Neville Peterson LLP: Customs and International Trade Law

M E M O R A N D U M
TO:	Clients and Friends of the Firm
FROM:	John M. Peterson Maria E. Celis Neville Peterson LLP
RE:	FDA Proposes Regulations to Implement "Facility Registration" and "Advance Notification" Requirements of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002

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I. INTRODUCTION

     The Department of Health and Human Services, Food and Drug Administration (FDA) has proposed regulations to implement sections 305 and 307 of the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (hereinafter, "Bioterrorism Act". The proposed regulations will require the registration with FDA of foreign facilities engaged in the production, handling and storage of food products. They will also require traders to provide advance notice of any shipments of food products to the United States.

     The new regulations will change significantly the procedures for the importation of
food products.

     The Bioterrorism Act was signed into law on June 12, 2002. It requires FDA to establish regulations requiring, inter alia, the registration of foreign facilities engaged in production of food products, and the advance notification of shipments of foreign food products to the United States. While FDA is required to place final regulations in effect by December 12, 2003, the agency has announced that it expects to have final regulations in place by
October, 2003.

     FDA recently conducted a public conference by satellite downlink to introduce its new regulatory proposals. FDA is soliciting electronically-transmitted or written comments regarding these proposals within 60 days after they are published in the Federal Register.

II. OVERVIEW OF PROPOSED REGULATIONS

     I. Section 305 - Registration of Food Facilities

     FDA's proposal would require all domestically - or foreign-owned facilities which manufacture, process, pack or hold food for human or animal consumption to register with the FDA by December 12, 2003. Registration is intended to assist the FDA in determining the location and cause of a potential threat to the United States food supply, so that the agency may notify facilities which might be affected in the event of a terrorist attack on the food supply.

     The facilities which are required to register include all facilities dealing with all foods and animal feed products regulated by FDA, including dietary supplements, infant formula, beverages (including alcoholic beverages), and food additives ¹. However, foreign facilities would not be required to register if food from the facility undergoes further processing or packaging (other than minimal activity ²) by another foreign facility before the food is exported to the United States ³.

     FDA's proposed regulation would require the owner, operator, or agent in charge of a domestic or foreign facility to register that facility with the FDA, providing the name and address of each facility at which, and any trade names under which, the registrant conducts business. The registration must also indicate categories of food the facility handles. For a foreign facility, the registration must include the name of the U.S. agent for the facility. The U.S. agent may register a foreign facility if it is authorized to do so by the facility. The proposal also would require facilities to update any changes to the information previously submitted within 30 days of the change.

     The proposal specifically exempts from registration farms, restaurants, other retail food establishments, nonprofit food establishments in which food is prepared for or served directly to the consumer, certain fishing vessels, and facilities (such as meat and poultry slaughterhouses) that are regulated exclusively by the U.S. Department of Agriculture. As noted above, also exempt are foreign facilities, if the food from the facility undergoes further processing or manufacturing, other than “minimal” operations, by another foreign facility before it is exported to the U.S.

     Registration with the FDA may be electronic, via the Internet, or by paper through surface mail. FDA strongly encourages electronic registration, however, as FDA plans to create an electronic registration system which will be able to accept new registrations from anywhere in the world 24 hours a day, 7 days a week. A registering facility also would receive confirmation of electronic registration and would be assigned a registration number instantaneously, once all the required fields on the registration screen are completed. There is no fee associated with registration. Once registered the FDA would assign each facility a unique registration number.

     Registration information would not be subject to public disclosure under the Freedom of Information Act, 5 U.S.C. Section 552.

     The Bioterrorism Act requires facilities to register by December 12, 2003, even if FDA has not issued final regulations by that time. FDA plans to have final regulations in place before the statutory deadline. FDA also plans to have its registration system operational by October 12, 2003, to accept early registrations.

     Under the Bioterrorism Act, it is a prohibited act for a facility to not be registered by December 12, 2003. If a firm does not register by the deadline, the United States can bring a civil action in federal court to enjoin persons who commit a prohibited act; or it can bring a criminal action in federal court to prosecute persons who commit a prohibited act. The Bioterrorism Act also requires food from unregistered foreign facilities to be held at the port of entry unless the FDA directs that the food be moved to a secure location.

     In short, registration of a food facility will be an essential requirement for importing food products manufactured or handled by such facilities.

     II. Section 307 - Prior Notice of Food Shipments

     FDA has also proposed regulations which would require that the agency be notified by noon of the calendar day before the day any imported food arrives at the U.S. border crossing or at the port of entry. The proposed rule would require the prior notice to be submitted electronically through an FDA Internet-based system that would be operational 24 hours a day, seven days a week.

     The Bioterrorism Act requires that the FDA receive prior notice of food shipments beginning December 12, 2003, even if final regulations have not issued by that date. The FDA plans to issue a final rule by October 12, 2003, after considering public comments.

     The proposed reporting rule does not apply to food carried in an individual’s personal baggage entering the United States for that person’s personal use, nor does it apply to meat, poultry or egg products that are exclusively regulated by the U.S. Department of Agriculture at the time of importation. All other imported food, including beverages, would be subject to the prior notice requirements, whether or not the food is intended for consumption in the United States.

     It is important to note that the FDA requires the reporting of every food item imported into the United States, not merely the reporting of each shipment. Thus, if a shipment contains multiple types of food products, multiple reports would need to be filed. FDA anticipates that some 20,000 notices will be filed each day.

     The persons who would be authorized/required to submit prior notice of importation of a food product would be limited to a purchaser or importer who maintains a residence or place of business in the United States, or an agent who resides in or maintains a place of business in the United States, and is authorized to act on behalf of the purchaser or importer.

     The proposed rule would require the prior notice to contain the following information concerning each imported food shipment:

Identification of the submitter, including name and firm information, including address, telephone number, fax number and email address. If the submitter is a firm required to register as a food producing or handling facility, it must also provide its
registration number;

Entry type and U.S. Customs Automated Commercial System (ACS) entry number, or other U.S. Customs identification number for the import (for example, if the goods are to be entered under bond) ⁴;

The location for any imported food products held at the port of entry for failure to submit an adequate prior notice, together with a contact name at that location;

The identification of the articles of food, including complete FDA product code, the common or usual name or market name, the trade or brand name (if different from the common or market name), the quantity described from the smallest package size to the largest container, and the lot or code numbers or other identifier (if applicable);

The identification of the manufacturer (name, address, telephone and facsimile numbers, email address, and FDA facility registration number;

The identification of the grower, if known (name, address, telephone and facsimile numbers, email address, and FDA facility identification);

The originating country of the food article (as defined in the regulations);

The identification of the shipper (name, address, phone and fax numbers, email and FDA registration data);

The country from which the article of food was shipped;

The anticipated arrival information: port of entry, date of entry ⁵, and approximate time of entry;

U.S. Customs entry process information;

The identification of the importer, owner, and consignee (name, address, phone and fax numbers, email addresses, and FDA registration numbers);

The identification of all carriers which will be used to bring the goods to the United States, including name, address, phone and fax numbers, email addresses, and Standard Carrier Abbreviation Codes (SCAC), if appropriate;

     The proposed rule would allow product identity information in prior notices to be amended if complete product identity information does not exist by the prior notice deadline. However, the extent to which amendments would be permitted is limited.

     The Bioterrorism Act states that it is a prohibited act to import or offer for import an article of food without prior notice, and that food imported or offered for import without adequate prior notice will be refused admission and held at the port of entry until adequate prior notice is received, unless FDA directs its removal to a secure facility.

III. INDUSTRY CONCERNS REGARDING PROPOSED FDA REQUIREMENTS

     While industry will be given ample opportunity to comment on the proposed FDA requirements, a number of groups and companies have already raised serious concerns respecting the proposed requirements. These can be summarized as follows:

Feasibility. One obvious concern is whether shippers of food products will be able to provide the detailed information required by the proposed regulation within the time specified by the FDA, i.e., by noon of the day prior to arrival of the goods at a U.S. port of entry. These concerns relate particularly to shipments of fresh products, shipments of goods requiring refrigeration, and overland shipments of good from Canadian and Mexican plants located close to the border,
Duplication of Other Agency Reporting Requirements. Many firms have expressed concern that the FDA’s advance reporting requirements duplicate similar requirements currently being imposed, or to be imposed in the future, by the United States Customs Service and other agencies. Customs has already imposed a 24-hour advance reporting requirement for goods shipped by ocean, and is planning other advance reporting requirements for air and overland shipments. The advance period required by the FDA proposal is, in many cases, longer than the advance reporting period required or proposed by Customs.
Effectiveness: FDA has furnished little information concerning how it will process and evaluate the data presented by food shippers, leading to concern regarding the likely effectiveness of the requirements in fighting possible bioterrorism.

IV. CONCLUSION: FILING OF PUBLIC COMMENTS

Obviously, the FDA’s proposed regulations will have a major impact on the process of importing food and beverages into the United States. Interested food shippers and importers will want to submit public comments in response to the proposed regulations.

Our firm stands ready to furnish any additional information or assistance which may be required in the preparation and submission of appropriate comments addressed to FDA’s important new regulations.

For registration purposes, the manufacturing/processing operations performed by facilities required to register would include "making food from one or more ingredients, or synthesizing, preparing, treating, modifying or manipulating food, including crops or ingredients." Examples include but are not limited to: cutting, peeling, trimming, washing, waxing, eviscerating, rendering, cooking, baking, freezing, cooling, pasteurizing, homogenizing, mixing, formulating, bottling, grinding, milling, extracting juice, distilling, labeling or packaging.
An example of a "minimal activity" would be the placing of a label on what is an otherwise finished product.
In that instance, both the facility manufacturing/processing the food and the facility performing the de minims activity would have to register.
The requirement that the advance notice contain the number of the consumption or in-bond entry will effectively mandate that the prior notice be submitted by the importer’s United States Customhouse broker, who will be the only party with access to the entry number data.
In this regard, some clarification will be required concerning whether the “date of entry” for purposes of the FDA regulations will be defined in the same way as the date of entry is defined for Customs purposes (i.e., for determining the date of entry for Customs purposes).

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