Tag Archives: FDA attorney

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.

 

 

The FDA detained my imported food… What can I do?

Under the Federal Food Drug & Cosmetic Act (FD&C Act) an article of food subject to a detention order may not be delivered to any of its importers, owners, or consignees.  To be clear, no person may transfer a detained article of food within or from the place where it has been ordered detained, or from the place to which it was removed, until an authorized FDA representative releases the article of food under or the detention period expires, whichever occurs first.  The transfer of an article of food in violation of a detention order is prohibited.

Can I Move my Detained Articles of Food?

Yes.  You have options!  The FD&C Act does not preclude all movement of detained food.  For example, at the FDA’s direction the imported food may be moved to a secure facility under an appropriate Customs’ bond, if required under the circumstances.  When the FDA issues an order detaining any article of food, a Notice of Detention (FDA 2289 Form) is issued to the custodian of the detained food and (if readily identifiable) the owner of the detained food.  Upon receipt of this notice, quick and informed steps need to be taken in order to minimize the impact of the detention.

An authorized FDA representative may approve, in writing, a request to modify a detention order to permit movement of a detained article of food for any of the following purposes:

(1) To destroy the article of food,

(2) To move the detained article of food to a secure facility under the terms of a detention order,

(3) To maintain or preserve the integrity or quality of the article of food, or

(4) For any other purpose that the authorized FDA representative believes is appropriate in the case.

21 C.F.R. 1.381(c).

As you can see, the importer possesses an arguably broad base for seeking a modification to a detention order.  Similarly, the FDA representative possesses broad authority to reject or deny your request.  This means that cooperation, professionalism, knowledge of your rights and a solid understanding of the FDA’s detention process is a MUST.

How to Modify a FDA Detention Order:

First, you must submit your request for modification of the detention order:

  • in writing and
  • to the authorized FDA representative who approved the detention order.

21 C.F.R. 1.381(d).  Importantly, the person who approved the detention order is identified in Box#17 of the Notice of Detention.  The FDA representative who approved the detention order is often NOT the same person who issued the Notice of Detention.  As a practical matter, a FDA Inspector issues the Notice of Detention and a FDA Compliance Officer approves the detention order.  Again, look at Box #17 on the Notice of Detention.

Secondly, you must state in your request:

  1. the reasons for movement;
  2. the exact address of and location in the new facility (or the new location within the same facility) where the detained article of food will be transferred;
  3. an explanation of how the new address and location will be secure, if FDA has directed that the article be detained in a secure facility; and
  4. how the article will be held under any applicable conditions described in the detention order.

Lastly, if you are requesting modification of a detention order for the purpose of destroying the detained article of food, you also must submit a verified statement identifying the ownership or proprietary interest you have in the detained article of food.

21 C.F.R. 1.381(d).

If FDA approves a request for modification of a detention order, the article may be transferred but remains under detention before, during, and after the transfer. FDA will state any conditions of transportation applicable to the detained article. You may not transfer a detained article of food without FDA supervision unless FDA has declined in writing to supervise the transfer. If FDA has declined in writing to supervise the transfer of a detained article, you must immediately notify in writing the authorized FDA representative who approved the modification of the detention order that the article of food has reached its new location, and the specific location of the detained article within the new location. Such written notification may be in the form of a fax, e-mail, or other form as agreed to by the authorized FDA representative.

21 C.F.R. 1.381(e).  Please note that the movement of detained food requires lots of separate written notices, approvals and other paperwork.  Care must be taken to keep your file as current as possible and to maintain copies of all the documents involved.  It is also important to properly identify all the relevant and necessary parties as their respective contact information will be needed to quickly and efficiently navigate this regulatory process.

Finally, you must ensure that any required tags or labels accompany the detained article during and after movement. The tags or labels must remain with the article of food until the FDA terminates the detention order or the detention period expires, whichever occurs first, unless otherwise permitted by the authorized FDA representative who approves the modification of a detention order under this section.

21 C.F.R. 1.381(f).

Take Away…

The key point here is that a solid understanding of your rights and the processes you must be prepared to navigate upon short notice is key to mitigating the risk to the value of your imported food.  Something as simple as quickly moving your perishable commodities from the port to a proper storage facility, as opposed to a shipping container, may make all the difference when it comes to your ability to sell your products post detention.

 

FSMA: Am I Operating a High-Risk Food Facility?

According to a recent FDA guidance document, the FDA’s risk-based model for prioritizing inspections of food establishments utilizes technology to analyze traditionally available information and to set the agency’s priorities for allocating domestic inspection resources. 

What does this mean in layman’s terms?

It means the FDA is going to analyze the data it already collects, tracks and monitors to determine the agency’s priorities when it comes to identifying food facilities to inspect. 

How does the FDA identify a high-risk facility?

The answer to this question is two fold.  First, the FDA looks at inherent risk factors at the industry wide level.  The industry wide risk factors include, but are not limited to:

  • foodborne illness outbreaks
  • recalls
  • reports of adverse events associated with a specific industry of category of food (i.e. cantalope, sprouts, etc.) 

Secondly, (and most importantly) the FDA looks at inherent risk factors at the firm or company level.  The firm or company level risk factors include, but are not limited to:

  • the known safety risks of the food manufactured, processed, packed or held at the facility.  (i.e. if your facility handles high-risk food(s) your facility will be deemed a high-risk facility based on that fact alone)
  • compliance history of the firm or company (i.e. food recalls, outbreaks of foodborne illnesses and prior violations of food safety standards)
  • the rigor and effectiveness of your hazard analysis and risk-based preventative controls.
  • whether the food manufactured, processed, packed or held at the facility meets the criteria for priority under section 801(h)(1) of the FD&C Act, which relates to the prioritization to detect intentional adulteration in food offered for import into the U.S.  (applies only to foreign food facilities)
  • whether the food or the facility the manufactured, processed, packed or held such food has received a certification from the FDA under the foreign supplier verification program or the voluntary qualified importer program.
  • anything else the FDA deems necessary and appropriate.  Two known examples include the establishment type / type of activity conducted at the facility (i.e. manufacturer/processor, repacker/packer, etc.) and the number of years since last inspection.

How is the information used to determine inspection priority?

The FDA’s decision-making process is based primarily on the first two bullets and the last.  The balance of the risk factors will be incorporated into the FDA’s decision-making process as they continue to develop their data collection and testing tools and will be laid out in the forthcoming Preventative Controls regulation.

In addition, the FDA may inspect facilities more often than the frequency mandate as a result of emerging public health information, follow-up to violative inspections and/or samples, etc.

From a technical position, the FDA is utilizing “a software program that assesses the characteristics of each facility in the agency’s inventory.”  This “software provides data access, analysis and reporting from the agency’s internal data systems.”   See Domestic Facility Risk Categorization

What does all of this mean to my business?

The FDA estimates that there are approximately 22,325 domestic high-risk (HR) food facilities and about 60,000 non high-risk (NHR) domestic food facilities.  FSMA calls for all HR domestic food facilities to be inspected within five years of the date the bill was signed into law.  Thereafter, all HR food facilities will be inspected once every three years and all NHR food facilities will be inspected once every five years.  Importantly, FSMA limits its inspection of food facilities to only those required to register under the Section 415 of the FD&C Act, which is the Bioterrorisim Act.

Food companies would be well advised to start preparing for inspections NOW before the USDA comes knocking.   A company may proactively mitigate many of the FDA’s risk factors through preparation.  For example, there should be no excuse for a food company not to:

  • be properly registered under the Bioterrorism Act.
  • have the proper food safety plans and related standard operating procedures prepared and ready for inspection. 
  • be in compliance with many of the already known food safety rules.  
  • possess a solid understanding of how to manage a FDA inspection
  • and more…

Genetically Modified Food (GMO) Labeling… will it be required?

Tom Karst of The Packer recently published an interesting opinion article on GMO labeling.  Tom’s article reported that “the group ‘Just Label it’ has a reported 990,000 signatures in its petition to FDA calling on the agency to label genetically engineered foods…” organizations in favor of this petition want the “FDA to take notice and act on this “right to know” issue.”  GMO food labeling: Resistance is useless – The Packer

Tom’s article raises an important issue that cannot be understated.  The consumers in today’s marketplace are more savvy than ever before and they are proactively asserting their “right to know” about the origins of the food they purchase and consume.  This is a critical point because perception is often more important that reality.

For a recent example of this we turn to the meat industry.  On March 26, 2012, Beef Products, Inc. reported that it suspended operations at three of its processing plants, which processes about 900,000 lbs. of meat at each facility daily.  Why did Beef Products, Inc. suspend its operations?

The decision to halt operations at the three plants comes shortly after retailers began stating they would no longer carry the company’s products due to customer concerns.

Beef Products suspends operations at three plants, FoodONE Article (Division of SeaFax, Inc.) published on March 27, 2012.

Specifically, grocery store operators revealed they would no longer carry the “lean finely textured beef,” or “pink slime,” produced by Beef Products Inc. Ironically, food industry experts agree the “lean finely textured beef” is safe, but recent media reports have caused considerable consumer concern about the product and retailers have bowed to this pressure.  The take away here is that consumer perceptions are stronger than reality when safe products are removed from our stores simply because they are perceived to be unsafe.

Apply this recent event to “Just Label It’s” pending petition to the FDA to require food companies to label GMO food products… rightly or wrongly, I must agree with Tom Karst and say “resistance is useless.”

Guilty Plea Entered in Tomato Fraud Case

Scott Salyer, former CEO of SK Foods LP, pleads guilty to allegations of price-fixing, bribery and racketeering. 

SK Foods, LP was a grower and processor of tomato and other food products.  According to various court documents, SK Foods paid bribes and kickbacks to purchasing agents of several of SK Foods’ customers.  In return for these routine payments, purchasing managers at B&G Foods, Inc., Frito-Lay, Inc. and Kraft Foods, Inc. promoted SK Foods products at their respective companies in order to ensure SK Foods obtained certain supply contracts.

According to these same documents, SK Foods also routinely and materially falsified the values of the various grading factors and data contained on the certificates of analysis, bills of lading, invoices, and bin labels.   These documents were falsified in order to make it appear to SK Foods’ customers that they were in fact receiving product that met their purchasing requirements and to avoid rejections of troubled product.  A specific example of this type of activity included the alleged modification of the labeling on certain tomato paste from conventional to organic.  This labeling change was alleged to have been made in order to make a sale to a customer who would not purchase conventional tomato paste. 

The court documents further discuss a price-fixing scheme involving product sold to McCain Foods, USA, Inc.  The primary purpose of the alleged price-fixing scheme was to install a floor in the base price for tomato paste sold to McCain Foods through a competitive bidding process.

Assuming the Court accepts the plea agreement, Salyer may face between four and seven years of incarceration.  In addition, Salyer must forfeit to the United States his right, title and interest in millions of dollars he transferred out of the United States in January of 2010.

Scott Salyer Pleads Guilty in Tomato Fraud Case – The Packer

FSMA: Consumers are not protected when the FDA’s rules are “stuck in review.”

On March 19, 2012, the Consumer Federation of America announced that its members voted to support a resolution urging the Obama Administration to issue four proposed food safety rules, which have been delayed for over two months. 
 
“On behalf of CFA’s nearly 300 members, we urge the Administration to immediately issue these important food safety proposals,” said Chris Waldrop of CFA’s Food Policy Institute.  “The longer these proposals are delayed, the longer it will take to fulfill the promise of the Food Safety Modernization Act, which is intended to better protect consumers from foodborne illness.”  Simply put, “consumers won’t be adequately protected if the FDA’s proposals are stuck in review.”  See CFA Press Release.
 
Being in the trenches with my food industry clients on a daily basis, I can confirm that the CFA’s position is well aligned with the industry’s current thinking.   However, I would like highlight the importance of the food industry’s comment period and the FDA’s attention to our collective voice.   As we all know, it is critical for the food industry to speak up and use comment opportunities to help shape the very rules that govern our business operations. 
 
To rush this process and force a potentially premature closure to the FDA’s listening period (e.g. when FDA uses the industry’s comments to further modify the proposed rules prior to issuance) invites future litigation to resolve issues of fairness, application, constitutionality, language interpretation, etc.   Although accountability is critical, I always urge people to look at all sides of any given position.
 
With that said, we are all waiting for the FDA to issue its long overdue food safety rules.   

Words produce buyers should NOT rely upon…

Use of words such as “work out the load“or “sell the product and we will settle at a later date” by the seller are NOT sufficiently specific to constitute an authorization that the buyer handle the produce on consignment.  Granada Marketing, Inc. v. Jos. Notarianni & Co., Inc., 47 Agric. Dec. 329 (1988); Royal Packing Co. v. William D. Class, Jr. d/b/a W.D. Class & Son, 42 Agric. Dec. 2077 (1983); B&L Produce of Arizona v. Mim’s Produce, 37 Agric. Dec. 201 (1978).

Similarly, “do the best you can” does NOT constitute permission to handle on consignment.  Relan Produce Farms v. Rushton & Co., 38 Agric. Dec. 1636 (1979); B & L Produce, Inc. v. Harry Becker Produce Co., 36 Agric. Dec. 913 (1977); Barkley Company of Arizona v. Ifsco, Inc., 31 Agric. Dec. 279 (1972).

Nor does:

“the buyer should work it out.” See Frank Gaglione & Sons v. Theron Hooker Co., 30 Agric. Dec. 528 (1971).

or “handle best possible” or “handle to best advantage.” See Ralph Samsel v. L. Gillarde Sons Co., 19 Agric. Dec. 374 (1960).

or “handle” or “open.”   See Ronnie Carmack v. Delbert E. Selvidge, 51 Agric. Dec. 892 (1992).

or respondent “should keep the shipment, [and] do with it what respondent could. . ..”  See Chiquita Brands, Inc. v. Joseph Williams, Jr. Co. Inc., 45 Agric. Dec. 374 (1986).

Still further, the phrase “customer will keep + Work Out” did NOT signify an agreement that the load could be handled on a consignment basis.   See The Lionheart Group, Inc. v. Sy Katz Produce, Inc., 59 Agric. Dec. 449 (2000).

Buyer’s Obligation to Modify Agreement or Reject Produce

When a buyer is seeking permission from the seller to sell a troubled load of produce on a price after sale (“PAS”) basis the buyer must take steps to ensure that the parties’ fixed price agreement (e.g. the invoice) is modified.

To convert a fixed price term agreement to PAS terms, the buyer must obtain clear, definite and unequivocal authorization from the seller.  Absent such authority, the Seller may successfully enforce the terms of its fixed price invoice and they buyer may have lost the opportunity to properly reject the produce or otherwise protect itself.

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.

FSMA (Section 107): What triggers the facility reinspection fee?

The FDA may assess fees under Section 107 of the FSMA whenever the FDA, or its agent, inspects a domestic or foreign facility and the final classification of the facility is:

            1.         Official Action Indicated, and

            2.         The non-compliance was “materially related to food safety.”

The fee will be assessed for a reinspection of domestic and foreign facilities to determine whether corrective actions have been implemented and are effective and compliance has been achieved to FDA’s satisfaction. 

What does the FDA mean by: “reinspection”?

Domestic Facilities: Reinspection means one or more inspections conducted under the FD&C Act subsequent to an inspection that resulted in a final classification of a facility as OAI and where the non-compliance was materially related to food safety.

Foreign Facilities: Reinspection means one or more inspections conducted by officers or employees duly designated by the Secretary subsequent to an inspection which identified non-compliance materially related to a food safety requirement under the FD&C Act. 

What does the FDA mean by: “materially related to food safety”?

Some examples of non-compliant conditions or practices that “materially relate to food safety” include, but are not limited to:

  • Food borne pathogens in ready to eat products
  • Pesticide residues on food or feed products above established tolerances
  • Failure to declare the presence of a major food allergen in product labels
  • Lack of adequate hazard controls (HACCP)

Who Pays the Facility Reinspection Fees?

The party responsible for paying the Facility Reinspection Fees include:

  • The responsible party for a domestic facility
  • TheU.S.agent for a foreign facility
  • Each importer subject to reinspection

How much will a reinspection fee cost my company?

Rates: For Fiscal Year 2012, the hourly rate per FDA inspector participating in a reinspection is $224.00 per hour if 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 size of the firm, number of products, number and nature of the violations observed in the initial inspection and the amount of expected resources needed to evaluate the firm’s corrective actions and current state of compliance with respect to the items identified in the initial inspection.   

Billable Activities: 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.