As part of the health care reforms of 2010, Congress imposed a
new regulatory scheme on "chain restaurants." New
legislation requires these restaurants to provide extensive
nutrition information about every regular menu item. Some of that
information—notably calorie counts—must be set
out on every menu and menu board. The FDA is drafting implementing
regulations. This process has proven surprisingly complex as the
FDA tries to take into account the many ways in which food is
prepared and presented, and the many kinds of establishments that
serve food. Although some details are still undetermined, it is
clear that restaurants—even those that are subject to
existing state and local regulations—will need to expend
significant effort and money to comply with the eventual
regulations.
This Commentary will summarize the new legislation, the
draft regulations the FDA published earlier this year, and some of
the issues shaping the rulemaking process.
The FDA currently plans to have final regulations in place by June
30, 2012,1 and intends to make the regulations
"effective" six months later.2
Current Law and the Push to Fight Obesity Through Menu Labeling Regulations
All packaged food sold in the United States must bear a label
stating the food's nutrition content, including calories per
serving. Until recently, restaurants were exempt from federal
nutrition labeling requirements.3
Recent years have seen increasing political support for requiring
restaurants to disclose nutrition information, especially calories.
According to the FDA, posting nutrition information "should
help consumers limit excess calorie intake and understand how the
foods that they purchase ... fit within their daily caloric and
other nutritional needs." More generally, the FDA asserts that
"nutrition labeling requirements should help consumers to make
more informed choices about the nutritional content of the food
they purchase."
It is far from clear that menu labeling laws will improve public
health. A July 2011 study published in the prestigious BMJ
(formerly known as the British Medical Journal) found that
a New York City menu labeling law has had, on average, no effect on
calorie intake. That same study reviewed prior research on the
subject and found that those studies "showed mixed
results." Some studies predicted a modest impact, while others
found no measurable effects.4
Nevertheless, a patchwork of state and local jurisdictions have
already enacted menu labeling laws. The best known of these are
laws governing California and New York City.5 Similar
legislation has also been passed in Connecticut, Maine,
Massachusetts, New Jersey, Oregon, Vermont, and a variety of cities
and counties. These laws will soon be joined (and largely
preempted) by FDA regulations.
Federal Legislation
Congress first legislated menu labeling in 2010, with the
passage of the Patient Protection and Affordable Care Act
("PPACA"). This lengthy bill is better known as part of
President Obama's sweeping efforts at health care reform.
Section 4205 of the PPACA mandates that covered restaurants provide
nutrition information, and it calls upon the FDA to issue
implementing regulations.6 This section falls within a
portion of the bill designed to prevent disease.
The menu labeling law does not cover every business that sells
food. Rather, § 4205 only covers "restaurant[s] or
similar retail food establishment[s]"7—a
phrase that the FDA is struggling to define. Furthermore, §
4205 does not apply to every "restaurant or similar retail
food establishment," but only to those that are "part of
a chain with 20 or more locations."
The scope of § 4205 is, however, considerably broader than
just so-called "fast food" restaurants. As long as a
restaurant is part of a chain of 20 or more locations, it is
covered regardless of the prices charged, the kind of food served,
or whether there is table service. Neither Congress nor the FDA has
identified any restaurant or class of restaurant as serving
unhealthy food.
Section 4205(b) requires covered restaurants to:
- Post calorie information on menus, on menu boards, and next to
self-service displays;
- Make available printed information containing a broader range
of nutritional information; and
- Post a statement concerning suggested daily caloric
intake.
The statute exempts some food items, including condiments, daily specials and other temporary menu items, and food served as part of a marketing test.
Preemption of State and Local Regulations
A notable feature of this legislation is that it preempts
conflicting state law. States and their subdivisions are now
precluded from establishing "any requirement for nutrition
labeling of food that is not identical to the [federal]
requirement[]."
As noted above, restaurants that are not part of a 20-location
chain are exempt from the new federal requirements. However, these
smaller businesses can choose to be regulated by the federal
mandate in order to obtain the benefit of federal preemption. A
business that registers with the FDA will be subject to FDA menu
labeling regulations but becomes exempt from all state and local
regulation.
The preemption of local regulation will be a significant benefit.
Businesses operating across state borders need not worry whether
local regulations are inconsistent, enabling them to use a single
menu for all their locations. And while compliance with the FDA
regulations will by no means be costless, restaurants (of any size)
are shielded from potentially more onerous local regulation.
An Overview of the FDA's Proposed Regulations
The FDA does not view § 4205 as being immediately
enforceable.8 Section 4205 calls upon the FDA to
implement regulations to carry out the section's mandate.
Accordingly, the FDA published proposed rules, along with an
extensive explanation, on April 6, 2011.
The proposed regulations implement the mandates set out in §
4205. The regulations specify where on a menu required information
must be posted, the type size and color of the statements, how to
provide information about self-service foods (such as buffets and
salad bars), and a host of other details.
These regulations will impose significant burdens on restaurants.
Restaurant owners will need to redesign menus, and many will need
to purchase new menu boards in order to add a column disclosing the
calories in each item. The required disclosures will tend to crowd
out other information that restaurants would otherwise place on
their menus, such as additional product offerings or promotional
messages. For example, covered restaurants will be required to
print, on every menu page: "A 2,000 calorie daily diet is used
as the basis for general nutrition advice; however, individual
calorie needs may vary."
Since menu labeling laws are already in effect in some state and
local jurisdictions, many businesses have already implemented some
of the required changes. Even for these restaurants, however,
additional changes will be required.
Unresolved Issues Affecting the Proposed
Regulations
The FDA, in drafting the proposed regulations, is struggling to
apply a somewhat murky legislative mandate to a large and
heterogeneous industry. The questions with which the FDA is
grappling include the following. Each has generated significant
commentary, both by the FDA as it seeks input and in the comments
submitted by people and businesses in response:
- What establishments, in addition to restaurants, are covered by
the new regulations?
- Must information be provided regarding alcoholic
beverages?
- How accurate must the nutrition information be?
- When will the new regulations come into effect?
Who Is Regulated? A wide variety of businesses
sell food to consumers for immediate consumption. Such businesses
include traditional restaurants, grocery stores, convenience
stores, movie theaters, sports arenas, hotels, amusement parks,
airlines, and many others. Determining which establishments are now
regulated has proven controversial.
Until passage of PPACA, "restaurants or other establishments
in which food is served for immediate human consumption" were
exempt from nutritional labeling requirements. The scope of §
4205 is not set out in parallel language. Section 4205 applies to
each "restaurant or similar retail food establishment."
This implies that there may be many establishments that remain
unregulated—establishments "in which food is served
for immediate consumption" but which are not
"similar" to a restaurant.
The FDA, at least, is of this view. Its proposed regulations would
only cover establishments "where the sale of food is the
primary business activity." The FDA's intent is to exempt
movie theaters, amusement parks, general merchandise stores,
hotels, trains, and planes, but not grocery stores or convenience
stores.
Must Nutrition Information Be Provided for Alcoholic
Beverages? Section 4205 mandates the disclosure of
nutrition information regarding all "food that is a standard
menu item." Under the Food, Drug, and Cosmetic Act,
"food" is defined to include "articles used for food
or drink." Citing this statutory definition, the FDA takes the
position that alcoholic beverages are "food" subject to
FDA jurisdiction.
Nevertheless, the FDA proposes that the new "labeling
requirements ... do not apply to alcoholic beverages." The
FDA's rationale is that primary responsibility over the
labeling of most alcoholic beverages resides with another agency
(the Alcohol and Tobacco Tax and Trade Bureau, which is part of the
Treasury Department). Thus although the FDA believes labeling would
result in health benefits, it will not require this labeling
because the FDA believes that "it is not clear that Congress
intended for the nutrition information disclosures required by
section 4205 to apply to alcoholic beverages ...."
How Accurate Must the Nutrition Information Be?
Menu labeling is hardly an exact science. A July 2011 study
comparing the calorie content of foods to the claims posted on
restaurant menus found that virtually no menu disclosures were
accurate to within 10 calories. Some menu claims understated
calorie content by hundreds of calories. On the whole, calories
were overstated as often as they were understated. The authors of
the study viewed "poor quality control of portion size"
as the likely cause of the inaccuracies.9
Section 4205 requires restaurants to have a "reasonable
basis" for their claims. The FDA interprets this phrase to
mean (among other requirements) that dishes must have no more than
120 percent of the calories, sugars, fats, cholesterol, or sodium
declared.
Many restaurants may have trouble meeting this standard of
accuracy. There is considerable variation from one serving of a
dish to the next, particularly in restaurants that prepare their
meals individually, by hand. Thus, if the proposed rule is adopted
without change, some restaurants will need to impose tighter
controls on how their meals are prepared.
When Must Restaurants Comply with the New
Regulations? The regulations implementing § 4205 are
not yet final; the FDA's internal timetable aims to publish the
final rules by June 30, 2012.10 The FDA proposes
"that the final rule become effective six months from the date
of its publication."
This timetable puts restaurants in a bind. The new regulations
will force restaurants to redesign their menus. Many restaurants
will find that they need to purchase new menu boards, and all will
need to have their menu items analyzed to determine nutrient
content. These tasks take time, and menu redesigns in particular
may not fit into the six-month window between publication of the
final regulations and their implementation. But since the final
regulations may vary from the current proposals, work done before
the final rules are published may be wasted.
Conclusion
Congress passed § 4205 under the theory that many consumers will significantly alter their behavior upon learning how many calories they are being served. Whether consumers will actually do so is anyone's guess, but restaurants will need to be prepared on a number of fronts. Restaurants should get ready to comply with the eventual FDA regulations, to compete in a new business environment, and to respond to public perceptions (and misperceptions) about their product offerings.
Footnotes
2.76 Fed. Reg. 19192, 19219 (April 6, 2011).
3.Until March 2010, this exemption was set out in the Food, Drug, and Cosmetic Act at § 403(q)(5)(A)(i).
4.Duanovsky, et al., "Changes in energy content of lunchtime purchases from fast food restaurants after introduction of calorie labeling: cross sectional customer surveys," BMJ 2011; 343:d4464 (published July 26, 2011).
5.Cal. Health & Safety Code § 114094; Rules of the City of New York, Title 24, § 81.50.
6.The language of § 4205(b) is codified as § 403(q)(5)(H) of the Food, Drug, and Cosmetic Act (21 U.S.C. § 343(q)(5)(H)).
7.FD&C Act § 403(q)(5)(H)(i).
8.More precisely, although the FDA views portions of § 4205 to be immediately effective, "FDA now intends to complete the notice-and-comment rulemaking process for [§ 4205] before initiating enforcement activities." 76 Fed. Reg. 4360 (Jan. 25, 2011).
9.Urban, et al., "Accuracy of Stated Energy Contents of Restaurant Foods," JAMA (July 20, 2011); Fisher, Christopher, "Overall Calorie Counts Accurate on Restaurant Menus, But Vary Widely For Some Individual Foods," The Behavioral Medicine Report (July 20, 2011).
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