With the passing of the recent Appropriations Act, USDA was prevented from using any funds to finalize the more controversial regulations originally proposed by the agency. These included regulations that would have: (1) eliminated the requirement to prove competitive injury in P&S cases, (2) required packers to substantiate price deviations, (3) provided examples of unfair practices, (4) established criteria for determining undue preference, and (5) required sample contracts to be provided to GIPSA.

Instead, the final rule contains only four regulations required by the 2008 Farm Bill, which primarily affect the poultry and swine industries: (1) a regulation identifying criteria for determining whether a live poultry dealer has provided reasonable notice for suspending delivery of birds to a grower, (2) a regulation identifying criteria for when an additional capital investment requirement on a grower could constitute an unfair practice, (3) a regulation identifying criteria for determining if a grower has been provided a reasonable period of time to remedy a breach of contract, and (4) a regulation identifying criteria for determining whether an arbitration provision in a contract provides a meaningful opportunity for a grower or producer to participate fully in the arbitration process.

Although regulated entities should be aware of these criteria and should adjust their practices accordingly before the Feb. 7, 2012, effective date of the final rule, the regulations are not expected to have the economic impact anywhere close to that originally contemplated.

During the same week that the above rule was published, USDA’s Food Safety and Inspection Service (FSIS) also published a proposed rule that would significantly expand the circumstances in which labels could be generically approved by inspected establishments.

Under the proposed rule, all labels could be generically approved and used without submitting them to the FSIS Labeling and Program Delivery Division (LPDD) for approval, except for three categories: (1) labels for products produced under a religious exemptions, (2) labels for products for foreign commerce whose labels deviate from FSIS regulations, and (3) labels for products bearing special statements and/or claims that are not defined in FSIS’ regulations.

Although this proposed rule did not receive the same attention as the GIPSA rule, the rule could have a greater impact on the meat and poultry industry if finalized … and not all of the impact could be favorable. When FSIS published the proposed rule, the agency indicated that the rule would reduce label approval delays and allow product to reach the market faster.

While this might be true and is good thing, the agency failed to also mention that it does not currently intend to allow companies to voluntarily submit labels to the LPDD for review and approval if they qualify for generic approval. Instead, the agency intends for inspection program personnel at inspected establishments to routinely select samples of generically approved labels to determine compliance with agency regulations.

Without the ability to submit most labels to the LPDD to ensure they meet regulatory requirements, it will be even more critical that establishments ensure their products are labeled properly before going to market. The failure to do so could lead to hundreds and thousands of pounds of product being retained by an inspector — often at hours when LPDD personnel are not available to resolve the issue — because the inspector, either correctly or incorrectly, determines that a label does not meet regulatory requirements.

Comments on the FSIS proposed rule are due by Feb. 3, 2012.