Obama’s Proposed Budget for FY2014 Calls For $252 Million in Fees For the Food Industry

As reported by Food Safety News on April 11, 2013, the Obama administration is “seeking a significant increase in funding at the U.S. Food and Drug Administration to help the agency implement the monumental Food Safety Modernization Act.”  Obama Administration Seeks FDA Funding…

United Fresh Produce Association Calls for More Time to Comment on FSMA’s Proposed Rules

On April 11, 2013, United Fresh Produce Association, on behalf of almost 90 separate produce industry groups, formally petitioned the FDA to enlarge the May 16, 2013 deadline for submitting industry comments to the proposed Produce Safety and Preventative Controls Rules under FSMA.  United…

FDA Extends Comment Period on the IFT’s Report to the FDA on the Improvement of Tracking and Tracing Food

On April 2, 2013, the FDA issued a Notice extending the comment period on the Institute of Food Technologists’ findings and recommendations to the FDA for the improvement of tracking and tracing food under FSMA.  The new deadline to submit comments on the IFT’s report is July 3,…

FDA Reopens Comment Period for Draft Risk Assessment for Food Facilities

As reported by The Packer (and announced by the FDA), “the FDA is reopening the comment period for a draft risk assessment for certain food facilities that include farm packing operations for fresh fruits and vegetables.”  See FDA Reopens Comment Period on Food Facilities.
To be…

What you Need to Know About Administrative Detention of Foods – New FSMA Guidence

The FDA recently issued a revised industry guidance document titled: What You Need to Know About Administrative Detention of Foods Small Entity Compliance.  Utilizing a question and answer format, this industry guidance document contains some valuable information.  Here are some of the highlights you need to know:

Why is administrative detention needed?

Administrative detention provides a means through which FDA can hold adulterated or misbranded food and prevent it from reaching the marketplace, thus further enhancing FDA’s ability to ensure the safety of food for U.S. consumers.

What food is subject to administrative detention?

The term food refers to (1) articles used for food or drink for man or other animals, (2) chewing gum, and (3) articles used for components of any such article (section 201(f) of the FD&C Act [21 U.S.C. § 321(f)]).  The term food also refers to dietary supplements, which are to be treated as food under the FD&C Act (section 201(ff) [21 U.S.C. § 321(ff)]).

How long may FDA administratively detain an article of food?

FDA may detain an article of food for a reasonable period, not to exceed 20 calendar days, after the detention order is issued. However, an article of food may be detained for 10 additional calendar days if a greater period of time is required to institute a seizure or injunction action. The entire detention period may not exceed 30 calendar days (21 CFR 1.379).

What criteria does FDA use to order an administrative detention?

An officer or qualified employee of FDA may order the administrative detention of any article of food that is found during an inspection, examination, or investigation under the FD&C Act if the officer or qualified employee has reason to believe that the article of food is adulterated or misbranded (21 CFR 1.378).

May an administratively detained article of food be delivered to another entity or transferred to another location?

It is a prohibited act under section 301(bb) of the FD&C Act [21 U.S.C. 331(bb)] to transfer an article of food subject to an administrative detention order and/or to alter or remove any mark or label that identifies an article of food as administratively detained.

Can an administrative detention order be modified?

FDA may approve a request for modification of an administrative detention order to allow for the destruction of the article of food or movement of the detained article of food to a secure facility, to maintain or preserve the integrity or quality of the article of food, or for any other purpose that the authorized FDA representative believes is appropriate in the case (21 CFR 1.381(c)).

What’s the difference between an import detention and administrative detention?

FDA’s authority to administratively detain food under section 304(h) of the FD&C Act [21 U.S.C. 334(h)] is separate and distinct from detention that may occur during FDA’s import admissibility review. Under section 801(a) of the FD&C Act [21 U.S.C. 334(h)], when food is imported or offered for import into the United States, FDA conducts an admissibility review to determined whether to admit the product into United States or detain the product.

On the other hand for administrative detentions under section 304(h) of the FD&C Act, FDA will issue an order to the owner of the suspect food notifying him that FDA is administratively detaining the food and that he has an opportunity to appeal the detention with or without a hearing (see 21 CFR Part 1 Subpart K).

When does an administrative detention order terminate?

If FDA terminates an administrative detention order or the detention period expires, an authorized FDA representative will issue an administrative detention termination notice to any person who received the detention order (or that person’s representative), releasing the article of food, as quickly as possible. If FDA fails to issue an administrative detention termination notice and the detention period expires, the administrative detention is deemed to be terminated (21 CFR 1.384).

Who pays the costs associated with the detention order, such as storage, moving, disposal or reconditioning?

As stated in the preamble to the 2004 final rule (69 Federal Register 31659 at 31690), the party or parties responsible for paying the storage costs of food that FDA orders administratively detained is a matter between the private parties involved with the food. FDA is not liable for those costs. An owner, operator, or agent in charge of the place where the food is located can always request modification of a detention order to destroy the food if they do not want to store it.

Please take the time to read the entire guidance document.  It contains information about your rights and other deadlines that become very important if your product is administratively detained.

Indemnification Agreements – Why You Should Read the Fine Print…

As many of you know, the introduction of the Food Safety Modernization Act (“FSMA”) and the subsequent delay in rolling out certain of its key provisions has the produce industry concerned.  As a direct result of this concern, coupled with the rise of recent foodborne illness outbreaks and the fact that number of food and beverage recalls has tripled since 2000, many produce companies are insisting that their suppliers execute indemnification agreements, hold harmless agreements or continuing guarantees.

Although logical on the surface, the problem I am seeing in the industry is that buyers are over using boiler plate language that someone “cut & paste” from something they either found on-line or pulled from a different agreement.   To add insult to injury, many produce buyers now require their suppliers to either sign one  of these “cut & paste” agreements or risk losing the business.

In connection with the preparation of real indemnification agreements that accurately reflect the realities of the produce industry; I have reviewed hundreds of seller prepared indemnification agreements that savvy suppliers refuse to sign.  Throughout this process, I compiled a list of the most commonly referenced statutes that produce buyers have asked their produce suppliers to indemnify them against and which have NO bearing on the produce industry.

Allow me to share:

Federal Food, Drug & Cosmetic Act Sections 404, 405, 505, & 512

Section 404 of the Federal Food, Drug, and Cosmetic Act provides for emergency permit control by the Secretary where the Secretary finds that a class of food distributed in interstate commerce is contaminated with micro-organisms during the manufacture, processing, or packing, that it is injurious to health, and that the injurious nature cannot be adequately determined after the articles have entered interstate commerce. The section further provides that the Secretary is authorized to suspend any permit issued under section 404 if a violation of the permit issued is found.  Nothing in Section 404 requires a seller of produce to comply with any regulations absent the initial finding of contamination by the Secretary and promulgation of regulations and issuance of permits. Therefore, there is no need to, ex ante, guaranty compliance with section 404.

Section 405 allows the Secretary to make regulations exempting certain labeling requirements, but does not put any affirmative obligation on suppliers to label products.

Section 505 provides that no person shall introduce or deliver into interstate commerce any new drug unless such application is approved. This section has no applicability to the sale of produce.

Section 512 provides that a new animal drug is unsafe unless there is an approval of an application on file with the FDA.  Again, this section has no applicability to the sale of produce.

Fair Packaging and Labeling Act

The Fair Packaging and Labeling Act exempts certain persons from the scope of its requirements.  Specifically, it exempts persons engaged in business as wholesale or retail distributors of consumer commodities unless they are specifically engaged in the packaging or labeling of such commodities or prescribe means by which commodities are labeled. 15 USC § 1452(b).  Most produce companies operate as either a wholesale or retail distributor of food products and are not engaged in packaging or labeling of the commodities, nor does it specify the manner in which the commodities are labeled.  Therefore, this Act will not apply to most produce companies.

Federal Hazardous Substances Act

Under 15 USC § 1261(f)(2), the term “hazardous substance” does not apply to foods, drugs, and cosmetics subject to the Food, Drug, and Cosmetic Act.  Fruits and vegetables are products subject to the Food, Drug, and Cosmetic Act (though the sections discussed above are inapplicable) and, therefore, the Federal Hazardous Substances Act is inapplicable.

Critical Point:

For the buyer: Improper use of “cut & paste” agreements and other boiler plate language can do more harm to your supply line than good because you may jeopardize a relationship with a valuable supplier if you demand they indemnify you against things outside of their control.  Simply put, you may force the end of a valuable and mutually beneficial relationship because you are asking your supplier to indemnify you against something over which they have no control.  This presents to great of a risk for the seller and smart sellers will not assume such a risk.

For the seller: You must read the fine print and know what it is that your customers are asking you to indemnify them against.  It could be financially disastrous for you to indemnify your customer against something over which you have no control.  Similarly, you must be careful and guard against the unintended consequences of signing agreements that reference statutes that you do not understand.  In a dispute, a court will likely rule against the seller because the obvious intent of any type of hold harmless agreement between a buyer and seller is the seller’s desire to indemnify the buyer in order to induce the buyer to purchase product from the seller.  Against this backdrop the tie goes to the buyer.

 

FSMA Update: Food Facility Registration and Updates to Food Categories

The FDA recently issued a DRAFT guidance for the food industry discussing the agency’s current thinking regarding the necessity of food categories in food facility registrations.

See Draft Guidance for Industry: Necessity of the Use of Food Categories in Food Facility Registrations and Updates to Food Categories

DISCLAIMER: The forthcoming discussion relates to draft guidance that is still open for comment, modification and retraction.  As such, it is not intended for immediate implementation in its current form and it does not create a legally enforceable responsibility.

 

Step One: Relevant Rule (FD&C Act & Bioterrorism Act)

Section 305 of the Bioterrorism Act, generally required domestic and foreign facilities that manufacture, process, pack, or hold food for human or animal consumption in the United States to register with FDA by December 12, 2003 (See 68 FR 58894). This section also required facilities to submit registrations to FDA containing information regarding applicable food product categories as identified in 21 CFR 170.3.

Step Two: Necessity to be Determined by the FDA Through Guidance

Section 415(a)(2) of the FD&C Act, as added by section 305 of the Bioterrorism Act, provided in relevant part that, when determined necessary by FDA “through guidance,” a registrant must submit a registration to FDA containing information necessary to notify FDA of the general food category (as identified in 21 CFR 170.3) of food manufactured, processed, packed, or held at such facility.

Step Three: FDA Issued the Requisite Guidance and Finding of Necessity

On July 17, 2003, FDA issued a guidance stating that the agency had determined that the inclusion of food product categories in food facility registrations was necessary for a quick, accurate, and focused response to an actual or potential bioterrorist incident or other food-related emergency (see 68 FR 42415).

Step Four: Net Result…

Section 305 of the Bioterrorism Act, in relevant part, requires a food facility registrant to submit a registration to FDA containing information necessary to notify FDA of the general food category (as identified in 21 CFR 170.3) of food manufactured, processed, packed, or held at such facility.

What’s New Under FSMA?

Step One: The New Relevant Rule

FSMA, enacted on January 4, 2011, amended section 415 of the FD&C Act. Section 415(a)(2) of the FD&C Act, as amended by section 102 of FSMA, now provides in relevant part that, when determined necessary by FDA “through guidance,” a registrant must submit a registration to FDA containing information necessary to notify FDA of the general food category (as identified in 21 CFR 170.3 or any other food categories, as determined appropriate by FDA, including by guidance)  of any food manufactured, processed, packed, or held at such facility.

Step Two: Necessity to be Determined by FDA Through Guidance

FDA believes that it is necessary for a food facility to submit to FDA a registration containing the general food category as identified in 21 CFR 170.3 and any other food categories as identified below, if applicable, for a quick, accurate, and focused response to a food-safety related issue or an actual or potential bioterrorist incident, other food-related emergency, or food safety incident.

FDA believes that information about a facility’s food categories is a key element to allow for rapid communications between FDA and facilities directly impacted by actual or potential bioterrorist attacks, other food-related emergencies, or food safety incidents. Information about the categories of food a facility handles currently assists FDA in conducting investigations and surveillance operations in response to food-related emergencies. These categories also enable FDA to quickly alert facilities potentially affected by such an incident if FDA receives information indicating the type of food affected.

Section 102 of FSMA, also provides in relevant part that FDA may, through guidance, determine that additional food categories, other than those listed in 21 CFR 170.3, are appropriate for the purposes of food facility registration under section 415 of the FD&C Act.

Step Three: FDA Issued a DRAFT Version of the Requisite Guidance and Finding of Necessity

This draft guidance document also addressed the FDA’s finding of necessity needed to include additional food categories into the food facility registration process.  To this end, the “FDA believes that the following additional food categories are appropriate for food facility registration and will include such categories as mandatory fields in the food facility registration form when FDA finalizes this guidance”:

Additional Food Categories for Foods for Human Consumption:

• Acidified Food (see 21 CFR 114.3(b));
• Cheese and Cheese Product Categories: Soft, Ripened Cheese; Semi-Soft Cheese; Hard Cheese; Other Cheeses and Cheese Products;
• Dietary Supplement Categories: Proteins, Amino Acids, Fats and Lipid Substances; Animal By-Products and Extracts; Herbals and Botanicals;
• Fisher/Seafood Product Categories: Fin Fish, Whole or Filet; Shellfish; Ready to Eat (RTE) Fishery Products; Processed and Other Fishery Products;
• Fruit and Fruit Products: Fresh Cut Produce; Raw Agricultural Commodities; Other Fruit and Fruit Products;
• Fruit or Vegetable Juice, Pulp or Concentrate Products;
• Low Acid Canned Food (LACF) Products (see 21 CFR 113.3(n));
• Nuts and Edible Seed Product Categories: Nut and Nut Products; Edible Seed and Edible Seed Products;
• Shell Egg and Egg Product Categories: Chicken Egg and Egg Products; Other Egg and Egg Products;
• Vegetable and Vegetable Product Categories: Fresh Cut Products; Raw Agricultural Commodities; Other Vegetable and Vegetable Products; and
• Baby (Infant and Junior) Food Products Including Infant Formula.

Additional Food Categories for Foods for Animal Consumption:

• Grain or Grain Products (i.e., barley, grain sorghums, maize, oat, rice, rye, wheat, other grains or grain products);
• Oilseed or Oilseed Products (i.e., cottonseed, soybeans, other oilseeds or oilseed products);
• Alfalfa Products or Lespedeza Products;
• Amino Acids or Related Products;
• Animal-Derived Products;
• Brewer Products;
• Chemical Preservatives;
• Citrus Products;
• Distillery Products;
• Enzymes;
• Fats or Oils;
• Fermentation Products;
• Marine Products;
• Milk Products;
• Minerals or Mineral Products;
• Miscellaneous or Special Purpose Products;
• Molasses or Molasses Products;
• Non-protein Nitrogen Products;
• Peanut Products;
• Recycled Animal Waste Products;
• Screenings;
• Vitamins or Vitamin Products;
• Yeast Products;
• Mixed Feed (e.g., poultry, livestock, equine);
• Pet Food;
• Pet Treats or Pet Chews;
• Pet Supplements (e.g., vitamins, minerals); and
• If none of the above food categories apply, print the applicable food category or categories (that does not or do not appear above).

Step Four: Net Result…  (coming some in final form)

Once FDA issues the final version of the aforementioned guidance document, the foregoing rules about registrations and additional food category disclosures will become a mandatory requirement for food facilities and a legally enforceable obligation under FSMA.

FSMA Update: 2013 Fee Schedule Features Reduced Rates!

On July 31, 2012, the FDA announced its fee structure for rates to be assessed under the Food Safety Modernization Act in 2013.  The rates for 2013 are $221.00 per hour if no foreign travel is required and $289.00 per hour if foreign travel is required.  These new rates will be effective from October 1, 2012 through September 30, 2013, which is when the next fiscal year’s fee schedule will be published.

The good news is that the 2013 rates are lower than the 2012 rates, which were $224.00 per hour is no foreign travel is required and $325.00 per hour if foreign travel is required.  Perhaps the rate reduction in 2013 is a sign that the FDA is attempting to implement FSMA in light of the known operational realities and pain tolerances for administrative fees that exist in the food industry.

With that said, it is important to remember that FSMA’s fee structure represents hourly rates charged by each FDA inspector participating any type of billable activity related to a given case.  As a reminder, billable activities include conducting the reinspection at the facility, making preparations and arrangements for the reinspection, traveling to and from the facility, analyzing records, analyzing samples, preparing reports or examining labels and performing any other activity deemed necessary to determine compliance with the regulation or statute found to be violated in the initial inspection.  Other billable activities include conducting recall audit checks, reviewing periodic status reports, analyzing the status reports and the results of the audit checks, conducting inspections, traveling to and from locations, and monitoring product disposition.  Simply put, even with a reduced fee structure, FSMA related fees can add up quickly and significantly impact businesses.

Will the FDA charge and collect fees under FSMA in 2013?

Because FDA recognizes that for some small businesses the full cost recovery of FDA reinspection or recall oversight could impose severe economic hardship, FDA intends to consider reducing certain fees for those firms.  FDA is currently developing a guidance document to outline the process through which firms may request such a reduction of fees. FDA does not intend to issue invoices for reinspection or recall order fees until this guidance document has been published.

Who will be affected by these fees?

Only those parties in the food and feed industry whose non-compliance results in the following activities:

• Facility reinspections – follow-up inspections conducted by FDA subsequent to a previous facility inspection that identified noncompliance materially related to a food safety requirement of the Federal Food, Drug, and Cosmetic Act (the Act). The reinspection must be conducted specifically to determine that compliance has been achieved.
• Recalls – food recall activities performed by FDA that are associated with a recall order with which a responsible party has not complied.
• Importer reinspections — follow-up inspections of a food offered for import conducted by FDA subsequent to a previous inspection that identified noncompliance materially related to a food safety requirement of the Act. The reinspection must be conducted specifically to determine that compliance has been achieved. As discussed in F.2.2., these fees will not be assessed until the agency has resolved issues associated with these fees and the public has been notified by the agency.

Can small businesses have their fees waived?

The FY 2013 fee schedule does not contain any reduced fee rate for small business. However, FDA does not intend to issue invoices for reinspection or recall order fees until a guidance document to outline the process through which firms may request a reduction of fees has been published. Once published, invoices will be issued and firms can apply for reductions as outlined in the guidance.

How does FDA plan to charge these fees?

For facility reinspection fees, FDA will invoice the responsible party for each domestic facility and the United States Agent for each foreign facility for the direct hours, including travel, spent to perform the reinspection at the appropriate hourly rate. For recall order fees, FDA will invoice the responsible party for each domestic facility or an importer who does not comply with a recall order under sections 423 or 412 of the Act for the hours spent to cover food recall activities associated with such order. For importer reinspection fees, FDA will invoice the importer for the direct hours spent to perform the reinspection including travel. Detailed payment information will be included in the invoice.

Which fiscal year rate will be used and when?

The fiscal year in which the reinspection occurs dictates the fee rate to be applied. For example, if a reinspection was conducted in September, 2012 and the invoice was issued in October, 2012, the fee rate to be applied would be the FY 2012 rate. The invoice clearly itemizes the fiscal year, hours and rate used to calculate the total invoice amount.

How long does the responsible party have to pay the fees?

Payment must be made within 90 days of the invoice date.

What happens if the responsible party or U.S. Agent does not pay?

Any fee that is not paid within 30 days after it is due shall be treated as a claim of the United States government subject to provisions of subchapter II of Chapter 37 of Title 31, United States Code.

FSMA Update: FDA Releases New Information Related to Food Facility Registration

The FDA recently published information answering three frequently asked questions:

QUESTION:  What form do I use to renew a food facility registration?

ANSWER:  FDA Form 3537.

Registrants must use Form 3537 to register, update, or renew a registration. Form 3537 is being updated to meet registration renewal needs. The next registration renewal cycle begins October 1, 2012. Facilities may register online via the Internet at http://www.fda.gov/furls, which operates during business hours from 7:00 am to 11:00 pm U.S. Eastern Standard Time.

QUESTION: Am I required to renew a food facility registration online? 

ANSWER:  No!  Registrants can renew food facility registrations online or submit the paper Form 3537 by mail or fax. A business with multiple facilities may also register on a CD-ROM by mail. FDA encourages online registration as the least costly, quickest, and most efficient means for food facility registration. With online registration, a food facility must enter all of the required information before the system will accept the submission. After all required information has been entered, a registrant will receive confirmation of registration and a registration number. Paper registration is a more costly and less efficient process to supply FDA with registration information and to provide food facilities with their registration numbers. Further, paper registration may have a higher number of errors or omissions on the form, which may require additional time to complete the registration process.

QUESTION: Why wait until October 1, 2012 to start the registration renewal process? 

ANSWER:  Because you will be required to do it again between Oct. 1 and Dec. 31, 2012.   The FDA Food Safety Modernization Act (FSMA) mandates that all food facilities that are required to register must renew their registrations every other year during the period beginning on October 1st and ending on December 31st of each even-numbered year. The first registration renewal cycle will occur from October 1 to December 31, 2012.

As always, more information may be found at: Food Safety Modernization Act – FAQ Page

Please keep in mind that the FDA does not provide answers to questions of registration strategy, information disclosure and impact of registration choices on frequency of inspections and the classification of a food facility as high risk or non-high risk.  These are ALL very important issues that need to be addressed.

FSMA Update: FDA Releases New Information Related to Food Facility Registration

The FDA recently published information answering two frequently asked questions:

QUESTION:  Does the Food Safety Modernization Act require a food facility to submit additional information to FDA in order for the facility to receive a food facility registration number?

ANSWER:  Yes!  Section 102 of FSMA amends section 415(a)(2) of the Federal Food, Drug, and Cosmetic Act by requiring food facilities to submit registrations to FDA containing additional information. Specifically, registrations are required to contain the e-mail address for the contact person of the facility, or for a foreign facility, the email address of the United States agent for the facility, and an assurance that FDA will be permitted to inspect the facility at the times and in the manner permitted by the FD&C Act. Additionally, if determined necessary by FDA, registrations are required to contain information regarding other applicable food categories, as determined appropriate by FDA, for foods manufactured/processed, packed, or held at registering facilities.

QUESTION: Will food facilities already registered with FDA under section 415 of the FD&C Act be required to renew their registrations during the October 1 – December 2012 registration renewal period? 

ANSWER:  Yes!  All facilities that are required to register must renew their registrations during the period beginning on October 1 and ending on December 31 of each even-numbered year. The first registration renewal cycle will be held from October 1 to December 31, 2012. Registrants are required to submit registrations to FDA containing the new information added by section 102 of FSMA. As new requirements and guidance go into effect related to facility registration renewal, FDA will post the information on this FSMA website.

As always, more information may be found at: Food Safety Modernization Act – FAQ Page