Bayer CropScience, which found the contamination in samples of long grain rice, in July notified the US Department of Agriculture (USDA) and the Food and Drug Administration (FDA) of the discovery.
The USDA and FDA last week concluded that a scientific review of available data revealed no human health, food safety or environmental concerns are associated with this rice.
The bioengineered variety of rice, called LLRICE601, was designed for herbicide tolerance, but has not undergone the necessary regulatory process for USDA to determine that it can be safely produced commercially. It is therefore known as a "regulated" crop.
According to the USDA, Bayer had no plans to market the GE rice variety, which is why it had not requested "deregulation" - or approval.
Speaking at a news conference on Friday, US secretary of agriculture Mike Johanns confirmed that the contaminated rice was a 2005 crop, but said that it was premature to estimate what level of spreading or contamination had occurred.
He was also unable to clarify where the crop originated from.
"In terms of the location of this sample and the information I've provided I can tell you very candidly, I didn't ask where this sample came from. I know it's long grain rice. I can't tell you if that came from this state or that state. The information that was provided to me was sufficient for purposes of ascertaining the safety of this, and I wanted to know where the process was at, and had it been through the process, and a whole list of things," he said in response to a question at the news briefing.
He was also unable to confirm if the product had potentially reached supermarket shelves, but stressed that "genetically engineered products in the United States are very, very common, have been for many, many years (…) it's just not an unusual phenomena here."
The USDA said it plans to conduct an investigation into how the product contaminated rice crops, and whether any violation of federal regulations occurred.
The process will be open to public comment.
Bayer, which also developed two deregulated lines of genetically engineered (GE) rice with the same herbicide-tolerant protein, is expected to now petition for the deregulation of LLRICE601.
According to the USDA, this is the first case of contamination between biotech and traditional rice crops.
And the contamination will also have an impact on rice exports. Around 50 percent of the US rice crop is exported, and 80 percent of that is long grain rice, said Johanns, adding that the USDA is engaging trading partners "very, very directly" on the issue.
The US currently provides about 12 percent of world rice trade. According to estimates for the 2006 crop year, rice production in the US is valued at $1.88 billion, approximately half of which is expected to be exported.
More than 100 varieties of rice are currently produced commercially in the US, primarily in six states: Arkansas, Texas, Louisiana, Mississippi, Missouri, and California.
The majority (58 percent) of domestic utilization of US rice is direct food use, while 16 percent is used in processed foods and beer respectively. The remaining 10 percent is found in pet food.
"Since 1987, the US Department of Agriculture and Plant Health Inspection Service (APHIS) has deregulated more than 70 GE crop lines and in the last decade farmers have increasingly planted biotech varieties engineered mainly for herbicide tolerance, insect resistance, and enhanced quality traits," said the USDA in a statement.
"USDA's National Agricultural Statistics Service estimates that in 2006, 61 percent of the corn, 83 percent of the cotton and 89 percent of the soybeans planted in the United States were biotech varieties."