Contributing Lawyers

Canada

Cyndee Todgham Cherniak

United States

Susan Kohn Ross

Australia

Andrew Hudson



Food Safety Enhancement Act of 2009

Given the expanding concern about the safety of the U.S. food supply, Congress is again taking action to change the rules. From what we have seen so far, those changes are likely to be dramatic and potentially quite costly, especially to small business. The U.S. House of Representatives passed the Food Safety Enhancement Act of 2009, H.R. 2749, see

 

While the Senate has its own version of a food safety bill, see S.150 at

 

We start with the basics. If the imported product is meat, poultry or eggs, those commodities remain subject to the U.S. Dept. of Agriculture rules and regulations. The changes arising from the current effort will only impact how FDA enforces the law. FDA regulates food, drugs, dietary supplements, cosmetics, medical devices, animal feed, pesticides, food additives (e.g., colors), biologics (e.g., blood plasma, tissue and organs), radiation emitting devices (e.g., lasers) and a host of other products that are either applied to or consumed on or in the body of man and animals. FDA’s definition of due diligence includes good manufacturing practices, good agricultural practices, HACCP (Hazard Analysis and Critical Control Point), packaging and how health claims and nutrition panel statements are expressed. Approximately 25¢ of every $1 spent in the U.S. is spent on a product regulated by FDA.

 

In terms of importing FDA regulated goods into the U.S., we begin with the FDA import process. Once a shipment arrives, it is submitted to FDA for consideration. If everything is in order, FDA issues a "May Proceed" notice. However, if there are concerns, a shipment may be subject to detention without physical examination or sampling. If sampled, the outcome of the testing dictates what happens next. If the sample is found to be in order, a "May Proceed" notice is issued. However, if there are violations found or the product was detained without physical examination, the next step is detention. At that point, the importer is given an opportunity to submit evidence as to why the product is compliant with the relevant FDA rules and regulations. If successful, the detention is canceled and the goods released. If not, the goods are subject to refused admission, at which point export or destruction are the only options and the failure to do so leads to significant penalties.

 

Typically, in its simplest terms, FDA stops goods because they are adulterated, misbranded or prohibited which covers a wide variety of issues involving contamination, labeling and other reasons why a product is out of compliance. Labeling is defined by FDA to include what is on the product, its outer box, any product insert or marketing piece and anything the importer or a third party states about the product on a website!

 

Against this backdrop, we turn to H.R. 2749. This bill proposes to expand the definition of misbranded to include food which is stored in a facility that is not registered. Registration is also expanded to include food exported from the U.S. The registration fee for 2010 would be $500 (not to exceed $175,000 per registrant). The fee is subject to increase in subsequent years. Of course, this fee applies to both U.S. and international facilities which must register with FDA.

 

Misbranding also results if a registration is canceled or suspended. Registration requirements consist of the name (including trade name), address, contact person, primary purposes/business activity plus seasonal dates, if applicable, the general category of each food manufactured, processed, packed or held, the U.S. agent/emergency contact, a unique identifier (which is also reported at time of registration), and other details required by regulation. There is a 30 day update period. As written, the registration fee expires in 2014.

Just as registrations can be created, they can also be suspended. The suspension standard is the product creates a serious adverse health consequences or death to humans or animals. There is notice and an opportunity to be heard, albeit at an informal hearing and on an expedited basis. As a result, there are provisions for reinstatement. Cancellation may also occur and is due to failure to pay the filing fee or failure to timely update data.

Registration fees are to be used only in connection with food safety activities which are defined as those dealing with staff, laboratories, systems, buildings, fixtures, furniture, equipment, materials, supplies and fee collection efforts. Food safety activities also include facilities compliance review, development and maintenance of performance standards and preventive controls, risk assessment, hazard analysis, inspection planning and inspections, third party inspections, enforcement, import review, IT support, test development, product sampling, risk communication and administrative detention.

HACCP is also addressed, but with an interesting twist. Specifically, if an importer does business with an owner, operator or agent of a facility which does not itself conduct hazard analysis, then the goods being stored, manufactured, packed, processed or otherwise transported or handled at that facility are considered misbranded and so will be refused admission. Conducting a hazard analysis means not only identifying any hazards, but also documenting any efforts undertaken, including any corrective action. The proposed record-keeping time frame is two (2) years.

Hazard analysis is expanded so that the owner, operator or agent is to evaluate any hazards, including those due to the source of the ingredients and/or reasonably likely to occur absent preventive controls that could affect safety, wholesomeness or sanitation, including those resulting from biological, chemical, physical and radiological hazards, natural toxins, pesticides, drug residues, filth, decomposition, parasites, allergens, unapproved food and color additives, and naturally occurring hazards, including those possibly introduced by terrorism.

All preventive controls are to be reanalyzed every two years or earlier, as circumstances warrant. Before an importer or domestic seller may introduce a food into the food supply, he must first have in place a food safety plan which must include a hazard analysis, preventive controls description, corrective actions procedure, description of validation/verification procedures, recordkeeping, supply chain security (including ingredients and components) and track and trace procedures descriptions, plus how science-based performance standards are implemented. There is an 18 month delay in implementation to allow the development of these standards by the Health and Human Services (HHS) Secretary (FDA is part of HHS) who is to issue guidance based on U.S. and international standards with due consideration given to the impact on small businesses.

These requirements are intended to expand hazard analysis to all facilities, not just those currently regulated by HACCP, such as seafood, some juices and low-acid canned food, which will be another significant change, even in the face of the 18-month delay in effective date.

The definition of adulterated food is also expanded, this time to include goods that are manufactured, processed, packed, transported or held under conditions that do not meet the performance standards which are to be promulgated. These performance standards will be recommended by the HHS Secretary and are to identify the most significant food-borne contaminants and related hazards, and recommend ways to minimize or eliminate such hazards and contaminants. These performance standards will also apply to fresh produce and other raw agricultural products (plant and fungus), whether they are grown, harvested, packed, sorted, transported or held. In both contexts, the goal is to prevent the introduction of known or reasonably foreseeable biological, chemical and physical hazards, including hazards that occur naturally, may be unintentionally introduced, or may be intentionally introduced, including by acts of terrorism. Specifically mentioned are controls in areas such as manure use, water quality, employee hygiene, temperature, and sanitation and animal controls, although discretion is granted to incorporate other criteria.

The bill also includes an inspection schedule based on risk. Enforcement and inspections may occur by federal and state regulators. In the case of facilities in foreign countries, foreign entities may be certified to conduct the inspections. In all cases, the HHS Secretary may limit the inspection schedule based on commodities or food types. The bill then goes on to identify the risk categories. A Category 1 facility is considered high-risk. It manufactures or processes food, including those that process raw products of animal and fish origin. These facilities are to be inspected every six (6) to twelve (12) months. Category II facilities are low-risk and manufacture, process, pack or label food. They are to be inspected every 18 months to three (3) years. Finally, Category III facilities are warehouses that simply hold food. They are to be inspected every five (5) years. FDA previously notified Congress it needed a different inspection schedule as it will need significant time and resources to ramp up for any serious inspection protocol. As a result, these time frames differ from the original proposal, and the version of the bill now under consideration also provides the Secretary may change the schedule by regulation.

Category 1 facilities will also be required to submit finished product testing results based on their good manufacturing practices (GMPs). The process is subject to notice and comment but is mandated to begin no more than two (2) years after enactment. Every two (2) years, HHS is to review and evaluate epidemiological and other data to identify risks from food-borne contaminants and the significant resulting hazards. Science-based standards are to be brought to bear through guidance (FDA written policy notices) or regulation to minimize, prevent or eliminate such hazards. The identified contaminants are to be published in the Federal Register.

 

In addition to GMPs and performance standards, there are to be safety standards for food and other raw agricultural products. The goal is to prevent the introduction of known or reasonably foreseeable biological, chemical, and physical hazards, including hazards that occur naturally, may be unintentionally introduced, or may be intentionally introduced, including by acts of terrorism, into raw agricultural commodities that are from a plant or a fungus; and provide reasonable assurances against adulteration, e.g. manure use and water handling. These safety standards are to be issued no later than 18 months after enactment and will be final at the third year after enactment.

There is also additional recordkeeping mandated. Each person who produces, manufactures, processes, packs, transports, distributes, receives, or holds an article of food in the United States or for import into the United States is expected to turn over his records within reasonable limits and in a reasonable manner after the officer displays his credentials. Turning over records is defined to mean making them available for copying. "Records" includes those related to "production, manufacture, processing, packing, transporting, distribution, receipt, holding, or importation of such article maintained by or on behalf of such person in any format (including paper and electronic formats) and at any location." The record-keeping period is three (3) years. Restaurants are only required to keep records about their suppliers and any subsequent distribution if to other than consumers.

The term "prohibited act" is expanded to include food which fails to meet the newly enacted traceability requirements, see below for more details. The traceability system is for all imported and domestic food and must include a full history of origin and previous distribution and a link to subsequent distribution. The tracking system is to be interoperable with other existing systems the person/company already has in place and mandates that each facility owned by a person must have a unique identifier. Any tracking system recommended by HHS is to be evaluated in conjunction with industry which is expected to provide extensive input. Direct sales by farms to consumers or restaurants are exempt. Other food may become exempt if HHS is satisfied it poses no risk to public health. If a facility is found in violation, it may be assessed additional fees, including those related to its being reinspected.

The food tracing system is to take into consideration existing technologies and methods already in use in various sectors of the food industry. The goal of such a system is to maintain the pedigree of origin and previous distribution, linkage to subsequent distribution, provide interoperability, including unique facility identifiers, and consider cost, feasibility and benefit plus allow tracking to be accomplished in no more than two (2) business days! The outcome is to include the use of lot numbers, standardization of pedigree format and common nomenclature. Farms and fisheries that sell directly to a grocery store or restaurant are exempt and must only keep sales records for six (6) months.

The Reportable Food Registry is expanded to include food which violates the provisions added by this bill. The recently created Registry allows instances of reportable food to be submitted by public health officials and responsible parties. Food is considered reportable when there is a "reasonable probability that the use of, or exposure to, such article of food will cause serious adverse health consequences or death to humans or animals." The information may then be shared among federal agencies or with state and local governments.

Three years after enactment, a certification of compliance requirement takes effect. Any shipment in violation is deemed misbranded and may be refused admission. There may also be country-specific certifications triggered by the circumstances in a given country and/or the nature of the food or product being imported. These certifications may be made by a foreign government official or a third party recognized by FDA. The third-party certifiers are subject to detailed conflict of interest rules.

There is also a provision that requires anyone who becomes aware of food which could be harmful to report that fact to FDA along with the location of the product. Voluntary recall is authorized as before, but now FDA will also have the ability to issue an order to "cease distribution" which includes giving notice to anyone who has already received the product. In other words, FDA finally gets its long-sought mandatory recall authority. There is a right to appeal within 24 hours and a provision for an informal hearing to be held no more than ten (10) business days later. There are also provisions for an emergency recall as ordered by the FDA with good cause.

Evidencing the ever-growing cooperation between state and federal officials, FDA is allowed to share information with other federal agencies as well as state and local governments. FDA is also permitted to share information with foreign governments plus with international organizations for public health reasons, and with regional or global organizations focused on harmonization of standards and requirements.

The bill further proposes the creation of The Safe and Secure Food Importation Program. To qualify, the importer: 1) verifies that each facility involved in the production, manufacture, processing, packaging, and holding of the food is in compliance with the food safety and security guidelines developed [as per the below criteria] with respect to such food; 2) ensures that appropriate safety and security controls are in place throughout the supply chain for such food; and 3) provides supporting information to the Secretary.

 

As part of the implementation process for this new program, which sounds very much like C-TPAT and the produce industry's traceability program, FDA is to develop safety and security guidelines for the importing of food which are to take into account: personnel, physical and procedural security; preventive controls; vendor and supplier information; validation by a third party and such other criteria as the Secretary deems appropriate.

 

The food borne surveillance system is to be upgraded. Strategies are to be developed and implemented which improve food safety at the state and local levels, all with the goal to better identify food-borne illnesses much faster so that intervention will be more effective, plus a public education program is also to be developed; all to enhance diagnosis and treatment of food-borne illnesses. Research into improved sanitation and food safety practices in production, harvesting and processing are also encouraged, along with improved means of monitoring and inspecting food safety so as to more quickly identify contaminants.

Of immediate concern to international traders is the provision which changes the grounds for detention from credible evidence or information to "reason to believe" which means the decision turns on the opinion of one FDA official rather than an objective standard. One hopes the guidance which is to be issued by HHS will make clear the objective standards to apply to the term "reason to believe."

Criminal penalties and the Sentencing Guidelines are being increased, while at the same time HHS is given quarantine authority, meaning if it suspects a food-borne outbreak, HHS will now be permitted to control the distribution of food and its transportation in a given region. Similarly, civil penalties are being increased to a maximum of $50,000 per individual and $1,000,000 per entity for negligent violations and $100,000 for individuals and $7,500,000 for entities in the case of intentional activities. The criminal penalty is up to 10 years in jail plus fines.

Importers (and customs brokers and other filers) should also be concerned about a provision which makes it a prohibited act to submit information which is incomplete or inaccurate or to fail to submit information as required. FDA is notorious for changing its requirements without notice to the public which makes this standard difficult to meet at the best of times. The threat of penalty or criminal prosecution makes this an even more dangerous situation.

There are also specific rules relative to infant formula and carbon monoxide used as a preservative. There is also a new labeling requirement. For processed foods, the goods must now state the last country of processing. It is not clear how this will be implemented in the event origin is not stated on the product. Earlier versions of the bill required the details to be listed on the manufacturer’s or packer’s website, but were later omitted.

All filers may have their registration revoked for violations of the act or upon the occurrence of "knowing or repeated making of an inaccurate or incomplete statement or submission of information relating to the importation of food." Given the inability of FDA to communicate its ever-changing regulations and procedures in a timely fashion to the trading community, one has to wonder how this will be interpreted and enforced.

Importers are expected to exercise good importer practices, which are defined to include verifying good manufacturing practices and preventive controls by their foreign suppliers. Customs brokers must be registered and must submit unique facility identifiers. The bill speaks about "other filers" but fails to define that term. However, what is clear is the failure to register by either the importer, filer or the customs broker leads to the product being barred as misbranded.

Importers of food, drugs and devices will all be assessed fees for their registrations, although the exact amount is not as yet specified. The unique identifier is tied to the registrant's primary place of business, but not necessarily each facility it has, although exactly what qualifies as a primary place of business is undefined. Similarly, manufacturers of food, drugs and medical devices are all required to register, whether domestic or foreign. Should any foreign plant or foreign government official delay, limit or refuse an inspection, the resulting product is considered adulterated.

FDA is barred from closing any of its laboratories unless it first submits a reorganization plan to Congress. On the other hand, FDA is now given its long-sought subpoena authority to obtain witnesses and records in order to conduct hearings, investigations or other proceedings. If a party fails to comply with a subpoena, the related product is refused admission.

The fact the underlying goods are considered adulterated, misbranded or prohibited allows FDA to force the export or destruction of the goods, often a heavy price to pay and so surely will get the importer’s attention. While the sampling, detention, and refused admission import process remains untouched, violations of the proposed new requirements will likely lead to far fewer options for importers to challenge FDA's determinations.

In terms of the existing Senate bill, S. 150, as noted above, most of its themes were incorporated into H.R. 2749. However, S.150 does contain a provision which was not and calls on FDA to allocate resources for inspections taking into account the risk profile of the food based on factors such as the food, country of origin, countries of transport, history of food recalls, outbreaks, importer food safety standard violations, the rigors of the foreign supplier verification program implemented by the importer, whether the importer is a participant in a voluntary qualified importer program, whether the food meets HHS’ definition for high priority for adulteration, whether the food is from a certified facility, and any other criteria determined by HHS.

The criteria which are to apply to a Voluntary Importer Compliance Program include many of the same factors applying to the risk allocation inspection criteria, such as the nature of the food being imported, the compliance history of the foreign supplier, the capability of the country of export’s regulatory system to ensure compliance with U.S. food safety standards, the importer’s compliance record, the recordkeeping, testing, inspection and audit of facilities, traceability, temperature controls and sourcing practices of the importer, the potential risk for intentional adulteration, and any other factors HHS determines should apply.

Unlike C-TPAT which allows the individual company to decide whether or not to publicize its involvement in the program, participation in the FDA importer program will be posted on the Internet.

 

It is clear that much effort went into combining many often conflicting proposals into the one bill which the House approved. There remain some provisions which appear questionable, but what seems clear is that Congress is intent on passing FDA reform legislation and soon. In other words, once Congress deals with health care, the economy and education, it is likely the process of considering and approving a food safety bill will go quickly. At the same time, the private sector is pushing hard to make sure the outcome is valuable. In a notice to members, the United Fresh Produce Association said it will focus on a number of issues when food safety is considered by the Senate, and specifically mentioned:

  • Targeting of resources generated by registration fees to specific FDA activities in support of food safety, not bureaucracy;
  • Eliminating unwarranted mandates for finished-product testing that would do nothing to increase food safety;
  • Requiring creation of an expedited entry program for imports that can demonstrate ongoing compliance with safety standards; and
  • Creating better organizational structure for food-safety outbreak management in the federal government, including specific inclusion of industry expertise to rapidly determine the source of outbreaks, remove at-risk product, and clear all concerns to allow for marketplace recovery.

 

While Congress has been considering possible regulatory changes, FDA has not been idle. Building on previously policies, FDA has released guidances addressing food and supply-chain safety regarding the handling of tomatoes, melons and spinach (leafy greens), whether at the growing, harvesting, packing, processing, or distribution stage and whether in the context of retail or food-service preparation. The tomato guidance can be found at

 

 

As the latest attempt to reformat FDA’s duties and obligations makes its way through the legislative process, traceability remains the watchword of the day. Whether it is this proposal or the next one, American food and food product traders should be taking steps to work more closely with their suppliers, and also focus on sustainability, the other major consideration these days. At the same time, so long as price drives the deal, you have to be concerned about quality. Whatever your supplier’s compliance program, it must be regularly monitored, tested, questioned and updated AND so must yours. How are you preparing?

 

thomas.loc.gov/cgi-bin/query/C. It has been referred to the U.S. Senate for further consideration. thomas.loc.gov/cgi-bin/query/C, by the time the House proposal worked its way through the system there, the vast majority of the concepts in the Senate bill had been incorporated into the House version. As such, while it is reasonable to expect some changes will be made to the bill by the Senate before it is enacted into law, the expectation is there will not be many substantive changes and so international traders should begin to think about how to deal with the likely impact as the bill is expected to be enacted relatively soon. www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/ProduceandPlanProducts/ucm173902.htm; the melon guidance at www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/ProduceandPlanProducts/ucm174171.htm; and the spinach/leafy green guidance at www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/ProduceandPlanProducts/ucm174200.htm. What they all have in common are additional obligations being imposed on the way companies do business in the future that will undoubtedly be looked at by plaintiffs’ counsel when future outbreaks occur.

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