.

Under this final rule, any person engaged in the business of supplying a covered commodity to a retailer, whether directly or indirectly (i.e., growers, distributors, handlers, packers, and processors, etc.), must make available information to the subsequent purchaser about the country(ies) of origin and method of production, as applicable, of the covered commodity. This information may be provided either on the product itself, on the master shipping container, or in a document that accompanies the product through retail sale provided it identifies the product and its country(ies) of origin and method of production, as applicable.

Any person engaged in the business of supplying a covered commodity to a retailer, whether directly or indirectly, must maintain records to establish and identify the immediate previous source (if applicable) and immediate subsequent recipient of a covered commodity for a period of 1 year from the date of the transaction.

In addition, the supplier of a covered commodity that is responsible for initiating a country of origin and, as applicable, method of production declaration, must possess records that are necessary to substantiate that claim for a period of 1 year from the date of the transaction. In an effort to reduce the recordkeeping burden associated with COOL, for that purpose, packers that slaughter animals that are tagged with an 840 Animal Identification Number device without the presence of any additional accompanying marking indicating the origin as being a country other than the U.S. (i.e., “CAN” or “M”) may use that information as a basis for a U.S. origin claim. In addition, packers that slaughter animals that are part of another country’s recognized official system (e.g., Canadian official system,

Mexico official system) may also rely on the presence of an official ear tag or other approved device on which to base their origin claims. Producer affidavits shall also be considered acceptable records that suppliers may utilize to initiate origin claims, provided it is made by someone having first-hand knowledge of the origin of the covered commodity and identifies the covered commodity unique to the transaction.

Under this final rule, any intermediary supplier handling a covered commodity that is found to be designated incorrectly as to the country of origin and/or method of production, as applicable, shall not be held liable for a violation of the Act by reason of the conduct of another if the intermediary supplier relied on the designation provided by the initiating supplier or other intermediary supplier, unless the intermediary supplier willfully disregarded information establishing that the country of origin and/or method of production, as applicable, was false.

For an imported covered commodity, the importer of record as determined by CBP, must ensure that records: Provide clear product tracking from the United States port of entry to the immediate subsequent recipient and accurately reflect the country(ies) of origin of the item as identified in relevant CBP entry documents and information systems; and maintain such records for a period of 1 year from the date of the transaction.

Under this final rule, retailers also have responsibilities. In providing the country of origin notification for a covered commodity, retailers are to convey the origin and, as applicable, method of production information provided by their suppliers. Only if the retailer physically commingles a covered commodity of different origins and/or methods of production, as applicable, in preparation for retail sale, whether in a consumer-ready package or in a bulk display (and not discretely packaged) (i.e., full service meat case), can the retailer initiate a multiple country of origin designation that reflects the actual countries of origin and methods of production, as applicable, for the resulting covered commodity.

Records and other documentary evidence relied upon at the point of sale by the retailer to establish a covered commodity's country(ies) of origin and method of production, as applicable, must either be maintained at the retail facility or at another location for as long as the product is on hand and provided to any duly authorized representatives of USDA within 5 business days of the request. For pre-labeled products, the label itself is sufficient information on which the retailer may rely to establish the product's origin and method of production, as applicable, and no additional records documenting origin and method of production information are necessary. A pre-labeled covered commodity is a covered commodity that has the commodity's country of origin and method of production, as applicable, and the name and place of business of the manufacturer, packer, or distributor on the covered commodity itself, on the package in which it is sold to the consumer, or on the master shipping container. The place of business information must include at a minimum the city and state or other acceptable locale designation.

Additionally, records that identify the covered commodity, the retail supplier, and for products that are not pre-labeled, the country of origin and method of production information, as applicable, must be maintained for a period of 1 year from the date the origin declaration is made at retail.

Under this final rule, any retailer handling a covered commodity that is found to be designated incorrectly as to the country of origin and/or method of production, as applicable, shall not be held liable for a violation of the Act by reason of the conduct of another if the retailer relied on the designation provided by the supplier, unless the retailer willfully disregarded information establishing that the declaration of country of origin and/or method of production, as applicable, was false.

Enforcement

The law encourages the Secretary to enter into partnerships with States to the extent practicable to assist in the administration of this program. As such, USDA has entered into partnerships with States that have enforcement infrastructure to conduct retail compliance reviews.

Routine compliance reviews may be conducted at retail establishments and associated administrative offices, and at supplier establishments subject to these regulations. USDA will coordinate the scheduling and determine the procedures for compliance reviews. Only USDA will be able to initiate enforcement actions against a person found to be in violation of the law. USDA may also conduct investigations of complaints made by any person alleging violations of these regulations when the Secretary determines that reasonable grounds for such investigation exist.

Retailers and suppliers, upon being notified of the commencement of a compliance review, must make all records or other documentary evidence material to this review available to USDA representatives within 5 business days of receiving a request and provide any necessary facilities for such inspections.

The law contains enforcement provisions for both retailers and suppliers that include civil penalties of up to $1,000 for each violation. For retailers and persons engaged in the business of supplying a covered commodity to a retailer (suppliers), the law states that if the Secretary determines that a retailer or supplier is in violation of the Act, the Secretary must notify the retailer or supplier of the determination and provide the retailer or supplier with a 30-day period during which the retailer or supplier may take necessary steps to comply. If upon completion of the 30-day period the Secretary determines the retailer or supplier has (1) not made a good faith effort to comply and (2) continues to willfully violate the Act, after providing notice and an opportunity for a hearing, the retailer or supplier may be fined not more than $1,000 for each violation.

In addition to the enforcement provisions contained in the Act, statements regarding a product's origin and method of production, as applicable, must also comply with other existing Federal statutes. For example, the Federal Food, Drug, and Cosmetic Act prohibits labeling that is false or misleading. In addition, for perishable agricultural commodities, mislabeling country of origin is also in violation of PACA misbranding provisions. Thus, inaccurate country of origin labeling of covered commodities may lead to additional penalties under these statutes as well.

With regard to the voluntary use of 840 tags on which to base origin claims, 9 CFR 71.22 prohibits the removal of official identification devices except at the time of slaughter. The importation of animals and animal health are regulated by the Animal and Plant Health Inspection Service (APHIS). This regulation does not alter any APHIS requirements.

Comments and Responses

On October 30, 2003, AMS published the proposed rule for the mandatory COOL program (68 FR 61944) with a 60-day comment period. On December 22, 2003, AMS published a notice extending the comment period (68 FR 71039) an additional 60 days. AMS received over 5,600 timely comments from consumers, retailers, foreign governments, producers, wholesalers, manufacturers, distributors, members of

Congress, trade associations and other interested parties. The majority of the comments received were from consumers expressing support for the requirement to label the method of production of fish and shellfish as either wild and/or farm-raised. Numerous other comments related to the definition of a processed food item, the recordkeeping requirements for both retailers and suppliers, and the enforcement of the program. In addition, over 100 late comments were received that generally reflected the substance of the timely comments received.

On June 20, 2007, AMS reopened the comment period for the proposed rule for all covered commodities (72 FR 33917). AMS received over 721 comments from consumers, retailers, foreign governments, producers, wholesalers, manufacturers, distributors, members of Congress, trade associations and other interested parties.

On October 5, 2004, AMS published the interim final rule for fish and shellfish (69 FR 59708) with a 90-day comment period. On December 28, 2004, AMS published a notice extending the comment period (69 FR 77609) an additional 60 days. AMS received approximately 800 comments on the interim final rule, the majority of which were form letters from consumers expressing their support for country of origin labeling and requesting that the definition of a processed food item be narrowed to require labeling of canned, breaded, and cooked products.

On November 27, 2006, the comment period was reopened on the cost and benefit aspects of the interim final rule (71 FR 68431). AMS received over 192 comments from consumers, retailers, foreign governments, producers, wholesalers, manufacturers, distributors, members of Congress, trade associations and other interested parties. The majority of the comments received were from consumers expressing support for the requirement to label fish and shellfish with the country of origin and method of production as either wild and/or farm-raised, and to extend mandatory COOL to the remaining covered commodities. Most of the comments did not address the specific question of the rule's costs and benefits. A limited number of the comments did relate to the costs and benefits of the documentation and recordkeeping requirements of the law. Some commenters noted no increased sales or demand for seafood as a result of COOL. Several commenters provided evidence regarding the costs of compliance with the interim final rule covering fish and shellfish. Other commenters cited academic and Government Accountability Office studies to argue that USDA overestimated the costs to implement systems to meet COOL requirements, and that the true costs to industry will be much lower than those projected by the economic impact analysis contained in the interim final rule for fish and shellfish. On August 1, 2008, AMS published an interim final rule with a 60-day comment period for the covered commodities other than fish and shellfish. The Agency received 275 comments representing the opinions of 11,798 consumers, retailers, foreign governments, producers, wholesalers, manufacturers, distributors, members of Congress, trade associations and other interested parties. The majority of comments received were on the definition of a processed food item, labeling muscle cuts of multiple countries of origin, and the recordkeeping provisions for both retailers and suppliers.

When the proposed rule was published on October 30, 2003, the regulatory provisions were all proposed to be contained in a new part 60 of Title 7 of the Code of Federal Regulations. Under the August 1, 2008, interim final rule, the regulatory provisions for the covered commodities other than fish and shellfish appeared at 7 CFR part 65. For the ease of the reader, the discussion of the comments has been broken down by issue. To the extent that a comment or issue pertains only to fish and shellfish covered commodities, it is noted in the explanation.

Definitions

Covered Commodity

Summary of Comments: Several commenters requested that the Agency add products to the list of commodities covered by COOL. One commenter suggested that almonds should be included in mandatory COOL and another commenter requested that fresh chestnuts be added. A final commenter suggested that meat commodities derived from beefalo be included as covered commodities. Another commenter asked that the Agency better clarify what is a “muscle cut.”

Agency Response:

The statute specifically defines the commodities covered by the mandatory COOL program. As such, the Agency does not have the authority to include additional classes of covered commodities. Accordingly, recommendations regarding covering additional classes of commodities cannot be adopted. With regard to clarifying what the Agency defined to be a muscle cut of beef, pork, lamb, chicken, or goat, the Agency has provided information on its Web site and in written form pertaining to specific items and will continue to do so as questions arise. In general, the Agency views those cuts of meat (with or without bone) derived from a carcass (e.g., beef steaks, pork chops, chicken breasts, etc.) to be covered items. However, cuts of meat that are removed during the conversion of an animal to a carcass (e.g., variety meats such as pork hearts, beef tongues, etc.) are not viewed to be muscle cuts nor are items sold as bones practically free of meat (e.g., lamb neck bones, beef femur bones, etc.) or fat practically free of meat (e.g., pork clear plate, chicken skin, etc.) removed from a carcass.

Ground Beef

Summary of Comments:

One commenter noted that fabricated steak is not specifically listed as a covered commodity in the law and expressed their belief that AMS could proactively cover a closely related commodity rather than limit COOL to only statutorily listed commodities. The commenter urged the Agency to broaden rather than narrow its scope of covered commodities to include fabricated steak in the definition of ground beef.

Another commenter noted the rule exempts ground beef, hamburger and beef patties that have been seasoned (unless that seasoning is salt or sugar), but does not exempt ground beef, hamburger and beef patties that have not been seasoned. The commenter requested that the definition for ground beef be reconsidered and clarified so that ground beef, hamburger and beef patties where salt or sugar is added are recognized as a processed food item and therefore exempt under this rule.

Several commenters did not agree that the Agency's expansion of the definition of ground beef to include hamburger and beef patties was justified. The commenters pointed out that the covered product specified by the 2008 Farm Bill is “ground beef,” which has its own regulatory standard of identity separate from hamburger and beef patties. One commenter also noted that the interim final rule's definitions of “ground lamb” and other ground meats do not similarly specify that patties made from such ground meats are covered items and suggested that this disparity appears to “favor” non-beef patties with possible exemption from the rule, to the disadvantage of beef patties. Another commenter stated that had Congress intended a more expansive range of processed food products to be subject to COOL, it would have specifically included them,

particularly where all other processed foods are categorically exempt from COOL requirements. The commenter urged the Agency to follow the intent of Congress and promulgate a rule that encompasses products captured in the regulatory standard of identity for “ground beef” and not extend the scope to items meeting other definitions.

Agency Response:

The Agency does not agree that commodities covered by the statute can be construed to cover fabricated steaks. Fabricated steaks are produced to appear like a whole muscle cut of meat but are in fact constructed from many different cuts of meat. Therefore, they are clearly not a “muscle cut” and, because the product is not ground nor is it sold as ground, it is not ground beef either.

The Agency agrees that a regulatory standard of identity for the term “ground beef” exists, but does not agree that it was the intent of Congress to limit the mandatory COOL program to only those products marketed under that standard of identity. Further, the Agency believes it is not reasonable that consumers would understand why beef that is ground and marketed as “ground beef” would require labeling and beef that is ground and marketed as “hamburger” would not. The regulatory standard of identities for “ground beef” and “hamburger” are virtually identical with the minor exception of “added fat” being allowed in beef that is ground and marketed as “hamburger”. Both are often marketed in bulk form or in patty form and can sit side by side in the fresh or frozen meat case with only the name capable of distinguishing them apart. Therefore, ground beef and hamburger sold in bulk or patty form are covered commodities under this final rule.

However, in its analysis of the issue and the points raised by the commenters, the Agency does concur with several of the commenters that beef that is ground and marketed as “imitation ground beef”, “imitation hamburger”, and “beef patty mix” should be exempt in this final rule. Products marketed under these standards of identities typically contain a number of binders and extenders that are not covered commodities and are not assumed by the consumer to be interchangeable with beef that is ground and marketed as “ground beef” or “hamburger”. Because the Agency does not view such variety meat items as beef heart meat and tongue meat (which are not allowed in “ground beef” or “hamburger”) as covered commodities, requiring such products as “beef patty mix” to carry COOL information would also require the beef processing industry to identify the country of origin for such beef variety meat items in the event they would be used as extenders in commodities like “beef patty mix”, which does allow their inclusion. The Agency believes that the costs associated with this segregation and identification of beef variety meats would be overly burdensome and that these items were not intended to be included as covered commodities under the statute. Accordingly, these recommendations are adopted in part.

Farm-Raised

Summary of Comments:

Some commenters expressed concerns regarding the definition of farm-raised in the fish and shellfish interim final rule. The commenters recommended that the Agency exempt molluscan shellfish from the COOL requirements.

Agency Response:

As the statute defines the term covered commodity to expressly include shellfish, the Agency does not have the authority to provide an exemption for molluscan shellfish. In addition, in the Agency's experience in three years of enforcement of the COOL program for fish and shellfish, it has found good compliance with the labeling of this commodity. Accordingly, this recommendation is not adopted in this final rule.

Lamb

Summary of Comments:

Several commenters requested that the regulation be revised to clarify the definition of lamb includes mutton. One of these commenters stated that because there are no common terminology differences describing the meat from different age groups of species such as cattle, swine, goat or chicken, the Agency was in error to exclude mutton in the definition of lamb in the interim final rule. The commenter further stated while specific definitional differences between lamb and mutton exist for other regulatory purposes, it is appropriate to cover meat from all ages of sheep in the rule as is done for the other livestock species.

Agency Response:

The Agency agrees that it is appropriate to include mutton under the definition of lamb as no distinctions describing meat from the different age groups of other livestock species were made. Accordingly, this recommendation has been adopted in this final rule.

NAIS-Compliant System

Summary of Comments:

Two commenters recommended that the Agency eliminate the definition of a “NAIS-compliant system” and replace it with the existing regulatory definition of “Official identification device or method” that is contained in 9 CFR § 93.400. The commenters contend that this modification is necessary so as to not mislead the public into believing that they must comply with all of the requirements of USDA's NAIS (e.g., premises registration) in addition to maintaining current compliance with existing official identification systems. The commenters stated this change would be consistent with USDA's assurance that the NAIS “does not alter any regulation in the Code of Federal Regulations or any regulations that exist at the State level.”

Agency Response:

The Agency continues to believe that voluntary use of the National Animal Identification System is an acceptable and easy option packers may utilize to obtain origin information on livestock. However, the Agency believes that the definition of NAIS-compliant should be deleted as it is not necessary. However, with regard to the commenter's suggestion to replace this definition with the definition of “Official identification device or method”, because they may be applied to imported animals, other identification devices or methods alone cannot be used to establish the U.S.-origin of livestock. Producers' management records will need to be used in conjunction with these other identification devices and methods to establish U.S. origin. Additional discussion on the NAIS provision is included later in the Comments and Responses section.

Processed Food Item

Summary of Comments:

Numerous commenters suggested that the Agency should narrow its definition of a processed food item so that more food items sold at retail are covered commodities subject to COOL requirements. The commenters recommended that roasting, curing, smoking and other steps that make raw commodities more suitable for consumer use should not be the criteria for categorizing these commodities under the statutory exemption of an ingredient in a processed food item and therefore exempt from labeling. Many commenters stated that USDA's overly expansive definition of a processed food item, which comes from the 2004 interim final rule for fish and shellfish, should not be used for the other covered commodities. The commenters stated that although the definition was possibly appropriate for fish and shellfish, it resulted in a much more substantial percentage of meat and nut covered commodities sold at retail being exempt. The commenters urged USDA to develop different definitions of a

processed food item for each specific category of covered commodity so that as many items as possible would be covered by the mandatory COOL program.

One commenter noted that relying on a change in character for the definition of processed food is fine as long as the Agency makes it clear that the change in character is such that a consumer would not use the items in the same manner as they would the original commodity. Thus, as spelled out in the 2003 proposed rule, not all forms of cooking (e.g., frying, broiling, grilling, boiling, steaming, baking, roasting), as well as canning would constitute a change in character. This commenter added that for muscle cuts of beef, lamb, pork, chicken and goat, chilling, freezing, cooking, seasoning or breading should not render those products as being processed food items as defined in the interim final rule and therefore exempt from mandatory COOL. The commenter expressed their support for the alternative proposal in the 2003 proposed rule in which a covered commodity that is further processed (i.e., cured, restructured, etc.) should not be excluded unless the covered commodity is mixed with other commodities such as a pizza or TV dinner. The commenter noted that by exempting restructured and cured products from COOL, the rule excludes bacon, hams and corned beef briskets from labeling. The commenter further stated that Congress clearly stated that pork was included in COOL, but exempting bacon and hams would exclude a significant portion of the pork market. This commenter also recommended that orange juice be included as a covered commodity since orange juice represents a major component of orange consumption in the U.S. Finally, the commenter noted that in a series of decisions, CBP determined that roasting of pistachios, pecan nuts and coffee beans did not constitute substantial transformation.

Several commenters urged AMS to revise the provision in the processed food item definition that states that combining different covered commodities renders those products being exempt from mandatory COOL. The commenters recommended that if covered commodities are combined, yet are still recognizable, they should be required to be labeled. The commenters suggested that broadly exempting all mixed vegetables as a processed food item is an excessive exclusion because most consumers would expect to have frozen mixed vegetables labeled.

Several commenters agreed with the Agency's definition of a processed food item. The commenters noted that the processed food definition that the Agency adopted in the interim final rule for fish and shellfish is simple, straightforward and provides a bright line test retailers and others can use to understand which covered commodities are subject to mandatory COOL and which are not.

One commenter recommended that the Agency designate that items with distinct varietal names within a generic category of products be deemed different products and excluded when two or more are combined. Several commenters recommended that any fresh-cut produce item, even those not combined with another substantive food item or other covered commodity, be included in the definition of a processed food item. By taking a raw agricultural commodity, washing it, then cutting it, the commenters contend that a company does change the product from a raw agricultural commodity to a ready-to-eat food item—similar to the way cooking changes a raw meat product to a ready-to-eat food, and that cutting fruit for a value-added package alters the commodity at retail.

One commenter noted that the interim rule provides that “the addition of a component (such as water, salt, or sugar) that enhances or represents a further step in the preparation of the product for consumption would not in itself result in a processed food item.” The commenter stated that as water, salt and sugar are used only as examples, it is apparent that the Agency assumes other ingredients, too, may merely enhance or further prepare the product for consumption such that they would be insufficient to render a product a processed food item.

Several commenters expressed that they were unclear when water, salt or sugar can be added to a product and still be covered and questioned why a marinated steak is exempt even though “marinated” is not defined. These commenters urged the Agency to clarify what is meant by enhancement steps that do not result in a processed food item. Some of these commenters further urged that the clarification encompass a much broader scope of flavorings, seasonings, etc., beyond water, salt or sugar.

One commenter expressed support for the fact that the addition of a component (such as water, salt, or sugar) does not represent a processing step that changes the character of a covered commodity. The commenter recommended that USDA also expressly state that the addition of water-based or other types of flavoring—such as a solution containing water, sodium phosphate, salt, and natural flavoring purportedly injected into meat muscle-cut commodities by some retailers—does not represent a processing step that changes the character or identity of a covered commodity. Another commenter agreed with the provision in the 2003 proposed rule in which oil, salt and other flavorings were considered non-substantive ingredients. In addition, the commenter also expressed support for the position laid out in the 2003 proposed rule that “needle-tenderized steaks; fully-cooked entrees containing beef pot roast with gravy; seasoned, vacuum-packaged pork loins; and water-enhanced case ready steaks, chops, and roasts * * * would not be considered processed food items”.

One commenter discussed products made up of a variety of fresh pork and beef muscle cuts that have been injected with a patented solution which, beyond simple water, salt, or sugar, also includes sodium phosphates, potassium lactate and sodium diacetate. The commenter stated that these products should be considered to be “covered commodities” and, therefore, subject to mandatory COOL requirements on the grounds that these products have not undergone a change in character and that because consumers cannot ascertain any difference between such enhanced products and those covered commodities that do not contain such additional ingredients, such an exemption would only confuse consumers.

Several commenters asked that the list of examples of processed food items be expanded. One commenter strongly supported inclusion of the following examples for the types of meat and other covered commodities that should be exempt as a processed food item as defined under the definition and recommended to be included in the final rule: flank steak with portabella stuffing, steakhouse sirloin kabobs with vegetables, meatloaf, meatballs with penne pasta, pot roast with roasted vegetables, cooked and smoked meats, blue cheese angus burgers, cured hams, bacon, sugar cured bacon, dry cured meats, corned beef briskets, marinated pork loin, marinated pork chops, marinated London broil, prosciutto rolled in mozzarella cheese, fruit salad, cooked and canned fruits and vegetables, orange juice, fresh apple sauce, peanut butter, candy coated peanuts, peanut brittle, etc.

Agency Response:

The Agency believes that the two-part definition of a processed food item defined in the final rule is an appropriate interpretation of the intent of Congress excluding covered commodities that are

an ingredient in a processed food item and provides a bright line differentiating the steps that do and do not result in a commodity being covered by mandatory COOL.

Furthermore, the Agency does not agree that such processing steps as cutting or enhancing render a covered commodity a processed food item. The definition of a processed food item uses examples of the addition of components “such as water, salt, or sugar”; however, such further preparation steps would also be meant to include other examples of enhancements that do not fundamentally alter the character of the product. For example, dextrose is a sugar, phosphate is a salt, and beef stock and yeast are flavor “enhancers”. In addition, the Agency believes that enhancement with enzymatic tenderizers, such as ficin and bromelain, do not by themselves change the character of the covered commodity and therefore do not result in a processed food item.

The Agency does agree that specific examples of products that are and are not covered can help the trade and consumers understand which products are covered by mandatory COOL. Therefore, the Agency will work to provide interpretive documents on its Web site and in print materials developed that will provide as many examples as necessary.

Produced

Summary of Comments:

One commenter noted that the interim final rule defines the term “produced” in the case of a perishable agricultural commodity, peanuts, ginseng, pecans, and macadamia nuts as grown. The commenter recommended that since some plants may be transplanted across national borders, the Agency should define the term produced as harvested.

Agency Response:

The Agency agrees with the commenter that the term “harvested” more accurately defines the term “produced” in the case of a perishable agricultural commodity, peanuts, ginseng, pecans, and macadamia nuts and has adopted this change in this final rule.

Country of Origin Notification

Exemption for Food Service Establishments

Summary of Comments:

Several commenters disagreed with the exemption for food service establishments from the COOL requirements. These commenters contend that since items sold in these types of establishments represent a major segment of the food industry, these establishments should not be exempt from labeling.

Agency Response:

The statute contains an express exemption for food service establishments. Therefore, this exemption is retained in this final rule.

Method of Production

Summary of Comments:

Two commenters focused on details for the designation of method of production for fish and shellfish (wild-caught or farm-raised). One commenter sought a more thorough definition and suggested the inclusion of the following additional information: for wild fish, the method of harvest (i.e., long-line, gillnet, trawl, purse seine, line and hook); and for farm-raised fish (1) whether it is a genetically engineered, and (2) the feed conversion ratio (quantity of fish feed required for producing the end-commodity). Another commenter expressed concern about fraudulent labeling of method of production for fish and shellfish. The commenter noted that there may be an economic incentive to mislabel farm-raised fish as wild caught fish, and the commenter provided evidence from a small sample they had investigated in November and December 2005 during the off-season for wild-caught salmon. They purchased 17 salmon products labeled as wild-caught, tested them for the presence of a synthetic coloring agent fed to farmed salmon to turn their flesh pink-orange and found that 7 of the 17 salmon products labeled as wild-caught were determined through this analysis to be actually farm-raised. The commenter noted that supermarkets were more likely to label wild-caught salmon correctly than fish markets.

Agency Response:

The statute only provides the Agency with the authority to require that fish and shellfish carry notification for country of origin and that the covered commodity distinguish between wild fish and farm-raised fish. Therefore, the additional labeling information cannot be required. With regards to the mislabeling of method of production identified by the commenter, in addition to conducting retail surveillance enforcement activities, the Agency also conducts supplier audits that are intended to prevent such mislabeling.

Labeling Covered Commodities of United States Origin

Summary of Comments:

Two commenters requested that the Agency revisit the regulatory requirements for labeling products as U.S. origin when they have been further processed or handled in a foreign country. One commenter recommended that USDA delete entirely § 65.300(d)(2), and include language instead that expressly prohibits the retention of a United States origin label for any commodity that undergoes additional processing or handling in a foreign country. Another commenter asked that the Agency clarify what it means by the terms “handled” and “processed” in the context of this provision. The commenter asked USDA to clarify if it intends to include meat products in this section of the interim final rule, and noted that the statute indicates that meat product processed in another country would need to list that particular country on the label. They pointed out that the interim final rule appears to have no discussion or rationale explaining why a U.S. product processed in another country would be eligible to maintain a U.S. origin label.

Another commenter requested that a fourth option for labeling imported products be considered in the final rule. This commenter pointed out that there are no provisions for labeling product that is caught or harvested in the U.S. and substantially transformed in another country. For example, wild fish that is caught in the U.S. and then subsequently filleted in “Country X” must be marked as a product of “Country X” with no allowable reference to the original U.S. source. The commenter suggested an alternative would be to label covered commodities harvested in the U.S. but substantially transformed in another country as “Harvested in U.S., processed in Country X.” The commenter concluded that such a label would provide complete information for the consumer while maintaining the original U.S. source of the product.

Agency Response:

With regards to the origin determination of United States country of origin products that are exported to a foreign country for processing prior to reimportation back into the United States, the Agency has deleted the express provision in the final rule as the Agency believes that the provision may have caused confusion. However, to the extent that existing regulations, including those of CBP and FSIS allow for products that have been minimally processed in a foreign country to reenter the United States as Product of the U.S., nothing in this final rule precludes this practice. In addition, to the extent that additional information about the production steps that occurred in the U.S. is permitted under existing Federal regulations (e.g., CBP, FSIS), nothing in this final rule precludes such information from being included.

Labeling Imported Products That Have Not Undergone Substantial Transformation in the United States

Summary of Comments:

Four commenters offered suggestions relating to labeling imported products that have not undergone substantial transformation in the United States. One commenter contended that COOL was illogical, unworkable and misleading. Another commenter elaborated on the labeling for transshipped fish and shellfish. The commenter pointed out that many fish and shellfish products are imported into the U.S. from countries that are not necessarily the country where the fish or shellfish were harvested. The commenter recommended that the final rule for fish and shellfish require labeling to identify the location where the seafood was harvested or raised. Another commenter noted that frozen products of “foreign origin,” as determined by tariff laws, already are subject to country of origin labeling under a comprehensive set of regulations administered by CBP.

Agency Response:

With regard to the origin of imported covered commodities, the Agency follows existing regulations, including those of CBP, regarding the origin of such products and requires that such origin be retained for retail labeling.

Labeling Muscle Cut Covered Commodities of Multiple Countries of Origin That Include the United States

Summary of Comments:

Numerous commenters stated that commodities derived from animals born, raised, and slaughtered in the U.S. should be labeled as “Product of the U.S.” and not be diluted or commingled with a multiple country of origin label such as, “Product of the U.S., Canada, and Mexico”. These commenters stated that the provision allowing this in the interim final rule directly contradicts the statute and diminished consumer choice and producer benefits that could have resulted from this program.

These commenters stated that the statute established four major categories for meat labeling to enable consumers to have the right to know specifically where their food originates. Other commenters stated that the regulation does not contain specific provisions allowing packers to label meat from livestock exclusively born, raised, and processed in the U.S. as mixed origin and that packers doing so were acting in violation of the regulation. Several members of Congress also commented that it was not the intent of Congress that all U.S. products or such product from large segments of the industry be combined with the multiple countries of origin category nor was it provided for by the statute. The members of Congress stated that the purpose of COOL is to clearly identify the origin of meat products, providing consumers the most precise information available.

One commenter stated that while processors claim that segregating U.S. meat from foreign meat would be burdensome, processors already easily segregate meat by grade (e.g. USDA. Choice vs. USDA. Prime) and by source (e.g., USDA Certified Organic vs. nonorganic) and that segregating the origin of U.S. and foreign meat is no more complicated or burdensome.

In contrast, several other commenters expressed support for a more flexible approach to labeling notifications for meat products sourced from multiple countries of origin. One commenter indicated that retailers desperately need the flexibility to commingle product in the display, especially in a full-service display case. The commenter stated that disallowing the commingling of meat from multiple origins including the U.S. is a logistical nightmare for retailers. Another commenter stated that the interim final rule affords critically important flexibility to retailers and the entities that provide covered commodities to retailers with respect to the labeling of covered commodities derived from animals of U.S. origin, as well as animals with multiple countries of origin. Another commenter urged the Agency to apply flexibility consistently for all sectors of the chain including retailers.

Several commenters stated their belief that Congress intended to provide flexibility between categories A and B afforded in the rule based on the permissive language of the statute for those two categories, which is supported by the absence of that very flexibility in subsections 282(a)(2)(C) and (D). The commenters noted that in subsections 282(a)(2)(C) and (D) of the statute, Congress used the word “shall” with respect to types of covered commodities identified in those categories, imported for immediate slaughter and foreign country of origin, and arguably limited the Agency's discretion to interpret how those categories of product should be labeled.

Another commenter recommended the same flexibility given to processors to label meat from animals of U.S. origin with a mixed origin label should be given to the labeling of meat from animals imported directly for slaughter. The commenter recommended that the final rule give processors the flexibility to make use of the order of countries mandated under this category (Product of Country X and the U.S.) when processing a production run including animals of U.S., mixed origin, or imported for immediate slaughter.

Another commenter noted that little attention seems to have been paid to the amount of exported meat this rule is putting at risk, which is now sold to Mexico, compared to the small amount of cattle born in Mexico and exported to the United States. Another commenter added that producers on the border States rely on Mexican cattle imports. The commenter warned that by establishing these categories, the value of finished Mexican cattle will be discounted at the packing plant because they will have to be sorted on the line in the plant, which costs the packer money. Another commenter stated that COOL has effectively cut off U.S-Mexican cattle trade and that because of COOL the packers have advised producers that they will not buy Mexican cattle.

One commenter indicated that the multiple country label prescribed in the rule for product derived from U.S.-raised pigs, regardless of their birth country, provides packers, processors and retailers with flexibility in labeling pork products. The commenter further stated that this labeling flexibility, in turn, gives flexibility to U.S. pork producers handling those pigs, which will reduce costs associated with label changes, product segregation, and duplicate stock keeping units at all levels of the pork marketing system.

Several commenters noted that the “Product of the U.S.” label allows for the labeling of pork products exclusively from pigs born, raised and slaughtered in the U.S. These commenters stated it will be effectively used for pork products offered to buyers who find value in that label. The commenters fully support the approach taken in the interim final rule. The commenters also expressed that including U.S.-raised pigs in the mixed origin labeling category also meets the “common sense” test as well as the economic reality of today's U.S. pork industry since more than 95 percent of the total end weight of a Canadian-born weaned pig is actually produced in the U.S. using U.S. feed, labor and buildings.

A final commenter wrote that the Agency should harmonize the final rule with the NAFTA Marking Rule. This commenter specifically encouraged the Agency to adopt a final rule that uses the tariff-shift method to determine the country of origin of covered commodities that are produced in the United States using ingredients or raw

materials imported from Canada or Mexico.

Agency Response:

The Agency recognizes that the multitude of different production practices and possible sales transactions can influence the value determinations made throughout the supply chain resulting in instances of commingling of animals or covered commodities, which will have an impact when mixing occurs. However, the Agency feels it is necessary to ensure information accurately reflects the origin of any group, lot, box, or package in accordance with the intent of the statute while recognizing that regulated entities must still be allowed to operate in a manner that does not disrupt the normal conduct of business more than is necessary. Thus, allowing the marketplace to establish the demand of categories within the bounds of the regulations will provide the needed flexibility while maintaining the structure needed to enforce these clearly defined categories. If an initiator of the claim chooses to mix commodities of different origins within the parameters of a production day, or if the retailer mixes product from different categories willingly, the resulting classification must reflect the broadest possible terms of inclusion and be labeled appropriately. The initiator may elect to segregate and specifically classify each different category within a production day or mix different sources and provide a mixed label as long as accurate records are kept. Likewise, if a retailer wants to mix product from multiple categories, it can only be done in multi-product packages and then only when product from the different categories is represented in each package in order to correctly label the product. With regard to producer benefits, while some U.S. producers may hope to receive benefits from the COOL program for products of U.S. origin, the purpose of the COOL program is to provide consumers with origin information.

With regard to the commenter's recommendation that the same flexibility given to processors to label meat from animals of U.S. origin with a mixed origin label should be given to the labeling of meat from animals imported directly for slaughter, this final rule allows muscle cut covered commodities derived from animals that are born in Country X or Country Y, raised and slaughtered in the United States, that are commingled during a production day with muscle cut covered commodities that are derived from animals that are imported into the United States for immediate slaughter as defined in § 65.180, the origin may be designated as Product of the United States, Country X, and (as applicable) Country Y.

With regard to using the tariff-shift method to determine the country of origin of covered commodities that are produced in the United States using ingredients or raw materials imported from Canada or Mexico, the Act specifically defines the criteria for covered commodities to be labeled with a U.S. origin declaration. Accordingly, this recommendation is not adopted.

Labeling Commingled Covered Commodities

Summary of Comments:

Several commenters expressed concerns about the notification requirements for commingled covered commodities. One produce supplier was concerned about their liability in the event ready-to-eat produce they supplied was commingled with other product from multiple vendors at retail stores. Another commenter voiced opposition to an alphabetical listing on a product sourced and commingled from multiple countries of origin. The commenter expressed support for the provision in the voluntary COOL guidelines published in 2002 (67 FR 63367) that would have required country of origin for each raw material source of the mixed or blended retail item by order of predominance by weight.

Another commenter expressed support for the current provision. The commenter noted that the current interim final rule states that for these products, the country of origin must be designated in accordance with CBP marking regulations, promulgated pursuant to the Tariff Act. To the extent that this will prevent a conflict between the two laws, this commenter supports the Agency's recent approach.

One commenter asked for clarification about the use of the word “or,” the phrase “and/or,” commas, slashes or spaces to separate the country names in a label listing multiple countries of origin for commingled commodities. The commenter pointed out that a comma would be equivalent to “and,” which might not be appropriate for labeling a single produce item that could not physically have been produced in two countries.

Agency Response:

As noted in both the interim final rule for fish and shellfish and the interim final rule for the other covered commodities, the Agency determined that requiring origin notification either by alphabetical listings or by listing the countries of origin by order of predominance by weight was overly burdensome to the regulated industries.

As commingling of the same type of products at retail containing different origin is permissible under this final rule, the Agency cannot prohibit the commingling of like products from multiple vendors at retail. The COOL program is not a food safety program. Commingling like products is a commercially viable practice that has been historically utilized by retailers and any decision to continue this practice has to be determined by the retailer.

The Agency does not agree that the statute allows for the use of terms and phrases such as “or, may contain, and/or” that only convey a list of possible origins. The intent of the statute is to require retailers to provide specific origin information to consumers. In addition, such disjunctive labeling schemes are not allowed under CBP regulations except under special circumstances.

For commingled covered commodities, each country must be listed. The Agency does not agree that the regulations should mandate how this list of countries be punctuated with commas, slashes or spaces. The Agency believes that it is best left to individual businesses to decide how to convey the information in a way that is neither confusing nor misleading.

Labeling Ground Meat Covered Commodities

Summary of Comments:

Several commenters expressed the opinion that the provision in the interim final rule that states, “when a raw material from a specific origin is not in a processor's inventory for more than 60 days, the country shall no longer be included as a possible country of origin” is too long. The commenters stated that in practical terms, this provision appears to allow a processor to have 60 days to correct the label of a product to delete specific country(s), even though that country's product may no longer exist in its inventory. The commenters provided the example that a processor on day one could have product from the U.S. and Canada, and then on day 7 run out of product from the U.S., and yet could continue using the “Product of U.S. and Canada” label for another 53 days. Commenters feared this provision could be easily abused by meat processors. Several commenters requested that the Agency reconfirm the appropriateness of this time-frame and explain the rationale and justification for this duration. Another commenter urged AMS to clarify this issue for the public record because in the opinion of the

commenter, the wording in this section of the rule is confusing and potentially misleading.

Another commenter pointed out this provision was intended to reflect the sourcing processes of commercial grinders and not to require them to change their labels simply because the market had changed and source product was more expensive from one country than another. As the statutory language that is interpreted here is directed to retailers, this commenter understood this provision to apply to retailers as well, and respectfully requested that the Agency confirm the applicable standard in the final regulation.

One commenter was concerned about the impact that mandatory country of origin labeling will have on imported beef, particularly ground beef at retail. The commenter stated that mandatory origin labeling will add significantly to meat production costs at a time of rapidly increasing food costs, and consumers will have to bear the additional expense resulting from the labeling regime. The commenter was concerned, therefore, that retailers will be induced to simplify their labeling obligations by excluding imported and certain domestic beef from ground beef in order to minimize the resulting increase in the costs that will be associated with compliance.

Agency Response:

As already stated, the intent of the authorizing statute was for consumers to have available to them for the purposes of making purchasing decisions accurate information pertaining to the country of origin of certain covered commodities sold at retailers as defined. That said, the Agency believes this program should be implemented in as least burdensome a manner possible while still achieving this objective.

In developing the interim final rule, the Agency spent considerable time analyzing the current production systems of the ground meat supply chain and retail industry so that this program could be implemented in a manner that was least burdensome as possible while still providing consumers with accurate information to base their purchasing decisions on. It also must be stressed that if a country of origin is utilized as a raw material source in the production of ground beef, it must be listed on the label. The 60-day in inventory allowance speaks only to when countries may no longer be listed. The 60-day inventory allowance is an allowance for the Agency' enforcement purposes for when the Agency would deem ground meat products as no longer accurately labeled.

The Agency arrived at the 60-day allowance during its analysis of the ground meat industry. In this analysis, the Agency determined that in the ground beef industry a common practice is to purchase lean beef trimmings from foreign countries and mix those with domestic beef trimmings before grinding into a final product. Often those imported beef trimmings are not purchased with any particular regard to the foreign country, but the cost of the trimmings due to currency exchange rates or availability due to production output capacity of that foreign market at any particular time. Because of that, over a period of time, the imported beef trimmings being utilized in the manufacture of ground beef can and does change between various foreign countries.

As large scale beef grinders can have in inventory at any one time, several days worth of beef trimmings (materials to be processed into ground beef) from several different countries and have orders from yet other foreign markets, or from domestic importers, trimmings from several foreign countries that will fulfill several weeks worth of ground beef production, the Agency determined that it was reasonable to allow the industry to utilize labels representing that mix of countries that were commonly coming through their inventory during what was determined to be a 60-day product inventory and on order supply. To require beef grinders to completely change their production system into grinding beef based on specific batches was determined to be overly burdensome and not conducive to normal business practices, which the Agency believes was not the intent of the statute. Further, because beef grinders often purchase their labeling material in bulk, if a given foreign market that a beef grinder is sourcing from is no longer capable of supplying product, the interim final rule allowed that grinder a period of time to obtain new labels with that given country of origin removed from the label.

With regard to the commenters' concerns with the potential of “abuse” of this allowance by processors, the Agency does not believe widespread abuses of this provision will occur and will address any issues with this provision during routine compliance reviews. As such and for all the reasons stated above, the Agency continues to believe that the 60-day inventory allowance is appropriate and was retained in this final rule.

With regard to if this 60-day inventory allowance is made for retailers or for suppliers of covered commodities, the Agency has made no distinction in this final rule and, as such, the same requirements would apply. Other concerns raised, including the impact of this regulation on the utilization of imported meat and consumer food costs are addressed in the economic impact analysis contained in this action.

Remotely Purchased Products

Summary of Comments:

Two commenters expressed the opinion that the provision on remotely purchased products is too weak because it allows country of origin information to be disclosed either on the sales vehicle or at the time the product is delivered to the consumer. The commenters stated that for origin information to be of use to consumers, it must be disclosed at the time that purchasing decisions are made. The commenters recommended that the country of origin or the possible country(ies) of origin could be listed on the sales vehicle (i.e. Internet site, home delivery catalog, etc.) as part of the information describing the covered commodity for sale. Another commenter encouraged the Agency to maintain the provision for remotely purchased products with the additional flexibility of permitting the declaration either on the sales vehicle or on the product at the time of delivery.

Agency Response:

The Agency believes that the provision contained in the interim final rules, which allows the information to be provided either on the sales vehicle or on the product itself, provides flexibility to suppliers and also provides useful information to consumers. If a consumer desires to purchase a covered commodity of a certain origin, they can so specify to the retailer.

Marking

General

Summary of Comments:

Several commenters addressed the question of preponderance of stickering and sticker efficacy. The commenters recommended that the Agency define “majority” as it applies to bulk display stickering for perishable agricultural commodities. The commenters noted that the Agency has recognized that when fresh produce is stickered with origin information, every product may not bear a sticker for a variety of reasons, and that a majority of the product should have stickers. Two commenters recommended that the Agency define “majority” as it applies to bulk display stickering for perishable agricultural commodities as “50% plus one” so that the industry has a specific understanding for compliance. Another commenter agreed with this definition, citing that the FDA found 50% product

labeling sufficient even in a case of human health. The commenter argued that such a standard would therefore be more than sufficient for adequate disclosure of country of origin. Another commenter recommended that the Agency not require more than a majority of produce items in any given bin to carry a PLU sticker. The commenter added that price look up (PLU) stickers, which include information on the supplier that initiates the country of origin claim, should not only satisfy a retailer's obligation to inform consumers of the country of origin of the item, it should satisfy the retailer's country of origin recordkeeping obligation as well.

Another commenter expressed concern that the lack of a specific minimum labeling requirement could ultimately require suppliers to have multiple containers and packaging inventories available. The commenter stated that a producer supplying fruit for bulk sale that is not currently stickering fruit may now be required by retailers to sticker individual pieces of fruit because the rule only “encourages” retailers to use placards or other methods. The commenter recommended that the rule establish a specific minimum standard to ensure greater consistency in compliance.

As it pertains to fish and shellfish, another commenter suggested that the Agency allow the use of statements such as “wild and/or farm-raised” or “may contain” in addition to allowing the use of “check box” labeling options to minimize the cost of labeling while still providing the required information for the consumer.

Agency Response:

As stated in the preamble of the August 1, 2008, interim final rule, the Agency understands that stickering efficacy is not 100%. Further, the Agency believes that under normal conditions of purchase, consumers would likely be able to discern the country of origin if the majority of items were labeled regardless if additional placards or other signage was present. Accordingly, the Agency does not believe it is necessary to modify the language with respect to this provision. The Agency will address the issue of preponderance of stickering in its compliance and enforcement procedures, as applicable, to ensure uniform guidance is provided to compliance and enforcement personnel.

With regard to this use of “may contain” and “and/or” statements, as previously stated, the Agency does not agree that the statute allows for the use of terms and phrases such as “or, may contain, and/or” that only convey a list of possible origins. Rather the Agency believes that the intent of the statute is to require retailers to provide specific origin information to consumers. In addition, such disjunctive labeling schemes are not allowed under CBP regulations except under special circumstances.

Signage Over Bulk Display Cases

Summary of Comments:

Several commenters expressed concern that the language authorizing a list of “all possible origins” on a bulk container (such as a meat display case that may contain commodities from different origins) would inadvertently allow a retailer to hang a sign over the entire meat display case that stated that the entire display contains products from the U.S. and one or more countries, even if the display case contains only commodities from the U.S. The commenters contend that nothing in the law expressly permits such labels on displays, holding units, or bins to merely provide information regarding “all possible origins” of the commodities contained therein and recommended that the Agency add language to require that if a meat display case contains commodities from more than one country, the commodities must be physically separated according to their origins within the meat display case and a separate origin declaration must be associated with each section.

Another commenter stated that they understood that the Agency is concerned that a sign such as “All beef is Product of the US” might be interpreted by consumers to encompass beef products that are not covered by the statute because they are processed. In order to provide clarity, the commenter urged the Agency to provide “safe harbor” standards for language and placement in order to ensure that retailers are properly meeting their obligations.

One commenter noted that retailers have the discretion to use signs, placards or other communications to convey origin information. Another commenter noted that the interim final rule allows for a bulk container at retail level that contains commingled products to be labeled with the country or countries of origin. However, the commenter also pointed out that the rule is silent on whether the individual pieces contained in bins must also be labeled, which would be difficult for certain species (e.g., broccoli, lettuce). This commenter requested confirmation that, for commingled produce sold in bins or trays, individual pieces of produce do not need to be labeled provided their origins are displayed on appropriate signage by the retailer.

Agency Response:

With regard to the provision in both interim final rules concerning bulk containers that allows the bulk container to contain a covered commodity from more than one country of origin, as previously stated, under this final rule it remains permissible provided that the notification representing a container, display case, bin or other form of presentation includes all possible country designations available for purchase.

With respect to the use of signage for bulk displays for meat covered commodities, as previously discussed, the Agency has observed that a vast majority of retailers are utilizing one sign for either the entire meat case or for an entire commodity type (i.e., chicken) to provide the country of origin notification. While the statute and this regulation provide flexibility in how the country of origin information can be provided, the Agency believes that the use of such signage could be false or misleading to consumers. The Agency encourages retailers to review signage that they have used in the implementation of the fish and shellfish program for alternative methods of providing COOL information.

With regard to comment concerning the labeling of individual pieces of produce, the rule provides flexibility in how the country of origin information may be conveyed. Thus, this final rule does not contain a requirement that individual pieces of product must be labeled with country of origin information. However, retailers may request that suppliers use specific methods of conveying origin information through contractual arrangements with their suppliers.

Abbreviations

Summary of Comments:

Several commenters requested additional guidance on acceptable abbreviations, and they provided a variety of recommendations to the Agency about specifying approved abbreviations. These commenters all favored the use of country abbreviations when marking country of origin declarations. One commenter requested that a select group of countries be permitted for abbreviation to include New Zealand, Guatemala, South Africa, Argentina and Australia. Another commenter said that abbreviations would serve a useful purpose on product labels and recommended that a list of reasonable abbreviations be developed that could be used by processors and retailers (e.g., CAN for Canada).

Other commenters appreciated the Agency's recognition of the need to abbreviate the names of some countries

using abbreviations from CBP. The commenters recommended that the language in section (e) be reworded to remove the first sentence (“In general, abbreviations are not acceptable.”). The commenters reasoned that the available space on product labels (e.g., price look-up [PLU] sticker) or bills of lading is scarce. The commenters further stated that it is important for the industry to be able to convey origin information on both of those vehicles for several reasons. Information on the product itself (through a PLU sticker, rubber band, twist tie, tag, etc.) is particularly important because it informs the consumer at point of purchase and moves with the product to the home. When industry can include the information on a bill of lading, it allows companies to use existing records as the statute requires. The commenters suggested that the Agency remove the requirement that a key to abbreviations be included with documents (each time or even once), because the industry is well aware of the abbreviations used and their meanings.

Several commenters suggested that the Agency rely on the ISO 3166 country codes maintained by the International Standardization Organization. One commenter disagreed with the Agency's determination that such abbreviations may not be readily understood by the majority of consumers. One commenter added that in addition to the ISO country codes, CBP recognizes country codes as do other federal agencies such as the Bureau of the Census. The commenter pointed out that the United Nations also recognizes both the two letter and three letter ISO country codes. Another commenter requested that a list of 3-digit country abbreviations be developed and allowed to identify the countries of origin. The commenter noted that these 3-digit codes would not be confused with 2-digit codes used in the U.S. to identify individual States.

One commenter indicated that in the event the Agency retains its current prohibition on abbreviations for consumer information, the Agency must be clear that origin information in records and paperwork can be maintained with any acceptable abbreviations. The commenter added that they strongly support the ability to utilize labeling of a U.S. State, region or locality in which a product is produced to meet label standards as product of United States. In addition, the commenter stated that they support the ability to use State abbreviations, which is standard practice in many current State labeling programs and is readily accepted identification by consumers. One commenter described a customer who had a requirement to list the State name in addition to the U.S. This commenter asked if it would be permissible to abbreviate State names when more than one needs to be listed (e.g., WA, CA, AZ). The commenter suggested putting the State abbreviations in brackets after USA (e.g., USA (CA, AZ)).

Agency Response:

As previously stated, the Agency believes that the limited application of abbreviations that unmistakably indicate the country of origin is appropriate. CBP has a long history of administering the Tariff Act and has issued a number of policy rulings with respect to the use of abbreviations. Because many of the covered commodities subject to the COOL regulation are also subject to country of origin marking under the Tariff Act, it would be inconsistent with CBP regulations to allow for the use of additional country abbreviations under the COOL program. With regard to the use of ISO codes that many commenters made reference to, CBP does allow for the use of such codes for statistical and other purposes with respect to e-commerce; however, CBP does not allow for the use of ISO codes for marking purposes. The Agency has obtained a more complete list of abbreviations from CBP and has posted this information to the COOL Web site.

With regard to State labeling for perishable agricultural commodities, peanuts, pecans, macadamia nuts, and ginseng, the Agency does believe that the majority of consumers are familiar with the standard State abbreviations used by the U.S. Postal Service and because the purpose of the COOL program is to provide consumers with origin information, it is reasonable to allow such abbreviations. Allowing this flexibility will address industry's concerns about the limited space on PLU stickers, twist ties, rubber bands and other package labels typically used for produce. Under this final rule, abbreviations may be used for state, regional, or locality label designations for perishable agricultural commodities, peanuts, pecans, macadamia nuts, and ginseng covered commodities whether domestically harvested or imported using official United States Postal Service abbreviations or other abbreviations approved by CBP. With regard to the use of abbreviations by suppliers or retailers in conveying origin information in records or documentary systems, there are no restrictions on the use of abbreviations as long as the information can be understood by the recipient. Accordingly, these recommendations are adopted in part.

State, Regional, and Locality Labeling

Summary of Comments:

Several commenters raised issues related to the provision for state, regional, and locality labeling of covered commodities. Three commenters requested that state, regional, and locality labeling be acceptable for covered meat commodities. One commenter sought confirmation that the provisions on State markings in the interim final rule apply also to States, regional and local labels of importing countries. This commenter understood that identification by region and locality is acceptable provided it is nationally distinct, but requested that this provision be clarified in the final rule.

Another commenter noted that USDA is silent on the use of locality labeling, and requested that the final rule recognize that locality labeling is likewise permitted by the statute. The commenter stated that many retailers source products locally and choose to provide this information to consumers because it is meaningful to these customers.

Agency Response:

With regard to the commenters' recommendation to allow State, regional, and locality labeling for meat covered commodities, the statute contains an express provision for this type of labeling for perishable agricultural commodities, peanuts, pecans, macadamia nuts, and ginseng. As such, the Agency does not have the authority to extend this provision to any other covered commodities. With regard to the commenter's request that the Agency clarify that this provision applies to imported perishable agricultural commodities, nuts, and ginseng and that locality labeling is also permitted, clarifying language has been added to section 65.400(f). Accordingly, these recommendations have been adopted in part.

Supplier Responsibilities

Summary of Comments:

Several commenters expressed concerns with the Agency's assertion in the interim final rule that “the supplier of a covered commodity that is responsible for initiating a country of origin claim * * * must possess or have legal access to records that are necessary to substantiate that claim.” The commenters maintained that the Agency's jurisdiction stops with the initiator of the origin claim of a covered commodity, which in the case of meat products is the slaughter facility. The commenters further stated that the COOL law authorizes only the Secretary

of Agriculture to conduct an audit for verification purposes, not the packer, and that furthermore, the Secretary may not require a person that prepares, stores, handles, or distributes a covered commodity to maintain a record of the country of origin of a covered commodity other than those maintained in the course of the normal conduct of the business of such person. The commenters argued that the 2008 Farm Bill language states that producer affidavits are sufficient in making a country of origin claim; therefore, packers or processors should not be given legal access to producers' records. The commenters recommended that the Agency eliminate language referencing “legal access” from the final regulation as they contend it is not authorized by the law.

Two commenters suggested that the Agency should require the original suppliers of covered products to substantiate the chain of custody and the accuracy of country of origin information. One commenter expressed the opinion that it is unreasonable that the liability ultimately is placed on the meat processor to provide country of origin information when they are relying on the word of livestock producers, who may or may not be providing accurate information.

Another commenter pointed out the importance of maintaining origin information by all segments of the industry to verify origin claims and to ensure the integrity of the labeling program. This commenter also stated that it is important that producers not be asked for unreasonable information that goes beyond what would be considered acceptable or the lack of which is a pretext for penalties against a producer or producers. The commenter recommended that the Agency provide a safe harbor of reasonable or acceptable information that can be asked of a producer to help avoid the possibility of unreasonable requests for information that would be considered unfair or an effort to single out a particular producer.

One commenter suggested removing the provision in the rule regarding supply chain traceability in the recordkeeping requirement. The commenter stated that the purpose of COOL is to inform consumers about the origin of the covered commodities and that the added recordkeeping requirement of traceability is not necessary and is an added regulatory burden.

One commenter noted that while producers are not directly affected by the COOL law, Section 282(3) of the statute expressly requires that “anyone engaged in the business of supplying a covered commodity provide country of origin information.” The commenter further stated that in the case of animals imported from Canada, this necessarily implicates Canadian producers who must present health papers to APHIS at the border. The commenter suggested further clarification is needed about the manner in which that origin will be tracked and conveyed to AMS should proof of origin be required further down the supply chain.

One commenter noted that Agency representatives have repeatedly advised the industry of the need for significantly more extensive records than are currently maintained in order to verify COOL. The commenter strongly urged the Agency to clarify in the final rule that the statutory prohibition of any new record requirement is recognized and accepted. This commenter also encouraged the Agency to provide a definitive declaration that suppliers may convey COOL information to retailers through any method of their choosing in order to comply with the regulation. The commenter stated that in current trade practice, some have been confused as to whether supplier labeling of COOL on the actual produce item is required, or whether multiple documents such as invoices or bills of lading must contain COOL information. The commenter suggested that USDA should make clear that COOL information may be provided to the retailer in any form. The commenter further suggested that relationships in the marketplace—not the statute—will determine in what form that communication will take place, including whether individual product eventually is labeled by a supplier.

One commenter stated that the most practical approach to meeting the COOL requirements for most covered commodities is for those producers to print the country of origin on all retail packaging for case and consumer ready, and on all case end labels for all products destined to be store processed or packaged by the retailer. The commenter suggested that producers will not need to continuously transmit country of origin information to the retailer on an order by order basis. Instead, package and case labeling in conjunction with the USDA establishment number (used to identify producer) and the lot or batch number (used to identify the specific lot of live animals from which products are derived) will already be on pre-packaged labels and case end codes. The commenter further stated that retailers already retain invoices to meet other reporting requirements, which identify the producers of the product, and can be used to satisfy the COOL recordkeeping obligation. The commenter also stated that there will be no required change in business processes for retailers but producers will be required to add accurate origin information to the retail packaging and/or case end labels.

One commenter identified a business process flow they hoped could be simplified with the intervention of the Agency. In import situations where a consolidated shipment could have multiple origins covered by one Bill of Lading (for example, a combined load of Navel Oranges from Australia and South Africa, and Clementines and Lemons from Chile) the commenter currently notes each line item on the documentation, which is an added step in the paperwork process. The commenter requested that the Agency provide suggestions in the rule about alternative means to comply with COOL on Bills of Lading, invoices, or packing slips.

One commenter suggested that the Agency consider a longer period, such as 10 business days, to provide records upon request to any duly authorized representatives of USDA for COOL compliance purposes. Two commenters referenced the statutory prohibition against the Agency requiring records that are not maintained in the normal conduct of business. These commenters noted that such records are deemed sufficient to satisfy the Bioterrorism Act's mandate to be able to identify immediate previous source and immediate subsequent recipient of foods. The commenters recommended that the Agency likewise accept multiple sourcing records for purposes of the mandatory country of origin labeling requirement for intermediary suppliers to identify their immediate previous source and immediate subsequent recipient.

Agency Response:

It is correct to say that the Agency's authority to audit ends at the slaughter facility as the slaughter facility is the first handler of the covered commodity and the Agency has deleted the requirement that suppliers have legal access to records from this final rule. However, as initiators of origin claims, packers must have records to substantiate those claims. With regard to records maintained in the course of the normal conduct of the business of such person and producer affidavits, the final rule states that producer affidavits shall be considered acceptable records that suppliers may utilize to initiate origin claims, provided it is made by someone having first-hand knowledge of the origin of the covered commodity and identifies the covered commodity

unique to the transaction. With regard to the commenter's assertion that producers not be asked for unreasonable information that goes beyond what would be considered acceptable, the Agency has provided examples of records kept in the normal course of business that may be used to substantiate origin claims. As previously stated, packers can utilize producer affidavits to obtain origin information. This final rule has been drafted to minimize the recordkeeping burden as much as possible while still providing the Agency with the information necessary to verify origin claims.

With regard to how suppliers may provide origin information to retailers, this final rule states that the information can be provided on the product itself, on the master shipping container, or in a document that accompanies the product through retail sale. It is up to the supplier and their retailer customers to decide which method is most appropriate. The Agency agrees that bills of lading, invoices, and packing slips may be used to provide origin information. Ultimately, retailers must ensure that covered commodities displayed for retail sale have country of origin designations.

With regard to the recommendation to allow a 10 day period to supply documentation to USDA officials, the Agency believes that the 5 business days provided in the August 1, 2008, interim final rule provides suppliers and retailers reasonable and appropriate time to provide records to USDA upon request. With regard to the commenters' reference to the statutory prohibition against the Agency requiring records that are not maintained in the normal conduct of business and that such records are deemed sufficient to satisfy the Bioterrorism Act's mandate to be able to identify immediate previous source and immediate subsequent recipient of foods, records maintained in the normal conduct of business can be used to satisfy the COOL recordkeeping requirements. However, the Agency recognizes that suppliers and retailers may need to make modifications to their existing records in order to provide the necessary information to be able to substantiate COOL claims as provided for in the statute.

Visual Inspection

Summary of Comments:

Several commenters expressed support for the Agency policy to accept visual inspection as a means to verify the origin of livestock during the period between July 15, 2008 and July 15, 2009. Specifically, the majority of commenters supported the Agency's decision to authorize sellers of cattle to conduct a visual inspection of their livestock for the presence or absence of foreign marks of origin, and that such visual inspection constitutes firsthand knowledge of the origin of their livestock for use as a basis for verifying origin and to support an affidavit of origin. They noted that visual inspection for verification of origin is particularly important to the trade during the period between July 15, 2008, and whenever the final regulation is published. The commenters stated that producers now have livestock without all of the origin documentation that may be necessary and that it would be very difficult, and in some cases impossible, to recreate the paper trail on many of these animals. Other commenters noted that the visual inspection of animals for import markings is a highly reliable, cost effective method of verification of origin and will significantly reduce compliance costs for livestock producers. The commenters recommend that visual inspection be made a permanent method on which to base origin claims.

Agency Response:

The Agency initially allowed for a transition period for the period July 16, 2008, through July 15, 2009, during which producers may issue affidavits based upon a visual inspection at or near the time of sale that identifies the origin of livestock for a specific transaction. Affidavits based on visual inspection may only be issued by the producer or owner prior to, and including, the sale of the livestock for slaughter. The Agency agrees with the commenters that affidavits based on visual inspection reduce the burden on producers. Accordingly, the Agency is making the ability to utilize visual inspection as the basis for forming an affidavit permanent.

Producer Affidavits

Summary of Comments:

Numerous commenters expressed support for the “Universal Country of Origin Affidavit/Declaration” that was developed by consensus across the livestock and chicken industry to serve as verification from producers to slaughter facilities for the country of origin of livestock. Several commenters requested that these agreed-upon documents be incorporated in the final rule. Several commenters also argued that producers should not be asked for unreasonable information. They urged AMS to consider a standardized producer affidavit that would accompany an animal from its first sale throughout the chain of custody.

Several commenters expressed support for the Agency's decision to allow composite affidavits where a producer can put together lots of cattle for sale and have one new affidavit for that lot based on the affidavits received for each animal, or lot of animals, that was combined in the new lot. The commenters also expressed support for the ability for producers to file an “evergreen” or “continuous” affidavit with the buyers of their livestock saying that, until otherwise noticed or revoked, all the cattle they will deliver to that buyer will be of a specific origin.

One commenter disagreed that a producer affidavit in conjunction with animal ID records can be deleted after 1 year when a majority of breeding stock lives beyond 5 years and 95% of cattle in the U.S. on July 15, 2008 were not close to slaughter age. The commenter was of the opinion that documentation and retention of affidavits needs to last longer if the Agency has to audit and trace back meats.

Agency Response:

The Agency believes the Universal Country of Origin Affidavit/Declaration that was developed by consensus across the livestock and chicken industry will assist the industry in implementing the rule in as least burdensome manner as possible. While the statute and this final rule allow for the use of producer affidavits, because the statute does not provide the Agency with authority to regulate producers, the Agency cannot mandate the use of such affidavits.

The Agency recognizes that animal production cycles vary greatly and depending upon which records are used for origin verification, retention of documents should be commensurate with the claim being affirmed through an affidavit or other means of declaration. However, the Agency only has the authority to require record retention for covered commodities. As the initiator of origin claims for meat, packers may specify the length of time records need to be maintained by entities outside the packer's system.

National Animal Identification System (NAIS)

Summary of Comments:

Commenters had mixed opinions about relying on NAIS as a safe-harbor for COOL compliance. Numerous commenters supported the provision in the interim final rule stating that voluntary participation in NAIS program will comply with COOL verification requirements. The commenters that support the use of NAIS stated that official USDA 840-tags can serve as a

universal passport for an animal during its lifetime indicating the animal is of U.S. origin, no matter how many times ownership of the animal changes during its lifetime. Commenters strongly encouraged the Agency to utilize Radio Frequency Identification (RFID) tags in NAIS to allow verification of country of origin at the speed of commerce and stated that official NAIS USDA 840-RFID tags for livestock represent the simplest way for producers to assist in the marketing of their animals to ensure compliance with COOL.

One commenter recommended that NAIS should be made mandatory. Two commenters suggested that the Agency could alleviate the record keeping burden by simply requiring all foreign cattle to bear a permanent mark that defines their origin. They suggested that this will not only aid commerce by reducing paperwork, but it will also enhance compliance.

Three commenters expressed support for reliance on other existing animal identification systems. One commenter noted that USDA/APHIS currently operates the National Scrapie Eradication Program (NSEP), which includes a regulated animal identification program. By regulation, feeder and slaughter sheep that are imported from Canada must carry official permanent identification. The commenter urged AMS to help processors and others recognize the relatively straight-forward nature of proving animal origin in the sheep industry. Two commenters pointed out that livestock producers who participate in “Age and Source Verified” programs administered by USDA should also be in compliance with COOL for both origin and verification claims.

Another commenter stated that identification of animal origin by ear tag is a cause for concern. This commenter noted that USDA has not provided guidance about what records will suffice for imported animals, stating only that for animals that are part of an official identification system, such as the Canadian cattle identification system, ear tags will suffice for proving origin at the slaughterhouse. The commenter was concerned with having requirements imposed because of a specific animal health concern, such as Canadian ear tags on cattle, ensnared in separate regulations for an entirely different and unrelated purpose. The commenter stated that this could restrict Canada's abilities to adapt its national cattle identification system to changing environments or technologies in the future.

A final commenter warned that the acceptance of an ear tattoo does not meet the needs of modern industry practices. Due to issues associated with the speed of commerce, recordkeeping, accuracy and overall effectiveness of the program, the commenter stated that the Agency should only allow a hot iron brand on all live foreign cattle.

Agency Response:

The Agency believes that voluntary use of the National Animal Identification System is an easy option packers may utilize to obtain origin information on livestock. The Agency has also made modifications to this provision for clarity. The Animal Identification Number (AIN) is defined in the Code of Federal Regulations as “A numbering system for the official identification of individual animals in the United States providing a nationally unique identification number for each animal. The AIN contains 15 digits, with the first 3 being the country code (840 for the United States), the alpha characters USA, or the numeric code assigned to the manufacturer of the identification device by the International Committee on Animal Recording. The AIN beginning with the 840 prefix may be used only on animals born in the United States.” As stated in the interim final rule published on September 18, 2008, (73 FR 54059), the AIN version starting with 840 is prohibited for use on animals born outside the United States. Therefore, under this final rule, packers that slaughter animals that are tagged with an 840 Animal Identification Number device without the presence of any additional accompanying marking (i.e., “CAN” or “M”) may use that information as a basis for a U.S. origin claim. Packers that slaughter animals that are part of another country's recognized official system (e.g. Canadian official system, Mexico official system) may also rely on the presence of an official ear tag or other approved device on which to base their origin claims. With regard to the commenter's concern regarding having requirements imposed because of a specific animal health concern, such as Canadian ear tags on cattle, in separate regulations for an entirely different and unrelated purpose, this regulation does not impact regulations pertaining to animal health or importation. In addition, use of official ear tags as the basis of origin claims is just one option that can be utilized to obtain origin information.

The other comments received relevant to making NAIS mandatory and allowing only hot iron brands on live foreign cattle are outside of the scope of this rulemaking. Accordingly, these recommendations have been adopted in part.

Retailer Responsibilities

Summary of Comments:

Numerous commenters addressed issues relating to the retailer recordkeeping provisions of COOL. One commenter stated that the Agency has offered simple, effective rules for recordkeeping by retailers. One commenter recommended that in § 65.500(c)(1), the Agency put the last sentence of the paragraph first (“For pre-labeled products, the label itself is sufficient evidence on which the retailer may rely to establish the product's origin.”). The commenter also requested that the Agency state specifically that retailers need not maintain any new or additional records documenting origin for those products that are pre-labeled on the product itself or on the box/container when the box/container is visible to consumers, such as when it is used as part of a retail display.

One commenter suggested sample and common technological standards such as the portable document format (PDF) or use of a common and interoperable database file system such as Microsoft Excel to enable both industry and the Agency to adopt a common computing platform. Another commenter suggested that the Agency should refer to the two different types of documents required to be maintained by retailers as Verification Records and Supplier records. The commenter suggested that the Agency should clarify in the final regulation that the information to satisfy both requirements may be on the same or different documents, provided all of the requirements are met. Several commenters encouraged the Agency to permit retailers to rely on the records that are currently maintained for Bioterrorism Act purposes.

One commenter strongly supported the specific recognition that retailers may rely upon pre-labeled products as “sufficient evidence” of the country of origin. The commenter stated that this is an important safe harbor for the produce and retail industries as an increasing share of fresh produce now arrives at retail stores pre-labeled with the country of origin. The commenter expressed concern that the IFR and the Agency's Q&A documents are not written in a way that conveys this information accurately, which is creating significant confusion throughout the produce distribution chain. The commenter recommended that the Agency clearly define pre-labeled products to include all produce items that bear a COOL declaration, regardless of any other information that may or may not be affixed directly to the produce item. In turn, the Agency must then specify that additional

recordkeeping at retail is not required for pre-labeled products as the vendor who supplied the pre-labeled produce has the responsibility to verify the claim. One commenter recommended that the Agency only require retailers to maintain the country of origin for covered products in the retail store for as long as the product is on hand.

Agency Response:

With regard to pre-labeled covered commodities, the Agency has added a definition of pre-labeled in this final rule. In addition, the Agency has clarified that for pre-labeled products, the label itself is sufficient information on which the retailer may rely to establish the product's origin and no additional records documenting origin information are necessary. However, the Agency does not agree with the commenter's recommendation to change the order of the sentences with respect to the provision on pre-labeled products.

With regard to the recommendation that the Agency adopt a common computing platform, the Agency does not have the authority to mandate a specific system. In addition, the Agency believes that retailers and suppliers should have the flexibility to choose whatever system works best in their particular operation. Accordingly, this recommendation is not adopted.

With regard to the suggestion that the Agency should refer to the two different types of documents required to be maintained by retailers as Verification Records and Supplier records and that the Agency should clarify in the final regulation that the information to satisfy both requirements may be on the same or different documents provided all of the requirements are met, the Agency has added language to the preamble to indicate that the supplier and origin information needed to satisfy the COOL recordkeeping requirements can be in the same document or different documents. However, the Agency does not believe that any changes to how the required documents are referenced are necessary. Accordingly, these recommendations have been adopted in part.

The Agency recognizes that several commenters encouraged the Agency to permit retailers to rely on the records that are currently maintained for Bioterrorism Act purposes. To the extent that these records contain the necessary information to meet the COOL recordkeeping requirements, the Agency agrees that records currently maintained to meet the requirements under the Bioterrorism Act can also be used to comply with the COOL recordkeeping requirements.

With regard to the recommendation that the Agency only require retailers to maintain the country of origin for covered products in the retail store for as long as the product is on hand, under this final rule, records and other documentary evidence relied upon at the point of sale to establish a covered commodity's country(ies) of origin must be either maintained at the retail facility for as long as the product is on hand or provided to any duly authorized representative of USDA in accordance with § 65.500(a)(2). For pre-labeled products, the label itself is sufficient information on which the retailer may rely to establish the product's origin and no additional records documenting origin information are necessary. Accordingly, this recommendation has been adopted in part.

Enforcement

Liability Shield

Summary of Comments:

Several commenters discussed the concept of a “liability shield” found in the interim final rule for fish and shellfish, but deleted from the interim final rule for the remaining covered commodities. The commenters noted that the Agency had previously contemplated a “shield” from liability for entities subject to the law on the theory that they should be permitted to reasonably rely on information provided by their suppliers. The commenters recommended that the Agency add a clarification to the final rule that will assure retailers that they will not be penalized when a retailers' non-compliance results from the conduct of others. The commenters further stated that the interim final rule holds suppliers responsible for providing retailers with country-of-origin information and that because the statutory liability standard only penalizes retailers for “willful” violations, it follows that a retailer should not be held responsible for its supplier's failure to provide COOL information or its supplier's provision of inaccurate information. The commenters recognized that the Agency deleted the safe harbor language from the interim final rule for remaining covered commodities because that language created a negligence standard of liability instead of the willfulness standard specified in the 2008 Farm Bill. These commenters agreed that a willfulness standard is required by statute. However, they also stated that an explicit safe harbor should be restored to the rule, in addition to the willfulness standard the statute requires. Thus, paralleling the language that had been used in the safe harbor provision for the fish and shellfish interim rule, a safe harbor provision one commenter suggested new regulatory language, “No retailer shall be held liable for a violation of the Act by reason of the conduct of another unless the retailer acted willfully in the same regard”. Another commenter strongly urged the Agency to reinstate the liability shield in the final rule, but given the change in the liability standard as a result of the 2008 Farm Bill, recommended alternative language.

Agency Response:

As noted by the commenters, the Agency deleted the liability shield language from the interim final rule for the remaining covered commodities because that language created a negligence standard of liability instead of the willfulness standard specified in the 2008 Farm Bill. Because of the willfulness standard contained in the 2008 Farm Bill, the Agency does not agree that the liability shield is necessary. However, to the extent that the liability shield language provides the industry with assurances that they will not be held liable for the conduct of others, the Agency believes that the liability shield is useful. Therefore, the Agency has included the liability shield provision in this final rule and has modified the language to reflect the willfulness standard contained in the 2008 Farm Bill. Accordingly, this recommendation has been adopted.

Assurances Against Meat Recalls for COOL Violations

Summary of Comments:

Several commenters expressed concerns about how FSIS or other federal agency may use a country of origin labeling failure as a reason to recall pork and other meat products. These commenters noted that the law does not amend any food safety law and that it is not a food safety program. The commenters further stated since it is a marketing program, failure to properly label the origin of products in the retail meat case should not force a product recall. Many producers reported to be confused and fearful that this law will be used to assert product liability claims. These commenters requested clarification regarding the scope of the COOL law to eliminate this confusion. They asked that USDA clarify that any violation of COOL will not trigger a recall of meat products.

Agency Response:

As noted by the commenter, the intent of the law and this rule is to provide consumers with additional information on which to base their purchasing decisions. COOL is a retail labeling program and as such does not provide a basis for addressing food safety. Food products, both imported

and domestic, must meet the food safety standards of the FDA and FSIS and are subject to any recall requirements imposed by those agencies. The Agency does note that FSIS did publish an interim final rule (73 FR 50701) on labeling to address concerns with compliance of their voluntary labeling approval authority and requirements of the COOL program. In addition, FSIS provided guidance that inspection program personnel are not to take any action to enforce the FSIS interim final rule until further notice and that during the next six months, FSIS will defer to the AMS program of outreach and education to ensure that there is compliance.

Timeframe for Implementation

Summary of Comments:

Numerous commenters provided suggestions about the Agency's informed compliance period during which the Department will provide education and outreach to aid industry in understanding the requirements of the COOL program.

Three commenters expressed appreciation for the 6-month phase-in period articulated in the rule and stated that the Agency must be prepared to provide producers, suppliers, retailers, and consumers with assistance to understand the regulations through guidance documents, seminars, and other resources that are readily available to the public during this period of informed compliance. One commenter pointed out that it will be critical for the AMS to work with officials with FSIS to ensure that there is common understanding between the two USDA agencies regarding questions that meat processing plant operators and federal meat inspectors may have. One commenter urged the Agency to withhold publishing a final rule until after the conclusion of the 6-month period in order to maximize the lessons learned under the interim final rule. Another commenter encouraged the Agency to provide as much time as possible to acclimate both retailers and those involved within the supply chain to the new requirements of the regulations prior to any enforcement.

Several commenters expressed support that the requirements of the interim final rule do not apply to covered commodities produced or packaged before September 30, 2008. However, these commenters noted that many firms in the industry procure packaging materials for a year's worth (or more) of production. The commenters recommended that given the short amount of time between the release of the Interim Final Rule and the effective date, companies subject to the rule be given a year from the effective date to use up existing packaging inventories, provided those packaging inventories were acquired prior to the effective date of the rule. One of these commenters expressed concern that a 6-month grace period will prove insufficient to implement a verifiable records system. This commenter stated that an 18-month implementation period will allow current nut products in the marketplace to rotate out and allow those in the field sufficient time to comply with all aspects of COOL. Another commenter was concerned about ensuring a reasonable phase-in period for the rule so that suppliers could use existing inventory to the greatest extent possible. This commenter supported a one-year phase-in as opposed to 6 months because the shipping season for table grapes and tree fruit generally runs from May through October. Therefore, a 6-month phase in from October through March would be of little benefit for this food sector. Another commenter noted that retailers, processors, and producers have expressed their willingness to make a good faith effort to comply with COOL; however, it is not clear that the 6-month industry education and phase-in period is sufficient. They strongly encouraged USDA to extend this period to 12 months in order that issues like recordkeeping and auditing the supply chain can be fully understood.

Agency Response:

In response to the commenters' request that the Agency not publish the final rule until after the six month period of education and outreach, the Agency is moving forward in an expeditious manner of publishing the final rule in order to provide retailers and suppliers as well as all other interested parties with the requirements for a permanent program. The Agency will allow sufficient time for the regulated industries to adapt to the changes in this final rule and will continue to provide for a period of education and outreach. The Agency believes that the six month period provided for in the interim final rule is adequate time for retailers and suppliers to adapt to the COOL program requirements. In addition, the Agency will continue to ensure that retailers and suppliers are educated on the Agency's compliance and enforcement procedures so that the regulated industries have clear expectations as to how the Agency will enforce this rule. With regard to using up existing packaging inventories, this final rule does not require that covered commodities are individually labeled with COOL information. Retailers can use placards and other signage to convey origin information.

Miscellaneous

WTO/NAFTA Trade Agreements

Summary of Comments:

Several commenters expressed concern that COOL may violate U.S. trade commitments under the World Trade Organization and the North American Free Trade Agreement, and that provisions of the COOL regulation ignore the reality of an integrated North American meat and livestock industry. Two foreign governments expressed that the amendments passed with the 2008 Farm Bill are still cause for concern, and that as they have consistently expressed in the past, COOL requirements should be consistent with the United States' international trade obligations. One commenter pointed out that the Codex General Standard for the Labeling of Prepackaged Food was considered adequate in the U.S. system for a number of years and will continue to remain the standard for retailers outside of the U.S. The commenter further stated that it remains the most practical, and also the most adaptable, to evolving commercial practice and growing international trade; and yet it is not the standard adopted in the COOL regulations.

One commenter stated that the COOL statute and regulation will likely result in discrimination against imported product, contrary to U.S. obligations under the WTO Agreement on Technical Barriers to Trade. The commenter indicated that despite changes in the law and the IFR that have made it less onerous for regulated firms to comply with the requirements of the regulation, COOL will still discriminate against imported cattle and beef. This commenter warned that the industry practice of importing cattle for feeding and/or slaughter will be discouraged by the increased complexity associated with the identification, segregation, and labeling requirements mandated for the resulting products to be sold at retail. This commenter suggested that the simplest solution would be to allow processors and retailers to label ground product with “May contain U.S. and imported meat” with the option to list the specific countries if the producer or its customers so desired. Another commenter acknowledged that the IFR makes some concessions to earlier complaints by trading partners with concerns regarding the compatibility of COOL with the WTO obligations of the United States.

Agency Response:

With respect to the commenters' concern regarding

international trade obligations, the Agency has considered these obligations throughout the rulemaking process and concludes that this regulation is consistent with U.S. international trade obligations. Further, as described more fully in the Summary of Changes section of this rule, the Agency has made a number of modifications in this final rule that provide additional labeling flexibilities. In addition, the Agency has worked closely with USDA's Foreign Agricultural Service to educate U.S. trading partners on the requirements of COOL and to assist them in complying with the regulation.

In regards to a commenter's statement that when a food undergoes processing in a second country that changes its nature, the country in which the processing is performed shall be considered to be the country of origin for the purposes of labeling, existing CBP rules and regulations with respect to determining origin of imported products apply to the extent that it is permissible under the statute. However, it is not permitted under the statute to consider imported products that are substantially transformed in the U.S. to be of U.S. origin as they do not meet the definition of U.S. origin provided in the Act.

With regard to the comment to allow a label to state “May contain U.S. and imported meats,” the Agency does not believe this type of labeling meets the intent of the statute. Accordingly, this recommendation is not adopted.

COOL as a Food Safety Program

Summary of Comments:

Commenters expressed differing opinions regarding whether or not COOL serves as a food safety program. Several commenters expressed the opinion that COOL is a retail labeling program that does not provide a basis for addressing food safety. The commenters argued that the U.S. has a safe food safety system; that all meat sold at retail, whether grown domestically or imported, must be inspected and declared safe for human consumption; and that country of origin labeling is solely a marketing tool. One commenter found it particularly problematic that mandatory COOL has been portrayed by some advocates as contributing to efforts to make America's food safe, yet there is no provision in the COOL statute or the interim final rule that prescribes food safety or inspection standards. Another noted that the food production, supply and retailing industry needs to help consumers understand that geography cannot become shorthand for food safety. Several commenters noted that Congressional intent is clear that COOL is not intended to be a traceability law, but merely to provide country of origin information to consumers. These commenters urged the Agency to implement COOL in a way that is true to its goal to inform consumers about where produce comes from, not create a new regulatory infrastructure. Other commenters noted their support for the provision of accurate information to consumers as required by the law and agreed with the Agency's statement in the preamble that this law is not a food safety law.

Two commenters wrote that COOL can serve as a risk management measure. One commenter suggested that developing countries, which may not have as stringent food safety regulations and/or have not implemented/enforced those regulations as rigorously as the U.S., may export hazardous food products. Another commenter referred to a GAO study that reported three elements of food-safety systems that were critical to respond to outbreaks of food borne illness: Traceback procedures that allow industry and government officials to quickly track food products to origin to minimize harm to consumers and the impact on business; cooperative arrangements between veterinarians and public health officials to document the names of suppliers and customers as well as the dates of delivery; and authority to recall a product from the market. The commenter noted that such food-safety systems depend on a verifiable chain of custody for food products that the COOL program can help institute. The commenter further stated that the COOL law provides for traceback provisions and for cooperative partnerships with states.

Agency Response:

As previously stated, the COOL program is neither a food safety or traceability program, but rather a consumer information program. Food products, both imported and domestic, must meet the food safety standards of the FDA and FSIS. Food safety and traceability are not the stated intent of the rule and the COOL program does not replace any other established regulatory programs that related to food safety or traceability.

USDA COOL Labeling Surveys

Summary of Comments:

Two commenters requested that USDA conduct nationwide retail surveys to gather information regarding country of origin labeling. One commenter requested that the Agency conduct a “nationwide retail meat labeling survey” within the year to discern the amount of product, the kind of product and the locations where exclusively U.S. labeled meat is being sold. The second commenter suggested that the Agency insert additional data entry points in the retail survey instrument used for existing retail reviews. The commenter encouraged the Agency to gather information relative to the availability and price of meat items by origin at the retail sto

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