Naples, Florida March 19, 2018 - PowerPoint Presentation

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Naples, Florida

March 19, 2018

NPA Annual Meeting

Public Policy in the Land of Oz

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Hogan Lovells

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Unprecedented Political EnvironmentLegislative Stalemate

Focus on Deregulation

But Some Must Pass Legislation

Some Regulations Mandated by Law

Stalemate and Lack of Consensus Won’t Stop Regulators from Regulating

Introduction

O

Otto von Bismark

“No Man Should Know How Laws or Sausages Are Made.”

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Hogan Lovells

White House, Senate, House Controlled by Republicans

But Majority Very Slim

And Divisions within Parties

Complicated by Procedural Rules

Filibuster in Senate

Hastert “Rule” in HousePresidential Veto

Political Environment

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Hogan Lovells

White House, Senate, House Controlled by Republicans

But Majority Very Slim

And Divisions within Parties

Complicated by Procedural Rules

Filibuster in Senate

Hastert “Rule” in HousePresidential Veto

Political Environment

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Hogan Lovells

Senate100 Senators

(Vice President votes in case of a tie)

47 Democrats

51 Republicans

2 Independents

House

435 Members238 Republicans193 Democrats0 Independents4 Vacancies

Congressional Make-up

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Hogan Lovells

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Among the 33

Senate

seats up for regular election in 2018 are 23 currently held by Democrats, two by independents who

caucus with the Senate Democrats

, and eight by Republicans.

One Senate

seat in Minnesota held by a Democratic interim appointee is also up for election.Senate

Midterm Elections

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Hogan Lovells

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As

of February 2018, the Republican Party is in the majority, holding 238 seats to Democrats' 193 seats, with four seats being vacant. The Democratic Party is well-positioned to gain seats in the chamber in 2018; since 1934, the party of a newly elected president has suffered an average loss of 23 seats in the House in the following midterm

.

House

Midterm Elections

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Hogan Lovells

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Continued Debate but Uncertain ActionImmigration ReformTax Bill “Fixes” (Coops)

Must Pass [Even if as Continuing Resolution or Extension]

2018 Appropriations

2019 Appropriations

Farm Bill

Likely Legislative Activity

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Hogan Lovells

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Deregulation Executive OrderTwo rescinded for each new regulation

Equal economic impact

Food Safety Modernization Act Implementation

State Initiatives

Some preempted by Federal Law (e.g., Vermont GMO)

Others continuing implementation (e.g., California Proposition 65)

Regulatory Activity

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FDA has issued 7 final rules:

Preventive Controls for Human FoodPreventive Controls for Animal Food

Foreign

Supplier Verification

Program (FSVP)

Food Defense/Intentional Adulteration

Sanitary Transportation of Food

Produce SafetyAccreditation of Third-Party Auditors

Status of FSMA Implementation

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Creates new regulations requiring facilities to develop and implement food safety plans (based on HACCP principles)

Hazard analysisPreventive controlsManagement components

Monitoring

Verification (including validation and testing)

Corrective

actions

ReanalysisSupplier verification

Preventive Controls Qualified Individual Modernized current Good Manufacturing Practices (cGMPs)All required documents (under Food Safety Plan) accessible for FDA review during inspections

Preventive Controls for Human Food

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Human food by-products diverted to animal foodFollow human food requirements up to diversion

Follow certain holding and distribution GMPs for diverted by-products that focus on holding the food under conditions to protect against contaminationThe full animal food

GMPs

and Preventive Controls would apply to any by-products subject to further processing by the food manufacturer (heat, drying, pelleting)

Manufacturers

of animal food need

to:Follow new GMPs for animal food

Implement food safety plans, just like preventive controls for human foodPreventive Controls for Animal Food

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Applies to “importers” of food to the U.S.

“Importer” = the person in the U.S. who owns, has purchased, or has agreed to purchase the food at the time of entryImporter must scrutinize the food safety programs of their foreign supplier to confirm that the food they are importing is safe

Requires “verification activities” to be conducted by the importer or a third-party, based on a risk evaluation that considers both risks associated with the food and the supplier

E.g., audits, testing, review of food safety records

All activities must be documented and subject to FDA review

“Deemed compliance” if the ingredient already is subject to supplier verification under the Preventive Controls rule

Foreign Supplier Verification Program

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Hogan Lovells

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Purpose: To protect food from intentional acts of adulteration where there is an intent to cause wide scale public health harm

Requires facilities to

conduct

a written vulnerability assessment to identify significant vulnerabilities

and actionable process steps

Then, implement mitigation strategies for actionable process steps, as appropriate

Implement food defense-specific management components (monitoring, corrective actions, verification)Focus is on bulk liquid receiving and loading; liquid storage

and handling; secondary ingredient handling; and mixing and similar

activities

Compliance date: July 26, 2019

Industry has raised concerns with the regulation

Intentional Adulteration (Food Defense)

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Establishes good transportation practices applicable to all transportation operations by motor or rail vehicle

Sets more specific obligations for shippers, loaders, carriers, and receivers in their respective roles

Important role for written agreements/contracts

FDA

is particularly focused

on:

Bulk cargoTemperature control for safety General maintenance of appropriate sanitary conditions

Exemptions include:Any transportation by farmsFully packaged food that does not require temperature control for safety Sanitary Transportation of Food

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For the first time, FDA has established basic food safety requirements for farms that are growing produce

(1) Worker Training and Health and Hygiene; (2) Agricultural Water; (3) Biological Soil Amendments; (4) Domesticated and Wild Animals; (5) Equipment, Tools, and Buildings; and (6) Sprouts

Applies to

almost all

produce,

except:

Produce subject to a kill step through commercial

processing (e.g., nuts that will be roasted), so long as certain documentation is keptSpecific commodities rarely consumed raw (e.g., potatoes) Produce Safety

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Would create an auditing system for importers

using the Voluntary Qualified Importer Program (VQIP) or for imports that must be accompanied by Mandatory Import Certification (MIC)MIC: Requirement for import certifications for high

risk food

imports,

as determined by FDA where foreign regulatory system is deemed

inadequate

FDA has suggested such a determination will be infrequentVQIP: “Fast lane” for certain low risk imports (narrow scope

)Only likely to affect companies that are interested in VQIP participationVQIP starts in October 2018Accreditation of Third Party Auditors

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Hogan Lovells

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Most of the compliance dates have passed March

19,

2018 is compliance

date for conducting supplier verification for a supplier that is a small business (<500 FTE employees company-wide)

FDA started conducting Preventive Controls and FSVP inspections in 2017

Supplier verification (Preventive Controls Subpart G) inspections also have started, apparently, but few companies have had them yet and FDA has not shared any trends or highlights

Inspections & Enforcement

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Planned 450 modernized GMP inspections; did 450+

Focus

on RTE foods with a high risk of allergens and/or pathogens

Preventive Controls inspections

:

Planned 300 (240 domestic/60 foreign); completed 115, 24 in progress; includes 32 foreign

77 “No Action Indicated” (NAI); 28 “Voluntary Action Indicated” (VAI); 10 “Official Action Indicated” (OAI)Inspectors reporting it takes 60 – 67 hours to conduct a PC inspection

FSMA PC Inspections – FY2017

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Hogan Lovells

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So far, FSVP inspections

are very easy

going

Primarily conducted by district-level import staff

Typically pre-announced and only last a few hours

FDA will let you know the line entry they’re focused on and may even send a list of the records that they’ll requestNo Warning Letters issued (as of mid-October 2017)

138 issuances of Form 483a Most common observation is failure to develop an FSVP and/or maintain adequate documentation FY 2017: Planned 325 inspections; conducted 290FY 2018: Planning for 2275 FSVP inspections!

FSVP Inspections – FY2017

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California’s Proposition 65

State law adopted in 1986

Requires the state to revise and republish at least once per year the list of chemicals known to the State to cause cancer or reproductive toxicity

Over 900 chemicals listed

Consumer rights-to-know: requires a warning/notice in instances when a product contains a listed chemical

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Proposition 65 Warning for Foods

WARNING: Consuming this product can expose you to chemicals including

acrylamide, which is known to the State of California to cause

cancer.

For more information go to www.P65Warnings.ca.gov/food.

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Enforcement

State can sue to enforce warning requirements

Bounty hunter provision allows private parties to bring a law suit (and get paid)

Private parties have sued retailers and manufacturers for selling snack foods that did not provide warning of presence of acrylamide

Lawsuits usually result in consent decree settlements

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Glyphosate

Effective July 7, 2017

, Prop 65

listed glyphosate as a carcinogenic

chemical under the Proposition 65

The

compliance date for Proposition 65 warning regarding

glyphosate – containing products

is

July 7,

2018

Monsanto, the producer of Roundup, is challenging the Prop 65 listing of glyphosate through litigation on the basis of First Amendment

Preliminary injunction enjoining the warning requirements for glyphosate until full trial on merits (listing is still effective)

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Safe Harbor Exemption

No

Proposition 65 warnings are required if the businesses can establish the level of

a listed

chemical in the products would result in a dietary intake level that is within a “safe

harbor”

OEHHA

proposed

a No Significant

Risk Level

(NSRL) of 1,100

μg

per day for glyphosate

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NPA’s Glyphosate Testing

The major sources of glyphosate in food products include grains such as barley, oats,

and wheat

Conduct testing for glyphosate residues can:

Help NPA members proactively assess Prop 65 enforcement risks

Help NPA members better communicate with retail customers on the need for Prop 65 warning

Task Force is working on product categories to be tested and contractual labs

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Proposed Rule on Added SugarsGuidance for Industry: Scientific Evaluation of the Evidence on the Beneficial Physiological Effects of Isolated or Synthetic Non-Digestible Carbohydrates Submitted as a Citizen Petition (21 CFR 10.30) (also online Q&A)

Draft Guidance for Industry: Declaration of Added Sugars on Honey, Maple Syrup, and Certain Cranberry Products

Guidance for Industry: Proper Labeling of Honey and Honey Product

Guidance for Industry: Reference Amounts Customarily Consumed: List of Products for Each Product Category

Guidance for Industry: Food Labeling: Serving Sizes of Foods That Can Reasonably Be Consumed at One Eating Occasion; Small Entity Compliance Guide

Gottlieb’s statement on nutrition labeling

FDA Nutrition Labeling

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Political Climate Uncertain (to say the least!)Mid-term Elections Will be Critical

Some Legislative and Regulatory Activity“Must Pass” billsRegulations mandated by statute

And Regulators will regulate, though constrained

Focus on FSMA Implementation, Farm Bill, Prop 65

Stay Tuned

Summary/Conclusion

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