How The FSMA Changes The Status Quo for Food Businesses<br />Kenneth Odza<br />Stoel Rives LLP<br />http://www.foodliabili...
	What You Need to Know			<br />FSMA/RFR – How does it affect you?<br />What can you do to minimize regulatory obligations?...
Food Safety Modernization Act (H.R. 2751)<br />Most expansive changes since 1938 Act<br />Sweeping new enforcement authori...
FSMA Provisions Effective Now<br />Stronger Records Access Authority (FSMA § 101)<br />Mandatory Recall Authority (FSMA § ...
Stronger Records Access Authority (FSMA § 101)<br /><ul><li>When “reasonable probability” of “serious adverse health conse...
Includes records of other food affected in similar manner – NEW
Proper credentials and written notice</li></li></ul><li>Mandatory Recall Authority (FSMA § 206)<br /><ul><li>Recall ordere...
Opportunity for voluntary recall
Hearing within two days of the order’s issuance </li></li></ul><li>Increased Frequency of <br />Inspections (FSMA § 201)<b...
Risk-based</li></ul> <br />
Whistleblower Protection (FSMA § 402)<br /><ul><li>Protects employees who
 Provide information re violation of FDC Act
Testify, assist or participate in a proceeding re violation
Object to “activity, policy, practice or assigned task” they “reasonably believe to be a violation”</li></li></ul><li>Fore...
Or, imported food will be refused admission</li></li></ul><li>Selected FSMA Provisions Effective Soon <br />Amendments To ...
Reportable Food Registry (RFR)<br />• “Reportable Food” - “Reasonable probability” of “serious adverse health consequences...
Amendments to RFR (FSMA § 211)<br />New “critical information” required<br />Within 18 months, FDA will require “consumer-...
Suspension of Registration<br /><ul><li>If FDA determines “reasonable probability” of food causing “serious adverse health...
Facilities that are “responsible” and those that knew or had reason to know are in jeopardy
Informal hearing within two days
FDA to consider corrective plans within 14 days
Effective in 18 months</li></li></ul><li>Broader Authority To Administratively Detain Foods (FSMA § 207)<br />Effective w/...
Preventative Controls (FSMA § 103)<br />Hazard analysis and implement preventative controls re:<br />sanitation<br />train...
Preventative Controls (cont’d)<br /><ul><li>Facilities are required to:
monitor the controls
establish corrective actions
maintain records of monitoring, instances of nonconformance, and corrective actions taken
verify that the plan is working and test programs</li></ul>Reduced to writing and made available to FDA during inspections...
Routine Environmental/Product Test Results Submitted To FDA (FSMA § 202)<br />FDA Accredited Labs W/30 Months<br />Testing...
Traceability (FSMA § 204)<br />270 days to establish traceability pilot program(s)<br />Not required:<br />a full pedigree...
Foreign Supplier Verification <br />Program (FSMA § 301)<br /><ul><li>Importers required to perform “risk-based foreign su...
FDA required to determine content of program within 1 year
Importer: U.S. owner or consignee of food at the time of entry into U.S. or U.S. agent or representative of foreign owner ...
Will require third-party certification
Importer: “the person that brings food, or causes food to be brought, from a foreign country into the customs territory of...
FDA can create system of accreditation for auditors
Program may be funded through fees imposed on auditors</li></li></ul><li>Food Defense (FSMA § 108)<br />National Agricultu...
The Road Ahead for FDA<br />10 rulemakings<br />No fewer than 10 guidance documents <br />13 reports (some on a recurring ...
Products Liability Exposure & Recalls<br />
Recalls Happen<br />Our manufacturing process is cautiously and carefully monitored at all times to ensure a safe, clean, ...
Recall Alone Can Be a Death Sentence<br />After Extensive Beef Recall, Topps Goes Out of Business<br />In a statement, Ant...
ListeriaMonocytogenes<br /><ul><li>Pregnant women, newborns, and adults with weakened immune systems
Kills 20-30 percent of those hospitalized – more than any other food-borne pathogen
Expected FSMA impact : increased enviro testing</li></li></ul><li>Salmonella<br /><ul><li>Diarrhea, fever, and abdominal c...
More severe illness: infants, elderly people, and people with impaired immune systems
Increasing diversity of products </li></li></ul><li>E. coli<br /><ul><li>Lots of publicity
Can result in kidney failure and death
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How FSMA Changes The Status Quo For Food Businesses

  1. 1. How The FSMA Changes The Status Quo for Food Businesses<br />Kenneth Odza<br />Stoel Rives LLP<br />http://www.foodliabilitylaw.com/<br />March 22, 2011<br />
  2. 2. What You Need to Know <br />FSMA/RFR – How does it affect you?<br />What can you do to minimize regulatory obligations?<br />Products Liability Exposure<br />How to Reduce Risk<br />Recall Strategies<br />Action Steps<br />
  3. 3. Food Safety Modernization Act (H.R. 2751)<br />Most expansive changes since 1938 Act<br />Sweeping new enforcement authorities<br />Exacting new food import requirements<br />Major new program activities for FDA<br />
  4. 4. FSMA Provisions Effective Now<br />Stronger Records Access Authority (FSMA § 101)<br />Mandatory Recall Authority (FSMA § 206)<br />Increased Frequency of Inspections (FSMA § 201)<br />Whistleblower Protection (FSMA § 402)<br />Foreign Facilities and Refusal of Inspection (FSMA § 306)<br />
  5. 5. Stronger Records Access Authority (FSMA § 101)<br /><ul><li>When “reasonable probability” of “serious adverse health consequences”
  6. 6. Includes records of other food affected in similar manner – NEW
  7. 7. Proper credentials and written notice</li></li></ul><li>Mandatory Recall Authority (FSMA § 206)<br /><ul><li>Recall ordered if “reasonable probability” (1) food is adulterated or misbranded and (2) serious adverse health consequences
  8. 8. Opportunity for voluntary recall
  9. 9. Hearing within two days of the order’s issuance </li></li></ul><li>Increased Frequency of <br />Inspections (FSMA § 201)<br /><ul><li>Immediate increased frequency of inspections
  10. 10. Risk-based</li></ul> <br />
  11. 11. Whistleblower Protection (FSMA § 402)<br /><ul><li>Protects employees who
  12. 12.  Provide information re violation of FDC Act
  13. 13. Testify, assist or participate in a proceeding re violation
  14. 14. Object to “activity, policy, practice or assigned task” they “reasonably believe to be a violation”</li></li></ul><li>Foreign Facilities and <br />Refusal of Inspection(FSMA § 306)<br /><ul><li>Foreign establishment must allow entry to U.S. inspector w/i 24 hours of requesting entry
  15. 15. Or, imported food will be refused admission</li></li></ul><li>Selected FSMA Provisions Effective Soon <br />Amendments To The RFR (FSMA § 211)<br />Suspension of Registration (FSMA § 102)<br />Changes to Administrative Detention Standard (FSMA § 207)<br />Preventative Controls (FSMA § 103)<br />FDA Lab Accreditation (FSMA § 202)<br />Traceability (FSMA § 204)<br />Major Changes To Regulation of Imports (FSMA § § 301,302)<br />Food Defense (FSMA § 108)<br />
  16. 16. Reportable Food Registry (RFR)<br />• “Reportable Food” - “Reasonable probability” of “serious adverse health consequences to humans or animals” <br />• “Responsible Party” - FDA-registered facility where product is “manufactured, processed, packed, or held” <br />• “Requirement” - Report to FDA portal within 24 hours <br />
  17. 17. Amendments to RFR (FSMA § 211)<br />New “critical information” required<br />Within 18 months, FDA will require “consumer-oriented information” including<br />Description<br />Product ID codes<br />Contact information<br />Anything else FDA deems necessary to enable a consumer to accurately identify whether such consumer is in possession of the reportable food<br />
  18. 18. Suspension of Registration<br /><ul><li>If FDA determines “reasonable probability” of food causing “serious adverse health consequences,” it MAY suspend registration
  19. 19. Facilities that are “responsible” and those that knew or had reason to know are in jeopardy
  20. 20. Informal hearing within two days
  21. 21. FDA to consider corrective plans within 14 days
  22. 22. Effective in 18 months</li></li></ul><li>Broader Authority To Administratively Detain Foods (FSMA § 207)<br />Effective w/in 180 days<br />Lowers Standard For FDA To Detain Foods:<br />FDA only needs “A reason to believe” food is “adulterated or misbranded.”<br />Class I recall situation not required<br />
  23. 23. Preventative Controls (FSMA § 103)<br />Hazard analysis and implement preventative controls re:<br />sanitation<br />training<br />environmental controls<br />allergen controls<br />a recall contingency plan<br />GMPs<br />supplier verification activities<br />
  24. 24. Preventative Controls (cont’d)<br /><ul><li>Facilities are required to:
  25. 25. monitor the controls
  26. 26. establish corrective actions
  27. 27. maintain records of monitoring, instances of nonconformance, and corrective actions taken
  28. 28. verify that the plan is working and test programs</li></ul>Reduced to writing and made available to FDA during inspections<br />Effective within 18 months<br />
  29. 29. Routine Environmental/Product Test Results Submitted To FDA (FSMA § 202)<br />FDA Accredited Labs W/30 Months<br />Testing by FDA Accredited Labs Mandated <br />Results Sent Directly To FDA<br />
  30. 30. Traceability (FSMA § 204)<br />270 days to establish traceability pilot program(s)<br />Not required:<br />a full pedigree, or a record of the complete previous distribution history of the food from the point of origin of such food<br />records of recipients of a food beyond the immediate subsequent recipient of such food<br />product tracking to the case level by persons subject to such requirements<br />
  31. 31. Foreign Supplier Verification <br />Program (FSMA § 301)<br /><ul><li>Importers required to perform “risk-based foreign supplier verification activities”
  32. 32. FDA required to determine content of program within 1 year
  33. 33. Importer: U.S. owner or consignee of food at the time of entry into U.S. or U.S. agent or representative of foreign owner or consignee</li></li></ul><li>Voluntary Qualified Importer <br />Program (FSMA § 302)<br /><ul><li>Within 18 months, FDA shall “provide for the expedited review and importation of food” for importers who participate voluntarily
  34. 34. Will require third-party certification
  35. 35. Importer: “the person that brings food, or causes food to be brought, from a foreign country into the customs territory of the United States”</li></li></ul><li>Import Certifications(FSMA § 302)<br /><ul><li>FDA may require third-party certification as a condition of import
  36. 36. FDA can create system of accreditation for auditors
  37. 37. Program may be funded through fees imposed on auditors</li></li></ul><li>Food Defense (FSMA § 108)<br />National Agriculture and Food Defense Strategy<br />Some Information May Not Be Disclosed<br />
  38. 38. The Road Ahead for FDA<br />10 rulemakings<br />No fewer than 10 guidance documents <br />13 reports (some on a recurring basis) <br />Numerous other resource-intensive implementation activities<br />
  39. 39. Products Liability Exposure & Recalls<br />
  40. 40. Recalls Happen<br />Our manufacturing process is cautiously and carefully monitored at all times to ensure a safe, clean, bacteria-controlled environment - from the selection of the finest source products, throughout production to testing of the finished product. We take quality and safety very seriously.  Topps has steadily and attentively developed standards and procedures to make certain we manufacture a safe product. We are fully compliant with all USDA Good Manufacturing Practices, and we have fully adopted and closely follow a HACCP (Hazard Analysis and Critical Control Point) program.  Topps Meat Company consistently employs technologically advanced equipment and our own safety innovations to create great tasting, quality products.<br />
  41. 41. Recall Alone Can Be a Death Sentence<br />After Extensive Beef Recall, Topps Goes Out of Business<br />In a statement, Anthony D’Urso, the chief operating officer at Topps, in Elizabeth, N.J., said that the company “cannot overcome the reality of a recall this large.” <br />He added, “This has been a shocking and sobering experience for everyone.”<br />Executives at Topps, which made frozen hamburgers and other meat products for supermarkets and mass merchandisers, declined to discuss how and why the company collapsed so quickly, or whether they could have taken steps earlier to protect consumers or to head off the plant’s closure. <br />Workers leaving the Topps Meat plant in Elizabeth, N.J., on Friday. <br />The company, which opened in 1940, went out of business shortly <br />after it issued a recall that expanded to 21.7 million pounds of ground beef.<br />Source: http://www.nytimes.com/2007/10/06/us/06topps.html?_r=2 <br />
  42. 42. ListeriaMonocytogenes<br /><ul><li>Pregnant women, newborns, and adults with weakened immune systems
  43. 43. Kills 20-30 percent of those hospitalized – more than any other food-borne pathogen
  44. 44. Expected FSMA impact : increased enviro testing</li></li></ul><li>Salmonella<br /><ul><li>Diarrhea, fever, and abdominal cramps
  45. 45. More severe illness: infants, elderly people, and people with impaired immune systems
  46. 46. Increasing diversity of products </li></li></ul><li>E. coli<br /><ul><li>Lots of publicity
  47. 47. Can result in kidney failure and death
  48. 48. Expect increased focus by FDA (and USDA) on non-O157 STECs</li></li></ul><li>Strict Liability<br />Focus is on the product, not fault or lack of care<br />
  49. 49. Farm<br />Processor and<br />Manufacturer<br />Restaurant or<br />Store<br />Strict Liability – Who’s Liable<br />Anyone “engaged in the business of selling or otherwise distributing” the defective food product.<br />- Restatement Third, Torts: Product Liability § 7<br />
  50. 50. Records Strategy<br />Food Safety Plan<br />Rehearse Recalls/RFR Events<br />FDA Inspection Plan<br />Review Manufacturing Strategies<br />Revise Supplier Agreements<br />Insurance Audit<br />What You Should Do Now <br />to Reduce Risk<br />
  51. 51. Record Keeping<br />Know What Records Will You Have To Produce<br />Strategize To Protect Trade Secrets<br />Strategize To Protect Records Of Unaffected Products<br />Use FOIA Where Possible To Protect Records<br />
  52. 52. Food Safety Plan<br />May Not Want To Wait Until Regulations<br />HACCP May Not Be Sufficient Though It’s a Start<br />Look Specifically At Environmental Risks Such As:<br />Allergens<br />Listeria<br />Be As Specific As Possible With Suppliers<br />Anticipate That We Be Living Without FDA Regulations<br />
  53. 53. Potential Recall Event: What to Do<br /><ul><li>Have & follow a recall plan
  54. 54. Log events, actions, and communications
  55. 55. Record all reported injuries
  56. 56. Document investigation
  57. 57. Institute litigation “hold”
  58. 58. Cooperate and communicate with government officials</li></li></ul><li>Rehearse/Follow Recall Plan<br />Steps To Assure Food Safety Plan Is Followed<br />Rehearse Recall Plan<br />Strategize About Recall Team<br />Make Sure Everyone on Recall Team Understands His/Her Role<br />RFR Training<br />
  59. 59. FDA Inspection Plan<br />Who Will Be Involved? <br />Documents to Be Released and Signed: If documents are going to be released, have a standard “FOIA Letter” <br />Test Results<br />Photographs<br />Interviews (who and review of legal counsel)<br />Plan Protected by Privilege?<br />
  60. 60. Manufacturing Practices<br />How Can You Limit Recalls?<br />Look at:<br />“Carry-Over” Practices<br />Cleaning SOPS<br />Testing SOPs<br />
  61. 61. Supplier Agreements<br />Be Specific:<br />Food Safety Plan<br />Test Results<br />Recalls<br />Imports<br />Records Access<br />Audits<br />Insurance<br />Indemnity <br />
  62. 62. Indemnification Language<br />Totally Unambiguous<br />Recognizes Strict Liability Concepts<br />Indemnifies Regardless of Negligence<br />Clear what “Recall” Costs Are Covered<br />Not limited by Insurance Limits/Availability<br />Insurance is limited, Indemnification Should Not Be<br />But, Understand Your Suppliers Limits<br />
  63. 63. Careful Review of Supplier/Vendor Agreement<br />Seller agrees to defend, indemnify and hold harmless Buyer<br />… for the recovery of damages… arising out of or alleged to have arisen out of (a) the delivery, sale, resale, labeling, use or consumption of any Product…<br />
  64. 64. Careful Review of Supplier/Vendor Agreement (cont’d)<br />Seller’s insurance described herein shall be primary and not contributory with Buyer’s insurance.<br />Buyer shall be named as an additional insured…<br />waivers of subrogation<br />
  65. 65. Insurance Audit<br />Right types of coverage<br />Products<br />Recall<br />Sufficient limits<br />Problematic Exclusions<br />Legal counsel & trusted broker who understands the industry & your business<br />
  66. 66. Pollution Exclusion<br />All-risk policy<br />$8M Claim (No Consumer Injuries)<br />No coverage for Listeria b/c language in pollution exclusion<br />
  67. 67. Found In A $50M Umbrella Policy For Produce Co.<br />ORGANIC PATHOGENS EXCLUSION<br />1. Any actual, alleged or threatened exposure to, existence of, presence of, ingestion of, inhalation of or contact with any “biological agents” whether or not occurring alone.<br />
  68. 68. Action Steps<br />Supplier Agreements (indemnification, insurance, compliance with FSMA)<br />Insurance Audit<br />FDA Inspection Plan<br />Food Safety Plan <br />Plan for Import Compliance<br />Recall Plan and Rehearsal<br />
  69. 69. Questions?<br />www.foodliabilitylaw.com<br />@KenOdza<br />kmodza@stoel.com<br />Direct Dial: 206-386-7595<br />

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