This article was originally published in The American Bar Association: Food, Cosmetics and Nutraceuticals Committee Newsletter in Winter 2017.
FDA commonly stresses that it regulates approximately 25 cents of every dollar through its regulation of food, drugs, medical devices, cosmetics, dietary supplements, animal food and drugs, and tobacco products.1 These commodities are increasingly imported into the United States or at least they rely on imported raw materials. Such statistics that are commonly shared about imports: (1) 80% of Active Pharmaceutical Ingredients (APIs),2 (2) 94% of seafood,3 50% of fresh fruit and 20% fresh vegetables,4 and 50% of medical devices5—and these numbers are old. Against this backdrop, the public and Congress have expressed concern that FDA is unable to ensure the compliance of these imported products.6 Despite all of this, there is a lot of misunderstanding about FDA’s authority to inspect and refuse imported products, and how FDA implements its authority. This leads to some unfair criticism of the Agency, and failure to appreciate the strength of FDA’s authority. For example in essence, FDA can issue an embargo against some imported products without needing to go to court or even undergo notice and comment rulemaking.7 To alleviate this confusion, the following provides a primer about the basic structure and approach that FDA takes to reviewing commodities for compliance while they are being imported.
FDA’s authority comes from the Food, Drug, and Cosmetic Act of 1938, which replaced the Pure Food and Drug Act of 1906. For products being offered for import into the United States, the Congress granted FDA the power to hold an administrative hearing and determine whether a product offered for import may be imported or not—note once released into domestic commerce, FDA no longer has its import authority and must rely on its domestic power.8 This import administrative hearing is parallel to FDA acting in rem against a product in court under Section 304—in particular FDA is alleging that the product is violative; FDA is not proceeding against an individual.
In particular, FDA’s authority to hold this administratively review and refuse imported articles comes from Section 801(a) of the Act. This Section is an excellent example of poor legal draftsmanship as it consists of one massive paragraph made up of eleven sentences that uses approximate 850 words. This poor construction occurred in part because the 1938 Act largely copied the language from the 1906 Act. Then since 1938, the Congress kept cramming more words into a bloated paragraph rather than clean-up the language when it added new requirements.
Throughout all of these many words, the statute establishes quite a simple system. FDA has the authority to examine any imported regulated product and the owner or consignee has the right to introduce testimony as to the product’s compliance.9 If based on FDA’s examination or otherwise the product appears to violate the Act, then FDA shall refuse its importation. However, prior to refusal, the importer may petition FDA to relabel or otherwise recondition the product, and it will be released if the reconditioning is successful. Yet, if the owner or consignee does not recondition the violative product, then FDA will refuse it and the product must be destroyed or exported within 90 days from the refusal.10
In the regulations, FDA further illuminated the administrative hearing process. When FDA decides to sample a product, the owner or consignee will receive notice and they must hold the product until they receive the results.11 If the product is in compliance, then FDA will pay for the samples and it may be released into commerce after being released by FDA.12 If not in compliance, then FDA will start the process to issue an import refusal. Beyond the examination, FDA encapsulated the right of the owner or consignee to introduce testimony by creating an informal hearing structure. In particular, once FDA concludes that it appears that a product “may be subject to refusal of admission,” then FDA will “detain” the product and give the owner or consignee written notice stating the reason why FDA asserts the product maybe subject to import refusal. With this notice, FDA provides the time and location for the hearing, but this can be changed.13 This “detention” is generally a metaphorical detention as the importer will usually have custody of the product as Customs will have conditionally released the product.
The statute and the regulations provide the basic framework, but there remain many issues that FDA resolved in practice. These include: (1) must FDA sample the product in order to detain it, (2) who has the burden of proof, what is the evidentiary standard, and is it reviewable by a court, and (3) are there other tools FDA can use against imported product. Admittedly, these are but a few of the many issues, but some of the most critical.
The statute indicates that FDA shall refuse a product “based upon the examination or otherwise.”14 FDA has interpreted the “or otherwise” language to mean that it can issue an import refusal based upon evidence gathered outside of examining an individual shipment. FDA’s reliance on the “or otherwise” language is largely manifested in FDA’s import alert system. An import alert is an internal Agency directive that a product that matches that which is described in an import alert may be subject to “detention without physical examination.”15 In other words, FDA will automatically detain a shipment of a product based upon previously collected evidence indicating the product’s non-compliance. There several different types of import alerts: (1) those limited to a specific product from a specific manufacturer (the most common), (2) those limited to a product from any manufacturer within a given country, unless exempt (referred to as “countrywide” alert), and (3) those for a given product, regardless of manufacturer or country of production.
In most cases, an import alert ultimately serves to shift the burden of proof. For FDA to refuse an imported product, it must persuade itself that the product appears to violate the Act. When subject to an import alert, FDA in essence is referring to evidence collected outside of the individual shipment at question to say that this current one appears subject to import refusal. At this point, the importer can collect evidence (usually in the form of third-party testing) to demonstrate to FDA that the product is in fact in compliance. If the testing demonstrates compliance, then FDA will release the shipment.
For example, FDA tested a previous shipment of tuna fish and detected Salmonella (thereby making the product appear to violate Section 402(a)(1) by containing a poisonous or deleterious substance that may render it injurious to health). When a later shipment of tuna fish arrives from the same manufacturer, FDA may detain it without physical examination. At this point the importer generally has two options: (1) test the product and provide evidence it does not contain Salmonella, or (2) take an import refusal.
This process of detention without physical examination continues in definitely until either (1) the manufacturer or importer petitions FDA to remove the product from import alert (or exempt it), or (2) FDA deletes the import alert completely because the Agency believes it is no longer sustainable (this usually only happens for countrywide alerts). If a facility hopes that FDA will remove the product/facility from an import alert sua sponte, they will be waiting a long time—indefinitely. FDA issued the first import alerts in 1974,16 and according to the public data, there are some facilities still on import alert since the 1980s.17
It is commonly said that the importer and foreign manufacturer are obligated to ensure the compliance of their product.18 While this is true (and is also true for domestic product), it does not mean that a product is subject to import refusal unless the importer satisfy FDA’s desires for any evidence that demonstrates compliance. Rather FDA has the burden of proof to obtain evidence to support the standard that the product “appears” to violate the Act.
By its very name (the appearance standard), this burden is low and usually easy for FDA to meet. The Agency simply needs some evidence to support the conclusion that it looks like the product is not in compliance—some logical relationship between the evidence and the charge made against the product. While these import hearings are subject to judicial review under the Administrative Procedure Act, the courts apply a highly deferential analysis to the Agency and will only overturn an import hearing if the Agency was arbitrary and capricious. In the reported cases, FDA has a strong record for their decisions being upheld.19
For imported products, FDA still possesses all of its other enforcement tools, which may be necessary given some of the limitations of Section 801(a) of the Act. To appreciate Section 801(a)’s limited capabilities, the Act’s enforcement tools need to be placed into context. Essentially, the Act’s enforcement provisions have two separate purposes: (1) keep adulterated or misbranded products out of commerce, which is accomplished through seizure,20 and (2) punish either civilly or criminally those associated with adulterated or misbranded products,21 which is accomplished through court proceedings. Section 801(a) is simply an administrative alternative for imported products that FDA can rely upon in place of seeking judicial seizure.
With that in mind, there are several limitations to Section 801(a). First, it does not provide FDA with seizure authority despite being the import alternative to judicial seizure. For imports, Customs commonly conditionally releases the imported product while FDA contemplates its compliance. This means that the importer has custody over the product, thereby creating a risk of the importer either intentionally or mistakenly distributes it. To minimize this risk, the importer only obtains custody of the product after posting a bond. If the importer fails to comply with its obligations, then it can be issued a claim for liquidated damages, which is three times the value of the product, up to the value of the bond.22 If FDA is concerned about that risk, then it must work with Customs proactively to not have the product conditionally released, or to have the importer return it to Customs’ custody.23
Once a product is subject to import refusal, like a court proceeding. it can be either destroyed or reconditioned (fixed) (although the reconditioning process must take place before the refusal). Product prohibited from commerce under Section 801(a) can be exported, unlike those condemned under Section 304. This creates the risk that someone will export the apparently violative product and attempt to re-import it in hope of slipping past FDA.24 Thus if FDA wants to seize an article to ensure that it does not enter into commerce, it must either ask U.S. Customs and Border Protection to use its authority under the Tariff Action of 1930,25 or it must seek judicial seizure under Section 304 of the FDCA.
Second, it is not a prohibited act itself to attempt to import a product that is later refused entry into the United States. Thus to punish someone who performs this action, FDA must bring a judicial action under Chapter 3 of the FDCA and prove by a preponderance of the evidence (civil) or beyond a reasonable doubt (criminal) that the importer committed a prohibited act, such as introducing into interstate commerce an adulterated or misbranded product. Thus FDA must possess greater quantity and quality of evidence beyond what it collected to issue the import refusal.
This being said, if the importer seeks to re-import a food previously subject to FDA import refusal, the food is adulterated if the owner or consignee does not affirmatively establish the food’s compliance.26 Then as a condition of import, the owner or consignee must declare to FDA if the food was previously refused admission.27 Thus if an importer seeks to evade FDA and re-import refused food, then it is easier to prosecute the individual as FDA is not having to establish that the food is adulterated or misbranded under the traditional means.28 Rather FDA is only having to establish the identity of the food and the behavior of the importer at question—an easier proposition.
Although these import hearings are informal and common (FDA performs thousands every year), they should not be confused with FDA’s better known enforcement tools: 483 Inspection Observations, Untitled Letters, and Warning Letters. Those tools are all advisory and the recipient is under no obligation to respond to them. An import detention hearing is in fact a hearing, and failure to respond will result in an import refusal that will not generally be overturned—much like a default judgment. Furthermore, based on FDA’s ability to use “other” evidence, FDA may use the refusal from one past shipment to justify stopping future shipments. Thus as supply-chains continue to rely more on imported finished goods or components, it is essential to understand FDA’s authority on the border and how the Agency implements its power. Otherwise, someone will find themselves with no product or at least delays — either option represents commercial harm to the importer and its customers.29
1. See, e.g., FDA, Executive Summary: Strategic Plan for Regulatory Science, available at http://www.fda.gov/ScienceResearch/ SpecialTopics/RegulatoryScience/ucm268095.htm.
2. See, e.g., FDA, Pathway to Global Product Safety and Quality, page 2, available at http://www.fda.gov/downloads/aboutfda/ centersoffces/oc/globalproductpathway/ucm262528.pdf
3. See, e.g., GAO, Imported Food Safety (GAO-16-399), page 1 (May 2016), available at http://www.gao.gov/assets/680/677538.pdf.
5. Global Pathway, page 2.
6. See, e.g., GAO, Imported Food: FDA’s Targeting Tool Has Enhanced Screening, but Further Improvements Are Possible (GAO-16-399) (May 2016), available at http://www.gao.gov/ assets/680/677538.pdf; GAO, Drug Safety: FDA Faces Challenges Overseeing the Foreign Drug Manufacturing Supply Chain (GAO- 11-936T) (September 2011), available at http://www.gao.gov/ assets/130/126943.pdf.
7. See, e.g., Import Alert 16-120 (detention without physical examination for fsh/fsh products processors not in compliance with seafood HACCP), available at http://www.accessdata.fda.gov/ cms_ia/importalert_25.html (although not mentioned in the public guidance, once a facility has been placed on the alert, FDA will not generally fnd persausive any evidence to demonstrate that the product is in compliance and therefore should not be refused); Import Alert 66-40 (dentetion without physical examination of drugs from frims which have not met drug GMPs), available at http:// www.accessdata.fda.gov/cms_ia/importalert_189.html (like Import Alert 16-120, the guidance makes no mention that it is essentially impossible to obtain the release of an individual shipment once the facility is on the alert).
8. FDCA, Section 801(a); Pure Food and Drug Act, Section 11.
9. FDCA, Section 801(a)
10. FDCA, Section 801(b).
11. 21 C.F.R. 1.90.
12. 21 C.F.R. 1.91.
13. 21 C.F.R. 1.94(a).
14. FDCA, Section 801(a).
15. FDA, Regulatory Procedures Manual, Chapter 9, Section 9-6.
17. See Import Alert 99-36, available at http://www.accessdata.fda.gov/ cms_ia/importalert_1130.html (FDA added Englert Kg to an import alert in 1985).
18. RPM, Chapter 9, Section 9-6.
19. See, e.g., Sugarman v. Forbragd, 405. F.2d 1189 (9th Cir. 1969) (holding that an FDA refusal was not arbitrary and capricious).
20. FDCA, Section 304; Pure Food and Drug Act, 1906 Act.
21. FDCA, Section 303.
22. 19 C.F.R. 113.62(m)(1).
23. 19 C.F.R. 141.113(c).
24. See FDA Warning Letter, Roxy Trading, available at http://www.fda. gov/ICECI/EnforcementActions/WarningLetters/ucm212104.htm 25 19 U.S.C. Chapter 4.
26. FDCA, Section 402(h).
27. FDCA, Section 801(m)(1).
28. Compare FDCA, Section 301(a) (prohibiting the introduction into interstate commerce of an adulterated food, which requires proving the ) with Section 301(prohibiting importing or offering for import a food that violates Section 801(m), which requires notifying FDA that a food was previously refused importation).
29. As it relates to harm, the courts have thus far held that a claim for damages under the Federal Tort Claim Act (28 U.S.C. Part 171) is barred because the decision to investigate a product is discretionary. See, e.g., Fisher. Bros. Sales v. United States, 46 F.3d 279 (3rd Cir. 1995).