ADMINISTRATIVE DETENTION FINAL RULE AND REGISTRATION UPDATE Ohio State University February 16, 2005

1. ADMINISTRATIVE DETENTION FINAL RULE ANDREGISTRATION UPDATE Ohio State UniversityFebruary 16, 2005 Robert Hahn Olsson, Frank and Weeda, P.C 1400 Sixteenth Street, N.W. Suite 400 Washington, D.C. 20036 202/789-1212 202/234-3537 (FAX)

2. Who We Are • Olsson, Frank and Weeda, P.C. is a 25 attorney Washington, D.C. law firm that specializes in representing business entities, individuals, and associations in industries regulated by the U.S. Food and Drug Administration or the U.S. Department of Agriculture. • OFW represents its clients before federal and state agencies, the courts, Congress, and the White House.

3. Preface • This presentation is for general informational purposes only and is not intended to constitute legal advice. Please contact your attorneys if you need legal advice.

4. I. ADMINISTRATIVE DETENTION

5. Administrative Detention • The Bioterrorism Act gave FDA the authority to administratively detain food • Section 303 of Bioterrorism Act is self-implementing, so FDA has had detention authority since enactment in 2002 • FDA final rule became effective July 4, 2004

6. FDA’s New Power • FDA may detain an article of food that is found during an inspection, examination, or investigation if there is “credible evidence or information” indicating it presents a threat of “serious adverse health consequences or death to humans or animals” (SAHCODHA)

7. Purpose • To enable FDA to prevent adulterated food from entering commerce before FDA is able to bring a court action to seize it or enjoin its distribution

8. Effect • Probably limited • Most states have detention/embargo authority, and FDA traditionally has asked state agencies to detain food when this was deemed necessary -- the only difference is now FDA can do itself

9. “Food” • “Food” is defined broadly to include all FDA-regulated foods, including food contact substances (i.e., substances that migrate into food from food packaging) • NB: Registration and prior notice interim final rules do not apply to food contact substances • Foods regulated exclusively by USDA not subject to this rule

10. Who May Order Detention? • Detention may be ordered by an officer or qualified employee of FDA (e.g., an FDA field investigator, other FDA employees, State or local employees commissioned by FDA) • The detention order must be approved by FDA District Director or a more senior FDA official

11. Who Receives the Detention Order? • FDA must issue the detention order to the owner, operator, or agent in charge of the place where the article of food is located • If owner of the food is different from the above parties and the owner’s identity is readily determinable, FDA must give owner a copy of the detention order • If detained food is on a vehicle or other carrier, FDA must give a copy to shipper of record and owner/operator of vehicle

12. Period of Detention • FDA may detain food for up to 30 calendar days after the detention order is issued • The detention order terminates when: (a) FDA terminates the order; (b) the detention period expires; or (c) FDA initiates a seizure or injunction action

13. Perishable Foods • If the detained food is perishable, FDA will expedite decision whether to bring seizure action • FDA will send any seizure recommendation to DOJ within 4 calendar days after the detention order is issued

14. Perishable Foods • “Perishable food” means food that is not heat-treated, not frozen, and not otherwise preserved to prevent quality from being adversely affected if held longer than 7 days under normal conditions • Fluid milk, fresh fish and shellfish, fresh fruits and vegetables

15. The Detention Order • The detention order must contain specific information, including: • Identification of detained article of food • Location and conditions of detention • Date and hour detention begins • Detention period • Statement of reasons for detention • Information regarding right to appeal

16. Consequences of Detention • Detained food may not be delivered to its importers, owners, or consignees • FDA may require that detained food be moved to a secure facility (e.g., if FDA concerned it may enter commerce) – owner bears storage and transportation costs • FDA may require marking or tagging of detained food

17. Modification of Detention Order • Recipient of detention order may request a modification of detention order to permit movement of the detained food to another location (e.g., to refrigerated storage to preserve quality)

18. Appeal of Detention Order • Any person who would be entitled to claim a detained article of food in a seizure action may appeal a detention order • Appeal must be submitted in writing to FDA District Director in the district where the detained food is located

19. Timeframes for Appealing • If the detained food is perishable: • Claimant must file appeal within 2 calendar days after receiving detention order • If claimant requests a hearing, and FDA grants hearing, FDA must conduct hearing within 2 calendar days after appeal is filed • FDA must issue decision within 5 calendar days after appeal is filed

20. Timeframes for Appealing • If the detained food is non-perishable: • Claimant must file appeal within 10 calendar days after receiving detention order • If claimant wants a hearing, must request one within 4 calendar days after receiving detention order • If FDA grants hearing, FDA must conduct hearing within 2 calendar days after appeal is filed • FDA must issue decision within 5 calendar days after appeal is filed

21. Appeal Decision • If FDA confirms detention order on appeal, that is final agency action subject to appeal in federal court • If FDA terminates detention order, FDA will issue a detention termination notice

22. Can FDA Detain Imports? • Yes, but FDA predicts this will happen infrequently • FDA and Customs more likely to use other enforcement tools: • Refusal of admission under FD&C Act 801(a) • 24-hour hold: FDA may request that Customs hold imported food for 24 hours if credible evidence of SAHCODHA and unable to inspect or examine food immediately

23. II. FACILITY REGISTRATION

24. Registration • The Bioterrorism Act added a requirement to register food facilities with FDA • FDA interim final rule on registration effective December 12, 2003 • Final rule expected by June 2005

25. Basic RegistrationRequirement • The owner, operator, or agent in charge of every domestic or foreign facility that engages in manufacturing/processing, packing, or holding food intended for human or animal consumption in the United States must register with FDA, unless exempt

26. Purposes Of Registration • To enable FDA to determine the source of, and communicate quickly with, affected facilities during an actual or potential bioterrorist event or other food-related emergency • Other purposes: • To identify and locate facilities for inspection • During inspection, to match registration information to inspector’s observations • To assist screening of food imports by matching registration information (e.g., food product category) with information in prior notice of import

27. Who Is Responsible forRegistration? • Owner, operator, or agent in charge of the facility is responsible for registering

28. Who Can SubmitRegistration? • Owner, operator, or agent in charge of the facility • Certain other persons may submit the registration, including: • Any individual authorized by the owner, operator, or agent in charge of the facility • A parent company may register its subsidiaries’ facilities • For foreign facilities, an authorized individual of facility’s U.S. agent (if foreign facility authorizes its U.S. agent to register on its behalf)

29. “Facility” • “Facility”: defined as “any establishment, structure, or structures under one ownership at one general physical location, or in the case of a mobile facility, traveling to multiple locations, that manufacturers/processes, packs, or holds food for consumption in the United States”

30. “Facility” – Not Included • Private residences • Transport vehicles that only hold food in usual course of business as carriers • If vehicle used for storage, packing, or manufacturing/processing food, it is a “facility” • Public or community water systems that collect and distribute tap water

31. “Food” • “Food”: broadly defined to include all FDA-regulated foods, except: • Food contact substances; and • Pesticides • Articles not yet in consumable form (e.g., gum base to be used in chewing gum) are “food” if reasonably expected to be directed to a food use

32. Retail Exemption • Retail facilities that primarily sell food directly to consumers • Includes grocery stores, vending machines • Facility sells “primarily” to consumer if annual dollar sales to consumers exceed annual dollar sales to all other buyers • A retail facility that manufactures/processes food is still exempt, as long as its primary business is selling food directly to consumers

33. Restaurant Exemption • Restaurants (i.e., facilities that prepare and sell food directly to consumers for immediate consumption) • Includes cafes, cafeterias, bars, food stands, fast food establishments, kennels • Does not include facilities that do not serve food directly to consumers: • Central kitchens not exempt • Facilities that provide food to interstate conveyances for service to passengers (e.g., airline caterers) not exempt

34. Foreign Facility Exemption • A foreign facility is exempt, if food from the facility undergoes further manufacturing/processing (including packaging) of more than a deminimis nature at another foreign facility before export to the U.S. • Thus, the last foreign facility that manufactures/ processes the food, and any subsequent foreign facility that packs, holds, or labels that food, must register

35. Foreign Facilities –“De Minimis” Operations • Adding labeling to packaged food is considered deminimis, because the food is not directly contacted or manipulated • Packaging is not regarded as deminimis • “Packaging” defined as “placing food into a container that directly contacts the food and that the consumer receives”

36. Foreign Facility Exemption –Example • Facility A in Canada makes milk chocolate in 25 pound bags for manufacturing use and ships it to Facility B in Canada • Facility B in Canada uses chocolate to make boxed chocolates and ships them to Facility C in Canada • Facility C in Canada puts the boxed chocolates into gift baskets and ships them to the U.S.

37. Farm Exemption • Farms (i.e., a facility in one general physical location devoted to the growing and harvesting of crops, the raising of animals (including seafood), or both) • Fruit orchards, dairy farms, feedlots, aquaculture facilities • Growing and harvesting includes: • Washing, trimming, cooling of produce • Natural drying of harvested crops • Includes facilities that pack or hold food, provided all such food is grown, raised, or consumed on that farm or another farm under same ownership • Includes facilities that manufacture/process food, provided all such food is consumed on that farm or another farm under the same ownership

38. Farm Exemption • An exempt farm may also pack or hold food, provided all such food is grown, raised, or consumed on that farm or another farm under the same ownership • “Packing” includes placing harvested crop into consumer-ready containers (e.g., plastic bags, mesh bags, clamshells) • An exempt farm may also manufacture/process food, provided all such food is consumed on that farm or another farm under the same ownership • “Manufacturing/processing” includes any activity that changes or manipulates the food (e.g., chopping carrots before placing them in a plastic bag)

39. Other Exemptions from FDA Registration • Facilities regulated exclusively by USDA, throughout the entire facility (e.g., a slaughterhouse that slaughters only poultry, cattle, sheep, swine, equines, or goats) • Non-profit “soup kitchens” and the like • Fishing vessels that do not engage in processing

40. Registration Options • Must use Form 3537 • Filing options • Electronic (http://www.access.fda.gov) • Paper (by mail or fax) • CD-ROM in PDF format (by mail)

41. Electronic Filing • FDA strongly encourages electronic filing through a link on FDA website: http://www.fda.gov/furls • Registrant will receive “instantaneous” confirmation, facility registration number, and PIN number

42. Registration Updates • If any required registration information changes, the facility must submit an update to FDA within 60 calendar days after the change • Update not required for change in optional information, but FDA encourages • Use Form 3537 • If electronic registration used, only need to enter any changes in information

43. Cancellation of Registration • Separate form (Form 3537a) for canceling registration • If facility is sold, goes out of business, or ceases providing food for consumption in the U.S., within 60 days: • Old owner, operator, or agent in charge must cancel • New owner, operator, or agent in charge must re-register, if appropriate

44. FDA CancellationOf Registration • FDA will cancel registration on own initiative only if it independently verifies: • Change of ownership • Facility out of business • Facility does not exist • FDA will notify facility of cancellation by mail

45. Relationship To Other FDA Registration Requirements • FDA’s facility registration requirement is in addition to, not in lieu of, any other FDA registration requirements that may apply to a food facility (e.g., low acid canned food)

46. Foreign Facilities • A foreign facility is a facility not located in a State or Territory, the District of Columbia, or Puerto Rico (regardless of whether owned by U.S. or foreign company) • Unless exempt, a foreign facility must: • Register with FDA; and • Designate a “U.S. agent”

47. “U.S. Agent” • “U.S. agent”: defined as “a person residing or maintaining a place of business in the U.S. whom a foreign facility designates as its agent” to act as a communications link between FDA and the foreign facility • May be a parent company, business partner, broker, U.S. lawyer, or specialized firm. May not be a mailbox, answering machine, or answering service • A responsible individual must be physically present

48. “U.S. Agent” • FDA will use “U.S. agent” for routine communications with foreign facility • FDA will contact “U.S. agent” in emergency, unless other person identified as emergency contact on Form 3537 • “U.S. agent” does not preclude having other agents for business purposes

49. U.S. Agent Services • Some private firms are offering registration and U.S. agent services for foreign facilities. These firms are not affiliated with FDA • OFW and The Food Institute have teamed up to form USA Food Agents, LLC to offer this service. For more information, go to www.usafoodagents.com

50. Sanctions – Failure To Register • Failure to register, update, or cancel is also a “prohibited act.” FDA may bring a civil lawsuit to compel registration or a criminal prosecution against the offender • But, registration violations do not render food adulterated or misbranded, and will not be a basis for recall or legal action once food is in commerce