[authors: Shannon Doyle Barna, Smitha G. Stansbury, and J. Michael Taylor, Washington, D.C.]

On November 27, 2015, the Food and Drug Administration (FDA) published the final rule on Foreign Supplier Verification Programs (FSVP) for Importers of Food for Humans and Animals under the FDA Food Safety Modernization Act (FSMA) (Final Rule).¹ The purpose of the Final Rule is to verify that food imported into the United States has been produced in a manner that meets applicable U.S. food safety standards. The Final Rule follows a proposed rule published in July 2013 (Original Notice), ² and a supplemental notice of proposed rulemaking in September 2014, which incorporated the first round of public comments (Supplemental Notice).³ While the Final Rule has a number of far-reaching implications for companies that import foods for human and animal consumption into the U.S., there are certain provisions that will be of particular interest to personnel with the day-to-day responsibility of working with U.S. Customs and Border Protection (CBP). This article highlights three key aspects of the Final Rule that will impact trade compliance personnel once importers are required to come into compliance with the new FSVP regulations, which will be as early as May 2017. 

A.    Summary of FSVP Requirements

The Final Rule requires importers to establish an FSVP to verify that the food they import into the United States is produced in compliance with FDA’s new produce safety and preventive controls rules,⁴ is not adulterated, and is not misbranded with respect to allergen labeling. Specifically, the Final Rule requires importers to conduct a hazard analysis to identify and evaluate the “known or reasonably foreseeable hazards” associated with each type of imported food to determine whether there are any hazards requiring a control.

Importers must then evaluate the risk posed by the food and each foreign supplier’s performance (e.g., information regarding the foreign supplier’s compliance with applicable FDA food safety regulations, responsiveness in correcting past problems, etc.) in order to approve their foreign suppliers, and to determine and conduct appropriate supplier verification activities. Although annual on-site audits of a foreign supplier’s facility generally are required when the foreign supplier controls the hazard, and there is a “reasonable probability that exposure to the hazard will result in serious adverse health consequences or death to humans or animals,” importers may engage in other verification activities so long as the alternatives provide adequate assurances that the foreign supplier is producing food in accordance with applicable U.S. safety standards.

Importers are required to establish and follow written procedures to ensure that they import food only from approved foreign suppliers. When necessary and appropriate, however, food may be imported from unapproved foreign suppliers on a temporary basis if the importer subjects the food to adequate verification activities prior to importation. Importers also must maintain certain records of their FSVP activities, periodically reevaluate foreign supplier performance and food risks, and take appropriate corrective actions when necessary.

Notably, the Final Rule contains a number of exemptions and modified requirements, and allows importers to meet some of their FSVP obligations by relying on the evaluations and activities performed by other entities in the distribution chain under certain circumstances.

B.     Key Points for Trade Compliance Personnel

1)      The “importer” for FSVP purposes may not always be the “importer of record” as defined by CBP

The Final Rule defines the term “importer” as follows:

[T]he U.S. owner or consignee of an article of food that is being offered for import into the United States.  If there is no U.S. owner or consignee of an article of food at the time of U.S. entry, the importer is the U.S. agent or representative of the foreign owner or consignee at the time of entry, as confirmed in a signed statement of consent to serve as an importer under this subpart.⁵

The Final Rule also clarifies that the term “U.S. owner or consignee” refers to “the person in the United States who, at the time of U.S. entry, either owns the food, has purchased the food, or has agreed in writing to purchase the food.”⁶

This definition of “importer” has been changed from the Original Notice, which defined the term as follows:

[T]he person in the United States who has purchased an article of food that is being offered for import into the United States. If the article of food has not been sold to a person in the United States at the time of U.S. entry, the importer is the person in the United States to whom the article has been consigned at the time of entry. If the article of food has not been sold or consigned to a person in the United States at the time of U.S. entry, the importer is the U.S. agent or representative of the foreign owner or consignee at the time of entry.⁷

FDA states in the Final Rule that it made the change to the definition of “importer” and added the new definition for “U.S. owner or consignee” in order to be more consistent with the underlying statute and to cover the “wide range of commercial arrangements between foreign owners and U.S. persons,” particularly the situation in which “ownership of imported food has not transferred from the foreign owner at the time of entry to the United States, but a person in the United States has nevertheless purchased or agreed in writing to purchase the goods.”⁸

Some parties submitting comments on the Supplemental Notice suggested that FDA adopt CBP’s broader definition of an “importer of record” for FSVP purposes. The Tariff Act of 1930 defines the “importer of record” as “the owner or purchaser of the merchandise,” or a person holding a valid customs broker license “when appropriately designated by the owner, purchaser, or consignee of the merchandise.”⁹ CBP has clarified, moreover, that for the purposes of defining the importer of record, the term “owner” and “purchaser” include any party with a financial interest in a transaction.¹⁰ CBP’s regulations state that the “importer” is primarily liable for the payment of any duties on the merchandise or an authorized agent.¹¹ For CBP’s purposes, however, the importer need not be a U.S. person.

According to FDA’s Final Rule, it is crucial that the importer “is a person who has a financial interest in the food and has knowledge and control over the food’s supply chain.”¹² Because a customs broker is unlikely to have control over the supply chain or knowledge of food safety practices, FDA states that having a customs broker serve as an “importer” would not serve the purpose of the FSVP regulations.¹³ FDA also requires that a designated “importer” be a U.S. person.¹⁴

Thus, companies currently relying on a customs broker or a non-U.S. person to serve as the importer of record for goods entering the United States will need to select another appropriate entity to serve as the “importer” for the FSVP regulations.

2)      FSVP importers must be identified for each food product line item when filing an entry with CBP

The Final Rule requires that importers be identified for each line item of food product when filing an entry with CBP.¹⁵ Specifically, the line entry must indicate the importer’s name and email address, as well as a “unique facility identifier recognized as acceptable by FDA, identifying you as the importer of the food.”¹⁶  These will become mandatory data elements for the entry filing process with CBP; FDA will issue additional guidance in the coming months with detailed formatting information for these data elements.  

In the Original Notice, FDA proposed that importers obtain a Dun & Bradstreet Data Universal Numbering System (DUNS) number for use as the unique facility identifier. While FDA has clarified in the Final Rule that a DUNS number would be an appropriate mechanism for identifying the responsible importer on the entry documents (and likely will be designated as the preferred mechanism), FDA now has conceded that it will accept other types of unique facility identifiers from companies that do not wish to obtain a DUNS number.¹⁷ FDA has not said which alternatives to the DUNS number it will accept, but it has committed to issuing guidance in the coming months on this point. Importantly, though, FDA has explained that a CBP importer of record number will not be appropriate as a unique facility identifier, because not all “importers” for FSVP purposes will necessarily be “importers of record” for CBP purposes (and thus FSVP importers may not have a CBP importer of record number).¹⁸ FDA also declined to use FDA registration numbers for importer identification purposes for the same reason.¹⁹

Companies that will serve as the importer for FSVP purposes will need to ensure that they have a unique facility identifier that is deemed acceptable to FDA. It will be important for importers to coordinate with their customs brokers when these requirements come into effect to ensure that each line item on the entry documentation corresponds with the correct importer identification.

3)      Certain products are exempt from FSVP requirements, but may require special reporting to CBP

Under the Final Rule, the following categories of imported food are exempt from the FSVP requirements:

·         Fish and fishery products, and certain ingredients for use in fish and fishery products in compliance with FDA’s Hazard Analysis and Critical Control Point (HACCP) regulations for those products;

·         Juice and certain ingredients for use in juice products in compliance with the relevant HACCP regulations;

·         Certain alcoholic beverages from registered facilities and certain ingredients for use in alcoholic beverages;

·         Certain meat, poultry, and egg products regulated by the U.S. Department of Agriculture at the time of importation;

·         Food imported for research or evaluation;

·         Food imported for personal consumption;

·         Food that is manufactured/processed, raised, or grown in the United States, exported, and returned to the United States without further manufacturing/processing in a foreign country;

·         Food imported for processing and future export that neither will be consumed nor distributed in the United States; and

·         Food that is transshipped through the United States.²⁰

Essentially, the Final Rule exempts certain foods that already are subject to another set of regulatory requirements, along with foods that are not intended to be distributed to the general public in the United States.²¹

If a company will be relying on the exemption for food that is imported for research or evaluation, the food must be labeled clearly with the statement “Food for research or evaluation use” at the time of entry, and the food must be imported in a small quantity that is consistent with a research, analysis, or quality assurance purpose.²² The entire quantity must be used for research or evaluation purposes; companies must dispose of any unused amounts.²³ In addition, an electronic declaration must accompany the CBP entry documents stating that the food will be used for research or evaluation purposes and will not be sold or distributed to the public.²⁴ FDA states in the Final Rule that it is requiring the electronic declaration, in part, so that “the designation for research and evaluation use is readily available to FDA during entry review of the food.”²⁵

The Final Rule does not require that an electronic declaration be filed with CBP upon entry into the United States for any food subject to the other exemptions from the FSVP requirements. Although some commenters have expressed concerns that the exemption for personal consumption may be abused (with food smuggled into the United States, allegedly for personal use, and then sold in retail facilities), FDA states only that it will take “appropriate action in response” to the extent that FDA becomes aware of any abuses of the personal consumption exemption.²⁶ It would not be surprising in the future if FDA and CBP began to require declarations for other foods falling within an exemption category that is contingent on the foods not being intended for consumption by the general public in the United States.

Finally, FDA makes clear in the Final Rule that food samples imported for trade shows are not exempt from FSVP requirements. FDA considers trade shows to be a method of sale and distribution to the general public. Thus, FDA feels that exempting these samples would be inconsistent with the broader intent of FSMA.²⁷ Companies, therefore, will need to be prepared to comply with all FSVP requirements for trade show samples.

C. Conclusion

The FVSP requirements will bring a number of changes to the way that companies importing food into the United States do business, even down to the way that food is reported to CBP at the time of entry. We anticipate that implementation guidance issued by FDA and/or CBP (e.g., with the enhancement of the Automated Commercial Environment (ACE) through a final rule expected to be issued by CBP this summer) will provide more clarity around these requirements in the coming year. 

Authors: Shannon Doyle Barna, Associate, Washington, D.C., +1 202 626 5607, sbarna@kslaw.com,
Smitha G. Stansbury, Partner, Washington, D.C., +1 202 626 2902, sstansbury@kslaw.com,
J. Michael Taylor, Partner, Washington, D.C., +1 202 626 2385, jmtaylor@kslaw.com.

¹ Foreign Supplier Verification Programs for Importers of Food for Humans and Animals; Final Rule, 80 Fed. Reg. 74226 (Nov. 27, 2015).
² Foreign Supplier Verification Programs for Importers of Food for Humans and Animals; Proposed Rule, 78 Fed. Reg. 45730 (July 29, 2013).
³ Foreign Supplier Verification Programs for Importers of Food for Humans and Animals; Proposed Rule; Supplemental Notice of Proposed Rulemaking, 79 Fed. Reg. 58574 (Sept. 29, 2014).
⁴ Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption; Final Rule, 80 Fed. Reg. 74354 (Nov. 27, 2015); Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventive Controls for Food for Animals; Final Rule, 80 Fed. Reg. 56170 (Sept. 17, 2015); Current Good Manufacturing Practice, Hazard Analysis, and Risk-Based Preventative Controls for Human Food; Final Rule, 80 Fed. Reg. 55908 (Sept. 17, 2015).
⁵ Final Rule, 80 Fed. Reg. at 74342.
⁶ Id.
⁷ Original Notice, 78 Fed. Reg. at 45773.
⁸ See Final Rule, 80 Fed. Reg. at 74238-74239.
⁹ 19 U.SC. § 1484(a)(2)(B).
¹⁰ See Customs and Border Protection, Customs Directive 3530-002A at ¶ 5.3.1, available at http://www.cbp.gov/sites/default/files/documents/3530-002a_3.pdf.
¹¹ 19 C.F.R. § 101.1.
¹² Final Rule, 80 Fed. Reg. at 74238.
¹³ Id. at 74239.
¹⁴ Note that while FDA states in the Final Rule that food may be refused admission to the United States if a U.S. agent or representative has not signed a statement of consent to act as an importer, FDA has stated publicly that the Final Rule does not require parties to submit this written consent at the time of entry. In other words, FDA may request to see a copy of the consent form from the importer as part of an inspection, but there will be no mechanism put in place to verify compliance with this requirement at the border. 
¹⁵ Final Rule, 80 Fed. Reg. at 74347.
¹⁶ Id.
¹⁷ Id. at 74299.
¹⁸ Id. at 74300.
¹⁹ Id.
²⁰ See id. at 74342-74343.
²¹ In addition to the exemptions, certain types of products (e.g., dietary supplements; food imported from certain small suppliers; food from a country with an officially recognized or equivalent food safety system) and certain entities (e.g., very small importers) are subject to modified FSVP requirements.
²² Final Rule, 80 Fed. Reg. at 74342.
²³ Id.
²⁴ Id.
²⁵ Id. at 74250.
²⁶ Id. at 74251.
²⁷ Id. at 74250-74251.