Proposition 37: A ‘Modest Proposal’
Proposition 37, a ballot initiative that California voters rejected on November 6, 2012, would have made Jonathan Swift blush. Prop. 37 would have required warning labels on foods offered for sale to consumers in California that are made from ‚Äúgenetically engineered‚ÄĚ plants or animals, and would render such foods “misbranded” if they were labeled or advertised as “natural.”
Prop. 37 included an enforcement provision that would have allowed “any person” to sue in Superior Court to enjoin violations of the law, notably without proof of damages or loss. Instead, economic damages would have been presumed to be “at least the amount of the actual or offered retail price of each package or product alleged to be in violation.” It also contained a “bounty hunter” provision, authorizing the Superior Court to award any person attorneys fees and costs for filing such a suit. This bounty hunter provision was modeled on Prop. 65¬†??¬†the 1986 initiative that established California‚Äôs Safe Drinking Water & Toxic Enforcement Act, under which hundreds of plaintiffs‚Äô attorneys have filed thousands of lawsuits.¬† These are known in the trade as Lawyers‚Äô Full Employment Acts.¬† But Prop. 37 would have been worse than Prop.65.
Prop. 37 did not expressly identify who may be held liable. Rather, it appeared to place a duty (as well as the risk of private enforcement) on all parties in the food-supply chain. It states that it would be unlawful for ‚Äúany person to manufacture, sell, deliver, hold or offer for sale‚ÄĚ any food that is misbranded.¬† Thus, the following could all be held liable under that provision:
- Manufacturers (‚Äúmanufacture‚ÄĚ)
- Distributors (‚Äúsell,‚ÄĚ ‚Äúdeliver‚ÄĚ)
- Storage Facilities (‚Äúhold‚ÄĚ)
- Retailers (‚Äúsell‚ÄĚ)
- Shippers/Transporters (‚Äúdeliver‚ÄĚ)
- Marketers (‚Äúoffer for sale‚ÄĚ)
Many entities in the food-supply chain are not equipped to determine whether a food is the product of ‚Äúgenetic engineering.‚ÄĚ Nonetheless, they could have been legally responsible under Prop. 37 and potentially subject to liability, even without the knowledge or intent that the food products they distribute or sell contain genetically engineered ingredients. How in the world is Piggly Wiggly supposed to know if a product contains genetically modified material? Facing the prospect of ruinous liability for sales of non-labeled GMOs, grocers likely would have required distributors to indemnify them against such liability, which would have the effect of banning GMO foods. Advocates may think it is a result they like ‚Äď but according to the California Office of the Attorney General, 70 percent of foods sold in California contain genetically modified material (including 88 percent of the corn and 94 percent of the soybeans produced). Thus, all that would be accomplished is that most foods would be labeled protectively, if not meaninglessly, with the words ‚ÄúMay contain genetically modified materials.‚ÄĚ
Regardless of the views held by consumers, growers, and food companies on the subject of genetic labeling, there was general agreement that the initiative was hastily and poorly drafted and that the subject of food labeling should be addressed nationally, not through a hodgepodge of state and local laws.
Federal law does not currently require the labeling of genetically engineered foods because the U.S. Food and Drug Administration (‚ÄúFDA‚ÄĚ) has not concluded that bioengineered foods differ from other foods in any meaningful way or present any different or greater safety concern than foods developed by traditional plant breeding.
In 2001, the FDA issued draft guidance on the subject, noting that, historically, the FDA has only required special labeling for information that is ‚Äúmaterial,‚ÄĚ where its absence may: (1) pose special health or environmental risks; (2) mislead the consumer in light of other statements made on the label; or (3) in cases where a consumer may assume that a food has nutritional characteristics of the food it resembles when in fact it does not.
Clearly, the FDA has not concluded that the fact that a food or an ingredient was produced using bioengineering is a material fact that must be disclosed, yet Prop. 37 sought ‚Äúto create and enforce the fundamental right of the people of California to be fully informed about whether the food they purchase and eat is genetically engineered.‚ÄĚ Precisely because the federal government — the principal guardian of food safety — has said that bioengineering is not a material fact, Prop.¬†37, had it passed, would have been open to challenge under principles of commercial free speech.
Equally troubling, had Prop. 37 passed, California courts may have exploded with inappropriate lawsuits targeting your everyday retailer or unaware distributor.¬† Those are not the right parties to be penalized for an incorrect or missing labeling. ¬†This was not the right measure for California, and the voters have paved the way for better legislation in the future.
Peter L. Gray is a partner with McKenna Long & Aldridge LLP, where he chairs the Environment, Energy and Product Regulation Department.
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