Sanitary Transportation of Food: Contracts and the New Rules
By Michael A. Walsh, Esq., Mark Andrews, Esq., and Moira Chapman, Esq.
Pursuant to the Sanitary Food Transportation Act of 2005 and the Food Safety Modernization Act (FSMA), the U.S. Food and Drug Administration (FDA) published the final rule entitled “Sanitary Transportation of Human and Animal Food” (SFT Rule) on April 6, 2016. The SFT Rule is effective June 6, 2016, with compliance beginning April 6, 2017 except for small businesses, which have until April 6, 2018, to comply. The SFT Rule establishes the requirements for sanitary transportation practices applying to shippers, loaders, carriers and receivers engaged in the transportation of food to ensure the safety of the food they transport. This article will provide an overview of the scope and coverage of the SFT Rule.
Shippers are persons who arrange for the transportation of food in the United States by a carrier or multiple carriers sequentially. Importantly, this definition includes a freight broker. The definition also includes imported food. For example, where a freight broker has arranged the U.S. land-based transportation leg of the foreign shipment, the broker is deemed the “shipper.”
Carriers are persons who physically move food by rail or motor vehicle in commerce within the United States, regardless of ownership of the vehicles. The term does not include any person who transports food while operating as a parcel delivery service.
Loaders are a new category defined by the SFT Rule and are defined as persons who load food onto a motor or rail vehicle during transportation operations.
Receivers are defined as persons who receive food at a point in the United States after transportation, regardless of whether that person is at the food’s ultimate destination. The term does not include consumers.
Transportation is defined as any movement of food by motor vehicle or rail vehicle in commerce within the United States.
Transportation equipment is the equipment used in food transportation operations, for example, bulk and nonbulk containers, bins, totes, pallets, pumps, fittings, hoses, gaskets, loading systems and unloading systems. Transportation equipment also includes a railcar not attached to a locomotive or a trailer not attached to a tractor.
Transportation operations are all activities associated with food transportation, including food requiring temperature control, which may affect the sanitary condition of food including cleaning, inspection, maintenance, loading and unloading, and operation of vehicles and transportation equipment. The SFT Rule excludes food in enclosed containers.
Vehicles are motorized land conveyances (i.e., motor vehicles) or those that move on rails (i.e., railcars) that are used in transportation operations.
With some exceptions, the SFT Rule applies to shippers, loaders, receivers and carriers involved in transportation operations for the transportation of human and animal food by rail or motor vehicle in commerce within the United States, whether or not the food is being offered for or enters interstate commerce. Applicability of the SFT Rule depends on the type of food being transported, the means of transportation, the intended destination of the food and the person(s) involved in the transportation operations. A significant change from the proposed regulations is that the definition of a “shipper” now includes one that “arranges for the transportation,” which now includes a transportation broker. Further, the SFT Rule applies even where the different transportation operations are conducted under the ownership or operational control of a single corporate/legal entity, that is, food shipments involving shippers, loaders, carriers and/or receivers that are corporate subsidiaries or affiliates of a common corporate parent company/legal entity.
Failure to comply with the SFT Rule requirements that causes the food to be “actually unsafe” renders the food adulterated and is a prohibited act under the Federal Food, Drug, and Cosmetic Act of 1938. An “inconsequential failure” by a carrier to meet the shipper’s temperature-control specifications, or from a broken seal or other evidence of tampering, will not create a “per se presumption of adulteration.” But if a covered person “becomes aware” or there is evidence of possible “material” deviation from the specifications, a “qualified individual” must determine that the food is not unsafe. Failure to take such action may render the food adulterated.
The SFT Rule does not solve or purport to solve any clearly identified problem but is part of FSMA’s overall “paradigm shift” from response to outbreaks to preventing them in the first place. Prevention is accomplished through a set of seven new rules and accompanying agency guidances that implement FSMA. Currently, it is common for manufacturing and distribution agreements to address regulatory requirements the old-fashioned way by simply stating: “XYZ Corp. will comply with all laws and regulations.” This simple provision served industry well for generations when the focus was on response, but today, prevention places the obligation on all participants in the supply chain to ensure upstream and downstream compliance.
The SFT Rule contains several exclusions for certain types of food and businesses. Additionally, the SFT Rule does not apply to issues not pertaining to the establishment of sanitary transportation practices, such as cargo security and food quality or appearance. Cargo security will be addressed in the upcoming Intentional Contamination Rule.
Responsibilities under the SFT Rule
The SFT Rule sets out equipment, operations, training and records requirements for those who serve as shippers, receivers, loaders and carriers engaged in transportation operations. The same person may act and be responsible in more than one of the above four capacities on a given shipment, and it is now necessary to ensure that the roles are specified in writing and that all participants in the supply chain have written procedures in place to ensure compliance. The responsibilities should be assigned among the parties in a written contract maintained in accordance with record-keeping requirements set forth in the SFT Rule. It is important for those involved in the transportation of food to specify in their contracts precisely who is responsible for ensuring compliance.
This section will discuss the new equipment, operations, training and records requirements for shippers, carriers, loaders and receivers engaged in transportation operations under the SFT Rule. Special attention is required to the new obligations the SFT Rule imposes on loaders and carriers.
1. Vehicles and Transportation Equipment
The SFT Rule imposes requirements for the design, maintenance and storage of vehicles and transportation equipment (V&TE) used in transportation operations. Specifically, V&TE must be designed and of such material and workmanship as to be suitable and adequately cleanable for their intended use to prevent the food they transport from becoming unsafe, that is, for it to be unadulterated, during transportation operations. Thus, the “intended use” of the vehicle will determine the material and workmanship necessary for it to be “suitable.” V&TE must then be maintained and stored to prevent them from becoming unsafe. While the SFT Rule does not specify which party is responsible for the V&TE requirements, each participant in the supply chain is responsible and must have procedures in place to ensure compliance and must know who is responsible for the V&TE and if those duties are assigned by contract.
2. Transportation Operations
Operational responsibilities under the SFT Rule include responsibilities for the measures taken during transportation to ensure food safety, such as adequate temperature controls, preventing contamination of ready-to-eat food from touching raw food, protection of food from contamination by nonfood items in the same load or previous load, and protection of food from cross-contact, that is, the unintentional incorporation of a food allergen. While the operational responsibilities apply to all shippers, carriers, loaders and receivers engaged in transportation operations, shippers have primary responsibility for determining appropriate V&TE for transportation operations absent a contractual agreement to assign some of these responsibilities to other parties. While the default responsibility falls to the shipper unless otherwise agreed by contract, all parties should make sure their procedures and contracts clearly delineate who has responsibility. All parties should also ensure that their procedures address documentation and records necessary to support their compliance and a mechanism for ensuring others in the supply chain are compliant.
Shippers are required to develop and implement written procedures to ensure that vehicles and equipment used in their transportation operations are in appropriate sanitary condition, that is, the V&TE will prevent the food from becoming adulterated, and, where applicable, to ensure that adequate temperature control is provided during the transportation of food that requires temperature control for safety under the required conditions of shipment. Measures to implement these procedures may be accomplished through a carrier or other party covered by the SFT Rule under a written agreement in compliance with the SFT Rule, but the shipper must furnish written specifications for the other party detailing the required sanitary specifications, including design and cleaning and, where applicable, operating temperature. The shipper should also have a procedure to request information from a carrier regarding prior cargo and most recent cleaning in the event that a bulk vehicle is used for food transportation.
Where the carrier and shipper have a written agreement that the carrier is responsible, in whole or in part, for sanitary conditions during the transportation operations, the contract must include the following six requirements:
1. The V&TE must be appropriate and meet the shipper’s specifications.
2. The contract must assign duty of providing the temperature information (if required) and demonstrating temperature compliance to the receiver. Recorded temperatures can be appropriate means to demonstrate compliance. Thus, carriers will need to have written procedures for documenting temperature before, during and at delivery.
3. Precooling must be addressed.
4. Bulk carriers should have documentation regarding prior cargo.
5. Procedures must be in place to document most recent cleaning.
6. Written procedures for cleaning, sanitizing and inspecting V&TE are required.
Loaders have responsibility for vehicle inspection. Before loading food not completely enclosed by a container, a loader must determine whether the V&TE is in appropriate sanitary condition and, where applicable, verify that each mechanically refrigerated cold storage compartment or container is adequately prepared for the transportation of such food. The loader may make its determination of whether the V&TE is in appropriate sanitary condition using industry standards. Perhaps recognizing that the SFT Rule is a solution in search of problem, FDA made a significant concession to industry in allowing industry standards to apply to assess appropriate sanitary conditions for V&TE.
The loader also must have written procedures in place to determine specifications and to determine if the V&TE is in appropriate sanitary condition. The SFT Rule requires a written policy and creation of documentation verifying the specifications and determining that the V&TE is adequately prepared.
Upon receipt of temperature-controlled food, “the receiver must take steps to adequately assess that the food was not subjected to significant temperature abuse, such as determining the food’s temperature, the ambient temperature of the vehicle and its temperature setting, and conducting a sensory inspection, for example, for off-odors.” This will require the receiver to know what it is receiving and to have procedures in place to assess and document the lack of problems. Thus, the receiver needs a policy to request operating-temperature specifications provided by the shipper and to ensure that compliance with those specifications has been accomplished.
When the carrier agrees in writing to be responsible for sanitary conditions during transport, the carrier must provide training to its personnel on food safety and basic sanitary food transportation practices. Training is to be done at hiring and as needed thereafter. Further, the carrier must establish and maintain records documenting the training, including the date of the training, the type of training and the person(s) trained.
The SFT Rule requires shippers, carriers, loaders and receivers engaged in transportation operations to maintain records of all written procedures, agreements and training (required of carriers) necessitated by the SFT Rule. The required retention time for these records depends upon the type of record and when the covered activity occurred but does not exceed 12 months. Specifically, shippers must maintain records demonstrating they provide specifications and operating temperatures to carriers as a regular part of their transportation operations for 12 months after termination of an agreement with a carrier. Shippers must also retain records of written agreements and procedures required by the SFT Rule for “12 months beyond when the agreement and procedures are in use.” For carriers, records of written procedures required by the SFT Rule must be kept for 12 months beyond when the agreements are in use in their transportation operations, and training records must be kept for 12 months after the person stops performing the duties. Any agreement assigning responsibilities under the SFT Rule must be kept for 1 year beyond its termination.
Records required to be maintained under the SFT Rule must be kept as originals, including true copies and electronic copies, and must be available “promptly” or within 24 hours if kept off-site. However, records of procedures that are in effect at a particular facility must be kept on-site.
Allocation of Responsibilities; Role of Written Contracts
Duties assigned by the SFT Rule to a shipper, loader, carrier or receiver may be reassigned by written contract and maintained in accordance with record-keeping requirements of the SFT Rule. Absent any contract reassigning responsibilities created by the SFT Rule, duty assignments appear to apply by default. Responsibility for ensuring that transportation operations are carried out in compliance with the SFT Rule must be assigned to “competent supervisory personnel.” The SFT Rule does not specifically address the issue of personal liability for responsible individuals, but it should be expected that FDA will apply its ordinary rules in this regard that impose liability on individuals in position of responsibility for compliance.
While the SFT Rule excludes certain small entities, FDA commented clearly that those entities, noncovered shippers, loaders and receivers, will remain subject to the current Good Manufacturing Practices provisions in Section 117.93 of the Preventive Controls rule that goes into effect in September 2016, as well as the rules prohibiting introducing adulterated food into commerce.
FDA intends to further promote the application of sanitary transportation practices through guidance for transportation activities performed by noncovered businesses.
Shippers, receivers, loaders and carriers subject to the SFT Rule may petition for a waiver of any requirement with respect to any class of persons, vehicles, food or nonfood products. FDA may grant the petition on its own initiative. The petition must describe with particularity the waiver requested, including the persons, vehicles, food or nonfood product(s) to which the waiver would apply and the SFT Rule requirement(s) to which the waiver would apply. The petition must also present information demonstrating that the waiver will not result in the transportation of food under conditions that would be unsafe for human or animal health, and will not be contrary to the public interest. Failure to include the required information in a petition is grounds for denial of that petition. The petition may also be denied if it is determined that either the waiver could result in the transportation of food under conditions that would be unsafe for human or animal health or that it could be contrary to the public interest. When a waiver is granted, a notice will be published in the Federal Register setting forth the waiver and the reasons for such waiver. This notice should assist in understanding the SFT Rule’s application after the effective date.
Under the SFT Rule, when any covered person or company at any point in the transportation supply chain becomes aware of a possible failure of temperature control or any other condition that may render a food unsanitary or adulterated, that food must not be sold or distributed until a determination of safety is made.
When the shipper has determined that temperature control is necessary, FDA requires the shipper and the carrier to agree upon how that is going to be done, how it is going to be monitored and how that is going to be recorded. FDA wants this agreement in writing because it will want to review the processes being used.
FDA has revised the final rule to place primary responsibility for determinations about appropriate transportation operations on the shipper. Each participant in the supply chain needs to have procedures in place to ensure it knows who is responsible for the V&TE. The default responsibility falls to the shipper unless otherwise agreed by contract, but all parties should make sure their procedures and contracts clearly delineate who has responsibility and who is to maintain documentation to support compliance.
The time-tested provision that the parties “will comply with all laws and regulations” has served industry well for generations and so too have general indemnification provisions. For those in the food industry today, however, the stakes are higher and the regulatory responsibility is increasing and can be assigned by contract. The stakes are higher for a number of reasons: First, FSMA’s paradigm shift from response to prevention requires a fresh look at policies and procedures and contracts to ensure compliance. Second, the U.S. Centers for Disease Control and Prevention, FDA and state health authorities are becoming more sophisticated in identifying the source of contamination and prosecuting those who fail to comply. Third, terrorists and other bad actors are increasingly looking for ways to exploit our open food supply chain and disrupt commerce to frighten, injure or kill the public. The issue of intentional contamination will be the focus of the final rule to be issued under FSMA. Finally, governmental enforcement, including recent U. S. Department of Justice pronouncements, is increasing the focus on senior management and executives in civil and criminal enforcement actions.
Michael A. Walsh, Esq., partner at Strasburger & Price LLP, serves as chair of the firm’s food, drug & medical device and products liability industry teams. He is the author of the book The Supply and Distribution of FDA-Regulated Products. He writes and speaks frequently on issues related to FDA litigation and compliance issues and has been published on issues concerning advertising, labeling, marketing, social media, off-label promotion and the First Amendment.
Mark Andrews, Esq., is partner-in-charge of Strasburger & Price LLP’s Washington, DC, office and cochairs the firm’s transportation group. He has more than 40 years of experience serving clients in the transportation and logistics industry. He counsels transportation and logistics companies on international trade compliance matters and on the interplay of federal transportation law with FDA regulations.
Moira Chapman, Esq., is a member of Strasburger & Price’s commercial litigation practice group. She works on a variety of cases including bankruptcy and employment litigation matters, with a special focus on transportation and food law issues.