Growing an Already Disjointed and Duplicative Federal Government

In 2008, GAO testified before a House subcommittee that “FDA is one of 15 agencies that collectively administer at least 30 laws related to food safety. This fragmentation is the key reason GAO added the federal oversight of food safety to its High-Risk Series in January 2007 and called for a government wide reexamination of the food safety system. We have reported on problems with this system—including inconsistent oversight, ineffective coordination, and inefficient use of resources.”

Specifically, GAO found that in 2003, FDA and USDA activities included overlapping and duplicative inspections of 1,451 domestic food-processing facilities that produce foods regulated by both agencies. This GAO testimony came on the heels of a 2005 GAO report that identified significant overlap in food safety activities conducted by USDA and the FDA, and to some extent the EPA and National Marine Fisheries Service (NMFS), including “71 interagency agreements [to coordinate overlapping activities] that the agencies entered into… However, the agencies have weak mechanisms for tracking these agreements that…lead to ineffective implementation.”

This overlap was evident in the egg salmonella scare. The Wall Street Journal reported (USDA Graders Saw Bugs and Trash at Egg Producer; Didn’t Tell FDA) that U.S. Department of Agriculture experts knew about sanitary problems at one of the two Iowa farms at the center of a massive nationwide egg recall, but did not notify health authorities.) USDA inspects farms and gives eggs their “Grade A” label, while the FDA technically is tasked with the safety of the final egg product.

This discrepancy was the impetus behind an egg safety rule originally promulgated 10 years ago by the FDA. Unfortunately, three administrations sat on the proposed rule without finalizing and implementing it. FDA Commissioner Dr. Hamburg stated, “We believe that had these rules been in place at an earlier time, it would have very likely enabled us to identify the problems on this farm before this kind of outbreak occurred.” A lack of regulatory bill isn’t the problem.

Charging the Bill to our Children and Grandchildren

The legislation will cost $1.4 billion over 5 years. This cost does not include an additional $230 million in expenditures that are directly offset by fees collected for those activities (re-inspections, mandatory recalls, etc.). The total cost of the bill is over $1.6 billion over 5 years. Of these costs, $335 million are for non-FDA programs – the food allergy grant program, implementation grants to assist producers, assistance grants to states and Indian Tribes.

Many argue that this spending is just “discretionary.” It is important to realize that the CBO score reflects the cost of the increase in FDA’s scope. It is true that this bill only authorizes funding (though problematically, for the first time ever provides an authorization line for just food activities at FDA).

If future appropriations do not add up to the amount CBO is estimating, the likely result is that none of these provisions can be fully implemented, or worse, the FDA is forced to cut corners in other areas it regulates (drugs/devices/etc.) to fund this added regulatory burden on foods.

Without paying for this bill, at best we are just passing it for a press release, and at worst, we shackle the FDA with unfunded mandates.

New and Unnecessary Non-FDA Spending

CBO estimates that implementing other provisions of S. 510 would increase non-FDA discretionary spending by $335 million over the 2011-2015 period. The bill would authorize three grant programs outside the purview of the FDA:

• School-based allergy and anaphylaxis management grants. Authorized at $30 million annually, CBO estimates that this program would cost $107 million over the 2011-2015 period. This program creates new federal standards for how local schools deal with food allergies and ties the “voluntary” standards to eligibility for federal grant funds. This is not a federal role, the standards are overly prescriptive, and it duplicates existing efforts. The CDC has already published extensive best practices for how local schools can implement sounder strategies for dealing with food allergens. The word “food” is the only relationship between legislation to dictate the food allergy policies of local schools and legislation to modernize how the FDA regulates the food industry.

• Food safety training, education, extension, outreach and technical assistance grants. Enacting the bill would require the Secretary of HHS to enter into cooperative agreements with the Secretary of Agriculture to provide grants for food safety training, education, extension, outreach, and technical assistance to owners and operators of farms, small food processors, and small fruit and vegetable merchant wholesalers. Based on spending patterns of similar programs, CBO estimates that implementing this provision would cost $21 million over the next five years

• Food safety participation grants for states and Indian tribes. S. 510 would authorize the appropriation of $19.5 million for fiscal year 2010 and such sums in subsequent years to award grants to states and Indian tribes to expand participation in food safety efforts. CBO estimates that implementing this provision would cost $83 million over the 2011-2015 period.

Along with the grant programs, S. 510 also would require the Environmental Protection Agency (EPA) to participate in food safety activities and would require the Centers for Disease Control and Prevention (CDC) to enhance its participation in food safety activities. CBO estimates that EPA will incur costs of about $2 million annually. CDC is required to significantly increase its surveillance activities, which CBO estimates will cost $100 million over 5 years. CDC is also required to set up “Centers of Excellence” at selected state health departments to prepare for food outbreaks at a cost of $4 million annually.

Burdensome New Regulations

There are 225 pages of new regulations, many of which are problematic. While some regulations are potentially onerous, but perhaps reasonable – such as requiring every facility to have a scientifically-based, but very flexible, food safety plan—others give FDA sweeping authority with potentially significant consequences.

While it is hard to pull out just 1 or 2 regulations in the bill that make the entire thing unpalatable, on the whole this bill represents a weighty new regulatory structure on the food industry that will be particularly difficult for small producers and farms to comply with (with little evidence it will make food safer). The following regulations are perhaps the most troubling:

• Performance standards. The bill gives the Secretary the authority to “issue contaminant-specific and science-based guidance documents, action levels, or regulations.” The way the bill is written the authority is extremely broad and could be used by FDA to issue very specific and onerous regulations on food facilities, without even the normal rule-making and guidance process FDA food regulations normally go through.

• Traceability. FDA is required to establish a “product tracing system within the FDA” based and develop additional recordkeeping requirements for foods determined to be “high risk.” The House legislation includes “full pedigree” traceback which puts FDA in charge of tracing the entire supply chain. The final bill requires the FDA to do this for high-risk foods, and while there are some limitations on FDA, anything further than the “one-up-one-back” requirement in the bioterrorism law will be very onerous on industry.

• Standards for produce safety. For produce, this bill gives FDA the authority to create commodity-specific safety standards for produce. Instead of trusting industry and the free-market, this provision implies that complying with government standards is the best way to keep consumers safe. A lot of the produce industry lobbied for these standards to provide “consumer confidence” after the jalapeno and tomato scare, but federal regulations could particularly adversely impact small providers.

Other regulations in this bill are overly punitive and could set up an adverse relationship with industry. They include:

• Administrative Detention of Food. The bill lowers the threshold for detaining articles of food to “adulterated or misbranded.” The threshold is currently higher for a reason—administrative detention is an authority that should only be used when there is clear, imminent danger.

• Suspension of Registration. Facility registration may be suspended if there is a reasonable probability that food from the responsible facility will cause serious adverse health consequences or death to humans or animals. “Reasonable probability” isn’t a difficult enough burden for FDA to prove when the consequence is closing down a private business.

• Fees. Allows FDA to assess fees for compliance failures (recalls and re-inspections). These fees give FDA incentive to find reasons to re-inspect a facility or order a mandatory recall—the only ways they can collect money for their efforts. Furthermore, assessing industry to pay for a new regulatory structure will increase food costs for consumers during a recession.

• Mandatory Recall Authority. Provides FDA with the authority to force a recall (and collect fees to pay for it). It is unclear why this authority is necessary – even in the worst food safety outbreaks, there do not appear to be any instances in which tainted products were on the shelves or with distributors that the company at fault did not work with FDA to conduct a voluntary recall. Allowing FDA to collect fees for forcing a mandatory recall could also push FDA to pull the trigger early on a mandatory recall – putting them at odds with the company responsible.