PACA Trust Litigation Alert!

 
PACA Trust Litigation Alert
On March 13, 2013, a civil action was filed in New York against Dutchie Enterprises LLC d/b/a ADJ Wholesale Produce to collect about $82,000.00 in alleged PACA trust debt.
On March 14, 2013, a civil action was filed in Florida against Quality Fruit…

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

FDA LogoThe 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.

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: Is There Penalty for Non-Compliance with a Recall Order?

YES!  The FDA may assess fees under Section 107 of the FSMA for non-compliance with a recall order under Section 423(d) or 412(f) of the FD&C Act. 

Non-compliance may include:

             1.         Not initiating a recall as ordered by the FDA

            2.        Not conducting the recall in the manner the FDA specifies in the recall order

            3.         Not providing the FDA with requested information regarding the ordered recall

Who Pays the fee for non-compliance with a recall order?

The party responsible for paying the non-compliance with a recall order fees include:

  • The responsible party for a domestic facility
  • An importer who does not comply with a recall order

The party paying the fee would be the party that received the recall order.  Importantly, this means that a distribution or storage company who owns or operates a food facility to provide services to others may be subject to this penalty even though they may not own the food. 

How much will a non-compliance with a recall order fee cost my company?

Rates: For Fiscal Year 2012, the hourly rate per FDA inspector participating in a reinspection is $224.00 per hour is no foreign travel is required and $325.00 per hour if foreign travel is required.

Number of FDA employees or agents assigned to a reinspection: The FDA will make this determination on a case-by-case basis.  Relevant factors for this decision include the anticipated number of direct hours spent on taking action in response to the company’s failure to comply with a recall order.  

Billable Activities: 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.

How can my company guard against or minimize its exposure to these  fees?

BE PREPARED!

  • Successful inspections are the result of comprehensive preparation.
  • Assess your company’s compliance with all relevant statutory and regulatory requirements.
  • Understand the FDA’s inspection process and know your rights at every stage
  • Be prepared to manage and control the inspection process… don’t let it control you.

Jason Klinowski Published in The Produce Professionals’ Quarterly Journal

The Blue Book Services recently published the April/May/June 2012 issue of its Blueprints – Produce Professionals’ Quarterly Journal publication and included a Food Safety Modernization Act Update that I authored.  Please see a link to the article below:

 FSMA: What Importers Need to Know

This article is VERY timely.  I hope you find it informative and useful.

 

 

Video Presentations from Freeborn & Peters’ SOLD OUT Food Safety Event

For those of you who could not attend our recent food safety event at the Federal Reserve Bank in Chicago, IL on March 1, 2012, please follow the link below to see take look at the video recordings of the keynote speakers and panel discussions.  

Opportunities and Challenges in Food Importation Event Video Library

This sold out event provided some VERY important and timely information about the Food Safety Modernization Act, the FDA’s food traceability pilot programs, and the current thinking of industry leaders.

The Opportunity and Challenge of Food Importation

Freeborn & Peters’ Food Industry Team is proud to sponsor the Global Midwest Alliance’s Chicago Winter Food Industry and Technology Event on March 1, 2012.

Featuring Keynote Speaker Dr. Robert E. Brackett, Vice President and Director, The Institute for Food Safety and Health at the Illinois Institute of Technology.  Dr. Brackett will discuss: How Importers Can Prepare for the Impact of the Food Safety Modernization Act.

Also featuring Industry Update Speaker Tejas Bhatt, Staff Scientist, The Institute of Food Technologists.   Mr. Bhatt will discuss: The FDA’s Food Safety Pilot Program: Meeting the Challenge of Traceability.

***This event is the part of the Global Midwest Alliance Food Trade and Technology Series.

http://foodindustry.eventbrite.com