Congress urged to hold line on food safety user fees

by Jay Sjerven
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WASHINGTON — Seventeen food and feed industry associations in a March 11 letter to congressional leaders voiced concern that future funding to fully implement the F.D.A. Food Safety Modernization Act (F.F.S.M.A.), which was passed by Congress and signed into law by President Barack Obama in December 2010, may entail efforts to exact as yet unspecified user fees from food manufacturers.

The associations’ letter was addressed to Representative Jack Kingston of Georgia, chairman of the House Committee on Appropriations’ Subcommittee on Agriculture, Rural Development, the Food and Drug Administration and Related Agencies, and Representative Sam Farr of California, the subcommittee’s ranking minority member.

The concern raised in the letter was that in its fiscal year 2012 budget request, the F.D.A. stated while its proposed budget does not include any legislative proposals for new food safety user fees in fiscal 2012, “F.D.A. plans to work with Congress during fiscal year 2013 to enact additional food safety fees to support the full implementation of the F.F.S.M.A.”

The F.D.A. in its budget request for fiscal 2012 requested $326 million in additional food program funding compared with fiscal 2010, with most of the increase targeted at implementing the F.F.S.M.A. Specifically, the F.D.A. request included $225.8 million in new budget authority (appropriations) for its food program, $183 million of which the agency said was directly related to implementing the F.F.S.M.A. Additionally, the F.D.A. budgeted for $100.2 million in user fees that were authorized under the F.F.S.M.A. to support specific programs or activities established under the act.

The user fees established by the act were not specified as concerns by the associations, which had supported the food safety reform. Rather, the concern seemed to be potential additional fees for financing the F.F.S.M.A. in future years.

“While ensuring the safety of the U.S. food supply is the No. 1 priority of our organizations and the food producers we represent, we urge you to reject any efforts to create a new food tax on consumers and food companies,” the associations’ letter stated. “While the administration has yet to detail the exact nature of the fees it seeks, Congress already rejected such fees during congressional consideration of the F.F.S.M.A.”

The letter pointed out the F.D.A. 2012 budget requested around $100 million in appropriated funding targeted toward specific initiatives aimed at implementing the F.F.S.M.A.

“However, congressional budget experts predict it will take at least $300 million a year to implement (the F.F.S.M.A.),” the letter said. “Given that discrepancy, the administration should have requested more funds for F.D.A. in their budget submission rather than relying on congressionally rejected user fees to make up the difference.”

A F.D.A. spokesman pointed to the budget request that indicated no user fees beyond those already authorized under the F.F.S.M.A. would be sought to implement the legislation in fiscal 2012 while acknowledging the F.D.A. budget proposal suggested additional fees may be sought for subsequent years.

The letter’s signatories included the American Bakers Association, the American Frozen Food Institute, the American Meat Institute, the Frozen Potato Products Institute, the Independent Bakers Association, the International Bottled Water Association, the National Chicken Council, the National Confectioners Association, the National Fisheries Institute, the National Frozen Pizza Institute, the National Grain and Feed Association, the National Meat Association, the Pet Food Institute, the Producer Marketers Association, the Snack Food Association, the United Egg Producers, and the United Fresh Produce Association.

David William Kennedy Acheson, manager, food and import safety practice at Leavitt Partners, said, “The letter strongly suggests significant sectors of the food industry would not be supportive of additional user fees beyond those already established under the F.F.S.M.A.”

Dr. Acheson noted the four user fees authorized by the F.F.S.M.A. include those required to operate the Voluntary Qualified Importer Program, conduct food facility re-inspections, cover the costs of mandatory food recalls and offset the expense of issuing food export certificates.

The F.D.A. envisions fiscal 2012 revenues from user fees collected from participants in the new Voluntary Qualified Importer Program would total $71,066,000, which would provide for 280 new full-time-equivalent employees to operate the initiative. The program will provide expedited entry of products to importers who can verify that all the food products and ingredients they offer have been produced in compliance with U.S. laws and regulations.

The fee would be collected each year and based on the number of participants. For instance, if there were 140,000 participants, each would pay a user fee of around $500 if the $71 million in anticipated revenues were to be raised. If the number of participants fell below that threshold, each may be required to pay a fee above $500, even well above, which a review by Leavitt Partners suggested likely would be the case.

The F.D.A. budget proposal projects the collection of $14.7 million in user fees to cover the cost of re-inspecting facilities found not to be in compliance with safety regulations during initial routine inspections. Leavitt Partners indicated food facilities may expect a fee of about $20,000 for a re-inspection based on recent experience.

The F.D.A. budgeted for $12,364,000 in user fees to be collected in the event of noncompliance with food recall orders. The fees only would be assessed in instances of mandatory food recalls and would cover technical assistance, follow-up effectiveness checks, public notification and other recall-related expenses. Leavitt Partners pointed out $12 million in recall-related user fees was a hefty budget item considering the F.D.A. indicated it didn’t anticipate using its mandatory recall authority to any great extent.

“Either the F.D.A. is expecting to do a significant number of mandatory recalls, or the number of mandatory recalls will be few and the cost to industry will be very expensive,” Dr. Acheson said.

The F.D.A. projects user fee collections for issuing food export certificates at $1,267,000. Under the F.S.M.A., the F.D.A. will assess a fee from an exporter for issuing an export certificate on its behalf when foreign customers or foreign governments request the exporting firm supply an F.D.A. affirmation that the product involved is in compliance with U.S. laws and regulations.

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