In recent years, there have been numerous public health scares and large-scale product recalls due to food-borne illness and defects in various consumer products. As a result, the US government is engaged on a number of fronts to enact new legislation and intensify regulatory efforts under existing authorities to enhance food and product safety, including food and other products imported into the United States.

In the last few months, Congress has introduced and passed legislation that would expand the powers of the US Food and Drug Administration (FDA), Consumer Product Safety Commission (CPSC) and Customs and Border Protection (CBP) to regulate foreign-sourced food and consumer products and the importers of such products. In addition, these administrative agencies have been developing new tools to implement their existing authority over imported products in an effort to enhance product safety. This greater attention has led to expanded enforcement efforts, resulting in record-setting penalties for importers that have violated product safety standards.

In many respects, the food and product safety policy developments relating to US manufactured goods simply modifies or enhances existing product safety regimes (e.g., increased inspections). By contrast, policy initiatives aimed at foreign-sourced goods and their importers are resulting in novel programs and approaches that will subject importers and their foreign suppliers to new and potentially onerous requirements. Given the number and diversity of import product safety initiatives, importers and foreign suppliers must be vigilant in monitoring these initiatives, developing a strategy for influencing these policies where appropriate, and ensuring compliance with new requirements.

The following is a brief interim report about several developments that Arent Fox LLP will continue to track. They include:

• Food safety bill passed by US House of Representatives

• Customs Reauthorization Bill in US Senate, which contains provisions on import safety

• Development and rollout of FDA import targeting program

• Increased FDA inspections of foreign facilities

• Legislation requiring Public Health Advisory Committee on Trade to be created and consulted during trade negotiations

• Guidelines issued by president’s working group on product safety

• Implementation of CPSIA; status reviewed by GAO in July 2009

• CPSC-issued guidance on use of “tracking labels” for children’s products

• Bill introduced in Senate that would subject producers of certain products to US jurisdiction in civil and administrative proceedings

• Record penalties imposed on importers violating product safety standards

House Passes Food Safety Enhancement Act
On July 30, 2009, the US House of Representatives passed the Food Safety Enhancement Act of 2009 (HR 2749). Sponsored by Rep. John Dingell (D-Va.) and supported by Rep. Henry Waxman (D-Calif.), the bill passed in the House by a substantial margin, was referred to the Senate and is now pending in committee. The proposed legislation contains numerous provisions that affect food producers, exporters and importers. Among other things, the legislation:

• Requires registration of importers and brokers, including registration fees for importers

  • Food imported by an importer or broker not registered with Department of Health and Human Services (HHS) would be considered “misbranded”

  • Misbranded food includes food that fails to identify the country in which final processing of food occurred, or country of origin for non-processed food; however, compliance with existing Customs country of origin marking is sufficient

  • Importer registration requires compliance with good importer practices, including taking measures to ensure compliance with new requirements; thus, the importer should have adequate information on tracing/sourcing, procedures to verify that food and all sources/providers/processors are in compliance, and procedures for corrective action

  • Registration requirements to be effective 24 months after enactment, though HHS would have 36 months to issue registration regulations

  • Base fee for importer registration would be $500

• May also require importers to certify compliance for high-risk imports

• Requires HHS to establish by regulation a tracing system for food that is located in the United States or is for import into the United States

  • Imported food could be refused admission if requirements for tracing (and related recordkeeping) are violated

  • Tracing would require identification of each person who grows, produces, manufactures, processes, packs, transports, holds or sells such food within two business days

  • More limited requirements applicable to grains/commodities and fish

  • HHS must assess costs/benefits and technologies available to implement such a tracing system; pilot program(s) required before full implementation

• Subjects all importer facilities to HHS inspection

  • Importers covered within increased random facility inspection regime

  • Risk-based focus (manufacturers/processors high risk; packs/labels food medium risk; carries or “holds” food lower risk)

• Revises administrative detention provisions by lowering standard for detention (reason to believe food is adulterated, misbranded); extends detention period to up to 60 days; extends to 15 days period FDA has to terminate/confirm detention after an appeal

  • Admission of food could be refused if traceability requirements are not met; if food is not in compliance with certification requirements for high-risk food (to be established by HHS, based on item and/or source country); if food is subject to cease distribution order; if facility identifier is not provided for imported food

  • FDA to comply with “international agreements” when implementing certification program; import certification would allow FDA to require imports be certified as meeting US safety standards if that country is found, through “scientific, risk-based evidence,” to have inadequate food safety controls

• Requires HHS to establish “safe” food program for importers, similar to C-TPAT; HHS, in consultation with CBP, to develop a program to facilitate imports if importer verifies that each facility involved in production, processing and packaging is in compliance with food safety and security guidelines issued by HHS and CBP

• Imposes civil penalties for failing to provide accurate or complete information, failing to submit information relating to food, and failing to register

  • Each violation and each day is a separate offense

  • Knowing/criminal violations could lead to imprisonment

Sen. Richard Durbin (D-Ill.) has introduced companion legislation in the Senate (S 510). The Durbin bill includes more lenient provisions on issues such as traceability and certification. No action is yet scheduled on the Durbin bill.

Any final import safety legislation will require numerous regulatory initiatives with an opportunity for private interests to participate.

Senators Introduce Customs Reauthorization Bill
On August 6, 2009, Sens. Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.), introduced the Customs Facilitation and Trade Enforcement Reauthorization Act of 2009 (S 1631). The bill, now pending in the Senate Finance Committee, includes numerous import safety measures.

• The bill establishes an interagency Import Safety Working Group (Department of Homeland Security, HHS, Department of Agriculture, Department of Treasury, Office of US Trade Representative, FDA, CBP, CPSC, Office of Management and Budget), which would:

  • Establish importer best practices in taking steps to ensure the safety of imports, including with respect to foreign manufacturing facility inspection

  • Establish and define importer accountability

  • Develop a Joint Import Safety Rapid Response Plan

  • Evaluate the adequacy of US government plans, practices and resources dedicated to import safety

• The Joint Import Safety Rapid Response Plan would set forth protocols and practices for CBP to use in responding to and coordinating federal responses to an incident in which an import poses a health/safety threat and in recovering from effects of actions and responses to such incident.

• DHS and CBP would be required to engage periodically in import health/safety exercises to test and evaluate protocols.

FDA Develops Import Targeting Program
FDA reports that the number of imports it inspected for admission into the United States increased from 7 million in 2001 to 18 million in 2006. As such, it has created an import screening system (Predictive Risk-Based Evaluation for Dynamic Import Compliance Targeting, or PREDICT).

• Designed to improve the efficiency and productivity of the inspection process by targeting high-risk imports (currently in pilot phase testing)

• Will help FDA inspectors decide which shipments of imported food to inspect by using system to assess information from multiple sources and which present highest risk (e.g., food from area where an event – e.g., a tsunami – could affect food storage; prior violations; transshipped from unusual ports)

• Beta testing at Los Angeles in easrly fall 2009; national implementation currently projected for late fall

• Additional information about the program is available here.

The FDA is also undertaking efforts to develop a single international standard for electronic submissions of information on regulated products – including food additives, medical devices, and veterinary products – for use at FDA and other regulatory authorities, including international agencies.

FDA Increases Inspections of Foreign Facilities
HHS has responded to recent high-profile contamination events in foods and drugs by developing bilateral memoranda of understanding (MOUs) with foreign governments and by establishing permanent FDA offices in several countries. This increased foreign presence will enhance FDA's ability to conduct inspections of foreign manufacturing facilities for foods, drugs and medical devices while also making harmonization with counterpart agencies more efficient and effective.

In addition, the president's fiscal year 2010 budget request for FDA is $3.2 billion – $511 million more than fiscal year 2009, representing a 19 percent increase. FDA plans to use the additional funding to conduct more foreign inspections and more import review and analysis, among other initiatives. Both FDA Commissioner Peggy Hamburg and Senior Advisor Michael Taylor have testified recently in front of congressional committees regarding plans to increase inspections of foreign facilities.
 
The following represents a sampling of specific activities that HHS and FDA have undertaken in the area of foreign oversight and inspections.

• In December 2007, the United States signed two historic MOUs with the Chinese government related to FDA-regulated products. The MOUs contain a framework to promote closer collaboration and information-sharing between HHS/FDA and its Chinese counterpart agencies to help assure Chinese products under FDA jurisdiction that come to the United States will be safer. In June 2008, the United States signed a similar agreement with the government of Vietnam, and other MOUs are being negotiated.

• In November 2008, FDA opened three offices in the People’s Republic of China – specifically, in Beijing, Guangzhou and Shanghai.

• In January 2009, FDA opened its first Latin American office, located in Costa Rica. A South American office as well as a Mexican office are also planned in order to cover the various regions on the continent.

• In mid-2009, FDA established two offices in India and two offices in Europe (in Brussels and London). An overseas FDA office may also be opened in the Middle East in the near future, possibly in Jordan.

Trade Negotiators to Consult with New Food and Product Safety Committee

• House and Senate bills have been introduced to establish the Public Health Advisory Committee on Trade:

  • HR2293

  • S1644

• The Committee would be added to the Federal Trade Advisory Committee System and thus must be consulted on trade negotiations.

• It would include members from not-for-profit organizations; issues of concern would include food and product safety, such as sanitary and phytosanitary measures.

President Establishes Food Safety Working Group
On March 14, 2009, President Obama announced the formation of the Food Safety Working Group (FSWG) to upgrade food safety laws and make other recommendations to develop a more health-based approach to food safety based on certain core principals.

• The FSWG – chaired by HHS and including FDA, DHS, Food Safety and Inspection Service, Center for Disease Control, Department of Commerce, Department of Stare, Environmental Protection Agency and White House – will advise the president on how to upgrade US food safety laws for the 21st century.

• The group cites growing threat of international contamination.

• On July 1, 2009, the FSWG submitted three core food safety principles to guide development of food safety system:

  • Preventing harm

  • Effective food safety inspections requires good data

  • Outbreaks should be identified quickly and stopped

• For further information about the FSWG, click here.

GAO Issues Report on Status of Implementation of CPSIA
On August 14, 2009, the General Accountability Office (GAO) issued a report on the CPSC's implementation of the Consumer Product Safety Improvement Act of 2008 (CPSIA). CPSIA seeks to improve import safety by expanding CPSC’s authority and placing a greater responsibility on industry to improve product safety. The GAO report indicates CPSC has not implemented key regulatory improvements to bolster ability to guard consumers against imports of unsafe products. Specific areas indentified are below.

• Testing and certification requirements have not yet been established.

• There is poor coordination with CBP:

  • CPSC has only limited presence at US ports

  • CPSC does not have access to key CBP import data it could use to target incoming shipments for inspection

  • CPSC has not updated agreements with CBP to clarify each agency’s roles and responsibilities; without better coordination with CBP, CPSC may not be able to inspect and enforce

• The legislation requires CPSC by August 2010 to develop a formal system for identifying shipments of imported consumer products that are likely to violate import provisions enforced by CPSC.

• The GAO says FDA has a more effective relationship with CBP because FDA receives advance shipment data from CBP of all imports under FDA’s jurisdiction, which FDA then screens electronically for potential food safety violations.

• The GAO report is likely to lead to renewed effort by CPSC and Congress to implement import-related aspects of CPSIA.

On October 7, 2009, the CPSC held a public meeting to discuss steps the Commission is taking to address the issues in the GAO report. To view the report, click here.

CPSC Issues Guidance on “Tracking Label” Requirement for Children’s Products

• The “tracking label” requirement applies to children’s products manufactured after August 14, 2009.

• The manufacturer is responsible for compliance. (“Manufacturer” includes importers.)

• This establishes a means for identifying the sources of children’s products in order to improve safety of such products by assisting in recalls, etc.

• There is no set format for a tracking label; however, it must be developed to ensure markings indicate, or allow knowledge of, the name of the manufacturer, location of production, date of production, cohort information and source of parts.

Senators Introduce Bill That Would Subject Foreign Manufacturers to US Jurisdiction
On August 6, 2009, Sens. Sheldon Whitehouse (D-RI), Richard Durbin (D-Ill.) and Jeff Sessions (R-Ala.) introduced the Foreign Manufacturers Legal Accountability Act of 2009 (S 1606).

• The bill would require foreign manufacturers of certain products imported into the United States to establish registered agents in the United States who are authorized to accept service of process for the purpose of all civil and regulatory actions in state and federal courts.

• Covered products include drugs, devices and cosmetics; biological products; consumer products; chemical substances; and pesticides.

• The registration requirement would be limited to those that manufacture or produce the covered product in excess of a minimum value or quantity.

• The legislation would also require USDA and FDA to complete a study on the feasibility of extending the scope of the registration requirement to foreign manufacturers of food distributed in the United States.

CPSC Announces Enforcement Actions

• CPSC announced a $665,000 civil penalty for importer OKK Trading of California for allegedly violating various federal child safety standards. The CPSC alleged that the importer knowingly imported and sold violating toys.

• CPSC announced a $2.3 million penalty for Mattel and affiliate Fisher-Price for violating federal lead paint ban. This was the highest penalty for a violation involving importation or distribution and the third-highest of any kind. Separately, CPSC announced a $600,000 civil penalty for Target Corp., noting that “importers and retailers have the same obligation to meet strict lead limits as the manufacturers.”

• Additional, similar settlements/penalties are likely to be announced arising from 2007-2008 “era of recalls.”

If you have any questions concerning this import safety update, please contact one of the following members of the Arent Fox import safety team.

This update on recent developments is for informational purposes only, and should not be considered legal advice. Please contact members of our team if you have specific questions or would like more information about these developments.