Margaret Hamburg, U.S. Food and Drug Administration (FDA) Commissioner recently warned that if FDA food safety funding did not increase, food safety risks to the general public would. On February 23, 2012 Congress examined FDA’s budget during a House appropriations hearing. Hamburg urged that FDA’s insufficient budget to implement the Food Safety Modernization Act (FSMA) is “an enormous concern” and highlighted that if FDA does not get the money it needs the country will see more “foodborne outbreaks” and problems with food imports. The Commissioner hopes to raise $220 million for FDA through facility registration fees to support FSMA, but similar proposals have failed in the past. She hinted that the fee would reflect a number of factors, including size of company and levels of production.
Representatives were concerned that Hamburg’s proposal would fall on consumers as a food tax. Hamburg responded by critiquing the amount of money individuals are ultimately providing to enhance food safety: “We are not, as a nation, putting the resources into food safety as we should be. If you look at the budget . . . if you look at how much every American is paying for the FDA, around food safety, it’s about three and a half dollars per year. If you look at the benefits we provide, I think it’s worth more than that.”
For more on FSMA, see our previous postings here, or contact partner Sarah Brew.
FDA has revealed its draft budget request for Fiscal Year 2013. Unsurprisingly, there is a significant bump in the budget, given all FDA needs to do in order to implement FSMA. What is surprising is FDA’s request for a Food Establishment Registration Fee of $500 per facility. Those following the competing food safety bills in Congress in 2009 and 2010 will recall that the House’s bill originally funded activities through substantial user fees. The Senate’s version of the bill, which ultimately became FSMA, stripped out that provision. More excellent commentary on this budget from Dr. David Acheson is available on the Leavitt Partners’ Blog.
This week FDA released its proposed new rule on Records Access along with updated draft guidance document regarding the rule. The rule updates the existing regulations and guidance to note FDA’s expanded access to records in certain circumstances under FSMA. Under the Bioterrorism Act, FDA already had expanded records access under Class I recall-type situations; the rule expands access to records for other products reasonably likely to be similarly affected (e.g. if Salmonella is found in a finished product in product line A, FDA may have access to records for product line B if it has a reasonable belief product line B products are similarly affected). The interim rule and draft guidance document are available on FDA’s FSMA website.
This is just a taste of what is to come. We expect to see additional rules and guidance on recordkeeping requirements and records access provisions as FDA continues to implement FSMA. Questions on what records you need to be keeping or what sort of records FDA may access during an inspection? Contact Sarah Brew or another member of our Food Litigation and Regulatory Team.
According to the most recent quarterly report released by Stericycle ExpertRECALL Index, food recalls increased over 50 percent in the fourth quarter of 2011 and almost 55 percent over the same quarter in 2010. Half of the fourth quarter recalls were Class I, and another 40 percent were Class II. Allergen concerns remained the primary cause of the food recalls, making up over 100 recalls announced by FDA, while the second leading cause was potential Listeria contamination. Potential Salmonella contamination was the third leading factor in initiating recalls, representing 18 recalls. In contrast, medical device recalls decreased by more than 60 percent and pharmaceutical recalls declined by 35 percent in the same quarter.
You can access the full Fourth Quarter 2011 Recall Index here:
http://www.expertrecall.com/wp-content/uploads/Quarter-Four-ExpertRECALL-Index.pdf
Or to view the fourth quarter food recall report summary, use the following link:
http://www.expertrecall.com/wp-content/uploads/Quarter-Four-ExpertRECALL-Index-Food.pdf
These statistics are consistent with a recent analysis of Reportable Food Registry reports, which showed undeclared allergens as one of the top reasons for such reports. They underscore the importance of supply chain management for allergens, ensuring your labeling is compliant, and instituting CGMPs to avoid allergen contamination on shared product lines or in shared facilities. Our food industry specialists regularly assist in reviewing and advising on food safety programs, labeling, and supply chain risk management. Please contact Sarah Brew for more information.
Do you manufacture goods, including food or agricultural goods, that are sold in California, or sell such goods in California? If so, you should be aware of a recent state law requiring disclosure of certain information about your supply chain. 
On January 1, 2012, the California Transparency in Supply Chains Act of 2010 went into effect. The Act requires any retail seller or manufacturer that does business in California and has annual worldwide gross receipts that exceed one hundred million dollars ($100,000,000) to disclose its efforts to eradicate slavery and human trafficking from the company’s direct supply chain for tangible goods offered to sale. Cal. Civ. Code § 1714.43(a)(1). The Act is likely to cover many large non-California retailers and manufacturers, even if these companies ’ activities and operations within California are relatively minor.
Under the Act, each covered company must disclose at minimum whether, and to what extent, the company does each of the following:
- Verifies product supply chains to evaluate and address risks of human trafficking and slavery;
- Conducts audits of suppliers to evaluate supplier compliance with company standards for trafficking and slavery in supply chains;
- Requires direct suppliers to certify that materials incorporated into the product comply with the laws regarding slavery and human trafficking of the country or countries in which they are doing business;
- Maintains internal accountability standards and procedures for employees or contractors failing to meet company standards regarding slavery and trafficking; and
- Provides company employees and management, who have direct responsibility for supply chain management, training on human trafficking and slavery, particularly with respect to mitigating risks within the supply chains of products.
These required disclosures must be made available on the company’s website with a “conspicuous and easily understood link” to the disclosure on the homepage. Cal. Civ. Code § 1714.43(b). Any retail seller or manufacturer that has not already done so should determine whether they are covered by the Act and make the requisite disclosures on their website if they are.
If you have any questions or concerns with this act, we urge you to contact your legal advisor. Kristin Eads, a partner in Faegre Baker Daniel’s Food Litigation & Regulatory practice, is also available to assist clients.
On January 23, 2012, the U.S. Supreme Court unanimously struck down a California law that bans the processing of all non-ambulatory livestock. The California statute, enacted in 2008, would have required the immediate euthanasia of non-ambulatory animals, including hogs, at the slaughterhouse.
The National Meat Association (NMA) challenged the state law before the U.S. District Court in California. The lawsuit was later appealed to the U.S. Supreme Court on the argument that the Federal Meat Inspection Act (FMIA) preempts California law. The high court agreed with NMA in a ruling that the FMIA expressly preempts the application of this law to federally inspected slaughterhouses. National Meat Association v. Harris, No. 10-224.
Faegre Baker Daniels attorney Lance W. Lange filed an amicus brief for the American Association of Swine Veterinarians, the National Pork Producers Council and the National Farmers Union in the Harris case. Read more.
Faegre Baker Daniels agribusiness litigator, Mark Carpenter, attended the recent 2012 International Dairy Foods Association (IDFA) Dairy Forum. Mark heads up the firm’s dairy segment within its Food & Agriculture Industry Group. This event was attended by industry leaders including many business representatives from major dairy companies. The firm is an active member of IDFA and was one of the sponsors of the Forum.
Feeding the growing world population was a central topic of the conference. Former U.S. Secretary of Agriculture Dan Glickman stressed the need for more public investment in research and development in the food sector. With much of the population growth in the coming decades expected to occur in China and India, Anil Gupta and Haiyan Wang of the China India Institute spoke about “Getting China and India Right,” a presentation discussing the business climate in those two countries, with positive and negative examples in the recent past from U.S. businesses who have attempted to establish a presence in China or India.
The conference also took a close look at sustainability issues, particularly the need to produce more dairy products for a larger population without using substantially more land or water. The closely related subject of consumer acceptance of production-increasing technology was addressed during multiple panels.
The Food and Drug Law Institute’s (“FLDI”) annual Food Week Conference is being held in Washington, D.C. on January 23-26, 2012. Sarah Brew will be leading a panel on Managing Outbreaks and Recalls, on Day 2 of the conference, January 25th.
Dr. David Acheson, Leavitt Partners, is also speaking on a panel addressing – FSMA: How Key Provisions Affect the Future of the Food Industry.
For 15% off of registration, use the discount code: FOODPRTNR
FDLI’s annual Food Week is a unique opportunity for food law and regulation professionals. This comprehensive conference will provide practical guidance and an educational forum on the latest legal and regulatory developments affecting all sectors of the food industry and go to the core of what food safety experts, food engineers, food law practitioners and food manufacturers do every day. Food Week 2012 consists of three days of advanced programming: advertising and labeling, food safety and global issues, as well as FDLI’s industry standard “Introduction to Food Law and Regulation” course.
Hope to see you there!
National Feed and Grain Association has learned that FDA is planning to issue four separate sets of proposed regulations on the one-year anniversary of President Obama’s signing into law the Food Safety Modernization Act (FSMA). Those four regulations are:
(1) Preventive controls for human food
(2) Preventive controls for feed, feed ingredients, and pet food
(3) Foreign Supplier Verification Program (FSVP)
(4) Regulations requiring produce growers to implement preventive controls and product tracing systems for certain types of produce
FDA is also expected to release a “fact sheet” for each of the proposed regulations summarizing the major requirements, as well as schedule public meetings to provide opportunity for comment. Full article from NGFA.
Faegre Baker Daniels and FaegreBD Consulting will provide more analysis and guidance on the proposed rules later this week.
Arleen Nand and Breia Schleuss recently attended the National Grain and Feed Association’s 40th Annual Country Elevator Conference & Trade Show in Chicago. The firm is an active member of the association and was a sponsor of the event that recorded the second highest attendance ever at over 700 people. Among those attending were representatives from AgriBank, Bank of America, Bank of the West, CoBank, JPMorgan, MetLife Investments and Wells Fargo. In response to the volatile commodities market and the bankruptcy of MF Global, several speakers at the conference focused on how lenders could provide their borrowers with the opportunity to increase or “right size” their credit facilities to meet urgent margin calls while using “accordions” to minimize usage fees. Accordion features permit a borrower to request an increase to a credit facility on an expedited (and often paperless) basis while not incurring usage fees until an accordion increase is exercised. Although lenders are not required to grant a borrower’s request, the accordion features provide a structure for responding to rapid market changes and the need for increased liquidity. Arleen and Breia are lawyers in Faegre’s finance and restructuring group and are focused on agricultural finance.