United States: Homeland Security Update on the New Border Protection Laws for Food Imports: Food Facility Registration, Prior Notice and Record-Keeping

Originally published December, 2003

By Lars-Erik A. Hjelm, Bernd G. Janzen and Lisa W. Ross

Domestic and foreign businesses engaged in U.S. food importation and distribution are quickly becoming familiar with new and onerous legal requirements imposed by the U.S. Food and Drug Administration (FDA), which the FDA will jointly administer with the Bureau of Customs and Border Protection (CBP). The purpose of these homeland security laws is to prevent bioterrorism and many of them will go into effect on December 12, 2003, while others will be published as final rules around that date. It is imperative that these businesses take immediate steps to comply with these new requirements and that they consider instituting internal compliance programs. The essential features of these laws, which are described in more detail below, are the following:

• qualifying foreign and domestic food facilities must register with the FDA by December 12, 2003

• qualifying foreign food facilities are required to designate a U.S. agent to serve as a communications link with the FDA concerning food imports into the United States

• effective December 12, 2003, importers must provide prior notice of qualifying food imports to CBP and/or the FDA

• the FDA will soon promulgate final rules requiring additional record-keeping procedures designed to ensure compliance with the food facility and prior notice requirements

• significant sanctions may apply for non-compliance with these requirements.

The purpose of this article is to bring our clients and friends involved in food importation and distribution up to date on these new rules that will require increased compliance obligations to maintain access to the U.S. food market.

The attacks of September 11, 2001, alerted the U.S. government to weaknesses in preventing bioterrorist attacks. In response, Congress passed the Bioterrorism Act in June 2002 (Act). The Act aims to increase the ability of the U.S. government to prevent terrorists from contaminating the U.S. food supply chain by establishing rigorous border protection measures. Specifically of interest to food importers and distributors, the Act requires the FDA to implement new laws mandating (i) the registration of foreign and domestic food facilities, (ii) prior notice of imported food and (iii) related record-keeping requirements.

On October 10, 2003, the FDA issued interim final rules regarding the food facility registration and prior notice of imported food requirements, which take effect on December 12, 2003. Moreover, in May 2003 the FDA issued a proposed rule regarding related record-keeping requirements and is expected to promulgate the new regulation by December 12, 2003.

Section 305 of the Act requires most facilities engaged in the manufacturing, processing, packing, or holding of food destined for human or animal consumption in the United States (e.g., produce, animal feed, etc.) to register with the FDA. Specifically, most domestic facilities that engage in these activities, even if food from the facility does not enter interstate commerce, must register. Covered foreign facilities must also register, unless food from the facility undergoes further manufacturing or processing by another foreign facility outside the United States. The Act also requires covered foreign food facilities to register a U.S.-based agent as a precondition for shipping food to the United States.

Some food facilities are not covered. For example, farms, retail food establishments, restaurants, fishing vessels, facilities regulated exclusively by the U.S. Department of Agriculture (USDA) under the Federal Meat Inspection Act, the Poultry Products Inspection Act or the Egg Products Inspection Act, and nonprofit facilities that prepare food for, or serve food directly to, consumers are not required to register. Importantly, there are caveats to each exception. Therefore, facilities must ensure that they meet the criteria for the exception before concluding that the requirement does not apply to their facility.

The FDA registration must include the facility’s contact information, including any trade names; emergency contact information; the owner, operator or agent in charge of the facility; contact information for the U.S. agent of a foreign facility; and parent company information, if applicable. Registrants must also certify that the information submitted is true and accurate. The FDA also requires that facilities update and cancel the registration within strict time periods.

Notably, registration must also include information regarding the general food categories produced, packed or held at the facility. Comments from the trade community published in the interim rule demonstrated significant concern about the administrative and financial burden that the compilation and maintenance of such information would entail. Thus, covered food facilities should begin to analyze inventories and compile relevant records to ensure that food category information is readily available.

The FDA has established electronic registration via the Internet and will also permit written registration or CD-ROM submissions. While there is no fee associated with registration, in order to comply, covered facilities may have to undertake extensive inventories and record-keeping to ensure that their registration includes all required information.

Prior Notice of Imported Food

Section 307 of the Act mandates notice of food imports to the FDA prior to their arrival at the U.S. port of entry. The purpose of the law is to enable the FDA to track imports in the event of threatened or actual bioterrorism. The prior notice requirement applies to imported food destined for human or animal consumption, storage, transportation or distribution in the United States, including food for gifts, trade and quality assurance/quality control samples, immediate export from the U.S. port of entry, or transshipment through the United States to another country. Certain meat, poultry and egg products that are within the exclusive jurisdiction of the USDA are excluded from this requirement.

The prior notice must include:-

• the identity of the submitter or transmitter of the prior notice

• the entry type

• the Bureau of Customs and Border Protection (CBP) entry identifier, if available

• the identity of the food article, including the FDA Product Code

• estimated quantity imported and other FDA lot or code numbers, if required

• the manufacturer for food no longer in its natural state

• the grower for food in its natural state, if known

• the FDA country of production

• the shipper and country from which the food is shipped

• anticipated arrival information

• mode of transportation

• specific carrier identification

• the importer, owner and ultimate consignee of the food

• certain planned shipment information, including the six-digit Harmonized Tariff Schedule code.

Additionally, the registration number of the manufacturer and shipper may also be required in the prior notice.

CBP, a division of the Department of Homeland Security, will also receive this advance information and has coordinated with the FDA to streamline the implementation of the prior notice requirement by allowing food importers to submit data to both agencies using an automated process. Prior notice may be submitted electronically through either the CBP’s Automated Broker Interface of the Automated Commercial System or the FDA Prior Notice System Interface. Most submissions will go through the CBP system. Thus, both agencies will be responsible for monitoring compliance with and enforcement of the prior notice requirement, and importers and their import agents should check to ensure submission through the correct system.

Importantly, the FDA has established varying deadlines for prior notice depending on the mode of transportation. For food arriving in the United States by land via road, notice must be submitted at least two hours prior to arrival; for arrival by air or land via rail, no less than four hours; for arrival by water, no less than eight hours. If the food will arrive by international mail, the notice must be received and confirmed by FDA before the food is sent to the United States. Moreover, prior notice may not be submitted unless it contains all required information. Except for imports arriving via international mail, notice may not be submitted sooner than five days before the anticipated date of arrival at the U.S. port of entry.

The prior notice requirements also become effective on December 12, 2003. Therefore, importers and their import agents should review the requirements and begin to compile the necessary information to ensure full compliance.

The Record-keeping Requirement

Section 306 of the Act authorizes the FDA to require the establishment, maintenance and accessibility of records of persons or entities that process, pack, transport, distribute, receive, hold or import food intended for consumption in the United States. When the FDA has a reasonable belief that food is adulterated and presents a threat of serious adverse health consequences to humans or animals, the FDA may require such persons or entities to make records available for inspection and copying.

Section 306 covers all domestic persons who process, pack, transport, distribute, receive, hold or import food intended for consumption in the United States. "Persons" include individuals, partnerships, corporations, cooperatives, associations and government entities. Additionally, foreign facilities that manufacture, process, pack or hold food for human or animal consumption in the United States are also subject to the record-keeping requirement.

As with the food facility registration, the FDA may exclude certain farms, restaurants, fishing vessels, retail facilities and persons who manufacture, process, pack, transport, distribute, receive or hold food that is within the exclusive jurisdiction of the USDA from the record-keeping requirements.

Although existing records may be used to meet the requirements, under the proposed rule, in general, the records should enable the FDA to identify the immediate previous source (IPS) and the immediate subsequent recipients (ISR) of the food. Moreover, the FDA distinguishes between the records that transporters and nontransporters of food must maintain. A "transporter" is a person who has possession, custody or control of a food article for the sole purpose of transporting the food. Conversely, "nontransporters" include persons who hold, process, pack, import, receive or distribute food for purposes other than transportation. The records that nontransporters must maintain are more extensive and include identifying the specific sources of each ingredient that was used to make every lot of finished food product received from the IPS.

Records pertaining to most perishable and animal foods must be retained for one year, while all other food records must be maintained for two years. Records must be created at the time of the activity and be kept at the establishment where the covered activities described in the records occurred or at another reasonably accessible location. The FDA will likely impose an extremely short window for production of records at the FDA’s request: within four hours if the request is made during business hours and within eight hours if made at any other time. Thus, it is imperative that covered persons and entities understand which records are required, begin to compile the necessary information and keep such records current to ensure compliance.

In accordance with the Act, the FDA plans to issue the final rule by December 12, 2003. However, certain statutory provisions regarding access to records and other information by the FDA are already in effect. Additionally, the FDA will likely require very small businesses to comply with the record-keeping requirement within 18 months of publication of the final rule, small businesses to comply within 12 months and larger businesses to comply within six months.

sanctions for Non-Compliance with the NEW LAWS

The Bioterrorism Act makes non-compliance with the food facility registration, prior notice and record-keeping laws a "prohibited act" under the Federal Food, Drug and Cosmetic Act. Thus, civil or criminal penalties could result from non-compliance.

Moreover, food that arrives in the United States without the requisite prior notice or from a foreign facility not registered with the FDA may be detained, seized and/or forfeited by the FDA and CBP. The FDA may also seek debarment of any person who has been convicted of a felony relating to the importation of food into the United States. Neither the FDA nor CBP is responsible for any expenses associated with transportation and storage of food due to non-compliance. Thus, failure to comply may result in additional storage and transportation costs, as well as significant administrative burdens.

Preparing for Compliance with the New FDA Requirements

Under all three requirements discussed in this article, affected businesses will be required to undergo exhaustive efforts to ensure that their inventories and records are current, complete and compliant and that they have submitted all necessary information by the appropriate deadlines. Ultimately, the FDA’s final rules may vary from the interim final rules issued on October 10, 2003, regarding food facility registration and prior notice and from the May 2003 proposed rule on record-keeping. Therefore, it is imperative for potentially affected businesses to monitor the FDA’s actions and to institute internal compliance programs for these heightened border protection measures.

The international trade group at Akin Gump - comprising lawyers, economists and other professionals in the United States as well as Moscow, Brussels and London - is skilled in all laws and regulations that apply to cross-border transactions. We have extensive experience in antidumping and countervailing duty litigation, customs and homeland security laws, exports controls and economic sanctions, WTO dispute resolution proceedings, foreign market access disputes and other trade proceedings. For other International Trade Alerts and for more information about our international trade practice, please visit our Web site at http://www.akingump.com/practice.cfm.