A Farm Bill by the Boot Straps

By Charles W. Stenholm

After two years of not passing a Farm Bill out of the House, it should be obvious to everyone that Farm Bills, as we have known and passed them, are over.  This time around, a majority wanted to end direct payments; the Farm Bill did that.  Most Members wanted to make producers more dependent on crop insurance as a risk management program; the Farm Bill did that. Some wanted reform in the food stamp program; the Committee bill did that.  Some, but not all, of the other desired changes were included in the bill presented for final vote on the House floor.  Yet, instead of accepting victory and moving the bill to conference to actually enact these achievements, too many Members who supported these changes voted against final passage.  So, instead of reform, we are looking at continuing the policies of the past for perhaps another year.  How could this have happened?

We can and must reduce spending responsibly.  In fact, I do believe we can reduce spending beyond the levels recommended by the House Agriculture Committee.

If anything is clear, it’s that Congress needs to improve its work ethic (instead of going home for multiple recesses as it has just done, again!).  The House worked its will on dairy, but not on sugar – why?  All subsidies must be looked at with the same intensity. Congress had plenty of time, if they took it and used it wisely. Given the House Ag Committee held no hearings on farm or nutrition policy in the first six months of this year, it should come as no surprise why Committee leaders were unable to refer to expert testimony and the reasonable exchange of ideas to defend the Farm Bill proposals they were advancing.  Regarding the controversial Supplemental Nutrition Assistance Program (SNAP) in particular, I would recommend that the Committee hold in-depth hearings in July, September, October – until a consensus can be reached on how to reduce costs without taking food from children, old folks, and those who can’t help themselves.  More spending cannot, and must not, be the answer.

Now, there were some in Committee and on the House floor who argued that farm and food policy are not sufficiently linked, and should be divided and argued as two separate bills.  I would argue this approach to be unwise, even if it were plausible, which I don’t think it is.  The American farmer produces more food than any other producer in the world at the lowest price. Therefore, it makes sense for the policy that produces the most plentiful food supply at a price most people can afford to be the jump off point for linking farms with nutrition policy.

Farmers have had the benefit of research and sound science, and have used this consistent knowledge base for years, to produce in abundance to the benefit of the consumer. Some now argue that we should make some foods more expensive to discourage the consumption of those items they believe to be of limited nutritional value.  Most often, that argument comes from those who can afford to pay more for food. If someone on a low income budget is buying the food items that are affordable on their income, or affordable with SNAP benefits, what will happen to them if food prices increase?  The ongoing debate between the House, the Senate and the advocacy groups regarding the proper budget number for SNAP poses a significant question: Does anyone really believe the budget dollars and votes are there to pay for higher food prices? Furthermore, should they be there?

So, how do you make food cheaper? Food safety, labeling, and environmental requirements all cost money, as do wages and health benefits for workers in the food industry.  The food industry is not a non-profit, and if you try to make it one, then you push out the incentive for innovation.  Should those who are eligible for SNAP be restricted as to what they can buy?  Some say absolutely; others say such requirements would only make it more difficult and expensive to administer the program.

Perhaps a better question to ask is, who has done an evaluation of the nutrition education programs offered by SNAP, the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), school meals, etc?  Millions of dollars are spent each year on these programs.  If people aren’t making informed choices, then it is reasonable to question the effectiveness of these programs.

Research, technology and scientific discovery continue to enhance food safety and availability. But our agricultural research funding has been flat-lined while other countries increase theirs and pursue the markets we like to call “ours.”  This is of the upmost importance given our farmers and ranchers will need to produce more food in the next 50 years than was produced in the last 10,000 years combined to keep up with the growth in human population.  Biotechnology in the 21st Century could well be as important as pasteurization was in the 19th Century.  Why is it that those who oppose biotechnology are never questioned as to how the hungry people of the world are going to be fed?

We do have a moral obligation to help our neighbors.  But if it is true that we now have 79 federal, means-tested programs that offer cash, food, housing, healthcare, or social services to the poor, would it not make some sense to look into who is getting what and how much? It should not be considered mean-spirited to suggest that only those who qualify should receive benefits. At a time when have fewer dollars to spend, don’t we have an obligation to be sure that each dollar is well spent?

To those who ignore our $600 billion deficits, our $17 trillion debt and $73 trillion long-term promises that cannot be kept: Why do you only worry about today and the next election?  And let us not forget; it took the Senate over 1,460 days to pass a budget.  It has now been over 100 days with no conference on the budget!  How many more days is it going to take?  A budget is a must in order to reach the compromises necessary to govern!

Boysie E. Day, former Professor of Plant Physiology at University of California–Riverside and pioneer in the science of weed control, once said, “Agriculture is not just the most essential industry; it is the only essential industry.”  Congress has an obligation to act responsibly, especially when dealing with the essential industry.

It’s time to pull on the boot straps, and find a way to get the Farm Bill done.

Former Congressman Charlie Stenholm represented the 17th District of Texas in the U.S. House of Representatives for 26 years. He was a member of the House Agriculture Committee throughout his career, serving as the Committee’s ranking Democrat for his last eight years in office.  

Dealing With FDA Warning Letters

By Casper E. Uldriks

The FDA issues Warning Letters to provide firms notice that unless they achieve voluntary correction of the violations noted in the letter, the agency is prepared to initiate an enforcement action without further notice.  Enforcement actions may include, for example, the seizure of goods, injunction and/or prosecution.  Other administrative actions may be taken, such as the automatic detention of foreign products presented for entry into the U.S. or issuing a mandatory recall order.  The FDA expects a response to a Warning Letter within 15 working days of the firm’s receipt of the letter.  It can be a challenge for some firms to meet this deadline.

Who really issues the Warning Letter?

For certain types of violations, such as manufacturing regulations, a Warning Letter may be issued by the FDA District Office in which the recipient is located. If the firm is located in Cambridge, Massachusetts, then the New England District Office would issue the Warning Letter to the firm.  If the firm is located in Houston, Texas, then the Dallas District Office would issue the Warning Letter to the firm. For certain other types of violations, such as for a product that lacks premarket approval or for not complying with advertising and promotion requirements, the FDA Center with jurisdiction over the product would issue the Warning Letter.  If a drug was involved, the Warning Letter would be issued by the Center for Drug Evaluation and Research. If a medical device is involved, then the Warning Letter would be issued by the Center for Devices and Radiological Health. A response to the Warning Letter should be sent to the point of contact identified in the letter for further communication.

Basic practical factors

Regardless of the particular issues raised in the Warning Letter, there are practical steps that can be taken to facilitate the response process.  The response should be well reasoned, address how each immediate problem will be resolved and how such violations will be prevented in the future. Each response should provide sufficient and concrete detail so the FDA can objectively determine whether or not the proposed corrective action is adequate.  Documentation provided in the initial and subsequent responses should be cross-referenced to the Warning Letter and, where appropriate, any related FDA Form 483 observations.  This will help to ensure that the FDA and you are “on the same page” when you are discussing a particular issue during a meeting or a telephone conversation with the Agency.  The purpose is to avoid confusion at this stage of the interactive process.

Meeting deadlines

Developing a meaningful response is usually a daunting task.  The content and tone of the FDA’s Warning Letter can instill a sense of alarm. Meeting the 15-day deadline makes it difficult to provide a well-reasoned and realistic response. The initial promise and plan of correction in the response may indicate that the firm is headed down a constructive successful path or traveling in a misguided direction.  In addition to the regulatory issues, the response should provide a detailed corrective action plan with a prompt, but reasonably achievable, timeline. In some cases implementing adequate corrections is bound by certain time frames.  The nature of the correction or corrective action often takes longer than the 15-day time frame allows.  For example, sterilization validation necessarily requires weeks to accomplish. If the 15 day response states that required sterilization validation has been completed, the FDA has prima facie evidence that the firm fails to understand how to meet its regulatory obligations.  A request by the firm for additional time to make corrections without providing FDA a reasonable basis for the request can work to a firm’s disadvantage in the process. In all probability, the FDA’s view of an unsupported request would not merit any special accommodations from the agency. In any case, timeframes proposed in the firm’s response should reflect the shortest time possible to provide the best possible result given the nature and risk of the issue at hand.

Promise of correction

Making a promise and keeping a promise will create the foundation for the FDA’s follow-up action.  A response deemed “adequate” by the FDA will in all likelihood prompt a follow-up inspection to verify whether or not the firm has fulfilled its promises.  If the same or similar types of violations continue, then the FDA will collect evidence of a firm’s failure.  Likewise, the firm will struggle with a loss of credibility and foster an expectation that the firm is not able to achieve compliance. Consequently, the FDA is motivated to act promptly.  A firm’s ability to negotiate with FDA may be adversely affected if the firm is suffering a credibility crisis with the Agency.

The FDA will expect rigorous adherence to the corrective action plan and sufficient evidence to demonstrate the plan is or will be effective.  In that regard, unrealistic or empty promises work to characterize the firm as a chronic bad actor that presents a significant risk to the public health and safety. The firm’s discussions during or after the inspection and the adequacy of the Warning Letter response may lead the FDA to the conclusion that, “They don’t get it.”  Salvaging one’s image becomes an uphill effort.  What you promise and what you actually accomplish should coincide.

Supreme Court Draws the Line on Genes and Patentability

By John G. Dillard

The discovery and isolation of a naturally-occurring gene is not eligible for patent protection.  Such was the holding issued by the U.S. Supreme Court in a unanimous opinion in Association for Molecular Pathology v. Myriad Genetics, IncWhile the Court’s decision has drawn both praise and ire from different pockets of the biotech community, the Myriad Genetics decision is not as much of a game-changer as the popular press would have you believe.  While the Court did hold that isolated genes were not patentable, synthetic DNA and screening tests that identify whether a subject carries a particular DNA sequence are patent eligible.

The Supreme Court has used the 2012-13 term to more clearly define the boundaries of its patent jurisprudence.  In Bowman v. Monsanto Co., the court analyzed whether patent rights extended to subsequent generations of self-replicating seeds.  (OFW Law participated in this case.)  In Bowman, the Court held that patent rights extended to subsequent generations of patented soybean seeds; however, it limited the scope of the decision to the context of agricultural seeds.  With the Myriad decision, the Court has established another bright-line rule – isolated, but naturally-occurring DNA is a “product of nature” and not patentable.

In Myriad, the plaintiffs challenged three of Myriad’s patents related to BRCA-testing.  The BRCA test, recently made famous by Angelina Jolie, allows a patient to determine whether she carries a gene for an increased risk of breast cancer.  Myriad held a patent on the isolated DNA sequence for the BRCA1 and BRCA2 gene.  Myriad also held a patent on complimentary DNA, known as cDNA, for these genes, which was synthetically-replicated based on the isolated DNA sequence in question.

35 U.S.C. § 101 delineates patent eligibility in rather simple, albeit legal, terms.  It reads: “[w]hoever invents or discovers any new and useful process, machine, manufacture, or composition of matter, or any new and useful improvement thereof, may obtain a patent therefor, subject to the conditions and requirements of this title.”  Simple enough, right?  Not really.  Disputes over these 36 words keep thousands of patent lawyers across the country very busy.

The difficult question Myriad posed to the Court was whether the act of discovering and isolating a naturally-occurring gene, an expensive and time-consuming breakthrough that could save millions of lives, was patentable.  Patent protection would give Myriad the right to determine how the gene was used and could allow it to recoup the cost it invested in discovering the gene.  However, one problem that was ultimately fatal to Myriad’s case is that “products of nature” cannot be patented.  The Court invalidated Myriad’s patents in the isolated DNA because it was a naturally-occurring product of nature that Myriad had discovered, but not made.  At the same time, the Court held that cDNA was patentable subject matter because its existence came about by human intervention, not nature.

Biotechnology has made waves in the patent world ever since the Supreme Court affirmed that living things are eligible for patent protection in Diamond v. ChakrabartyMyriad is certainly a landmark case that places some boundaries on Chakrabarty.  However, in practice, its effect will be limited and I would not expect a significant impact on the biotech industry for two reasons.  First, Myriad does not place limits on developing synthetic DNA, patenting methods to identify naturally-occurring genes, or transgenic modification (genetic engineering).  Myriad simply stands for the proposition that one must take a step beyond isolating DNA to qualify for patent protection.  Second, most biotechnology players that hold (now-invalid) patents on isolated DNA also hold patents for subsequent processes or technology that utilize the naturally-occurring DNA; the patents for these processes and technologies are still valid.  For instance, Myriad’s now-famous test to identify the BRCA genes remains patented.

AMS Issues Final COOL Amendment

By Barbara J. Masters, D.V.M.

On May 23, 2013, the United States Department of Agriculture’s (USDA) Agriculture Marketing Service (AMS) issued a final rule to amend the Country of Origin Labeling (COOL) regulations (which became effective March 16, 2009).  The final rule provides consumers more detailed information for muscle cut commodities by requiring that labels specify the production steps of birth, raising, and slaughter of the animal from which the meat is derived that took place in each country listed on the origin designation, including the United States. It also eliminates any commingling of the covered muscle cut commodities originating from different countries and amends the definition for “retailer” to include “any person subject to be licensed as a retailer under the Perishable Agricultural Commodities Act (PACA).”

These amendments to the 2009 COOL regulation were in response to the fact that in June 2012, the Appellate Body of the World Trade Organization (WTO) affirmed an earlier WTO Panel decision finding that the United States’ COOL requirements for muscle cut meat commodities discriminated against Canadian and Mexican imports and thus were inconsistent with the WTO Agreement on Technical Barriers to Trade.  Specifically, it was determined that the COOL requirements were inconsistent in ensuring that imported products were treated no less favorably than domestic product.  It was determined that, “The United States had until May 23, 2013, to come into compliance with the WTO ruling.”  A proposed rule to address this ruling was issued for comments on March 12, 2013.

There is a significant estimated cost for implementing the changes that will be incurred—primarily by the packers and processors of muscle cut commodities as well as retailers that are subject to the regulations. AMS has determined the total cost for the rule will be driven by costs to firms changing labels as well as losses to firms having to adjust processes to accommodate for the loss of flexibility that was previously afforded by commingling.  The cost estimate for label changes required by the final rule is an estimated range of $17 to $47.3 million.  The Agency provides various scenarios to estimate the costs associated with the loss of flexibility to commingle.  When all the various costs are taken into consideration and combined, the total estimated costs range from $53.1 million to $192.1 million.  Additionally, AMS acknowledges that the economic benefits are small relative to the 2009 final rule.

The regulation is effective immediately, however, AMS will provide education and outreach for the first six months after publication.  Existing stocks of muscle cut covered commodities labeled in accordance with the 2009 COOL regulations that are already in the system would have the opportunity to move through commerce during this time frame.  Finally, after the 6 month outreach and education period, retailers may continue to use the older labels if they provide the more specific information through alternative means such as signage.

With regards to the WTO obligations, AMS stated in the preamble to the final rule that the rule would bring the United States into compliance with the WTO obligations.  However, trading partners have publicly expressed contrary views.  If WTO compliance is not met, then this could lead to increased discrimination against U.S. products in foreign commerce, as well as other trade sanctions.  OFW Law will continue to monitor activity in regards to this concern.

FSIS Notification Rule – One year later

By Brett T. Schwemer

A little over a year ago, the Food Safety and Inspection Service (FSIS) issued a final rule requiring inspected meat and poultry establishments to notify their FSIS District Office within 24 hours of learning or determining that misbranded or adulterated meat or poultry product received by, or originating from the official establishment has entered commerce (hereinafter “Notification Rule”). Although many predicted that the Notification Rule would result in a significant increase in product recalls and enforcement actions as FSIS became aware of issues that were previously kept “in house”, so far the impact of the final rule has not been nearly as dramatic. With the exception of an uptick in recalls due to foreign material contamination, there has been no noticeable increase in recalls overall, or in FSIS enforcement actions.  This is largely because inspected facilities have traditionally kept FSIS inspectors “in the loop” regarding food safety issues, and this has not changed with the promulgation of the Notification Rule.

With that said, it has been our experience that many establishments, especially small and very small plants, are still not as familiar with the Notification Rule as they should be.  For example, many establishments continue to believe that they do not need to notify the agency of mislabeled or contaminated product that has entered commerce if it is unlikely that the mislabeling or contamination issue would arise to a food safety risk.  This is incorrect.  Even if a product poses no food safety risk at all, if product is considered “adulterated” or “misbranded” as a matter of law and has entered commerce, notification would be required.

Some establishments also mistakenly believe that they would not have to notify the agency in situations where misbranded or adulterated product entered commerce, but the official establishment was able to regain control of the product and the product was no longer in commerce.  Again, the key criteria for determining whether notification is required are whether product: (1) has entered commerce, and (2) is legally adulterated or misbranded.  Even if an establishment is able to regain control over the product and take appropriate disposition, notification would still be required in this situation because adulterated or misbranded product had entered commerce.

Finally, establishments should be aware that just because it might be required to notify the agency of adulterated or misbranded product that has entered commerce, it does not necessarily follow that a recall would be warranted.  Although the agency defines a recall as “a firm’s removal of distributed meat or poultry product from commerce when there is a reason to believe such products are adulterated or misbranded,” the agency will consider the facts of each case on its own merits and may decide that a relatively minor issue would warrant a market withdrawal (in which no press release is issued) as opposed to a recall.  For example, in cases involving foreign material contamination, the agency might decide that a market withdrawal is warranted in a case where an establishment can demonstrate that the contamination event was isolated (not systemic), the amount of contaminated product in commerce is small, and there is no food safety risk posed by the contamination.  To that extent, it would be prudent for establishments to provide information to FSIS regarding these factors when notification is made to the agency regarding noncompliant product in commerce.

When the agency issued its final “Notification Rule,” it issued instructions to inspection program personnel regarding the rule and a questions and answers document.  Recently, FSIS updated its instructions to clarify when it considers adulterated or misbranded product to be “in commerce.”  These documents can be found at:

Notice 36-13: http://www.fsis.usda.gov/OPPDE/rdad/FSISNotices/36-13.pdf.

Q&As:  http://www.fsis.usda.gov/PDF/Questions_and_Answers_Notice_34-12.pdf

Establishments should review these documents to ensure they are familiar with their responsibilities under the final rule and should consult with legal counsel, or other appropriate resources, if questions remain.