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Federal court upholds Seafood Traceability Rule; targets fraud

Big business, lobbyists say it's too costly to make sure the fish they sell is what the labels say it is

A new federal plan to combat seafood fraud by requiring the fishing industry to trace their catches from boat or farm to the U.S. border has survived a court challenge.

The Seafood Traceability Rule surfaced during President Barack Obama’s final days in office and is scheduled to take effect on Jan. 1, 2018. For the first time, it requires seafood importers of species like tuna, grouper, swordfish, red snapper and blue crab to track fish entering the U.S. by species and origin.

The rule is the American government’s response largely to the international advocacy group Oceana’s evidence showing fish sold on restaurant menus and in retail stores are often identified as one species on labels and menus when they are actually a less expensive or inferior species.

The National Fisheries Institute and eight individual seafood companies, however, brought a lawsuit in January to prevent the rule from taking effect.

Imports account for 90 percent of the fish Americans consume each year — ocean products worth about $10 billion a year. Tracking it all can be complicated. U.S. District Judge Amit P. Mehta, who heard the case, understands that.

He wrote that “the vast majority of seafood consumed each year in the United States either originates from the waters far from home or is caught locally but passes through a foreign processing and distribution chain.”

“Take, for example, a catch of king crab harvested off the coast of Alaska,” the judge wrote. “That crab may be sent from Alaska to South Korea or China for processing and packaging. The packaged crab meat, in turn, is exported from Asia across the Pacific to the United States, to be combined with other ingredients into a crab cake, eaten by someone with little appreciation for the peripatetic journey that produced her meal…”

Mehta, himself born in India, says the “catch-to-table distribution chain, however, is rife with vulnerabilities.”

“It is well documented that, at each stage, opportunities seek to game the system, largely by circumventing laws or norms that regulate the manner in which the world seafood market operate,” he said. “Such activities — known as ‘illegal, unreported, and unregulated’ (IUU) fishing and ‘seafood fraud’ — have had profound global and domestic economic and non-economic consequences.”

The judge, appointed by Obama, ruled against the fishing industry.

“In the end, the rule weathers the storm of plaintiffs’ various challenges,” he said in his ruling. However, he first asked President Donald J. Trump’s Secretary of Commerce, banker Wilbur Ross, to sign on to the rule, and he did.

Until Ross came on board for Seafood Traceability, the “muddled” administrative record left some saying the rule was a last-minute maneuver of the Obama Administration.

“In the court’s view, Secretary Ross’ under-oath ratification of the rule cures any potential Appointments Clause promulgation,” Mehta wrote in his 67-page ruling, upholding the program.

The U.S.-based seafood importers, processors, and harvesters tried other arguments, such as claiming the Food and Drug Administration has exclusive jurisdiction over the industry. The judge did not see it that way.

He found the Magnuson-Stevens Fishery Conservation and Managment Act (MSA) gives the Department of Commerce all the power it needs to implement the rule.

Fish importers are also concerned about the financial cost of compliance. The department’s estimate for the first year’s cost to the industry ranges from $60,000 to $7.85 million and just more than  $6 million annually after that. There’s an “upper-bound” cost estimate of $20.3 million in the first year and $18.5 million for each year following.

Mehta said the industry cost of compliance — even at the “upper-bound” levels “remained only a fraction, less than one-half of one percent, of the $9 billion value of U.S. seafood imports.” Also,the record keeping burden would not pose a significant adverse impact on small businesses, according to his ruling.

Illegal, unreported and unregulated (IUU) fishing costs $10 billion to $23.5 billion worldwide with legitimate fishermen being among those who suffer the losses because IUU fish undercut their prices. Seafood fraud is misleading consumers about the type or origin of seafood to charge more than the actual market value

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