How The FSMA Changes The

Status Quo for Food Businesses

Kenneth Odza
Stoel Rives LLP
http://www.foodliabilitylaw.com/
March 22, 2011

What You Need to Know

FSMA/RFR How does it affect you?
What can you do to minimize regulatory obligations?

Products Liability Exposure

How to Reduce Risk
Recall Strategies
Action Steps

Food Safety Modernization Act (H.R. 2751)

Most expansive changes
since 1938 Act
Sweeping new
enforcement authorities
Exacting new food import
requirements
Major new program
activities for FDA

FSMA Provisions Effective Now

Stronger Records Access Authority (FSMA 101)

Mandatory Recall Authority (FSMA 206)
Increased Frequency of Inspections (FSMA 201)
Whistleblower Protection (FSMA 402)
Foreign Facilities and Refusal of Inspection (FSMA
306)

Stronger Records Access

Authority (FSMA 101)
When reasonable probability of
serious adverse health
consequences
Includes records of other food
affected in similar manner NEW
Proper credentials and written
notice

Mandatory Recall Authority (FSMA 206)

Recall ordered if reasonable probability (1) food is adulterated

or misbranded and (2) serious adverse health consequences
Opportunity for voluntary recall
Hearing within two days of the orders issuance

Increased Frequency of
Inspections (FSMA 201)

Immediate increased
frequency of inspections
Risk-based

Whistleblower Protection (FSMA 402)

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

Foreign Facilities and

Refusal of Inspection (FSMA 306)

Foreign establishment must allow entry to U.S. inspector w/i 24

hours of requesting entry
Or, imported food will be refused admission

Selected FSMA Provisions

Effective Soon
Amendments To The RFR (FSMA 211)
Suspension of Registration (FSMA 102)
Changes to Administrative Detention Standard (FSMA
207)
Preventative Controls (FSMA 103)
FDA Lab Accreditation (FSMA 202)
Traceability (FSMA 204)
Major Changes To Regulation of Imports (FSMA
301,302)
Food Defense (FSMA 108)
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Reportable Food Registry (RFR)

Reportable Food
- Reasonable probability of serious adverse
health consequences to humans or animals

Responsible Party
- FDA-registered facility where product is
manufactured, processed, packed, or held

Requirement
- Report to FDA portal within 24 hours

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Amendments to RFR (FSMA 211)

New critical information required
Within 18 months, FDA will require
consumer-oriented information including
Description
Product ID codes
Contact information
Anything else FDA deems necessary to
enable a consumer to accurately identify
whether such consumer is in possession
of the reportable food

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Suspension of Registration
If FDA determines reasonable
probability of food causing serious
adverse health consequences, it MAY
suspend registration
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

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Broader Authority To Administratively

Detain Foods (FSMA 207)
Effective w/in 180 days
Lowers Standard For FDA To Detain Foods:
FDA only needs A reason to believe food is adulterated or
misbranded.
Class I recall situation not required

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Preventative Controls (FSMA 103)

Hazard analysis and implement
preventative controls re:
sanitation
training
environmental controls
allergen controls
a recall contingency plan
GMPs
supplier verification activities

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Preventative Controls (contd)

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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
Reduced to writing and made available to FDA during
inspections
Effective within 18 months

Routine Environmental/Product Test Results

Submitted To FDA (FSMA 202)

FDA Accredited Labs W/30

Months
Testing by FDA Accredited
Labs Mandated
Results Sent Directly To FDA

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Traceability (FSMA 204)

270 days to establish traceability
pilot program(s)
Not required:
a full pedigree, or a record of the
complete previous distribution history
of the food from the point of origin of
such food
records of recipients of a food beyond
the immediate subsequent recipient of
such food
product tracking to the case level by
persons subject to such requirements

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Foreign Supplier Verification

Program (FSMA 301)
Importers required to perform riskbased foreign supplier verification
activities
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 or consignee

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Voluntary Qualified Importer

Program (FSMA 302)
Within 18 months, FDA shall
provide for the expedited review
and importation of food for
importers who participate
voluntarily
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 the
United States

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Import Certifications (FSMA 302)

FDA may require third-party
certification as a condition of
import
FDA can create system of
accreditation for auditors
Program may be funded through
fees imposed on auditors

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Food Defense (FSMA 108)

National Agriculture and Food Defense Strategy
Some Information May Not Be Disclosed

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The Road Ahead for FDA

10 rulemakings
No fewer than 10 guidance
documents
13 reports (some on a recurring
basis)
Numerous other resource-intensive
implementation activities

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Products Liability Exposure &

Recalls

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Recalls Happen
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.

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Recall Alone Can Be a Death

Sentence
After Extensive Beef Recall, Topps Goes Out of Business

Workers leaving the Topps Meat plant in Elizabeth, N.J., on Friday.

The company, which opened in 1940, went out of business shortly
after it issued a recall that expanded to 21.7 million pounds of ground beef.
Source: http://www.nytimes.com/2007/10/06/us/06topps.html?_r=2

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In a statement, Anthony DUrso, the chief operating

officer at Topps, in Elizabeth, N.J., said that the
company cannot overcome the reality of a recall this
large.
He added, This has been a shocking and sobering
experience for everyone.
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 plants closure.

Listeria Monocytogenes

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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

Salmonella

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Diarrhea, fever, and

abdominal cramps
More severe illness: infants,
elderly people, and people
with impaired immune
systems
Increasing diversity of
products

E. coli

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Lots of publicity
Can result in kidney failure and
death
Expect increased focus by
FDA (and USDA) on nonO157 STECs

Strict Liability
Product was
defective

Defect caused
injury

Focus is on the product, not fault or lack of care

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Strict Liability Whos Liable

Anyone engaged in the business of selling or
otherwise distributing the defective food product.
- Restatement Third, Torts: Product Liability 7

Farm
Farm

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Processor
Processor and
and
Manufacturer
Manufacturer

Restaurant
Restaurant or
or
Store
Store

What You Should Do Now

to Reduce Risk

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Records Strategy
Food Safety Plan
Rehearse Recalls/RFR Events
FDA Inspection Plan
Review Manufacturing Strategies
Revise Supplier Agreements
Insurance Audit

Record Keeping
Know What Records Will
You Have To Produce
Strategize To Protect
Trade Secrets
Strategize To Protect
Records Of Unaffected
Products
Use FOIA Where Possible
To Protect Records

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Food Safety Plan

May Not Want To Wait Until Regulations
HACCP May Not Be Sufficient Though Its a Start
Look Specifically At Environmental Risks Such As:
Allergens
Listeria

Be As Specific As Possible With Suppliers

Anticipate That We Be Living Without FDA
Regulations

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Potential Recall Event: What to Do

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Have & follow a recall plan

Log events, actions, and communications

Record all reported injuries

Document investigation

Institute litigation hold

Cooperate and communicate with

government officials

Rehearse/Follow Recall Plan

Steps To Assure Food Safety
Plan Is Followed
Rehearse Recall Plan
Strategize About Recall Team
Make Sure Everyone on
Recall Team Understands
His/Her Role
RFR Training

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FDA Inspection Plan

Who Will Be Involved?
Documents to Be Released
and Signed: If documents are
going to be released, have a
standard FOIA Letter
Test Results
Photographs
Interviews (who and review
of legal counsel)
Plan Protected by Privilege?

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Manufacturing Practices
How Can You Limit Recalls?
Look at:
Carry-Over Practices
Cleaning SOPS
Testing SOPs

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Supplier Agreements
Be Specific:
Food Safety Plan
Test Results
Recalls
Imports
Records Access
Audits
Insurance
Indemnity

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Indemnification Language
Totally Unambiguous
Recognizes Strict Liability Concepts
Indemnifies Regardless of Negligence
Clear what Recall Costs Are Covered

Not limited by Insurance Limits/Availability

Insurance is limited, Indemnification Should Not Be

But, Understand Your Suppliers Limits

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Careful Review of Supplier/Vendor Agreement

Seller agrees to defend, indemnify

and hold harmless Buyer

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

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Careful Review of Supplier/Vendor Agreement (contd)

Sellers insurance
described herein shall
be primary and not
contributory with
Buyers insurance.

Buyer shall be named

as an additional
insured

waivers of subrogation
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Insurance Audit
Right types of coverage
Products
Recall

Sufficient limits
Problematic Exclusions
Legal counsel & trusted broker who understands the
industry & your business

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Pollution Exclusion
All-risk policy
$8M Claim (No Consumer
Injuries)
No coverage for Listeria
b/c language in pollution
exclusion

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Found In A $50M Umbrella Policy For Produce Co.

ORGANIC PATHOGENS EXCLUSION

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.

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Action Steps
Supplier Agreements
(indemnification,
insurance, compliance with
FSMA)
Insurance Audit
FDA Inspection Plan
Food Safety Plan
Plan for Import
Compliance
Recall Plan and Rehearsal
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Questions?
www.foodliabilitylaw.com
@KenOdza
kmodza@stoel.com
Direct Dial: 206-386-7595

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