New and Existing GM Crops: In Search of Effective Stewardship and Coexistence

2) The author of the article and the Idaho Law Review are properly identified; (3) Proper notice of the copyright is affixed to each copy; and (4) Notice of the use is given to the Idaho Law Review.

The development of genetically modified (GM) food has been a matter of considerable interest and worldwide public controversy. However, in order to fully understand the controversy and draft appropriate public policy, the demand for these goods needs to be understood as well. No matter how technologically superior GM crops may be to the farmer, they will not have an impact if consumers are not willing to accept them.

This paper considers one tangled web of conflicting developments. It involves the popular desire to replace chemical pesticides with more “natural” biological control strategies, plus a slowly emerging awareness of a less benign side to microbial pest control agents, based on their potential invasiveness and sometimes striking similarities to agents of bioterrorism and biological warfare. This desire, however, is overshadowed by concerns about the environmental release of genetically engineered organisms. I argue that as some of the concerns about ecological diversity, as captured by the Convention on Biodiversity, were channeled into the subsequent Cartagena Protocol on Biosafety to the Convention on Biological Diversity (Cartagena Protocol) with its emphasis entirely on products of biotechnology, microbial pest control agents have “fallen through the cracks” of international environmental law.

New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 169 NEW AND ExISTING GM CROPS: IN SEARCH OF EFFECTIVE STEWARDSHIP AND COExISTENCE Colin A. Carter1 and Guillaume P. Gruère2 ABSTRACT Signiicant gaps remain in the U.S. regulatory system regarding accidental contamination from both regulated and deregulated genetically modiied (GM) crops. First, costly blunders have been associated with conined ield trials of regulated GM crops. Second, recent court cases have found that, in some cases during the USDA approval process, the U.S. government failed to account for the economic efects of deregulated GM crops on non-adopters. Procedures for approving and managing GM crops in the U.S. could be improved at a relatively low cost compared to the potential economic damage of further market disruptions. key words: GM crops, coexistence, biosafety regulations, GMOs. INTRODUCTION I. Genetically modiied (GM) crops3 are produced using plant biotechnology to select desirable characteristics in plants and transfer genes from one organism to another.4 It is an understatement to say that the application of genetic engineering to food and agriculture is one of the most signiicant technological advances to afect modern agriculture,5 1 2 3 4 5 Department of Agricultural and Resource Economics and Giannini Foundation of Agricultural Economics, University of California, Davis. International Food Policy Research Institute, Washington, DC. Also called genetically engineered (GE) crops, transgenic crops, or biotech crops. See, e.g., Peggy G. Lemaux, Genetically Engineered Plants and Foods: A Scientist’s Analysis of the Issues (Part I), 59 Ann. Rev. Plant Biology 771, 773 (2008). Robert Herdt, Gary Toenniessen & John O’Toole, Plant Biotechnology for Developing Countries, in 3 Handbook of Agric. Econ. 2641-2667 (Robert Evenson & Prabhu Pingali eds., 2007); Comm. on the Impact of Biotechnology on Farm-Level Econ. and Sustainability, Nat’l Research Council of the Nat’l Acads., The Impact of Genetically Engineered 170 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 even though this technology is still conined to relatively few crops.6 he future of this technology holds promise of signiicant continued beneits through application to more and more crops, higher yields due to better control of pests and diseases, salt tolerance, and resistance to frost and drought.7 In addition, certain bioengineered crops require fewer chemicals and can therefore be more environmentally friendly.8 It is believed that bioengineered foods will eventually ofer nutritional and medical beneits to consumers.9 In 2010, ifteen years after their introduction, GM crops have been widely adopted internationally, with a total area reaching an estimated 148 million hectares in twenty-nine countries.10 Over 75 percent of the global soybean acreage is now planted with biotech varieties and close to 50 percent of the world’s cotton is biotech.11 But due to diferences in national regulations, variations in consumer acceptance, and food processor and retailer concerns, adoption of biotech crops has been essentially limited to four non-food GM commodities (corn, soybeans, Crops on Farm Sustainability in the United States vii (2010) [hereinafter Nat’l Research Council], available at http://www.nap.edu/openbook. php?record_id=12804&page=R1; Genetically Modified Food and Global Welfare xxi (Colin A. Carter et al. eds., 2011). 6 Clive James, Int’l Serv. for the Acquisition of Agri-Biotech Applications, ISAA Brief 42-2010: Executive Summary, Global Status of Commercialized Biotech/GM Crops: 2010 3 (2010), available at http:// www.isaaa.org/resources/publications/briefs/42/executivesummary/pdf/ Brief%2042%20-%20Executive%20Summary%20-%20English.pdf. 7 Alexander J. Stein & Emilio Rodríguez-Cerezo, Joint Research Ctr., Eur. Comm’n, The Global Pipeline of New GM Crops: Implications of Asynchronous Approval for International Trade 39 (2009), available at ftp://ftp.jrc.es/pub/EURdoc/JRC51799.pdf. 8 Herdt, Toenniessen & O’Toole, supra note 5, at 2661. 9 Robert Herdt & R. Nelson, Biotechnology and Agriculture: Current and Emerging Applications, in Genetically Modified Food and Global Welfare, supra note 5, at 12. 10 James, supra note 6, at 2. 11 Genetically modiied plants: Global cultivation on 134 million hectares, GMO Compass (Mar. 29, 2010), http://www.gmo-compass.org/eng/agri_biotech nology/gmo_planting/257.global_gm_planting_2009.html. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 171 cotton and canola)12 leaving aside major food crops (including rice, wheat, or fruits and vegetables).13 hese four crops (corn, soybeans, cotton and canola) are widely traded and consumed in a large number of countries. While most production and trade of these crops is composed of an undiferentiated mix of GM and non-GM primary products, a small but persistent share of the production of these crops has been devoted to pure (or segregated) non-GM or organic products,14 reaching market niches especially in Europe and Eastern Asia.15 For instance, Japanese consumers eat a considerable amount of food containing genetically modiied organisms (GMOs) (such as canola oil) but they also demand a certain amount of non-GM commodities such as non-GM corn for snack foods.16 Japan imports non-GM corn each year from the U.S. and China.17 his corn is used in food products 12 13 14 15 16 17 Authors’ calculation based on James, supra note 6, at 7 (noting that more than ninety-nine percent of the global area sown to GM crops is devoted to these four crops- 50% soybeans or 73.3 mha, 31% corn or 46.8 mha, 14% for cotton or 21.0 mha and 5% for canola or 7.0 mha). Guillaume P. Gruère, Int’l Food Policy Research Inst., An Analysis of Trade Related International Regulations of Genetically Modified Food and Their Effects on Developing Countries 1 (2006), available at http://www.ifpri.org/sites/default/iles/pubs/divs/eptd/dp/papers/eptdp147. pdf. International and national organic standards typically forbid the use of genetically modiied organisms (GMOs). In other words, organic usually means non-GM. See Welcome to the National Organic Program, Agric. Mktg. Serv., U.S. Dep’t of Agric., http://www.ams.usda.gov/AMSv1.0/nop (last visited Apr. 23, 2012); Council Regulation 834/2007, 2007 O.J. (L 189) 1, 2 (EC); Codex Alimentarius Commission, Guidelines for the Production, Processing, Labeling and Marketing of Organically Produced Foods 4 (2001), available at http://www.fao.org/organicag/doc/glorganicinal.pdf. Max Foster, Australian Bureau of Agric. & Res. Econ., Conference Paper 10.04, Evidence of Price Premiums for non-GM Grains in World Markets 2 (2010), available at http://adl.brs.gov.au/data/warehouse/pe_ abarebrs99014390/AARES_4.pdf; See Guillaume P. Gruère, Global Welfare and Trade-Related Regulations of GM Food: Biosafety, Markets, and Politics, in Genetically Modified Food and Global Welfare 309, 313 (Colin A. Carter et al. eds., 2011). See Colin A. Carter et al., The Economics of Genetically Modified Wheat 56-59 (2005). Colin A. Carter & Guillaume P. Gruère, International Approval and Laveling 172 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 that are subject to GM labeling.18 On the other hand, most of Japan’s imported corn is GM,19 which is used for animal feed and the inal meat product does not have to be labeled.20 Additionally, although there are no separate trade data on nonGM crops, up to 20 percent of Japan’s annual soybean imports (around 3.5 million metric tons of total imports) may be non-GM.21 he nonGM soybeans are mainly used for tofu, which, unlike soybean oil, is subject to Japan’s GM labeling regulations,22 and is preferred by GMaverse consumers. If their product falls under GM labeling requirements, processors who want to avoid labeling must purchase non-GM commodities.23 Interestingly, because of regional agricultural specialization, signiicant shares of the pure non-GM crops are produced in countries that have adopted GM crops, as shown in Table 1. hese countries represent ive diferent continents, and have been able to manage the coexistence of GM and non-GM crop production and to generally maintain market access in countries they export to, regardless of the importing nations’ GM/non-GM preference. For instance, India has the largest production areas of both GM cotton24 and organic cotton;25 18 19 20 21 22 23 24 25 Regulations of Genetically Modiied Food in Major Trading Countries, in Regulating Agricultural Biotechnology: Economics and Policy 459, 473 (Richard E. Just et al. eds., 2006); Carter et al., supra note 16, at xi. China has not commercialized GM corn so technically all of China’s corn exports to Japan are non-GMO. Carter & Gruère, supra note 17, at 472-74. Id. at 474. Id. Id. at 473. Id. Id. at 472-73. Guillaume Gruère & Debdatta Sengupta, Bt Cotton and Farmer Suicides in India: An Evidence-Based Assessment, 47 J. Dev. Stud. 316, 316 (2011). Organic cotton production up 15% despite recession in 2009-10, Fibre2fashion (Jan. 13, 2011), http://www.ibre2fashion.com/news/textile-news/newsdetails. aspx?news_id=94742&page=1 (stating that “India remained the top producing nation [of organic cotton] in 2009-10 for the third straight year”); Organic Cotton Growing Regions – South Asia, Textile Exchange, http://farmhub. textileexchange.org/learning-zone/growing-regions/south-asia (last visited Apr. 2, 2012) (stating that “India is the world’s largest producer of organic cotton”); Liesl Truscott et al., Textile Exchange, 2010 Farm &Fiber Report 14-15 New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 173 Brazil produces a large share of the world’s GM and non-GM soybeans,26 and South Africa,27 Spain and the United States have all continued to produce pure non-GM corn despite their wide adoption of GM corn.28 his demonstrates that both coexistence and segregation are economically feasible, despite contradicting reports published by certain non-governmental organizations.29 26 27 28 29 (2010), available at http://textileexchange.org/sites/default/iles/te_pdfs/ Farm%20%26%20Fibre%20Report%202010%20Final%20%28EXEC%20 SUMMARY%29%20100111%20-Small.pdf. See Foreign Agric. Serv., U.S. Dep’t of Agric., GAIN Report No. BR0612, Brazil Biotechnology - GE Plants and Animals: Brazilian Annual Biotechnology Production & Outlook 3 (2010), available at http://gain. fas.usda.gov/Recent%20GAIN%20Publications/Biotechnology%20-%20 GE%20Plants%20and%20Animals_Brasilia_Brazil_7-23-2010.pdf; see also Victor Paleaz et al., Implementation of a Traceability and Certiication System for Non-Genetically Modiied Soybeans: he Experience of Imcopa Co. in Brazil, 13 Int’l Food & Agric. L. Rev. 27, 27-28 (2010). Guillaume P. Gruère & Debdatta Sengupta, Reviewing South Africa’s Marketing and Trade Policies for Genetically Modiied Products, 27 Dev. S. Afr. 333, 33536 (2010). See Graham Brookes & Peter Barfoot, PG Econ. Ltd., Co-existence of GM and Non GM Crops: Case Study of Maize Grown in Spain (2003), available at http://www.pgeconomics.co.uk/pdf/Coexistence_ spain.pdf; Manuel Gómez-Barbero & Emilio Rodríguez-Cerezo, European Comm’n, Economic Impact of Dominant GM Crops Worldwide: A Review 24-25 (2006), available at http://ec.europa.eu/ food/food/biotechnology/evaluation/docs/economic_impact_of_gm_ crops_jrc.pdf. . See, e.g., Greenpeace Spain, Assemblea Pagesa de Catalynya & Plataforma Transgenics For a, La Imposible Coexistencia (2006), available at http:// www.greenpeace.org/raw/content/espana/reports/copy-of-la-imposiblecoexisten.pdf, translated in Greenpeace, Impossible Coexistence (2006), available at, http://www.greenpeace.org/international/Global/international/ planet-2/report/2006/4/impossible-coexistence.pdf; Press Release, Peoples Earth Decade, “Coexistence” Can Only Mean Contamination (Apr. 12, 2006), http://www.peoplesearthdecade.org/articles/article.php?id=415; Press Release, GM Free Cymru, Coexistence is Impossible, Say GM Opponents (Sept. 19, 2003), http://www.gmfreecymru.org/news/impossible.htm 174 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 Table 1. Successful coexistence schemes: example of countries that produce and market GM and non-GM crops30 Producing Country Corn Soybeans GM & organic Australia Brazil GM GM & non-GM Canola GM & non-GM GM & organic GM, fair trade & organic Burkina-Faso Canada Cotton GM, non-GM & organic GM, non-GM & organic GM, non-GM & organic China GM & organic India GM & organic Pakistan GM & organic South Africa GM & non-GM Spain GM, non-GM, & organic USProA GM, non-GM & organic GM GM & organic GM, non-GM & organic GM & organic GM, non-GM & organic However, coexistence is not always successful; there have been a number of occurrences where GM crops have been introduced into the non-GM production and or marketing chain either illegally/unoicially or unintentionally, as shown in Table 2. In countries where GM crops have been legally introduced, any GM event (unique crop/trait combination) must pass a biosafety regulatory process before being released.31 Many GM events have gone through the process successfully (top-right cell of Table 2).32 Yet, some GM events have been introduced illegally by 30 See generally Max Foster, supra note 15, at 5-12; Gruère & Sengupta, supra note 27, at 316, 320-22; Fibre2Fashion, supra note 25; see also Search the NonGMO Sourcebook Directory, The Non-Gmo Sourcebook, http:// nongmosourcebook.com/non-gmosourcebook/index.php (last visited Apr. 2, 2012) (listing suppliers of non-GM products by location and product category). 31 Carter & Gruère, supra note 17, at 460-63. 32 See generally GM Crop Database, Ctr. for Envtl. Risk Assessment, Int’l Life Sci. Inst. Research Found., http://cera-gmc.org/index.php?action=gm_ New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 175 entrepreneurs or farmers importing seeds for their own use (top-left cell of Table 2),33 such as soybeans in Argentina.34 Other GM events have been unintentionally (i.e., accidentally) introduced before their approval, mostly around the stage of ield-testing during the approval process (bottom-left cell of Table 2), such as LL601 rice in the United States.35 Lastly, some approved GM events have been found in non-GM ields or supply chains (bottom right cell of Table 2).36 hese two latter categories represent cases of accidental contamination.37, 38 33 34 35 36 37 38 crop_database (last visited Oct. 12, 2011) (searchable database of GM crops by event name, crop type, approval type, and country). See, e.g., Guillaume P. Gruère et al., Int’l Food Pol’y Res. Inst., Discussion Paper 00808, Bt Cotton and Farmer Suicides in India: Reviewing the Evidence 11 tbl.6 (2008). See Terri Raney, Economic Impact of Transgenic Crops in Developing Countries, 17 Current Op. in Biotechnology 174, 175 (2006). Heidi Ledford, Out of Bounds, 445 Nature 132, 132 (2007). See, e.g., Gregory Heard, Flooded Farmer Unhappy with GM Response, Stock & Land (May 5, 2011, 10:43 AM), http://sl.farmonline.com.au/news/state/ grains-and-cropping/general/flooded-farmer-unhappy-with-gmresponse/2153862.aspx. In this article, we deine “contamination” as the unwanted introduction of GM material in the non-GM supply with negative market consequences. he food, feed and environmental safety issues associated with GM crops are not being questioned here. Most of these cases of contamination (and especially those in the irst column of Table 2) were most likely due to human errors, not due to pollen low or natural gene low. However, it is not always easy to detect the cause of the contamination. For instance, after an extensive investigation of the LL601 rice contamination, the U.S. Department of Agriculture concluded that they did not know how the experimental rice entered the certiied seed supply, but they ruled out direct cross-pollination. Animal & Plant Health Inspection Serv., U.S. Dep’t of Agric., Report of LibertyLink Rice Incidents 1 ( 2007) [hereinafter Report of LibertyLink Rice Incidents], available at http:// www.aphis.usda.gov/newsroom/content/2007/10/content/printable/ RiceReport10-2007.pdf. 176 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 Table 2. International episodes—unlawful unintended commingling of GM events: a typology39 Type of Introduction Intentional Unintentional Unapproved GM event Approved GM event GM Soybeans in Argentina,* Brazil,* Bolivia, & Romania;† GM Cotton in Brazil,* India,* Pakistan,* hailand, & Vietnam; GM Rice in China; GM Corn in Mexico & Peru. All legally commercialized GM crops including the four main crops (canola, corn, cotton and soybeans) in twenty nine countries. GM Corn in the U.S.*† ‡ § and Chile; GM Rice in the U. S.; GM Papayas in hailand; GM Potatoes in Sweden; GM Corn in Chile. GM canola in wild species (Canada/USA); GM Flaxseed in Canada;** GM corn/canola in nonGM or organic ields in the U.S., Canada, and Australia; GM corn in organic corn in Spain. Notes: * GM event approved after commingling, at least in the producing country; † GM event approval reversed upon joining the EU; ‡ GM event with split approval: for use in the feed supply but not the food supply; § GM corn for pharmaceutical purposes under trial; ** GM laxseed approved and then voluntarily withdrawn and still found in supply chain. 39 U.S. Gov’t Accountability Office, GAO-09-60, Genetically Engineered Crops: Agencies Are Proposing Changes to Improve Oversight, But Could Take Additional Steps to Enhance Coordination and Monitoring 6 tbl.2 (2008) [hereinafter Genetically Engineered Crops], available at http://www.gao.gov/new.items/d0960.pdf; Natasha Gilbert, GM Crop Escapes into the American Wild, Nature News (Aug. 6, 2010), http:// www.nature.com/news/2010/100806/full/news.2010.393.html; Ledford, supra note 35, at 132-33; Canadian Grain Comm’n, Sampling and Testing Protocol for Canadian Flaxseed Exported to the European Union 1 (2010), available at http://www.grainscanada.gc.ca/gmlax-lingm/stpf-peevl-eng. pdf; Vu Duc Quang, Agric. Genetics Institute, Current Status of GM Crops and GM-derived Products in Vietnam, Presentation at the National Workshop on Risk Assessment of GM Crops, 37-38 (Oct. 4, 2004) New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 177 In the United States, where GM crops were irst planted on a large scale,40 coexistence has both succeeded (Table 1) and failed (Table 2). Despite the successful wide commercialization of GM crops41 and a history of safe consumption,42 signiicant gaps remain in the U.S. regulatory system regarding accidental contamination from both regulated and deregulated GM crops.43,44 While the safety of GM crops has been the primary focus of regulatory eforts,45 the proper handling of conined ield trials of regulated crops is being increasingly questioned, after several recent costly 40 41 42 43 44 45 available at http://it.doa.go.th/asianbionet/activities/vietnamOct2004/doc/11Quang.ppt; Foreign Agric. Serv., U.S. Dep’t of Agric., GAIN Report VM8051, Vietnam Biotechnology Update 3 (2008), available at http:// www.fas.usda.gov/gainiles/200807/146295193.pdf; Akhter Ali & Awudu Abdulai, he Adoption of Genetically Modiied Cotton and Poverty Reduction in Pakistan, 61 J. Agric. Econ. 175, 176 (2010); See generally GM Contamination Register, GeneWatch U.K. & Greenpeace Int’l, http://www.gmcontamin ationregister.org/ (last updated Nov. 15, 2011) (searchable database of GM contamination incidents by location, category, GM organism, and date); C. D. Ryan & S. J. Smyth, Economic Implications of Low Level Presence in a Zero Tolerance European Import Market: he Case of Canadian Triid Flax, AgBio Forum (forthcoming 2012) (on ile with authors). GM tobacco was planted for a few years in China in the early 1990s before the United States. Robert Paarlberg, Starved for Science: How Biotechnology is Being Kept Out of Africa 136 (2008). See generally Nat’l Research Council, supra note 5. Lemaux, supra note 4, at 542. A. Bryan Endres, Coexistence Strategies: he Common Law of Biotechnology and Economic Liability Risks, 13 Drake J. Agric. L. 115, 137 (2008). In U.S. biosafety system terminology, an unapproved crop is a “regulated” crop, while one that has passed through approval is called “non-regulated” or generically “deregulated”. See Biotechnology Permits, Notiications, and Petitions, Animal & Plant Health Inspection Serv., U.S. Dep’t of Agric., http:// www.aphis.usda.gov/biotechnology/submissions.shtml; Animal & Plant Health Inspection Serv., U.S. Dep’t of Agric., BRS Deregulation Fact Sheet 1 (2006), available at https://scholarworks.iupui.edu/bitstream/ handle/1805/821/USDA%20Biotechnology%20Deregulation%20 Process%20-%20BRS%20factsheet.pdf?sequence=1. For more on the focus of U.S. regulatory eforts impacting GM crops, see generally U.S. Reg. Agencies Unified Biotechnology Website, http:// usbiotechreg.nbii.gov (last visited Oct. 12, 2011); Endres, supra note 43, at 118-125; Richard K. Perrin, Regulation of Biotechnology for Field Crops, in Regulating Agricultural Biotechnology: Economics and Policy 638, 640-42 (Richard E. Just et al. eds., 2006). 178 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 failures (see bottom left cell of Table 2). Furthermore, no visible efort has been undertaken by the U.S. government to comprehensively address the growing issue of GM/non-GM coexistence for deregulated crops.46 While GM and non-GM crops (e.g., corn, soybeans, and cotton) are produced and marketed in the U.S. in parallel,47 regulatory questions are being raised with regard to newer GM crops such as alfalfa. Recent court cases have highlighted the U.S. Department of Agriculture’s (USDA)48 failure to account for the economic efects of GM crops on non-adopters when approving new GM crops.49 In 2007, the U.S. District Court for the Northern District of California issued a permanent injunction, halting the production of GM alfalfa pending the USDA’s completion of an Environmental Impact Study (EIS), including an assessment of the economic efects on non-adopters such as organic producers.50 he 9th Circuit airmed the permanent 46 47 48 49 50 Catherine Greene & Katherine Smith, Can Genetically Engineered and Organic Crops Coexist?, Choices, 2d Q. 2010, at 25, available at http://www. choicesmagazine.org/magazine/pdf/article_131.pdf. he USDA’s National Agricultural Statistics Service (NASS) publishes annual acreage estimates of genetically engineered (GE) and non-GE crops. See Adoption of Genetically Engineered Crops in the U.S., Econ. Research Serv., U.S. Dep’t of Agric., http://www.ers.usda.gov/Data/BiotechCrops/ (last updated July 1, 2011) (providing a summary of the NASS data). See Emily Waltz, Industry Exhales as USDA Okays Glyphosate-Resistant Alfalfa, 29 Nature Biotechnology 179, 180-81 (2011) (summarizing these court cases). he U.S. regulatory framework for biotechnology includes three agencies: the irst, the U.S. Department of Agriculture, Animal and Plant Health Inspection Service (“USDA APHIS”), is in charge of ensuring the safe trials and release of GM ield crops (except pesticide expressing crops); the second, the Environmental Protection Agency (“EPA”), is in charge of evaluating and approving pesticide related crops (Bt crops); and the third, the Food and Drug Administration (“FDA”), is in charge of food safety (via a voluntary consultation for substantially equivalent products). For more on the U.S. regulations, see generally Endres, supra note 43; Perrin, supra note 45 (for crops); Carter & Gruère, supra note 17, at 466-468 (for food). Geertson Farms Inc. v. Johanns, 2007 WL 1302981 at *3-8 (N.D. Cal. May 3, 2007) (unpublished); see Geertson Seed Farms v. Johanns, 2007 WL 518624 at *8-9 (N.D. Cal. Feb. 13, 2007) (the District Court determined that the USDA had not adequately considerd the economic efects on organic and conventional farmers resulting from its decision to deregulate GM alfalfa). New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 179 injunction.51 In 2010, the U.S. Supreme Court reversed and remanded the case, holding that the District Court abused its discretion in issuing the permanent injunction, which erroneously prevented the USDA from partially deregulating GM alfalfa before completing an EIS.52 Once an EIS was completed in 2011, the USDA granted unconditional approval of GM alfalfa, approving it without any restrictions such as bufer zones.53 he USDA said it only had authority to establish conditions for planting GM alfalfa if there are safety risks.54 In other words, the agency said that it had little authority to consider whether or not a GM crop poses economic harm to an organic crop, for example, because of co-existence risks. he objective of this paper is to provide an analysis of the growing challenges of coexistence and unintended commingling in the United States, at a time when an increasing number of GM events are expected to reach the market in the coming years.55 Recently, the USDA has taken steps to improve the management of ield trials56 and has discussed possible measures to ensure the coexistence of GM and non-GM foods in the market chain,57 but it has not implemented any regulatory procedures leading to progress in this area. We argue that coexistence is an issue of critical importance for U.S. agriculture, with signiicant international trade implications. Increased eforts by public authorities in the U.S. and abroad are needed to avoid future market and trade disruptions, to internalize production externalities, and, at the same time, to provide choice for consumers and producers. 51 52 53 Geertson Seed Farms v. Johanns, 570 F.3d 1130, 1141 (9th Cir. 2008). Monsanto Co. v. Geertson Seed Farms, 130 S.Ct. 2743, 2761 (2010). Andrew Pollack, U.S. Approves Genetically Modiied Alfalfa, N.Y. Times, Jan. 28, 2011, at B1. 54 Endres, supra note 43, at 139. 55 Alexander J. Stein & Emilio Rodriguez-Cerezo, European Commission Joint Research Centre, The Global Pipeline of New GM Crops 10 (2009). 56 Genetically Engineered Crops, supra note 39, at 5. 57 Paul Voosen, Courts Force U.S. Reckoning with Dominance of GM Crops, N.Y. Times, Oct. 8, 2009, http://www.nytimes.com/gwire/2009/10/08/08green wire-courts-force-us-reckoning-with-dominance-of-gm-43684.html (citing Agriculture Secretary Vilsack’s willingness to reconsider regulations: “hese crops need to ind a better way to coexist, he said”). 180 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 Many papers have been written on GM/non-GM coexistence strategies, mostly in the context of the European Union.58 In North America, a number of studies have been published on the cost of market segregation for non-GM crops, most focusing on soybeans and wheat.59 But the critical policy issues related to managing market risks in a large GM producing and exporting nation have not been treated in a systematic manner.60 his paper is organized into three sections. Section 2 reviews the economic efects of some of the major unintended commingling incidents. Section 3 reviews some of the indings from recent court cases on coexistence and the USDA’s response to these cases. he last section concludes the paper and suggests key policy recommendations. II. RECENT UNINTENDED COMMINGLING INCIDENTS Many cases of unintended GM commingling have been reported worldwide, including in the United States.61 By far, the most serious 58 A. Messean et al., New Case Studies on the Coexistence of GM and Non-GM Crops in European Agriculture (2006); V. Beckmann, C. Soregaroli, & J. Wessler Coexistence of Genetically Modiied (GM) and NonModiied (Non-GM) Crops: Are he Two Regimes Equivalent With Respect to the Coexistence Value?, in Genetically Modified Food and Global Welfare, supra note 5, at 201; see, e.g., Yann Devos et al., Coexistence of Genetically Modiied (GM) and Non-GM Crops in the European Union: A Review, 29 Agronomy for Sustainable Dev. 11 (2009). 59 Israel Huygen et al., Cost Implications of Alternative GM Tolerance Levels: NonGenetically Modiied Wheat in Western Canada, 6 AgBioForum 169, 169 (2003); William W. Lin, Estimating the Costs of Segregation for Non-biotech Maize and Soybeans, in Market Development for Genetically Modified Foods 261 (V. Santaniello et al. eds., 2006); William W. Wilson et al., Implications of Biotech Traits with Segregation Costs and Market Segments: he Case of Roundup Ready® Wheat, 35 Eur. Rev. Agric. Econ. 51 (2008); Carter et al., supra note 16, at 102-105. 60 Greene & Smith, supra note 46. Greene and Smith provide a review of the issue related to coexistence in the U.S., but with a speciic focus on organic versus GM crops. 61 See Ledford, supra note 35; see also GeneWatch U.K. & Greenpeace Int’l, supra note 39, which reports 241 contamination as of August 15, 2011. A recent instance is the case of Triid laxseed, which was developed by the University of Saskatchewan (Canada) and approved in 1998, but deregistered in 2001 without having being commercialized, but found in several shipments New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 181 incidents were the corruption of the U.S. corn supply by StarLink corn in 200062 followed by the “contamination” of the U.S. long grain rice market by Liberty Link (LL) rice in 2006.63 In both of these cases, weak government oversight and poor stewardship by crop science companies64 caused enormous losses for U.S. farmers.65 Below we briely describe the main characteristics and market efects of the StarLink corn and LLRice commingling events. StarLink Corn StarLink66 was an insect resistant Bt corn that was approved by the U.S. Environmental Protection Agency (EPA) in 1998 for commercial 62 63 64 65 66 imported by the European Union in 2009 and 2010. See also, Joan Delaney, Canada’s Flax Industry threatened by Triid Seed, The Epoch Times, Jan. 27, 2010, http://www.theepochtimes.com/n2/content/view/28728. he European Union’s Rapid Alert System for Food and Feed (RASFF) 2009 annual report noted 95 detected cases of unauthorized linseed oil (from laxseed), Triid, FP967.he Rapid Alert System for Food and Feed Annual Report 2009, at 23, COM (2010), available at http://ec.europa.eu/food/food/rapidalert/docs/ report2009_en.pdf. Michael R. Taylor & Jody S. Tick, Pew Inst. on Food and Biotechnology, The Starlink Case: Issues for the Future 1 (2001), available at http:// www.rf.org/rf/Documents/RFF-RPT-StarLink.pdf. Since the term “contamination” may imply the adverse health or environmental efects of its synonym “pollution,” and use of the word in legal, scientiic, or economic literature can lead courts and insurers to interpret third party liability insurance as not covering unintended commingling of biotech crops, the authors use “contamination” only in reference to LLRice, where the court is using this term. See Court Papers, In Re: Genetically Modiied Rice Litigation, http://www.bayerricelitigation.com/ (follow Court Papers hyperlink) (last visited Apr. 9, 2012). See, e.g., Rebecca M. Bratspies, Myths of Voluntary Compliance: Lessons from the StarLink Corn Fiasco, 27 Wm. & Mary Envtl. L. & Pol’y Rev. 593, 641 (2003). Gregory Jafe, Genetically Engineered Crops Need More Oversight, The Des Moines Register, Mar. 26, 2007, at 7A, available at http://greenbio. checkbiotech.org/news/genetically_engineered_crops_need_more_oversight. For a complete review of the StarLink commingling case study, see generally U.S. Envtl. Prot. Agency, Concerning Dietary Exposure to Cry9C Protein Produced by StarLink® Corn and Potential Risks Associated with Such Exposure (Mar. 28, 2008) [hereinafter EPA White Paper] (White 182 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 production for animal feed but not for human consumption. StarLink was not approved for human consumption because it contained Cry9C, a protein that might cause allergic reactions in some humans.67 his approval represented a unique split license approach to deregulation – all other GM crops had been approved for use in food and feed together.68 On September 18, 2000, the Washington Post reported that StarLink material was found in Kraft Food’s taco shells.69 Kraft Foods soon announced a voluntary withdrawal of all taco shell products from grocery stores.70 his led to recalls of hundreds of food products domestically.71 Soon after, on October 26, 2000, StarLink corn was reportedly discovered in snack foods and animal feed in Japan.72 Similar discoveries were reported in South Korea and Canada, where StarLink corn was discovered in both food and animal feed.73 he StarLink commingling episode was a major event in the agricultural markets, especially in East Asia, a large corn importer. hat market shifted its demand for corn imports away from the U.S. and towards other countries (such as China) due to concerns that food products made from U.S. supplies could be contaminated with StarLink.74 67 68 69 70 71 72 73 74 paper concerning dietary exposure to Cry9C protein produced by StarLink corn and the potential risks associated with such exposure); William Lin, Gregory K. Price, & Edward Allen, StarLinkTM: Where No Cry9C Corn Should Have Gone Before, Choices, 4th Q. 2001, available at http://www.choices magazine.org/2002-4/2002-4-05.pdf; homas P. Redick and Donald L. Uchtmann, Coexistence through Contracts: Export-Oriented Stewardship in Agricultural Biotechnology vs. California’s Precautionary Containment, 13 Drake J. Agric. L. 207, 212-215 (2008); Taylor & Tick supra note 62. EPA White Paper, supra note 66, at 1. Henry Miller, Split Approvals and Hot Potatoes, 28 Nature Biotechnology 552, 553 (2010), available at http://www.nature.com/nbt/journal/v28/n6/full/ nbt0610-552.html. Taylor & Tick, supra note 62, at 15. Id. Id. at 17-18. Id. at 19. Colin A. Carter & Aaron Smith, Estimating the Market Efect of a Food Scare: he Case of Genetically Modiied Starlink Corn, 89 Rev. Econ. Stat. 522, 523 (2007), available at http://ageconsearch.umn.edu/bitstream/25447/1/cp 060335.pdf. Darrel Good, Corn: Production Exceeds Expectations, Grain Price Outlook, Oct. 2001, at 3, available at https://www.ideals.illinois.edu/bitstream/ New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 183 But given the dominance of the U.S. in the international corn market,75 major importers like Japan had few alternatives apart from continuing to import from the U.S. while working out an arrangement for a new testing protocol for detecting StarLink GMOs and dealing with low levels of unintended commingling. In fact, by December 2000, a few months after Starlink was discovered in the food supply, the U.S. Department of Agriculture (USDA) quickly developed a new testing procedure to assure Japan that any further corn imported from the United States would not contain detectable StarLink material.76 According to the Wall Street Journal, the December 2000 U.S.-Japan agreement lifted corn prices. In the commodities column, the Wall Street Journal reported that March corn futures at the Chicago Board of Trade rose ive cents to $2.2325 a bushel on news that US and Japan had reached an agreement on export inspections for genetically modiied StarLink corn.77 here were four main reasons why the StarLink commingling episode was not as costly to U.S. farmers as it could have been. First, corn imports into Japan were primarily for feeding animals.78 Second, at the time there was no mandatory requirement in Japan that animal feed be free of unapproved GMOs.79 hird, Japan had no alternative source for 75 76 77 78 79 handle/2142/2385/1001corn.pdf?sequence=2. See Corn Imports Rise to Six Year High: Reduced Competition Increases US Market Share, Grain: World Markets and Trade Archives, Foreign Agric. Serv., U.S. Dep’t of Agric., http://www.fas.usda.gov/grain/circular/2000/00-09/graintoc. htm(demonstrating that four corn exporting countries – Argentina, Eastern Europe and the United States – represented 96% of world trade, with the U.S. exporting the majority of corn as of September 2000). Int’l Grains Council, Grains Market Report 296, at 9 (2000) (on ile with authors). Dyanna DeCola, U.S.-Japan Corn Deal Lifts Prices, Wall St. J., Dec. 19, 2000 at C15. Japan’s domestic corn production is virtually zero and, on average from 19982000, 74% of Japan’s corn consumption was used for feed purposes. See PSD Online Home - Custom Query, Food & Agric. Serv., U.S. Dep’t Agric, http:// www.fas.usda.gov/psdonline/psdQuery.aspx (select Corn, Imports or Domestic Consumption, and Japan) (last visited Apr. 9, 2012). Before April 2003, Japan only had a voluntary procedure to approve imports of GM events for animal feed. See Tetsuo Hamamoto, Foreign Agric. Serv., U.S. Dep’t Agric., GAIN Report No. JA3002, Japan Biotechnology Update on Japan’s Biotechnology Safety Approval and Labeling Policies 184 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 all of its corn import needs outside of the United States.80 Fourth, the Japanese government has a very practical approach to GMO labeling, as a way to minimize scandals and keep the price premium for non-GMOs at a reasonable level.81 Since April 2001, the Japanese government has required mandatory labeling when GM material is present in the top three raw ingredients and accounts for 5% or more of the total weight.82 It also allows the presence of non-GM labels at the same tolerance level, if produced with identity preservation.83 Exemptions to Japan’s labeling requirements include feedstufs, alcoholic beverages, and processed foods such as soya sauce, corn lakes, and other vegetable oils.84 What was important in the StarLink case is that, as part of a new regulation requiring safety assessment for GM animal feed implemented on April 1st 2003, the Japanese government set a 1% tolerance for the unintentional commingling of GMOs in feed approved in other countries but not yet approved in Japan.85 Even though a relatively small share of U.S. corn acreage was planted with StarLink, it contaminated the U.S. corn crop and the world corn market.86 Acreage planted with StarLink peaked at 350,000 acres in 2000, less than 1 percent of total U.S. corn acreage at the time.87 But the market impact was large because the U.S. is the world’s largest producer 80 81 82 83 84 85 86 87 2003, at 8-9 (2003) available at http://www.fas.usda.gov/gain iles/ 200301/145785045.pdf. See Casey Bean & Hisao Fukuda, Foreign Agric. Serv., U.S. Dep’t Agric., GAIN Report No. JA1078, Japan Grain and Feed 2000 U.S. Corn Import Forecast Raised to 15 MMT due to Difficulties Sourcing Non-U.S. Corn 2001, at 1 (2001), available at http://www.fas.usda.gov/gain iles/ 200108/125681562.pdf. Colin A. Carter & Guillaume P. Gruère, International Approval and Labeling Policies of Genetically Modiied Food in Major Trading Countries, in Regulating Agricultural Biotechnology: Economics and policy 459, 472 (Richard E. Just et al. eds., 2006). Id. South Korea’s regulations are similar to Japan’s except that the tolerance level is 3% of the top 5 ingredients. Guillame Gruère &S.R. Rao, A Review of International Labeling Policies of Genetically Modiied Food to Evaluate India’s Proposed Rule, 10 AgBioForum 51, 53 tbl.2 (2007). Carter & Gruère, supra note 81, at 472. Id. Hamamoto, supra note 79, at 8-9. Carter & Smith, supra note 73, at 523. Id. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 185 and exporter of corn, accounting for about 40 percent of global output and 65 percent of world corn exports at the time of the commingling episode.88 here are numerous importers of U.S. corn, and in 2000 the major markets were Japan, Taiwan, Mexico, Egypt, South Korea, and Colombia.89 At the time of the commingling episode, StarLink was not approved for any use in Japan, the largest single foreign customer of U.S. corn.90 he StarLink commingling episode was disruptive because a relatively large share of the market had zero tolerance for its use, and zero tolerance is virtually impossible to attain in the U.S. commodity trade system.91 StarLink zero tolerance applied to food use of corn in the U.S., Japan and South Korea.92 Once co-mingling of StarLink was discovered, about 25% of the market for U.S. corn required assurance that they were purchasing non-StarLink corn.93 Lin, Price, and Allen analyzed the negative impact on U.S. corn exports due to the StarLink issue. hey identiied an 11% decline in U.S. exports to Japan through March 2001, narrowed to 7% by mid-April 2001 and ultimately to 6% for the marketing year.94 Other evaluations of the reduced demand reached similar conclusions.95 88 89 90 91 92 93 94 95 Id. at 522-23. Mkt. & Trade Econs. Div., Econ. Research Serv., U.S. Dep’t Agric., FDS2001, Feed Situation and Outlook Yearbook 75 (2001), available at http:// usda.mannlib.cornell.edu/usda/ers/FDS-yearbook//2000s/2001/FDSyearbook-04-25-2001.pdf. Hisao Fukuda, Foreign Agric. Serv., U.S. Dep’t Agric., GAIN Report No. JA2011, Japan Grain and Feed Annual 2002, at 16 (2002), available at http://www.fas.usda.gov/gainiles/200204/135683880.pdf. he U.S. system favors scale economies and eiciency to move large volumes of grains to traders and users. As a result, most grain is mixed with other types at some point and/or transported or stored in the same fashion. See, e.g., Nicholas Kalaitzandonakes, Int’l Food & Agric. Trade Policy Council, The Potential Impacts Of The Biosafety Protocol On Agricultural Commodity Trade 11-16, IPC Technology Issue Brief (2004), available at http://www.agritrade.org/Publications/IBs/Techy/BSP.pdf; William Lin, et al., StarLink: Impacts on the U.S. Corn Market and World Trade, 19 Agribusiness 473, 477 (2003). Lin et al., supra note 66, at 31, 34. See Carter & Smith, supra note 73, at 525. Lin et al., supra note 66, at 33. See, e.g., Fukuda, supra note 90, at 16; Peter McAulife, Is StarLink Corn a 186 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 he StarLink “split license” was lawed regulation from the beginning and was discontinued by the EPA.96 he U.S. grain handling system was clearly not prepared to handle split licensing and, as a result, StarLink easily became co-mingled with non-StarLink corn and found its way into U.S. and foreign food products and bulk export cargoes.97 Less than 1% of the total U.S. corn acreage was planted to StarLink, yet 67% of the inbound corn samples tested by Japan (the most important foreign market) between September and December 2000 tested positive for StarLink.98 Aventis provided compensation for StarLink growers, but not for other corn growers who sufered from the price shock due to trade disruption.99 Carter and Smith found the StarLink commingling episode resulted in a 6.8% drop in the price of corn that lasted for at least 6 months; translating into a loss of roughly $500 million to the non-StarLink U.S. corn growers.100 However, in a class action settlement, counsel representing U.S. corn farmers who grew non-Starlink corn between 1998 and 2002 settled for $110 million.101 Table 3 reports results from the Japanese testing of inbound U.S. corn for feed and the level of commingling was 67% of the lots tested from April to September 2000.102 he measurable level of commingling declined to 47% from October 2000 to March 2001, and then to 15% from April to September 2001.103 In December 2002, more than two 96 97 98 99 100 101 102 103 Problem for U.S. Corn Exports World Commodity Analysis Corp., May 9, 2001, available athttp://www.gene.ch/genet/2001/May/msg00040.html. See U.S. Gov’t Accountability Office, Genetically Engineered Crops: Agencies are Proposing Changes to Improve oversight but Could Take Additional Steps to enhance Coordination and Monitoring 22 (2008), available at http://www.gao.gov/new.items/d0960.pdf. D.L. Uchtmann, StarLink – A Case Study of Agricultural Biotechnology Regulation, 7 Drake J. Agric. L. 159, 208-11 (2002). Carter & Smith, supra note 73, at 523. William Lin et al., StarLink: Impact on the U.S. Corn Market and World Trade, Feed Situation and Outlook Yearbook 46, 47-48 (Apr. 2001), available at http://usda.mannlib.cornell.edu/usda/ers/FDS-yearbook//2000s/2001/FDSyearbook-04-25-2001.pdf.; Carter & Smith, supra note 73, at 523. Carter & Smith, supra note 73, at 533. See generally homas P. Redick, Engineering Legal Risk Management Into Agriculture Biotechnology, Legal Backgrounder, Jan. 16, 2004 (discussing the “Public Nuisance” decision and its implications for the industry). Hamamoto, supra note 79, at 8. Id. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 187 years after the presence of StarLink was withdrawn from the market, a cargo of food corn shipped to Japan tested positive for StarLink.104 he Japanese Ministry of Health, Labor and Welfare (in charge of food safety regulations) continued testing inbound cargoes for StarLink until early 2008.105 he USDA stopped testing for StarLink in corn exports on August 15, 2010, ive years after it last detected traces in shipments.106 Table 3: Monitoring for the presence of StarLink in Japan’s feed corn imports107 Time Period April to Sept. 2000 Oct. 2000 to Mar. 2001 April to Sept. 2001 Oct. 2001 to Mar. 2002 April to Sept. 2002 Positive Ratio Commingling Concentration 20/30 (66.7%) 0.51% 34/72 (47.2%) 0.17% 8/53 (15.0%) 0.05% 5/45 (11.1%) 0.09% 4/42 (9.5%) 0.10% Source: USDA, FAS. Japan “Update on Japan’s Biotechnology Safety Approval and Labeling Policies” GAIN Report #JA3002, February 28, 2003. Despite the fallout from the StarLink commingling episode, and changes in EPA procedures, the 2011 deregulation by USDA of a biofuel corn developed by Syngenta (Event 3272), made some observers suggest the possibility of similar accidental commingling episodes in years to come.108 his GM corn is designed to improve the conversion to ethanol, 104 Hisao Fukuda , Foreign Agric. Serv., U.S. Dep’t of Agric., Gain Rep. No. JA3020, Japan Grain and Feed Ann. Rep. 2003, at 17 (2003), available at http://www.fas.usda.gov/gainiles/200303/145884946.pdf. 105 Dr. Suguru Sato, U.S. Dep’t of Agric., Gain Rep. No. JA8047, Japan Biotechnology Annual Report 9 (2008), available at http://www.fas.usda. gov/gainiles/200807/146295225.pdf. 106 Robert Lijewski, U.S. Dep’t of Agric., Program Notice No. FGISPN-10-10, Official StarLink Testing Discontinued (2010), available at http://archive.gipsa.usda.gov/reference-library/bulletins/pn10-10.pdf. 107 Hamamoto, supra note 79, at 8. 108 World’s First Genetically Engineered Biofuels Corn hreatens Contamination of Food-Grade Corn, The Ctr. for Food Safety (Feb. 11, 2011), http://www. centerforfoodsafety.org/2011/02/11/worlds-first-genetically-engineeredbiofuels-corn-threatens-contamination-of-food-grade-corn; Emily Waltz, 188 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 but is not intended for feed or food use (mainly because it would afect the starch milling industry).109 he main diference is that, in this case, the corn industry did push the biotech company to obtain import clearance in some of its major markets (Australia, Canada, Mexico, the Philippines, and Russia).110 But at the time of commercial release, China,111 Japan and the European Union still had to approve it.112 Even with no proven health risks,113 introducing a non-food GM crop into the largely mixed corn commodity chain could create domestic challenges to the starch industry and possible trade disruptions, especially knowing that post-approval management rules and oversight have not changed since the StarLink case. Liberty Link Rice he United States is a signiicant participant in the overall world rice market, ranking among the top ive rice-exporting nations in the world 109 110 111 112 113 Amylase Corn Sparks Worries, 29 Nature Biotechnology 294, 294 (Apr. 2011). World’s First Genetically Engineered Biofuels Corn hreatens Contamination of Food-Grade Corn, The Ctr. for Food Safety (Feb. 11, 2011), http://www. centerforfoodsafety.org/2011/02/11/worlds-first-genetically-engineeredbiofuels-corn-threatens-contamination-of-food-grade-corn; Emily Waltz, supra note 108, at 294. See SYN-E3272-5 (Event 3272), GM Crop Database, Ctr. for Envtl. Risk Assessment (last modiied Dec. 30, 2008), http://cera-gmc.org/index.php?evi dcode%5B%5D=Event+3272&auDate1=&auDate2=&action=gm_crop_ database&mode=Submit. Syngenta will apply to approve it in China, but China’s procedure can only start after a GM event has been approved in the US, which forces asynchronicity of approval. E-mail from Prof. Jikun Huang, Dir., Chinese Ctr. for Agric. Policy, Chinese Acad. of Scis., to author (July 20, 2011) (on ile with author). he National Corn Growers Association had signiicant discussions with Syngenta pre-approval, and it was decided that the risk could be minimized by obtaining approval in import countries and the guarantee that it would be marketed close to ethanol factories. Syngenta’s record of stewardship was considered better than competing companies, despite the Bt 10 Corn story. Interview with Martin Barbre, Co-Chair, Commodity Classic Comm., Nat’l Corn Growers Assoc., in D.C. (March 14, 2011). See Sam Hananel, U.S. Heading to Deregulate Corn for Ethanol Use, Associated Press, Nov. 25, 2008. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 189 along with hailand, India, Pakistan, and Vietnam.114 Consequently, foreign markets are an important driver of prices received by U.S. rice farmers. In the U.S., rice is grown in the west and the south.115 Production is concentrated in California in the west and in ive southern states with Arkansas serving as the largest producer in the south.116 In the southern region, the predominant varieties are long-grain, whereas California produces primarily medium-grain varieties.117 his section describes the economic efects of a large scale contamination of the southern U.S. rice crop by unapproved Liberty Link rice, a GMO, which was oicially detected in the rice supply in 2006. GM Liberty Link long-grain rice—including LLRICE 601 and LLRICE 604—was developed by Aventis to address weed control problems. hese varieties were developed to be herbicide tolerant, resistant to glufosinate, the active ingredient in Bayer’s Liberty herbicide.118 As part of the approval process, Liberty Link rice ield trials were conducted by Louisiana State University in collaboration with Bayer CropScience from 1999 through 2001.119 Field tests for LLRice 601 were conducted by Aventis (acquired by Bayer in 2001) in several U.S. states or regions, including Puerto Rico, Arkansas, Louisiana, Mississippi, and Texas,120 but the rice varieties did not go through the complete USDA deregulations. Five years after these ield trials, in August 2006, these unapproved varieties were detected in a cargo of rice shipped to the EU,121 one of 114 See Foreign Agric. Serv., U.S. Dep’t of Agric., Rep. No. FG 05-11, Grain: World Markets and Trade 15 (May 2011), available at http://www.fas.usda. gov/grain/circular/2011/05-11/grain.pdf. 115 Nat’l Agric. Statistics Serv., U.S. Dep’t of Agric., All Rice 2010 Planted Acres by County for Selected States 1 (2010), available at http://www. nass.usda.gov/Charts_and_Maps/Crops_County/pdf/AR-PL10-RGBChor. pdf. 116 Id. 117 A.J.H. Latham, Rice: The Primary Commodity 86-87 (1998). 118 Master Consolidated Class Action Complaint at 14, In Re: Genetically Modiied Rice Litig., No. 4:06 MD 01811 CDP (E.D. Mo. May 17, 2007), available at http://www.moed.uscourts.gov/sites/default/iles/mdl/06-1811/ doc264.pdf. 119 Peter Vermij, Liberty Link Rice Raises Specter of Tightened Regulations, 24 Nature Biotechnology 1301, 1302 (2006). 120 Master Consolidated Class Action Complaint, supra note 118, at 15. 121 See Press Release, Agric. Sec’y Mike Johanns Regarding Genetically Engineered Rice, USDA Press Release No. 0307.06 (Aug. 18, 2006). 190 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 the most important U.S. markets for long-grain rice. his immediately afected the predominant type of rice grown in the southern states of Arkansas, Louisiana, Missouri, Texas, and Mississippi. he USDA announced that unapproved GM rice (Liberty Link LL601) was found in shipments of U.S. long-grain rice, and the carrier variety was soon found to be a very popular variety named Cheniere.122 Immediately after, the Chicago rice futures price dropped sharply, plunging 10% in just a few days (Figure 1). Farmers were just beginning the rice harvest and sufered this signiicant loss in the value of their crop before they had a chance to market it. While the visible price drop happened in the irst week following the announcement (Figure 1), there is evidence that such price shocks can be persistent and have much longer efect (lasting several years) on the overall price average, even after the situation has resolved itself.123 Figure 1. Price efect of the LL 601 “contamination” announcement:124 Chicago Rice Future November 2006 ($/cw) 10.1 9.9 9.7 9.5 9.3 9.1 8.9 8.7 11/6/06 11/15/06 10/28/06 10/19/06 10/1/06 10/10/06 9/22/06 9/4/06 9/13/06 8/26/06 8/8/06 8/17/06 7/30/06 7/21/06 7/3/06 7/12/06 6/24/06 6/6/06 6/15/06 5/28/06 5/19/06 5/1/06 5/10/06 8.5 122 Report of LibertyLink Rice Incidents, supra note 38, at 1. 123 Paul Cashin et al., How Persistent Are Shocks to World Commodity Prices?, 47 IMF Staff Papers 177, 215 (Dec. 2000). 124 Proprietary data that can be ordered for rice from the Commodity Research Bureau website at http://www.crbtrader.com/marketdata/grains.asp (on ile with author); Rough Rice No. 2 (CRB InfoTech CD) (can be purchased at: http://www.crbtrader.com/infotech.asp). New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 191 In March 2007, there was a further setback to the rice industry when the USDA announced that an additional popular variety of longgrain rice, Clearield CL131, was found to contain another Liberty Link variety, Bayer’s unapproved LL604 rice.125 In total, Cheniere and CL131 represented about 30% of the Southern long-grain rice acreage in 2006.126 hese varieties could not be planted in 2007 to avoid rice contamination,127 which could have caused additional inancial losses for rice farmers, not to mention problems with seed availability for noncontaminated varieties. In response to the USDA announcement that LLRice had contaminated shipments, the EU swiftly imposed measures to minimize the amount of contaminated rice entering the EU food supply.128 U.S. farmers export approximately 50% of their long-grain rice,129 so foreign tolerance levels for adventitious presence of GM material are very important. he EU was a signiicant importer of U.S. rice but this trade came to a virtual halt following the Liberty Link contamination, and it has not fully recovered (see Figure 2). he EU has zero tolerance for adventitious presence of unapproved GM events like LL601 and as of 2011 Bayer had not applied for import authorization of LL601 in the EU.130 125 Report of LibertyLink Rice Incidents, supra note 38, at 5. 126 Direct Examination of Colin A. Carter by Don M. Downing 112-13, n. 143, In Re: Genetically Modiied Rice Litigation, No. 4:06 MD 01811 CDP (E.D. Mo. Jan. 20, 2010) (on ile with author) [hereinafter Carter Direct Examination]. 127 See Robert H. Wells, Replacing Cheniere in 2007, Delta Farm Press, Feb. 13, 2007, http://deltafarmpress.com/replacing-cheniere-2007; News Release, Dr. Ron Dehaven, Statement by Dr. Ron Dehaven Regarding APHIS Hold on Clearield CL131 Long-Gran Rice Seed (Mar. 5, 2007), http://www.aphis. usda.gov/newsroom/content/2007/03/ge_riceseed_statement.shtml. 128 Commission Decision 2006/601, 2006 O.J. (L 244) 27, 27. 129 Prior to the contamination announcement, long-grain exports averaged 52% of the three-year (2003/04-2005/06) annual production. Econ. Research Serv., U.S. Dep’t of Agric., Rice Yearbook, tbl. 3 (2007), available at http:// usda01.library.cornell.edu/usda/ers/89001/2007/TABLE03.xls. 130 Perhaps because of the revert it received to a previous GM rice. No rice has been approved in the EU as of March 2011. See GM Food & Feed – Introduction, http://ec.europa.eu/food/dyna/gm_register/index_en.cfm. 192 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 Figure 2. U.S. long-grain rice exports to the EU (million hundred weight) Aug-July (rough equivalent)131 10 9 8 7 6 5 4 3 2 1 0 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 he EU “emergency measures” on LLRice remained in place for almost 4 years.132 Upon lifting the emergency measures on April 19, 2010, the Member States of the European Commission voted to: “repeal[ ] Decision 2006/601/EC on emergency measures regarding the nonauthorised genetically modiied organism ‘LL RICE 601’ in rice products, and provid[e] for random testing for the absence of that organism in rice products.” 133 his decision took efect in June 2010 and required the testing at origin of U.S. long grain rice for the presence of the LL601 trait.134 After the emergency measures were lifted, the U.S. rice industry began the diicult process of seeking to regain the important EU market, but signiicant hurdles remained. It is noteworthy that once the emergency measures were removed, “random testing” for LL601 remained in the EU135 131 See Standard Query, Historical FAS US Trade Online Selections, Foreign Agric. Serv., U.S. Dep’t of Agric., http://www.fas.usda.gov/gats/ExpressQuery1. aspx. 132 Commission Decision 2010/315, 2010 O.J. (L 141) 10, 10 (EC), repealing Decision 2006/601/EC (on emergency measures regarding the non-authorised genetically modiied organism ‘LL RICE 601’ in rice products, and providing for random testing for the absence of that organism in rice products). 133 Id. 134 Id. 135 Id. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 193 and there is no doubt that additional testing in the future (independent of the mandatory random testing) will continue on a commercial basis.136 Apart from individual testing by commercial buyers, member states may also continue their own testing.137 his means that there are three potential testing roadblocks to the exportation of U.S. rice to the EU: random testing as per the EC directive, commercial testing as per customer demands, and member state testing in response to consumer demand & the EU’s zero tolerance directive. While the April 19, 2010 vote served to remove legally binding emergency measures, it did not eliminate the commercial stigma associated with the LLRice “contamination” of the U.S. rice supply. In the almost ive years that U.S. rice was prohibited from import to the EU, other countries, such as hailand and Uruguay, essentially took over the market and established commercial relationships.138 It will take signiicant time for the U.S. industry to regain those relationships and build up exports to anywhere near the level they were before the contamination. here remains concern in the EU over unapproved LLRice turning up in food products.139 his loss of export has not been compensated by additional exports to other destinations (Figure 3). Overall, more than 80% of the U.S. exports to the EU have been lost since the beginning of the 2006-07 marketing year.140 Removal of the emergency measures was a necessary, but 136 Id. 137 Id. 138 E.U. Agric. & Rural Dev., Rice: E.U.-27 Main Markets 2009 – 1000 Tons (2011), http://ec.europa.eu/agriculture/agrista/tradestats/2009/graphs/g4_ p47_rice_q.pdf; See European Comm’n, Data Navigation Tree, EUROSTAT Data, http://epp.eurostat.ec.europa.eu/portal/page/portal/statistics/search_ database, (for statistics on loss of U.S. market share and increased market share of hailand and Uruguay, select External Trade/ External Trade detailed data/ EU27 trade since 1988 by SITC (DS_018995) then Select Data, Flow: Import, Indicators: Value in Euros, Partners: US, hailand, Uruguay, Period: Jan-Dec 2004 to Jan Dec 2010, Product 042 Rice; Reporter EU 27). 139 For instance, as recently as April 2011, the European Food Safety Authority (EFSA) reported unauthorized LL601 rice detected in food products. See Unauthorised Genetically Modiied (LL601 Rice) Rice Fusilli from Vietnam Notiication Detail - 2011.0491, Rapid Alert System For Food & Feed Portal, European Comm’n, https://webgate.ec.europa.eu/rasf-window/ portal/index.cfm?event=notificationDetail&NOTIF_REFERENCE =2011.0491 (last updated Sept. 19, 2011). 140 Carter Direct Examination, supra note 126, at 82. 194 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 insuicient, condition to regain what the U.S. rice industry lost due to the contamination. As of early 2011, the total judgments and settlement imposed on Bayer in a few cases amounted to an estimate $250 million.141 Four hundred and ifty separate lawsuits were launched against the company.142 On July 1, 2011, Bayer inally agreed to pay $750 million in compensation to rice farmers in Arkansas, Louisiana, Mississippi, Missouri and Texas to settle these lawsuits.143 Figure 3. U.S. long-grain rice exports to countries other than the EU (million hundred weight) Aug-July (rough equivalent)144 80 70 60 50 40 30 20 10 0 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 141 Douglas McLeod, Genetics Modify Liability: Engineered Life Forms Create Opportunities, Concerns, The Next Asbestos: Five Emerging Risks that Could Shift the Liability Landscape, Business Insurance White Paper, 2011, at 5, available at http://www.businessinsurance.com/assets/PDF/ CB73978514.PDF. 142 Id. 143 Jeannie Nuss, Bayer to Pay $750M in Genetic Rice Settlement, Associated Press, Jul. 1, 2011, http://inance.yahoo.com/news/Bayer-to-pay-750M-ingenetic-apf-132428842.htmo?x=0. 144 See U.S. Rice Industry: Background Statistics and Information, U.S. Dept. of New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 195 Table 4 provides an overview comparison of the StarLink corn and Liberty Link rice contamination events. Both events were caused by European cropscience companies on U.S. soil,145 which is somewhat ironic considering the EU’s zero tolerance policy for GM material discussed below. he LLRice contamination was worse than the StarLink corn case because the unapproved rice was in the foundation seed and at least 30% of the southern U.S. rice acres were contaminated.146 he authors estimate that LLRice contamination cost U.S. farmers at least $1.2 billion, which does not include the $80 to $180 million of estimated economic damages to the European rice industry, in 2008.147 Damages in the LLRice case are very high because the U.S. farmers lost one of their most important markets. Now, 5 years after the contamination, the EU is still not a signiicant buyer of U.S. long grain rice.148 145 146 147 148 Agric., April 30, 2008, http://www.ers.usda.gov/news/ricecoverage.htm; see also U.S. Export Sales: Rice, Foreign Agric. Serv., U.S. Dept. of Agric., Sept. 15, 2011, http://www.fas.usda.gov/export-sales/rice.htm.; see also U.S. Rice Exports by Destination, Econ. Res. Serv., U.S. Dep’t of Agric., h t t p : / / w w w. e r s . u s d a . g ov / b r i e f i n g / r i c e / Ga l l e r y / g a l l e r y 2 0 0 8 / U S riceexportsbydestination.gif. Aventis and Bayer Crop Science are European companies, LL 601 Rice and Starling Maize occurred in the US. Carter Direct Examination, supra note 126, at 112-13. Graham Brooks, Economic Impacts of Low Level Presence of Not Yet Approved GMOs on the EU Food Sector 6 (2008), available at http:// www.ferm-eu.org/downloads/LLP%20inalreportGBrookes.pdf (Brookes’ igures were 52 to 111 million Euros by 2008 and we converted these estimates to U.S. dollars using an exchange rate of 1.6, which was the approximate rate in 2006). See EUROSTAT Data supra note 138. 196 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 Table 4. Comparison of StarLink Corn and LibertyLink Rice commingling episodes149 Crop and Year of Announcement StarLink Corn 2000 % Acres Infected % Crop Afected Years to Identify Infection Major Market Impacted Settlement Years with Positive Test Results LibertyLink Rice 2006 1% 30% 100% 100% 1 year 5 years Japan European Union $110 million 2+ years $750 million 5+ years Even though the southern U.S. rice crop acreage is much smaller than the U.S. corn crop (2.3 million acres in 2006 for rice versus 79.5 million acres in 2000 for corn), the settlement on the rice case, announced in 2006, exceeded to the one afecting the corn crop announced in 2000.150 here are at least ive reasons as to why the rice damages incurred by U.S. farmers were higher compared to the StarLink corn case. First, the LLRice contamination afected a much larger share of the rice crop compared to the StarLink corn incident. Second, rice is primarily a food crop, whereas corn is primarily a feed grain. hird, the rice contamination afected US long grain rice exports to the EU market, which is less tolerant of GMO contamination compared to the feed market in Japan,151 the 149 See generally Carter & Smith, supra note 73 (regarding StarLink); Master Consolidated Class Action Complaint, supra note 118, at 17-18; Bayer Rice Oicial Settlement Agreement, BrownGreer, PLC – GM Rice Seed Settlement, http://gmricesettlement.com/BY_OicialSettlement.aspx (last visited Apr. 23, 2012). 150 See Table 4; see also Quick Stat Database, U.S. Dep’t of Agric., Nat’l Agric. Statistics Serv., http://quickstats.nass.usda.gov/ (last visited Apr., 23, 2012). 151 Carter & Gruère, supra note 17, at 468-73. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 197 major market afected by StarLink. Fourth, the EU was able to turn to alternative export supplies of long-grain rice (e.g., Uruguay and hailand) to replace the U.S. as a source, and that was not an option for Japan in the case of corn.152 U.S. corn sales to Japan were only temporarily disrupted by StarLink, unlike the Liberty Link rice situation which interrupted U.S. rice sales to the EU for many years. Finally, the LLRice contamination was especially problematic because it found its way into the rice foundation seed supply.153 Unfortunately the USDA could not explain how this happened even after conducting an expensive investigation.154 he contaminated seed supply meant that the LLRice contamination was very widespread–all U.S. long-grain rice farmers were impacted, as samples from the ive Southern states in the growing region tested positive for unapproved LLRice.155 But just like StarLink, the LLRice iasco has demonstrated that it takes a very long time to clean unapproved GM crops from contaminated commercial supplies.156 As the LLRice case illustrates, the U.S. government underestimated the additional costs that farmers would incur in cases of accidental contamination. he U.S. government demonstrated its ignorance when it established rules for the management of conined ield trials, which resulted in a lack of comprehensive oversight, ultimately causing the accidental contamination. After investigating the LLRice contamination, the U.S. government decided to take no enforcement action against Bayer CropScience,157 the company that developed and ield-tested LLRice, even though the accident caused farm losses of possibly over $1 billion.158 152 E.U. Agric. & Rural Dev., supra note 138. 153 A. Bryan Endres, Coexistence Strategies, the Common Law of Biotechnology and Economic Liability Risks, 13 Drake J. Agric. L. 115, 136 (2008) (USDA investigation found LLRice601 contamination in 2003 Cheniere rice variety foundation seeds); Report of LibertyLink Rice Incidents, supra note 38, at 4. 154 See Report of LibertyLink Rice Incidents, supra note 38. 155 Id. at 4-6. 156 See Triid Seed hreatens Flax Industry, CBC News (January 20, 2010, 10:01 AM), http://www.cbc.ca/news/canada/manitoba/story/2010/01/20/mb-laxtriid-manitoba.html (describing the Triid laxseed case in Canada, where GM lax appeared in shipments ten years after its destruction). 157 Report on LibertyLink Rice Incidents, supra note 38, at 1. 158 See e.g., U.S. Gov’t Accountability Office, GAO-09-60, Report to the 198 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 III. GM/NON-GM COEXISTENCE: ACCOUNTING FOR MARKET RISK he economic efects of deregulation of a GM crop on nonadopters and on domestic and foreign markets are obviously important159 but typically are not a serious part of the deregulation decision. he risk of GM contamination and unintended GM seed material introduction in a non-GM market chain is a negative externality;160 non-adopters bear the risk of losing access to markets because of contamination.161 he beneits and costs of deregulation for the market as a whole should be considered, but the USDA does not routinely consider them in its decision-making process.162 Several recent court cases brought by public interest groups have demonstrated that the USDA should pay more attention to the economic impacts of GM contamination on conventional and organic farming.163 159 160 161 162 163 Committee on Agriculture, Nutrition, & Forestry 99 (Nov. 2008), available at http://www.gao.gov/new.items/d0960.pdf. Comm. on the Impact of Biotechnology on Farm-Level Economics and Sustainability, Nat’l Research Council of the Nat’l Acads., supra note 5, at 169-174. GianCarlo Moschini & Harvey Lapan, Labeling Regulations and Segregation of First- and Second- Generation GM Products: Innovation Incentives and Welfare Efects, in Regulating Agricultural Biotechnology: Economics and Policy 263, 279 (Richard E. Just, Julian M. Alston & David Zilberman eds., 2006). Note that, while it is not discussed here, there may also be positive externality from the use of GM crops to non-GM crops that should be part of the discussion, See, e.g., W.D. Hutchinson et al., Areawide Suppression of European Corn Borer with Bt Maize Reaps Savings to Non-Bt Maize Growers, 330 Sci. 222, 224 (2010); Comm. on the Impact of Biotechnology on Farm-Level Econ. and Sustainability, Nat’l Research Council of the Nat’l Acads., supra note 5, at 86-89. here has been some discussion of coexistence for several years and the USDA was encouraged to support coexistence, but it remains a side issue that does not really afect decision-making. See generally Advisory Comm. on Biotechnology and 21st Century Agric., U.S. Dep’t of Agric., What Issues Should USDA Consider Regarding Coexistence Among Diverse Agricultural Systems in a Dynamic, Evolving, and Complex Marketplace?, available at http://www.usda.gov/documents/Coex_inal.doc. Geertson Seed Farms v. Johanns, 2007 WL 518624 (N.D. Cal. Feb. 13, 2007) (GM alfalfa); Int’l Ctr. for Tech. Assessment v. Johanns, 473 F. Supp. 2d 9 (D.D.C. 2007) (GM bentgrass); see also Emily Waltz, Courts Upbraid USDA for New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 199 Regarding GM bentgrass and alfalfa, both the Washington DC Federal Court164 and the Northern California Federal Court165 in 2007 found that the USDA failed to provide a complete environmental impact statement (EIS)166 under the National Environmental Policy Act (NEPA). In 2009, the reached a similar conclusion on GM sugar beets.167 Under NEPA, the USDA is supposed to conduct a full environmental assessment, including a basic economic assessment of the efects of a GM crop on non-adopters, where there is likelihood of signiicant environmental efects.168 Such assessments however had not been conducted because the USDA considered that there was no likelihood of signiicant efect. he case of alfalfa is the most revealing.169 In 2007, the U.S. District Court of Northern California issued a ruling that clearly highlighted some important gaps in the current system.170 One major problem underscored by the alfalfa case is the lack of federal rules regarding accidental contamination of organic products with GM material.171 he USDA maintains that producers may not “necessarily” lose their organic certiication if they unintentionally sell contaminated organic crops 164 165 166 167 168 169 170 171 ‘Lax Review’ of GM Crops, 27 Nature Biotechnology 970, 970 (2009), available at http://www.emilywaltz.com/sugar_beets-Nov_09.pdf; Waltz, supra note 48, at 180. Int’l Ctr. for Tech. Assessment, 473 F. Supp. 2d at 29. Geertson Seed Farms, 2007 WL 518624 at *12. An EIS is a complete assessment of potential environmental and human health efect. See 40 C.F.R. § 1502 (2011). Ctr. for Food Safety v. Vilsack, 2009 WL 3047227 at *9 (N.D. Cal. Sep. 21, 2009); Waltz, supra note 163, at 970. 42 U.S.C. § 4332(C); Apart from adventitious presence and non-GM certiication in the three contended cases (alfalfa, bentgrass, and sugarbeet), there is also a nonzero likelihood of genelow to weedy relatives in the U.S., which is not the case for corn or soybeans. See Comm.on the Impact of Biotechnology on Farm-Level Econ. and Sustainability, Nat’l Research Council of the Nat’l Acads., supra note 5, at 107-12. See Endres, supra note 43, at 141 (discussing this case and its consequences). Geertson Seed Farms, 2007 WL 518624 at *6. Geerston Seed Farms, 2007 WL 518624 at *5; Organic standard is a production process, i.e., the presence of GM or other prescribed materials in the inal product does not preclude the presence of a standard. See generally James Deaton & John P. Hoehn, he Social Construction of Production Externalities in Contemporary Agriculture: Process Versus Product Standards as the Basis for Deining “Organic”. 22 Agric. & Human Values 31, 31-38 (2005). 200 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 because of the lack of testing and the fact the USDA national organic standard is based on production process.172 Some organic producers may not agree as the market test may not be the same as the legal standard; consumers expect zero GM content in organic products, regardless of the oicial organic standard, and producers do not want to cheat them. As the Court indicated, even if the USDA allowed contamination of organic alfalfa to occur through high tolerance levels for adventitious presence, and sellers could still claim organic status when contamination occurred accidentally, this would not correspond to what organic consumers believe they are buying: “many farmers and consumers have higher standards than what the federal government currently permits; to these farmers and consumers organic means not genetically engineered, even if the farmer did not intend for his crop to be so engineered”.173 In other words, organic consumers could feel cheated and organic producers would feel that they do not produce an organic GM-free product. he right to produce organic is diferent from the right to sell a product that is labeled organic.174 he case resulted in a temporary ban in the planting of GM alfalfa in 2008,175 but was appealed and later reviewed by the U.S. Supreme Court.176 he outcome was that the USDA completed its irst EIS of a GM crop for alfalfa.177 he Supreme Court decision also prompted the USDA to consider coexistence measures. In efect, at the conclusion of 172 Geertson Seed Farms, 2007 WL 518624 at *5; Stephanie E. Cox, Genetically Modiied Organisms: Who Should Pay the Price for Pollen Drift Contamination?, 13 Drake J. Agric. L. 401, 407 (2008). 173 Geertson Seed Farms, 2007 WL 518624 at *5. 174 he right to produce organic represents farmer’s choice to adopt certiied organic practices and avoid prohibited substances to comply with the organic standard and adhere with its philosophy. he right to sell labeled organic product is simply the right to sell products that comply with certiication standards without certainty of GM –free status. 175 Geertson Seed Farms, 2007 WL 518624 at *12; Dan Levine, Circuit Deals Blow to Altered Crops, The Recorder (Sept. 3, 2008), http://www.law.com/jsp/ca/ PubArticleCA.jsp?id=1202424229687. 176 Monsanto Co. v. Geertson Seed Farms, 130 S. Ct. 2743, 2749 (2010). 177 Completed on December 16 2010, after 47 months. Animal & Plant Health Inspection Serv., U.S. Dep’t of Agric., Glyphosate-Tolerant Alfalfa Events J101 and J163: Request for Nonregulated Status, Final Environmental Impact Statement (2010), available at http://www.aphis. usda.gov/biotechnology/downloads/alfalfa/gt_alfalfa%20_feis.pdf. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 201 the EIS, the USDA Secretary ofered two options for moving forward, either unconditional deregulation, or conditional deregulation with coexistence measures (such as geographic restrictions and isolation distances).178 But after consultations in the US Congress, and reported industry pressures, on January 27 2011, the USDA opted to deregulate the crop unconditionally.179 hus, even if contamination options were considered for the irst time, they were left aside by the regulators. In a similar case, concerning a much larger commercial crop, the GM sugar beet case did advance discussions around coexistence guidelines at the USDA. he 2008 case was iled in the U.S District Court for Northern California by a coalition of organic farmers, consumers and environmental groups that were concerned about the GM trait afecting organic sugar beet and related crops.180 While courts were discussing the case, the herbicide tolerant sugar beet was rapidly adopted by 59% of farmers within a season, and reached a 95% adoption the second season.181 In 2010, discussions around the case focused on whether GM sugar beets could still be planted while the USDA complied with its requirement to provide an EIS.182 In August 2010 the District Court ruled that GM sugar beets could not be planted,183 and in December 2010 the Court ordered growers to pull from the ground 265 acres of baby beet plants that were intended for use in 2012;184 this resulted in market fears that insuicient seed supplies would cause a large drop in US sugar production in the 2011 season.185 In February 2011, while the EIS was being inalized, the USDA issued a temporary partial deregulation of GM sugar beets.186 his 178 Under the Supreme Court ruling, the USDA has the authority to grant partial deregulation. Monsanto, 130 S. Ct. at 2761; Pollack, supra note 53. 179 Bill Tomson & Scott Kilman, Genetically Modiied Alfalfa Gets Green Light for Use, Wall St. J., Jan. 28, 2011, at A5. 180 Waltz, supra note 163. 181 Andrew Marshall, 2nd-Generation GM Traits Progress, 28 Nature Biotechnology 306, 306 (2010). 182 Lucas Lauren, Sugar beets still in the game, 28 Nature Biotechnology 992 (2010). 183 Ctr. for Food Safety v. Vilsack, 734 F. Supp. 2d 948, 955 (N.D. Cal., 2010). 184 Ctr. for Food Safety v. Vilsack, 753 F. Supp. 2d 1051, 1062 (N.D. Cal., 2010). 185 William Neuman & Andrew Pollack, Duel Over Sugar Beet Seeds Could Create Shortage, N.Y. Times, Dec. 3, 2010, at B7. 186 Ctr. for Food Safety v. Vilsack, 2011 WL 672802 at *2 (N.D. Cal., Feb. 18, 2011). 202 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 allowed GM sugar beets to be planted in 2011 under eighteen speciic conditions (listed in a compliance agreement) including a requirement that the GM beets be planted at a minimum distance from organic sugar beets or other related plants.187 While this decision could be seen as a step towards coexistence guidelines, the conditional requirements were intended to be temporary188 in order to avoid market disruption until the completion of the EIS. But the decision was not well received by the plaintif organizations, who iled a legal challenge to USDA’s decision.189 Interestingly it was not accepted by the developing company either, who felt that the EIS was unnecessary.190 Regardless of this,191 the sugar beet case shows that while the USDA considers coexistence as an issue, it has maintained a reactive posture that may not be sustainable, especially as new cases are brought to courts. hese two cases underline the lack of involvement of the USDA in managing market risks before planting, leaving this task to the industry. But do the companies efectively respond to market risks? Perhaps because of the diiculty for non-GM farmers to establish liability,192 whether under private nuisance, trespass, or strict liability,193 the response has not been suicient. he soybean industry is the only industry that has developed 187 Michael J. Crumb, USDA: Farmers Can Plant Genetically Modiied Beets, Associated Press, Feb. 4, 2011, http://www.foodmanufacturing.com/scripts/ ShowPR~RID~19253.asp.; Andrew Pollack, U.S. Says Farmers May Grow Engineered Sugar Beets, N.Y. Times, Feb. 5, 2011, at B3. 188 Crumb, supra note 187; Pollack, supra note 187. 189 Farmers and Conservationists Challenge Latest Federal Approval of Genetically Engineered Sugar Beets, Ctr. for Food Safety (Feb. 4, 2011), http:// truefoodnow.org/2011/02/04/farmers-and-conservationists-challenge-latestfederal-approval-of-genetically-engineered-sugar-beets/; Lyndsey Layton, Genetically Modiied Crops Get Boost over Organics with Recent USDA Rulings, Wash. Post (Mar. 23, 2011), http://www.washingtonpost.com/politics/ genetically-modified-crops-get-boost-over-organics-with-recent-usdarulings/2011/03/10/ABAAWNLB_story.html. 190 Layton, supra note 189 (noting Monsanto’s subsequent suit against the government for not fully deregulating GE sugar beets). 191 See, e.g., Henry I. Miller, he Seeds of Irresponsible Activism, Forbes (Jan. 22, 2010, 12:15 PM), http://www.forbes.com/2010/01/22/farming-geneticallyengineered-seeds-environment-opinions-contributors-henry-i-miller.html. See generally Herdt, Toenniessen & O’Toole, supra note 5. 192 See Cox, supra note 172, at 409. 193 Id. at 409-11. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 203 a comprehensive stewardship program to ensure that unapproved GM or approved GM does not enter the non-GM chain and that exports are being maintained.194 Other commodity groups, such as corn, rice, and wheat, have adopted voluntary measures that have not been as successful.195 he Biotechnology Industry Organization has developed voluntary stewardship guidelines encouraging strict coninement of ield trials, and a market risk assessment with import approval before domestic commercialization.196 Yet, recent events demonstrate that these practices are not yet universal applied by all companies. Certain states have tried to advance speciic legislations to cope with the lack of federal rules, and the challenges for any farmer to get compensated for loss of organic certiication, but their eforts have been limited.197 With new GM crops and products (like salmon) in the process of being approved, this approach may become more successful in moving forward in the future. In the absence of federal rules, however, contaminations could still happen. As of now, USDA’s Animal and Plant Health Inspection Service (APHIS) is only required to include safety considerations in its decisionmaking; the result of an economic assessment, if conducted (e.g., for alfalfa), is not even a factor in the deregulation decision.198 Reforming the system would require introducing market risk assessments. As a result of the assessment, the USDA might determine that a new GM crop facing or creating large commercial risks could only be grown under 194 he American Soybean Association introduced a rigorous eleven-point stewardship program in 1999 (before the StarLink debacle), and imposed it on biotech companies willing to sell new GM soybean varieties. Among other things, the plan requires companies to obtain approval for imports in the sixteen top markets for US soybeans. See Redick, supra note 101; homas P. Redick & Michael J. Adrian, Do European Union Non-Tarif Barriers Create Economic Nuisances in the United States?, 1 J. Food L. & Pol’y 87, 120-21, 12930 (2005). 195 Redick & Adrian, supra note 194, at 122-24. 196 Endres, supra note 43, at 131; Biotechnology Industry Approves Product Launch Stewardship Policy, Biotechnology Indus. Org., May 21, 2007, http://www. bio.org/node/1759. 197 See Cox, supra note 172, at 413-17; homas P. Redick & Donald L. Uchtmann, supra note 66, at 227-29. 198 Interview with Andrew Roberts, U.S. Dep’t of Agric., Animal & Plant Health Inspection Serv., Bureau of Regulatory Serv. (Nov. 2009). 204 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 certain geographical or temporal restrictions, with bufer zones, and/or traceability and segregation rules. 199 Of course, a full assessment would not be required in all cases, simply because not all crops present the same potential market risk. here are biological and marketing diferences across cases, e.g., produce and grains are not sold the same way. Going forward, the USDA should strive to consider which new crops constitute a signiicant economic risk and which do not.200 A decision tree could be used to decide whether a case requires a full assessment and what questions should be asked.201 Even the EE approval of new GM crops does not entail a formal assessment of the potential commercial market risks.202. We caution that market tests that are too stringent could easily transform into a “precautionary approach” like the EU’s regulatory approach, which would be a clear mistake. Preventing commercialization of potentially promising crops for an unsubstantiated reason (unproven risk) would be detrimental to farmers and consumers: it would result in less R&D efort, and could afect long term agricultural productivity with global efects including on food security. 199 See generally Allen E. Van Deynze et al., Gene Flow in Alfalfa: Biology, Mitigation, and Potential Impact on Production (2009) (discussing scientiically proven strategies that would permit coexistence of conventional, organic, and biotechnology-derived alfalfa). Interestingly, Canada considered a bill (GMO exportability bill C-474) that was supposed to cover basic market risks, but the proposed bill was rejected in Parliament. Karen Stephenson, GMO Exportability Bill C-474 Shot Down in Canadian Parliament, Suite101. com (Feb. 10, 2011), http://www.suite101.com/content/gmo-exportabilitybill-c-474-shot-down-in-canadian-parliament-a345789. 200 For instance, Argentina, one of the leading GM crop-adopting nations, has included export risk assessment (and more speciically, the risk of losing exports to Europe) as a mandatory step before approval of new GM crops. Jose Benjamin Falck-Zepeda & Patricia Zambrano, Socio-economic Considerations in Biosafety and Biotechnology Decision Making: he Cartagena Protocol and National Biosafety Frameworks, 28 Rev. Pol’y Res. 171, 182-83 (2011). 201 See Guillaume Gruère & Debdatta Sengupta, Biosafety Decisions and Perceived Commercial Risks: he Role of GM-Free Private Standards, Int’l Food Pol’y Res. Inst. (Discussion Paper No. 00847) 2009, at 21-22. 202 Falck-Zepeda & Zambrano, supra note 200, at 183. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence IV. 205 CONCLUSION: A BATTLE AGAINST THE STATUS QUO While the escape of unapproved GM material from conined ield trials (or speciic market channels) and the unintended commingling of approved GM with non-GM crops are very diferent situations, they both arise from a lack of regulatory oversight. In the irst case, all farmers stand to lose and it is often the legal responsibility of the developing company. In the second case it is a coexistence issue in the marketing channel. Recent events have shown that even the U.S. courts do not provide suicient incentive for companies to proactively contain market risk. But court decisions have demonstrated that the implicit laissez faire approach on coexistence is not sustainable. Current procedures for approving and managing GM crops in the U.S. could be improved at a relatively low cost compared to the damage that has already occurred under the current system. he U.S. government should begin by clarifying rules and responsibilities regarding: 1) the management of conined ield trials of unapproved GM events; 2) coexistence at the approval stage, at the ield level, and in the supply chain; and 3) the thresholds for adventitious presence for organic and non-GM. he government should help to anticipate and manage market risks from the time of ield trials to commercial release. In parallel, large importers should also reconsider the issue of zero tolerance for unapproved GM products. In 2008, the World Health Organization/ United Nation Food and Agricultural Organization’s Codex Alimentarius Commission introduced a procedure for temporary approval of unapproved GM material present at low levels in imports and that have been authorized in the country of export.203 Yet, despite an international consensus around these guidelines, as of March 2011, no country had explicitly adopted this approach. . In contrast, the EU Commission does test for unapproved biotech crops under its Rapid Alert system.204 In an attempt to avoid further trade disruption, at the behest of its animal feeding industry, the 203 Codex Alimentarius Comm’n, Guideline for the Conduct of Food Safety Assessment of Foods Derived from Recombinant-DNA Plants 15-18 (CAC Doc. GL 45-2003 rev. ed.2008). 204 See generally European Comm’n, The Rapid Alert System for Food and Feed Ann. Rep., available at http://ec.europa.eu/food/food/rapidalert/docs/ report2009_en.pdf. 206 NORTHEASTERN UNIVERSITY LAW JOURNAL Vol. 4, No. 1 EU has proposed use of a non-zero (0.1%) tolerance level for unapproved events intended for animal feed in the process of approval.205 For instance, this tiny tolerance may help to avoid the costly temporary ban of GM soybeans imports from unintended commingling of traces of unapproved corn, but the measure would not include crops not yet preliminarily approved by the European Food Safety Authority in the multi-step EU approval process (like LL601 rice or Bt34 rice from China).206 Past mistakes with accidental contamination were major setbacks to the global biotechnology revolution in agriculture with untold costs. Beyond economic impacts on U.S. farmers, these incidents have had a much wider impact on the acceptance of biotechnology.207 In particular, developing countries that are in the process of creating their biosafety regulations have questioned the feasibility of regulating GM crops and producing both GM and non-GM crops with the hindsight of U.S. contamination incidents.208 here is evidence that the need for regulatory overhaul is commonly known, and has been known for a long time,209 but there is a strong reluctance to change. Biotechnology companies have developed guidelines 205 Charlie Dunmore, Most EU States Back Trace GM in Food Imports: Paper, Reuters, Jan. 21, 2011, http://www.reuters.com/article/2011/01/21/us-eugmo-imports-idUSTRE70K57720110121. 206 Id. 207 See, e.g., Guillaume Gruère & Debdatta Sengupta, GM-Free Private Standards and heir Efects on Biosafety Decision-Making in Developing Countries, 34 Food Pol’y 399, 399, 405 (2009); Nii Armah Kweiio-Okai, Ghana: GM Foods Can Wait, GhanaWeb, Sept. 4, 2010, http://www.ghanaweb.com/GhanaHomePage/ NewsArchive/artikel.php?ID=189646; Mary Lou Marigza, Farmers Protest BT Eggplant Testing, N. Dispatch, Aug. 14, 2010, http://bulatlat.com/main/ 2010/08/14/farmers-protest-bt-eggplant-testing. 208 See generally Bratspies, supra note 64 (using the StarLink case to highlight structural laws in the regulatory process and proposing a comprehensive new approach toward regulation of GM crops); Michael R. Taylor & Jody S. Tick, Post-Market Oversight of Biotech Foods: Is the System Prepared? Pew Initiative on Food and Biotechnology (2003) (analyzing post-release and post-market oversight issues posed by biotech crops, as well as the adequacy of U.S. government policies and programs to address them); Genetically Engineered Crops, supra note 39, at 34 (discussing proposed regulatory changes by U.S. agencies to enhance oversight of GM crops). 209 See, e.g., Bratspie, supra note 64; Taylor & Tick, supra note 208; Genetically Engineered Crops, supra note 39. New and Existing GM Crops: In Search of Efective Stewardship and Coexistence 207 around the issue of possible unintended movements but companies may not apply them consistently. Several grain associations have tried to adopt stewardship programs designed to manage market risks, but they have not all been successful. In the absence of federal action, certain States have tried to advance towards their own measures, but only on speciic and limited cases.210 he USDA has acknowledged the issue211 but not addressed it. he USDA Secretary has repeatedly emphasized the fact that the regulations needed to be revised to ensure the viability of GM and non-GM production,212 going as far as proposing a set of new coexistence rules for the case of alfalfa, but he was pushed to retract his position and deregulate alfalfa unconditionally.213 Attempts to address these issues have come from every level, but it is the federal government who sits in the best position to regulate. he stakes are too high for policy makers to defend the status quo. GM crops hold tremendous promise for the future of U.S. and world agriculture, but they must be managed and regulated in a way that assures the marketplace that economic risks are properly managed. 210 Cox, supra note 172, at 416-17 (describing legislative proposals in California and Vermont); Redick & Uchtmann, supra note 66, at 232-33 (citing the example of rice in California). 211 See U.S. Dep’t of Agric., Advisory Comm. on Biotechnology and 21st Century Agric., What Issues Should USDA Consider Regarding Coexistence Among Diverse Agricultural Systems in a Dynamic, Evolving, and Complex Marketplace? 7 (2008), available at http://www. usda.gov/documents/Coex_inal.doc. 212 Neuman & Pollack, supra note 185, at B7; Voosen, supra note 57. 213 While the measure was supported by large non-GM retailers and processors (Whole Foods Market, Organic Valley, and Stonyield Farm), it was strongly opposed by agricultural commodity groups, biotech groups and, interestingly, by the Organic Consumer Association. Ag Groups Write White House Regarding GM Alfalfa, W. Farm Press (Jan. 11, 2011, 1:07pm), http://westernfarmpress. com/alfalfa/ag-groups-write-white-house-regarding-gm-alfalfa; Jeferson Dodge, Frankenfoods, Boulder Wkly. (Feb. 10, 2011), http://www. boulderweekly.com/article-4397-frankenfoods.html.

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New and Existing GM Crops: In Search of Effective Stewardship and Coexistence

New and Existing GM Crops: In Search of Effective Stewardship and Coexistence

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