gcostanza olive oil adulteration
TRANSCRIPT
TABLE OF CONTENTS
I. INTRODUCTION......................................................2
II. BACKGROUND ON OLIVE OIL..........................................3
A. OLIVE OIL HAS UNIQUE PHYSICAL CHARACTERISTICS THAT MAKE IT
HIGHLY PRIZED AMONG CONSUMERS...................................3
B. OLIVE OIL DEFINED BY NATIONAL AND INTERNATIONAL STANDARDS....5
III. OLIVE OIL HAS A LONG HISTORY OF FRAUD IN THE UNITED STATES......7
A. EARLY YEARS OF OLIVE OIL FRAUD...............................8
B. THE SALAD OIL CASES.........................................11
C. OLIVE OIL ADULTERATION POST PURE FOOD AND DRUG ACT OF 1906..15
D. THE SQUALENE RACKET.........................................18
E. OLIVE OIL ADULTERATION AFTER THE FEDERAL FOOD, DRUG AND
COSMETIC ACT OF 1938...........................................19
F. THE UC DAVIS REPORT.........................................24
III. OPTIONS FOR RESPONDING TO OLIVE OIL ADULTERATION...............28
A. GAME THEORY.................................................29
B. INCREASING THE RISK OF DETECTION............................30
C. INCREASING THE RISK OF ENFORCEMENT..........................33
IV. CONCLUSION......................................................35
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I. INTRODUCTION
I have been tasting olive oils all of my life. As a teenager I
would organize blind tasting parties every year for my large family;
everyone would sip the extra virgin olive oil and rank its sensory and
gustatory qualities. I always selected olive oils from different
countries for sample diversity. We found that quality was not
strictly correlated with price, and collectively the family agreed
that the extra virgin olive oils with a fruity, spicy balance and a
delicate mouth feel were our favorites. Like fine wines, all of the
olive oils we tasted were quite unique.
So this is what I was looking for on a recent excursion to a new
neighborhood Persian grocery in west Los Angeles: a unique, flavorful
extra virgin olive oil. This store had a nice long rack of unique
brands of olive oil, half of which proclaimed their extra virginity.
I chose one that had a well-designed, colorful label and cost slightly
more than the other brands, hoping that this selection strategy would
lead me to a tasty new brand. When I opened the bottle at home, and
sipped the straw-colored oil from my spoon, I was immediately
disappointed. The oil was bland, not fruity nor spicy, and it left a
stale aftertaste in my mouth.
This is the saga of olive oil in countless markets across the
United States; it is a glass half-empty, glass half-full tale. On the
one hand, olive oil quality has come a long way from the days where a
significant number of high quality olive oils on the market were
diluted with cheap vegetable and seed oils. Today, high quality olive
oil is diluted with lower grade olive oils, or chemically similar
hazelnut oil, to evade detection. Nonetheless, consumers like me have
2
continued to suffer from a lack of strong detection and policing in
the market, and this also harms honest merchants with fancy labels and
high quality extra virgin olive oil. This paper traces the legal
developments of olive oil regulation in the United States; i.e., the
regulation of a food product that is but a part of a larger
constellation of consumer food products that have faced fraudulent
adulteration and misbranding in order to make a quick buck.
II. BACKGROUND ON OLIVE OIL
A. OLIVE OIL HAS UNIQUE PHYSICAL CHARACTERISTICS THAT MAKE IT
HIGHLY PRIZED AMONG CONSUMERS
Virgin and extra virgin olive oil (VOO and EVOO respectively) are
unique among edible oils because they are a "fresh squeezed" juice1.
Virgin and extra virgin olive oil extraction from the olive fruit is a
simple process. After a short rinse, the olives are crushed into a
paste, gently heated and mixed, and then the oil is either pressed and
decanted or simply decanted by centrifugation2. If the paste is heated
and extracted below 27 ºC (80.6 ºF), it is known as “cold pressed” or
“cold extracted3.”
This cool, gentle extraction of virgin and extra virgin olive
oils is critical for saving hundreds of salubrious micronutrients,
1 See Pérez-Jiménez F, Ruano J, Perez-Martinez P, Lopez-Segura F, Lopez-Miranda J. (2007). The influence of olive oil on human health: not a question of fat alone. Mol Nutr Food Res. 51:1199-1208.
2 See The Olive Oil Source, http://www.oliveoilsource.com/page/extraction-process
3 See Commission Regulation (EC) No 1019/2002 of 13 June 2002 on marketing standards for olive oil; Articles 5(a) and (b), http://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:32002R1019:EN:HTML
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subtle aromas and delicate flavors from oxidation and enzymatic
degradation4. These micronutrients, like polyphenols and
phytochemicals, are thought to be responsible for the health promoting
effects associated with the consumption of virgin and extra virgin
olive oil5.
Lower grades of olive oil are often extracted at higher
temperatures, require neutralization of chemical defects, and may have
used solvents in the extraction process6. Despite their inferiority to
VOO and EVOO, lower grades of olive oil are still perceived to be
healthier than other edible oils because of the high percentage of
monounsaturated fat, as oleic acid, that comprises all olive oils7.
The qualitative superiority of olive oils has attracted
discerning consumers for millennia. Homer extolled olive oil as
“liquid gold” in the Odyssey8. For millennia, the Greeks and Romans
have used the highest quality olive oils to enhance the palatability
of their breads, stews, salads and vegetables9. Demand for olive oil
has surged in the United States as health conscious Americans have
4 See Aturki Z, Fanali S, D’Orazio G et al. (2008). Analysis of phenolic compounds in extra virgin olive oil by using reversed-phase capillary electrochromatography. Electrophoresis 29:1644.
5 See Pérez-Jiménez, supra note 1, at 1200.
6 See Dimitrios Boskou, Olive oil: minor constituents and health (CRC Press 2008).
7 See Id.; See also Pérez-Jiménez, supra note 1, at 1200.
8 See The Odyssey of Homer: Volume 1, available at http://books.google.com/books?id=c20qAAAAYAAJ&pg=PA147&dq=%22liquid+gold%22+homer&hl=en&ei=XFzcTO6EHomusAOIkezkAw&sa=X&oi=book_result&ct=result&resnum=2&ved=0CDQQ6AEwAQ#v=onepage&q&f=false
9 See José Mataix and Javier Barbancho. Olive Oil And Health (CAB International 2006).
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tried to model their diet on the healthier Mediterranean diet10. While
per capita consumption of olive oil has doubled to 0.7 kg per year in
the United States from 1991-2003, per capita consumption in Greece and
Italy has remained high at 13-15 kg per year11. Olive oil typically
sells for about 5 times the price of other vegetable and seed oils12.
B. OLIVE OIL DEFINED BY NATIONAL AND INTERNATIONAL STANDARDS
The International Olive Council (“IOC”) and the Codex
Alimentarius (“Codex”) recognize seven categories of edible13 olive
oils, all of which are defined by highly specific chemical and
organoleptic (i.e. odor and taste) characteristics14. Of the chemical
properties, the free acidity, expressed as percent oleic acid, is the
most significant because it is directly attributable to the quality
and storage of the extracted oil. The highest quality oils are “Extra
virgin,” “Virgin,” and “Ordinary virgin,” with free acidity levels of
<0.8%, <2.0%, and <3.3% respectively. All of these virgin oils are
obtained solely by mechanical or other physical means and under
thermal conditions that do not alter the oil, and where no other
10 See Pérez-Jiménez, supra note 1, at 1199.
11 See Paul Vossen. California and World Olive Oil Statistics (UC Davis (2004); See also Zeev Wiesman, Desert olive oil cultivation: advanced biotechnologies (Academic Press 2009).
12 See Firestone, D. (2001). Assuring the Integrity of Olive Oil Products. Wiley Award Address: Journal of AOAC International Vol. 84, No. 1.
13 Note There are non-edible grades as well, referred to as “lampante virgin olive oil” and “crude olive-pomace oil.”
14 See International Olive Council COI/T.15/NC No 3/Rev. (2009). Trade Standards Applying to Olive Oils and Olive-Pomace Oils; See also Codex Standard For Olive Oils and Olive Pomace Oils, CODEX STAN 33-1981, Amendment in 2009.
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treatment besides washing, decantation, centrifugation and filtration
has occurred15.
In addition to these three high quality olive oils, the IOC and
Codex also recognize “Refined olive oil,” which is obtained from
virgin oils but has been processed to reduce the free acidity to less
than 0.3%, and it has an “acceptable” odor and taste. “Olive oil” is
defined as a blend of “refined” and “virgin” oils, has a free acidity
of <1.0%, and has “good” organoleptic characteristics. Next there is
“Refined olive-pomace oil,” which is oil that has been extracted with
the use of solvents, has a free acidity of <0.3%, and has “acceptable”
odor and taste. Finally, “Olive-pomace oil” is a blend of refined
olive-pomace oil and virgin olive oils, and has a free acidity of
<1.0% and “good” organoleptic characteristics16.
The United States Department of Agriculture (“USDA”) adopted
updated voluntary standards that are nearly identical to the IOC and
Codex standards17. These standards went into effect on October 25,
2010. The main difference of the USDA standard is that it dropped the
category “Ordinary virgin” olive oil. Therefore, the USDA recognizes
six categories of olive oil for human consumption, in descending order
of quality: “U.S. Extra Virgin Olive Oil,” “U.S. Virgin Olive Oil,”
“U.S. Olive Oil,” “U.S. Refined Olive Oil,” “U.S. Olive-pomace Oil,”
15 Id.
16 Id.
17 USDA, United States Standards for Grades of Olive Oil and Olive-Pomace Oil, Effective October 25, 2010. This is the second issue of the United States Standards for Grades of Olive Oil published in the Federal Register on April 28, 2010. It supersedes the first issue, which has been in effect since March 22, 1948.
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and “U.S. Refined Olive-pomace Oil18.” The USDA defines some of the
positive organoleptic attributes of olive oil as olive, apple, green,
sweet, grass, nutty and tomato, and negative attributes as musty,
fusty, winey-vinegary, muddy-sediment, and rancid19.
III. OLIVE OIL HAS A LONG HISTORY OF FRAUD IN THE UNITED STATES
For as long as consumers have prized the highest quality olive
oils, swindlers have tried to pull the olive branch over their eyes.
As Hart described in his landmark article on the history of food
adulteration20, “the adulteration of foods is as old as commerce
itself21.” Hart goes on to say, “as commerce developed and knowledge
spread, adulteration grew more subtle22.” A history of olive oil
consumer fraud in the United States reveals this progression, and the
specific factors that have driven olive oil adulteration from a bald
swindle to a technological arms race between cheaters and prosecutors.
Meanwhile, federal and state statutory and case law have attempted to
keep pace with catching a scam that appears simple at first blush, but
has proven as difficult to eradicate as cancer is to cure. A review
of this history is intended to provide an informed backdrop in order
to analyze the current options available for policing the market.
18 Id. at 3-5.
19 Id. at 7.
20 Note Hart used a narrower definition of the term adulteration than that used in the Federal Food, Drug and Cosmetic Act, in order to focus on the history of the intentional adulteration of foods for economic gain, instead of instances where a food is “naturally” adulterated through unintentional means. This paper will have the same focus.
21 See F. L. Hart, A History of the Adulteration of Food Before 1906 (January 1952), pp. 5.
22 Id.
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A. EARLY YEARS OF OLIVE OIL FRAUD
The earliest cases of olive oil fraud involved the whole or
partial mixing of olive oil with cottonseed, sesame or peanut oil.
These cases were prosecuted under state law23, before the promulgation
of the Federal Pure Food and Drug Act of 1906 (“1906 Act”)24. Hart
cited a report claiming that, around 1880, 71% of all olive oils sold
in New York and Massachusetts were adulterated with cottonseed oil25.
A Pennsylvania case in 1897 upheld a lower court ruling for “violation
of the pure food law” where a grocery sold what they claimed to be
olive oil, when in fact it was 100% cottonseed oil26. A report from
the Connecticut Experiment Station on the adulteration of olive oil
with cottonseed, sesame and peanut oils showed that in 1897 close to
40% of the 60 oils sampled from grocers were adulterated; in 1900 the
percent adulterated was unchanged27.
Classical physical and chemical tests were used during this early
period to detect these adulterants, including refractive index,
specific gravity, the Halphen test to detect the presence of
cottonseed oil, and the Villavecchia test for sesame oil28. These
23 See Bronco Wine Co. v. Jolly, 33 Cal. 4th 943, 960 (Cal. 2004).
24 Pure Food and Drugs Act, ch. 3915, § 6, 34 Stat. 768 (1906) (repealed 1938).
25 See Hart, supra note 21, at 21.
26 Com. v. Curry, 4 Pa. Super. 356 (Pa. Super. Ct. 1897).
27 Public Document No. 24, Thirty-third and Thirty-fourth Annual Reports of The Connecticut Agricultural Experiment Station (State of Connecticut 1910). pp. 214-217.
28 See Firestone, supra note 12, at 176.
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tests were later replaced by direct methods of detecting the
percentage of olive oil in a blend, discussed infra.
By 1906 Congress attempted to combat food fraud out of health and
safety concerns, but also with an awareness of the negative economic
effects of food adulteration29. The Pure Food and Drug Act of 190630
established definitions of adulteration and misbranding31, and
subjected foods to seizure and destruction for violations32.
The establishment of legal definitions for adulteration and
misbranding provided the federal government with an effective legal
framework to prosecute olive oil fraud. This legal framework operated
in tandem with the scientific sophistication necessary to chemically
detect adulterants. Section 7 of the 1906 Act defined adulteration
broadly, under six categories, including the dilution or substitution
of valuable constituents, the masking of inferiority, and the addition
of deleterious ingredients33. Section 8 of the Act defined the
misbranding of foods under four categories, including the sale of an
29 See Richard A. Merrill & Earl M. Collier, Jr., “Like Mother Used to Make”: An Analysis of FDA Food Standards of Identity, COLUM. L. REV. 561, 564-65 (1974).
30 Act of June 30, 1906, ch. 3915, 34 Stat. 768, repealed 52 Stat. 1059 (1938), available at http://www.h-net.org/~hst203/documents/pure.html
31 Note When olive oil is intentionally adulterated for economic gain, the perpetrator either substitutes the olive oil in whole or in part with a different oil altogether, or will add a lower grade of olive oil to a higher grade of olive oil, and then intentionally misrepresent the product as being of the higher grade. In either circumstance, depending on the olive oil’s label, the adulterated product may also be misbranded. While the language that distinguishes between a product that has been “adulterated” and “misbranded” will be explored infra, it is important to note that in cases where olive oil is intentionally adulterated for economic gain, it is almost always the case that it has been misbranded as well.
32 See Merrill and Collier, supra note 29, at 564; See also Act of June 30, 1906, supra note 30, Section 10.
33 See Act of June 30, 1906, supra note 30, Section 7.
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imitation food, the labeling or branding of a food intended to deceive
the consumer, the incorrect labeling of weights or measures, and if a
mixture or compound is a distinctive product, it was misbranded when
it did not contain the words “compound,” “imitation,” or “blend34.”
The threat of legal action at the federal level led to a rapid
improvement in the marketplace, although as has been true for the
entire history of olive oil adulteration, this improvement was short-
lived. The Connecticut Report noted the improvement of adulterated
olive oils sold at grocers since 1905, and noted “the effect of the
law on correct labeling” which found thirteen samples in 1905 and
eleven samples in 1906 were labeled “compound,” whereas before they
were just referred to as pure olive oil3536. Despite this favorable
change, the Connecticut Report reveals the confusing array of labels
that the average consumer still faced:
“Pure Lucca Oil;” “Olive oil Superfine Clarified;” “Virgin Olive
Oil;” “Qualité extra Supérieure;” “Pure Olive Oil;” “Huile d’Olive
Extra Surfine;” “Olive Oil Qualité Extra;” “Olive Oil, Extra Gold, The
Duck;” “Butter-Nut Huile d’Olive Qualité Superfine;” “Virgin Olive
Oil, Extra Quality;” “Castle’s Cream Olive Oil;” “Extra Virgin Olive
Oil;” “Strictly Pure Olive Oil37.”
So long as these olive oil labels were not grossly inaccurate,
they were largely protected from claims of misbranding. However, the
words “virgin,” “extra virgin,” “superior,” “superfine,” etc. lacked
34 See id. at Section 8.
35 See Public Document No. 24, supra note 27, at 217.
36 Note It is likely that many manufacturers of olive oil changed their labels in anticipation of the federal law going into effect.
37 See Public Document No. 24, supra note 27, at 217.
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any standard meaning. Consumers had to rely on their senses to
discern the quality of the product they were buying38. Neither the
Federal Pure Food and Drug Act of 1906 nor state laws established a
system of food standards for consumers or the courts to compare the
inferiority or imitation of one product to another39.
This was a major weakness of a law that seemed straightforward
when enacted; to catch olive oil fraud prosecutors had to both detect
the presence of foreign oils in the olive oil (the scientific
challenge) and they had to prove a legal violation relative to a
commonly understood benchmark. This was easiest to do when a label
specifying that the product was “pure olive oil” had been diluted with
cottonseed or sesame oil. However, once the word “compound” or
“blend” was introduced, it became easier for adulterated olive oils in
the market to pass as legitimate products.
B. THE SALAD OIL CASES
In looking for a more euphemistic term to describe these olive
oil blends, marketers turned to the word “salad oil” as a means of
deceiving consumers. A description of this event from Dental Digest
in 1917 noted:
The French, Spanish and Italians have long used olive oil to
dress their salads. This became fashionable among American
housewives, who purchased “salad oil” with an understanding that
38 See Merrill and Collier, supra note 29, at 566.
39 See Miller and Skinner, The Nose of the Camel: The Paradox of Food Standards, 39 Food Drug Cosm. L.J. 99, 100 (1984); See also Christopher Chen, Food and Drug Administration Food Standards of Identity: Consumer Protection Through the Regulation of Product Information, Food & Drug L.J. 185, 193 (1992).
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it was a low grade of olive oil. Enterprising American food
manufacturers found great commercial possibilities in salad oil
and salad dressing, and wanted to use cheaper oils in place of
olive oil for salad oil and salad dressing, prompting a trade
dispute. However, they wanted it both ways: millions of tin cans
and bottles were made, decorated with designs of foreign flavor
and phrases. Often the tin cans of adulterated salad oil were
ornamented with olive leaves and statements about the “sublime”
quality of the pure olive oil it contained, but this was all a
ruse: many of the salad oils never contained any olive oil
whatsoever. Dr. Harvey W. Wiley exposed this fraud, and these
brands dropped the ruse and just called their product, salad oil.
The common people, always slow to learn, never suspected that the
salad oil was not olive oil at all. They just bought and paid
for the product that was sold in a glass bottle or tin can
believing that it was the genuine article40.
The courts attempted to define the meaning of “salad oil,” but as
will be seen, the adulterated olive oils eventually prevailed in
seizing the salad oil moniker for themselves. The early definition of
salad oil was established in a Second Circuit ruling in 1910, Brina v.
United States, which affirmed a conviction for misbranding salad oil
because, “salad oil prima facie imports olive oil: that is what the
world has been accustomed to regard as salad oil41” [internal
quotations omitted]. The oil in question was cottonseed oil and “was
calculated to mislead the purchaser and induce him to believe the cans 40 See A. W. McCann, Questions About Food, Dental Protective Association of the United States, Volume 23, Jan-Dec. 1917, pp. 729-730.
41 See Brina v. United States, 179 F. 373 (2d Cir. N.Y. 1910).
12
contained olive oil42.” Brina followed another lower court ruling that
also defined salad oil as olive oil43.
Brina was followed by another Second Circuit ruling in 1912, Von
Bremen v. United States, which reversed a lower court ruling that
found the label, “Imported Salad Oil Morel Brand” to be false and
misleading because the oil in question was entirely sesame oil and did
not contain any olive oil whatsoever44. The reversal was based on the
lower court’s error in refusing to allow sufficient testimony to
justify their findings45. This ruling left the meaning of salad oil up
in the air.
Any question as to the meaning of salad oil was definitively laid
to rest in U.S. v. 52 One-Gallon Cans and U.S. v. 397 Cases, etc46. By
this time, the court felt that the landscape had shifted, i.e., that
the public no longer equated salad oil with olive oil. In 52 One-
Gallon Cans, where the labels in question described the product as,
“Pure Vegetable Salad Oil,” the court stated, “Regardless of what the
understanding may have been many years ago when about [sic] the only
salad oil commonly known was olive oil, today with great advances made
over the old days the words ‘salad oil’ and ‘olive oil’ are everywhere
42 Id.
43 See The Journal of Industrial and Engineering Chemistry, March 1910. (N.J. 133) Adulteration and Misbranding of Olive Oil (A mixture of Cottonseed and Olive Oils) from January 10, 1910. “the statement that the product was a compound of salad oil and olive oil was untrue because “the usual acceptation of the term “salad oil” does not include cottonseed oil.”
44 Von Bremen v. United States, 192 F. 904 (2d Cir. N.Y. 1912).
45 Id. at 906.
46 See United States v. 52 One-Gallon Cans, 16 F. Supp. 385 (D. Conn. 1935); See also United States v. 397 Cases, etc., 16 F. Supp. 387 (D.N.J. 1936).
13
recognized as being distinctly different products47.” In 397 Cases,
etc., where the label in question was the same as one of the labels in
52 One-Gallon Cans, the court was more emphatic:
“On the front and back panels of the can, there are three
diagonal stripes of red, white, and green, as a background for
the printed matter. There are three vertical stripes of red,
white, and green in the national flag of Italy. Is the court to
believe that the public has been deceived for years into thinking
that ‘Canada Dry Ginger Ale’ is a Canadian product because the
word ‘Canada’ is part of its trade-name, and because the map of
Canada is displayed on its label? Is the court to believe that
the public considers ‘Italian Balm’ an Italian or foreign
product? Is the court to believe that the public is misled by
‘Kraft French Dressing’ and numerous similar products prepared by
reputable dealers and which have been in use for years? The court
gives the public credit for not being so gullible. It believes
the can in question does not mislead, nor is it likely to mislead
the public as alleged in the libel48.”
These salad oil cases demonstrate how the original use of a name,
salad oil, as a way to accentuate the superior taste and quality of
olive oil on salads, could be co-opted by adulterating brands until
the meaning was completely subsumed. Moreover, the lack of a
provision requiring manufacturers to list the ingredients in their
food products made it difficult for the courts to compare imitation
foods to traditional foods, and thus find that the former were 47 See United States v. 52 One-Gallon Cans, 16 F. Supp. 385, 387 (D. Conn. 1935).
48 See United States v. 397 Cases, etc., 16 F. Supp. 387, 390 (D.N.J. 1936).
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inferior to the latter, which would have rendered them adulterated and
misbranded under the 1906 Act49,50. For salad oil, a clear standard of
identity or a disclosure of the ingredients could have protected or
alerted unsuspecting consumers to this shift in definition.
C. OLIVE OIL ADULTERATION POST PURE FOOD AND DRUG ACT OF 1906
Despite the favorable changes in the marketplace following
passage of the Pure Food and Drug Act of 1906, by the 1910s and early
1920s olive oil adulteration was back in full swing. In 1921 the
Cotton Oil Press reported on this phenomenon:
Large quantities of olive oil, sold in New York as virgin olive
oil, but declared to have been adulterated with cotton-seed, soya
bean, peanut and sesame oils, have been confiscated by the
Federal Government within the past three weeks, according to the
statement of W. R. M. Wharton, chief of the Eastern Food and Drug
District, Bureau of Chemistry.
The practice of certain New York brokers and dealers of mixing
cotton-seed and other vegetable oils with olive oil, and selling
same to the public at higher prices, based on imported olive-oil
quotations, is reported to have become so prevalent that the
American Olive Oil Association has offered its assistance to the
Federal officials in stopping the practice.
49 See Merrill and Skinner, supra note 39, at 100.
50 Note One major defeat of the government in this regard is seen in the case, United States v. Ten Cases Bred Spread, 49 F. 2d 87 (8th Cir. 1931), where the defendant prevailed against the charge that their jam-like concoction of low-fruit ‘bred spread’ was adulterated because it was “mixed so as to conceal its inferiority, and the misbranding of the article because it was an imitation of another article, jam.”
15
"Adulterated olive oil," said R. U. Delapenha, president of the
American Olive Oil Association, in commenting on the situation,
"is largely fabricated in New York City, and it is difficult for
an honest retailer of limited experience to be sure of much of
the oil sold today under the pseudonym of olive oil. The Federal
authorities are busy every day testing olive oil and watching the
shipment out of the State of New York. The port officials can
keep out adulterated olive oil, but they cannot prevent its
adulteration after landing51."
A Popular Mechanics article from 1925 noted the hundreds of
seizures and prosecutions52 that had taken place to combat olive oil
fraud:
“The substitution of cottonseed oil in whole or in part for olive
oil is another form of adulteration that persists on the part of some
dealers in spite of hundreds of seizures and prosecutions. Cottonseed
oil is an excellent, wholesome product, having a well-deserved and
extensive market on its own merits. But since it is cheaper than
olive oil, its sale as olive oil at a higher price than it would
command under its own name is a fraud53.”
51 See The Cotton Oil Press, Official Monthly Bulletin of the Interstate Cottonseed Crushers Association, v.5, no.1 (1921), pp. 38.
52 There are numerous cases of seizure and condemnation reported for olive oil adulteration and misbranding under the 1906 Act. Many of these cases were published in the Service and Regulatory Announcements from the U.S. Bureau of Chemistry, which was part of the Department of Agriculture. Starting in 1927, many cases were reported in the “Notices of judgment under the Food and drugs act” as part of the newly formed Food and Drug Administration. There also continued to be cases prosecuted under state law.
53 See PR. H. Moulton, Protecting the Nation’s Food Supply, Popular Mechanics, (August 1925), pp. 292.
16
By the 1930s tea seed oil (Thea sinensis) was being used to
adulterate olive oil because it was able to avoid detection by the
usual chemical and physical tests54. The Food and Drug Administration
(“FDA”) responded by devising a test to detect this adulterant
directly, as had been done for cotton and sesame seed oils55. However,
by this time it became clear that it would be useful to develop a test
that could directly estimate the amount of olive oil in a blended
sample, instead of testing for the presence of many different
adulterants56.
D. THE SQUALENE RACKET
In 1943, a test was developed to measure squalene, a chemical
compound that exists in significantly greater quantities in olive oil
compared to vegetable oils57. As David Firestone, a career chemist at
the FDA who focused on assuring the integrity of food oils and fats
observed, “For a brief period in the middle 1940s the olive oil
content of olive oil-vegetable oil blends approximated label claims
following successful legal actions against several adulterated blends
and their packers58.” It did not take long for fraudsters to figure
out a way to evade this new test. Firestone described the squalene
racket that was occurring as he started his career:
54 See Food engineering. (1936). Chilon Co., V.8, pp. 359.
55 See Firestone, supra note 12, at 176.
56 Id.
57 See United States v. Antonio Corrao Corp. et al, 185 F.2d 372, 376 (1950); See also Firestone, supra note 12, at 177.
58 See Firestone, supra note 12, at 177; See also People v. Bertola, 70 N.Y.S.2d 854 (1947) as a typical case where the squalene test was used.
17
In early 1946, FDA inspectors heard rumors that squalene was
added to blends to make them appear to have more olive oil than
actually present. Laboratory examinations showed high squalene
content but weak olive oil flavor. In June 1947, the source of
the adulterant was traced to a manufacturer of chemicals and
vitamins who obtained squalene as a by-product of shark liver
fractionation (shark liver is an excellent source of vitamin A).
Squalene production was stopped when the manufacturer was
informed of its apparently illegal use and it was agreed that 75
gallons of squalene on hand would be identified with a chemical
marker to distinguish it from vegetable oil squalene... The test
was used to detect adulterated olive oil blends which began to
appear on the market and preparations were ongoing to initiate a
court contest following seizers of marked blends as I began my
FDA career. The court case was concluded in favor of the
government and the squalene olive oil racket was ended59.
The court case at the heart of this racket was United States v. 5
CASES, ETC.60, also known as the “Figlia Mia” adulterated oil case. In
a discussion of the Figlia Mia case, FDA commissioner Paul B. Dunbar
noted that “a number of other cases very similar in character were
terminated in May by pleas of guilty by seven individuals, one
blending corporation, and the drug store operated by the individual
who furnished squalene to the blender. These cases are extremely
involved since they are characterized by all of the earmarks of a
tremendous racket carefully worked out by experienced racketeers. 59 See Firestone, supra note 12, at 177.
60 See United States v. 5 Cases, More or Less, 179 F.2d 519 (2d Cir. Conn. 1950).
18
Enough squalene had been purchased by the convicted drug store to
adulterate over one million gallons of peanut oil to simulate a 20 per
cent olive oil blend61.”
E. OLIVE OIL ADULTERATION AFTER THE FEDERAL FOOD, DRUG AND
COSMETIC ACT OF 1938
The cases utilizing the squalene test were all prosecuted under
the Federal Food, Drug and Cosmetic Act of 1938 (“FD&C Act”). The
FD&C Act attempted to address some of the shortcomings of the 1906 Act
through the addition of several new definitions62. Two of these
definitions are germane to the prevention of olive oil adulteration,
although neither of them has had any significant effect on actually
stemming olive oil adulteration.
First, the FD&C Act added a clause to the definition of
adulteration that was absent from the 1906 Act. This clause, which is
the final language of Section 402(b)(4) of the Act, states that a food
is adulterated “if any substance has been added thereto or mixed or
packed therewith so as to ... make it appear better or of greater
value than it is63.” This broad language expanded the legal scope of
what constitutes adulteration. While most olive oil adulteration
cases now fall under this broad definition, the previous definition
under Section 7 of the 1906 Act, which stated “if any substance has
been mixed or packed with it so as to reduce or lower or injuriously
61 See P. B. Dunbar, On the Food and Drug Administration, Food Drug Cosmetic Law Journal, August 1950, Vol. 5, No. 6, pp. 463-64.
62 See Peter Barton Hutt, Richard A. Merrill and Lewis A. Grossman, Food and Drug Law: Cases and Materials 13 (Foundation Press 2007, 3rd ed.).
63 See 21 U.S.C. § 342(b)(4).
19
affect its quality or strength,” was already a sufficient legal
definition to prosecute those who attempted to dilute olive oil64.
The second addition was a provision, § 401, empowering the FDA to
formulate standards of identity for foods65. Despite a confusing array
of labels for different grades of olive oil that have been on the
market for over a century, the FDA has never exercised its § 401
authority to set standards of identity. The Agency issued a Notice of
Intent to Establish [a] Standard in the Federal Register in 197966.
The notice offered interested parties an opportunity to review and
comment on the proposed Codex Alimentarius standard for olive oils and
on the need for a standard in the United States67.
Before this standard was proposed, the period from the early
1960s until the 1980s saw only one case of olive oil fraud
prosecuted68. Firestone noted that “olive oil adulteration and
misbranding had a low priority, few additional FDA resources were
expended until the 1980s69.” In 1976, the New York City Department of
Consumer Affairs reported widespread mislabeling of olive and
vegetable oil blends70. In 1978 a Spanish official reported that
64 Note § 401(b)(1) and (2) have been cited as appropriate provisions whereby olive oil adulteration may be prosecuted; the language in § 401(b)(1) and (2) largely mirrors the language from the 1906 Act.
65 See 21 U.S.C. §341.
66 See 44 FR 10742-01, Virgin And Refined Olive Oil And Refined Olive-Residue Oil, Notice of Intent to Establish Standard. Vol. 44, No. 38 (1979).
67 Id.
68 See United States v. 40 Cases, More or Less of Pinocchio Brand 75% Corn, Peanut Oil & Soya Bean Oil Blended with 25% Pure Olive Oil, 289 F.2d 343 (2d Cir. 1961)
69 See Firestone, supra note 12, at 177.
70 Id.
20
significant quantities of “esterfied” olive oil (i.e., chemically
treated to reduce the olive oil’s acidity level), which was illegal to
sell in Spain and other Mediterranean countries, was being shipped in
international trade71.
Under Firestone’s recommendation, the FDA began to pay closer
attention to the problem, and formed a relationship with an Italian
researcher to create a validated analytical method to identify
different grades of olive oil72. This move by the Agency came on the
heels of a massive food poisoning outbreak around the Madrid area in
Spain in 198173. More than 20,000 people fell ill and over 800 people
died when aniline-laced industrial rapeseed oil was sold as olive oil
and other cooking oil74. This tragedy demonstrates the perilous
position of ignoring economic adulteration because it normally does
not pose a health risk.
A survey conducted in late 1981 indicated that imported olive
oils were adulterated with undeclared vegetable oils, which was then
substantiated by the Italian Experiment Station for Fats and Oils75.
The FDA instituted an olive oil sampling program in 1982 to stop this
adulteration and misbranding76. Three of the initial seven oils
sampled were found to contain esterfied olive oil77. A further
71 Id.
72 Id.
73 Id.
74 Id.
75 Id. at 178.
76 Id.
77 Id.
21
inspection in 1983-1984 found 18 of 25 products labeled “olive oil” or
“virgin olive oil” to contain either esterfied or olive pomace oils78.
Interestingly, in the midst of this stepped-up sampling and with
renewed attention to the problem of olive oil adulteration, in
September of 1982 the FDA terminated its consideration of the
establishment of a U.S. standard based on the Codex standard79. The
Agency stated, “There is neither sufficient interest nor need to
warrant proposing a U.S. standard for these foods80.” Of the sixty-
five comments received in response to the advanced notice of proposed
rulemaking in 1979, “The majority of comments favored establishing a
U.S. standard because they wanted the sale of lower quality refined
olive-residue oil as higher priced pure or refined olive oil to be
curtailed81” [internal quotation marks omitted]. Despite the favorable
response, the Agency cited a lack of “data” submitted as justification
for its conclusion that there was insufficient need to warrant
proposing a standard under its section 401 authority82. The decision
to terminate consideration was done without prejudice to future
consideration of the matter83.
Firestone noted, “While the presence of undeclared esterfied
olive oil was soon eliminated from olive oil products, it was found
that continuing surveillance was required to keep mislabeling at a
78 Id.
79 See 47 FR 42123, Virgin Olive Oil, Refined Olive Oil, and Refined Olive-Residue Oil; Termination of Consideration of Codex Standard.
80 Id.
81 Id.
82 Id.
83 Id.
22
minimum. In the early 1990s, 15-20% of imported olive oils were
detained. By 1995, detections dropped to 2%84.” Firestone ends his
essay by noting, “Constant development of new and more useful
analytical techniques as well as continuous surveillance is required
to control adulteration and mislabeling of olive oil products85.”
F. THE UC DAVIS REPORT
In July of 2010, the newly formed UC Davis Olive Center issued a
report on the results of their collaboration with the Australian Oils
Research Laboratory where they evaluated the quality of extra virgin
olive oils on retail shelves in California86. The research team
collected 14 imported brands and five California brands from three
different regions in California from March 3, 2010 to March 10, 201087.
The two laboratories evaluated these oils based on standards and
testing methods established by the IOC and the U.S. Department of
Agriculture (“USDA”), in addition to cutting edge testing methods
developed in Germany and Australia. The study reported several
specific findings:
1) 69 percent of imported olive oil samples and 10 percent of
California olive oil samples labeled as extra virgin olive oil
failed to meet the IOC/USDA sensory (organoleptic) standards for
extra virgin olive oil88.
84 See Firestone, supra note 12, at 178.
85 Id. at 179.
86 UC Davis Olive Center Report, July 2010, Tests indicate that imported “extra virgin” olive oil often fails international and USDA standards.
87 Id.
88 Id.
23
2) 31 percent of the imported samples that failed the sensory
standards also failed the IOC/USDA standards for UV absorbance of
oxidation products, which indicates that these samples were
oxidized and/or were of poor quality89.
3) 83 percent of the imported samples that failed the IOC/USDA
sensory standards also failed the German/Australian DAGs
standard. Two additional imported samples that met the IOC/USDA
sensory standard for extra virgin failed the DAGs standard90.
4) 52 percent of the imported samples that failed the IOC/USDA
sensory standards also failed the German/Australian PPP standard.
Two additional imported samples that had met the IOC/USDA sensory
standard for extra virgin failed the PPP standard91.
5) The IOC/USDA chemistry standards confirmed negative sensory
results in 31 percent of cases, while the German/Australian DAGs
and PPP standards confirmed negative sensory results in 86
percent of cases92.
This last finding is particularly revelatory because the DAG and
PPP tests are indicators of potential adulteration with refined oil.
The Report refers to “media reports” of fraud in the olive oil
business, “where extra virgin olive oils have been adulterated with
cheaper refined oils such as hazelnut oil. Another method is to
adulterate extra virgin olive oil with cheaper refined olive oil,
89 Id.
90 Id.
91 Id.
92 Id.
24
thereby making chemical detection of adulteration more difficult93.”
One media report in particular stands out for its in-depth
analysis of the trade in adulterated olive oil. The article was
titled Slippery Business, and was published in 2007 by Tom Mueller of
the New Yorker magazine94. Mueller’s article chronicles how a powerful
olive oil trader got rich in the early 1990s from importing “Greek”
olive oil and re-selling it to some of the largest producers of
Italian olive oil, including Nestle, Unilever, Bertolli, and Oleifici
Fasanesi95. This Greek oil was actually hazelnut and sunflower seed
oil from Turkey and Argentina respectively96. By 1997 and 1998,
Mueller reports, “olive oil was the most adulterated agricultural
product in the European Union, prompting the E.U.’s anti-fraud office
to establish an olive-oil task-force97.” One investigator told
Mueller, “Profits were comparable to cocaine trafficking, with none of
the risks98.”
Mueller also exposes a range of adulteration tactics. “Most
olive-oil frauds are easy to detect using chemical tests.” However,
there are more sophisticated scams taking place at high-tech
factories, where hazelnut and deodorized lampante olive oil are used
to doctor high quality olive oil. It was the sophistication of these
93 Id.
94 See Tom Mueller, Letter from Italy: Slippery Business, The New Yorker (Aug. 13, 2007), available at http://www.newyorker.com/reporting/2007/08/13/070813fa_fact_mueller?currentPage=all.
95 Id.
96 Id.
97 Id.
98 Id.
25
frauds that prompted E.U. regulators in 1991 to respond by adding
organoleptic standards in addition to the chemical standards already
in place for grades of olive oil.
By 2007, the Italian government announced that it had
investigated 787 olive-oil producers, and found that 255 were likely
adulterated and falsely labeled99. In one case in 2006 that reached
American soil, federal marshals seized 61,000 liters of supposedly
extra-virgin olive oil and 26,000 liters of a lower-grade olive oil
from a New Jersey warehouse100. The importer blamed its suppliers in
Italy101. Mueller points out that the FDA still considers olive-oil
fraud a “relatively rare problem” and does not conduct routine
testing102. Instead, the Agency relies on major producers and trade
groups, like the North American Olive Oil Association, to alert it to
suspicious products103. With the industry as its own watchdog, the
United States has remained as a dumping ground for low quality olive
oils being sold as extra virgin.
The UC Davis Report prompted the filing of a class action lawsuit
in August of 2010104. The case, Martin v. Carapelli, was filed in
Orange County Superior Court, and alleged six causes of action against
at least 24 named defendants and 1000 does for fraud, negligent
misrepresentation, breach of warranty, false advertising under CA
99 Id.
100 Id.
101 Id.
102 Id.
103 Id.
104 Unpublished.
26
Business and Professions Code §§ 17500 and 17200, and unjust
enrichment105. These defendants were olive oil merchants, retail
stores, and distributors106. The pleadings base most of their claims on
the UC Davis Report, and refer to a article published in the Los
Angeles Times which alleged that falsely labeled “extra virgin” olive
oil is being sold for almost 80% more than it is worth107. However, for
unknown reasons, the plaintiffs requested a dismissal without
prejudice on December 8, 2010 and the request was granted the
following day.
III. OPTIONS FOR RESPONDING TO OLIVE OIL ADULTERATION
Two trends emerge from the long history of olive oil adulteration
in the United States. First, there has been a perpetual technological
arms-race between adulterers and regulators. Regulators initially
relied on basic physical and chemical tests to detect adulteration,
later they developed tests to identify specific adulterants.
Subsequently, the testing moved to identify the percent of olive oil
in a blend, and now this testing methodology has advanced to a point
where highly sophisticated instrumentation is used to profile the
range and ratios of specific chemical compounds. This first trend
dovetails with the second. After each new tool was developed to
detect adulteration, there was a period of stepped-up enforcement,
followed by a change in tactics by adulterers to once-again evade
detection. Furthermore, enforcement has not been constant. The FDA
105 See Martin v. Carapelli, 2010 WL 3216040 (Cal. Superior), For docket see 30-2010-00395464-CU-FR-CXC.
106 Id.
107 Id.
27
has seen its responsibilities enlarge over the years, and with limited
resources, it is forced to prioritize the allocation of its
enforcement resources.
A. GAME THEORY
Game theory provides a useful analytical framework to
conceptualize the potential responses to the problem of adulteration.
It also is an aid for understanding the behavioral dynamic behind the
pendulum swing of periods of successful enforcement and a
corresponding clean-up of the marketplace, and back again to rampant
fraud.
Game theory is a tool for analyzing behavior in strategic
situations, where the success of one party is dependent on the choices
of others. An equilibrium is said to exist in any given situation
where a) the parties know the equilibrium strategies of the other
parties and b) no party can benefit by changing their strategy while
the others keep theirs unchanged.
The game theory strategy in selling olive oil is simple; like the
majority of business endeavors, success is dependant on maximizing
profits. Since diluting expensive oils is highly profitable, there is
a strong perpetual incentive to do so. Firms that engage in illegal
adulteration without getting caught have a competitive advantage over
those that choose to remain honest. This competitive advantage
creates pressure on honest merchants to cheat in order to remain
competitive. Absent any enforcement, the equilibrium would be that
the majority of firms would attempt to maximize profits by cheating
their customers, en masse.
28
However, the equilibrium is constantly changing in response to
three risks: the risk of detection, the risk of enforcement, and the
risk that the consumer will reject a particular brand of oil
altogether. The marketplace as a whole will also suffer when
consumers reject an entire category of a product, like all extra
virgin olive oils, because they find the majority of products to be
unacceptable. Given a situation where the risk of detection was high,
the risk of enforcement was high, and the risk that consumers would
immediately turn away from one’s brand was high, then the equilibrium
would change toward a market where consumers were getting the grade of
olive oil they paid for. This is the equilibrium sought by
regulators, consumers and honest merchants. This conceptual model
suggests that any solution to reach this equilibrium must take into
account a sustained, robust ability to detect and enforce olive oil
adulteration. If these two factors are present, consumers will be
able to make accurate choices, and if there is a perception that the
market for olive oil is not tainted with fraud, then demand should
rise overall.
B. INCREASING THE RISK OF DETECTION
Detecting olive oil fraud is a technological challenge. The IOC
has a Chemists Working Group that is constantly researching, updating
and recommending new methods of detection108. Academic centers in olive
producing countries are also engaged in this research. While many of
the technical processes are beyond the scope of analysis in this
paper, it seems clear that those methods of detection that are the
108 See Firestone, supra note 12, at 179.
29
most accurate and the least costly will be the most useful for
increasing the risk of detection.
One approach recommended by the Grocery Manufacturer’s
Association (“GMA”) is the establishment of a product “fingerprint”
from which to compare an unknown sample109. The GMA points out that
establishing such a fingerprint is an expensive process that has
dampened its adoption110. They suggest a collaborate effort to
establish this fingerprint, so as to reduce the costs to any
individual company or government. In the GMA’s report on economic
adulteration, they stated, “Most leading companies already use a
number of sophisticated testing methods for detecting common day-to-
day, known quality and safety concerns. Yet due to the inherent
variability within natural raw materials, it is difficult to test for
every unknown threat. Verifying the authenticity of an ingredient,
rather than verifying the absence of every possible adulterant,
provides the best way to detect adulteration111.”
Torrecilla recently published one attractive model, useful as an
illustration, in the Journal of Food Engineering112. This paper
compared the use of differential scanning calorimetry (“DSC”), where
minute temperature changes are measured relative to heat input, to the
use of much more complex instrumentation utilizing spectroscopic and
chromatographic techniques. The use of DSC is far less expensive than
109 See AT Kearney and Grocery Manufacturers Association, Consumer Product Fraud: Deterrence and Detection, 14 (2010).
110 Id.
111 Id. at 17.
112 Torrecilla Jose S, et al. (2011). Quantification of adulterant agents in extra virgin olive oil by models based on its thermophysical properties. Journal of Food Engineering 103:211-218. (available online 26 October 2010)
30
the use of these other instruments.
What makes the use of DSC unique in this paper is that it was
combined with complex statistical analysis that has only become
available in this era of powerful computing. Torrecilla reported that
this DSC-stat technique had a lower limit of detection for refined
olive oil of 1.2%113. This was lower than the limit detectable from the
more complex and expensive instrumentation. Torrecilla noted, “This
difference in the lower limit of detection shows the power of lag-k
autocorrelation coefficient concerning adulteration of EVOO. This
widens the horizon to design tools which solve the problem of illegal
adulterants, which in some cases can cause serious problems aside from
constituting economic fraud114.” Torrecilla goes on to say that the
calculation of these lag-k autocorrelation coefficients is easy, and
can then be extracted “from huge databases such as DSC scans115.” He
then suggests, “Complex DSC profiles can be transformed into simple
LCC profiles which maintain the information necessary to detect slight
adulterations with inferior edible oils116.”
The attractiveness of this approach – the combination of
inexpensive testing equipment with complex math and computing – is
that the data can be collected by anyone, like school children,
consumers, consumer protection groups, universities and of course the
government. The analysis of this collected data could then be done
quickly over the Internet. If this approach were capable of raising
113 Id. at 216.
114 Id.
115 Id.
116 Id.
31
the risk of detection significantly, then it would make average
consumers the best enforcers.
C. INCREASING THE RISK OF ENFORCEMENT
There should be at least a two-prong approach to enforcement.
First, there is always a role for the FDA to directly or indirectly
test the olive oil entering the United States for adulteration. This
role can be viewed as an early-warning system since the volume of
products entering is so great that it is inevitable that impure olive
oil will enter the market. The FDA can also work with state
governments to monitor and test the food supply to ensure its safety
and purity.
As suggested though, if the cost of detection is low and its
accuracy against unknown adulterants is high, then this makes it
easier for consumers and other interest groups to be the primary
police of the marketplace. Under this scenario, the government –
state or federal - should create incentives for this policing, similar
to those created under California Civil Code § 52117. Under § 52(a), an
individual who has been discriminated against is entitled to treble
damages, with minimum statutory damages of $4000118. If a person is
able to pay for example, $20 for the cost of detection, and they are
entitled to receive $4000 for prevailing against a manufacturer who
sells an adulterated product (or even the store that sells the
product), then this would create a very strong enforcement mechanism.
In California, a cottage industry has arisen around pursuing
117 Cal. Civ. Code § 52.
118 Id.
32
violators of the Americans with Disabilities Act (“ADA”), where
violation of the act allows one to recover under California’s §
52(a)119. This zealous enforcement of disability discrimination laws
prompted some backlash by small business that were discontent that
they were not allowed to rectify their violations before being sued120.
However, “prevailing party” language seems to require such an offer
for correction of one’s violations for recovery of attorney’s fees.
Also, it would not be difficult to create a statutory regime that does
give committers of olive oil fraud a chance to rectify their actions
before an individual can recover for damages.
This sort of statutory scheme, combined with legally enforceable
standards of identity for different grades of olive oil, like those
adopted for voluntary use by the USDA121, would work in concert with the
latest technology to fundamentally change the current equilibrium
towards one where consumers and honest businesses win.
IV. CONCLUSION
It is easy to predict the fallout from the UC Davis Report.
Aside from a chorus by the media for reform, and a desire by the FDA
to address the problems of economic adulteration (although action may
be wanting), the winds of change will inevitably diminish. In the
next few years, olive oils will quickly go back to tasting stale, and
swindlers in the marketplace will continue to operate as they always
have. With rising demand in the United States, and increasing
119 See California Access Compliance, Americans with Disabilities Act (ADA) in California, available at http://ashdownarch.com/blog/?p=1
120 Id.
121 See USDA, supra note 17.
33
production of olive oil by California growers who are struggling to
compete, this dual approach of detection and enforcement may be a path
forward.
34