Highlights of Broker Requirements in House-Passed Food Safety Bill

(Although the House has passed H.R. 2749, it is not yet in effect. Generally, in order for a bill to be implemented, identical versions of that bill must be passed by both the House and Senate, and then the bill must be approved (enacted) by the President.)

The following are highlights of the provisions affecting customs brokers of the House-passed version of H.R. 2749. Also included are certain provisions affecting importers and facilities that could involve brokers, as well as certain provisions whose impact (if any) on brokers is unknown.

(See ITT's Online Archives or 08/04/09 news, 09080415, for BP summary of the importer-specific requirements of House-passed H.R. 2749. See future issues of ITT for BP summaries of other aspects of the bill.)

Broker Registration

Brokers Would Need to Register and Submit Unique Facility Identifier

H.R. 2749 would require a customs broker, with respect to the importation of food, to be registered with the Health and Human Services (HHS) Secretary in a form and manner specified by the HHS Secretary; and to submit at the time of registration, a unique facility identifier for the principal place of business for which such person is required to register.

No fee. H.R. 2749 would not require customs brokers to pay a fee associated with this registration requirement.

Unique facility identifier. The HHS Secretary may, by guidance, and in consultation with the Commissioner responsible for U.S. Customs and Border Protection (CBP), specify the unique numerical identifier system to be used and the form, manner, and timing of its submission. Development of such guidelines would have to take into account the utilization of existing unique identification schemes and compatibility with customs automated systems, such as integration with the Automated Commercial Environment (ACE) and the International Trade Data System (ITDS), and any successor systems.

Cancellation of Broker Registration and Exemptions

The HHS Secretary would be able to cancel a customs broker's registration, after notice to the broker, if the broker's registration is not updated or otherwise contains false, incomplete, or inaccurate information.

However, H.R. 2749 provides that if the broker's registration is updated or corrected no later than seven days after notice of intended cancellation is provided to the broker, the HHS Secretary would not cancel the registration.

The HHS Secretary would also establish, in consultation with CBP an exemption from the broker registration requirements for importations for personal use, as well as have the authority to establish other exemptions.

(House-passed H.R. 2749 does not contain a provision providing for the suspension of a broker's registration for the knowing or repeated making of inaccurate or incomplete statements or submissions of information related to the importation of food. Such a provision was in the earlier House Energy and Commerce Committee version.)

Regulations on Broker Registration and Effective Date

Not later than 24 months after enactment, the HHS Secretary, in consultation with CBP, would be required to promulgate the regulations required to carry out the above broker registration requirements. H.R. 2749 also states that the broker registration requirements would take effect on the date that is 24 months after enactment.

Inspection of Broker Facilities and Records Upon Request

H.R. 2749 also states that every customs broker required to be registered with the HHS Secretary would be required, upon request of an officer or employee designated by the Secretary, to permit such officer or employee at all reasonable times to inspect the facilities of such person and have access to, and to copy and verify, any related records.

Misbranding/Prohibited Acts/Penalties

Misbranding for Failure to Register (Civil Penalty Exemption for Brokers)

H.R. 2749 would consider food misbranded under 21 USC 343, if it is imported or offered for import by an importer or customs broker not duly registered with the HHS Secretary.

However, customs brokers who violate Section 301 (Prohibited Acts, 21 USC 331) of the Food, Drug, and Cosmetic Act (FD&C Act) because of misbranding resulting from the failure to register would not be subject to civil penalties under section 303(f) of the FD&C Act.

3 New Prohibited Acts Related to Registration, Etc. (Civil Penalty Exemption for Brokers)

H.R. 2749 would amend Section 301 to include the following three food-related prohibited acts but would not subject customs brokers to civil penalties under section 303(f) of the FD&C Act for violating them:

submission of information relating to food that is required by or under section 801 (Imports & Exports) of the FD&C Act that is inaccurate or incomplete (including inaccurate or incomplete registration information or unique facility identifier);

the failure to submit information relating to food that is required by or under Section 801 (including failure to submit registration information or a unique facility identifier);

the failure to register with the HHS Secretary.

(Note that Section 301 already lists a large number of prohibited acts. The above would be newly added prohibited acts.)

New and Increased Civil Penalties for Violations Relating to Food

H.R. 2749 would amend section 303(f) of the FD&C Act to require that any person who violates a provision of section 301 (Prohibited Acts) relating to food would be subject to a civil penalty for each such violation of not more than $20,000 in the case of an individual, not to exceed $50,000 in a single proceeding; and $250,000 in the case of any other person, not to exceed $1,000,000 in a single proceeding.

"Knowing" violations. In addition,any person who knowingly violates a provision of section 301 (Prohibited Acts) relating to food would be subject to a civil penalty for each such violation of not more than $50,000 in the case of an individual, not to exceed $100,000 in a single proceeding; and $500,000 in the case of any other person, not to exceed $7,500,000 in a single proceeding.

Separate offense. Each violation and each day during which the violation continues would be considered a separate offense.

(Note that customs brokers would not be subject to certain civil penalties. See above.)

New Criminal Penalties for Violations Relating to Food

H.R. 2749 would amend section 303 (a) to require, among other things, that any person who knowingly violates paragraph (a), (b), (c), (k) or (v) of section 301 with respect to any food that is misbranded or adulterated would be imprisoned for not more than 10 years or fined in accordance with 18 USC, or both.

(Paragraphs (a), (b), (c) and (k) have to do with adulterated or misbranded food in interstate commerce. Paragraph (v) has to do with unsafe dietary supplements in interstate commerce.)

Refused Admission

New Reasons to Refuse Admission of Food

H.R. 2749 would provide for the following new reasons to refuse admission to imports of food:

if the requirements of Section 414 of the FD&C Act on Maintenance and Inspection of Records (21 USC 350c) were not complied with (including new food tracing system requirements - see below);

if an article of imported food were not incompliance with the certification requirements that the HHS Secretary would be able to establish for high risk foods, high risk countries, etc.

if an article of food were subject to a cease distribution order or recall; or

if the appropriate unique facility identifier that H.R. 2749 would require was not provided for imported food.

Detention/Seizure

Lower Threshold for and Longer Administrative Detention

H.R. 2749 would revise the administrative detention provisions in 21 USC 334(h) by:

lowering the standard for administrative detention to a "reason to believe that an article is adulterated, misbranded, or otherwise in violation of the FD&C Act" (from the current standard of "credible evidence or information indicating that such article presents a threat of serious adverse health consequences or death to humans or animals").

extending the maximum administrative detention period to 60 days (from 30 days)

extending the period from five to fifteen days for the FDA to terminate or confirm a detention order after an appeal has been filed.

Seizure Procedures

H.R. 2749 would revise the procedures for seizure in 21 USC 334(b) to state (new text is denoted by ):

The article, equipment, or other thing proceeded against shall be liable to seizure by process pursuant to the libel, and the procedure in cases under this section shall conform, as nearly as may be, to the procedure in admiralty; except that on demand of either party any issue of fact joined in any such case shall be tried by jury and except that, with respect to proceedings relating to food, Rule G of the Supplemental Rules of Admiralty or Maritime Claims and Asset Forfeiture Actions shall not apply in any such case, exigent circumstances shall be deemed to exist for all seizures brought under this section, and the summons and arrest warrant shall be issued by the clerk of the court without court review in any such case.

Certification for High Risk Food

Under H.R. 2749, the HHS Secretary may, as an additional entry condition for high risk food articles and countries, require that a qualified certifying entity provide a certification that the article complies with specified requirements of the FD&C Act. This certification could take the form of a statement. In addition, the Secretary would be required to provide, in coordination with CBP, for the electronic submission of certifications.

Program for "Safe" Food Importers Similar to C-TPAT

H.R. 2749 would permit the HHS Secretary to establish by regulation or guidance, in coordination with CBP, a program to facilitate the movement of food through the importation process under the FD&C Act if the importer of such food verifies that each facility involved in the production, manufacture, processing, packaging, and holding of the food has been determined to be in compliance with food safety and security guidelines that the HHS Secretary, in consultation with CBP, would develop.

This program for such "safe" importers would take into account, to the extent appropriate, other relevant Federal programs such as CBP's Customs-Trade Partnership Against Terrorism (C-TPAT). It is unknown whether customs brokers would be involved in this program.

Food Tracing System

After information gathering and pilot testing, the HHS Secretary would be required to issue regulations establishing a food tracing system that enables the Secretary to identify each person who grows, produces, manufactures, processes, packs, transports, holds, or sells such food in as short a timeframe as practicable but no longer than 2 business days. It is unknown if or how these regulations would affect customs brokers.

(See future issues of ITT for BP summary of the food traceability requirement.)

Facility Requirements

H.R. 2749 contains various requirements for facilities. Facilities are defined by statute to include any factory, warehouse, or establishment (including a factory, warehouse, or establishment of an importer) that manufactures, processes, packs, or holds food.

It is unknown if customs brokers who also act as holders of food, etc. would be subject to any of the facility requirements of H.R. 2749. These facility requirements include (partial list):

requiring facilities to register on an annual basis and paying a fee;

implementing certain preventive safety controls;

notifying the HHS Secretary if the facility has reason to believe an article of food is adulterated or misbranded in a manner that presents a reasonable probability of serious health consequences.

(See ITT's Online Archives or 07/31/09 and 07/30/09 news, 09073110 and 09073005, for BP summaries of the House passing H.R. 2749 and the House failing to pass H.R. 2749 under expedited procedures, respectively.

See ITT's Online Archives or 07/08/09, 07/02/09, 06/30/09, 06/26/09, and 06/25/09 news, 09070820, 09070210, 09063015, 09062625 and 09062515, for BP summaries of various aspects of the House Energy and Commerce Committee version of H.R. 2749.)

H.R. 2749 amendment in the nature of a substitute adopted by House available at http://www.rules.house.gov/111/SpecialRules/hr2749/111_substitute_hr2749.pdf

House Committee on Energy and Commerce short bill summary (dated July 2009) available at http://energycommerce.house.gov/Press_111/20090729/hr2749_floorsummary.pdf

House Committee on Energy and Commerce section-by-section bill summary (dated July 2009) available at

http://energycommerce.house.gov/Press_111/20090729/hr2749_sectionsummary.pdf