Starting on January 1, 2020 The USDA will require certain products that contain Genetically Modified Organisms (GMOs) to have a “Biological Engineered” or “BE” label. (For additional information on BE labeling requirements, please see Polsinelli Update linked here.) While the USDA’s BE labeling requirements are rational and preferable to a patchwork of state labeling requirements, the definition of Biologically Engineered under the USDA’s new “BE” labeling requirements are not consistent with a lay persons understanding of GMOs, the USDA’s organic standard as it relates to GMOs, the EU’s and China’s import standards for GMOs, and private non-GMO labeling.

On December 21, 2018, the Agricultural Marketing Service (AMS) of the United States Department of Agriculture (USDA) promulgated regulations that requires all organisms that contain foreign DNA to carry the “Biologically Engineered” or “BE” label. Some commenters have tried to draw a distinction between “Gene-Edited” and “Genetically Modified” with the distinction that “Genetically Modified” organisms have foreign DNA and “Gene Edited” Organisms use newer techniques like CRISPR and TALENs to directly edit the genetic material without adding foreign DNA. However, the question is, do the new “gene editing” techniques need to carry the “BE” label if they do not contain foreign DNA? Although untested, the answer appears to be no.

Couple this with the USDA’s regulatory position on “gene edited” organisms. As noted in a previous update, the USDA current position allows developers who use certain gene editing techniques to get their products to market without the lengthy process required for crops that rely on foreign DNA. Calyxt’s high oleic soybean is a good example. Calyxt used the TALEN gene editing technique to suppress the genes responsible for producing saturated fat in soybeans. Thus, soybean oil from Calyxt’s soybeans has 20% less saturated fat than normal soybean oil. The USDA and FDA rightfully allowed Caltex to bring this innovation to market quickly. There is little doubt that these products can have a significant health benefit for the consumer and therefore the possibility to fetch a premium price.

However, at least one seed co-op marketed Calyxt’s soybean as “non-GMO”. “Non-GMO” is an important and profitable selling point. Non-GMO can be used as feed for “Organic” poultry and livestock. Furthermore, Non-GMO crops do not have to get the same, burdensome, import approval as GMO varieties.

Is it “BE” or not “BE”, and why does that matter? First and foremost, under the current USDA “BE” regulations Calyxt’s soybeans probably won’t be required to carry the “BE” label. However, Calyxt’s soybeans and byproducts cannot be labeled as organic or used as organic feed under the USDA’s Organic label—even if it is grown using organic farming techniques—because it is genetically modified according to the USDA’s organic standard. Furthermore, the EU does not distinguish between gene-editing and genetic modification. Thus, according to EU regulations Calyxt is a GMO soybean and, as of now, has not approved Calyxt for import.

Furthermore, many companies who purchase non-GMO products want to market them as “Non-GMO” and affix a private certification label from organizations like the Non-GMO project. However, the Non-GMO project has taken the position that the Calyxt soybean (Called the “TALEN soybean”) is genetically modified and cannot qualify for the non-GMO label.

What could possibly go wrong? Considering traits—developed by relatively new companies—are now on the market there is an elevated business risk from these new traits. All parties—from innovators to food companies—should take a proactive approach in dealing with this issue. Companies can use audits, contracting, insurance, monitoring, and stewardship programs can help you avoid potentially catastrophic liability.