SEAFOOD INDUSTRY BRACES FOR COOL RULE 2004-03-29 (2)

LYNNE MILLER

BOSTON -- The seafood supply chain feels like it's swimming in circles awaiting final county-of-origin labeling rules from the U.S. Department of Agriculture, and industry experts warn confusion looms before the Sept. 30 implementation date like a hungry shark.

"A lot of folks thought seafood got the two-year delay," said Justin LeBlanc, vice president of government relations for the National Fisheries Institute, Arlington, Va., noting the seafood sector did not benefit from Congressional action early this year that granted the meat, produce and peanut industries a two-year reprieve in the implementation of mandatory labels. "The frustrating part is you don't have the final rule."

The USDA has issued proposed regulations, but they have yet to be finalized, he said. Judging from comments heard on the floor of the International Boston Seafood Show here, many industry professionals do not fully understand the ramifications of the law.

"There's been a lot of misunderstanding in the seafood industry," agreed LeBlanc. He, along with co-panelists Barry Carpenter, deputy administrator, livestock and seed program for the USDA, and Deborah White, associate general counsel for regulatory affairs, the Food Marketing Institute, Washington, updated members of the seafood industry on the status of COOL.

For their part, retailers believe the labeling rule offers no benefit to consumers and carries significant liability, White said. One of the many grievances the food industry has with COOL is the cost of implementation -- for the seafood segment alone, costs are estimated at close to $1.8 billion the first year, or about $50,000 per store, White said. The penalties for violating labeling rules are also "unprecedented," she said.

The breadth of the law appears to be one of the misunderstood areas. Many in the industry believe the law only applies to imports, LeBlanc said. The rule actually covers domestic as well as imported items.

Not all seafood items sold in supermarkets are subject to the origin labeling. Products deemed to be "combined or restructured" will be excluded. For instance, items such as fish sticks made from minced product, seafood combinations such as surimi, sushi, crab salad, smoked farm-raised salmon and clam chowder are among the items exempt from labeling requirements.

If there's disagreement between retailers and processors over whether a product is exempt from labeling, retailers ultimately may be the ones to make the final call, LeBlanc said.

Companies found not in compliance with the legislation face fines of $10,000 per day per violation. Whereas retailers face fines if they commit willful violations, processors can be penalized even when there's no sign of intent.

"We're all looking at substantial penalties if we're not doing the right thing," White said.

The COOL rule is groundbreaking, since it differs so much from other labeling laws, she said. COOL places the burden of country-of-origin notification with retailers. They in turn will rely on suppliers for country-of-origin information, including product stickers and documentation, White said.

Once the law takes effect, companies will be required to have verified segregation plans for a variety of products, she said. Recordkeeping rules will require companies up and down the supply chain to keep documentation showing where products came from. Domestic producers may feel the recordkeeping pinch the most, since products of U.S. origin are ones most likely to face scrutiny from the federal government's enforcement arm, LeBlanc said.

"One of the ironies of the law is if your product is labeled 'Product of the U.S.,' you better be able to prove it," he said.

The industry will be expected to set up new systems to comply with the law, even though businesses do not have a final regulation to follow.

Technically, the USDA has until Sept. 30 to promulgate rules for all covered commodities. But to help the industry prepare, "we're trying to get the regulations out before Sept. 30," Carpenter told the crowd.