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See the January 13, 2005 College Park Transcript of Public Meeting: What You Need to Know to Ensure Compliance With the New FDA Establishment and Maintenance of Records Final Rule That Implements Section 306 of the Bioterrorism Act for more information.
[TRANSCRIPT PREPARED FROM A TAPE RECORDING.]
P R O C E E D I N G S
Questions and Answers
DR. BERU: Thank you and welcome back. A bit about the questions and answers, to the extent that things are in the preamble and codified, we will clarify those but, as I said at the outset, there is such a huge number of entities that there are always nuances and practices here and there that we may not necessarily have addressed in the preamble and codified. By its nature, it had to be general and broad enough to cover everyone, but there may be some practices that we need to revisit and clarify.
To the extent we do that, what we will do is issue, as Emma also said earlier, questions and answers, one set of which we are working on. We did the same for prior notice regulations under this BT Act, for registration, for administrative detention and now we will do it for record-keeping. So, some questions are not easily answerable in that we haven't dealt with them specifically, but we do have a compliance period of at least one year for large firms and we hope to come out soon with the first set of Q&A that clarifies certain things. These answers obviously have to be vetted to the same degree that we vetted within the agency--the responses that we have given to comments, as I mentioned in the preamble earlier on.
With that, let me first just handle a few questions that were handed to me, written questions and then we will go to the open mike.
One question asks that I address vertically integrated companies. This is one we actually address in the preamble. We have said in the preamble that for vertically integrated companies, for example a manufacturer of products uses his own trucks to deliver to a warehouse, and then uses his own trucks again to take it from the warehouse or distribution center to a retail facility that is buying that product. We said that this vertically integrated company doesn't have to establish and maintain records with respect to the intra-corporate or intra-company transfer, in other words, transfer from the manufacturer facility to the warehouse, and so on.
So, while that company would be required under this Rule to establish and maintain the one up or the immediate previous source with respect to the ingredients that it is purchasing to make that product, what he has to keep is the immediate subsequent recipient, which is a retailer in this case, not the entire corporation that is owned in that vertically integrated company.
I hope that clarifies it. This is actually in response to one or two of the comments that we received. It is in the preamble. If you want, you can access the final Rule on the web and search it using vertically integrated company and you can see what our thinking is there.
Another question that was received is are R&D labs subject to this Rule with respect to food they are testing that eventually gets destroyed and is not consumed?
The answer is if the food is not consumed, if the testing doesn't include actual consumption of the food, then those facilities are exempt from all the requirements of this Rule. If it is research and development and the food is destroyed in the end, then they are not subject to this Rule.
This is another question, farms are excluded but does that exclusion extend to farms that conduct field packing or have packing facilities on site? What about farms that pack at another non-farm location?
Our initial thinking on this actually was that if you pack, if you have a shed and you are packing your product for the purpose of transportation you are still a farm. You are still excluded. We have gotten several comments on this issue that many farms actually do field packing and we have since reconsidered and, in fact, this is what I mean by clarification in questions and answers. We have clarified that. That activity takes them out of the farm exemption. So, even if you do those activities on the farm, if you are packing food in the final retail container, as opposed to the packing that is normally done in a packing shed, you are still a farm and are excluded from the requirements of this Rule.
Another question we received is do exclusively FDA facilities have to record source of spices, seasonings and starches, etc.?
Well, the Act and the Rule excludes products to the extent that they are within the exclusive jurisdiction of the USDA. Under the Meat Inspection Act, Poultry Products Inspection Act and the Egg Products Inspection Act, these are FDA-regulated products so, in that sense, the Rule does apply to USDA-regulated products. These are not products that are exclusively regulated by USDA under those three acts that I mentioned.
Here is one with a series of questions. How does the Rule apply to foreign subsidiaries who manufacture product in another country which is imported to the U.S.? Where does the record-keeping begin?
Again, foreign entities are exempt from this Rule, from all the requirements of the Rule, except to the extent they transport within the United States. So, in this case, in the U.S. the firm that is receiving those products that are manufactured outside would be responsible for keeping in its records information that identifies the foreign manufacturer as a source of that food, as well as the transporter that brings that food to the U.S. company. But the foreign manufacturer is not subject to the requirements of this Rule.
The second part says do foreign subsidiary employees count for FTEs size determination?
While in the preamble we haven't specifically delineated whether the company has employees within the States or outside the United States, what we have said is that the FTEs of the entire corporate structure is what is considered for the compliance requirement dates.
So, the answer to this would be yes because it is a resource issue. The bigger the firm, we believe, the more sources it has to implement the requirements sooner than a small or very small firm that may not have as big resources as the large company. So, yes, these FTEs would count.
I am not sure I can read this--perhaps the person can clarify but accounting for firms length transaction or not.
Q. I will clarify it. In the previous question you said that the foreign entities and foreign manufacturers are not responsible for record-keeping. Then you say [not at microphone...]
DR. BERU: Yes, but it is the location. I mean, a foreign subsidiary, for purposes of this Rule, is a domestic entity. If it is physically located within the 50 states or the commonwealths of Puerto Rico, Virgin Islands, Guam and so on, that is considered a domestic entity.
But in terms of bringing resources to bear and establishing and maintaining records, whether it is creating new forms, software and so on, then the resources of that entire company is what counts.
Perhaps you can clarify the second one, ingredients for agricultural products?
Q. Yes, you list the ingredients [not at microphone...] so farms are not exempt.
DR. BERU: For farms that are not exempt?
Q. Yes.
DR. BERU: The same records, the immediate previous source of food, as well as the transporter and non-transporter immediate previous--
Q. For ingredients?
DR. BERU: Ingredients are food by definition. Let me clarify, you know, food is not just finished product. For the purposes of this Rule, food additives are food. Food contact substances are food legally. However, with respect to food contact substances, I clarified the distinction between packaging food contact substances and the finished container that contacts the food. But all these fall within the definition of food. So, ingredients are food for the purposes of this Rule.
Q. To follow-up, do agrichemicals count as ingredients?
DR. BERU: No, agrichemicals are not food additives so they don't count as food.
Then, foreign transporters for transport to border, do they need to keep records?
The answer here is no, they have to transport within the United States to fall within the requirements of this Rule. But if they stop at the border they don't fall under this requirement.
That is the sum total of the written comments we have gotten so far. If there are additional comments that we can address, because it is being recorded, I think we would want you to use the mike to ask questions. Sorry, but we are recording this.
Q. Going back to your first example where you had a manufacturer or a distribution facility that did shipping to retail outlets using their own trucks, it was identified that we did not have to create additional record-keeping. If that same manufacturer or distribution facility used an outside carrier to transport food to one of their retail outlets, what would be the requirements to be in compliance?
DR. BERU: That is a very good question. This same question was actually asked at the previous outreach meeting as well. This is one where we have said we are going to clarify it through questions and answers. Does the fact that this other entity is doing it under contract legally make it part of that corporate structure, or does the fact that it is taking possession and control of food for the sole purpose of transportation make it fall under the transporter requirements? This one is one where we said we need to do some additional thinking, and we intend to address that in the next set of questions and answers.
Any other questions?
Q. I know animal food is covered under this Act also. We are a dairy and, of course, we have courtesy dumps and the return of the dumps--we call it hog feed--goes out to the hog farmer. Now, there is very little record-keeping on that. Can you expound on that a little bit?
DR. BERU: Yes, animal feed as well as pet food falls under the definition of food under the Federal Food, Drug and Cosmetic Act. So, to the extent that that is going to a feed farm it is covered under this Rule so you need to establish and maintain records of food that you are shipping for consumption by hogs or other entities.
Q. As a non-transporter, there have been instances where our consumer has brokered a third party to transport our final product. Who would maintain the records on that third party?
DR. BERU: Well, in this case, if the buyer has contracted your responsibility would be to identify not only your buyer but also the transporter that has been contracted by the buyer as the immediate subsequent transporter and non-transporter recipient.
Q. So, even though they have done the contracting we would be?
DR. BERU: You would be, yes. Because you are releasing food. The Rule says you have to establish and maintain records not only of the non-transporter recipient, who is the buyer, but also the transporter that takes it away from you.
Q. Thank you. I wanted to clarify the statement you made recently about the FDA ingredients and the USDA finished goods. We would keep the records for the ingredients that are FDA-regulated that go into the finished product that has the USDA bug on it. So, does the record-keeping stop once the ingredients go into that finished product?
DR. BERU: As I said, any product that is under the exclusive jurisdiction of FDA [sic] is excluded from the requirements of this Rule. That is in the statute.
Q. Yes.
DR. BERU: However, these other ingredients are not under the exclusive jurisdiction of USDA.
Q. Correct.
DR. BERU: So, yes, the Rule would require you--it is also regulated by FDA and it would require you to maintain immediate previous source of these products.
Q. The previous source, but what about the subsequent?
DR. BERU: If the finished product is under the exclusive jurisdiction of FDA [sic] and, again, keep in mind that there are products that are under both jurisdictions--if it is under the exclusive jurisdiction of USDA, then you are not required to establish and maintain the immediate subsequent recipient of the food. But if it is something where co-jurisdiction applies, then you would have to establish and maintain the immediate subsequent recipient with respect to the FDA-regulated components.
Q. So, if the finished product has components that are from FDA--
DR. BERU: Well, if it is a product that has both FDA and USDA jurisdiction, I think there is no question with respect to the ingredients, spices and so on. But the final food may be under the exclusive jurisdiction of USDA. In that case the Rule wouldn't apply. But there are some products that are regulated by both USDA and FDA, then with respect to the ingredients that are regulated by FDA you would be expected to keep records of the immediate subsequent recipient.
Q. Thank you.
Q. Good morning, sir. As a non-transporter, the way I understand the regulations, we receive food from the manufacturer, receive it into our distribution centers and then transport it to retail outlets with our own fleet. Under our record-keeping requirements, can you address lot numbers generated by the manufacturer as far as our record-keeping requirements?
DR. BERU: Under the proposed Rule you would have been required to establish and maintain the lot and code number information. However, what we have learned through the rule-making comment process is that while manufacturers do keep lot numbers of the manufacturer and pack, when it comes to your distribution center, our understanding is that products get broken up. When you fill an order for a retail facility you take some product from here, product from another source, and so on. So, the integrity of that one lot that came to your center is broken up and, under those circumstances, our understanding is--unless you instituted a process at great cost--that it becomes virtually impossible to track lot and code number.
So, when it gets to your distribution center the requirement for lot number stops. You would not be required to record lot or code information for food that you are distributing to others.
Q. But for the food that we get from the manufacturer, do we have to document the lot number for each specific shipment?
DR. BERU: Well, yes, because that has lot code information so you would be expected to establish and maintain that information, but then as you send product out you have broken up that product. And, then we understand that there are technologies that are in the works that will make it possible for you to link incoming with outgoing product but right now they are cost prohibitive, and we hope that down the years the cost will come down enough--ideally, that is what we want. That is what I am saying but we also know that physically it is impossible to do without incurring a lot of cost.
And, it is not the purpose of this Rule to mandate, you know, re-engineering your process at great cost and that is why we are saying in some instances for example with respect to linking incoming and outgoing product to the extent that information is reasonably available to you. In the case of the distribution center, we understand that is not reasonably available. When it comes in it comes in as one batch with one lot number, but when it goes out, from what we understand, that integrity is broken up and it is impossible to record the lot number.
Q. So, the manufacturer has to track by lot number going out to the customer. Right? Their customer?
DR. BERU: Right, yes. That is why I said in my presentation that the lot or code number applies to manufacturers and processors who pack food, not to anybody else.
Q. So, both manufacturer and the distributor have to track--I mean, they are downstream--well, they are upstream from us and we are downstream from them, so do we both have to track lot numbers?
DR. BERU: Well, no. As I said, for you, when you ship it out--my understanding is you are not shipping it out whole?
Q. No, I am talking about receiving.
DR. BERU: Again, maybe we need to make that clear in the questions and answers, but our understanding is that as a distribution center, when you receive it from the manufacturer it comes under one lot number. So, that would be a reasonable thing for you to keep in your records. However, when you break up product and you ship it out that is not a reasonable requirement.
Q. [Not at microphone...] lot number was only required for persons who manufacture, process or pack food.
DR. BERU: Right.
Q. So, when I receive it I am not a person who manufactures, processes or packs--
DR. BERU: Well, as I said, I think--
Q. --I don't have to record the lot number.
DR. BERU: --we need to clarify that. Yes, you are right, as a distributor the Rule, as it is written now, doesn't require you to do that.
Q. Thank you.
Q. Further clarification on that, as a feed manufacturer, when we receive ingredients and then we manufacture a finished feed, my understanding is we would not have to record the lot numbers of the ingredients. Is that correct?
DR. BERU: Well, you are a manufacturer and I don't know what kind of lot numbers, but for manufacturers the lot number requirement applies, as we said.
Q. For our finished product?
DR. BERU: Right.
Q. But not for the ingredients that we receive from a supplier?
DR. BERU: No, but, again, we said to the extent that you can link lot number from incoming ingredients to outgoing ingredients, your records have to show that. Keep in sight that we said lot or code number to the extent the information exists. If that information doesn't exist for your incoming ingredients, then you are not required. But if that information is available to you as a manufacturer, you have to maintain that information.
Q. I have a series of questions so if I start to go too long, just someone throw something at me and I will sit down. Again, we are a mid-size retail grocery company. My understanding, just so we are absolutely clear, is that when we ship product from our distribution center to our retail stores we do not have to track that.
DR. BERU: This is your own distribution center--
Q. Yes.
DR. BERU: --to your own retail? No, that is intra-corporate and we have said that you don't have to keep records of your internal company transfers.
Q. We own our distribution centers and we own all of our stores, and we ship from that distribution center to our retail outlets, we have to record that?
DR. BERU: You do not have to.
Q. Okay. That is why I was really asking; I didn't understand. Again, we would not have to record the transportation on our own trucks?
DR. BERU: No, since you are using your own trucks you are a non-transporter; you are not a transporter.
Q. Okay. On third-party deliveries, do we have to record if the product that we don't ship through our distribution centers comes to a store--Fritos, all this stuff that comes in DSD third party--do we have to track who we got that from?
DR. BERU: Yes, you have to, with the exception that for DSD--and we make this clear in the preamble. We understood that the DSD process is such that even if a manufacturer is directly delivering to the stores through the DSD system, it is impossible to keep track of lot numbers. So, yes, you do have to keep information on who the source of the food is, and what the food is, and the amount, the quantity, and so on, but you don't have to keep the lot numbers.
Q. When we are back-hauling product--we will send product out to a store and we will make deliveries from the distribution center to our stores, and then we will back-haul. In other words, we will run by a manufacturing plant and pick up product from that plant and then bring it back to our distribution center. Do we have to do anything there in the way of records?
DR. BERU: Could you clarify that a little more? I am not quite sure I understood.
Q. We will put product for two or three stores on a truck so we will fill a truck up and we will go out on the route, if you would. So we would go to store 150 and put off five pallets, and go to the next store and the next store. So, when that truck is empty we may be 150 miles away from the distribution center. So, if it is in Savannah and they bring a lot of sugar into port there, we will pick up that sugar; we will pick up 22, 24 pallets of sugar and then bring that back to the distribution center.
DR. BERU: Yes, in that case you would need to keep the identity of the supplier but, you know, you are using your own trucks so the transporter part doesn't apply but you do need to have information on the immediate previous source of that sugar, the identity information and so on, the amount and the date you picked it up.
Q. When we receive product into the distribution center we do know the vendor name and address, but a lot of times we will have different ship points and we don't always record that on that particular receipt. Would we have to know the particular ship point or could we say this came from this particular vendor?
DR. BERU: That is an excellent question. That also has been raised before. Keep in mind that this Rule is intended to enable us to track along the chain so, ideally, for our purposes it would be the shipping point. But if that information is unavailable--this question was presented, you know, do you want the corporate address or the shipping point, in another meeting. Again, this is one thing that we haven't clarified in the preamble and we will clarify it in the questions and answers. But keep in mind that for our purposes the intent of the Rule is to enable us to follow the food along the distribution pathways so the distribution point is what would interest us, more so than the corporate address.
Q. When we have product that is stored at a third-party outside storage--sometimes we can't hold everything inside our distribution center so we will go to a third party and they will hold the product for us, and then we will order that back as we need it. Are you interested that it is PNG product, as an example, that we are pulling out of that particular facility or the fact that it is a third party storing it?
DR. BERU: Again, the former. You know, the product could very well be, deliberately or not deliberately, tampered with in that third-party warehouse. So, the third-party warehouse will also need to establish and maintain records with respect to food they are receiving from you as well as the food it is releasing back to you because it falls within the definition of a non-transporter who is holding food.
Q. If a distribution center sends product to a food bank, not the retail store but if the distribution center sends it to a food bank, what are the record-keeping requirements there?
DR. BERU: There are no record-keeping requirements. We have said that the food bank, which presumably falls under the definition of a charitable entity as we have defined it in the Rule--we have said that food bank can stand in for consumers, just as grocery stores don't have to keep information on the consumers that buy the food. You do not have to keep records. In other words, the food bank stands in for a consumer. You do not have to keep records.
Q. That was a short answer. Okay, I am with you. We cross-dock a lot of product--
DR. BERU: Excuse me, cross?
Q. Cross-docking, it is where the product comes in on a truck but then we will move it, just within a matter of 10, 15 minutes, to another truck that is going outbound. A lot of our facilities do a large percentage--30 percent of our product will be cross-docked. As an example, CNS, which is a wholesaler, if you would, so we will-cross dock some of that product. What are the record-keeping requirements in that situation?
DR. BERU: For the terminal where shipments are being moved? If the purpose is to just move food from one transportation mode to another, unless it is really holding food--but if it is just off-loaded for the mere purpose of transferring it to another truck, then that entity doesn't fall under the record-keeping regulations.
Q. It does?
DR. BERU: No, it does not.
Q. It does not.
DR. BERU: Yes, the transfer point does not unless it is holding food as we define "holding."
Q. On outside storage--well, we have covered that.
DR. BERU: There are a couple of people behind you.
Q. Doctor, if I could ask for your patience, you may have spoken to this but the commodity that I am concerned about is bottled water. We are doing our own manufacturing. We have our own route trucks. The example that I would like to submit to you is that a typical route truck may hold 250 5-gallon bottles along with small pack or PET bottles. It goes out on its route through the course of the day and, to your point, that truck by the end of day, with its various stops for commercial accounts and distribution may drop off two bottles, 50 bottles. So, are you saying that we do not have to capture these lot numbers for that day's distribution? That is the key.
DR. BERU: No, you are distributing bottled water.
Q. Yes.
DR. BERU: No, as a distributor you are not subject to the lot code number. You are subject to identifying--
Q. Sure, unique identifier on each bottle.
DR. BERU: Well, not identifier on each bottle but your records have to show the immediate subsequent recipient of the bottled water, whether it is the 5-gallon or the small container, the amount that--
Q. Was produced that day?
DR. BERU: No, delivered. We are talking about the immediate subsequent recipient right now.
Q. Right.
DR. BERU: If you are shipping to buyer A, B, C your records have to indicate how much you are delivering to A, how is it packaged, all the information--the identity of buyer A including address and telephone number, etc., and the date the delivery was made. You would have to have similar records for buyer B and buyer C. But as a distributor you are not required to have lot or code number information.
Q. Another example, commercial account, one stop but multiple buildings for that commercial account. Same scenario applies? We will document who we are delivering to but we don't have to capture those lot numbers? Let me give you an example. California Kaiser Permanente for example, that is one of our large commercial accounts and they have multiple campuses and on one campus they could have six or eight buildings and we are delivering multiple bottles to each one of those buildings.
DR. BERU: Well, to the extent that the folks in those buildings are the consumers, you don't have to have the one down information on that.
Q. Right.
DR. BERU: But the distribution center where you are delivering to--you know, it is not unlike the example I gave of the manager who was not a party to that transaction.
Q. Right.
DR. BERU: That distribution center is a party to this transaction and would be expected to have also information of water that was received from your firm, but would not have to maintain the one down to the extent that that water then is going to consumers.
Q. Thank you very much.
Q. In the case of a processing facility outside the U.S. which sells to U.S. customers and arranges air freight from the foreign country into the port of entry where the product is taken into possession by the U.S. customer, would that processing facility be deemed to be transporting goods in the U.S. for the purposes of record-keeping?
DR. BERU: If it is just transporting it to the port of entry, that wouldn't be considered transporting within the U.S.
Q. Thank you. A second question, a U.S. company that outsources all the freight handling activities, one of those activities is to go and pick up product from the airport into a warehouse. Our company also outsources that service but the company providing the service to us might subcontract that to different trucking companies. For the purposes of our record-keeping who is the transporter that brought the product from the airport into the warehouse?
DR. BERU: This is similar to the earlier question of subcontracting even when you are distributing your own products but you employ subcontractors. Again, we haven't fully vetted that process and what are the legal--does that subcontractor become in essence part of that transporter that you are working with, or is it an independent transporter that is then taking possession of those products for the sole purpose of transportation, which then would require them to fall under the transporter regulations. We will clarify that in the questions and answers.
Q. Thank you.
Q. My question is about protecting chain of custody. If a manufacturer sends product out and it is less than a truckload shipment, if it is 5000 lbs., you send it to a carrier who transports that product, those 5000 lbs., and on that truck there is a multitude of manufacturers that also have product on that truck. He takes that to a facility, takes that product off the truck, puts it in a warehouse, reloads it onto another truck that is going to go to another bulk facility, and so on. How in the world can the chain of custody be protected with so many people handling that product and so many drivers who would be responsible for also protecting the chain of custody? How can they record that? The paperwork would be monumental.
DR. BERU: Well, the rules do require that when the transporter delivers it to the warehouse, the transportation company is responsible for maintaining the records identifying that distributor and the immediate subsequent recipient of the food, together with how much food is being delivered, etc., all the record points that I pointed out earlier. Then, when another transporter picks that food up from that transporter, then the transporter has to identify that new transporter as the immediate subsequent recipient, and the transporter has to identify the warehouse as the immediate previous source.
The reason we do this--I mean, ideally we would want the records to be in one place that identify the entire chain from beginning to end, but the statute only is specific about requiring covered entities to establish and maintain records of the immediate previous source and immediate subsequent recipient only. We cannot mandate that they keep records of transactions they are not party to. Unfortunately, as that is the case, we have to go from entity to entity if we have to trace-back and trace-forward. We are going to have to do it simply because the nature of the statute doesn't require establishment and maintenance of records of others in the chain, only the immediate previous source and the immediate subsequent recipient.
Q. I can understand that and I can understand with manufacturers with corporate people who are responsible for their individual record-keeping. The scary part about this whole thing is that you are putting a driver--and not to downgrade a driver or his intelligence or anything, but you are putting a driver on a truck who is basically responsible for going forward and delivering this information, who might not be the most educated person in the world but is totally responsible for the product safety. It is extremely concerning, I am sure, for a lot of the trucking companies that they are going to put the onus on the driver who is going down the road to maintain records.
DR. BERU: I understand your concern but we can only issue a regulation to the extent that the statute allows us to. I guess that is the short answer, but I do understand your concern.
Q. To give an example of my question, I am a food distributor. I received a shipment from Green Giant, and I find that I have more of that in my distribution center than I need and I want to move that to another distribution center within my organization. My question is does the IPS information that I received from the source need to be transported, so to speak, with the product when it moves from one of my facilities to another, not yet reaching the retail point.
DR. BERU: No. Again, that is an example of an intra-company transfer. When you finally do deliver it to the retailer then, of course, the records have to include the retailer as the immediate subsequent recipient of the Green Giant product, whatever the quantity is, how it is packaged, etc. You records will also still identify receipt of the Green Giant product in the initial instance, not when it goes to the second distribution center. But you have to maintain the record in your first warehouse of having received the Green Giant product and what the quantity was, how it was packaged, etc., but you don't have to record intra-corporate transfers.
Q. So, the receiving warehouse will have the previous source information--
DR. BERU: Right.
Q. --and the second warehouse that actually ships to the retail point--
DR. BERU: The subsequent, yes.
Q. Thank you very much.
Q. About a foreign facility, as an example, I mean you have a foreign facility that manufactures a food additive and sends it to the U.S. What would this facility have to keep as a record? I mean, the raw material to produce this food additive is not food.
DR. BERU: Well, actually, the definition of food additives is a little broader. It includes also substances that are used to make food additives. But the short answer to your question is that the foreign entity has no requirement under this regulation. However, when it makes the food additive and sends it to the U.S., whoever is receiving it in the U.S. has to have in his records that foreign entity as an immediate previous source of the food additive. But on the part of the foreign entity there is no requirement.
Q. There is no requirement? And, do the foreign entities still have to be registered?
DR. BERU: Yes.
Q. Yes?
DR. BERU: These are two different regulations. If the foreign entity--let me see now, the registration regulations apply to anyone who manufactures, processes, packs or holds food. We have said that it is the entity that does the last major thing to the food which, in this case, would be your foreign manufacturer. So, they would be required. These are different rules. They still need to register but they are not required to establish and maintain records.
Q. So, records have to be kept here, in the U.S.
DR. BERU: Yes, whoever receives it. The importer has to establish and maintain records of the food, whoever you are sending it to, whether it is domestic or an exporter. But there is no requirement on the part of the foreign entity unless you, yourself, are bringing the food and transporting it into the U.S.
Q. Thank you.
Q. Hi. I just wanted to ask two questions. One, clarification on when you are saying vertically integrated companies, are we talking about even if you have separate corporate entities as long as they have the same controlling parent? You are considering that intra-company? Or, are we talking about only within the same corporate entity transfers?
DR. BERU: Good question. Again, the preamble says within the same corporate entity but we haven't really considered this other arrangement you mentioned. By the way, let me say that we really appreciate receiving real-life questions like this for clarification in our questions and answers. That I think is one we will have to clarify. You know, there are so many different corporate arrangements, we haven't addressed everything in the preamble but, please, do send in written questions. Again, the way to do that should be up on the website, as I explained, the bioterrorism website. I hope it is up. But, if not, feel free to send those questions directly to me.
Q. Okay. So, that question you all haven't clarified yet with regard--
DR. BERU: Right, we need to clarify that.
Q. So, should I go ahead and formally submit it?
DR. BERU: Yes, we would appreciate that. The reason I am saying that is that then we can get questions clearly, with a real-life example of what the situation is out there--as I said, you know, there are so many entities and there are so many different permutations of arrangements, and so on that while the Rule can issue general terms and try to broadly cover, it can't possibly predict every single situation and address every single situation. And, we would appreciate receiving questions to the extent that they are not clear in the preamble or in the codified.
Q. My second question, I think I get it but I just want clarification, we have our own distribution center; we have our own restaurants and we use our own trucks. So, in that situation I know we are good. We keep records coming in from the transporter on previous but going out to our restaurants we don't have to keep records. Right?
DR. BERU: To your own restaurants.
Q. To our own restaurants. However, as a courtesy, we then transport on our trucks to others. Do we now become a transporter or are we still--
DR. BERU: No, you are using your own trucks so you are a non-transporter but you have to establish and maintain records of the other entity.
Q. Of the third party?
DR. BERU: The immediate subsequent recipient.
Q. Thank you.
Q. Any feel for when the first Q&A is going to be published?
DR. BERU: I hate to give time lines because I have been wrong before but we are working on a set. Keep in mind that these have to be vetted not only within our own center but they have to be vetted by our Office of General Counsel. We will try to issue the first set, you know, as soon as possible but I just hesitate to give you a date. But it is certainly going to be well before the compliance date even for large firms.
Q. Just keep in consideration that it takes a lot of time to develop this--
DR. BERU: We understand.
Q. Thank you.
Q. We are a retail operation that manufactures and sells directly to customers so I realize at that point we are exempt from keeping those records. But we also sell to other businesses like restaurants. What type of record-keeping would be required for that?
DR. BERU: As a retail entity, yes, you are not required to keep the immediate subsequent recipient with respect to selling to consumers. But if you are selling to businesses, such as restaurants, you have to establish and maintain records of the immediate subsequent recipient, but with a qualifier, to the extent that that information is reasonably available to you. Now, if a restaurant owner comes in and buys some products from your retail operation, it is not your responsibility to ask him whether he is a consumer or whether he is buying for a business. But, for example, if that restaurant has a business account with you, then that information is reasonably available to you and you need to capture that.
Q. And would that be in the form of lot tracking or just the finished goods?
DR. BERU: No, at the retail level we are not saying lot applies. Remember, lot is manufacture, process and packing.
Q. Thank you.
Q. We are a food manufacturer and I am concerned about this language, "persons who manufacture, process or pack food must also include the lot or code number or other identifier if the information exists." When we receive product--nuts, chocolate--if the immediate previous source, our supplier, has identified a lot number we can capture that information and we will. It is not always available to us and, yet, the information exists. So, are we in violation of the Rule if we do not get that lot information from our supplier?
DR. BERU: Well, if you are not getting it I presume it doesn't exist for you--
Q. Well, is that what the verbiage of the Rule means?
DR. BERU: This is a very specific question. Again, this is a reading of the regulation as written that can be interpreted either way. I think probably I will defer that to question and answer. That is a good question.
Q. On the other side, when we manufacture the product and then ship our product out we can identify our product by different codes, lot numbers. But do we have to identify where the raw materials that came in are in the finished product going out? I guess, do you require full traceability?
DR. BERU: Well, yes and no. We said to the extent that that information is available to you, and I don't know what kind of product you manufacture but, remember, I gave the example of the cookie maker. Taking flour as an ingredient, if you have one receiving bin for all the flour you receive from different companies and it is mixed in and you are sourcing from that bin to make your cookies, then the information that is reasonably available to you is the batch of cookies you made. The flour that was used to make that batch of cookies could have come, you know, from source A through F--
Q. By virtue of the fact that you have that example in your materials, it would indicate to me that you do not require full traceability.
DR. BERU: Yes. The reason I said yes or no is because if the information is reasonably available to you, we would expect that in your records. But if it is not reasonably available, that is on a case-by-case determination. So, yes, you are right, it is not full.
Q. So, to the extent that we do have lot or code numbers from our suppliers, we keep them. And, to the extent we can identify our finished products going out by lot or code number, we retain that if the information is available to us rather than if the information exists.
DR. BERU: Well, if the information exists was for the lot or code number.
Q. Right.
DR. BERU: But with respect to linking incoming with outgoing product, we said to the extent the information is available to you. There are two different standards there.
Q. Thank you.
Q. If we are a small business, then my understanding is that we have until June 9, '06 to notify you that we are in compliance with the record-keeping. Is that correct?
DR. BERU: No--well, again yes and no. You have until that time to come into compliance but you don't have to notify us.
Q. We do not have to notify you?
DR. BERU: No, you do not have to notify us.
Q. Thank you.
DR. BERU: But you are right about the time frame.
Q. So, if we file and get our FDA food facility registration number, then that was notification that we are already in compliance. Correct?
DR. BERU: Yes. Well, see, these are two different rules. The registration rule did require you to register. As a part of that registration process you get a registration number. That is totally different from the record-keeping rule. For the record-keeping rule you have to come into compliance by the date that applies to you based on your size but there is no requirement for you to let FDA know that you have started keeping records as the Rule says. As I said, we assess those records when we have met the threshold that I talked about, and that will be the first time that we will see those records.
Q. Thank you.
Q. My question kind of relates to an earlier one where we talked about contract transportation and whether that is considered part of intra-company activity. My company contracts distribution centers for food retailers. We service exclusively a single retailer out of our facility. Under that type of contract, would we be required to track the shipment to each one of the individual stores?
DR. BERU: Again, these questions are very similar. You are right, as you indicated, when you contract out does it automatically become your company or is that a separate entity? I think we have said in all the public meetings that that is one that we need to clarify in the questions and answers.
Q. Thank you.
Q. We are a retailer but we have in our retail stores an in-store bakery operation whereby there is some processing of goods that are eventually sold to customers. Would that operation, in and of itself, be a manufacturing operation where we would have to tack all the ingredients and lot numbers going into those products?
DR. BERU: No, you are still a retailer. I mean, we have said that if a major part--in this case, if your sales of food product from your retail part is higher than any other activity, for example from processing and so on, you still fall under the retail definition. As a retailer, provided you have ten or more employees--of course, if you have ten or fewer you are exempt even from the establishment and maintenance part although you are subject to access. Assuming you are bigger than ten or more, or 11 or more, then you are subject to the retailer requirements which are the immediate previous source of food you bring in and that is it. You don't have to establish or maintain records of consumers that buy from you, except, as we just said a while ago, if they are businesses and if that information is available to you, you have to maintain that record.
Q. In the retail operation sometimes sales are made to businesses, different types of businesses. There are charge account sales. Obviously, we would know that that is a sale to a business customer. Currently there is no tracking or there is no record-keeping for every single one of those items that is required under the regulations. Would we have to implement a process to track all of that to collect all the information for those business customers?
DR. BERU: Yes, if you know they are businesses you have to establish and maintain records. But, again, even if you are not doing it now, and the whole purpose of giving you compliance times is so that, you know, you can modify your process and come into compliance and I don't know how big your firm is, but even if you are a large firm you have a whole year to come into compliance even if you fall under the definition of a large firm which is 500 or more employees.
Q. Thank you.
Q. It is my understanding that the required records will only need to be made available in the case that FDA believes that a product has been adulterated and presents a serious threat. Does this mean that FDA will then not have any plans to implement compliance inspection activities with regard to the requirements?
DR. BERU: I guess I can say that we are looking at whether or not there could be verifiable activities, but as it stands now, the only time we will ask for the records is when, as you say, the threshold is met.
Q. Thank you.
DR. BERU: But we are looking into whether or not we have authority to verify that those records are being maintained.
Q. As a transporter, we often deal with brokers.
DR. BERU: Excuse me, with what?
Q. Brokers. For the purposes of identifying the IPS, oftentimes the broker will give you a location and a time to pick up the product but no contact name. Would you use the contact name of the broker?
DR. BERU: I think in this instance probably as a transporter I would ask the broker for the contact number for where you are picking up.
Q. Well, sometimes they are hesitant to do that for obvious reasons. They don't want you to contact their customers.
DR. BERU: It is hard to answer that question, but we do have to have the contact information, the name, address and telephone number--
Q. If available?
DR. BERU: Oh, no, no. In this case it is not if available--
[Laughter]
--you don't have an out there!
Q. We will do our best; we will ask. I don't know what else we could do.
DR. BERU: Any other questions?
Q. I have a couple of different questions. Up till now all the regulations have basically talked about people that process, pack, hold and manufacture. All of a sudden, you are bringing into it import. What if I import it but do not receive it; I send it to a public warehouse? Is the importer or the public warehouse or both required to keep the records?
DR. BERU: I think the answer there is, you know, do you actually get physical possession or are you facilitating that import? In which case, if you are just, you know, paperwork facilitating you are not liable for this regulation so it would be the warehouse that would maintain the immediate previous source of that product. You know, for both transporter and non-transporter you have to have custody, possession, ownership. But I would say, you know, if you are facilitating only and never really actively have custody or possession of the product, then you would not be required.
Q. One other question on the samples, what if it is only consumed as taste test? Is that considered consumed? For research only?
DR. BERU: Yes. Right now we have said that if it is consumed as taste test it falls within the requirements. If the R&D just implies chemical testing and what-not and is eventually destroyed, then you don't come under the purview of this regulation. But if the food is consumed, whether it is through tasting, then you are required to keep those records.
Q. One other question, when you are going to send a written notice, are you sending it to the person that registered us with the FDA or one contact when you send us the notification?
DR. BERU: Well, I think you probably mean when we come with a written notice of inspection asking for records. Right?
Q. Right.
DR. BERU: No, the FDA inspector or investigator will be the one doing that.
Q. It says that when you notify us in writing. Who are you sending it to? For instance, you are going to send me a written notice, who are you going to send it to?
DR. BERU: To the agent, operator or the one in charge of that facility when we are asking for the records.
Q. But it says notice of inspection to owner, operator or agent in charge--oh, that is FDA agent in charge?
DR. BERU: No, that is the facility.
Q. So, you are going to send it to my facility.
DR. BERU: Right, it will be hand-carried because the FDA investigator has to show credentials and present you with a written request for the records.
Q. So, he will come to my facility with a written record?
DR. BERU: Yes.
Q. Okay. I was under the assumption that you were going to mail it out and I was concerned about that.
DR. BERU: No, no, no. Once you receive that written notice, then the records have to be made available as soon as possible but not to exceed 24 hours.
Q. My last is more of a comment I guess. I am surprised with all the regulations that are going on and bringing the transporters into it, nothing has ever been mentioned about locking, sealing or security in that way, and I am just surprised it hasn't been mentioned. Because we are having a lot of issues with transporters not wanting to lock and I am just kind of surprised at that.
DR. BERU: Well, two things about that, number one, the regulations can only be what the statute says, and in the case or record-keeping the statute says, you know, FDA should promulgate a regulation requiring those who transport, pack and so on, to establish and maintain records of the immediate previous source, immediate subsequent recipient.
Now, with respect to your other part though, and I hope you all go to our website and look at the guidance, documents we have issued with respect to security, which is what you are talking about--and we hope you are looking at those guidance documents, and they do address the things you were mentioning as part of security. The regulations really only can be what the statute says. They cannot go beyond that. Even if we wanted to do that, our lawyers wouldn't allow us to.
Q. Dr. Beru, these are probably more for clarification. One is on R&D samples again. If I am in an R&D lab and I am making samples, I get ingredients from all over the place and I make, say, the cookie example that you had and I send those out to one customer, and that customer does, indeed, eat them, I have to keep establish and keep records for that?
DR. BERU: Yes, you do.
Q. So, how do I keep records on all of those ingredients that I received? A lot of ingredients are received as samples themselves.
DR. BERU: Well, you must know where those ingredients are coming from and that is what the Rule asks you to do, establish and maintain records of the identity of where you get the ingredients from, the date you receive them, etc.
Q. Right now, we are currently not doing that. We have R&D people who call a customer and say I am going to send you a sample of this mix, and they will send it to them; they will use it. They don't record anything.
DR. BERU: I realize that may not be the case now but, again, that is why we are giving you a compliance period. But if you are an R&D operation and food is being consumed, then you are subject to the regulations.
Q. I just wanted to clarify that. The other clarification is on lot numbers again. You said that a manufacturer has to establish those lot numbers. What if they don't have them, if they are just not available? One example was with the animal feed. If we are making a finished good that has code dates on it and time frames for which the product was made and it is going out to our customers, that is one thing. But when we take that same product and it is used as scrap, there are no lot numbers established for that when it is going to a hog farm or for animal feed. So, we have to establish lot numbers for that?
DR. BERU: No, you do not have to establish lot numbers specifically for this regulation. That is why I said if that information exists, then the expectation is that that will be recorded. But if they do not exist, the Rule doesn't mandate that you start doing a lot of code numbers.
Q. And that is for, like, the animal feed portion. What about for the product that doesn't currently have lot numbers?
DR. BERU: Well, if it doesn't currently have it the Rule doesn't say that you have to start using code numbers. Remember, I said to the extent the information exists.
Q. You talked about the procedures that FDA is going to use in order to get this information to you that says we are going to come in and access your records. How long do you think that that is going to take? It seems like, you know, I have to send this form over here, and then this person has to sign it and he has to get a written notification, and then they bring that to you. How long is that going to take. In the event that there is a crisis what time frame are we looking at for that to happen? Say, for example, we are going to do a voluntary recall ourselves, do we have to wait for you to go through your procedures for checking into this?
DR. BERU: No, if you have the information I don't see why you wouldn't, but the thing is that for us to access the records, as I said, we have to meet that threshold and we have to make a determination that we have met that threshold.
By the way, what I outlined is a draft guidance still. We haven't finalized it. We are looking at comments we have received and if you have comments, as I said before, please do send them in. But I expect we will make that determination fast because we are talking about a major public health issue here. Similarly, once we do come to you with a written notice asking for the records, we would hope that you don't say, well, I have 24 hours to comply with this. Because it is a public health emergency, we anticipate that you would provide us the records as soon as possible in order to be able to trace back and trace forward.
Q. One last clarification, if I had a company, for example, that was in Canada and, say, they were importing a USDA-regulated item but they were transporting that food, is that going to be subject to the transporter regulation?
DR. BERU: Not if it is under the exclusive jurisdiction of USDA.
Q. Thank you.
DR. BERU: Thank you.
Q. You are not off the hook yet.
DR. BERU: No, go ahead please.
Q. I am a retailer and it seems that FDA would put the majority of the emphasis on record-keeping at a higher level where, if there was a situation, you could get more information about where it went rather than focusing on an individual store. Our store people are very good at running their stores but they are not experts in bioterrorism so if an FDA inspector comes into our store and wants to see verification of the records, if you can do some type of validation of processes, will you focus on that area of the supply chain or would you focus more on the manufacturer or a distributor to determine where the product went rather than going into a store and saying we want to know who all your DSD vendors are, or we want to see your records on selling to businesses?
DR. BERU: Well, I don't think that is what we will be doing. I mean, in the first instance, we are not really just focusing on the big firms. Yes, we have excluded retailers who have ten or fewer FTEs but, remember, those retailers are not excluded from records access. I mean, the first inkling we will have that there is a problem is probably when a consumer gets sick and we identify the product and the consumer is able to tell us where he or she bought that product. It may be your retail store, in which case that will be our first stop in the tracking process. So, no, it is not just focused on large companies. You, as a small retailer of ten or fewer, do not have to establish and maintain records.
This is something within the final Rule. I mean, you were covered in the proposed rule but in the final Rule there were several reasons for excluding that. Also, you know, in consideration that small retailers have a smaller number of products and typically those products are pretty much the same product that larger retailers will have too. So, even if we weren't able to get information about that product from the small retailer, we can get it from the larger retailer. So, there are a number of considerations that went into excluding retailers of ten or fewer from the establishment and maintenance part.
But, remember, they are not exempt from records access. The records access is going to be about specific products, not just give me all the information you have on all the firms you get food from.
Q. I guess that is my concern. It doesn't matter what size retailer you are when you are looking at one particular store and how conversant that store manager is, whether you have a chain of a thousand stores or five stores, in what their requirements are under bioterrorism when the FDA inspector comes in. Because we have a lot of turnover in our industry, and if an FDA inspector comes in and says I want to see your records--they keep thousands of records so I think FDA needs to consider the sophistication and the knowledge possibly and at what level as they ask the question.
DR. BERU: Yes, and that is why we are doing quite a bit of outreach and public meetings, and we will continue to do outreach. We will continue to make tutorials available on our website. As I said, we have in the works some of "The Cliffs Notes" version, as Leslye says, of the Rule so that everyone can have an understanding of what the requirements are. Also, remember, there is a compliance period. That is why we are giving small firms up to 24 months to come into compliance. And there is a responsibility on the part of those entities to make sure that employees are conversant with the rules and what the requirements are.
It looks like that was the last of the questions. I really want to thank you on my behalf for coming to this public meeting. I hope this was useful to you. If you have additional questions, please do send them in in writing. As I said, you can send them on our website or directly to me, if need be, and we will consider them. Again, thank you for your attention.
[END OF TAPED RECORDING.]
