COOL enforcement lax

Sep 16, 2011

A recent audit by USDA’s Office of the Inspector General (OIG) revealed that the Agricultural Marketing Service (AMS) has been lax on enforcing the country of origin labeling (COOL) law on retail products.

Various agricultural and consumer advocacy groups have argued for legislation requiring food products to be labeled, and the 2002 Farm Bill did just that, requiring retailers to notify their customer of the country of origin of certain commodities. The COOL final rule went into effect in March 2009.

The OIG report shares what they believe are significant strides AMS has made regarding COOL, including agreements with all 50 states to conduct reviews of retailers licensed under the Perishable Agricultural Commodities Act (PACA). AMS also conducts traceback of commodities to ensure suppliers are meeting COOL requirements and keeping records. In addition, they implemented a complaint system for customers. AMS forwards their reviews to the appropriate states to conduct their own COOL reviews, and reimburses the states $600 per review.

However, according to the OIG report, AMS still needs to make improvements with its controls and processes to ensure retailers and suppliers fully comply with regulations. More specifically, AMS needs to strengthen its process for selecting retailers for review, strengthen the review process, and improve timeliness with evaluations.

Items covered by COOL law are: •Muscle cuts of beef, veal, lamb, goat, chicken and pork •Ground meats including beef, lamb, chicken, goat, and pork. •Wild and farm-raised fish and shellfish. •Fresh and frozen fruits and vegetables of all kinds, including cherries in brine. •Peanuts, Pecans, Macadamia Nuts •Ginseng OIG’s recommendations for AMS 1. Conduct an analysis of retailers with under $2 million in annual sales to determine if PACA-licensed retailers are in this category of the contractor’s data base.

If this analysis does identify PACA-licensed retailers having under $2 million in annual sales, develop parameters to include a percentage of stores with under $2 million in annual sales when requesting retailers for review.

2. Develop and implement a system for identifying stores that are out-of-business or not PACA-licensed and remove these stores from the retailer review lists sent to the States.

3. Initiate a process to begin identifying that retailers selected from past reviews were PACA-licensed and required to adhere to COOL. For non-PACA-licensed retailers, contact these stores and inform them they do not need to adhere to COOL.

4. Begin monitoring COOL compliance at smaller branches of PACA-licensed corporations that are required to adhere to COOL.

5. Develop and implement a retailer compliance rating system that establishes thresholds or levels of materiality regarding noncompliances to identify retailers who need additional assistance complying with COOL.

6. Using the rating system, develop and issue non-compliance letters appropriate for the extent of retailer noncompliance and amend the retailer review follow up procedures to determine reasons for retailer noncompliance.

7. Develop and implement procedures to test additional commodities if errors are identified during record reviews and evaluate retailers’ recordkeeping systems.

8. Implement procedures to ensure that AMS’ evaluations of retailer reviews and distribution of noncompliance letters are completed in a timely manner.

9. Develop and implement written procedures to monitor and provide timely follow-up with retailers who may be willfully violating COOL regulations or do not make good faith effort to comply with COOL regulations. These procedures should include comparing follow-up reviews to prior reviews completed at applicable retailers.

10. Develop procedures to investigate potentially willful violations and issue civil penalties. This should include specific criteria for the types of violations that warrant the issuance of civil penalties and the manner in which these determinations may be appealed.

11. Implement a process to periodically evaluate State performance of retailer reviews. For State agencies determined to have deficiencies in evaluating COOL compliance, perform follow-up as necessary to improve their ability to conduct retailer reviews.

12. Distribute specific guidance regarding labeling requirements, abbreviations, and acceptable forms of origin to all retail establishments subject to COOL.

13. Implement a system to analyze the results of retailer reviews and retailer corrective actions and identify noncompliance trends that exist on a nationwide basis and, as applicable, corporate-wide basis.

14. Implement a process to develop and disseminate guidance to correct the noncompliances identified in the trend analysis. —Traci Eatherton, WLJ Editor