FDA was Busy in 2013 and its Sleigh is Packed Heading into the New Year

By Richard L. Frank and Michael J. O’Flaherty

While often rightly the subject of criticism for delay or inaction on important regulatory matters, FDA in late 2013 has been bustling.  The FDA, during the second Obama term, has been pursuing a very aggressive regulatory agenda.  In addition to the widely discussed FSMA regulations (e.g., FSMA LIVES…..FDA Tells Food Importers How It Wants Them To Verify the Safety of the Foods They ImportFDA Proposed Reg will be “Game Changer” for Auditing and Certification OrganizationsFDA Released its Proposed Animal Food Rule: What’s in it?), notable examples include:

  • Trans Fat/PHOs

Based reportedly on new scientific evidence and the findings of expert scientific panels, FDA in early November published notice of its tentative determination that partially hydrogenated oils (PHOs) are not generally recognized as safe (GRAS) for any use in food.  PHOs are the primary dietary source of industrially-produced trans fat.

A partially hydrogenated oil is formed when hydrogen is added to a vegetable oil (a process called hydrogenation) to make it more solid.  PHOs are used by food manufacturers to improve the texture, shelf-life, and flavor stability of foods.  PHOs and, therefore, trans fat, are found in baked goods, such as cakes, cookies and pies; snack foods, such as microwave popcorn; some fast foods; coffee creamer; vegetable shortenings; refrigerator dough products, such as biscuits and cinnamon rolls; and certain other products.

Trans fat consumption has been linked to an increased risk of coronary heart disease (CHD).  To address this health concern, FDA proposed in 1999 that manufacturers be required to declare the amount of trans fat in a food’s Nutrition Facts.  That requirement became effective in 2006.  The Centers for Disease Control and Prevention more recently estimates that a further reduction of trans fat in the food supply would prevent, each year, an additional 7,000 deaths from CHD and up to 20,000 heart attacks.  FDA agrees with expert groups, such as the Institute of Medicine and the American Heart Association, that trans fatty acids have a stronger effect on CHD risk than saturated fatty acids.

In light of the health risks associated with the consumption of trans fat, FDA is proposing that PHOs be regulated as food additives, rather than as self-affirmed GRAS ingredients.  If finalized, this would mean that food manufacturers would no longer be permitted to sell PHOs, either directly or as an ingredient in another food product, without prior FDA approval for use as a food additive.

The comment period on the proposal presently is scheduled to close on March 8, 2014.

  • Off-Label Drug/Device Use – Statements to the Financial Community

In a sharply worded Warning Letter dated November 8, 2013, FDA’s Office of Prescription Drug Promotion (OPDP) took the position that statements made by the CEO of Aegerion Pharmaceuticals, Inc. on episodes of a CNBC investment talk show, “Fast Money,” constituted representations that a company drug product, Juxtapid capsules, was intended for a use not approved by FDA.  This being the case, such statements rendered the drug misbranded by reason of not bearing adequate directions for use (for the unapproved use).

“Off-label” use of a prescription drug or medical device refers to the ability of licensed health care providers to prescribe or use the drug/device for indications, conditions, patients, dosages or routes of administration not yet evaluated and approved by FDA.  The decision to prescribe a prescription drug or use a medical device off-label typically is based on emerging science and clinical evidence, and may or may not differ from the evidence used for FDA to approve the product’s usage in the marketplace.

The Warning Letter (and its aftermath) merit monitoring not only because it represents the first OPDP Warning Letter taking issue with broadcast statements aimed at the financial community, but also because of its apparent juxtaposition with a recent federal appellate court decision (U.S. v. Caronia, 703 F.3d 149 (2d Cir. 2012)), essentially holding that representatives of pharmaceutical manufacturers have a right under the First Amendment to make truthful statements regarding their products, even if such statements indirectly promote drugs for uses not approved by FDA.

  • Antibacterial Soap

In mid-December, FDA published a proposed rule to require manufacturers of antibacterial hand soaps and body washes to demonstrate that their products are safe for long-term daily use and more effective than plain soap and water in preventing illness and the spread of certain infections.  The proposed rule would amend a 1994 tentative final monograph for these over-the-counter (OTC) antiseptic drug products.

Millions of Americans use antibacterial hand soap and body wash products.  Although consumers generally view these products as effective tools to help prevent the spread of germs, FDA believes there is no current evidence that they are any more effective in preventing illness than washing with plain soap and water.  Further, some data suggest that long-term exposure to certain active ingredients used in these antibacterial products — for example, triclosan (in liquid soaps) and triclocarban (in bar soaps) — could pose health risks, such as bacterial resistance or hormonal effects.

The comment period on the proposed rule is scheduled to close in June 2014.  Thereafter, the requirements of the ensuing final rule would become effective one year following its publication.  If companies do not demonstrate the safety and effectiveness of their antibacterial hand soaps and body washes, these products would need to be reformulated or relabeled to remain on the market.

  • Animal Feed Antimicrobials

In mid-December, FDA began implementing a plan to help phase out the use of medically important antimicrobials in food animals for food production purposes. The plan will also phase in veterinary oversight of the remaining appropriate therapeutic uses of such drugs.  The plan focuses on those antimicrobial drugs that are considered medically important (i.e., are important for treating human infection), and that are approved for use in feed and water of food animals.

Certain antimicrobials historically have been used in the feed or drinking water of cattle, poultry, hogs, and other food animals for “production” purposes (e.g., using less feed to gain weight).  Some of these antimicrobials are important drugs used to treat human infection, prompting concerns about the contribution of this practice to increasing the ability of bacteria and other microbes to resist the effects of a drug (e.g., antibiotic resistance).  Once antimicrobial resistance occurs, a drug may no longer be as effective in treating various illnesses or infections.

In a guidance document issued on December 11th, FDA laid out a road map for animal pharmaceutical companies to voluntarily revise the FDA-approved use conditions on the labels of these antimicrobial products to remove production indications.  The plan also calls for changing the current OTC status to bring the remaining appropriate therapeutic uses under veterinary oversight.  Once a manufacturer voluntarily makes these changes, its medically important antimicrobial drugs may no longer be used for production purposes, and their use to treat, control, or prevent disease in animals will require veterinary oversight.  FDA is asking animal pharmaceutical companies to notify the agency of their intent to sign on to the strategy within the next three months.  These companies would then have a three-year transition period.

  • Acrylamide

Acrylamide is a chemical that can form in some foods during high-temperature cooking processes, such as frying, roasting, and baking.  On November 15, 2013, FDA announced the release of a new draft guidance document, Guidance for Industry: Acrylamide in Foods. The draft guidance provides FDA’s current thinking on procedures that can be used by various sectors of the food industry, including farmers, food processors, and restaurants, to reduce the level of acrylamide in a number of food products.  While acrylamide can form in a large variety of foods, the draft guidance document is focused on potato products (e.g., french fries and potato chips) and cereal grain-based products (e.g., breads, crackers and breakfast cereals).  The document also includes recommendations on cooking/preparing frozen french fries, as well as appropriate techniques for reducing acrylamide in potato and cereal-based foods for food service operations.

The draft guidance document is meant to suggest a range of possible approaches to acrylamide reduction, rather than to identify any specific approach as appropriate.  Nevertheless, FDA recommends that manufacturers evaluate and consider adopting acrylamide reduction approaches relevant to their products, if feasible.  FDA also recommends that manufacturers be aware of acrylamide levels in their products; however, at this time, FDA is not recommending specific limits or action levels for acrylamide or acrylamide precursors.  FDA will continue to monitor acrylamide levels in food to determine if reductions occur over time.

  • GMO Salmon

Nearly a year ago, FDA issued an environmental assessment and finding of no significant impact for Aqua Bounty’s genetically engineered salmon.  The agency is expected to formally approve the product in early 2014.

  • Spice Safety

In November, FDA issued a draft risk profile on pathogens in spices that concluded most imported spices are twice as likely to host salmonella than other imported foods.  Comments are due in March 2014.

* * * * *

FDA clearly has much afoot as it heads into the New Year.  OFW Law will help cover it for you.

FNS Permanently Eliminates Grain and Protein Maximums; Allows Sugar to Process Frozen Fruit in School Nutrition Programs

By Roger R. Szemraj

According to an advance copy of the rule made public earlier today, USDA’s Food and Nutrition Service will be making permanent the elimination of weekly maximums on grains and meat/meat alternates, and the allowance of processing frozen fruit with sugar, within the National School Lunch Program.  The rule will be published in the Federal Register on Friday, January 3.

Some of the key language follows from pages 7-8:

“Feedback on the memoranda concerning flexibility for weekly maximum grains and meat/meat alternates has been overwhelmingly positive, and there have been numerous requests to further extend this change. This new flexibility  or measuring compliance has had a meaningful impact on the certification process by making it less complicated for school food authorities (SFAs) to be certified as compliant with the new meal pattern. Allowing for more grain and meat/meat alternates has also increased student acceptability of the new meals they are being served. Therefore, FNS is making this flexibility permanent by including it in this final rule at 7 CFR 210.7(d)(1). Because ongoing compliance with the meal patterns is assessed during administrative reviews, FNS is further extending this flexibility by including in the final rule at 7 CFR 210.18(g)(2)(vi). When conducting administrative reviews, State agencies should consider any SFA compliant with the weekly ranges for grains and meats if the weekly minimums are met. SFAs continue to be required to meet the weekly minimum and maximum range requirements for calories and the other dietary specifications.”

From pages 9-10:

“In addition to the challenges associated with processing frozen fruit without sugar, allowing SFAs to use frozen fruit with added sugar will make it less complicated for SFAs to meet meal pattern requirements, and also expand the types of frozen fruit allowable in school meals. It is also consistent with canned fruits since some added sugar is allowed in canned products. Additionally, the calorie limits for meals help preserve the integrity of the updated nutrition standards, as schools have to plan menus and select products carefully, including frozen fruit with added sugar, in order to be in compliance with the standards.  For those reasons, FNS is making this flexibility permanent by including it in this final rule at 7 CFR 210.7(d)(1)(iii)(B). Because ongoing compliance with the meal patterns is assessed during administrative reviews, FNS is further extending this flexibility by including it in the final rule at 7 CFR 210.18(g)(2)(vi). When conducting administrative reviews, State agencies should consider any SFA compliant with the meal pattern requirements even if the SFA serves frozen fruit containing added sugar. This flexibility is also applicable to fruit offered in the School Breakfast Program.”

The pertinent rule language is as follows:

§210.7 Reimbursement for school food authorities.

* * * * *

(d) * * *

(1) * * *

(iii) State agencies must review certification documentation submitted by the school food authority to ensure compliance with meal pattern requirements set forth in §210.10, §220.8, or §220.23, as applicable. For certification purposes, State agencies should consider any school food authority compliant:

(A) If when evaluating daily and weekly range requirements for grains and meat/meat alternates, the certification documentation shows compliance with the daily and weekly minimums for these two components, regardless of whether the school food authority has exceeded the maximums for the same components.

(B) If when evaluating the service of frozen fruit, the school food authority serves products that contain added sugar.

10 Ag-Related Items to Watch in 2014

By John G. Dillard, as published on his AgWeb.com Blog – Ag in the Courtroom

With 2013 nearly in the books and the holiday season nearly behind us, its time to prepare for the challenges that face us in the coming year. While I am no expert on forecasting long-range weather patterns, commodity market fluctuations, or predicting the future of the Kardashian family, I do feel adequately qualified to indulge in a few predictions regarding what will be hot topics in the agricultural policy realm in the coming year. Accordingly, I, like most writers with access to an audience, have prepared a top 10 list of things to watch in agriculture in 2014.

1.      The 2012 2013 2014 Farm Bill

Farm Bills are getting harder and harder to come by these days. The 2012 effort to pass a Farm Bill failed. Congress punted by granting a one-year extension. The 2013 effort has been a struggle that will spill over into 2014. In particular, the fight over how far to cut SNAP benefits has put Democrats and Republicans at loggerheads. Based on the latest developments, we can expect to see one some time in January. However, the specifics of the Farm Bill remain to be seen because the legislation is being worked out behind the scenes by committee leaders and their staff.

2.      The Chesapeake Bay TMDL

The Chesapeake Bay is entering its third year under the restrictions imposed by the Chesapeake Bay TMDL. Under the TMDL plan, EPA is requiring the states in the watershed to make significant annual progress in reducing nitrogen, phosphorus and sediment pollution. Agriculture bears a significant portion of this burden. Achieving water quality goals in a watershed as large as the Chesapeake Bay through a single plan is a clunky process. It’s also questionable as to whether EPA has the authority to impose such a plan. American Farm Bureau Federation challenged EPA’s authority to mandate the TMDL as it did. Farm Bureau lost at the district court level, but it has appealed the case to the Third Circuit Court of Appeals. We will likely get a decision from the appeals court some time this year. The outcome of this litigation will determine how EPA approaches watershed restoration in not only the Chesapeake Bay, but other large watersheds.

3.      Mississippi River Basin Numeric Limitations on Nutrients

The Chesapeake Bay TMDL was supposed to be EPA’s case study in approaching large scale watershed restoration efforts. EPA’s plan was to take the lessons that it learned from the Bay TMDL and apply it to other watersheds across the country, with the Mississippi River being the ultimate goal. However, some environmental groups were impatient with EPA’s approach. They petitioned EPA to develop numeric limitations for nitrogen and phosphorus for all waters in the Mississippi River Basin. When EPA denied this petition, the environmental groups took them to court. A federal court held that EPA has to respond to the petition and determine whether numeric nutrient limitations are appropriate for the Mississippi River Basin. EPA has appealed this decision to the Fifth Circuit Court of Appeals. We can expect a decision on this case in the coming year.

4.      Mandatory Country of Origin Labeling

The new COOL “born, raised, and slaughtered” regulations became effective on November 23, 2013. The battle to overturn these regulations, which are intended to protect American swine and cattle producers from foreign competition, is waging on three fronts – Capitol Hill, the federal courts, and the WTO.

mCOOL supporters and opponents have been working the Farm Bill conferees to ensure that their interests are protected on the legislative front. We will likely know what the Farm Bill looks like in the next month.

The major livestock and meatpacking trade associations have challenged mCOOL in the federal courts. The mCOOL supporters, including USDA, R-CALF and HSUS, prevailed on the first round of litigation. mCOOL opponents have appealed this decision. The appeal will be heard in the D.C. Circuit on January 9th. We can expect a decision sometime in the next few months on this matter.

Canada and Mexico have also challenged the new mCOOL regulations at the WTO because mCOOL provides an incentive to discriminate against Mexican and Canadian livestock. The WTO has assigned their challenge to the same panel that rejected earlier mCOOL provisions that were lessdiscriminatory against foreign livestock. The wheels turn slow at the WTO, but we can expect to hear at least an initial decision on the matter before the end of the year.

5.      Lawyers, Dust and Feathers – the Alt case

One of the major cases decided this year was Alt v. EPA. In Alt, EPA alleged that a poultry farmer needed a NPDES permit on the basis that the farm was discharging pollutants when stormwater washed dust, feathers and litter away from the barnyard area. Under this theory, nearly every CAFO would be required to obtain a NPDES permit, a costly and onerous process. A federal judge held that the farm was not required to obtain a NPDES permit because runoff from the barnyard area is an agricultural stormwater discharge that is exempt from permitting requirements under the Clean Water Act. While this decision is a major victory for animal agriculture, it’s not quite time to uncork the champagne. EPA and the environmental groups that intervened in the suit have decided to appeal this case. Arguments will take place later this year and we can expect a decision towards the end of 2014 or the beginning of 2015.

6.      FSMA Rollout

FDA is under the gun, or actually a court order, to write the rules that implement the Food Safety Modernization Act of 2011. FDA has to propose, accept public comment on, and finalize several major regulations pursuant to FSMA by June 30, 2015. This is a major strain on FDA’s resources and some of the rules that have been proposed reflect the rushed state that the Agency is operating under. While these rules will not be finalized until 2015, FDA is accepting public comments on their various proposals through the early months of 2014. We can expect that the new FSMA rules will have a substantial impact on various segments of the ag sector, especially produce farms and feed manufacturers.

7.      GMO Labeling

Whether food manufacturers should be required to label their products that include genetically engineered ingredients has been a hot button issue for the past few years. Supporters of mandatory labeling have hit several roadblocks at the federal level, so they have turned to state governments to require labeling. While high-profile ballot initiatives in California and Washington state have failed, supporters have made inroads with some measures in the northeastern states. For instance, Maine and Connecticut have labeling measures in place, but they only become effective if a critical mass of other states require GMO labeling. In order to avoid a patchwork of various state labeling laws, we may see efforts ramp up in 2014 to pass some type of law regarding GMO labeling at the federal level, which would preempt state labeling laws.

8.      The Renewable Fuels Standard

The fight over the Renewable Fuels Standard will likely come to a head this year. Much of the political support for the policy has dwindled in the face of opposition from a growing number of strange bedfellows including environmentalists, livestock producers, and the oil industry. With petroleum consumption decreasing, the RFS mandate for renewable fuel use is hitting the “blend wall” much sooner than was anticipated when the legislation was drafted in 2007. In response to the blend wall concerns, EPA has proposed lowering the targets for corn ethanol use in 2014. Opponents of the RFS believe this is a step in the right direction, but not far enough. Meanwhile, supporters believe this is a step down a slippery slope. We can expect 2014 to bring us legislative proposals to gut the corn ethanol portion of the RFS. We can also expect RFS supporters to sue EPA if it finalizes its proposal to reduce the corn ethanol mandate.

9.      Trade Agreements

The Obama Administration is currently negotiating two major trade agreements that could have a major long-term effect on agricultural trade. The Trans-Pacific Partnership could significantly improve our access to export markets in the Asia-Pacific region. However, agriculture is a major sticking point in these negotiations. Japan, in particular, wants to protect much of its agricultural industry from foreign competition. If this is allowed, then other countries to the agreement will likely seek similar protections, making the TPA a much weaker deal for US agriculture. We will likely see some progress on this matter in the coming year.

The second major trade agreement under negotiation is the Transatlantic Trade and Investment Partnership (TTIP). This is a proposed trade agreement between the US and the European Union. While this trade agreement could be the biggest trade deal in the world, agriculture could be a major sticking point in the negotiations. Conflicts over GMO acceptance in some of the EU member countries, the use of hormones for growth promotion, and animal welfare practices could be roadblocks for increasing trade with the EU. The TTIP negotiations have not progressed as far as TPA, so we can expect developments in TPA to influence the outcome in TTIP.

10.  Immigration Reform

The story for immigration reform in 2014 will likely be a disappointment. While it seemed possible that some type of bipartisan immigration reform deal could have emerged in early 2013, that window has likely closed. The mid-term elections will be looming over Congress and its unlikely that enough members will be motivated to take what could be a risky stand on immigration issues so close to election day. While the Republican Party continues to take a pounding on a national level for failure to catch up to the electorate’s view on immigration reform, many of the individual members of the House are from districts where any appearance of granting amnesty is a political non-starter. In the meantime, millions of undocumented workers must remain in the shadows and farmers and ranchers that depend on immigrants for labor will face the same uncertainty and labor shortfalls that they have experienced the last few years.

U.S. Farm Income

A Congressional Research Service (CRS) report from earlier in the month revealed that national net farm income—a key indicator of U.S. farm well-being—is forecast at a record $131 billion in 2013, up 15% from last year, and about $13 billion above 2011’s previous record.

In addition to record net farm income, farm wealth is also at record levels. Farm asset values—which reflect farm investors’ and lenders’ expectations about long-term profitability of farm sector investments—are expected to rise nearly 7% in 2013 to a record $3,008 billion for a fifth consecutive year of gains. Farm land cash markets have continued to see gains related to strong crop prices in 2013. Since 2008, farm asset values are up 49% while farm debt has risen by only 28%. As a result, the farm debt-to-asset ratio has declined steadily since 2008 and is expected to fall to 10.3%, its lowest level since 1960.

At the farm-household level, average farm income (the sum of both on- and off-farm income) is projected up slightly, at $109,035, in 2013 for a fourth consecutive year of growth. The share of farm income derived from off-farm sources had increased steadily for decades but appears to have peaked at about 95% in 2002. In 2013, off-farm income sources are forecasted to account for about 82% of the national average farm household income, compared with about 18% from farming activities. Over the past decade, farm household incomes have surged ahead of average U.S. household incomes. In 2012 (the last year for which comparable data were available), the average farm household income of $108,844 was about 53% higher than the average U.S. household income of $71,274.

The 2013 outlook for a third year of strong farm income occurs in spite of slow growth in the domestic economy and the lingering effects of the 2012 drought—the most severe and extensive drought in at least 25 years. The 2012 drought destroyed or damaged a significant portion of the U.S. corn and soybean crops, with deleterious impacts on all U.S. livestock sectors—cattle, hogs, poultry, and dairy—as feed costs reached record levels. However, a return to trend yields in 2013 is expected to generate record-large harvests of major crops which, in turn, would likely benefit livestock producers in the second half of the year and into 2014 as crop prices are expected to decline sharply from record-high levels. Cash grain farmers in the Corn Belt and Northern Plains are expected to experience a third year of near-record revenues as higher output offsets a substantial portion of the anticipated crop price decline.

Government farm payments, at $11.4 billion, are expected to remain relatively small in 2013 (third-lowest total since 1997) as high commodity prices continue to shut off payments under the price-contingent marketing loan and counter-cyclical payment programs.

These data suggest a strong financial position heading into 2014 for the agricultural sector as a whole relative to the rest of the U.S. economy, but with substantial regional variation. Declining prices for most major program crops signal tougher times ahead. Eventual 2013 agricultural economic well-being will hinge greatly on the final 2013 crop harvests and harvest-time prices, as well as both domestic and international macroeconomic factors including economic growth and consumer demand.

Click here to view the CRS Report in its entirety.

Generic Drug User Fee Act Information Technology Plan

Today, FDA published a notice in the Federal Register announcing the availability of the Generic Drug User Fee Act (GDUFA) Information Technology (IT) Plan.  The plan explains FDA’s approach for enhancing business processes, data quality and consistency, supporting technologies, and IT operations as described in the GDUFA Performance Goals and Procedures for Fiscal Years 2013 through 2017.

FDA is requesting comments from industry and other interested stakeholders as FDA moves towards a fully automated standards-based environment that enhances the regulatory review process for human pharmaceuticals.

John Block: What’s In The Farm Bill?

By John R. Block

The obvious issues in the farm bill are nutrition programs, crop insurance, and farm safety net supports. However, there are some important sections in the bill that could be almost as important that don’t get much attention.

The first one deals with trade. Trade accounts for 25 percent of U.S. farm receipts. When we plant our crops, we can count on seeing one-third of that production go to some other country. 95 percent of the world’s customers are not in the U.S. The growing world population, expected to surpass 9 billion by 2050, will need our food.

We are good at what we do, but we can be even better. The U.S. Department of Ag Trade function has not been significantly reorganized in 35 years. This is the time to reorganize the trade-related agencies, programs and activities at the USDA. Create a new Under Secretary for Trade and Foreign Agriculture Affairs. The Trade Under Secretary would report directly to the U.S. Secretary of Agriculture. This would give that individual a high-level position to lead in trade negotiations with senior foreign officials. That would give our Trade Secretary the power and respect to effectively fight to keep existing foreign markets open and gain access to new markets. It’s not easy. We are constantly facing a wall of non-tariff barriers holding back our exports.

Both the House and Senate have trade reorganization language in their farm bill proposals. The final bill needs to give the Department of Agriculture this new focus.

Another issue that I hope is fixed in the farm bill is the country of origin labeling (COOL) language. Either get rid of COOL altogether or, perhaps, approve a label that simply says “North American.” COOL is our non-tariff barrier. A consistent trade policy should be to avoid such trade restrictions.

The final issue is California’s trade barrier. California has a law prohibiting the import of eggs from farms that don’t meet California’s strict hen housing requirements. There is some possibility that this trade barrier can be dealt with in the farm bill. If not – congratulations to Missouri’s Attorney General, who has announced that he intends to sue California for their egg restrictions.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

John Block: Free Trade With Europe

By John R. Block

We should get a farm bill in January. It appears that we now have a budget. That helps because now the Ag Department will know how much money the Department has to spend. Let’s keep the pressure on to get it done.

The subject that I want to focus on today has not had enough attention in my judgment. We all know how important trade is to the ag industry. We are in the process of negotiating a free trade agreement with the European Union. “The Economist” magazine tells us that “a free trade pact has never had such support in Europe” as it does today.

So, where do we start? Tariffs are already very low. What is there to do?

Regulatory barriers – they are very severe. Here is how severe they are.  U.S. approved cars cannot be driven on European roads until they have special review by European regulators. I think we all know that agricultural trade has long been a major area of US-EU contention. They have used regulations as non-tariff barriers to protect their agriculture for years. I remember when they forced the inspection of all of our meat processing plants. Today, they are blocking a host of GE crops. The list is long.

Now, just as the trade talks get under way –

Europe has taken new steps in the wrong direction. The European Commission has laid out a set of new rules that could effectively ban a quarter to a third of U.S. agricultural output and keep out U.S. products for controlling weeds, funguses and insects.

The new European rules would ban the importation of fruits, vegetables and grains when even the tiniest residues of so-called “endocrine disruptors” are detected. I don’t pretend to be an expert on this subject, but our scientists tell us that detection methods can now register trace residues in such minute quantities that, as a practical matter, compliance will be all but impossible to achieve.

Worse, the science behind this concept is extremely controversial. Many natural as well as man-made substances impact the human endocrine system, including soy, sunlight and sugar. Even exercise could be considered an “endocrine disruptor,” though it is clearly not harmful.

Leading scientific journals regarding chemical hazards have accused the European Commission of acting “contrary to science.”

If the major challenge of the trade negotiations is harmonization of regulations, then promulgating unscientific rules that look like a smokescreen for protectionism could destroy our highly promising trade talks before they get fully underway.

John Block was Secretary of the U.S. Department of Agriculture from 1981-1985, where he played a key role in the development of the 1985 Farm Bill.

Wetland Compliance: USDA’s National Appeals Division Confirms a Rule of Reason and Science

By Kenneth D. Ackerman

wetland 1Not all “wetlands” are equal.  And while protecting these previous environmental legacies is a high priority for USDA’s Farm Service Agency (FSA), its power to penalize farmers for inadvertent wetland conversions must be tempered by reason and science.

The National Appeals Division (NAD) recently underscored this message in a Hearing Officer Determination (FSA chose not to appeal).  In this case, the producer had mistakenly cleared a small (less than two acre) wetland that was part of a 300 acre field and a multi-thousand-acre farm operation.  It was undisputed that the producer had no knowledge the land had been deemed a “wetland” when he cleared it.  It didn’t look “wet”; subsoil moisture did not appear until more than a foot underground most of the time.  And USDA’s Natural Resources and Conservation Service (NRCS) ten years earlier had sent its original wetland determination for the spot to the producer’s landlord, not the producer himself.

Still, FSA penalized the farmer by requiring he repay all FSA program benefits for a multi-year period covering his entire operation, amounting to hundreds of thousands of dollars.

We defended the producer, and central to our argument was testimony from two scientists, the NRCS District Conservationist and a private certified geologist hired by the producer to provide a “second opinion” – much like you’d get from a doctor.   The two scientists, not surprisingly, agreed on most key points.  Their testimony confirmed that the wetland itself was small, had previously been farmed (that is, was not “virgin wetland”), was not visually wet most of the time, would naturally regenerate itself if simply left alone, and was not easily identifiable as a “wetland” by a non-scientist.  The producer himself demonstrated that, despite some miscues with the local FSA office, he had in fact followed the NRCS restoration plan ever since it was presented to him, even if the written form was not signed until a few months later.

FSA wetland rules give the agency authority to forgive good faith mistakes when a farm producer owns up to them and is prepared to correct them.  If a wetland conversion is unintentional, penalties can be waived.  If the “seriousness” of the violation – based largely on the environmental value of the wetland – is less, then penalties can be reduced accordingly.  FSA has a duty to apply this discretion when the facts support it.

That’s the message of the new NAD decision.   Click here to read the full text.

FSIS 2014 Annual Performance Plan

By Barbara J. Masters, D.V.M.

FSIS issued their 2014 Annual Performance Plan as a tool to document specific targets for 2014.  In reviewing the plan for FSIS, it is clear that there is one main target for this food safety regulatory agency: Salmonella.

The plan contains eight “goals,” and the steps that FSIS plans to take to meet these goals.  Each of the eight key goals is addressed as to the specific actions to be taken and the expected results.  It is organized in a few ways, but probably most easily viewed by FSIS Program Area.

Highlights from this year’s plan include FSIS’ intent to modernize poultry slaughter inspection, along with the idea of using a meat industry survey to develop economic analysis for a beef slaughter proposed rule consistent with the poultry slaughter modernization regulations.

That said, the focus is Salmonella.  One FSIS action item is the completion of hazard analysis verification (HAV) and food safety assessment (FSA) procedures in at least 75 percent of the eligible comminuted poultry operations.  The agency has also committed to evaluation of research and data on lymph nodes and institution of sampling of all raw beef for Salmonella.  In addition, FSIS will develop verification procedures for sanitary dressing of hog carcasses, as well as assessing whether FSIS’ existing policies on Salmonella are being effectively implemented.  Consumers will find initiatives associated with Salmonella as well.  FSIS will work on ensuring consumers use thermometers continue to proactively change behavior.

It should be noted the entire plan is not limited to Salmonella.  FSIS considers non-O157 STEC, humane handling, food security and other important issues.  But no one will question the Agency priority when reviewing this plan, and that is the reduction of Salmonella in FSIS-regulated products.

Before joining OFW Law, Dr. Masters served as Acting Administrator and then Administrator for the United States Department of Agriculture Food Safety and Inspection Service (FSIS) from March 2004 through January 2007.

The Budget Agreement and Some Thoughts About Next Steps

By Roger R. Szemraj

House Budget Committee Chairman Paul Ryan (R-WI) and Senate Budget Committee Chairman Patty Murray (D-WA) announced a two-year budget agreement that, in their words, “reduces the deficit—without raising taxes…it cuts spending in a smarter way…prevent(s) another government shutdown and roll(s) back sequestration’s cuts to defense and domestic investments in a balanced way.”

While this budget agreement is not the grand bargain that many will continue to insist is needed, it does provide some increased measure of certainty for the weeks ahead.  In its Statement of Administration Policy, the Office of Management and Budget said “ The Administration urges the Congress to pass this bipartisan agreement and looks forward to working with the Congress to enact clean, full-year FY 2014 appropriations bills based on this agreement in order to continue growing the Nation’s economy and creating jobs.”  The House is expected to vote on the “Bipartisan Budget Act of 2013” by week’s end, and the Senate next week.

The agreement sets discretionary spending for the current fiscal year at $1.012 trillion—about halfway between the Senate budget level of $1.058 trillion and the House budget level of $967 billion. It provides $63 billion in sequester relief over two years, split evenly between defense and non-defense programs. Over the ten year life of this budget agreement, there will be mandatory savings and non-tax revenue totaling approximately $85 billion, and deficit reduction of between $20 and $23 billion. In fiscal year 2014, defense discretionary spending would be set at $520.5 billion, and non-defense discretionary spending would be set at $491.8 billion.  There is a two year extension of sequestration for mandatory programs, by requiring the President to sequester the same percentage of mandatory budgetary resources in 2022 and 2023 as will be sequestered in 2021 under current law.

This agreement does not explicitly call for any further modifications in farm programs.  In fact, there are only two specific references to USDA programs.  According to the section by section analysis, Section 602 would eliminate the current requirement that the Maritime Administration (MARAD) reimburse USDA and USAID for shipping expenses for food aid that exceed 20 percent of total program cost (the value of commodities plus shipping expenses) in a given fiscal year, by the dollar amount above 20 percent reimbursements.  MARAD reimbursed $10 million in FY 2012, according to USDA budget documents.  Section 705(a) would authorize the Natural Resource Conservation Service (NRCS) to prescribe and collect fees of up to $150 per conservation plan to cover some of the costs of providing technical assistance for completing a conservation plan for a producer or landowner.  These payments would be deposited in a new Conservation Technical Assistance Fund, and would be available only pursuant to future appropriations.  The Secretary of Agriculture would have the authority to waive fees for assistance provided to members of historically underserved groups, such as beginning farmers or ranchers, limited resource farmers or ranchers, and socially disadvantaged farmers or ranchers. Fees also could be waived by the Secretary for assistance provided to USDA program participants seeking to maintain payment eligibility under Section 1212 of the Food Security Act of 1985, or to comply with local, state, or Federal regulatory requirements.

So what is next?

For funding the federal government for the balance of FY 2014, it is now expected that the House and Senate Appropriations Committees will be given revised budget allocations by the end of next week.  That will allow those Committees to move forward with their plans to develop an omnibus appropriations bill for House and Senate consideration prior to the January 15th expiration of the current Continuing Resolution.  Whether this is done with one single bill or with a series of bills remains to be seen.  But it had always been expected that final appropriations action would provide spending levels somewhere between those included in the FY 2014 bills approved by the Committees earlier this year.  The Senate Agriculture/FDA Subcommittee received a discretionary spending allocation of $20.93 billion, compared with $19.45 billion in the House.  The Senate Interior Subcommittee, which funds the Forest Service, received a discretionary spending allocation of $30.10 billion, compared with $24.28 billion in the House.    How the reductions are allocated within these bills is left to the subcommittees.  They could find individual program reductions based on changing needs, do across-the-board reductions, or a combination of both.  Programs like food safety and WIC will be expected to continue to receive the strongest support from a variety of committee members, but it is not assured that they may be exempt from any reductions.  The agreement creates a reserve fund for payments to rural schools. Unfortunately, the conferees did not advance a solution to wildfire suppression funding, meaning the appropriators will have to work out an approach on their own and within the constraints of the bill.

The agreement also sets spending limits for FY 2015 in the event a FY 2015 budget resolution is not adopted by April 15, 2014.  For FY 2015, defense discretionary spending would be $521,272,000,000, while non-defense discretionary spending would be $492,356,000,000.  This would free the House and Senate Appropriations Committees to begin consideration of individual bills as had been done in the past so that action could be completed prior to the start of FY 2015 on October 1, 2014.

For the Farm Bill, the agreement also clears the way for final action on the conference report.  Even though Speaker Boehner has said that savings from the Farm Bill would not be used as part of this budget agreement, we had always expected that the Farm Bill conferees would have to be given some indications as to what their spending limits might be.  Remember that in response to the requirements of the Super Committee established by the Budget Control Act of 2011, the House and Senate Agriculture Committee leadership had come up with an agreement to reduce farm spending by $23 billion over ten years.  This reduction continued to be the basis for the Farm Bill this year.