What Happens When FDA Delays a Rule? Menu Labeling as a Case Study

by Jonathan A. Havens

Think back, if you will, to 2010. A magnitude 7.0 earthquake struck Haiti, a group of 33 Chilean miners were rescued after spending nearly 70 days underground, and President Obama signed the Patient Protection and Affordable Care Act1 (the Affordable Care Act or ACA) into law. The Affordable Care Act is of course best known for its health insurance provisions. However, a lesser-known part of the legislation—Section 4205—set the stage for what turned out to be a years-long debate over calorie and nutritional information on restaurant, convenience store, and grocery store menus and menu boards.

Menu Labeling Rule

By way of background, Section 4205 of the Affordable Care Act, which amended Sections 403(q)(5) and 403A of the Federal Food, Drug, and Cosmetic Act (FDCA or the Act),2 requires disclosure of calorie and other nutrition information by restaurants and similar retail food establishments that are part of chains with 20 or more locations doing business under the same name and offering for sale substantially the same menu items (covered establishments).3 More specifically, FDA’s rule implementing Section 4205 of the ACA requires that covered establishments post on menus and menu boards: (1) calorie information; (2) a statement on suggested daily caloric intake; and (3) a statement that written nutrition information is available upon request (and provide such information upon request).4

Beyond mandating disclosure of calorie and nutrition information, which is aimed at helping consumers make informed and healthful dietary choices, one of the driving forces behind Congress setting the framework for a national menu labeling standard in the ACA is the patchwork of inconsistent state and local menu labeling statutes that existed pre-Affordable Care Act. In fact, the retail food industry asked Congress to help ease their compliance burden by setting such a national standard, with the expectation that the federal law would preempt non-identical state and local standards.

National Labeling Standard and Preemption

Let us look very quickly at the preemption language in the national uniform nutrition labeling statute, which Congress enacted as part of the Nutrition Labeling and Education Act (NLEA) of 1990,5 and amended under the ACA. In relevant part, 21 U.S.C. § 343-1(a)(4) now states that:

[N]o State or political subdivision of a State may directly or indirectly establish … any requirement for nutrition labeling of food that is not identical to [FDA’s menu labeling requirements], except that this paragraph does not apply to food that is offered for sale in a restaurant or similar retail food establishment that is not part of a chain with 20 or more locations doing business under the same name… and offering for sale substantially
the same menu items.6

Interestingly, Congress included in the ACA a rule of construction stating that nothing in the Affordable Care Act’s amendments regarding nutrition labeling should be construed “to preempt any provision of State or local law,” with the notable exception of any state or local law that “establishes or continues into effect nutrient content disclosures of the type required” under 21 U.S.C. § 343(q)(5)(H) (i.e., those established by FDA in its Menu Labeling Rule).7 Accordingly, it seems clear that if a state or city tried to adopt menu labeling requirements that differ at all from FDA’s, such requirements would be preempted.

In order for a federal rule to preempt a state or local one, one would assume that the federal rule has to be in effect, or at least scheduled to go into effect. But what about a federal rule that is in effect but whose compliance date has delayed multiple times and whose future is not entirely clear? While Congress enacted and President Obama signed into law the federal menu labeling standard in 2010, FDA did not finalize its rule implementing the same until December 2014. Thereafter, the agency delayed the Rule’s compliance date until December 1, 2016, then Congress delayed it again until May 5, 2017, and finally FDA delayed it once more until May 7, 2018.8

New York City Gets Tired of Waiting

Soon after FDA’s most recent delay, New York City (the City) Mayor Bill de Blasio announced that the City would be enforcing its analog of FDA’s Menu Labeling Rule,9 which is nearly identical to the agency’s rule except it applies to covered establishments that are part of chains with 15 or more locations, rather than 20 or more. The City first proposed chain restaurant calorie labeling in 2008, with other cities and states following suit.10 The City updated its menu labeling rules in 2015 but delayed enforcement in anticipation of FDA’s Rule.11 After the agency’s most recent delay of its Menu Labeling Rule, the City decided to enforce its calorie labeling rules. This decision raised an interesting preemption question: how, if at all, does delay of a federal rule affect the rule’s preemption of state and local requirements? And what about the fact that the City’s rule applies to chains with 15 or more locations rather than FDA’s Rule which applies to chains with 20 or more locations?

Federal Preemption

The concept of federal law preempting conflicting state law is grounded in the Supremacy Clause of Article VI of the U.S. Constitution.12 The Supreme Court has “long recognized that state laws that conflict with federal laws are ‘without effect.’”13 Recall the discussion above about federal menu labeling preemption. The first part of 21 U.S.C. § 343-1(a)(4) makes sense, that states and cities cannot adopt menu labeling rules that differ from FDA’s Rule, but what about the second part, that the restriction does not apply to food that is offered for sale in restaurants that are not part of chains with 20 or more locations? Congress did not do us any favors with the double negative in the statute, but one possible interpretation of the restriction is that as long as a state or locality’s menu labeling rule applies to a restaurant that is part of a chain with less than 20 locations, such a requirement would not be preempted.

You have to hand it to New York City: crafting their menu labeling rule to apply to chains with 15 or more locations rather than 20 or more locations was pretty clever. But the City’s approach is problematic. Unless enforcement is restricted to restaurants with between 15 and 19 locations, it seems that the City’s rule would still be preempted because it also applies to chains with 20 or more locations. As an aside, New York City’s rule applies to a chain as long as one location is in the City itself. Think about a growing restaurant chain that wants desperately to have a single New York City location to get itself on the map. Even if the chain’s 14 other locations are outside of the City, the restaurant would need to comply with the City’s menu labeling rule.

Industry and FDA Fight Back

Unsurprisingly, on July 14, 2017, the National Restaurant Association’s (NRA) Restaurant Law Center (RLC), the Food Marketing Institute (FMI), the National Association of Convenience Stores (NACS), and the New York Association of Convenience Stores (NYACS) jointly filed suit in the Southern District to halt the City from implementing its menu labeling rule.14 In the suit, the groups alleged, among other things, that the City’s rule is preempted both expressly and impliedly by FDA’s Rule, and thus sought to preliminarily and permanently enjoin the City from enforcing its version of the same. And on August 14, 2017, Joon H. Kim, Acting United States Attorney for the Southern District of New York, filed a statement of interest in the case on behalf of FDA.15

Shortly after the U.S. Government filed its statement of interest, the parties reached an agreement to ensure that the City will not enforce its analog of the Menu Labeling Rule against plaintiffs’ members with 20 or more locations nationally until May 7, 2018, when FDA plans to start enforcing its Rule.16 Importantly, and as alluded to above, nothing in the stipulation prevents the City from enforcing its menu labeling rule against covered establishments that: (1) are not members of NRA, FMI, NACS, or NYACS; or (2) are part of a chain with fewer than 20 locations nationally. Accordingly, it is reasonable for covered establishments with between 15 and 19 locations to expect that the City will enforce its menu labeling rule against them. While the City believes it can enforce its rule against covered establishments with 20 or more locations that are not members of the trade groups identified above, such establishments would have an argument that the City’s rule is preempted by FDA’s rule.

The agreement followed an announcement by FDA Commissioner Scott Gottlieb, M.D., that the agency will be providing “additional, practical guidance” on its menu labeling rule by the end of the year.17 In response, City Health Commissioner Mary Bassett noted that while “[w]e take the FDA at its word,…[s]hould the FDA fail to live up to this commitment, this case remains before the court. The city is prepared to defend its right, independent of FDA action, to enforce its requirements that give New Yorkers the information they need to make informed dietary decisions.”18

What Does the Future Hold?

While the case discussed above merely applies to the City’s menu labeling rule, its outcome (temporary, though it may be) will likely make cities and states will think twice about enforcing their menu labeling rules before FDA enforces its Rule. Despite City Commissioner Bassett’s admonition to FDA, one has to wonder: if FDA delays the Menu Labeling Rule again and New York City moves forward with enforcement of its rule, how, if at all, will the agency’s delay factor into the preemption analysis? While courts have generally recognized federal agencies’ authority to set effective dates and compliance dates as they see fit,19 it will be interesting to see if such deference continues in the face of repeated Menu Labeling Rule delays, and whether this preemption debate expands into areas beyond menu labeling, particularly given the growing list of Obama-era food rules that the Trump administration has delayed.

  1. Pub. L. No. 111-148, 124 Stat. 119 (2010).
  2. Pub. L. No. 75-717, 52 Stat. 1040 (1938), as amended 21 U.S.C. §§ 343(q)(5) and 343-1 (2016).
  3. 21 U.S.C. § 343(q)(5)(H)(i) (2016).
  4. See FDA, Food Labeling; Nutrition Labeling of Standard Menu Items in Restaurants and Similar Retail Food Establishments, 79 Fed. Reg. 71,156 (Dec. 1, 2014) (codified at 21 C.F.R. Parts 11 and 101) (hereinafter, Menu Labeling Rule or the Rule).
  5. Pub. L. No. 101-535, 104 Stat. 2535 (1990).
  6. 21 U.S.C. § 343-1(a)(4) (2016).
  7. Pub. L. No. 111-148, 124 Stat 119, §4205(d).
  8. See FDA, Menu Labeling Requirements, http://www.fda.gov/Food/GuidanceRegulation/GuidanceDocumentsRegulatoryInformation/LabelingNutrition/ucm515020.htm (last visited October 11, 2017).
  9. See Press Release, De Blasio Administration Announces New Calorie Labeling Rules (May 18, 2017), http://www1.nyc.gov/site/doh/about/press/pr2017/calorie-label-rules.page.
  10. Id.
  11. Id.
  12. U.S. Const., art. VI, cl. 2.
  13. Maryland v. Louisiana, 451 U.S. 725, 746 (1981).
  14. See National Association of Convenience Stores et al. v. New York City Department of Health and Mental Hygiene et al., Case No. 1:17-cv-05324 (S.D.N.Y. July 14, 2017) , available at http://www.fmi.org/docs/default-source/newsrelease/7—2017-07-14-complaint.pdf?sfvrsn=24f6706e_0.
  15. See Statement of Interest of the United States of America, id, Aug. 14, 2017, available at http://dlbjbjzgnk95t.cloudfront.net/0954000/954966/https-ecf-nysd-uscourts-gov-doc1-127120805690.pdf.
  16. See Stipulation, id., Aug,. 25, 2017, available at http://www.restaurant.org/Downloads/PDFs/advocacy/NYC-Menu-Labeling-Agreement.
  17. FDA, Statement from FDA Commissioner Scott Gottlieb, M.D., on the FDA’s role in ensuring Americans have access to clear and consistent calorie and nutrition information; forthcoming guidance will provide greater clarity and certainty (Aug. 25, 2017), http://www.fda.gov/NewsEvents/Newsroom/PressAnnouncements/ucm573277.htm?source=govdelivery&utm_medium=email&utm_source=govdelivery.
  18. Dan Goldberg, New York City won’t begin enforcing new menu labeling rules, agrees to wait for FDA, Politico (Aug. 25, 2017), http://www.politico.com/states/new-york/albany/story/2017/08/25/new-york-city-wont-begin-enforcing-new-menu-labeling-rules-agrees-to-wait-for-fda-114157.
  19. See, e.g., Nat. Res. Def. Council v. EPA, 749 F.3d 1055, 1061 (D.C. Cir. 2014).