Client Advisory

October 13, 2003

THE FDA PUBLISHES INTERIM FINAL RULES FOR FOOD PRODUCTS: REGISTRATION AND ADVANCE NOTICE PROCEDURES EFFECTIVE DECEMBER 12, 2003 FDA ANTICIPATES A 16% LOSS OF U.S. FOOD IMPORTS AS A RESULT OF BIOTERRORISM REGULATIONS

On October 10, 2003, the FDA published its interim final rulemaking for implementation of the Prior Notice and Facility Registration requirements under the BioTerrorism Act of 2002. The interim rules require that food facilities be registered with the FDA starting October 16, 2003 and that Prior Notice and registration numbers must be provided to the FDA for all arriving food articles on and after December 12, 2003. As part of its economic analysis of these new regulations, the FDA anticipates that 16% of foreign manufacturers will elect to stop supplying food to the U.S.

The interim rules are substantially different from the much-criticized rules published in February 2003, and must be carefully reviewed to assure that importers and their suppliers are in compliance. While the interim rules address many objections raised by the trade community, the FDA still anticipates that 16% of foreign manufacturers will elect to stop supplying food to the U.S. rather than comply with the new regulations. While these are interim regulations (comments will be accepted through December 23, 2003) and guidance to both CBP and FDA will provide transitional periods for enforcement, the law will require that governed facilities be registered with the FDA by December 12, 2003 and, on December 12, 2003, Prior Notice must be provided to the FDA for all arriving food articles Anticipating further criticism, FDA has announced it will implement its enforcement efforts in stages over a four-month period, and has invited additional comments by Christmas Eve (December 24 2003)...

Numerous changes are found throughout the interim rulemaking, including changes in definitions, exemptions and review procedures. Below are only some of the interim rulemaking highlights:

Highlights of Facility Registration Interim Rule:

• Facility registrations may be possible filed as of October 16, 2003 and must be accomplished by December 12, 2003 or prior to commencement of the activity requiring such registration by the facility.
• Food packaging, contact substances and pesticides are no longer included within the definition of "food" under the Act and, as such, these manufacturers and processors are not required to registered nor is Prior Notice required for these articles.
• Transporters holding food in the normal course of business are not required to register with the FDA.
• Foreign port storage and inspections facilities are required to register and, arguably, certain retailers may also now be required to register with the Agency prior to December 12, 2003.
• The interim regulations provide no further guidance as to who may serve as a U.S. Agent of foreign facilities other than that it may be an individual or a business residing or doing business in the U.S. who serves as a communications link between the FDA and the foreign facility. Representatives of foreign governments are discouraged from serving as a U.S. Agent.
• Notably, all facilities, even those without a U.S. Agent, may appoint a third party to register the facility with the FDA.

To ensure timely and accurate facility registration, please access www.strtrade.com and link to the FDA Food Facility Registration Program.

Highlights of Prior Notice Interim Rule:

• Prior Notice may be filed either through existing ABI systems or through FDA's new Prior Notice system. ABI will accept prior notice for T&Es and ITs, and for the first time, will require notice for food arriving at foreign-trade zones (FTZ).
• Prior Notice is not required for articles being exported directly from the Port of Arrival without ever leaving the Port (IE).
• The Prior Notice must be submitted 2 hours before arrival for articles arriving by land via road; 4 hours before arrival for articles arriving by air or rail and 8 hours before arrival for articles arriving by water. For international mail, Prior Notice must be submitted before the mail is sent.
• There is a distinction between a submitter and a transmitter. The Prior Notice submitter is responsible for accuracy and verification; the transmitter is the entity with whom the ABI system will communicate in terms of validation of Prior Notice submission. Anyone with knowledge may submit the Prior Notice and may appoint any other party to transmit that information to the FDA.
• Prior Notices may not be amended or updated and must include Planned Shipping Information.
• If a food article is refused at the Port, FDA/CBP will advise the carrier that the food has been refused and the carrier is responsible with communicating that information to additional parties.
• Refused articles will be considered and treated as general order merchandise. The articles may, however, be moved under bond to the Port of ultimate destination and the refused articles may be segregated from other items consolidated in a shipment.

Numerous other changes are found throughout this interim rulemaking. Definitions have changed, exemptions have changed and review procedures have been put in place.

To learn more about these regulations and how they may impact upon your business operations, please go to www.strtrade.com today and register for an upcoming seminar on the final rulemaking. You should also feel free to contact: