Understanding FDA’s New FSMA Rule for Produce Farms – Part 1

From the National Sustainable Agriculture Coalition

http://sustainableagriculture.net/blog/produce-rule-analysis-part-1/

This is the first in a multi-part series analyzing FDA's recently released rule that sets standards for the growing, harvesting, packing, and holding of produce for human consumption (aka “the Produce Rule”). This first post addresses those farms that may be fully or partially exempt from the Produce Rule. The next post provides an overview of what's required of farms that must comply with the new rule.

Brief Background

The Food Safety Modernization Act (FSMA), signed into law in January 2011, authorizes the U.S. Food and Drug Administration (FDA) to take a preventive approach to food safety. This new approach includes the authority to establish first-time food safety requirements for farms producing fruits and vegetables, among other requirements for participants across the food supply chain.

Earlier this year, FDA finalized the Preventive Controls Rule, which governs food processing operations, which can include farms depending on the degree of value-added processing they are doing. Now, FDA has finalized the Produce Safety Rule, which sets food safety standards for farms to follow in an effort to minimize the risks of microbiological contamination that may occur during the growing, harvesting, packing, and holding fresh produce. These two rules are among seven major rules that span across the supply chain, from farms to transportation to processing to imports.

Not all farms will be subject to the new Produce Rule; some will be exempt from all requirements, some may be eligible for modified requirements. To understand whether the rules apply to a particular operation, it is important to start with some key definitions.

Which farms must comply and which are exempt?

The Produce Rule applies to covered farms doing covered activities on covered produce. Each of these terms has a specific definition in the Produce Rule. Therefore, if what you are doing on your farm does not fit these terms, then you are likely exempt from the rule.

A covered farm is one that annually grosses more than $25,000 in sales of produce, averaged across a rolling three-year period, and adjusted for inflation (with 2011 as the baseline year).

• This means that farms with $25,000 or less in annual gross produce sales (based on a rolling average of three years' worth of sales and adjusted for inflation), are not covered by the Produce Rule. This is referred to as the “de minimis” exemption.

A covered activity means growing, harvesting, packing, or holding covered produce on a farm. These definitions – of farm, harvesting, packing, etc – are the same for both the Preventive Controls Rule and the Produce Rule.

• This means that the rules only apply to activities within the definitions of “growing, harvesting, packing, and holding.” These rules do not apply to other activities on your farm (e.g. making cheese, or other value-adding processing activities), though those activities may be subject to other FSMA regulations, including the Preventive Controls Rule. See our post on the Preventive Controls Rule for a more detailed explanation of these terms.

Produce means any fruit or vegetable, and includes mushrooms, sprouts (irrespective of seed source), peanuts, tree nuts, and herbs. However:

• Produce does not include food grains — meaning the small, hard fruits or seeds of arable crops, or the crops bearing these fruits or seeds, that are primarily grown and processed for use as meal, flour, baked goods, cereals and oils rather than for direct consumption as small, hard fruits or seeds (including cereal grains, pseudo cereals, oilseeds and other plants used in the same fashion). Examples of food grains include barley, dent- or flint-corn, sorghum, oats, rice, rye, wheat, amaranth, quinoa, buckwheat, and oilseeds (e.g., cotton seed, flax seed, rapeseed, soybean, and sunflower seed).

Covered produce just means produce that is subject to these rules; so, produce that is in its unprocessed state, and is usually consumed raw.

FDA has provided a non-exhaustive list of covered produce, which includes:

Almonds, apples, apricots, apriums, Artichokes-globe-type, Asian pears, avocados, babacos, bananas, Belgian endive, blackberries, blueberries, boysenberries, brazil nuts, broad beans, broccoli, Brussels sprouts, burdock, cabbages, Chinese cabbages (Bok Choy, mustard, and Napa), cantaloupes, carambolas, carrots, cauliflower, celeriac, celery, chayote fruit, cherries (sweet), chestnuts, chicory (roots and tops), citrus (such as clementine, grapefruit, lemons, limes, mandarin, oranges, tangerines, tangors, and uniq fruit), cowpea beans, cress-garden, cucumbers, curly endive, currants, dandelion leaves, fennel-Florence, garlic, genip, gooseberries, grapes, green beans, guavas, herbs (such as basil, chives, cilantro, oregano, and parsley), honeydew, huckleberries, Jerusalem artichokes, kale, kiwifruit, kohlrabi, kumquats, leek, lettuce, lychees, macadamia nuts, mangos, other melons (such as Canary, Crenshaw and Persian), mulberries, mushrooms, mustard greens, nectarines, onions, papayas, parsnips, passion fruit, peaches, pears, peas, peas-pigeon, peppers (such as bell and hot), pine nuts, pineapples, plantains, plums, plumcots, quince, radishes, raspberries, rhubarb, rutabagas, scallions, shallots, snow peas, soursop, spinach, sprouts (such as alfalfa and mung bean), strawberries, summer squash (such as patty pan, yellow and zucchini), sweetsop, Swiss chard, taro, tomatoes, turmeric, turnips (roots and tops), walnuts, watercress, watermelons, and yams.

FDA has also established an exhaustive list of produce that is “rarely consumed raw.” This exhaustive list includes:

Asparagus; beans, black; beans, great Northern; beans, kidney; beans, lima; beans, navy; beans, pinto; beets, garden (roots and tops); beets, sugar; cashews; cherries, sour; chickpeas; cocoa beans; coffee beans; collards; corn, sweet; cranberries; dates; dill (seeds and weed); eggplants; figs; ginger; hazelnuts; horseradish; lentils; okra; peanuts; pecans; peppermint; potatoes; pumpkins; squash, winter; sweet potatoes; and water chestnuts.

This means that if you are only growing grain, then this rule does not apply to you because grain is not considered “produce.”

If you only grow produce found on FDA's list of “rarely consumed raw,” then this rule does not apply to you, because that is not considered “covered” produce.

If, however, you are growing both grains and covered produce, or both covered and not-covered produce, then these requirements would apply to the covered produce that you grow.

Additional Exemptions

In addition to the de minimis exemption and the exemption for produce that is rarely consumed raw, there are also exemptions for produce that:

1. is grown only for personal or on-farm consumption;
2. is not a raw agricultural product (e.g. produce that has been processed and is no longer in its natural state, in which case the Preventive Controls Rule may apply); or
3. is destined for commercial processing.

However, to claim the exemption for commercial processing, the processing must adequately reduce the presence of microorganisms of public health significance, and certain assurances and disclosures are required.

So, to recap: if you are a farm, and you grow, harvest, pack, or hold produce that is usually consumed raw but is not destined for commercial processing, and you exceed the $25,000 produce sales threshold, then you are not exempt from the new requirements. However, you still may not be required to comply with the full Produce Rule if you are a “qualified exempt farm” as explained below.

Qualified Exempt Farms

Some farms that exceed the $25,000 sales threshold may still be eligible for modified requirements as “qualified exempt” or “Tester-Hagan” exempt farms based on their size and market channels. This name comes from the amendment to FSMA championed by Senator Jon Tester (D-MT) and former Senator Kay Hagan (D-NC), which established alternative requirements for farmers selling primarily into local markets.

To be considered a qualified exempt farm and be eligible for modified requirements, you must meet certain criteria:

1. You have less than $500,000 in sales of all food (not just produce) based on an average of the previous three years and adjusted for inflation; and
2. Your sales to “qualified end users” exceed your sales to all other purchasers.

A qualified end user is the consumer of the food (an individual, not a business), or a restaurant, or a retail food establishment, that is located either in same State or same Indian reservation as the farm that produced the food, or not more than 275 miles from the farm.

If these criteria are met, then the farm is not considered a “covered farm” and is eligible for modified requirements.

So, to recap: a qualified exempt farm is one with combined sales of all farm food products (including animal feed, dairy, grains, produce, etc) that gross less than $500,000 annually (averaged across three years and adjusted for inflation) and at least 50.1 percent of those sales are direct to: a consumer through a CSA, farmers market or other direct marketing platform; a restaurant; or a retail food establishment (e.g., a grocery store) within the same state, or if not within the same state then within 275 miles.

A few examples:

• A farm sells $240,000 in grains to a grain mill for processing, and then also has a CSA that grosses $250,000 selling to members in the same state. The farm would be qualified exempt.
• If, however, the farm sells $250,000 in grain and $240,000 in produce, then the farm would not be qualified exempt, because the direct sales do not exceed the other sales.
• Now take a farm selling $475,000 in produce — $200,000 wholesale, $200,000 to a local restaurant, and $75,000 to a local grocery store. The farm is qualified exempt because the sales to qualified end users exceed the sales to other buyers, and the sales are below $500,000.
• If, however, the grocery store was in the next state over, and 300 miles away from the farm, then all the conditions would not be satisfied and the farm would not be qualified exempt because the grocery store would not be considered a “qualified end user.”

Modified Requirements

A farm eligible for modified requirements is subject to some but not all of provisions in the rule. A qualified exempt farm is subject to certain labeling requirements, and is also subject to the requirements regarding records, compliance and enforcement, and the withdrawal of a qualified exemption.

1. Labeling

If the produce requires a food packaging label, then the label “must include prominently and conspicuously on the food packaging label the name and the complete business address of the farm where the produce was grown.”

• Compliance timeline: If the packaging label is required, then the compliance date by which the proper label is required is January 1, 2020.

If the produce does not require a food packaging label, then the name and complete business address of the farm where the produce was grown must be “prominently and conspicuously” displayed on a label, poster, sign, placard, or documents delivered contemporaneously with the produce in the normal course of business. In the case of Internet sales, this could include an electronic notice. “Complete business address” means the street address or P.O. Box, city, state, and zip code for domestic farms.

• Compliance timeline: As opposed to the specificcompliancetimeline above for packaging labels, farms with produce that does not require a food packaging label have until their general compliance date to comply with these traceability requirements. Those general compliance dates vary by size of operation as follows:
  • Farms grossing no more than $250,000 in produce sales annually (based on a rolling three-year average) are considered very small businesses, and the general compliance date for very small businesses is four years from the effective date of the rule (so, four years from January 26, 2016).
  • Farms grossing no more than $500,000 in produce sales annually (based on a rolling three-year average) are considered small businesses, and the general compliance date for small businesses is three years from the effective date of the rule (so, three years from January 26, 2016).

2. Records

A qualified exempt farm must keep adequate records necessary to demonstrate that the farm satisfies the criteria for the qualified exemption (e.g. records that show the farm is below the sales threshold, selling more to qualified end users than not, and that the purchaser is a qualified end user).

• Compliance timeline: FDA expects farms that will be claiming the qualified exemption to begin keeping these records as of the effective date of the rule – 60 days after publication – or, starting January 26, 2016.

The farm must also keep a written record that reflects an annual review and verification of the farm's continued eligibility for the qualified exemption.

• Compliance timeline: Farms do not have to begin keeping this record until a year from the farm's general compliance date. As discussed above, that's four years from the effective date of the rule for very small businesses, and three years for small businesses.

These records that document status and annual verification do not have to be submitted to FDA, but they must be retained and made available upon request.

These records are subject to the same general requirements for all records kept under the Produce Rule: they must be detailed, accurate, legible, dated and signed or initialed by the person performing the documented activity; they can be stored offsite as long as they can be retrieved within 24 hours of request for official review; they can be written or electronic; they must be original or true copies; and they can be based on existing records.

Sales receipts retained to document the $500,000 threshold for qualified exempt farms do not need to be initialed, but they should be retained long enough to document the qualified exempt status for the applicable year, based on the rolling three-year average.

Note: Our next blog post will provide more details on records required of covered farms.

3. Compliance/Enforcement

Qualified exempt farms are subject to the same compliance and enforcement provisions as covered farms. The compliance and enforcement provisions of the rule state that “failure to comply with the requirements of [the Produce Rule] is a prohibited act under section 301(vv) of the Federal Food, Drug, and Cosmetic Act.” Committing a prohibited act is a federal offense, punishable by fines or incarceration.

It is important to note that – under existing law — putting adulterated food into interstate commerce is also a prohibited act, regardless of whether the farm is covered by the Produce Rule or not.

4. Withdrawal and Reinstatement of a Qualified Exemption

All farms eligible for the qualified exemption are also subject to the process and circumstances under which FDA may withdraw their qualified exempt status. An important change in the final rule from the original proposed rule is that FDA is not adopting a “one-strike-and-you're-out” approach. Rather, a farm that has a qualified exemption withdrawn may be able to have that exemption reinstated under certain circumstances.

Note: The following does not map out the processes in full detail, but provides an overview. If you are interested in the specifics, the regulations regarding the process begin here.

FDA can withdraw a qualified exemption in the event of an active investigation of a foodborne illness outbreak that is directly linked to your farm, or if they “determine [withdrawal] is necessary to protect the public health and prevent or mitigate a foodborne illness outbreak based on conduct or conditions associated with your farm that are material to the safety” of the covered produce your farm is growing, harvesting, packing, and holding.

However, it is worth noting that FDA has said repeatedly that they see the withdrawal of a qualified exemption as a last resort, and that they have many other tools at their disposal to prevent or mitigate a foodborne illness outbreak in the event a farm is linked to a foodborne illness investigation or has conditions or conduct that are material to food safety — and that they would rely on such tools and assist the farm in rectifying such problems prior to issuing an order to withdraw an qualified exemption.

The rule specifically states that before FDA can issue an order to withdraw a qualified exemption, FDA must:

1. Provide the farm owner or operator with a written notice of the circumstances that may lead FDA to withdraw the exemption;
2. Provide an opportunity for the owner or operator to respond, and
3. Consider the actions taken by the farm to address the circumstances that may lead FDA to withdraw the exemption.

FDA may also consider one or more actions to protect the public health rather than issuing an order to withdrawal, which include a warning letter, recall, administrative detention, seizure, or injunction.

The rules provide a detailed process, including timelines for responding to notices, information on appealing the order and requesting an informal hearing, when an order to withdraw a qualified exemption may be revoked, and a process for requesting that a withdrawn exemption be reinstated.

Reinstatement of a withdrawn exemption may occur in three possible ways, depending on the reason(s) why it was withdrawn:

1. In the case of conduct or conditions material to food safety: if FDA finds that the farm has resolved those issues and the withdrawal is not necessary to protect public health or mitigate a foodborne illness outbreak, then FDA can reinstate the exemption on its own initiative, or at the request of the farm.
2. In the case of an active foodborne illness investigation directly linked to the farm: if FDA concludes that the outbreak was not directly linked to the farm, then FDA will reinstate the exemption and notify the farm in writing.
3. If the withdrawal was based on a combination of the above scenarios, and FDA concludes that the outbreak was not directly linked to the farm, then FDA will notify the farm of this outcome, but the farm must request the reinstatement.

Whenever the farm requests the reinstatement, the request must be in writing, and must include data and information to demonstrate that any problems have been resolved, and that the withdrawal is not necessary to protect public health and prevent or mitigate a foodborne illness break.

If a qualified exemption is withdrawn, then the farm must come into compliance with the full requirements of the Produce Rule within 120 days. In our second post, we explore what those full requirements entail.

Considerations for Exempt Farms

Regardless of whether a farm is exempt or qualified exempt, each farm has a duty to take the necessary steps to minimize the risks of contamination on the farm and keep adulterated food from entering the food supply.

Moreover, certain buyers may require farms to demonstrate compliance with a food safety standard (like USDA GAPs or GroupGAP, for example) even if the farm is exempt from FSMA. As we discussed in our analysis of the Preventive Controls Rule, there is language in the rule that explains to buyers that they do not need to require more of their suppliers that are de minimis or qualified exempt farms than what FDA requires of them. However, buyers may still require their suppliers to undergo an audit before purchasing from them.

We have discussed audits and their role in FSMA implementation in earlier posts, and will explore the issue more in our next post as it relates to compliance expectations for covered farms.

Additional Information and Resources

The second post in this series explores the full Produce Rule requirements that covered farms must follow.

You can view the final regulations and the discussion of comments received on the proposed rule via the Federal Register or FDA's Produce Rule webpage.

You may also be interested in our analysis of the Preventive Controls Rule. Remember that some produce and non-produce farms that also do value-added processing may also be subject to the Preventive Controls Rule.

FDA will be following up on many issues in the final rule by developing guidance documents, which provide more explanation for the regulated industry (and regulators) to use in determining whether and how the final rules apply to a specific situation. FDA is accepting questions and suggestions as they begin to develop these documents. You can submit questions or recommendations to FDA here to assist them in identifying issues that will require further explanation.

In the near future, NSAC will be updating our website and “Am I Affected” flowchart to reflect the final rules, designed to help farmers, small food businesses – and the organizations that work with them – understand whether the FSMA rules apply to them and if so, what requirements apply.

You can also read our recent blog posts on FSMA implementation and appropriations issues to learn more.