Press Release

Columbia, MD 8.16.2011

This month FDA announced its plan to implement “re-examination” fees under the recently enacted FDA Food Safety Modernization Act (“FSMA”, which amended the federal Food Drug and Cosmetic Act, “FDCA”). Through FSMA, FDA is authorized to collect a fee from importers for a re-inspection/re-examination of an imported food if there is any identified failure to comply with a requirement that is materially related to food safety. Slated to go into effect October 1^st, 2011, this new fee structure will create significant new layers of costs and fees for importers.  At the core of this new process is the requirement that at least two examinations of a food must take place for FDA to assess the new imported food fee. Unfortunately for importers, FDA has so broadly defined what constitutes the “first examination” that virtually every imported food shipment on which FDA spends any resource will be subject to the re-examination fee. U.S. importers, most of them small businesses, will be charged $224 per hour (plus expenses) for any such re-examinations. Those expenses will be passed on to consumers resulting in a dramatic increase to food costs in the USA.

In its Federal Register notice, FDA stated that a first examination occurs whenever it reviews information to determine a food’s admissibility and that review results in an FDA detention for a violation related to food safety. Such a review includes the very few instances when FDA actually samples and tests imported food and conducts a facility inspection (e.g., of a foreign manufacturer or US importer) or a food label review. However, FDA also includes in its “first examination” definition other tasks that do not involve an FDA examination of the food at all, such as reviewing sample results from a third party, reviewing any relevant epidemiological evidence, reviewing a third party facility inspection report, and almost any activity related to an FDA import alert.

After FDA’s initial “examination”, the importer must pay FDA for all costs associated with any further review conducted by FDA on the same imported food. These costs can even include expenses for examining future shipments of food (through FDA’s import alert program). FDA provided a list of four examples when the importer can expect to pay a re-examination fee.

1. When imported food is reconditioned orrelabeled.

2. When an importer is seeking release of an imported food under FDA detention.

3. When an importer or foreign manufacturer petitions FDA requesting removal from FDA import alert.

4. When FDA supervises destruction of FDA refused food.

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This represents two primary shifts in how FDA defines “examination.”  First, FDA defines “examination” outside the context used in the FDCA and its own regulations. The FDCA gives FDA the authority to examine samples of any imported food. Then, “if it appears from the examination of such samples or otherwise…” that the imported food is in violation of the law FDA must refuse the food. “Examination” refers to a sample analysis of the food import – not reviewing just any old information FDA comes across. When read in context, FDA may only assess a fee if it reexamines a food after FDA conducted its own sampling and testing of the imported food. Even FDA’s own examples admit the Agency is over reaching the new FSMA authority by including activities involving shipments on import alert, which by FDA’s own definition are detained expressly “without physical examination.”

The second core shift in this policy is that for the purpose of counting FDA examinations for applying the fee, FDA’s approach focuses on imported food-generally, rather than a specific imported shipment of food. For instance, according to FDA, the first examination takes place when it decides to place a food from a specific manufacturer on import alert. Every following shipment of that food automatically detained by FDA will be subject to re-examination fees – every step of the way. For most import alerts FDA expects to see at least five clean shipments (tested by private laboratory) before it will entertain a petition seeking removal of the food from import alert. Consequently, every one of those later shipments will be subject to FDA fees for virtually every keystroke on the government’s big import computer. In addition, the foreign manufacturer must pay FDA a fee to review a petition seeking removal from import alert.

When a food is on FDA import alert, the Agency still must determine that the specific, automatically-detained shipment appears to violate the FDCA because of “other information”; and expressly not an examination of a sample. Therefore when read in context, the first examination and all subsequent re-examinations must pertain to a specific food shipment. Under the plain meaning of the amendment, FDA can only assess a fee for re-examining an imported food shipment when the Agency has initially examined a sample from that specific shipment. Examinations from previous entries should not be relevant for determining if an importer must pay a fee.

These changes will dramatically increase the costs imposed on food importers and likewise, consumers.

Benjamin L. England is a former 17-year veteran of the FDA and served as the Regulatory Counsel to the Associate Commissioner for Regulatory Affairs.  Currently he is founder and CEO of FDAImports.com, LLC, a firm of consultants and affiliated attorneys practicing at the intersections of complex administrative law and regulations that impact international traders in highly regulated commodities.

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For more information contact Benjamin L. England and the FDAImports.com team at http://www.fdaimports.com, call(410) 740-3403 or contact Jon Barnes atjrbarnes@fdaimports.com.