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WASHINGTON (March 4, 2003) — A new set of regulations proposed last month by the Food and Drug Administration aimed at combating bioterrorism could pose significant risks and penalties for domestic and foreign food manufacturers and processors that rely on cross-border distribution of food and beverages, cautions the homeland security practice group at law firm Venable LLP.

On March 4, the firm brought together over 70 senior commerce officials from more than 40 countries, including many of key US trading partners. Among the countries represented were Australia, Brazil, Canada, Denmark, Egypt, France, Germany, Honduras, Indonesia, Israel, Mexico, Thailand, and Turkey, as well as the Commission of the European Union.

The briefing provided countries information needed to help their commercial food exporters participate in the public comment period as well as prepare for the new FDA guidelines. These exporters face more cargo inspections and the possibility of administrative detention or destruction of goods because of noncompliance.

On February 3, the FDA proposed regulations requiring domestic and foreign food facilities that manufacture, process, pack, or hold food for human or animal consumption in the United States to register with the agency by December 12 of this year. Another regulation requires that importers provide "prior notice" of the arrival of food products into the US. Both regulations implement the Public Health Security and Bioterrorism Preparedness and Response Act of 2002.

Although foreign distributors will feel the greatest impact of the new regulations, they will also have substantial effects on US food and beverage companies that rely on imported ingredients, covering everything from beer to cookies to orange juice.

"The potential impact on the new FDA regulations is enormous for many of America’s key trading partners, which deliver vast quantities of food stuffs to the US each month," said Jim Jatras, partner in Venable’s legislation practice.

"We thought this briefing would be of critical interest to embassy commercial and economic officers, who are on the front lines for businesses in their countries exporting to the United States" he added. "Many foreign food manufacturers have never had to deal with FDA. It is likely that many have not heard about the new regulations — but by later this year they'll have to be in compliance with them." Mr. Jatras is a former senior policy analyst for the Senate Republican Policy Committee with an emphasis on foreign affairs and national security.

Cargo inspections, searches and penalties

David Dickman, a member of Venable’s homeland security practice who served over two decades in the US Coast Guard and is familiar with port and shipping security matters, described the possible consequences if companies do not register with the FDA or notify the agency when a shipment is coming into a US port. He noted that companies may not know how specific food products will be affected until the regulations go into effect.

Mr. Dickman also warned that any detainment or refusal of entry will affect the entire cargo load, including nonfood items. "This means US companies waiting on goods delivered by a container with unregistered food products could also suffer severe delays and face unforeseen costs associated with an FDA-ordered detention," he said.

Venable warned of other consequences for noncompliance. If a company does not register or provide adequate "prior notice," then any shipments will be held at the port of entry until complete information is given to the FDA. Moreover, the cost of detention would be borne by the purchaser, owner, importer, or consignee. Any detained or refused shipment also cannot be delivered under bond; rather, it must be held at the port, face re-export or be destroyed, adding to the disruption that could befall the food distribution system across the US.

Once the food reaches the US, the FDA will be there to inspect more aggressively than in the past. The new bioterrorism law provides the FDA with increased powers to inspect and detain food for further investigation. "The FDA has publicly announced that it has hired 650 new inspectors who are now undergoing training," according to Anne Keys, Venable’s food policy advisor.

The FDA has also publicly stated that it is conducting risk analyses to determine the places and types of products that are high bioterror targets. "Countries and their industries need to know more about these risk analyses, so that they now how to deal with real or perceived risks," added Ms. Keys.

An additional concern is how these new requirements will affect obligations on importers under existing trade agreements. "There has been insufficient consideration as to whether these new requirements will conflict with other U.S. trade obligations," noted Lindsay Meyer, partner in charge of Venable’s international trade practice.

For example, country of origin declarations under the North American Free Trade Agreement may not, in all instances, be consistent with these new reporting requirements for FDA.Moreover, "it remains an open question as to whether these requirements meet our obligations of national treatment under other trade agreements," added Ms. Meyer.

What is "food"?

The FDA will apply a broad definition of what food products could be covered under the new regulations. Under the "prior notice" rule, FDA defines "food" as: "(1) articles used for food or drink for man or other animals, (2) chewing gum, and (3) articles used for components of any such article." The agency also has created a list of products for particular scrutiny, including: fruits, vegetables, live food animals, dairy products, raw agricultural commodities for use as food or food ingredients, animal feed and even dietary supplements.

Even imported wines and spirits will now have to comply with the FDA regulations. "Until passage of the Bioterrorism Act and the FDA regulations mandated by it, most alcoholic beverages entering the United States were not under FDA jurisdiction. That has changed," Mr. Jatras said. "This is one example of a tighter regulatory climate for imports that will be even more restrictive as tensions rise in the international area and homeland security concerns intensify. This is the beginning of a process, not the end."

Other members of Venable’s homeland security practice who participated in the forum and are available for comment are:
  • Jill Deal, an attorney focusing on food and drug law, FDA approval and marketing of therapeutic products
  • Michele Crown, an attorney at Venable who handles FDA matters and former General Counsel of the American Meat Institute

For more information on these regulations or to speak with one of the attorneys listed above, please contact Venable.

One of the American Lawyer’s top 100 law firms, Venable LLP has attorneys practicing in all areas of corporate and business law, complex litigation, intellectual property and government affairs. Venable serves corporate, institutional, governmental, nonprofit and individual clients throughout the U.S. and around the world from its headquarters in Washington, D.C. and offices in California, Maryland, New York and Virginia.