Tag: Made in the USA

USDA Focused on Accurate “Made in the USA” Beef Labeling

  • In response to industry concerns for mislabeled beef products, U.S. Agriculture Secretary Tom Vilack recently said that the “Product of the USA” label on meat products should undergo a full-scale review. Vilack maintains that he is “committed to ensuring that the ‘Product of USA’ label reflects what a plain understanding of those terms means to U.S. consumers.” In March, we reported that the Tenth Circuit dismissed lawsuits based on meat producer’s use of allegedly deceptive and misleading “Product of the USA”  labels on their beef products that did not originate from cattle born and raised in the United States.
  • The issue of country-of-origin beef labeling (“COOL”) continues to be a source of debate. Earlier this week, the FTC finalized a rule that is intended to tighten the use of the Made in the USA standard. The FTC said that this update would benefit small businesses who lack the resources to defend their products from foreign imitators. However, the FTC rule does not require USDA action. In response, the beef industry is demanding Congress to act swiftly.
  • R-CALF, a group of USA-based cattle ranchers, has been pushing hard for reforms on COOL. On September 22, R-CALF released a poll that shows staggering support for mandatory COOL legislation by the American public. R-CALF reports that 86 percent of American voters support the American Beef Labeling Act that reinstates mandatory country of origin labeling for beef, and 90 percent of voters are concerned that foreign importers of beef can legally put a “Product of USA” sticker on a package containing beef that was born, raised, and harvested outside the United States.
  • Currently, Congress is working through prospective beef labeling legislation that would require USDA oversight of COOL. The American Beef Labeling Act (S.2716) is a bipartisan bill that was introduced in the Senate in 2021; however, the bill has languished without action in the U.S. Senate Agriculture Committee. In March 2022, a bipartisan companion bill was introduced in the U.S. House (H.R.7291), which has also seen little to no progress in the House Agriculture Committee. Keller and Heckman will continue to monitor these legislative developments and USDA action.

For more Food and Drug Law news, click here to visit the National Law Review.

© 2022 Keller and Heckman LLP

FTC Proposes New Rule Codifying “Made in USA” Policy

On July 16, 2020 the FTC published a notice of proposed rulemaking in which it announced its intention to codify its long-time enforcement policy regarding products labeled as “Made in the USA” (MUSA); these claims are currently enforced through the FTC’s general authority to prevent unfair and deceptive practices.

The proposed rule does not change the substantive criteria on which such claims will be evaluated and rather is primarily intended to (1) strengthen the FTC’s enforcement mechanism by making it easier for the FTC to assess civil penalties against those making unlawful MUSA claims and (2) give marketers more regulatory certainty. Under the proposed rule, a MUSA claim may, as before, only be made where (1) the final processing or assembly occurs in the USA, (2) all significant processing that goes in the product occurs in the USA, and (3) all or virtually all of the ingredients or components of the product are made and sourced in the U.S. While the proposed rule would apply to a broad range of product labels, it would also apply to MUSA claims found outside of the product label such as mail order catalogs and mail order promotional materials defined to include “any materials, used in the direct sale or direct offering for sale of any product or service, that are disseminated in print or by electronic means, and that solicit the purchase of such product or service by mail, telephone, electronic mail, or some other method without examining the actual product purchased.”  The proposed rule would not apply to qualified MUSA claims.

Comments to the proposed rule are due by September 14, 2020.

© 2020 Keller and Heckman LLP

For more on labeling regulation, see the National Law Review Administrative & Regulatory law section.

Made in the USA (For the Most Part)

made in the USANewspaper headlines report a new economic trend—manufacturing is returning to the United States. The country’s industrial production grew by 0.7 percent in July, its biggest jump since November 2014. This number represents everything made by factories, mines, and utilities. Before companies start slapping “Made in the USA” labels on their wares, they need to make sure they are familiar with the legal requirements to do so.

The Federal Trade Commission (the FTC) monitors the marketplace and aims to keep businesses from misleading consumers. Within the FTC’s jurisdiction is regulating “Made in the USA” claims.

If a product is labeled as “Made in the USA,” without any qualification, it must be “all or virtually all” made in the United States. “[A]ll significant parts and processing that go into the product must be of U.S. origin. That is, the product should contain no – or negligible – foreign content.” The FTC contemplates the site of final assembly or processing, the proportion of manufacturing costs paid to the U.S., and how detached the foreign material is from the finished product. For many businesses, this standard can be hard, if not impossible, to meet.

Since January 2015, the FTC has issued 46 letters to companies asserting misleading U.S. origin claims on a wide range of products, such as cookware, snow blowers, auto parts and pet products.

For example, the FTC recently determined that Shinola—a Detroit-based manufacturer of high-end watches, bicycles, and leather goods—did not meet it. Shinola advertises its products with the slogans “Built in the USA” and “Built in Detroit.” But in June of this year, the FTC called this labeling misleading because “100 percent of the cost of materials used to make certain watches . . . [and] more than 70 percent of the cost of the materials used to make certain belts” goes to imported materials. For example, Shinola’s watches incorporate Swiss-made timekeeping components.

Shinola’s founder had a good reason for why his company incorporated foreign parts:  many of the components are unavailable in the U.S. The components are imported to Detroit where Shinola’s 400 employees assemble watches in the company’s factory. The FTC, however, applied its “net impression” analysis and determined that Shinola’s slogans contradict reality. Shinola’s advertisements will now read “Built in Detroit using Swiss and Imported Parts.”

In light of the FTC’s stance on U.S. origin claims, companies should follow FTC decisions and exercise caution when saying “Made in the USA.” There is no bright line rule for whether a product is “all or virtually all” made in the USA. Companies should consider how their products fit within the FTC’s framework and only then decide whether their merchandise has, according to the FTC, been “Made in the USA.”

ARTICLE BY Brittany Robbins of Schiff Hardin LLP

© 2016 Schiff Hardin LLP

Wasn't That Supposed to be Made in the USA?

Made in the USA.jpgDespite the existence of long-standing U.S. laws strongly favoring the purchase of domestic products for use by governmental entities, in governmental programs and particularly the fulfillment of Department of Defense (“DoD”) contracts, a surprising number of companies still attempt to circumvent these laws.  They do so at their own peril.  Recognizing the harm likely to befall American workers as a result, an increasing number of employees and former employees have “blown the whistle” on these practices in recent years and teamed up with the U.S. Government to curtail this trend.

The Buy American Act, 41 U.S.C. §§ 8301–8305, (“BAA”) was enacted in 1933 under President Hoover as part of New Deal legislation intended to help struggling American depression era companies.  The BAA superseded an 1875 statute that “related to preferential treatment of American material contracts for public improvements.” (1933, Sect. 10).   The law carried with it a very simple idea: require the government to exercise a clear preference for US-made products in its purchases to bolster the American economy.

To this day, the BAA continues to require federal agencies to purchase “domestic end products” and use “domestic construction materials” in contracts exceeding certain dollar amounts performed in the United States. Unmanufactured end products or construction materials qualify as “domestic” if they are mined or produced in the United States. Manufactured products are treated as “domestic” if they are manufactured in the United States, and either (1) the cost of components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the items are commercially available off-the-shelf items.

Exemptions and exceptions to the applicability of the BAA exist. For example, the BAA does not apply if the purchasing agency determines “it to be inconsistent with the public interest, or the cost to be unreasonable.” Furthermore, the U.S. Trade Agreements Act of 1979 authorizes the President to waive any procurement law or regulation that accords foreign products less favorable treatment than that given to domestic products in foreign lands.  Additionally, purchases from Canada and Mexico are exempt from BAA prohibitions under the North American Free Trade Agreement. Other treaties and agreements also limit the BAA.  Despite these, the BAA continues to cast a wide liability net for those that seek to willfully or knowingly circumvent it.

Similar to the BAA, the Berry Amendment was passed in 1941 to promote the U.S. economy through the preferential purchase of certain U.S. goods. The Amendment was eventually codified as 10 U.S.C. 2533a in 2002.  The law prohibits the Department of Defense (“DoD”) from utilizing any funding available to or appropriated by the DoD for the purchase of the following end product items from “non-qualifying countries” unless these items are wholly of U.S. origin: food; clothing; tents, tarpaulins, or covers; cotton and other natural fiber products; woven silk or woven silk blends; spun silk yarn for cartridge cloth; synthetic fabric or coated synthetic fabric (including all textile fibers and yarns that are for use in such fabrics); canvas products, or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or any item of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials; and hand or measuring tools. Noticeably absent from the definition of “qualifying country” are China, Japan, Thailand and Korea- among others.

Congress revised the Berry Amendment for fiscal years 2007 and 2008 with National Defense Authorization Act. The revised statute, 10 U.S.C. 2533b, declares that the DoD is prohibited from acquiring specialty metals or component parts for the use in the construction of aircraft, missile and space systems, ships, tank and automotive items, weapon systems, or ammunition unless the DoD itself acquires those materials directly.  In other words, contractors engaged in the production of these items must use American made specialty metals or require that the DoD obtain these materials and component parts for use in any such fabrication and manufacturing.

Despite the existence numerous limitations with the Buy American Act, Berry Amendment and Trade Agreements Act, as discussed above, the United States Government and private citizen plaintiffs (known as Relators) have recently collaborated in bringing numerous False Claims qui tam actions against companies seeking to profit at the expense of the American Taxpayers. In the majority of these cases, contractors attempted to pass off foreign goods as made in the U.S.A.  Examples of these include: MedTronic (relabeled Chinese devices allegations – $4.4 million settlement); ECL Solutions (conceal country of origin-$1.066 million civil forfeiture); Invacare (wrongfully certified as American Made- $2.6 Million settlement); Staples (foreign made goods- $7.4 million settlement), Office Depot (foreign made goods – $4.75 million settlement) and Office Max (sale of goods not permitted by Trade Agreements Act results in $9.72 million settlement).

According to Justice Department statistics released last week, whistleblowers filed 638 False Claims Act lawsuits in FY2015. Because these cases remain under seal sometimes for years, we do not know how many involved violations of BAA or related laws. We are aware from conversations with the Justice Department of an uptick in these claims, however.

Whistleblowers who bring claims under the False Claims Act can earn up to 30% of whatever the government collects from the wrongdoer. To qualify, one must have original knowledge or information about the fraud. Successful whistleblowers are usually current or former employees but anyone with inside information can file.

Article By Brian Mahany of Mahany Law

© Copyright 2015 Mahany Law

Wasn’t That Supposed to be Made in the USA?

Made in the USA.jpgDespite the existence of long-standing U.S. laws strongly favoring the purchase of domestic products for use by governmental entities, in governmental programs and particularly the fulfillment of Department of Defense (“DoD”) contracts, a surprising number of companies still attempt to circumvent these laws.  They do so at their own peril.  Recognizing the harm likely to befall American workers as a result, an increasing number of employees and former employees have “blown the whistle” on these practices in recent years and teamed up with the U.S. Government to curtail this trend.

The Buy American Act, 41 U.S.C. §§ 8301–8305, (“BAA”) was enacted in 1933 under President Hoover as part of New Deal legislation intended to help struggling American depression era companies.  The BAA superseded an 1875 statute that “related to preferential treatment of American material contracts for public improvements.” (1933, Sect. 10).   The law carried with it a very simple idea: require the government to exercise a clear preference for US-made products in its purchases to bolster the American economy.

To this day, the BAA continues to require federal agencies to purchase “domestic end products” and use “domestic construction materials” in contracts exceeding certain dollar amounts performed in the United States. Unmanufactured end products or construction materials qualify as “domestic” if they are mined or produced in the United States. Manufactured products are treated as “domestic” if they are manufactured in the United States, and either (1) the cost of components mined, produced, or manufactured in the United States exceeds 50% of the cost of all components, or (2) the items are commercially available off-the-shelf items.

Exemptions and exceptions to the applicability of the BAA exist. For example, the BAA does not apply if the purchasing agency determines “it to be inconsistent with the public interest, or the cost to be unreasonable.” Furthermore, the U.S. Trade Agreements Act of 1979 authorizes the President to waive any procurement law or regulation that accords foreign products less favorable treatment than that given to domestic products in foreign lands.  Additionally, purchases from Canada and Mexico are exempt from BAA prohibitions under the North American Free Trade Agreement. Other treaties and agreements also limit the BAA.  Despite these, the BAA continues to cast a wide liability net for those that seek to willfully or knowingly circumvent it.

Similar to the BAA, the Berry Amendment was passed in 1941 to promote the U.S. economy through the preferential purchase of certain U.S. goods. The Amendment was eventually codified as 10 U.S.C. 2533a in 2002.  The law prohibits the Department of Defense (“DoD”) from utilizing any funding available to or appropriated by the DoD for the purchase of the following end product items from “non-qualifying countries” unless these items are wholly of U.S. origin: food; clothing; tents, tarpaulins, or covers; cotton and other natural fiber products; woven silk or woven silk blends; spun silk yarn for cartridge cloth; synthetic fabric or coated synthetic fabric (including all textile fibers and yarns that are for use in such fabrics); canvas products, or wool (whether in the form of fiber or yarn or contained in fabrics, materials, or manufactured articles); or any item of individual equipment manufactured from or containing such fibers, yarns, fabrics, or materials; and hand or measuring tools. Noticeably absent from the definition of “qualifying country” are China, Japan, Thailand and Korea- among others.

Congress revised the Berry Amendment for fiscal years 2007 and 2008 with National Defense Authorization Act. The revised statute, 10 U.S.C. 2533b, declares that the DoD is prohibited from acquiring specialty metals or component parts for the use in the construction of aircraft, missile and space systems, ships, tank and automotive items, weapon systems, or ammunition unless the DoD itself acquires those materials directly.  In other words, contractors engaged in the production of these items must use American made specialty metals or require that the DoD obtain these materials and component parts for use in any such fabrication and manufacturing.

Despite the existence numerous limitations with the Buy American Act, Berry Amendment and Trade Agreements Act, as discussed above, the United States Government and private citizen plaintiffs (known as Relators) have recently collaborated in bringing numerous False Claims qui tam actions against companies seeking to profit at the expense of the American Taxpayers. In the majority of these cases, contractors attempted to pass off foreign goods as made in the U.S.A.  Examples of these include: MedTronic (relabeled Chinese devices allegations – $4.4 million settlement); ECL Solutions (conceal country of origin-$1.066 million civil forfeiture); Invacare (wrongfully certified as American Made- $2.6 Million settlement); Staples (foreign made goods- $7.4 million settlement), Office Depot (foreign made goods – $4.75 million settlement) and Office Max (sale of goods not permitted by Trade Agreements Act results in $9.72 million settlement).

According to Justice Department statistics released last week, whistleblowers filed 638 False Claims Act lawsuits in FY2015. Because these cases remain under seal sometimes for years, we do not know how many involved violations of BAA or related laws. We are aware from conversations with the Justice Department of an uptick in these claims, however.

Whistleblowers who bring claims under the False Claims Act can earn up to 30% of whatever the government collects from the wrongdoer. To qualify, one must have original knowledge or information about the fraud. Successful whistleblowers are usually current or former employees but anyone with inside information can file.

Article By Brian Mahany of Mahany Law

© Copyright 2015 Mahany Law