November 16, 2023

Podcast - A Look Into the FDA and USDA Regulatory Regimes

Legal Bites Podcast

In the next episode of the "Legal Bites Podcast" series, Food and Beverage Litigation Team leader Nathan Adams and Practice Development Manager Kristina Merritt speak with Public Policy & Regulation attorney Sara Klock, who focuses her practice on food, agriculture, drug and device, digital health and life sciences. 

Our hosts explore Ms. Klock's background and legal career, specifically how she became involved in food and beverage regulation. They also take a closer look at the most important recent regulatory developments affecting the food and beverage industry, food traceability recordkeeping requirements and how the firm can best equip clients with effective recordkeeping to comply with food traceability requirements.

More Episodes in this Series

Episode 1: Trends Affecting the Grocer and Retail Space

Episode 2: A Look Into the FDA and USDA Regulatory Regimes (You are currently listening to Episode 2)

Nathan Adams: Welcome to our Legal Bites podcast series. Today, we have an opportunity to sit down with our guest, Sara Klock, to talk a little about federal regulation of the food and beverage industry. My name is Nathan Adams. My co-host is Kristina Merritt. We are so pleased that you have joined us today to consider another important sector of the food and beverage industry and the manner in which it's regulated. Kristina.

Kristina Merritt: Hi, everyone. We have Sara Klock today. Sara, could you tell us about your background and how you became involved in food and beverage industry regulation?

Sara Klock: Yes. Thank you, Kristina, and thank you, Nate, for having me on your podcast, the Legal Bites podcast series. My name is Sara Klock. I'm a senior associate in public policy and regulation for Holland & Knight. I sit in D.C., but prior to joining Holland & Knight and prior to going to law school, I actually grew up on a dairy farm in upstate New York. And growing up I was really interested in the food supply chain and pretty much how cows were milked. I watched daily, my family milk cows that are fifth generation dairy farm, and when I decided to go to law school, I really wanted to do something related to food without really knowing what that was. As a high school senior and going into college and in college, I spent some time at the Office of National Drug Control Policy, which is a policy branch of the executive office of the president, which happens to be across the street from my current office here in D.C. with Holland & Knight, and then really like the drug side of, of the world as well, and was offered a really great opportunity in law school to work at a firm that specializes in FDA regulatory matters. And so pretty much since my first year of law school, I've been doing work through food and beverage companies. And today at Holland & Knight, my practice is primarily an FDA, USDA regulated practice. So that means that I help companies who are either selling products, manufacturing products, dietary supplement companies, large food companies, pretty much handle any sort of regulatory requirements, whether that be what is required to get your product to the market or how do you handle a recall or FDA has inspected and issued some sort of inspection finding, and I really enjoy it, and I'm really fortunate. And I look back now growing up on the farm, and I actually have pictures of cows all in my office, which is ironic and funny, but really fortunate and lucky to be here today.

Nathan Adams: All right. Well, what a great background. So I took my kids this last summer to a farm that is in our family. And they had never seen the milking of a cow before. And the farmer, dairy farmer was kind enough to advise them to look closely at the, at the area where the where the cow was being milked to see if they could see the star and they all got wet in the process was pretty awesome. Well, listen, from your perspective, what are a few of the most important recent regulatory developments affecting the food and beverage industry?

Sara Klock: Yeah, it's a great question. And look, it's an ever-changing world. So whether it be grocers or importers or distributors or stores or manufacturers of food and beverages, right? So everyone needs to be aware of what's going on and current trends and current changes. So pretty much two big things that I think everyone should be aware of, everyone along the entire supply chain: The first is going to be FDA's new food traceability requirements. So these were just finalized, and they do not go into effect, I think, until 2026. So there's a lot of runway there. And I think — well, I can add a little bit more detail shortly about what's required there — but essentially it's way more oversight of the supply chain and passing of records from one end to the other. And the other recent regulatory development that goes into effect early next year — and companies should be aware of this — is additional oversight of the organic supply chain. So USDA has issued a final rule to strengthen the organic supply chain, which pretty much means that those entities who are touching organic products that previously weren't required to hold an organic certification are now required to hold back.

Kristina Merritt: Those are two very important trends, Sara. Can you tell us a little bit more about the food traceability recordkeeping requirements?

Sara Klock: Yes, I am happy to do that. So I think everyone is aware that a few years ago there were some pretty, pretty unfortunate food tainted products that caused illness and I think maybe some death. And so FDA really wanted to respond strongly to that. And through its Food Safety Modernization Act and related statutes, really wanted to set forth traceability requirements beyond what currently exists for manufacturers, holders, packers, processors of food. So if you aren't aware, if you're doing any of those activities, you should hold the food facility establishment registration. If you don't, we can talk about how you can get registered. But the new rules set forth recordkeeping requirements that will require entities that pass product from one person to the other, so from a manufacturer to a warehouse, to hold and maintain records. These records are considered a key data element. So KDE's associated with specific critical tracking events known as CTE's, is to ensure that if there is an issue with the food, that that person can be traced back along the supply chain quickly and to provide FDA the necessary tracking of the food as well. Like I said, the compliance date isn't until 2026, so there's a lot of runway here. But companies are going to be affected by this and need to become aware of what is their regulatory responsibility.

Nathan Adams: Sara, this is not new ground, I think, in the, this, in other industries such as in the drug industry where there's pretty, pretty significant traceability requirements already. And I think not just at the federal level, but also at the state level. Florida, for example, has its own traceability regime, which in certain respects is more rigorous than the federal. Is there, do you think there's going to be an effort at the state level to do the, kind of follow this? We'll see state acts along the same lines?

Sara Klock: This is not new ground, specifically with the drug industry. What you're referencing is the Drug Supply Chain Security Act, which essentially requires the supply chain for drugs and devices passing from one entity to another to handle recordkeeping requirements and verify the previous and next entity in the supply chain. But the problem with the DSCSA is that it was passed almost 10 years ago and it's not fully implemented. Because of this, the lack of full implementation, there's even a bigger disconnect between state and federal law as to what governs and what companies are supposed to do and to provide what records to whom. Because, like, you know, there, states like Florida have implemented recordkeeping and traceability requirements. The disconnect between state and federal law has caused problems specifically with the DSCSA because FDA proposed a final rule last year that the agency, FDA, now believes it sets both the floor and the ceiling as it relates to recordkeeping and traceability for the drug in device supply chain, thereby not allowing states to implement stricter requirements. So there are problems that exist when states try to regulate what the federal government is already regulating. And, you know, specific to the food world, California and Massachusetts have each recently, in the last few years, passed laws governing how pork, veal and eggs are handled and raised. So specifically in California — and with pork, this is known as Prop 12 — California now regulates breeding confinement standards and how sows and piglets are handled and cannot be handled in a cruel manner, and how the pork moving through the supply chain is labeled and what recordkeeping requirements those along with supply chain are required to obtain and retain. And to date, there hasn’t been any successful preemption argument. And all of this to say, is that states are regulating supply chains, including recordkeeping requirements, as they move in and out of the state. And it can cause disruption, especially when there's a divide between the federal government and the state government. We have a lot of experience representing parties dealing with state issues. So happy to chat further on specific state requirements or federal requirements that are different from state requirements. But states and the federal government are regulating recordkeeping requirements, and states likely could implement food traceability requirements that differ from the federal government and happy to help any clients or companies who need help in that space.

Kristina Merritt: Wow. Sara, you know, you've discussed a lot of this recordkeeping. You know, how can you best equip clients with effective recordkeeping to comply with these food traceability requirements?

Sara Klock: Yeah, that's a great question. And thanks, Kristina. I think it's most important to identify how the rule exactly applies to your current business and potentially your future business. Here at Holland & Knight, we've already started doing that. I've started helping clients figure those, those requirements out, and we can figure out what, what governs you and how to become compliant and set up systems in place. I think the government thinks that this is easy for companies. This isn't going to be a big deal, but in practice that's not going to be the case. So just call us and we can help figure out what, what applies to you and how to, how to get processes and procedures in place.

Nathan Adams: Please also share your thoughts on the new regulations regarding selling, labeling or representing products as organic.

Sara Klock: Sure. Happy to. Currently, the organic certifications apply to the farmers. Those people processing the organic products and any sort of label are right. If you're going to make a labeling claim as it relates to organic, you need to understand the supply chain and who has the organic certifications along that process to support and substantiate your organic claim, including the organic seal, the USDA seal. The new organic regulations, which take effect next year, so we're talking three or four months out here, broadens who is required to have an organic certification, thereby submitting that the product is handled organically or handled in a way that meets organic requirements from start to finish. And so the new entity, subject to their organic regulations, is much broader, and entities that previously weren't required to hold the certification. So this is going to apply to brokers and traders. And most importantly, and what we're seeing importers and distributors of organic product.

Kristina Merritt: Sara, is full compliance required, or are there exemptions?

Sara Klock: So there, there are some exemptions. However, similar to the food traceability rule, the exemptions here are very narrow. And so we need to figure out what your company is doing and how to comply. What you wouldn't want to do is think you are exempt for whatever reason and in practice not be. But there are exemptions that exist both for the organic and the food traceability rule. But it's important to get a good grasp of what systems you're currently operating, to figure out what systems and what business operations you're currently engaging in, to figure out if either one of those rules covers you.

Nathan Adams: Sara, as a litigator myself, I know the firm is increasingly involved in defending deceptive trade practices, types of claims involving labeling, and often an issue that arises in that context is whether federal preemption applies or whether it doesn't. I imagine that these new regulations will have some impact on that, at least in the area of organic. Is that true?

Sara Klock: Yeah, completely. And the thing, specifically with organic, right? Organic is a voluntary claim, and it is going likely to be litigated, is going to likely have, require substantiation. FTC has brought in, as I'm sure you're aware, lots of litigation or actions against companies for not being able to substantiate their organic claims.

Kristina Merritt: Sara are, as we look around the corner at other developments in the food and drug industry, is there anything else that you see?

Sara Klock: Yeah, I think piggybacking off of what Nate was talking about with litigation and food claim litigation, so there's been a pretty steady uptick over the last few years of plaintiffs bars, competitors either bringing class action lawsuits or bringing competitor claims or false advertising claims or state law claims against food companies, whether that be a dietary supplement manufacturer or a large grocery store who private label, private, private label products and suing them for making what the, the plaintiff would say would be deceptive advertising. And so we've seen a lot of litigation around this for natural claims. We've seen a lot of litigation around flavoring claims and what FDA requires to be on the label and what is actually on or not on the label and find that there's specific flavors in the product. And then one other trend that I just want to know is we will likely see an uptick in preservatives and acids used in food products that a company might think are only to act as an acid or as a preservative, but plaintiffs are arguing also add flavor, thereby making the product no longer be naturally flavored and be artificially flavored instead.

Nathan Adams: All right. Well, that's all interesting. I want to thank Sara Klock for this informative and interesting insight into the regulatory sector of the food and beverage industry, particularly the FDA, USDA regulatory regimes. And I want to thank my co-host, Kristina Merritt. Most of all, thanks to you for joining us today. Please plan to join us for our next Legal Bites podcast. Have a great day.

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