If you shop at supermarket meat departments, you’ve probably seen packages of meat labeled as “Product of USA, Canada, Mexico,” or with no country-of origin-label at all, and wondered whatever happened to COOL.
Well, the country of origin labeling law (COOL) remains in place, but a recent audit by the USDA’s Office of the Inspector General reveals that the Agricultural Marketing Service has been slow to enforce the rule at the retail level.
In their report, the OIG notes the 2002 and 2008 Farm Bills amended the Agricultural Marketing Act of 1946 to require retailers to notify their customers of the country of origin of certain commodities at the final point of sale. Covered commodities include muscle cuts of beef, veal, lamb, chicken, goat, and pork; ground meats including beef, lamb, chicken, goat, and pork; wild and farm-raised fish and shellfish. The COOL final rule went into effect in March 2009.
In the audit report, the OIG notes that AMS made significant strides implementing the final rule, entering into cooperative agreements with all 50 States to conduct reviews of retailers licensed under the Perishable Agricultural Commodities Act (PACA) to ensure they adhere to COOL regulations. AMS also conducts traceback of commodities to ensure suppliers meet COOL recordkeeping requirements, and verify the accuracy of the method of production and country of origin labeling information. AMS also implemented a complaint system that allows customers to file complaints regarding how products are labeled. AMS forwards the sample of retailers to the appropriate States to conduct COOL reviews and reimburses the States $600 per review.
But in the area of enforcement, the OIG found the program lacking in several areas, noting the following:
- AMS still needs to make improvements to its controls and processes to ensure retailers and suppliers fully comply with the regulations. Specifically, AMS needs to strengthen its process for selecting retailers for review, strengthen the review process itself, and improve the timeliness with which AMS evaluates retailer documentation and issues noncompliance letters.
- AMS needs to vigorously enforce COOL requirements, provide better oversight of the State agencies tasked with conducting the retailer reviews, and improve the way it communicates with and provides program guidance to retailers.
- AMS’ methodology does not ensure that all PACA-licensed retailers have a chance of being selected for onsite reviews, and AMS does not currently have a procedure for removing from the sample any retailers who are found not to be PACA-licensed or are no longer in business.
- Officials of both AMS and the Office of the General Counsel stated that, under the Act, all retail branches of a PACA-licensed corporation, regardless of whether the branches individually meet PACA licensing requirements, are required to adhere to COOL. However, AMS did not include these retailers in their onsite monitoring efforts because they focused their resources on large retailers.
- AMS did not require adequate testing to verify the accuracy of the labels themselves. This occurred because AMS designed the noncompliance procedures to be uniform for all retailers regardless of the extent of noncompliance, and because AMS placed a greater emphasis on ensuring that commodities were labeled rather than ensuring the accuracy of the labels. As a result, AMS had reduced assurance that onsite reviews were of sufficient scope to identify the true extent of retailers’ compliance, or that any underlying causes for noncompliances were being identified and corrected.
- Once the States complete retailer reviews, AMS has an internal policy to evaluate the reviews and issue noncompliance letters within 30 days, but the audit revealed a backlog of reviews that had not been acted upon. The OIG attributed this problem to a lack of sufficient personnel dedicated to evaluating reviews. As of February 2010, only five permanent AMS employees had been tasked with evaluating the reviews. Following discussions with AMS officials, they temporarily re-assigned and trained an additional 14 employees to help reduce this backlog.
- Backlogs have continued, but AMS believes a new database implemented in August 2011 will eliminate backlogs through electronic data input and automatic data updating.
- AMS has not issued any civil penalties, which are allowed up to $1,000 per violation, even though these may have been warranted in some cases. This occurred because COOL was a new program and AMS wanted retailers to become familiar with its requirements.
- Although AMS conducted followup reviews, the agency did not use these reviews to identify and investigate cases where continued noncompliances of the same type may have indicated willful violations on the part of the retailers.
- The auditors noted large discrepancies between reviewers in different states, and notes that AMS needs to ensure that State reviewers consistently evaluate compliance with COOL requirements.
- In spite of AMS education and outreach programs, all retailers are not aware of the COOL requirements.
The OIG recommends that AMS “develop and implement a process for selecting only PACA-licensed retailers for retailer reviews. We also recommend that AMS officials develop and implement a retailer compliance rating system and appropriate followup procedures for retailers identified as noncompliant and promptly issue noncompliance letters. In addition, we recommend that AMS enhance its enforcement procedures, periodically evaluate State performance of retailer reviews, and improve communications with retailers.”
AMS agreed with the report’s 14 recommendations, and based on that response, the OIG has listed management decisions for each of the report’s 14 recommendations.
Read the full OIG report online.