Earlier this spring, the White House Office of Management and Budget (OMB) issued additional guidance for agencies on implementing Executive Order (EO) 13771, entitled “Reducing Regulation and Controlling Regulatory Costs.”  EO 13771 established the expectation that for every new regulatory action an agency issues, it must offset the cost of the regulatory action with two deregulatory actions. OMB’s guidance supplements the interim guidance the agency issued on February 2, 2017.

Like the previous guidance, OMB’s most recent guidance addresses how agencies should implement Section 2 of EO 13771, which concerns agency actions during fiscal year (FY) 2017. However, it also addresses Section 3(d), which established that for FY 2018 and subsequent years, the White House will set for each agency a total amount of incremental costs that will be allowed when it issues new regulations and repeals regulations for the next fiscal year. The new guidance defines key terms such as an “EO 13771 regulatory action” and “EO 13771 deregulatory action” and provides further clarification of the scope of the EO, how agencies should calculate cost, and addresses how the requirements  apply in particular circumstances.

OMB also recently issued a memorandum to the heads of executive departments and agencies that lays out the next steps agencies must take as a part of the comprehensive plan to reform the federal government and reducing the federal civilian workforce. OMB’s memorandum officially ends the federal hiring freeze implemented shortly after the Trump administration took office; however, the memorandum directs each agency to develop a long-term workforce reduction plan, in addition to making near-term workforce reductions and other measures to implement the government-wide reform plan, as discussed further below. We summarize the topics covered in OMB’s guidance and memorandum of most relevance to food and agriculture companies.

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On May 22, 2017, the Center for Food Safety (CFS), Breast Cancer Prevention Partners (BCPP), Center for Science in the Public Interest (CSPI), and Environmental Defense Fund (EDF), filed a complaint for declaratory and injunctive relief against the U.S. Food and Drug Administration (FDA) for the agency’s final rule regarding substances that are Generally Recognized as Safe (GRAS) for use in human and animal foods (the Final Rule). The Plaintiffs take issue with the voluntary nature of the GRAS notice program and allege the Final Rule is an “unlawful[ ] sub-delegation of authority,” an arbitrary and capricious agency action, and an abdication of statutory duty that violates the Administrative Procedure Act (APA) and the Federal Food, Drug, and Cosmetic Act (FFDCA).

By way of brief background, on August 17, 2016, FDA published the Final Rule to comply with a consent decree with CFS from another lawsuit that claimed the agency violated the APA by “indefinitely operating under a proposed rule in lieu of promulgating a final rule.”  The Final Rule clarified the criteria for when the use of a substance is GRAS and exempt from premarket approval requirements of the FFDCA for food additives. It also finalized the administrative procedure for any person to voluntarily notify FDA the basis of a conclusion that a substance is GRAS.

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The Trump Administration recently released its Fiscal Year (FY) 2018 budget request. The FY 2018 budget request is notable because it proposes dramatic cuts to both the Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA), among other agencies. Presidential budget proposals are at most a starting point – with Congress ultimately responsible for deciding what funds to appropriate – but often provide valuable insight into an administration’s priorities.

The FY 2018 budget request earmarks a total of $5.1 billion for FDA as a whole – an increase of $456 million or 10 percent above the funding provided by Congress in the FY 2017 Continuing Resolution. This increase, however, would consist of reducing FDA’s total budget authority by $854 million, while proposing an increase in user fees of $1.3 billion in non-food programs (which are unlikely to pass, as explained below).

The FY 2018 budget request proposes $137 billion to USDA, a decrease of $12 billion or 8 percent from an estimated $149 billion in FY 2017, and outlines plans to lower spending on USDA programs by roughly $230 billion over a decade. This memorandum discusses FDA and USDA’s plans for reducing expenditures as they relate to food safety.

As described in more detail below, the proposed FY 2018 budget calls for a sizeable reduction ($82.8 million) in FDA’s food safety program and a modest increase ($25 million) in the Food Safety and Inspection Services (FSIS) food safety program at USDA. Notably, no new user fees are proposed for either FDA or FSIS food safety budgets, although the USDA budget alludes to a desire for legislation authorizing user fees, as have past budgets.

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May 15, 2017, was the “stand up” day for the Food and Drug Administration’s (FDA) Office of Regulatory Affairs (ORA) new organizational structure under its Program Alignment initiative. The Program Alignment initiative began in 2013 as an effort to modernize and strengthen the agency’s workforce and to improve public health response. A key aspect of the Program Alignment initiative is a shift from the current geography-based district offices to program-specific “division” offices where staff are aligned by FDA-regulated product – i.e., there will now be distinct food-based offices, inspectors and labs and distinct medical products-based offices, inspectors and labs. This means that, over time, food companies will be inspected by individuals trained in food inspections, not drug or device inspections. This increase in specialization is intended to create a more proficient workforce and increase the efficiency of FDA operations.

With the change to program-specific division offices, some of the former district offices have been merged together. Practically speaking, this means that for some food companies, the contacts in their respective division offices may have changed. Other key changes under the Program Alignment initiative include a reorganization of the import program, state cooperative programs, and FDA’s field laboratories, and the creation of a Produce Safety Network. We have provided an overview of the key organizational changes at ORA that impact the food industry.

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The Court of Justice of the European Union (“CJEU“) has issued a ruling on the interpretation of Directive 2002/46/EC on food supplements, finding that a French law prohibiting the sale of food supplements from other EU Member States containing vitamins and minerals above French national limits is contrary to EU law.

The CJEU held that while individual Member States can set their own maximum vitamin and mineral levels for food supplements, the absence of a procedure for evaluating and authorizing food supplements lawfully marketed in other Member States that exceed those national limits means that the French law contravenes the EU principles of free movement of goods and mutual recognition.

The CJEU also confirmed that where an individual Member States sets its own national maximum vitamin and mineral levels for food supplements, those levels must be set on a case-by-case basis following a comprehensive risk assessment based on generally accepted scientific data, including international and not only national data.

The ruling is significant for food supplement companies in confirming that even where national limits are allowed to be set, these must be based on robust scientific evidence and cannot be used to automatically prevent products sold legally elsewhere in the EU from being sold in that national market. In the longer term, the ruling also highlights the need for harmonised EU maximum vitamin and mineral levels to be developed.

Read the full judgment here.

This blog post originally appeared on HL Focus on Regulation.

There will be significant changes at the U.S. border starting May 30, 2017, that will affect all imported FDA-regulated foods—even if they are exempt from the Foreign Supplier Verification Programs (FSVP) regulation under the FDA Food Safety Modernization Act (FSMA). All food imports will be rejected at entry unless certain new information is provided to FDA. We summarize these new data requirements below.

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On May 1, 2017, the Food and Drug Administration (FDA) issued an interim final rule (IFR) extending the compliance date for the final rule on menu labeling by one year, to May 7, 2018. FDA is also seeking comment on how FDA “might further reduce the regulatory burden or increase flexibility while continuing to achieve our regulatory objectives to provide consumers with nutrition information so that they can make informed choices for themselves and their families.” Interested parties affected by this rule should consider the comment period an opportunity to highlight for FDA specific requirements that are difficult to implement or otherwise unduly burdensome.

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The Food Safety and Inspection Service (FSIS) recently issued a notice instructing inspectors in establishments to collect data on the use of certain raising and other claims as a prelude to developing a field compliance testing program to verify that various approved claims are accurate based on product testing. The survey covers establishments that produce raw ground beef products, raw chicken parts, and ready-to-eat (RTE) products. Inspectors will complete a “Labeling Claims Questionnaire” to collect information on three types of labeling claims: 1) claims on raw ground beef products that hormones were not administered to the cattle; 2) claims for raw chicken parts that antibiotics were not used in the chicken production; and 3) soy-free claims on RTE products.  Claims of limited use of antibiotics for raw chicken parts are not included in the survey.

FSIS intends to use the information collected to conduct an exploratory sampling program to verify that such claims are accurate based on actual product testing. This notice also provides some insight on the types of claims FSIS has reviewed and approved for each of the categories of claims itis evaluating under this notice, as discussed further below.

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The Food and Drug Administration (FDA) recently issued a Notice that provides three types of waivers from the requirements of the Sanitary Transportation of Human and Animal Food rule  (Sanitary Transportation rule).  Specifically, FDA has made waivers available in specific circumstances for companies operating under the Pasteurized Milk Ordinance (PMO), food  establishments that provide food directly to consumers, and companies operating under the Interstate Shellfish Sanitation Conference’s National Shellfish Sanitation Program (NSSP). In the  Notice, FDA both expands and clarifies the scope of the waivers originally proposed in the Sanitary Transportation rule.

This Notice publishing the waivers is significant because it is the agency’s first substantive food related Federal Register notice issued under the new administration. This notice was not subject to Executive Order (EO) 13771 (i.e., the order establishing the “one in, two out” rule) because is purely deregulatory in nature and only confers savings to all affected parties, consistent with the Office of
Management and Budget’s (OMB’s) guidance on the EO. FDA explains the deregulatory nature of the waivers in the notice:

The issuance of these waivers is deregulatory in nature because they lessen the burden imposed on shippers, receivers, loaders, and carriers engaged in transportation operations without impairing  our ability to ensure the safety of food. The waivers will remove certain classes of persons from having to comply with the requirements of part 1, subpart O.

Below we provide an overview of the three different types of waivers from the Sanitary Transportation rule. These waivers became effective immediately upon publication of the Notice in the Federal Register. Note that the Sanitary Transportation rule is now in effect, as we have passed the April 6, 2017 compliance date for large companies.

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The Food and Drug Administration (FDA) recently issued a guidance document entitled Recognition of Acceptable Unique Facility Identifier (UFI) for the Foreign Supplier Verification Programs [(FSVP)] Regulation, which recognizes the use of Dun & Bradstreet Data Universal Numbering System (DUNS) numbers for identifying the FSVP importer to FDA when filing entry for imported food. This recognition was anticipated, having been forecast during the rulemaking. It is notable, however, because it serves as a reminder of the importance of ensuring the appropriate entity’s DUNS number is provided at entry given the significant responsibilities placed on the FSVP importer. Therefore, in addition to providing background on and a summary of FDA’s guidance, this post also discusses the significance of DUNS numbers for identifying the FSVP importer.

This new requirement takes effect as soon as May 30, 2017 for some imports.  DUNS numbers also will be required for imported food that is verified or further processed under the either of the Preventive Controls regulations.

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