There is much legal assistance needed for companies in the food, beverage and nutrient supplement industries. FDA regulatory and labeling matters, as well as trademark and other intellectual property work require much legal guidance. Whether it involves advertising, marketing or distribution matters, good legal counsel can protect a company from many dangerous situations. What follows is a brief presentation of some of the facts about the 2002 Bioterrorism Act.

The FDA has published for comment its second and final set of proposed rules to implement the mandates of the 2002 Bioterrorism Act. As reported in the Winter 2003 issue of Food & Marketing Law Update, the agency previously published rules pertaining to facility registration and prior notice to the FDA of the importation of food products into the United States. The new proposed rules cover record keeping requirements for the receipt and shipment of food from processor to retailer and the circumstances and procedures under which the FDA can administratively detain inventories of food products.

Virtually Everyone in the Food Business Will Be Affected

On January 29, 2003 the FDA published Federal Register notices for two sets of proposed rules to implement two of the four required FDA mandates in the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the “Bioterrorism Act.”). The requirements of these four mandates will fundamentally affect the business practices of many domestic and foreign firms that sell food (including dietary supplements) in the United States.

The two published notices are for rules that (a) require, with certain exceptions, the registration with the FDA of every domestic and foreign facility that processes, packs or stores food that is sold in the US and (b) require prior notice to the FDA of every shipment of food imported into the US. The FDA intends to have these rules finalized and its Internet based 24/7 registration and import notice systems operational by October 12, 2003. Any person or firm who fails to register a covered facility by December 12, 2003 or who imports food into the United States after December 12, 2003 without providing prior notice to FDA will be in violation of the act and subject to civil and criminal sanctions.

The FDA had delayed the publication of the proposed rules to implement the two other mandates in the Bioterrorism Act. One mandate requires that all businesses that manufacture, process, pack, transport, store, or import food into the United States keeps a paper trail of all suppliers of the food and the persons to whom the food be sold. We anticipate that these rules will require food manufacturers and processors to keep batch-by-batch records of the sources of ingredients used to make their products. This rule must also be effective no later than December 12, 2003.

The fourth mandate gives the FDA new authority to administratively detain (i.e. without court order) any food that the agency has evidence or information that the food presents a threat of a serious adverse health consequence to either humans or animals. The legislation mandating this rule does not require any association with terrorist threats or activity. There is no deadline for implementation of this rule.
The two proposed rules that have been published by the FDA are far too complex to fully detail in this article. However, some significant items to note are:

Proposed Facility Registration Rule

• Facilities include businesses involved in the production and distribution of food packaging materials
• Facilities mean specific physical locations such as individual plants, warehouses, or retail stores which also engage in wholesale activities (e.g. Costco).
• Any updates must be reported to the FDA within 30 days.
• All foreign facilities must have a US based agent. (Currently this requirement only applies to foreign drug manufacturers.)
• Exempt from registration are farms (including fish farms) which only engage in the sale of raw agricultural products, restaurants, grocery stores, non-profit food establishments (e.g. soup kitchens and food banks), fishing boats that do not engage in on-board processing, facilities subject to USDA regulation and foreign facilities that send food to other foreign facilities for further processing or packing prior to export to the US. Note that mixed facilities, which have both exempt and non-exempt operations, must be registered.
• Imported food will not be allowed into the US if it was produced at an unregistered, non-exempt foreign facility.
  
  Proposed Import Notification Rule
• Importers will be responsible for compliance with this rule
• This will be a stand-alone system. (The FDA has stated that it will continue to work with US Customs to create a unified system.)
• Shipments of food, which have not been registered, will be either refused entry or stored at a secure facility at the importer’s expense.
• The definitions of country of origin and port of entry are different from the Customs definitions.
• The notices may be filed no earlier than 3 days before the anticipated entry date of the shipment into the US and no later than noon of the day before entry.
• Separate notice will be required for each “article,” which appears to be equivalent to an SKU.
• The notices will require up to 13 elements of information including Customs numbers, identification of foreign manufacturer, type of food based on FDA 7 digit product codes, lot code country of origin, identification of importer and carrier.
• Certain amendments of the notices as to quantity, port of entry, time of entry will be permitted up to two hours before arrival. No amendments will be allowed as to the type of goods
  It is strongly recommended that if you are in a related food company that this pertains to that you now begin examining your business operations to determine how you might be affected by these new rules. You may very well need professional assistance in that examination and in the establishment to new systems to assure seamless compliance when the rules become effective.

BusinessPlans.com is very grateful that Attorney Allan I. Zackler has provided this valuable information for our business owners in food related businesses. Attorney Allan I. Zackler offers regular articles and information at his site http://www.foodlaw.com . BusinessPlans.com in no way represents themselves as providing any legal advice or opinion on any of the above matters.