NAMA’s Comments
to FDA re Reportable Food Registry
July 21, 2010
Division of Dockets Management (HFA-305)
Food and Drug Administration
5630 Fishers Lane, Room 1061
Rockville, MD 20852
Via Regulations.gov
Re: Docket No. FDA-2009-D-0260
Dear Sir/Madam:
The North American Millers' Association is the trade association representing the wheat, corn, oat and rye milling industry. NAMA’s 45 member companies operate 170 mills in 38 states and Canada. Their aggregate production of more than 160 million pounds per day is approximately 95 percent of the total industry capacity. NAMA would like to take this opportunity to comment on the “Draft Guidance for Industry: Questions and Answers Regarding the Reportable Food Registry as Established by the Food and Drug Administration Amendments Act of 2007” published in May 2010 (“draft guidance”).
We would like to take this opportunity to commend FDA for making much needed improvements to the reporting portal. The changes have made reporting more efficient and less burdensome for companies with multiple facilities. The enhanced ability to save and amend reports is very helpful for companies seeking to comply with the Reportable Food Registry (“RFR”) requirements. We also commend FDA for making staff available on a timely basis to assist impacted companies to interpret this complex statutory amendment.
In the draft guidance on the Reportable Food Registry, FDA stated that a “transfer to another person” within the meaning of section 417(d)(2)(B) of the Federal Food, Drug, and Cosmetic Act “occurs when the responsible person releases the food to another person” (see the agency’s responses to questions E.4 and E.5 in the draft guidance). In a Federal Register notice announcing the availability of the draft guidance, FDA noted that “transfer” was not defined by Congress, and asked for comment on whether FDA’s proposed interpretation of “transfer” is appropriate. In specific, FDA asked for comment on whether its interpretation of “transfer” should depend on a change of possession, ownership, or some other factor. We appreciate being given an opportunity to offer the following comments to FDA.
We believe that FDA’s proposed interpretation of “transfer” as stated in the draft guidance is not appropriate, in that it fails to consider whether there has been a change in ownership and control of a food (and, as discussed further below, whether there has been acceptance of the food by the receiving person). In the food industry generally (and in the milling industry specifically), it is common for there to be a change in the location of a food without a corresponding change in the ownership and control of that food. For example, a milling facility might store product in a third party warehouse under test-and-hold procedures, or a grain supplier might ship product to a milling facility for evaluation and potential acceptance. These types of arrangements are necessitated by the fact that many producers lack the capacity to store product on-site given high volumes of production. In neither of these examples would there be the change of ownership and control necessary to enable further distribution of a potentially adulterated food in interstate commerce. Without such further distribution, there would be no potential risk to public health. Yet in both examples FDA would require the submission of a report to the RFR, thereby unnecessarily burdening industry. It bears mention that those most affected by FDA’s proposed interpretation of “transfer” would be smaller businesses, as these are the least likely to have on-site storage capacity.
FDA’s proposed interpretation of “transfer” also fails to recognize and conform to commercial concepts and terminology. Although FDA proposes to conclude that a transfer occurs when a food is released to another person, it is not meaningful to speak of a release unless the receiving person has accepted the food. Notably, section 2-606 of the Uniform Commercial Code (“UCC”) states that “acceptance of goods occurs when the buyer. . . after a reasonable opportunity to inspect the goods signifies to the seller that the goods are conforming or that the buyer will take or retain them in spite of their nonconformity” (emphasis added). See Uniform Commercial Code, 2009-2010 Edition, at p. 150. Consistent with this standard, FDA should not deem a transfer to have occurred absent acceptance by the receiving person. Otherwise, FDA would be placing an undue reporting burden on an entity that has not accepted a food into its production facilities. As recognized by the UCC, it is common for a product (including food) to be shipped to a receiving person on the condition that if the food does not pass specified tests, it will be rejected. If rejected, it will be returned or rerouted at the shippers’ expense. In some instances that food can be rerouted or treated so that the adulteration is corrected and the food qualifies for the exception to the reporting requirement in section 417(d)(2) (assuming that the other criteria for applying the exception are also met). The receiving person should not have to take on the reporting responsibility for a food that was never accepted, and over which the receiving person lacks any control or right with respect to disposition.
In addition to failing to recognize accepted industry practices and terminology, FDA’s proposed definition of transfer threatens to yield illogical results, as evidenced by the agency’s response to question E.10 in the draft guidance. FDA proposes to conclude that, if a truck driver drops off a trailer full of product at a facility and drives away, then the facility is considered to have “held” the food and must report it – even if the receiving person never accepts ownership and control of the food because testing reveals that the food is not acceptable. Yet, if the driver is made to wait while the product undergoes testing and rejection, then presumably FDA would not consider the facility to have “held” the food, and no reporting would be required. These different outcomes make little sense, given that the only distinction between the two scenarios is whether the shipper undertakes the expense and inefficiency of having a driver sit idle. Furthermore, the distinction drawn by FDA does not take into account the fact that a shipment can be sent via rail, in which case the option of having a driver sit idle is unavailable. These types of results can be avoided if FDA interprets “transfer” to require not just a change in the location of a food from one facility to another, but also a change in its ownership and control.
We note that the interpretation of “transfer” that we propose is not new to FDA. The complexity of the “transfer” issue was made clear to FDA staff during public outreach sessions prior to the publication of first edition of the draft guidance. In recognition of this complexity, FDA staff stated during the outreach session held in Chicago on August 5, 2009 that a company could take into consideration whether it had total control of the products in a third party warehouse and whether title had transferred when determining whether a food has “transferred” for purposes of section 417(d)(2)(B). Thus, we are only urging FDA return to its initial interpretation of “transfer,” which incorporated consideration of the factors of ownership and control. Notably, the interpretation of “transfer” that we propose and that FDA initially considered is consistent with the dictionary definition of the term (Webster’s Deluxe Unabridged Dictionary, Second Edition, defines “transfer” as “to make over the legal title, right, or ownership of to another”).
We also note that our proposed interpretation of “transfer” would not result in any gap in FDA’s regulatory authority or in the protection of public health. Even if a food is deemed not to have been transferred, it must still meet other conditions to qualify for the exception from reporting provided in section 417(d)(2) (i.e., the adulteration must have originated with the responsible party, and the responsible party must have correct the adulteration or destroyed or caused the destruction of the food). Otherwise, the failure to submit a report to the RFR would constitute a prohibited act.
In conclusion, NAMA urges FDA to interpret “transfer” to include consideration of whether there has been acceptance of a food by a receiving person, and a corresponding change in ownership and control of that food. That interpretation is consistent with both the dictionary definition of the term and common usage of the term in industry. It would also facilitate the maintenance of longstanding commercial arrangements that are designed to maximize efficiency and productivity, particularly for smaller businesses, without diminishing FDA’s authority or ability to protect public health.
Thank you for your consideration of our comments.
Sincerely,
Mary Waters
President, North American Millers’ Association