The Food Safety Modernization Act: What Exporters to the U.S. Need to Know

1. The Food Safety Modernization Act:What Exporters to the U.S. Need to Know Erik R. Lieberman Prepared for AgroBalt 2014 April 4, 2014

2. Food Marketing Institute Trade association for the supermarket industry 1,225 U.S. and international retail and wholesale member companies operating more than 40,000 stores with annual sales of more than $770 billion Members range from largest international chains to single-store operators

3. Overview • The Food Safety Modernization Act (FSMA) will have very large impacts on U.S. importers and exporters to the U.S. • Third-party food safety auditors will also face major new changes if they “opt-in” • Very significant implications for the global supply chain • Note that regulations reviewed are currently proposals, they will be finalized next year and in 2016

4. New RegulationsFood Exporters to U.S Must Know • Foreign Supplier Verification Program (FSVP) • Accreditation of Third-Party Auditors • Preventive Controls for Food for Humans (and Animals) • Produce Safety • Food Defense • Food Facility Reregistration • Sanitary Food Transportation Act (certain exporters)

5. Why Do Exporters Need to Know? Because exporters will be required to comply with many of these requirements starting in 2016 And Because importers will be required to verify that their foreign suppliers are complying starting in 2017

6. FSVP Overview • FSMA (Sec. 301) requires all importers to establish a FSVP program to verify that imported food is produced in compliance with: • Preventive Controls Rules (for human and animal food)* • Produce Safety Rule* AND • Is not adulterated (Section 402 of Federal Food Drug and Cosmetic Act (FD&C Act)) • Is not misbranded with respect to allergen labeling requirements Section 403(w) of FD&C Act *or a standard that provides the same level of public health protection

7. Who is an Importer? • Definition of importer in FSVP rule • The person in the U.S. who has purchased an article of food that is being offered for import into the U.S: • If the article of food has not been sold to a person in the U.S. at the time of U.S. entry, the importer is the person in the U.S. to whom the article of food has been consigned at the time of entry • If the article of food has not been sold or consigned to a person in the U.S. at the time of U.S. entry, the importer is the U.S. agent or representative of the foreign owner or consignee at the time of entry • FDA definition not tied to U.S. Customs and Border Protection (CBP) definition of importer of record

8. Food Import Requirements Before FSMA • Pre-FSMA, all U.S. standards apply to imported food entering U.S., but no affirmative requirement to check production practices outside of U.S. • All importing of food is considered to be introduction into U.S. interstate commerce • All applicable requirements of U.S. food law (FD&C Act) apply • Cannot be adulterated or misbranded • Prior notice • Food facilities must be registered • Food importations by nonresident importers permitted

9. New Requirements for Importers Created by FSMA • Affirmative obligation to verify that products are being produced overseas in compliance with preventive controls, produce safety and U.S. law concerning adulteration and allergen labeling • Import certifications • Prior notice change • Previous refusal of article by another nation • Prohibition on food imports by nonresident importers/consignees

10. FSVP Rule • Importers are required to: • Review the compliance status of a food and the foreign supplier before importing • Conduct a hazard analysis for each food imported • Conduct foreign supplier verification and related activities including: • Maintaining a list of suppliers • Establishing written foreign supplier verification procedures • Verifying that importer and customer of importer adequately controls hazards within their control

11. FSVP Rule (contd) • Importers are required to: • Conduct foreign supplier verification and related activities including: • Verifying that foreign supplier adequately controls hazards within their control through activities such as: • Auditing • Lot-by-lot sampling and testing • Review of foreign supplier’s food safety records • Reassess the effectiveness of their FSVP periodically • Use a DUNS number when filing entry with CBP • Maintain certain records • Violation of FSVP rule is punishable by criminal penalties • Compliance required as early as February 2017

12. Accreditation of Third-Party Auditors Rule • FDA is required to set up a system for recognizing accreditation bodies to accredit third-party auditors to conduct audits for purposes of verifying foreign supplier compliance with U.S. requirements, Voluntary Qualified Importer Program (VQIP) and import certifications • VQIP is an expedited entry program for food • FDA can require high risk foods from regions/countries with food safety systems determined to be inadequate by FDA to be accompanied by a certificate for entry • Not a blanket regulation of all third-party auditors, only those that choose to opt-in

13. From 78 Fed. Reg. 45783 (July 29, 2013)

14. Third-Party Audit Rule Facilities seeking to participate in VQIP and food requiring a mandatory import certification must be audited by auditors accredited pursuant to the FDA program established by this regulation Auditor(definition for certification body is same) can be a foreign government, agency of a foreign government, foreign cooperative or any other eligible third-party Audit must be conducted unannounced during 30-day operating schedule provided by entity

15. Third-Party Audit Rule (contd) Two Categories of Audits • Consultative • To determine compliance with FD&C Act and industry standards and practices • Used for internal purposes only • Cannot be used for determining eligibility for food or facility certification under FSMA or for onsite audit under FSVP • Regulatory • To determine whether entity is in compliance with FD&C Act • Results used to determine eligibility for food or facility certification • May be used by importer in meeting onsite audit requirements for FSVP • Audit report must be submitted to FDA

16. Third-Party Audit Rule (contd) • Auditor must immediately notify FDA when it discovers any condition found during a regulatory or consultative audit that could cause or contribute to a serious risk to public health • FDA will withdraw accreditation from an auditor if food or facility certified is linked to an outbreak of foodborne illness that has reasonable probability of SAHCODHA • Agency does have limited discretion in making such decisions • Program expected to be established by October 2016

17. Preventive Controls for Human Food: Who is Covered? Facilities that are currently required to register with FDA as food facilities Includes facilities that manufacture, process, pack and hold food Includes domestic and foreign facilities

18. Preventive Controls for Human Food Each owner, operator or agent in charge of a facility is required to comply with the rule The proposed requirements are similar to HACCP systems

19. Preventive Controls for Human Food (contd) • Each covered facility is required to prepare and implement a written food safety plan which includes: • A hazard analysis • Preventive controls • Monitoring • Corrective actions • Verification activities • Recordkeeping • Compliance required as early as August 2016 • Violation of regulation is punishable by criminal penalties

20. Preventive Controls Rule for Animal Food • Proposed rule applies to the manufacturing, processing, packing and holding of animal food • Establishes CGMPs for animal food for the first time • Creates new preventive controls provisions similar to those for human food • Violations are punishable by criminal penalties • Compliance required as early as August 2016

21. Produce Safety Rule Establishes minimum standards for safe growing, harvesting, packing and holding of produce on farms Applies to both domestic and imported produce Contains several exemptions

22. Produce Safety Rule (contd) • Establishes food safety standards on: • Worker training and health and hygiene • Agricultural water • Biological soil amendments • Domesticated and wild animals • Equipment, tools and buildings • Sprouts • Violations are punishable by criminal penalties • Compliance required as early as December 2017

23. Sanitary Food Transportation Act Rule Only rail and motor vehicle carriers are regulated.  Air and water transportation is exempt Foreign exporters are subject to regulation if they arrange for transportation of an intact container onto a motor or rail vehicle In-transit temperature monitoring is required for both TCS foods and non-TCS foods(that are at risk of microbial spoilage if subject to temperature abuse) Fully packaged shelf-stable foods are exempt Raw agricultural commodities (RACs) are exempt when transported by farms (whether or not they are shippers, carriers or receivers) Rule applies to animal food and USDA-regulated meat, poultry and egg products (in addition to FDA-regulated human food)

24. Sanitary Food Transportation Act Rule (contd) Verification of trailer pre-cooling is required Carriers must provide in-transit temperature data to receivers of product if the receiver requests it or evidence of a written agreement between the carrier and shipper that shipper is responsible for monitoring the temperature (if there is such an agreement) Refrigerated/freezer compartments in trailers must have thermometers, temperature-measuring devices or temperature-recording devices  

25. Sanitary Food Transportation Act Rule (contd) Shippers must visually inspect trailers/vehicles for cleanliness before loading unpackaged food items (a produce box with vents at the top is not considered packaged) Shippers must specify to carriers in writing all necessary sanitary requirements for vehicle and transportation equipment Shippers and receivers must provide vehicle operators who are expected to handle unpackaged food with hand washing facilities Violations are punishable by criminal penalties Food is becomes adulterated if transported in violation of rule Compliance required as soon as March 2017

26. Food Defense Rule Applies to domestic and foreign facilities required to register under section 415 of the Bioterrorism Act Requires facilities to write and implement a food defense plan Several exemptions—rule does not apply to holding of food (except food in liquid storage tanks); certain small businesses are exempt; rule does not apply to animal food or activities of a facility subject to the Produce Safety Rule Note that rule applies to certain facilities exempt from the Preventive Controls Rule for human food, i.e. in compliance with seafood, juice, LACF rules, dietary supplement facilities) Covers acts intended to cause massive public health harm, including acts of terrorism Does not include acts of sabotage by disgruntled employees Violations are punishable by criminal penalties Compliance required as soon as May 2017

27. Required Food Defense Measures • Food defense plan must be written • Food defense plan must include: • Written identification of actionable process steps • Written focused mitigation strategies • Written procedures for monitoring • Written corrective action procedures • Written verification procedures

28. What Activities are Subject to Food Defense Rule? Bulk liquid receiving and loading Liquid storage and handling Secondary ingredient handling Mixing and similar activities Or conduct your own vulnerability assessment and go with that

29. Food Facility Registration All facilities that process, pack and hold food for humans or animals intended for consumption in the U.S. (excluding meat and poultry facilities) must register with FDA FSMA added a requirement that such facilities reregister on every even-numbered year between Oct. 1 and Dec. 31 Violation is punishable by criminal penalties Compliance required now

30. Questions? Thank you! Erik Lieberman elieberman@fmi.org (202) 810-4044