On July 14, the United States Food and Drug Administration (FDA) issued a final rule amending federal regulations on the registration of food facilities with FDA. The final rule, which went into effect September 12, includes an amendment to the definition of “retail food establishment” that Congress directed FDA to make with the passage of the Food Safety Modernization Act (FSMA); farms and other businesses qualifying as retail food establishments are exempt from having to register as food facilities with FDA.1 The importance of this exemption cannot be overstated.
A business will be categorized as a retail food establishment “if the establishment’s primary function is to sell from that establishment food, including food that it manufactures, processes, packs, or holds, directly to consumers. A retail food establishment’s primary function is to sell food directly to consumers if the annual monetary value of sales of food products directly to consumers exceeds the annual monetary value of sales of food products to all other buyers.”2
For farmers, sales direct to consumers not only include sales on the farm but also sales at a roadside stand or farmers’ market, sales through a community supported agriculture program (CSA), and sales at “other such direct-to-consumer platforms, including door-to-door sales; mail, catalog and internet order, including online farmers markets and online grocery delivery; religious or other organization bazaars; and State and local fairs.”3 Sales at all of these venues would be factored as direct-to-consumer sales in determining whether a farm is a retail food establishment even if food products sold by the farm were manufactured or processed at a facility not located on the farm premises.4 Further food sold by a farmer directly to a consumer that is not produced by that farmer is still counted as direct-to-consumer.5
FDA indicated in the Federal Register notice that direct-to-consumer sales would also include sales through food hubs, buying clubs, auctions, and “non-farm community-supported distribution models” that went to the final consumer.6 Sales to any business, including restaurants and grocery stores, would not be counted as direct-to-consumer sales under the regulation.7
Artisan producers whose businesses are not based on farms did not receive as favorable treatment in the final rule. Under the amended regulation, only sales from the artisan producer’s establishment qualify as direct-to-consumer; sales at venues such as a farmers market or a roadside stand would not.8 It appears that sales over the phone and through the mail and internet could qualify as being from the establishment and therefore direct-to-consumer for a non-farm business. There’s no definition of “sale” in the Food, Drug and Cosmetic Act (FDCA), nor is there one in the regulations pertaining to food facility registration.
Those firms categorized as retail food establishments are not subject to the following laws in the FDCA:
- Food Facility Registration.9 As already stated, retail food establishments do not have to register as a food facility.10 FDA has the power to shut down “food facilities” by suspending their registration if the Secretary of the Department of Health and Human Services determines that
food manufactured, processed, packed, received, or held by a facility registered under this section has a reasonable probability causing serious adverse health consequences or death to humans or animals, the Secretary may by order suspend the registration of a facility–
(A) That created, caused or was otherwise responsible for such reasonable probability; or
(B)(i) That knew of or had reason to know of such reasonable probability; and
(ii) packed, received, or held such food.11
During the suspension, no person from the facility can introduce food into intrastate or interstate commerce.12 The Secretary must provide the suspended facility with the opportunity to have an informal hearing within two business days of the order. The Secretary shall decide whether to maintain or lift the suspension.13 Failure to have a valid registration is a prohibited act subject to criminal penalties.14
- Hazard Analysis and Risk-Based Preventive Controls (HARPC).15 HARPC is an onerous one-size-fits-all mandate requiring those businesses subject to it to develop a food safety plan. HARPC requires businesses to identify hazards in their products and operations and then develop an extensive plan putting controls in place to prevent or minimize those hazards.16 There is a qualified exemption for those registered food facilities whose gross revenues are less than $1,000,000 per year,17 but FDA has broad power to take that exemption away. Federal regulations provide that the exemption can be withdrawn “if FDA determines that it is necessary to protect the public health and prevent or mitigate a foodborne illness outbreak based on conditions or conduct associated with a qualified facility that are material to the safety of the food manufactured, processed, packed, or held at such facility.”18
Firms either manufacturing, processing, packing or holding food for human consumption that are exempt from HARPC must still comply with federal regulations on Current Good Manufacturing Practices (CGMP), but firms only in the business of manufacturing, processing, packing, or holding food for animal consumption that are exempt from HARPC are exempt from the CGMP requirement as well.19
Failure to be in compliance with the HARPC requirements is a prohibited act subject to criminal penalties.20
- FDA Inspection Schedule.21 Those firms exempt from the registration requirement would not be subject to inspection by FDA under the inspection schedule established in FSMA. FSMA requires that “high-risk” facilities be inspected every three years, and “non-high-risk” facilities must be inspected every five years.22
- FDA Authority to Collect Fees for Reinspection.23 FDA is not allowed under FSMA to charge fees for reinspection of any firm exempt from the registration requirement. FDA can charge any registered food facility up to $221 per hour for reinspection;24 with the agency being underfunded for carrying out its mandate to enforce FSMA, it has every financial incentive to find problems at a facility that warrant reinspection.
- Reportable Food Registry.25 If a registered food facility manufactures, processes, packs or holds an article of food for which “there is a reasonable probability that such article of food will cause serious adverse health consequences or death to humans or animals”, the facility must file an initial report and likely subsequent reports with FDA on the suspect food.26
The failure to file a report is a prohibited act subject to criminal penalties.27
- Mandatory Recall Authority.28 If a facility refuses to recall an article of food when FDA has determined the food is either adulterated or misbranded and “the user exposure to such article will cause serious adverse health consequences or death to humans and animals,” the Secretary of the Department of Health and Human Services (DHHS) has the power to issue a mandatory recall.29 The Secretary must provide the facility subject to the recall with an opportunity for an informal hearing not later than two days after issuing the order.30 The Secretary determines whether or not to lift the order.31
The refusal or failure to follow a recall order is a prohibited act subject to criminal penalties.32
If a business not registered as a food facility is suspected of adulteration, FDA still has several tools at its disposal to protect the public health. It can obtain an injunction from a court shutting down the business’ operation.33 It can also obtain a seizure order from a court against any food suspected of being adulterated or misbranded.34 Further, FDA can administratively detain any food it finds during an inspection, examination, or investigation that the agency has reason to believe is either adulterated or misbranded.35
While one recall or suspension would be the cost of doing business for a large corporation, a recall or suspension can bankrupt a small business. Farms and other businesses should be afforded stronger due process protection than they’re given as registered food facilities under FSMA and FDCA where the Secretary of DHHS issues orders and then rules on their validity.
Just being subject to the HARPC requirement alone will increase the chances of a small or mid-sized firm going out of business. Farms and other businesses categorized as retail food establishments will have a more favorable regulatory climate to operate in.
1 United States Code, 21 USC 350d(c)(1) [view 21 USC online] and Code of Federal Regulations, 21 CFR 1.226 – Farms are also exempt from registration, but the way “farm” is defined by regulation (21 CFR 1.227), the term only applies to commodity agriculture and not farmers direct marketing their products. [View 21 CFR online]
2 21 CFR 1.227, Retail food establishment
5 Federal Register, 81 FR 45911 & 45922 [View 81 FR 45911-45954 online] 6 Ibid., pages 45924-45925
7 21 CFR 1.227
8 81 FR 45911 & 45922
9 21 USC 350d
10 21 USC 350d(c)(1)
11 21 USC 350d(b)(1)
12 21 USC 350d(b)(4)
13 21 USC 350d(b)(2)
14 21 USC 331(dd) and 21 USC 333
15 21 USC 350g
16 21 CFR 117.126 – 117.190
17 21 CFR .5(h)(3) and 21 CFR 117.3, Definition of “very small business”
18 21 CFR 117.251(a)(2)
19 21 CFR 507.5(a)
20 21 USC 331(uu) and 21 USC 333
21 21 USC 350j
22 21 USC 350j(a)(2)(B)(ii) & (a)(2)(C)(ii)
23 21 USC 379j-31, see also 81 FR 45911 & 45917
24 21 USC 379j-31(a)(1)(A) and 49 FR 5025 & 5027
25 21 USC 350f
26 21 USC 350f(a)(2), (d)(1) & (d)(7)
27 21 USC 331(e) and 21 USC 333
28 21 USC 350l, see also 81 FR 45911 & 45917
29 21 USC 350l(a), (b)
30 21 USC 350l(c)
31 21 USC 350l(d)
32 21 USC 331(xx) and 21 USC 333
33 21 USC 332
34 21 USC 334(a)
35 21 USC 334(h)
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