7/7/2015 - wi agri-business asn · 2016-07-14 · 7/7/2015 2 fda key definitions (cont.) “raw...
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FEDERAL REGULATIONS UPDATE
Wisconsin Agri-Business Association
Safety Day
July 15, 2015
Attorney David A. Crass
Michael Best & Friedrich LLP
(608) 283-2267
www.michaelbest.com
Attorney Seth A. Mailhot
Michael Best & Friedrich LLP
(202) 747-9566
www.michaelbest.com
Overview
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FDA and the Food Safety Modernization Act
EPA Enforcement Process
Applicable Environmental Regulations
EPA Enforcement Trends
FDA Key Definitions
“Food” means:
1. articles used for food or drink for man or other animals,
2. chewing gum, and
3. articles used for components of any such article.
“Food additive” means any substance where the
intended use results in its becoming a component or
otherwise affecting the characteristics of any food, if
such substance is not GRAS
“Pesticide chemical” means any substance that is a
pesticide within the meaning of the Federal Insecticide,
Fungicide, and Rodenticide Act, except when applied
to food during the preparing, packing, or holding of the
food for commercial purposes 3
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FDA Key Definitions (cont.)
“Raw agricultural commodity” means any food in its
raw or natural state, including all fruits that are washed,
colored, or otherwise treated in their unpeeled natural
form prior to marketing
Note that pesticide chemicals are not food additives,
unless they are applied to food during the preparing,
packing, or holding of the food for commercial
purposes, but not when used on raw agricultural
commodities
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The FDA Food Safety Modernization Act (FSMA)
Signed into law by President Obama on January 4,
2011
Makes changes to the Federal Food, Drug and
Cosmetic Act with respect to FDA’s authority over food
Intended to strengthen FDA to ensure the safety of the
U.S. food supply by:
Improving capacity to prevent food safety problems,
Improving capacity to detect and respond to food safety
problems, and
Improving the safety of imported food
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Food Facility Registration: Who Must Register
Domestic and foreign facilities that manufacture,
process, pack, or hold food for human or animal
consumption in the United States are required to
register with FDA
Farms, restaurants, and retail food establishments are
not required to register, unless they engage in a
“mixed-use”
Farm is a facility in one general physical location
devoted to the growing and harvesting of crops, the
raising of animals (including seafood), or both.
Washing, trimming of outer leaves of, and cooling
produce are considered part of harvesting. 6
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Food Facility Registration: Suspension
Under FSMA, FDA can now order suspension of a food
facility’s registration when:
1. FDA determines that food manufactured, processed, packed,
received, or held by a registered facility has a reasonable
probability of causing serious adverse health consequences or
death to humans or animals (SAHCODHA); and
2. That facility:
a. Created, caused, or was otherwise responsible for that
reasonable probability of SAHCODHA; or
b. Knew of, or had reason to know of, the reasonable
probability of SAHCODHA, and packed, received, or held
such food (section 415(b) of the FD&C Act).
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FSMA Mandated Inspection Frequency
High-risk domestic: Once in the first 5 years following
FSMA enactment and then once every 3 years
Non-high-risk domestic: Once in the first 7 years and
then every 5 years
Foreign: Inspect at least 600 facilities within one year
of FSMA enactment, and then double every year for
five years
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Outstanding FSMA Rules
Rule for Preventive Controls for Human Food (Hazard
Analysis and Risk-based Preventative Controls, or HARPC)
science-based minimum standards for conducting a hazard analysis,
documenting hazards, implementing preventive controls, and
documenting the implementation of preventive controls for human food
Produce Safety Rule
science-based minimum standards for the safe production and
harvesting of raw agricultural commodities to minimize the risk of
serious adverse health consequences or death
Foreign Supplier Verification Programs (FSVPs)
requires importers to perform risk-based foreign supplier verification
activities
Accreditation of Third-Party Auditors/Certification Bodies
program for accreditation of third-party auditors to conduct food safety
audits and issue certifications of foreign facilities 9
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Outstanding FSMA Rules (cont.)
Preventive Controls for Animal Food
science-based minimum standards for conducting a hazard analysis,
documenting hazards, implementing preventive controls, and
documenting the implementation of preventive controls for animal food
Sanitary Transport of Food and Feed
regulations governing the transport of food and feed originally required
under the Sanitary Food Transportation Act of 2005
Intentional Contamination
protect against the intentional adulteration of food (Food Defense)
appropriate science-based mitigation strategies or measures to prepare
and protect the food supply chain from intentional adulteration at
specific vulnerable points, among other requirements
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Changes to FDA’s Food Inspections Operations
Memo released last year announced FDA will shift from
the current region-based inspection and compliance
system to a product-based system
Investigators and compliance officers will specialize
according to commodity
One subset is for “food and feeds”
FDA will also “de-layer” its management and review levels
associated with inspections & enforcement to shorten review
time
FDA laboratories will also become more specialized with
management becoming more centralized. Labs under Office of
Regulatory Affairs (now managed by geographic location) will
report to a central senior executive level scientist within ORA.
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EPA Enforcement Process: Summary
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Typically a stepped enforcement process
May start with informal conversations, a site inspection
or more frequently an information request (e.g., a
Section 114, 308 inquiry)
Can end with a referral to the state or federal
Department of Justice for prosecution in court
Settlement with an administrative order is almost
always an option throughout the process
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The Stepped Enforcement Process
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Informal Contacts/ Inspection/
Information Request Start Regular Stepped
Enforcement
Notice of Noncompliance
Notice of Violation or
Finding of Violation Start Fast Track
Enforcement
Direct Action
-ORDER-
Enforcement Conference
Administrative Order Referral to DOJ for
Prosecution
Direct Action
-REFERRAL-
Initiate Court Proceeding
Preliminary Enforcement
Primary Enforcement
Enforcement Process: Section 114 Requests 308
CWA Counterpart)
14
The Clean Air Act broadly authorizes EPA to:
Seek information from anyone who:
Owns or operates an emission source;
Who manufactures emission control or process equipment;
or
Any other person the agency believes can assist in
achieving its regulatory or enforcement objectives
Request documents and data, including Confidential Business
Information (CBI)
Respondents may indicate CBI content and have an
expectation that such information will remain private
Require testing or installation of monitoring equipment
Enforcement Process: Enforcement Tools
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Civil Administrative Actions
Non-judicial enforcement actions taken by the EPA or state
agency under its own authority
Civil Judicial Actions
Formal lawsuits filed in court against persons (or entities) that
have failed to:
Comply with statutory or regulatory requirements
Comply with administrative action orders
Criminal Actions
Typically reserved for the most egregious violations in the
sense that violations were committed willfully and/or knowingly
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Enforcement Process: Civil Enforcement Results
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Settlements
Consent Agreements and Final Orders (CA/FO)
Administrative Orders on Consent (AOC)
Penalties and Forfeitures
$10 to $37,500 per day of violation
Injunctive Relief
e.g., install pollution control equipment or continuous emissions
monitoring; install runoff controls or spill prevention equipment
Mitigation projects
i.e., Supplemental Environmental Projects (SEP)
Not dollar for dollar credit
Not something company would otherwise do
Quantify environmental benefit
Enforcement Process: High Priority Violator (“HPV”)
Policy
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Gives enforcement priority to the most environmentally
sensitive cases
Virtually every permit violation qualifies as an HPV
Stringent schedule for resolution:
60 days to issue an NOV
270 days to achieve compliance or refer for prosecution
Expectation of penalty
Enforcement Process: How are Targets Chosen?
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Advance an EPA enforcement goal:
Fossil fuel combustion
Hazardous air pollutants
Risk Management Plans
Change in emission factors
Comparing number of permits, number of sources and
general industry growth
Compilation and extrapolation of inspection data
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Enforcement Process: Calculating Penalties
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Penalties calculated using the CAA Stationary Source
Penalty Policy (October 25, 1991)* (CWA Companion
Penalty Policies)
Economic Benefit Component
Delayed costs
Avoided costs
Gravity Component
Actual or potential harm
Importance of regulatory scheme
Size of company
Adjustments for willfulness, negligence, degree of cooperation,
history of non-compliance, environmental damage
Voluntary disclosure may mitigate gravity component
*http://www2.epa.gov/sites/production/files/documents/penpol.pdf
Enforcement Process: Role of Citizen Suits
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Citizens can prosecute their own enforcement cases
Can recover attorney and expert witness fees
Increasingly common in many industry sectors
Can proceed simultaneously with state or EPA
enforcement
Notice Requirements specific to citizen suits
Cannot pursue if state or EPA are diligently
prosecuting the same allegations
Enforcement Trends: EPA Priorities List
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Declared every three years
Focuses on most serious pollution problems
Target industry areas or pollution types
Decided by reaching out to regional offices, state, and
tribal governments for input
Initiatives for 2014-2016 same as previous three years
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Enforcement Trends: EPA Priorities List
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EPA has six sector-based enforcement priorities
through 2016:
Reducing air emissions from the largest sources;
Reducing discharges of untreated sewage and storm water;
Preventing waste from concentrated animal feeding operations;
Reducing air toxics emissions through leak detection and
repair, reducing flared emissions, and targeting pollution
emitted during times of startup, shut down and equipment
malfunction;
Ensuring that hydraulic fracturing and other energy extraction
processes comply with air and water laws; and
Reducing pollution from mineral processing operations
Enforcement Trends: Increased Attention to Opacity
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EPA’s “Visual Determination of Opacity of Emissions”
Opacity refers to the density of visible emissions
i.e., how much light can come through a plume of emissions
from a smokestack
Observers are trained to accurately assign opacity values
Current NSPS prohibits grain elevators from
discharging fugitive emissions that exhibit greater than
20% opacity
Proposed NSPS adds opacity limitations for non-
fugitive emissions (chimneys, smokestacks) released
through any wire screen column dryer (prohibiting
opacity greater than 10%)
Enforcement Trends: Clean Air Act § 112 Violations
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Failure to Implement or Renew Risk Management Plans
Facility Year Penalty/Compliance
Costs
Tate & Lyle Ingredients
Americas LLC (Ill.)
2011 $79,100
Family Tree Farms (Cal.) 2012 $3,200
Farmers Cooperative
Company (Iowa)
2013 $11,500
Crossroads AG LLC
(Wis.)
2013 $4,400
Dixon Elevator Co.
(Neb.)
2015 $38,350
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Regulations Applicable to Grain Storage Facilities
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Clean Air Act (CAA)
Construction/Modification
Permits
Operating Permits and
Operating Standards
Spill Prevention, Control, and
Countermeasure Plans
(SPCC)
Emergency Planning and
Community Right-to-Know
Act (EPCRA)
Applicable Regulation: Clean Air Act
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U.S. EPA identifies air pollutants, determines what
concentrations are safe, and codifies allowable
thresholds
Primary responsibility for
assuring air quality is
delegated to the states
State Implementation Plan
(SIP); upon approval, SIPs
are federally enforced law
Prevention of Significant
Deterioration of Air Quality
(PSD) program
Applicable Regulation: Clean Air Act
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Facilities that emit air contaminants above the EPA
thresholds must be in compliance with SIPs
Stationary Sources
Major Sources
Wisconsin Department of Natural Resources requires:
Construction/Modification Permits
Operating Permits and Standards of Performance
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Applicable Regulation:
CAA: Construction Permit Exemptions
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Grain storage facilities (elevators) that receive less
than 5,500 tons of grain per month, on average*; and
Grain processing facilities (feed mills) that receive less
than 4,500 tons of grain per month, on average*.
The vast majority of grain storage facilities will require
a permit.
*Includes facilities with column dryers or rack dryers
Applicable Regulation:
CAA: Operating Permit Exemptions
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A facility may be exempt from an operation permit if it:
Has less than 1 million bushels of permanent grain storage;
AND
Is a grain storage facility (elevator) that receives less than
5,500 tons of grain per month (on average); OR
Is a grain processing facility (feed mill) that receives less than
4,500 tons of grain per month (on average).
Applicable Regulation: CAA: Permit Exemptions
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Even if a company thinks its
facility is exempt from a
construction and/or operation
permit, it must document data to
prove the facility qualifies.
See NR 407.03(4)(a)
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Applicable Statute: CAA: Aggregation
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When calculating if an exemption applies,
WDNR may aggregate the grain storage and
processing capacity of geographically dispersed
facilities
However, common ownership should not
increase the likelihood of aggregation being
appropriate, so if WDNR suggests or requires
aggregation, it is best to seek legal counsel to
discuss options
Applicable Regulation: CAA: Construction Permitting
32
Unless exempt, a construction air permit must be
obtained prior to commencing any construction
Starting construction before receiving a permit is a
commonly enforced violation
The maximum penalty for such a violation is $37,500 per day,
although actual fines tend to be less.
Construction permits are required for modifications
and/or additions to existing facilities
Important Considerations Prior to Construction
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Timing
Compliance Costs
Modeling of Air Emissions
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Applicable Regulation: CAA: Operation Permits
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Permits have wide latitude to require compliance in a
wide range of operational areas
Contaminant reducing product usage
Records
Inspections
Maintenance
Repairs
Contingency plans
e.g., plans to reduce the likelihood of filter failure
Hours of operation
Other
Applicable Regulation: CAA: New Source
Performance Standards (NSPS)
35
Includes grain storage or grain terminal elevators
Sets thresholds for particulate matter that may be
released from facilities
Determines testing methods for proving compliance
Approximately 900 grain elevators in the U.S. are
subject to current NSPS emission controls
Current standards were set in 1978 and had minor
clarifying revisions in 1984
Applicable Regulation: Amended NSPS Standards
36
Proposed New Source Performance (NSPS) for Grain
Elevators
Comments period closed December 22, 2014; however, new
standards have not been issued yet.
The proposed new section would include:
New emission limits for certain grain elevators (specifically,
opacity standards);
Additional testing, monitoring, recordkeeping, and reporting
requirements;
Different compliance requirements for periods of start up,
shutdown, and malfunction procedures.
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Applicable Regulation: Amended NSPS Standards
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Potential Impact of Amended Standards
Clarify definition of “temporary” vs. “permanent” storage
Proposal includes formula for counting “temporary” storage
space as 1/3 its capacity adding to “permanent” storage
capacity
Reducing storage capacity may relieve some facilities from
NSPS obligations
Increase operation costs associated with new monitoring,
record keeping, and reporting requirements
Applicable Regulation: Spill Prevention, Control, and
Countermeasure (SPCC)
38
Proximity to water affects
requirement
Above ground storage tanks
may trigger other requirements
Goal to ensure oil is prevented from reaching navigable
waters and enjoining shorelines
Gasoline or hydraulic oil stored on site may trigger the
requirement
Applicable Regulation: Emergency Planning and
Community Right-to-Know Act (EPCRA)
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Over 600 “Extremely Hazardous Substances” (EHS)
and other chemicals listed
Facilities must report any of these chemicals stored on
site
Facilities must have emergency plans in place in the
event of a spill
Must report spills of chemicals
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Questions?
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Seth Mailhot is a partner and lead of the FDA Regulatory Practice Group in Michael Best & Friedrich’s Washington D.C. office. His 14 years working in the U.S. Food and Drug Administration (FDA) has provided him a unique perspective when counseling clients on a broad range of matters involving the FDA. Seth’s practice includes representation of the medical device, pharmaceutical, dietary supplement, tobacco and food industries, and covers both premarket and post-market issues. His practice is focused on development of premarket submission strategies, and FDA enforcement of good manufacturing practices, both domestically and abroad.
Admissions
District of Columbia Massachusetts
U.S. Patent and Trademark Office
Education
New England School of Law, J.D., Valedictorian, summa cum laude
University of Massachusetts, B.S., Chemical Engineering
Seth A. Mailhot
601 Pennsylvania Avenue, N.W.
Suite 700 South
Washington, D.C. 20004-2601
Phone: (202) 747-9566
Cell: (617) 842-0484
Fax: (202) 347-1819
42
David Crass is a member of the Firm’s Management Committee, Co-Chair of the Firm's Agribusiness, Food and Beverage Industry Group, and a leader in the Firm's Energy practice, focusing on environmental, regulatory, legislative and project development in the energy, agricultural and food processing space. He focuses his practice primarily in the areas of environmental and energy law, enforcement defense, compliance counseling, environmental cleanups, including vapor intrusion cases, agricultural and food industries and renewable energy project development. Mr. Crass has also secured and negotiated federal, state and local permits and approvals for numerous industrial facilities, renewable energy plants and livestock operations.
David A. Crass
1 South Pinckney Street, Suite 700
Madison, WI 53703
Phone: (608) 283-2267
Fax: (608) 283-2275
Admissions
Wisconsin U.S. District Court, Eastern District
of Wisconsin U.S. District Court, Western District
of Wisconsin
Education
University of Wisconsin Law School, J.D., Valedictorian, cum laude
University of Wisconsin-Madison, B.S., with honors