No more sugar coating—the Rules impose new label requirements, and manufacturers will incur additional costs.
The US Food and Drug Administration (FDA or the Agency) has announced the issuance of two new final rules: one on serving sizes (Serving Size Rule),  and one on changes to the Nutrition and Supplement Facts panels (Nutrition and Supplement Facts Rule) (collectively, the Rules). The Rules are scheduled to be published in the Federal Register on May 27. FDA reviewed more than 300,000 comments, citizen petitions, survey data, consensus reports, and findings from consumer studies to develop the new Rules. Potential effects of the Rules include the following:
The US Department of Agriculture (USDA) Food Safety Inspection Service (FSIS) has publicly stated that it is currently developing its own proposed rules to address the same issues for the meat and poultry products it regulates. We expect it to issue a proposed rule by the end of the fiscal year.
New additions to the Nutrition Facts panel include the following:
Removals from the Nutrition Facts panel include the following:
Other notable changes include the following:
For the first time, the panel has been modified to require the identification of added sugars. Coupled with a declaration of a daily value, this is the most significant and controversial aspect of the Nutrition and Supplement Facts Rule. Commenters who objected to this change emphasized that, as a matter of chemical analysis, no distinction can be made between naturally occurring and added sugars. In addition, they questioned the scientific basis for establishing the DV limit for added sugars of 200 calories based on a 2000 calorie daily diet. FDA’s rejection of these comments reflects the Agency’s determination that excessive consumption of added sugars is a significant public health concern and, as a result, manufacturers must maintain records and supporting documentation that substantiates the amount of “Added Sugars” in food products.
Products May Need to Be Reformulated
The Nutrition and Supplement Facts Final Rule discusses industry concerns regarding the potential effects of the required changes to the nutrient labeling of foods on a manufacturer’s ability to make nutrient content claims. For example, comments stated that
FDA confirmed that the Nutrition and Supplement Facts Final Rule does not address how the new nutrition requirements specifically affect nutrient content claims and stated that they know it will affect the ability to make a number of nutrient content claims. Nonetheless, FDA refused to delay changing nutrient DRVs to assess those effects. Therefore, food manufacturers must reassess all products with nutrient content claims to ensure these are still valid (e.g., fiber claims where isolated or synthetic, nondigestible carbohydrates that do not meet the definition of dietary fiber) and explore new opportunities to make claims for products previously ineligible to make nutrient content claims (e.g., good source claims for products that did not previously meet the required percentage amounts).
FDA developed one forthcoming Final Regulatory Impact Analysis (FRIA) for both Rules. FDA’s “cost” considerations include relabeling, recordkeeping, additional labeling, future UPC growth labeling, and reformulation costs.
There are additional costs associated with packaging design considerations; development of new artwork to provide space for required dual-labeling; regulatory consultation to review and ensure label compliance; review of supply agreements, including guarantees, for possible modifications; reconsideration of advertising that may become inconsistent with the new labeling requirements; and the “human cost” associated with new operating procedures and training to ensure overall compliance.
Given the compliance deadlines of two to three years (depending on food operation sizes), food companies will also have to factor in costs associated with implementing all of the new requirements with similar compliance dates mandated by the FSMA, including the Preventive Controls Final Rules, the Produce Safety Final Rule, the Foreign Supplier Verification Program Final Rule (if applicable), the Sanitary Transportation Final Rule, and the Menu Labeling Final Rule (i.e., potential calorie and nutrition information changes from reformulation).,
The Nutrition and Supplement Facts Rule requires manufacturers to make and keep certain records to verify the amount of added sugars when a food product contains both naturally occurring added sugars, isolated or synthetic nondigestible carbohydrates that do not meet the definition of dietary fiber, different forms of vitamin E, and folate/folic acid declared on the Nutrition Facts or Supplement Facts Panel. Manufacturers are required to provide these records, which will incur costs to maintain, to an appropriate regulatory official upon request during inspection. Manufacturers also are required to maintain the records to verify the label declaration of the aforementioned nutrients for a period of two years after introduction or delivery for introduction of the food into interstate commerce.
Because of the new recordkeeping requirements, it can be expected that contractual provisions used throughout the supply chain will likely be modified or updated to include requests for records and documentation, especially for “Sugars Added” and/or “No Sugars Added” confirmations.
Small Business Cost Concerns
FDA discusses small business concerns regarding the effect of the Nutrition and Supplement Facts Rule on advertising campaigns. For example, FDA acknowledges the importance of communicating nonmandatory promotional and marketing information about a product, including food preparation, recipes, and safety issues relative to the product. However, FDA specifically states that nonmandatory label information is not a consideration in determining the sufficiency of space to include nutrition information. Therefore, all manufacturers, regardless of size, are on equal footing in terms of following the general food labeling requirements, but small businesses are seemingly put at a disadvantage in terms of marketing strategy considerations when using nonmandatory labeling information if they cannot afford alternative marketing avenues (e.g., broadcast advertising, websites, etc).
Manufacturers will need to conform to the new label requirements by July 26, 2018 (two years after the Rules’ effective date). However, manufacturers with less than $10 million in annual food sales will have an additional year to comply (July 26, 2019).
The Rules will drive fundamental change in the way nutrition information will be conveyed to consumers. These Rules are aligned with the 2010-2020 Dietary Guidelines for Americans and the Obama administration’s focus on reducing obesity. Although the exact cost to manufacturers associated with relabeling, reformulation, packaging design, artwork, FSMA, and regulatory consultation to review and ensure label compliance is uncertain, manufacturers will need to make a significant investment in implementing these changes. Manufacturers will need to ensure that their products comply with nutrient content and health claim requirements, and maintain proper records of nutrient verification.
If you have any questions or would like more information on the issues discussed in this LawFlash, please contact any of the following Morgan Lewis lawyers:
 US Food & Drug Admin., Food Labeling: Serving Sizes of Foods That Can Reasonably Be Consumed At One Eating Occasion; Dual-Column Labeling; Updating, Modifying, and Establishing Certain Reference Amounts Customarily Consumed; Serving Size for Breath Mints; and Technical Amendments (scheduled to be published in the Federal Register on May 27, 2016 at http://federalregister.gov/a/2016-11865) [hereinafter Serving Size Rule].
 US Food & Drug Admin., Food Labeling: Revision of the Nutrition and Supplement Facts (scheduled to be published in the Federal Register on May 27, 2016 at http://federalregister.gov/a/2016-11867) [hereinafter Nutrition and Supplement Facts Rule].
 The new standard wording is: “*The % Daily Value tells you how much a nutrient in a serving of food contributes to a daily diet. 2,000 calories a day is used for general nutrition advice.”
 Nutrition and Supplement Facts Rule, supra n. 2, at 43, 116–17, 270 (“we intend to revisit our other regulations for nutrient content claims at a later date to determine if changes are necessary”). Additionally, the Serving Size Final Rule states that the labeling costs that result from changes in the eligibility to bear nutrient content claims or health claims (e.g., the cost of removing a claim from labeling or adding a required disclaimer) are included in the burden on manufacturers. See Serving Size Rule, supra, n. 1 at 146.
 Nutrition and Supplement Facts Rule, supra n. 2, at 17-18.
 Nutrition and Supplement Facts Rule, supra n. 2, at 18; Serving Size Rule, supra, n. 1 at 8.
 For additional information on FSMA Preventative Control Rules, Sanitary Transportation, the Produce Safety Rule, and the Foreign Supplier Verification Rule, see Morgan Lewis’s Well Done food blog.
 For example, the Menu Labeling Final Rule compliance date is May, 2017. Thus, if reformulations occur after the compliance date, updated nutrition information will be required for all covered entities.
 Id. at 863-868.
 Nutrition and Supplement Facts Rule, supra n. 2, at 818.