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FSMA Archive

FDA Changes Produce Safety Regulations to Exempt More Small Farms

November 19, 2014

by Lauren Handel

In late September 2014, FDA issued revised versions of its proposed produce safety regulations under the Food Safety Modernization Act (FSMA). Of particular relevance to farms with small produce operations, the revisions significantly change which farms would be covered by or exempted from the rules.

As initially proposed, the Produce Safety Rule would have exempted any farm with total food sales of not more than $25,000 on average, per year during the previous three years. Thus, a farm with very small fruit and vegetable sales of $25,000 or less annually would not have qualified for the exemption if its combined annual sales of produce and all other foods (such as grains, dairy, meat or processed foods) exceeded $25,000. In response to criticisms that the rule would have served as a disincentive for diversification of farming operations, FDA has revised the exemption criteria so that only produce sales are counted toward the $25,000 limit.

Similarly, FDA has proposed to count only produce sales, rather than sales of all food, in determining whether a farm is a “small business” (defined as having average annual produce sales not exceeding $500,000) or “very small business” (defined as having average annual produce sales not exceeding $250,000). Under FDA’s proposal, small businesses and very small businesses will have three years and four years, respectively, to comply with the final Produce Safety Rule after it takes effect, whereas all other covered farms will have only two years to comply.

While these revisions make good sense, they do not go as far as some commenters had hoped in that all produce sales, and not just sales of “covered produce,” will be counted in the dollar limits. A covered farm is subject to the Produce Safety Rule’s requirements only with respect to its “covered produce” operations. Covered produce is, generally, fruits and vegetables that are likely to be consumed raw and that will not undergo a kill-step in processing. Thus, for example, a farm that sells less than $25,000 per year of leafy greens and tomatoes (covered produce) will have to comply with the Produce Safety Rule with respect to the greens and tomatoes if it also sells enough potatoes (not covered produce) to bring its total annual produce sales above $25,000.

FDA’s revisions also do not satisfy critics who argued that the eligibility criteria for the qualified exemption (known to many as the Tester-Hagan Amendment) should, likewise, be based on sales of produce or covered produce, rather than sales of all food. Under the Tester-Hagan Amendment, a farm is eligible for a conditional exemption from most requirements of the Produce Safety Rule if its total food sales are less than $500,000 on average, per year, and more than half of its food sales are directly to consumers and/or to restaurants or food retailers located in the same state or not more than 275 miles from the farm. While it would be logical to base eligibility for this qualified exemption on produce sales, rather than sales of all food, FDA cannot make that change unless Congress amends the FSMA statute.

FDA’s revisions also make significant changes to the Produce Safety Rule’s requirements for water quality testing, the use of raw manure soil amendments, and the process for withdrawing and reinstating a farm’s qualified exemption. As these rules will have an enormous impact on covered farms, it is critical that farmers understand what the regulations will require and participate in the rulemaking process. I encourage farmers to read the proposed Produce Safety Rule, as well as the revisions. Interested parties may submit comments on the revisions to FDA by December 15, 2014.

Legal Tools for Food Hubs, Part 3: Planning to Minimize the Burdens of FSMA

April 11, 2014

by Lauren Handel

Food hubs and the farmers who supply them will be significantly impacted by the new regulations FDA is promulgating under the Food Safety Modernization Act (FSMA) — in particular, the rules relating to produce safety and preventive controls. The rules are only in draft form now, and new drafts are due to be released this June. So it remains to be seen exactly how the exemptions will be defined. We will be looking closely at what changes, if any, are made to the exemptions for small businesses. Businesses that might qualify for the exemptions also should pay attention and plan ahead to minimize their regulatory burdens to the extent possible.

Under both the preventive controls and produce rule, businesses will be exempt from all or most requirements if their annual food sales are below certain dollar amounts. Both rules provide a qualified exemption from most of the requirements if a business’s average annual food sales are less than $500,000 and if the majority of its sales are direct to consumers or to local retailers or restaurants. The preventive controls rule also provides a qualified exemption for “very small” businesses, meaning those with annual food sales less than $250,000, $500,000 or $1 million (FDA has not yet decided which limit to use). Also, if a farming business’s annual food sales do not exceed $25,000, it would be completely exempt from the produce rule.

What food sales count toward these limits differs under the two rules. For the preventive controls rule, all food sales of affiliated companies count. In other words, all food sales of separate food processing or handling facilities under common ownership or control will be counted toward the exemption limit. In contrast, for purposes of the produce rule exemptions, the relevant food sales are those of a “farm,” which is defined as a physical place. Thus, as the produce rule is currently drafted, a farming business with multiple farms in different locations might qualify for an exemption on one farm, but not another, depending on the relative food sales from each farm.

When the rules are finalized, small food and farming businesses should consider whether they can structure their businesses or operations to avoid taking on more of a regulatory burden than necessary. It may be possible for a food hub enterprise to keep various parts of the operation under separate ownership and control so that their total food sales will not be aggregated for purposes of determining whether any one facility is exempt from the preventive controls rule. Similarly, a farming business with more than one farm location should consider the exemption criteria when planning what crops to plant on each farm. Of course, such considerations will have to be weighed against business needs and practical concerns.

We will be monitoring this issue as the FSMA rules continue to take shape. If you would like to discuss strategies you might employ in your small food or farming business to plan ahead for FSMA, feel free to contact me or Jason at (888) 908-4959 or info@foodlawfirm.com.