An uptick in the federal government’s reliance on voluntary commitments, agency announcements and guidance has helped the Make America Healthy Again movement rack up quick wins and offers industry a measure of flexibility, but sidestepping traditional rulemaking could leave companies exposed to legal and regulatory risks, warns a top USDA official.
The agencies overseeing the food supply have long used voluntary targets to encourage reformulation, including its sodium-reduction initiative, but the Trump administration has embraced the practice more broadly as a way to push changes to the food system without waiting for regulation. Examples include HHS Secretary Robert F Kennedy, Jr’s “understanding” with CPG companies to phase out select synthetic colors, FDA plans to encourage companies to lower added sugar in processed and prepared foods, and HHS’ decision to propose a definition of ultra-processed foods via a white paper rather than a proposed rule.
On the surface, less formal approaches like these are a win-win for the government and industry. Because they can drive change more quickly than a formal rulemaking, which can take years, the government can act within a single administration and companies have more time and latitude to decide how, or whether, to reformulate their products.
The trade-off, however, is that these approaches can shape consumer expectations, influence state lawmakers and provide fodder for private litigation – even when the agency has not issued a legally binding requirement, warned USDA General Counsel Tyler Clarkson.
Danger on two fronts
At the Food & Drug Law Institute Food Advertising Conference late last month in Washington, DC, Clarkson stressed his statements were his personal views, and described this phenomenon as “government by signal,” or “policy made through instruments that impose no obligation, and enforced by people who were never asked to enforce it.”
While he acknowledged that guidance, if done well, can play a constructive role in de-risking the regulatory environment for industry and provide transparency to the public. But, he added, “a problem arises when guidance leaves the proverbial federal building.”
He explained: “A warning letter binds no one. As a matter of law, a guidance document binds no one. A request for information, a preamble, a press release – none of them binds anyone. And every one of them is, in a courtroom, evidence of what a reasonable consumer expects, evidence of what the government believes, including what it believes about science, and often enough, lengthy recitation of policy alternatives that can be quoted selectively.”
Thus, the door is open for a litany of litigation in which plaintiffs need not rely on the force of law offered by a binding regulation, rather they simply need “it to be admissible and quotable, and those are much lower bars.”
Clarkson also warned of second unintended, and often overlooked, danger: state legislatures.
In the absence of a federal definition for ultra-processed foods or official ban on synthetic colors and select additives, several states are attempting to legislate ingredients. Among these are Texas, which beginning Jan. 1 would require products to warn when they include any of 44 ingredients that are not recommended for human consumption by appropriate authority in Australia, Canada, the European Union or the United Kingdom.
These types of laws often spur similar action in other states, which may pass legislation that is similar, but not identical – creating a patchwork of laws that are difficult to follow.
In both instances, Clarkson said, “the government captures the policy benefit of a signal without bearing the procedural cost of a rule, and a regulated industry absorbs the legal consequence.”
This arrangement is not stable or defensible, Clarkson said.
A call for change
Given the downside to governing via signal, Clarkson makes the case for more formal notice-and-comment rulemaking – not just because the Administrative Procedure Act requires it – but because the process helps agencies identify errors, compile technical knowledge, draw legally enforceable lines and create a reviewable administrative record.
“A guidance document has no such mechanism,” he added. “It is issued, and the agency learns of the error the way everyone else does once it is already out in the ether, and perhaps most adversely in a court proceeding.”
What should food companies do when government ‘asks’ rather than orders?
Given the risks that governing by signal poses to industry, Clarkson argues food companies and other stakeholders should not assume informal documents, agreements or guidance are harmless just because they are not binding.
Rather, he advises companies to consider if documents:
- Create expectations that effectively operate like obligations,
- Define a category without a statutory anchor, and
- Give agencies a result they may not be able to attain through a rule.
If the answer is yes, then a rulemaking may offer more protection, even though it may take longer to attain.
“Notice and comment rulemaking remains the gold standard, and for good reason. It is the only instrument that comes with its own record, its own limits and its own check,” Clarkson said.
“Guidance is cheap and easy, and it has a legitimate place. But guidance carries an externality that no one prices when it is issued,” he added, explaining: “A plaintiff’s bar that will seize on it, lift it out of context and present it to a jury as the government’s conclusion about something on which the government never reached a real conclusion. The agency pays nothing for that at the time. Regulated industry pays for it later.”
