By Dave Roberts

Proposition 37 has been touted as a simple measure that provides consumers with the right to know what is in the food they buy at grocery stores. It requires that all products containing ingredients that have been genetically modified be labeled as such. While it’s questionable whether that knowledge would actually make consumers safer, there’s little doubt it would make California courts busier.

“Proposition 37 would create a litigation nightmare, no doubt about it, for grocers, who would need to comply with all of its requirements,” said Ron Fong, president and CEO of the California Grocers Association, speaking at a joint legislative committee informational hearing on the measure. “The proposition, in our opinion, is not a right to know — it’s a right to sue. And when it comes time to sue, grocers and retailers will be on the front line, no doubt about it. As a colleague of mine put it, ‘When lawsuits are filed, lawyers might not be able to figure out where your Cheerios come from, but they sure as heck know where they bought it.’ And that’s us, the grocery retailers.

“Grocers would be responsible for a paper trail on every ingredient on every product that we sell. And that’s potentially hundreds of thousands of products requiring paperwork down to the seed level. The average 50,000 square-foot grocery store that you probably shop at on the weekends contains over 100,000 SKUs [stock-keeping units] in a variety of categories coming from different suppliers. It would not be a simple process to keep a simple trail of paperwork. Is it the retailer that keeps the paperwork? Is it the supplier that keeps the paperwork? The wholesaler? You have to keep the paperwork with each delivery. That’s going to amount to a nightmare of potential paperwork and record keeping.”

Fong predicted that Prop. 37 will result in a repeat of the lawsuit tsunami created by Proposition 65, the Safe Drinking Water and Toxic Enforcement Act of 1986. A multi-million-dollar industry sprang up for bounty-hunter lawyers preying on businesses, often on flimsy pretenses. To protect themselves, businesses had to put up those annoying signs: “WARNING: This area contains a chemical known to the State of California to cause cancer and birth defects or other reproductive harm.”

Grocers

“Grocery retailers have lived and learned from Proposition 65,” said Fong. “In the last two decades, Proposition 65 has been abused by lawyers seeking to shake down grocers into paying huge settlements that benefit only trial lawyers. Similar to Prop. 65, the food labeling proposition creates a new category of lawsuits allowing private citizens the right to sue claiming that a food company, a grocer or farmer has violated the labeling provisions. Like Proposition 65, the food labeling measure would require businesses to pay attorney fees and other legal costs incurred by the plaintiff’s lawyers.”

Fong argued that, if Prop. 37 was actually designed to help consumers, it would not contain so many exemptions.

“For example, soy milk requires a label, but cow’s milk does not,” he said. “Dairy products, eggs, meat and poultry are all exempt, even though those animals are fed genetically engineered grain. Dog food with meat requires a label, but meat for human consumption does not. Fruit juices require a label, but alcohol made with some of the same genetically engineered ingredients is exempt. Food in grocery stores you have to label, but the same foods in restaurants are exempt. If the proponents of 37 are so concerned with the right to know, why would they exempt so many of these categories? The reality is Prop. 37 is not a simple labeling measure. It’s filled with lawsuits, loopholes, increased costs for the consumers — and that’s the bottom line.”

Kent Bradford, a professor of plant science at UC Davis, pointed out that genetic engineering of crops with grafting and cross-breeding has been going on for hundreds if not thousands of years, with no adverse consequences to human health. In fact, the newer techniques are safer.

“We do many things to create new crops based on genetics,” he said. “We genetically modify them all the time based on techniques that we use in standard breeding techniques and other types of approaches. All modify the genetics of our plants in one way or another. That’s how we make progress. Today we have newer techniques. That is, we can be very targeted, very specific in what we’re trying to do. If we need to enhance just one trait, one property of a plant, we have the capability of doing that. This makes the process safer, not less safe.

“Foods produced from that, which the proponents of Proposition 37 want to put warning labels on, have in fact been eaten by trillions of servings. The vast majority of these foods are fed to animals. And we eat and utilize billions of farm animals every year. I think if there were really serious health issues, our livestock producers would have noticed that. The vast majority of corn and soybeans utilize these [genetically modified] products. And certainly we have no documented cases yet of any health issues to humans or animals due to genetically engineered foods.”

European Union

The European Union, which bans genetically engineered foods, has commissioned hundreds of studies, none of which show serious health or safety issues with those products, according to Bradford. But California’s regulations would be even stricter than the EU if Prop. 37 passes. It would require a 0.5 percent maximum for genetically modified content versus Europe’s 0.9 percent threshold. Such a low threshold would increase litigation liability because a fraction of the tests create false positives, Bradford said.

Ironically, the environment would actually be worse off by eliminating genetically engineered crops.

“Utilization of herbicide-tolerant crops has enabled conservation of tillage,” said Bradford. “We have farmers who don’t own ploughs anymore because they can control their weeds in other ways. This has many benefits on reducing soil erosion, enhancing organic matter in soil. In fact, hopefully sequestering carbon out of the air into soil if we stop plowing enough. This has been a huge benefit. We have used more of some certain herbicides. But we have replaced herbicides that have much greater impact on the environment. So the overall impact on herbicides has gone down considerably.

“Insecticides used in corn and cotton have been much more dramatically reduced. There’s no question on any side that we have reduced the use of those insecticides which are the ones that tend to have the most likelihood of collateral injury to humans and particularly to workers who are plowing in these fields. If we can reduce the application of these insecticides, we would really like to do that. And that has been done.

“Labeling requirements such as this, which would create pushback in the marketing stream for these types of crops, would certainly be a disincentive for further investment in genetically engineered crops, including those that are in the pipeline that would be targeting much more important traits such as drought tolerance, salinity tolerance, heat tolerance. Issues that are very, very important in California. Water use is a key issue in California. We have already approved the concept of these types of advances. They can be done using genetically engineered crops.

“So I just have to ask whether in fact this is a strategy as a society we should pursue to put additional hurdles, de facto warning labels, on a whole technology. This is not like saturated fat or calories. This is an entire technology not specific to the product that we are going to label foods for, I think it’s clear to say, with the clear intent to create fear and some concern in the consumer’s mind. That will have an impact on the market and investment in these scientific advances. And we are going to forego as a society advances that we need and that the global population needs. We need to feed 9 to 10 billion people in about 30 years. And we need these tools.”

Prop. 37 proponents don’t acknowledge that hurting the mainstream food industry in order to buck up the organic share of the market is one of the main goals of the measure. Instead, they couch their arguments in terms of transparency.

Arguments in favor of Prop. 37

“One of the great freedoms we have as Americans is the basic right to choose from a different variety of foods in the marketplace,” said Rebecca Spector, west coast director of the Center For Food Safety. “If we want to know if our food contains gluten, high fructose corn syrup, trans fats or MSG, we can simply read the label. This information has empowered millions of consumers to take control of what we eat and feed our families for health, religious, environmental or ethical reasons.

“However, these freedoms are being denied to the more than 90 percent of Americans who want to know if their food contains genetically engineered ingredients. The intention of Prop 37 is simple. It merely requires that foods that are produced using genetic engineering are labeled as such. The initiative is intended to provide California consumers with information about the foods they purchase that is currently hidden. Because more than 80 percent of all processed foods contain genetically engineered ingredients such as corn and soy.

“Unlike 50 other countries, including European Union member states, Japan, Brazil, Russia and China, the U.S. has no law requiring labeling of genetically engineered foods. As a consequence, millions of consumers are unknowingly purchasing and consuming genetically engineered foods every day, despite the fact that the U.S. Food and Drug Administration does no independent testing of the safety. In fact, documents that we uncovered in our previous litigation against the agency showed that scientists within FDA have indicated that genetically engineered foods could pose serious health risks.”

Spector suggested that the FDA has failed to crack down on genetic engineering because it is in the pocket of the pesticide industry.

It appears that Californians might not be ready to go organic. An Oct. 28 California Business Roundtable/Pepperdine poll shows 39 percent support with 50 percent opposed. An Oct. 21 Los Angeles Time poll shows 44 percent support and 42 percent opposed.

By Wayne Lusvardi

On Nov. 6, voters face a number of  initiatives on the ballot targeted at California’s endemic budget and tax problems. All promise reforms embraced by both liberals and conservatives.  Some even are being marketed as libertarian reforms.  Here’s a rundown.

Props. 30 and 38 tax increases

Proposition 30 is called, grandly, the Schools and Local Public Safety Protection Act of 2012. And Proposition 38 is called, even more grandly, the Our Children, Our Future: Local Schools and Early Education Investment and Bond Debt Reduction Act.

Prop.  30 is Gov. Jerry Brown’s $8.5 billion income and sales tax increase, purportedly for public schools and police that mainly would tax the “rich.”

Prop.  38 is attorney Molly Munger’s proposed alternative, a $10 billion income tax increase on nearly all income levels except the poor to fund schools and pre-school programs.

Except that public schools have been overfunded the past few years. Some $4 billion was “borrowed” from public education to plug the state budget deficit since 2008.  Despite this loss of funding, no core teachers had to be laid off statewide.  In other words, public schools didn’t need the money.  On top of that, statewide enrollments in public schools have declined 1 percent and are projected to continue to decline.

The $4 billion borrowed from education funds was “internal borrowing,” not bonds.  These borrowings could be paid back in the long run with cost savings by shifting from politically protected “categorical” jobs programs for ancillary school personnel to block grants.

Sure, taxes from either Prop.  30 or 38 will go to public schools. But that would only free up already guaranteed education funds for other programs that are running deficits.  This is called “fungibility”: funds are interchangeable and can be used for education, social services, or road repairs.

School children are only political poster children to fund less popular programs such as Medicaid and public employee pensions. President Obama’s policy of shifting 1.5 million of the unemployed nationwide to Social Security Disability has put a $5 billion hole in California’s general fund budget, by this writer’s estimate.  Brown’s and Munger’s school tax proposals are just false fronts to cover up Obama’s financially ruinous policies to California, along with paltry state pension reform.

Proposition 98 already guarantees public schools about 43 percent of the entire state general fund budget no matter if attendance is declining or they didn’t even need $4 billion over the past few years.  Voters need to be informed that Props. 30 and 38 do not specifically earmark new funds for public schools.

Prop.  31 on the budget

Proposition 31 is called the Government Performance and Accountability Act. It promises five budget reforms:

1. A two-year budget cycle instead of annual budgets;

2. A requirement to identify funding for all legislative bills more than $25 million;

3. Authorization for the governor to declare a fiscal emergency;

4. Authorization for the governor to exercise line-item budget veto;

5. Requires performance budgeting in all state agencies.

The undisclosed problem with all of the above so-called reforms is that they already are on the books or can be implemented without voter approval or a constitutional amendment.   They are just an enticement to entice voters into approving the creation of an unelected new layer of government called Strategic Action Plan Committees — SAPs.

These committees supposedly would be able to relax environmental laws and other regulations to get public projects and programs done more cost effectively.  But then why do we need such phony committees in the first place?  Why not just deregulate the revenue sharing funds that flow from Sacramento to local cities and counties?  What Prop. 31’s Strategic Action Plan Committees are all about is tax sharing between financially strapped big cities and wealthier suburbs.

Let’s look at just the provision in Prop. 31 that funding needs to be identified before passing any bill in the legislature of $25 million or more.  This can be so easily gamed by creating only $24.9 million expenditures, fudging the numbers of spending cuts to afford new programs, using projected revenues that never materialize for new spending programs, and padding expenditure bills so that the governor can appear to reduce them with his veto.

Prop. 31 is a pretense for elites to grab public funds away from local governments for their pet projects and programs.  It would undermine representative government and the cost savings are artificial.

Proposition 39: Interstate protectionism

Proposition  39‘s title seems so wonderful: the Tax Treatment for Multistate Businesses, Clean Energy, and Energy Efficient Funding Initiative Statute.

It is a proposition being funded by another billionaire, “hedge-fund king” Tom Steyer, who has bankrolled it with $20 million.

Prop. 39 is a sort of new version of the Smoot-Hawley Act of the 1930’s that was blamed for triggered the Great Depression. The Smoot-Hawley Act raised U.S. tariffs on imported goods.  Likewise, Prop.  39 will increase taxes on out of state businesses trading with California.  Ballotpedia.com more accurately calls Prop.  39 the “Income Tax Increase for Multistate Businesses Initiative.”

Prop.  39 supposedly would level the playing field between businesses inside and outside of California.  But it would be ripped off by well-connected elites, such as Tom Steyer, to reap a windfall on overpriced alternative energy schemes. This will only add to the cost of higher energy under California’s Cap and Trade program to be rolled out in January 2013.

And it will raise the price of consumer goods from out-of-state suppliers.  So Prop. 39 may close a $1 billion tax “loophole” in “lost” revenues for California.  But this would be offset by increased costs for electricity and consumer goods from other states.

In short, the November election gives voters a choice on how they will structure state finances for years and even decades to come. Let’s hope they choose wisely.

By Wayne Lusvardi

In 2004, California voters voted for Proposition 71, the Stem Cell Research and Cures Act. It has ended up doing nothing but help wealthy and connected elites grab $3 billion of taxpayer’s money with no promised cancer or paralysis cures on the near horizon.

According to opinion polls, California voters are again about to pass an initiative, Proposition 37. The Mandatory Labeling of Genetically Engineered Food Initiative promises much but is unlikely to deliver much — except to trial lawyers. Meanwhile, special interests would be exempted, much as Obamacare granted waivers to 1,200 companies.

Prop. 37 would require the labeling of “genetically engineered” (GE) foods in California. This voter initiative has been “engineered” to appeal to:

* Those who are fearful of big corporations re-engineering the genetics of food;

* Those of more libertarian persuasion who believe that government’s role is to limit fraud by full disclosure of ingredients in products;

* Those who believe in pure air, water, and organic foods.

However, there is no such thing as “pure” plant food because plants make their own pesticidesto protect from insect infestation.  Such natural pesticides are what makes broccoli have anti-cancer and anti-oxidant properties.

Genetic changes have made such foods possible as Ruby Red grapefruit, tangerines, tangelos, clementines, Valencia oranges, boysenberries, strawberries, loganberries and wines such as Chardonnay, Cabernet Sauvignon, and Pinot Noir, all of which we consider natural.  All foods, even genetically engineered foods, are already reviewed and regulated by the U.S. Food and Drug Administration.

But genetically cultured cheeses, fermenting agents in beer and wine, and growth hormones in milk would all be exempted from Prop. 37.  That is because these are foods that are popular and highly visible.  But food additives such as corn oil or soybean oil derived from genetically changed strains of plants would be subject to regulatory capture.

Gregory Conko of the Competitive Enterprise Institute and Henry I. Miller, physician and molecular biologist at Stanford’s Hoover Institution, reveals the true purposes behind Prop.  37:

“Why then are Proposition 37 supporters so adamant about singling out genetic engineering? It’s simple: Labeling only GE foods would stigmatize those products, raise the costs of making them, discourage the use of the technology and encourage money-seeking lawsuits for inconsequential violations. In fact, the initiative seems to have been drafted with these very goals in mind.  Ironically, Proposition 37 would also impose huge costs on producers who try to avoid GE. Those committed to using GE ingredients can slap a “Genetically Engineered” label on their products and be done. But producers who want to sell non-GE foods must bear the costs of tracing the source of every ingredient they use and getting sworn guarantees that they “are not knowingly or intentionally” engineered.” 

Let’s Put a Label on the Faces of Prop.  37

The biggest donors to the Prop. 37 campaign are Jim Wheaton, a trial lawyer who wrote the wording of the proposition, and Joseph Mercola a doctor and alternative health supplement salesman. Their  businesses would stand to profit if the law passed.

According to the California Attorney General’s Office Annual Summaries of Private Settlements (see summary at link), Wheaton assisted in writing previous ballot measures that have shaken down businesses for $500 million over the last 20 years.

One of the provisions of Prop.  37 would allow lawyers to sue small neighborhood grocers and family farmers if the wording used on food labels was not compliant.  No harm would have to be proved.

The FDA already has powers to recall products, seize products, stopping manufacturing by court order, and impose criminal fines and jail time.  What Prop.  37 does is let third-party lawyers in on the enforcement action to shake down businesses.

The No on Prop.  37 campaign reports Joseph Mercola is a health supplement and organic food businessman who has invested $1.1 million into supporting the ballot initiative. Mercola runs the “world’s No. 1 natural health website” and is opposed to vaccinations for children, according to the San Diego Union Tribune.

Opposition is coming from liberal newspapers, such as the Los Angeles Times, and conservative ones, such as the Victorville Press.

Are the polls correct that Prop. 37 is winning? It’s hard to say. The response rates to opinion polls has dropped from 36 percent in 1997 to 9 percent in 2012. So polls aren’t as accurate as they used to be.

By Colin A. Carter

Californians will soon vote on Proposition 37, which requires that genetically modified (GM) food to be labeled in food stores throughout the state. Supporters argue that mandatory labeling would offer consumers greater choice and provide them with more information on the content of the foods they eat. How can anyone argue with such a simple and compelling claim that Prop. 37 will give us more information on food content?

Well, suppose the message isn’t true because the fine print of the proposed mandatory food labeling regulations would result in a much different outcome than promised. The most likely outcome would be a market where food category choice decreases under Prop. 37, rather than increases; and the added labeling information would be very imprecise and downright confusing to most consumers.

Prop. 37 would introduce a double standard for testing for GM purity in organic versus non-organic foods, which should be a huge red flag to voters. The organic industry helped write Prop. 37, and it exempted organic food from the very type of mandatory testing it wants to impose on other food suppliers.

If Prop. 37 passes, organic food may contain GM without violation of the new regulation. But non-organic food would have to comply with an impractical zero percent tolerance.

Suppose the lawyers behind Prop. 37 test two boxes of breakfast cereal, one box “organic” and one labeled as “non-GM.” If the tests come back showing each box has an identical low-level trace of GM (say due to a low amount of canola mixed in with wheat), then the lawyers can go after the supplier of the non-GM cereal, but the organic supplier is exempt.

Higher costs

Consumers who have no interest in GM warning labels will face higher food bills. And those who want to avoid buying GM food will not be better informed.

There are so many exemptions (such as organic, restaurant food, dairy products, etc.) that consumers will not know what percent GM ingredients they are eating if it is organic, a dairy product or restaurant food. At the same time, many food products will end up carrying a GM warning label in case they might have a trace amount of GM. How does such a regulation give consumers a better option for avoiding GM? The answer is that it does not.

Prop. 37 is not about stricter food regulations. Instead, it is about improving business opportunities for some of those behind the initiative.

Consumer activists, lawyers and organic-food groups are behind the initiative; while agribusiness, food manufactures and most retailers are opposed. If implemented, Prop. 37 would constitute the first mandatory GM labeling law in the United States. Similar attempts to pass mandatory GM labeling laws in other states have failed.

Voluntary labeling

Voluntary labeling is a much better solution for those consumers who want more practical information on the content of their food and they are willing to pay for it.

In the U.S. market where GM crops (such as corn, soybeans, canola and sugar beets) are common, zero tolerance for commingling with non-GM is just is not practical and is not even met today by the organic food industry. In fact, U.S. organic food regulations for processed foods require that the food contain at least 95 percent certified organic ingredients — a 5 percent tolerance. Why didn’t the organic industry use their own 5 percent standard for accidental contamination when Prop. 37 was drafted?

Other countries truly interested in mandatory labeling have not taken such an unrealistic zero tolerance approach as Prop. 37. In the European Union, the threshold is 0.9 percent for adventitious presence of GM, which is roughly the level used in California today by voluntary “GM free” labeling schemes such as the Non-GMO Project, a verification process organized by food retailers such as Whole Foods Market.

In Japan, a country much more averse to biotech foods than the United States, the legal tolerance level for accidental presence of GM ingredients in non-GM food is 5.0 percent of the top three ingredients. As a result of a practical labeling scheme, the Japanese consumer can purchase non-GM products, an option that would all but disappear with Prop. 37 in California.

If passed, the full economic effects of Prop. 37 are uncertain. But there is little doubt that the measure will soon end up in domestic and international courts as it would exclude certain foods from the California market due to the zero-tolerance criterion. Federal law, not state law, governs international trade in America.

Food manufacturers and retailers will be unwilling to provide non-GM products because of the litigation it would invite and the difficulty associated with obtaining non-GM ingredients that meet the zero percent tolerance. As a consequence, Prop. 37 would result in many products on the food shelf carrying a GM warning label.

In the breakfast cereal aisle, consumers’ choice would be reduced to either organic corn flakes or corn flakes labeled as possibly containing GM. It might get to the point where there are so many products with GM labels that most consumers would just ignore the labels because they would be everywhere.

Colin A. Carter is a professor of agriculture at the University of California, Davis, and the director of the Giannini Foundation of Agricultural Economics.

Commentary

Sept. 19, 2012

By Laer Pearce

The warm, caring hands of government are poised to protect us once again.  Just like how California started protecting us in 1986 from chemicals it knew, in its wisdom, could cause cancer, birth defects and other reproductive harm, it may soon be protecting us from those nasty genetically engineered foods.

In 1986, it was Proposition 65, the Safe Drinking Water and Toxic Enforcement Act. I began to understand how sleazy that proposition was when I got a frantic call from a homebuilder client just a couple months after it passed.

“I’m going to have to put warning signs on all my new model homes or I’ll get sued,” he moaned. “What’s it going to do to sales if people have to walk by a cancer warning to go into one of my models?”

I told him not to worry because his competitors would have to post similar signs.  But I was curious why a model home would need a Prop. 65 warning.  After all, a brand new home is hardly a toxic sump of the sort the Yes on Prop. 65 ads had frightened Californians about.

“Well, for starters,” he said, “estrogen and testosterone are both on the Prop. 65 list of known carcinogens, so unless something other than men and women is going through my models, I’m going to have to post the signs.”

That was when I realized California had become what I’ve come to call “Crazifornia,” a state that has become a state of disaster. And it will be even more of a disaster if Proposition 37 passes this November.

Prop. 37

Prop. 37, we learn from its campaign website, “is a common-sense November ballot measure that will help consumers make informed choices about the food they eat.” That sounds reasonable.  If my donut is laced with DDT or my orange was doused in Agent Orange, I want to know about it before I take a bite.  Who could possibly have a problem with that?

Certainly not Jim Wheaton (pictured above), the Berkeley-educated lawyer who wrote Prop. 37. That would be the same Jim Wheaton who heads up the Environmental Law Foundation, a Bay Area litigation mill that has made $3 million in settlements and legal fees off Prop. 65 lawsuits.  Oh, and he’s the same Jim Wheaton who wrote much of Prop. 65 in the first place.

Prop. 37 is a genetically engineered clone of Prop. 65. To create it, Wheaton simply grafted an anti-genetically engineered food gene onto Prop. 65’s DNA. If you’re worried about genetically engineered foods running rampant and destroying ecosystems, you should see what a genetically engineered proposition can do to California’s already reeling business sector.

More bureaucrats

Like Prop. 65, Prop. 37 would create a panel of experts, hand selected by Wheaton and his environmentalist and trial attorney collegues, that would decide what food ingredients and compounds at what concentrations constitute risk in California’s eyes. As a starting point, California’s regulations will be about twice as tough as ones that are already hurting farmers and food processors in Europe.

And as occurs with Prop. 65, each year attorneys from litigation mills and their environmentalist expert witnesses will petition this panel to have more compounds added to the list.  Industry will push back, but most of the compounds will make it onto the list.

Then, similar to Prop. 65, state functionaries will look for violators who have missed the latest round of updates. They will monitor tens of thousands of food labels at grocery stores, retail outlets, farms and food processors, burning through tax dollars to produce the citations that are the raw materials for one of California’s biggest products: anti-business litigation.

The Prop. 65 litigation mills worked this formula so well with Prop. 65 that, between 1989 and 2011, companies have paid attorneys like Wheaton nearly half a billion dollars in legal fees and settlements to settle nearly 20,000 lawsuits.  That’s apprently not enough, so the trial attorneys are hopeful they’ll open a big new market with Prop. 37.

At the top of this column, I alluded to DDT in my donuts and Agent Orange in my oranges.  Surely the Yes on 37 campaign wouldn’t stoop so low as to dredge up dangerous chemicals that have long since been banned, right? Think again.

“You’ve heard the false corporate health claims before,” says a pro-37 ad.  “DDT is ‘safe.’ Agent Orange is ‘harmless.’ Now they say genetically engineered food is safe.”

Of course, food manufacturers, retailers and farmers are lining up against Prop. 37, but as with the earlier Yes on 65 campaign, Yes on 37 is simply painting them as greedy corporations that don’t mind killing off customers, as long as they make an extra buck or two.

In 1986, 63 percent of California voters bought the lie. With polls showing 51 percent of likely voters planning to vote for Prop. 37 and just 16 percent planning to vote against it, there’s little evidence the voters have wised up to Wheaton’s game.

Laer Pearce is the author of “Crazifornia: Tales from the Tarnished State.” Portions of this column are excerpted from the book.