FSMA Files: Straight Talk from the Experts – All About Compliance

Welcome back to our FSMA Files column! This month, we’re focusing on questions we’ve received regarding FSMA compliance dates. These questions are timely, as FDA recently announced a delay in the compliance dates for the agricultural water requirements in the Produce Safety Rule. We’ve also fielded a number of questions about whether operations are considered farms or facilities and how to cancel a facility registration with the FDA.

Please keep your questions coming! You can send them to Tim Birmingham at tbirmingham@almondboard.com with the subject line “FSMA Files,” and we’ll be sure to address them in upcoming columns.

Question: When does FSMA compliance begin?

Straight Talk: Your FSMA compliance dates depend on the specific rule that applies to you. This is related to the size of your business and whether FDA has delayed any portions of the rule applicable to you. For example, FDA has delayed the compliance dates for the written assurance of commercial processing requirements in the Produce Safety, Preventive Controls and Foreign Supplier Verification Programs (FSVP) Rules and has announced plans to delay the compliance dates for the agricultural water requirements in the Produce Safety Rule. For a better idea of how different rules apply to different business, read on.

Explanation: Each FSMA rule has its own set of compliance dates. These dates vary based on the size of the operation, as defined under each rule. Generally, a “large business” is a business with more than 500 full-time-equivalent (FTE) employees. A “small business” is typically defined as fewer than 500 FTE employees. Each of the rules has its own definition of a “very small business,” which is based on food sales plus the value of food held without sale (see the next question below regarding these dollar amounts). In addition, due to various comments regarding implementation challenges, FDA has delayed the compliance date for certain components of the rules.

Specifically, FDA has announced plans to delay the compliance date for the agricultural water requirements in the Produce Safety Rule. The original compliance dates for these requirements were set to begin in January 2020 (but certain sampling would have had to begin sooner). FDA is exploring ways to simplify these requirements after receiving feedback from stakeholders that some aspects of the rules are too complex to understand and implement. FDA has not yet determined the new compliance dates, as “the length of the extension is under consideration.”

Other extended compliance dates address:

  • The requirement to obtain customer assurances for food that will be subject to further processing. Note that the original compliance dates remain in effect for the requirement to disclose that a hazard has not been controlled when relying on a subsequent entity to control the hazard.
  • Compliance with the Preventive Controls rules for facilities solely engaged in packing and/or holding activities conducted on nut hulls and shells. This extension covers almond brown skin facilities that only size, sort, grade or pack almonds, as well as facilities that only hull and shell almonds, as long as the facility does not engage in manufacturing or processing activities (i.e., chopping, grinding, mixing, roasting, pasteurizing, salting).
  • Compliance with the Preventive Controls rules for facilities that would qualify as “secondary activities farms” except for ownership of the facility. Facilities that meet the definition of “secondary activities farms” except for the ownership criterion can take advantage of an extension for compliance with the Preventive Controls rule if:
    • The operation is not located on the primary production farm;
    • The operation is devoted to harvesting, packing and/or holding of raw agricultural commodities (RACs) (including operations that hull, shell and/or dry nuts without additional manufacturing); and
    • The operation is under common ownership with the primary production farm that grows, harvests and/or raises the majority of the RACs harvested, packed and/or held by the operation. Examples of common ownership include:
      • An operation owned by (or that owns) one or more primary production farms (e.g., a packing house owned by a cooperative of individual farms)
      • Operations that are managed within the same business structure as the primary production farm (e.g., the farm and packinghouse are separate operations owned by parents and their children, respectively, and both operations are part of the same business jointly owned by the parents and the children)

In general, FDA has delayed compliance by two years in order to align the Preventive Controls rule compliance date with the Produce Safety rule compliance date for those facilities that can look to the Produce for compliance guidelines.

For specific compliance dates with each of the FSMA rules, please explore the resources available at almonds.com/processors/fsma.

Question: What is the definition of a “very small business” for the purposes of determining FSMA compliance dates?

Straight Talk: Each of the FSMA rules has its own definition of a “very small business”. “Very small businesses” are typically exempt from complying with the rule. Determining whether or not you qualify for this exemption is based on the dollar value of sales of human food plus the market value of human food manufactured, processed, packed or held without sale (e.g., held for a fee). There are baseline values set in each of the FSMA rules, but FDA will adjust these values over time due to inflation. Thus, the exact cutoff value will change from year to year. Basic guidance is provided in the table below.

Explanation: Each FSMA rule has its own definition of a “very small business” based on the value of food sales and food held without sale. “Very small businesses” are exempt from rule compliance due to their size, as defined by sales. The rationale is that these operations do not have the resources to comply with the rule and exempting them represents a low risk to the food supply. Because the compliance obligations and risks are different from rule to rule, the sales values that determine the definition are different as well. An operation must review the definitions in each FSMA rule to determine whether it meets the definition and to determine its compliance date.

FDA will adjust the baseline values established in the regulations for inflation at the end of March each year. To do this, FDA will use the federal calculation for the gross domestic product price deflator, provided by the Bureau of Economic Analysis. Below we provide a table with the average three-year inflation-adjusted values for the FSMA rules, which are the values that need to be taken into account when determining whether an entity meets the very-small-business-related definitions under the various FSMA rules as of 2017.

By way of example, the Preventive Controls for Human Food definition of “very small business” includes a threshold of an average of “less than $1 million, adjusted for inflation, per year, during the 3-year period preceding the applicable calendar year in sales of human food plus the market value of human food manufactured, processed, packed or held without sale (e.g., held for a fee)” (emphasis added). Using the inflation-adjusted values provided by FDA, in 2017 a facility’s average annual income now would need to be below $1,065,291 to qualify as a “very small business.”

FSMA Inflation-Adjusted Cut Off Values

 

Regulation and Definition

 Baseline Value for Cut-offs (2011)

Average 3-Year Value for 2014 - 2016 

Preventive Controls for Human Food: “Very Small Business”

 $1,000,000

 $1,065,291

Preventive Controls for Animal Food: “Very Small Business”

 $2,500,000

 $2,663,227

Produce Safety Rule: “Qualified Exemption”

 $500,000

 $532,645

Produce Safety Rule: “Not Covered Farm”

 $25,000

 $26,632

Foreign Supplier Verification Programs: Human Food: “Very Small Importer”

 $1,000,000

 $1,065,291

Foreign Supplier Verification Programs: Animal Food: “Very Small Importer”

 $2,500,000

$2,663,227 

Sanitary Transportation of Human and Animal Food: “Non-covered Business”

 $500,000

$532,645

Intentional Adulteration: “Very Small Business”

 $10,000,000

$10,652,906 

 

Question: If my farm is registered with FDA, but based on the new definition of a “farm” I am not required to register it, what should I do?

Straight Talk: If your operation was previously registered with FDA, but now no longer needs to be registered, you should cancel the registration.

Explanation: Operations that meet the definition of a farm do not need to register with FDA. If your operation was registered, but now meets the definition of a “farm” under the new regulations, you should cancel your registration. You should go online to FDA’s facility registration portal and cancel your registration electronically (through https://www.access.fda.gov/). Alternatively, you can cancel your registration by paper (mail or fax). This form is available here: https://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Forms/UCM072017.pdf. You will be asked to provide information such as registration number, facility name and address.

This column was prepared by Elizabeth Fawell and Maile Hermida, who are lawyers with Hogan Lovells US LLP in Washington, DC. The FSMA Files column is provided for informational purposes only and does not constitute legal advice.

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