U.S. Food Industry Radically Changed By Bioterrorism Act
A special report by RIGGLE & CRAVEN
The Public Health Security and Bioterrorism Preparedness and Response Act of 2002, (Commonly called the Bioterrorism Act) will radically change the importation and sale of foreign food products. The Bioterrorism Act applies to all domestic and foreign facilities that manufacture, process, pack or hold food which will be consumed in the United States. These facilities must register with the Food and Drug Administration (FDA).
IF THESE FACILITIES DO NOT REGISTER, THE FOOD THAT IS PROCESSED BY THESE FACILITIES CANNOT BE SOLD IN THE UNITED STATES. THE FDA BEGAN FULL ENFORCEMENT OF THE ACT ON NOVEMBER 1, 2004.
Requirements of the Act
The Act requires, with limited exception, the registration with the FDA of any facility which processes, packs, manufacturers or holds food which will be consumed in the United States. In addition to registration, the Act also requires that these facilities maintain detailed records of the acquisition, production, distribution and sale of food products; that registrants are immediately accessible to the FDA; and that registrants are able to provide the FDA with detailed tracing of any food product at a moments notice. In addition, foreign processors must designate a U.S.
based agent to serve as a contact point for the FDA.
Impact on Importers
An importer must be able to provide, prior to entry of the food products into the United States, the bioterrorism registration number for the facility that actually produced or packed the food product along with the registration numbers of any facilities that held the product. If the importer cannot provide this information, the food will not be allowed to enter the United States. If the importer provides inaccurate or incorrect information the food may not be allowed to enter the United States AND the importer may face significant monetary penalties and potentially a permanent ban on importing into the United States.
The Act also limits sourcing options to processors who have registered and foreign distributors who have approval of their registered processors to export. As Bioterrorism registration numbers are not publicly available, if a processor elects not to provide its Bioterrorism registration number to a particular foreign distributor, then that foreign distributor is precluded from selling these goods for consumption in the United States market. This is a significant change and restriction. Even if the products were otherwise purchased through a legitimate channel of trade, the foreign producer must now consent to export of the product in order for it to be distributed in the United States.
Finally, as the Act requires more information about the source of goods to be provided to a purchaser, the importer’s actual source will have to be disclosed to its U.S. Customers. Importers must, therefore, take precautions to ensure that its U.S. Customers do not begin to directly deal with the source and thereby cut the importer out of the transaction. This can include an agreement with the Foreign Producer that it will not disclose its Bioterrorism registration number to third parties.
Impact on Foreign Processors
Any Foreign Processors must register their facility prior to shipping food to the United States and must also maintain detailed records. Although this may seem to be a slight burden, the key is that the registration requirement is for each FACILITY that produces products, not each Foreign Entity. Thus if a Foreign Processor purchases some of its product from other processors, those facilities must also be registered and the Foreign Processor must be able to trace its shipments to the U.S. to these other producers AND must notify its importers of the actual producer of the food product. This information, for all practical purposes, must be at the Foreign Processor’s fingertips and must be provided prior to entry of the food into the United States. If the information is not provided or is inaccurate, the food will be denied entry or seized. Further, as the act does not contain an exception for “samples”, if a Foreign Producer is not registered and not selling to the U.S. market, it cannot ship samples to the U.S. market without first registering and putting into place an internal product tracing system. This is a substantial barrier to market entry for new producers.
Impact on Domestic Producers
The Act requires domestic producers of food to register. While domestic food products do not directly pass through a formal government review prior to distribution in the U.S. market, the FDA has made clear its intent to actively enforce the Bioterrorism Act, to punish processors that do not comply with the Act, and to detain food products sold by processors that do not comply with the Act. The FDA will primarily use its powers of Administrative Detention to enforce the Act within the United States. Under its powers of Administrative Detention, the FDA can essentially prevent the movement of any food product that it so elects to detain and can basically shut down any entity in the Food industry and address the propriety of the shut-down at a later date. Even if an entity ultimately shows that the Administrative Detention was improper, the harm will still be significant. The FDA intends to begin active enforcement of the Bioterrorism Act as of November 1, 2004, and any company, which has not complied with the requirements of the Act as of that date, is placing all of their food shipments at risk.
Impact on Domestic Shippers
Domestic Shippers face concerns, which are quite similar to those, faced by US importers. (It should be noted that the Bioterrorism Act only applies to Domestic Shippers that actually take physical possession of the goods. A company which only arranges for shipment of food products directly from the processor to its customers does not need to register.) While domestic food products do not directly pass through a formal government review prior to distribution in the U.S. market, the FDA has made clear its intent to actively enforce the Bioterrorism Act, to punish domestic shippers that do not comply with the Act, and to detain food products sold by domestic shippers that do not comply with the Act. The FDA has already begun to visit US entities in order to confirm that they have registered under the Bioterrorism Act. The FDA intends to begin active enforcement of the Bioterrorism Act as of November 1, 2004, and any company which has not complied with the requirements of the Act as of that date, is placing all of their food shipments at risk.
How Can RIGGLE & CRAVEN Help?
Even at this late date, it is still possible to comply with the Bioterrorism Act and its rather draconian provisions. RIGGLE & CRAVEN, through its related entity RC Food Agents, Inc., can quickly register your entity with the FDA and help to educate your sources and your customers as to the requirements of the Act. Even if YOU are registered, your business is imperiled if your foreign processors are not also registered.
The law firm of RIGGLE & CRAVEN is providing this as part of a commitment to advise of recent developments which are of importance to the international trade community. Permission to reproduce, photocopy, reprint or excerpt this advertising material is granted provided the source is attributed to RIGGLE & CRAVEN. The information provided is in summary form and we urge readers to confirm any conclusions reached before taking action based on it.