On September 17, FDA formally published the first major final rule under the Food Safety Modernization Act (FSMA) in the Federal Register.

This final rule addresses the standards for “facilities” that sell food for human consumption. The rule has staggered deadlines for compliance, so that large businesses will have to come into compliance in November 2016, while small businesses will have an additional one to two years depending on their size.

(The Produce Safety Rule, the other major rule under FSMA, is supposed to be finalized by late October of this year.)

This first published final rule implements FSMA’s requirement that businesses that manufacture, process, pack, hold or store food implement “hazard analysis and risk-based preventive controls” (HARPC), including a written food safety plan that identifies the possible problems that could affect the safety of their products and outlines steps the facility would take to prevent or significantly minimize the likelihood of those problems occurring.

FARFA, together with the Western Organization of Resource Councils, led the coalition that fought for an exemption for small, direct-marketing facilities from this rule. The Tester-Hagan amendment, which Congress included in FSMA, provides a “qualified exemption” for “very small businesses” and for businesses that gross under half a million dollars annually and that sell more than half directly to individual consumers or local restaurants and retailers.   In the rulemaking process, we succeeded in getting the FDA to define very small businesses as those that gross under $1 million annually, regardless of who they sell food to – both expanding the scope of the qualified exemption and simplifying the process of determining if a business is exempted.

These very small businesses must do either a  simplified plan or submit documentation that they comply with state and local laws, rather than doing the full HARPC plan.

In the rulemaking process, we also fought to protect exempt businesses from having that exemption removed unfairly, prevent farms from being treated as facilities, and address some of the heaviest burdens that will be imposed on non-exempt businesses. We had success with some of these issues, although far from all.

One of the most important changes from rule as originally proposed by FDA is in the definitions section, addressing how farms and farm activities are defined. Farms are exempt from this new rule, although they will have to comply (unless exempted under Tester-Hagan) with the produce safety rule that is due out in October. FDA’s final definition of a farm allows for multiple owners and multiple locations, reflecting the reality of many farms. In addition, the definitions of various farm activities, such as harvesting and packing, are more expansive and will help prevent farms from being misclassified as facilities for doing normal farm activities such as cleaning and bagging produce.

Unfortunately, the FDA still has not issued its final definition of “retail food establishments,” which are also exempt from this rule. In FSMA, Congress clarified that sales through direct-to-consumer sales platforms like roadside stands, farmers markets, and community-supported agriculture (CSAs) operations were included within the exemption for retail food establishments. Yet FDA is dragging its fight in incorporating this provision in the regulations.

Another serious problem is that the process for withdrawing the qualified exemption under the Tester-Hagan provision is left far too much to FDA’s discretion and lacks appropriate procedural safeguards. We did succeed in getting a few improvements: pre-withdrawal notification and an opportunity to respond, a longer time frame for coming into compliance if the exemption is withdrawn, and a provision for reinstating the exemption. However, the timelines are still very tight.

The FDA did clarify in the final rule that it can only withdraw the exemption on specific farms, not classes of farms. In other words, FDA can withdraw the exemption on Farm X, but not on all raw milk cheese farms. That was the intention of the Tester-Hagan amendment from the beginning, and it is valuable that FDA has officially acknowledged it.

For those businesses that are not exempt, one of the potentially biggest problems is the requirements for supplier, or supply chain, verification. When Congress passed FSMA, it was sensitive to the fact that buyers are increasingly requiring audits of farmers and that – while an audit can provide a useful verification tool – it is only one tool to ensure that risks are being minimized across a supply chain. Congress specifically said audits could not be required as part of FDA’s new food safety framework. But FDA’s final rule includes requirements for supplier verification that create significant pressure to implement an audit system.

As originally proposed, the supplier verification requirement would even have imposed burdens on small facilities exempt under Tester-Hagan, if they sold to a facility that wasn’t exempt. In other words, to be a supplier of a non-exempt facility, the exempt facility would have to provide various assurances that would have created unknown liabilities. After FARFA and others objected, FDA modified the requirement so that the exempt facility need only provide assurances about its exemption.

In addition, as part of the HARPC, each facility will have to conduct verification activities to determine if their preventive controls are actually working. FDA includes product testing and environmental testing as two of the verification activities. Depending on the scope of these requirements (frequency, targets, and locations), they could easily drive small and mid-sized food producers out of business.

The rule is very long and complex, and we will post additional information in the coming weeks as we continue our analysis of it.  We will also be working with partner organizations on how to help producers navigate the new regulatory maze, to meet the new requirements as cost-effectively as possible.

Posted September 17, 2015