In the 2021 second-quarter edition of Nixon Peabody’s Crystal Ball newsletter, our Food, Beverage, & Agribusiness (FBA) team shares insights into various industry trends, including the new Occupational Safety and Health Administration (OSHA) COVID-19 emphasis program; the intellectual property landscape for CRISPR as applied to FBA; climate change and other environmental, social, and governance (ESG) issues for FBA businesses; and the increased use of carbon labels and packaging. We will continue to watch closely as these issues, and others, unfold in the months ahead and as we continue into 2021.
Effective March 12, 2021 through March 12, 2022, the Occupational Safety and Health Administration (OSHA) will implement a National Emphasis Program (NEP) aimed at identifying and eliminating, or at least reducing, exposures to COVID-19 in identified high-hazard industries and at preventing retaliation for reporting COVID-19 hazards. Under this program, meat processing plants, grocery stores, and full-service and limited-service restaurants are “Primary Targets.” The agribusiness industry generally, food and beverage manufacturing, and other food and beverage stores are “Secondary Targets” for increased enforcement efforts. As part of the NEP, OSHA will resume its on-site inspections, increase outreach to employers on COVID-19 safety, and enhance its compliance assistance for the targeted industries. OSHA also plans to conduct follow-up inspections on workplaces that it inspected in 2020. In its inspections, OSHA will evaluate all risks with a focus on COVID-19 and will review whether the employer implemented appropriate protective measures, including appropriate respiratory protection and use of other personal protective equipment. Targeting under this program began on March 26, 2021. To prepare, employers, especially those in the alleged high-COVID hazard categories, should reexamine COVID-19 safety controls and ensure compliance with appropriate federal, state, and local guidance. Shelagh Michaud, Rachel Conn
The intellectual property landscape for CRISPR (an acronym for “clustered regularly interspaced short palindromic repeats”) as applied to the food and agribusiness space is very much in flux. CRISPR-Cas technology uses a bacterial enzyme (e.g., Cas9) and a short piece of CRISPR RNA, based on DNA sequences found in bacterial genomes, to guide genome modifications in a much faster and more targeted way than previous techniques. In 2018, the European Patent Organization granted Cellectis a patent (EP3008186B1) to a method of using CRISPR-Cas to genetically modifying a plant genome. However, in 2019, Bayer CropScience AG filed an opposition arguing that the Cellectis patent claims were not novel or inventive over previous publications. While this European proceeding is ongoing, the corresponding U.S. patent applications have yet to be granted, due in part to similar arguments about prior publications. The outcomes of these patent disputes will have significant effects on freedom to operate and the licensing environment for food and agribusiness companies. Companies should also be aware of country-specific regulations for CRISPR-modified organisms. For instance, Europe regulates such organisms as genetically modified organisms (GMO), while the U.S. Department of Agriculture has so far declined to regulate CRISPR-modified plants as GMOs. Barring future regulations and patent disputes, the field appears ripe for CRISPR-modified plants in the U.S. Alissa Young, Nicole Kling
Recent trends show that many investors are focusing on the risks of climate change and other environmental, social, and governance (ESG) issues and their potential impact on companies’ future performance and profitability. For food, beverage, and agribusiness companies and their suppliers, concerns over the environmental and social impacts of production and distribution — e.g., deforestation and soil degradation, water usage, greenhouse gas emissions, waste management, energy efficiency, and fair trade and labor practices — figure prominently. However, even as investors demand greater disclosure of and accountability for ESG policies and practices, there is a lack of uniform standards for such disclosure. A recent flurry of U.S. Securities and Exchange Commission (SEC) activity targeting the climate risk and broader ESG space indicates the SEC is quickly ramping up its efforts to address this area, including through enforcement initiatives and future changes in the ESG disclosure framework. In light of this heightened focus from investors and the SEC, companies should take steps now to freshly assess the material ESG issues arising in their operations, review their public statements and disclosures in SEC filings for accuracy and consistency, and ensure that their board of directors is informed and engaged on ESG topics. Kelly Babson, Stephen LaRose
With the growing interest in climate change, there is a rising demand for companies to provide information about their product’s carbon impact. Several companies have responded by adding carbon footprint labels to their products, including the carbon impact of the product throughout the product’s lifecycle from origin, including how and where it is grown and/or produced, to its packaging and transportation and ultimate disposal or reuse. In addition to companies manufacturing plant-based products (e.g., Quorn Foods, Oatley) that conventionally have a smaller carbon footprint, a number of larger companies are adding carbon impact information to their labels. For instance, Unilever committed to labeling all of its products (approximately 70,000), while Panera Bread and Chipotle also pledged to include carbon labels on their products. As this movement gains traction, carbon labeling is likely to become more mainstream and influence consumers. While there is no federal uniform carbon labeling requirements yet, food and beverage manufacturers will want to keep abreast of the ever-changing landscape. Tracey Scarpello
The foregoing has been prepared for the general information of clients and friends of the firm. It is not meant to provide legal advice with respect to any specific matter and should not be acted upon without professional counsel. If you have any questions or require any further information regarding these or other related matters, please contact your regular Nixon Peabody LLP representative. This material may be considered advertising under certain rules of professional conduct.
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