Qualified Exemptions and Modified Requirements (Produce Rule)

NOTE: This text has been updated to reflect changes in the proposed FSMA rules as of October 2014.

Background

No farm is exempt from the responsibility to produce safe food, but different scales and types of supply chains pose varying levels of risk to public health.  A farm that produces lettuce on a large scale that is shipped across the country and served to thousands of people in institutional cafeterias poses a different level of risk to public health than a farm that produces lettuce on a small scale to sell directly to a consumer at a farmers market.  The scale of production and consumption, the complexity of the supply chain, and the time and distance between harvest and consumption are all risk factors that can influence the safety of a food product and how many people get sick if the product is contaminated.

In writing the Food Safety Modernization Act (FSMA), Congress recognized that different scales of farming and different types of supply chains pose different risks to the safety of the food supply.  Congress required FDA to take a risk-based approach to the new regulations and to provide sufficient flexibility in the regulations to be applicable to a wide range of farms, including small businesses and farms that sell directly to consumers.  Instead of a “one-size-fits-all” approach to food safety, Congress required the Food and Drug Administration (FDA) to take into account differences due to scale and supply chain when writing the new food safety regulations.

One of the parts of this risk-based, scale-sensitive approach was a provision that set forth modified requirements for farms that both gross less than $500,000 in all food sales annually and sell the majority of their food directly to consumers or to grocery stores, institutions, or restaurants in-state or within a 275-mile radius.  The law allows for these farms – which FDA calls “qualified exempt” – to comply with less burdensome, modified requirements instead of with the full set of produce safety regulations.  Congress also stipulated that qualified exempt farms could have their status withdrawn under certain circumstances (see below).

Proposed Qualified Exemptions and Modified Requirements

In its proposed Produce Rule, FDA outlines the modified requirements for qualified exempt farms.  A farm is eligible for modified requirements through a qualified exemption if the farm:

  1. Has less than $500,000 in annual gross sales (adjusted for inflation) over a previous three-year period AND
  2. Sells the majority of the food directly to a “qualified end-user” (i.e., a consumer, or a restaurant or retail food establishment (e.g., a grocery store) that is located in the same state as the farm or not more than 275 miles from the farm).

The $500,000 threshold applies to the value of all food sales, not just sales of covered produce.  This includes sales of processed foods, hay, commodities like corn and soybeans, dairy, livestock, and produce.

Our “Who Is Affected?” page includes the full list of out-right exemptions and modified requirements in the proposed Produce Rule.

What the Proposed Standards Require

Under the proposed Produce Rule, qualified exempt farms are subject to three parts of the regulations:

  • General provisions,
  • Compliance and enforcement, and
  • Withdrawal of a qualified exemption.

General Provisions

This section of the proposed Produce Rule includes modified requirements for qualified exempt farms.  Under the modified requirements, a qualified exempt farm must include its name and complete business address on either a food packaging label on the produce, on a sign that is displayed at the point of sale with the produce, on documents delivered with the produce in the normal course of business, or an electronic notice in an internet sale.  These requirements apply only to produce that is covered by the regulations (for the list of covered produce, click here).

Compliance and Enforcement

Regardless of their status under FSMA, all farms – including qualified exempt farms – are prohibited through pre-existing law from selling adulterated food.  Food is considered to be adulterated under a number of circumstances, including if it:

  • “consists in whole or in part of any filthy, putrid, or decomposed substance, or if it is unfit for food; or
  • if it has been prepared, packed, or held under insanitary conditions whereby it may have become contaminated with filth, or whereby it may have been rendered injurious to health.”

It is extremely unclear in the proposed Produce Rule whether FDA is expanding the definition of when and how a food is considered adulterated, and whether, in doing so, FDA is also negating the option for a farm to be compliance with the regulations through the modified requirements.  If FDA is negating that option, then FDA’s change is a huge issue that contradicts FSMA.  We will provide more clarification on this issue once we receive more information.

The proposed standards also state that failing to comply with the Produce Rule is a “prohibited act” subject to penalties and enforcement actions laid out in pre-existing law, the Federal Food, Drug, and Cosmetic Act.

Withdrawal of a Qualified Exemption

FDA can withdraw a qualified exemption under certain broad circumstances:

  1. In the event of an active investigation of a foodborne illness outbreak that is directly linked to a qualified exempt farm; or
  2. If FDA determines that it is necessary to protect the public health and prevent or mitigate a foodborne illness outbreak based on conduct or conditions associated with the farm that are material to the safety of the covered produce grown, harvested, pack, or held on the farm.  (Also known as the “material conditions” clause.)

FDA did not establish a strong evidentiary standard for issuing a withdrawal order.  FDA also did not define key terms in the “material conditions” clause to clarify the situations that would lead to a withdrawal.  FDA has again declined to define these terms in the re-proposed Produce Rule.

The proposed rule laid out a procedure for withdrawal that includes issuing an order to withdraw the exemption.  FDA specified the type of information the order must contain, including a statement that the farm must comply with the full standards in the Produce Rule within 60 days after the date of the order.  The farm owner, operator, or agent receiving the withdrawal order must either comply within 60 days or appeal the order within 10 days of the notice.  In the re-proposed rule, FDA is now requesting comments on whether the farmer should have 120 days to come into compliance, which would mirror the Preventive Controls process, rather than the currently proposed 60 days.

The preamble of the revised proposed rule explains that FDA views the withdrawal as a last resort, and now provides explicitly in the regulations that:

  1. FDA may consider alternative actions before withdrawing a qualified exemption, including a warning letter, recall, administrative detention, suspension of registration, seizure, and injunction; and
  2. Before FDA can withdraw a qualified exemption, FDA must first provide notice in writing of the circumstances that may lead FDA to withdraw the exemption; provide the farmer with an opportunity to respond to the notification; and consider the actions taken by the farm to address the circumstances that may lead FDA to withdraw the exemption.

The revised proposed rule also establishes a process whereby a farmer can have a qualified exemption reinstated.  This is a significant improvement from the original proposed rule, which took a “one strike you’re out” approach.  Now, a qualified exemption can be reinstated if:

  1. The withdrawal resulted from the farm being directly linked to an ongoing foodborne illness investigation and the investigation concludes and determines that there was no direct link; or
  2. The farm resolves the conditions or conduct that caused FDA to issue the withdrawal, and withdrawal is no longer necessary to protect public health or prevent or mitigate a foodborne illness outbreak.

In the case of (1) above, FDA will reinstate the qualified exemption at its own initiative and notify the farm in writing that the exemption was reinstated. In the case of (2) above, FDA will reinstate the exemption at its own initiative or at the request of the farm.  If both (1) and (2) apply, then the farm must request the reinstatement.

If a farmer decides to appeal a withdrawal order, FDA outlines a procedure for submitting an appeal, which can include a request for an informal hearing.  FDA provides additional detail on the process for requesting an informal hearing and on the requirements applicable to that hearing.  FDA establishes a timeframe for a decision on an appeal.

Finally, FDA provides information about when a withdrawal order would be revoked.

FDA Needs to Hear from YOU About Qualified Exemptions and Modified Requirements

If you will be eligible for qualified exempt status, FDA needs to hear from you about how to improve the modified requirements, compliance and enforcement standards, and withdrawal provisions.

Here are some questions to guide your comments on this part of the proposed Produce Rule if you are eligible for the qualified exempt status:

  • How can the withdrawal process be improved?
  • What type of evidence of a problem should FDA include in a withdrawal order?
  • What information should should FDA include in the initial notice of intent to withdraw a qualified exemption?
  • Should the process for withdrawing a qualified exemption be the same across the Produce and Preventive Controls rules?
  • Are the timelines outlined in the withdrawal process feasible?  Should FDA allow 120 days to come into compliance instead of 60 days?
  • What type of documentation do you regularly keep that could be used to appeal a withdrawal order?
  • If you are happy with FDA’s decision to allow a withdrawn qualified exemption to be reinstated, be sure to say so in your comments!

How do I submit a comment to FDA?

Our step-by-step instructions show you how.

Additional Resources

 

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