Ninth Circuit Invalidates USDA’s Exemption for Highly Refined Foods Under the National Bioengineered Food Disclosure Standard

On October 31, 2025, the Ninth Circuit struck down certain parts of USDA’s National Bioengineered Food Disclosure Standard, including the exemption for highly refined foods in which modified genetic material is undetectable.[1] The decision remands the invalidated portions of the regulations to USDA for revision and could result in a significant expansion in the range of products subject to the bioengineered (BE) food labeling requirements.

Background

In 2016, Congress enacted Public Law No. 114-216, which amended the Agricultural Marketing Act of 1946 (Act) and, among other things, directed USDA to establish a national mandatory standard for disclosure of information to consumers about foods that are or may be bioengineered. The Act, as amended, defines “bioengineering” with respect to a food as a food “(A) that contains genetic material that has been modified through in vitro recombinant deoxyribonucleic acid (DNA) techniques; and (B) for which the modification could not otherwise be obtained through conventional breeding or found in nature.”[2]

The USDA’s Agricultural Marketing Service (AMS) issued a final rule establishing the National Bioengineered Food Disclosure Standard (Standard) in 2018. Notably, the definition of “bioengineered food” in the final rule incorporated the definition of “bioengineering” in the statute, but also incorporated AMS’s interpretation that foods with undetectable modified genetic material are not BE foods. Accordingly, under the 2018 final rule, certain highly refined products, such as oil and sugar processed from genetically engineered crops, are not considered “bioengineered foods” and are thus exempt from the BE food disclosure requirements if modified genetic material cannot be detected through a validated testing process. See our previous client alert for a summary of the final rule, including the BE food disclosure requirements and exemptions.

In 2020, a coalition of organic grocery retailers and consumer advocacy organizations sued USDA in the U.S. District Court for the Northern District of California, challenging several aspects of the rule. The plaintiffs alleged that AMS acted unlawfully under the Administrative Procedure Act (APA) by excluding highly refined foods from mandatory disclosure, requiring use of the term “bioengineered” instead of more familiar terms such as “GMO” or “genetically engineered,” and adopting QR code and text message disclosure format options that they alleged limit consumer access to information. In 2022, the district court dismissed all of the plaintiffs’ claims, except with respect to the disclosure format issue. On that issue, the court remanded the challenged provisions to USDA “without vacatur,” meaning that, to avoid disrupting the food industry and consumer access to BE disclosures, the provisions remain in effect while the agency cures the defect. The plaintiffs subsequently appealed the decision to the Ninth Circuit.

Ninth Circuit Decision

On appeal, the Ninth Circuit held that USDA committed legal error in excluding highly refined foods from the BE food definition on the basis that such products do not contain detectable genetic material. The court explained that, under the Act, a food is “bioengineered” if it “contains” modified genetic material, and that the ordinary meaning of “contains” refers to actual presence, not to whether a substance can be detected by a particular testing method. Thus, the court rejected USDA’s interpretation that “the non-detectability of a substance under the regulation was equivalent to its non-presence.” The court remanded this issue to the district court with instructions “(1) to grant summary judgment to [p]laintiffs on [this] cause of action; (2) to remand the relevant regulations to the AMS; and (3) to determine, after receiving input from the parties, whether any portions of the regulations should be vacated in connection with that remand to the agency.”

Notably, the Ninth Circuit rejected the plaintiffs’ contention that the agency lacks any discretionary authority to adopt a detectability exception for highly processed foods made from BE ingredients. The court noted that Section 293(b)(2)(B) of the Act directs USDA to determine “the amounts of a bioengineered substance that may be present in a food, as appropriate, in order for the food to be a bioengineered food.” This provision, the court explained, allows the agency to establish quantitative limits below which a food would not be considered a “bioengineered food” under the regulatory standard authorized by Section 293(b)(2)(B). The court clarified that the food would still meet the broad statutory definition of BE food,” and that it “would not count as a ‘bioengineered food’ under the regulatory standard only because it was excluded under a limit-of-detection-based standard promulgated under § 293(b)(2)(B).”

In addition to reversing the district court’s ruling with respect to the highly refined foods exemption, the Ninth Circuit held that the district court abused its discretion in declining to vacate the invalid QR code and text-message disclosure provisions. The Ninth Circuit remanded to the district court “with instructions to fashion an appropriate prospective vacatur of [the provisions] after receiving input from the parties.”

In all other respects, the Ninth Circuit affirmed the district court’s judgment, including the district court’s decision that USDA was not arbitrary and capricious in requiring use of the term “bioengineered” in the BE disclosures.

Next Steps and Implications for Regulated Entities

While the Ninth Circuit decision introduces uncertainty for food manufacturers that currently rely upon the highly refined foods exemption, it does not trigger any immediate compliance changes.

In terms of next steps, the district court will need to determine whether any portion of the regulations relating to the highly refined foods exemption should be vacated. The Ninth Circuit decision requires the district court to obtain input from the parties prior to making such a determination. Until the district court takes these steps, the highly refined foods exemption remains in effect. In the event the district court does vacate the highly refined foods exemption in its entirety, which would cause many foods that are currently exempt to require BE labeling, USDA, in theory, has the option to decide to exercise enforcement discretion to minimize disruption to the industry.

Once the remand of the relevant regulatory provisions to AMS occurs, AMS will need to revisit the definition of “bioengineered food,” in particular, its treatment of highly refined foods. As discussed above, the Ninth Circuit acknowledged that AMS retains limited authority to establish threshold amounts of BE substances that must be present to trigger disclosure. This would require new rulemaking and, as an initial step, AMS might issue a request for information to gather stakeholder input and technical data. There is no specific deadline by which AMS must issue a final rule and, given the government shutdown and other priorities, progress may be delayed for some time absent significant stakeholder pressure.

The district court must also decide upon an appropriate timeline for a prospective vacatur of the QR code and text message disclosure provisions after receiving input from the parties. Depending on the timeline ultimately chosen, regulated entities subject to the Standard may need to transition their labels promptly to avoid enforcement risk.

Covington will closely monitor related developments, including the district court proceedings and AMS updates regarding BE labeling.

If you have any questions concerning the material discussed in this client alert, please contact the members of our Food, Beverage, and Dietary Supplements practice.