On June 11, 2019, President Trump signed an executive order directing the Food and Drug Administration (FDA), Environmental Protection Agency (EPA), and United States Department of Agriculture (USDA) to ease rules for approving new genetically modified crops and other agriculture products. Couple this with, as we noted in a previous update, the USDA’s current approach which 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, and one can predict that there is going to be a significant uptick in new agriculture products with innovative traits hitting the market in the next few years. Unfortunately, the definition of what constitutes a Genetically Modified Organism (GMO) is no longer consistent among the regulators, industry and private certificate labels.

It all starts with the USDA’s new consumer labeling regulations. Starting on January 1, 2020, the USDA will require certain products that contain GMOs to have a Bioengineered (BE) label. (For additional information on BE labeling requirements, please see the 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 “bioengineered” 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 European Union’s and China’s import standards for GMOs, or private non-GMO labeling.

On December 21, 2018, the Agricultural Marketing Service (AMS) of the USDA promulgated regulations that require all organisms that contain foreign DNA to carry the 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 edit the genetic material directly 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.

Calyxt’s high oleic soybean is a good case study. 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 have 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 will not 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 European Union 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 genetically modified 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 to help avoid potentially catastrophic liability.