The stated purposes of these proposals is
to improve the security of the U.S. food supply by enhancing the FDA’s ability
to inspect imported food upon arrival in the U.S., as well as FDA’s ability to
deter, prepare for, and respond effectively to bioterrorism and other public
health emergencies that might result from importations of food products. Additionally, FDA believes that the proposed
regulations would facilitate product tracking for containment, should an outbreak
or a bioterrorism event occur and assist the FDA in determining the source and
cause of problems.
Because the rules set forth in the two dockets are inter-related, the following comments relate to both dockets.
Comments
At the outset, we wish to express wholehearted support for the intended aim of the proposed regulations - - the protection of the American public. However, as currently set forth in the NPRM, we do not believe that the proposals represent the most appropriate solutions for achieving the purposes of the Bioterrorism Act. As a practical matter, in many instances, the proposed rules are unrealistic, unduly burdensome, and will unnecessarily interdict the normal flow of trade in food products. Its unintended effect will be to impose impossible burdens on U.S. importers, as well as entities involved in the transportation and importation of these products. Therefore, as detailed below, we must object to the implementation of the proposed regulations.
1. The Time For Submission Of Prior Notice Disregards Various Factors That Will Effect The Flow of Trade.
Proposed regulation §1.286 provides that
notice “must be submitted by noon of the calendar day before the day the
article of food will arrive at the border crossing in the port of entry;” with
the further requirement that any amendments to the notice must be received at
least three hours before arrival. The authority cited for this regulation,
section 801(m) of the Act, states that the deadline for prior notice “shall be
no less than the minimum amount of time necessary for the [FDA] to receive,
review, and appropriately respond to such notification.” Yet, the “Background” section contains no
adequate explanation or reasons why this unduly long prior notice period is
required, particularly for shipments coming from Canada and Mexico.[1]
The NPRM also fails to adequately address
section 801(m)(2)(A) of the Act, which provides that the FDA consider “other
factors” when deciding the deadline for prior notice, specifically: its effect
on commerce; the locations of various ports; various modes of transportation;
types of food; and any other consideration.
In this regard, the NPRM appears to take no account of the myriad of
business and transportation factors, such as motor and rail transit times from
contiguous countries, that effect the period between when food products are
ready to be shipped to the United States and their actual arrival at the
border. It also overlooks perishable
food products that are loaded aboard the transportation conveyance at the farm,
as well as the possible effect of local weather conditions on fresh produce,
that can adversely impact transit time.
Further, the time frame is also impractical with regard to the shipment
of baked goods, fresh fish and seafood; most often, the exact variety and
quantity of such products cannot be determined by noon of the prior day. At the least, if the FDA does not address
these concerns and revise the proposed regulations, they will drastically
effect on food shipments arriving from contiguous countries and from the Caribbean.[2]
Ocean vessels rarely arrive at the time
originally scheduled. However, the
person required to file the prior notice does not have access to that
information and, most often, only becomes aware of the vessel’s arrival via
notification from the carrier.
Requiring estimated date and time of arrival reporting and/or amendments
where the shipment will be delayed by three hours or arrive one hour earlier
necessitates “24x7x365” operation by importers or their agents (i.e., Customs brokers), as well as other
service providers in the supply chain, particularly so on the northern U.S.
Border. The strict time periods
provided for notice will also eliminate the current method by which
international overnight air carriers presently conduct business. Typically, cargo on international flights is
loaded and detailed well after noon of the calendar day prior to its arrival at
the destination port. As such, the
exhaustive details required on the prior notice, as set forth in the proposed
regulation are not known by the time provided for submission. Even assuming that compliance is possible,
it will only happen at great expense to both the shippers and the carriers, who
will have to completely revise their current shipping schedules.
Even in situations where the transit time
is longer, cargo scheduled for a particular trip may not be ready in time for
shipment. Since cargo space is at a
premium, carriers need the ability to substitute other cargo. If this occurs after noon of the calendar
day prior to importation, the regulations preclude this because proposed
regulation section §1.289 only allows amendments concerning the last two digits
of the FDA product code and other product information that provides the
specific identity of the article, such as the brand name or common trade
name. A prior notice may not be amended
to completely change the identity of the article. Instead, the filer must cancel the initial prior notice and submit
a new one. In these instances, to
require prior notice to be filed by noon of the calendar day prior to
importation is impractical and will have the effect of delaying cargo either at
the port of entry or at a secure facility, because valid commercial
considerations make it impossible for the entry filer to timely file the prior notice.
Equally problematic is the impact of the
different time zones involved in international trade. For any given shipment, with the possibility of a dozen or more
time zone differences in play, the reporting requirement is silent as to which
time zone (i.e., place of shipment or
place of arrival) will govern. If the time at the port of arrival governs, an
importer can be subject to the assessment of penalties and delays in
deliveries, by reason of not timely transmitting the information. This, in turn,
can increase both the shipper’s and the importer’s inventory costs, with
resultant higher prices for consumers.
The regulation should specify which time zone that applies.
In the present economy, where profit
margins have already decreased considerably, the cost of complying with
regulations is a primary concern by industry.
For example, freight forwarders, regardless of the size of their
operation, are "eating costs" in order to update their software
and/or facilities to conform to the manifest reporting requirements already in
place pursuant to Customs regulations.
To require the trade industry to invest yet another round of software
and other technical upgrades in order to adhere to additional and differing reporting
requirements from the FDA, creates an unreasonable financial burden on the
industry.
As noted below, to avoid duplication of
effort, it is essential the FDA cooperate with the Bureau of Customs and Border
Protection (“Customs”) by sharing the arrival data submitted via the Automated
Manifest System (“AMS”) or Border Cargo Selectivity (“BCS”) systems. Otherwise, it is likely that the data given
to FDA will not be consistent with that given to Customs.
2. The NPRM Will
Unnecessarily Create A New Electronic Interface For Importers, With New
Requirements.
Although the NPRM states that the FDA has
consulted with Customs prior to promulgation of this notice, the Commissioner
of Customs stated publicly that he was unaware of the NPRM, or its
requirements. It is essential that FDA
and Customs work together with each other and the trade to arrive at a single
system, with realistic requirements.
Customs currently has issued requirements
for the filing of a cargo declaration twenty-four hours prior to lading on board an ocean vessel. Moreover, pursuant to Section 353 of the
Trade Act of 2002, and in conjunction with The Treasury Advisory Committee on
Commercial Operations of the United States Customs Service (“COAC”), Customs is
studying the requirements for other modes of transportation. Customs is also developing its Automated
Commercial Environment (ACE), which will replace all current systems.[3]
Through the Automated Commercial System
(“ACS”) importers and Customs brokers electronically provide import data to
Customs for FDA’s Operational and Administrative System for Import Support
(“OASIS”). Section 1.286 would, in
essence, require that importers provide a second “advance entry” over the
Internet, to FDA. This will cost the
importer both time and money, will not operate as contemplated, and, given the
Customs requirements, is unnecessary.
The proposal suggests that data
transmission could be accomplished with a simple computer over 56K line. This is a flawed assumption. In view of the high volume of advance notices
which must be filed each day, transmitting over a website portal is
impractical, especially for high volume importers. Based on experience with Customs transmissions, this large amount
of data would require high-speed batch data processing over dedicated lines.
The notice also makes unrealistic
assumptions regarding the current state of computer capabilities in the food
trade - - many suppliers simply do not have the equipment and/or expertise to
prepare and transmit the data required under section 1.288. Most important, use of an Internet website
leaves the system open to “hackers” and others that intend to do harm to our
food supply.
Further, this also means that much of the
same data will have to be input twice: once for Customs over ABI and again for
FDA over the Internet. This unnecessary
redundancy increases the risk of transmitting incorrect data through clerical
error.
3. The Proposed
Regulations Will Require New ABI Software.
Proposed rule 1.288 requires that the
Customs entry number as well as a detailed line item data be presented on the
prior notice. Today, under the systems
in use by every Customs filer, the entry number is generated at the time the
data is input into ABI. Meeting the FDA
time requirement will involve a major redesign of the systems and will lead to
duplications and errors. Moreover, given that ACE will shortly replace ABI,
such expenditures cannot be justified. This is another reason supporting the
use of a single transmission to Customs containing the information needed by
FDA.
4. Detaining Cargo At
Arrival Terminals Will Congest The Ports.
If an import does not meet all prior
notice criteria, section 1.278 requires that the cargo be held at the arrival
port or at an “approved storage facility,” other than the importer’s premises.[4] Currently,
pending FDA review, examination, sampling, and eventual disposition, an
importer is already obligated under its import bond, to provide for the
transport to and holding intact at its facility, of all FDA regulated goods. This procedure works well and should not be
discontinued, merely because of a defect in the prior notice.
5. Registration of All
Facilities With FDA Is Duplicative.
Many of the facilities that will become
subject to registration under proposed section 1.225 are already registered
with the FDA and/or other federal regulatory agencies. For example all bonded warehouses have been
assigned facility numbers and/or Facilities
Information and Resource Management System (“FIRMS”) code. To facilitate efficiency, minimize duplicate
reporting of information, FDA should, wherever possible, use the Customs
Service FIRMS code, reported on Customs documents and in Customs entry data
transmissions, as the primary location identifier for imported food items being
held in a “secure facility” in accordance with proposed §1.241(e). Further, to minimize confusion, especially
about which of one facility’s multiple registration numbers apply to what types
of activities, we strongly recommend that FDA include, on its food facility
registration form 3537 or electronic equivalent, optional fields for:
(1) Type of other facility registration
number, with checkable options including the above types of registration codes,
as well as an option for an “other” type of code, and
(2) The appropriate registration number
for each option that is checked.[5]
6. The Proposed
Rules Use Terms and Definitions That Are Incompatible With Their Traditional
Meaning In Customs And International Trade
As set out in proposed section
1.227(c)(9), “Port of Entry” is
defined as ‘the water, air, or land port at which the article of food is
imported or offered for import into the United States, i.e., the port where
food first arrives in the United States.”
This definition is inconsistent with that used by Customs to denote the port
where a Customs entry is lodged, together with, when applicable, FDA data via
ABI to OASIS.[6]
Use of this definition will lead to confusion and likely result in the
incorrect completion of the prior notice.
The term should be changed to “Port of First Arrival,” and the
definition of “Port of Entry” should be modified to make it compatible with the
term as it appears in 19 C.F.R. §101.1, and as it is traditionally understood
by the import trade.[7]
The NPRM does not define “Submitter,” although it uses that term
frequently throughout the background discussion in the NPRM. At page 5433 of the notice, it states, “FDA notes that the submitter is the entity
responsible for ensuring the adequacy and accuracy of the prior notice.”
For the reasons noted below, a customs broker often acts as the agent of the
importer but should not be considered liable for incorrect or inaccurate
information.
Proposed §1.277(c)(2), FDA adds a new
definition for the “origin” of
imported goods as the “country from which the article of food was shipped
defined as loaded aboard the conveyance that brings it into the United
States.” This definition fails to take
into account what frequently occurs in the international transportation
industry. Both ocean and air carriers
routinely use “feeder” vessels/aircraft to move cargo from the country of
origin to a “gateway,” for transfer to a larger vessel or aircraft, that will
transport the cargo to its final destination. The importer/submitter does not
necessarily know when and where this may occur. Moreover, ocean vessels frequently discharge containers destined
for the U.S. in Canada, where they are transferred to a motor carrier for
transport to the U.S.[8]
The proposed definition requires that the
submitter reflect the “origin” of the goods as the place it was put on the
conveyance to the U.S. We fail to
understand what possible use this information can be to the FDA and/or how it
will impact on determining if the product has been adulterated. Certainly, the rule will confuse importers and
require them to (needlessly) attempt to obtain the cargo routing from the
master carriers. We believe that the
requirement should be changed to reflect the country where the product
originated and or was last stored.
Finally, proposed section 1.286(a)
requires that prior notice be submitted by noon of the day before the article
of food will arrive at the “border
crossing in the port of entry.”
That term may be clear when used with regard to goods imported through a
port on the Mexican and Canadian border, however, with regard to ocean vessels,
the Customs’ definition of “date of
importation” is defined in 19 C.F.R. §101.1 as “the date on which the vessel
arrives within the limits of a port on the United States with the intent then
and there to unlade.” That term has a
clear and definite meaning. Unless FDA
intends that a different meaning should apply, the regulations should adopt the
Customs definition.
7. The Prior Notice
Information Required Is Unduly Burdensome
The FDA notes that over 4.7 million entry
lines of food were entered during the 2001 fiscal year. FDA now proposes to increase this already
overwhelming amount of data by requiring the reporting of more product code
breakouts than ever before. Showing of brand name and lot information for
canned goods, requiring grower data for produce, and demanding size breakout
for seafood, translates into a vast number of additional lines of reporting and
creates an unreasonable burden on the importer. We also question whether FDA has the resources to assimilate and
react to this increase in data.
FDA is also of the belief that
information about a sale is always known at time an order for merchandise is
placed. Many transactions are
confirmed for a quantity that is to be shipped over a period of time. With
fresh produce, it is not uncommon for substitution to be made in the growing
fields, during picking process. (For
example, an importer may order 40 crates of green lettuce, but the supplier
ships 20 crates of red and 20 crates of green.) In some industries, such as seafood, quantities are always
subject to change, based upon the day’s catch.
Under the proposed regulations, any
change in product breakouts or different line numbers would require that a new
prior notice process, as well as new customs entry, must be transmitted. This is an inordinate burden upon submitters
and entry filers. It will certainly
lead to delays in the export of shipments.
Further, in view of the increased number
of entry lines proposed, it is impractical to limit the number of amendments to
one, (Section 1.290(b)) and require that they be made not later than two hours
prior to arrival of goods in the U.S.
In light of the volume and variety of data FDA seeks, and the small window
of opportunity to obtain and present such data, it is an unrealistic
limitation. The proposed regulations
must allow for the correction of routine clerical error and/or registration
information without limitation, so long as it is received in time for the FDA
to react to the new information.
Of equal importance is the fact that the
regulations do not require the transmission by FDA of an acknowledgement of a
prior notice and/or the fact that it is complete - - the importer will only
determine this after arrival, when the cargo is accepted or refused by
FDA. To avoid substantial economic harm
to importers and the industry at large, this oversight should be corrected.
8. The Responsibilities and Liabilities Of An “Agent” Should Specifically Exclude Licensed Customs Brokers.
The term “U.S. Agent,” as described in
proposed §1.227(c)(12) clearly includes customs brokers as parties authorized
to submit prior notice. However, the
proposals also extend liability for the accuracy of the information submitted
in the prior notice, to parties that did not provide the information.
Customs brokers will very likely be
called upon to serve as the U.S. agent of the importer under the proposed rule,
in that this authority already exists under the Customs Regulations. Pursuant to 19 CFR 141.36, a customs broker
is required to obtain a power of attorney to conduct “customs business” and
accept service of process, on behalf of a nonresident principal. However, as an
agent of the importer, Customs recognizes that the broker is not responsible
for the accuracy of the invoice information upon which it relies, in preparing
the entry.
Contrary to the above, proposed section
1.278 appears to create liability on the part of the customs broker for the
accuracy and timeliness of submissions by non-resident principals. Only the entity supplying the data or a
party-in-interest in the transaction should be held liable for the accuracy of
the information submitted. In order to
permit the continuation of importations by foreign importers, particularly on
the Northern U.S. border, FDA must revise the rule to reflect that the customs
brokers is merely an agent for the filing
of information submitted by
importers, and is not responsible for either the adequacy or accuracy of the
data submitted, other than to exercise reasonable care to present the
information provided by its client in correct form.
9. Limiting Authorized Parties Submitting Prior Notice To U.S. Agents Is Discriminatory.
While, the proposed regulations do not specifically require foreign facilities to designate a
U.S. agent, section 1.225(c) implies that all foreign facilities must have U.S. agents, designated as “agent in charge”. Section 1.232(f) requires that the foreign facility list U.S. contact information. Under proposed section 1.285(a), the purchaser or importer residing in the U.S. is the party responsible for submitting notice. These proposed regulations fail to take into account the fact that certain types of products, such as coffee, is sold in transit or after release by FDA and Customs. Therefore, the actual consignee information is simply not available at the time the prior notice must be submitted. This could result in a “refusal” by FDA simply because the prior notice information is incomplete. FDA must allow for the foreign shipper to appear as consignee on the prior notice.
10. The Requirements of the NPRM Will Cause Economic Harm To The Importer and Carrier Without A Commensurate Increase In Security.
There are many instances where the
geographic distance and subsequent transit time between the foreign port of
lading and the U.S. port of discharge is minimal.[9]
If the proposed regulations are implemented as presently drafted, they
would impose significant additional costs on the trade industry. Carriers would effectively be barred from
loading last minute cargo, resulting in significantly lower revenue. It will also interdict the importers ability
to employ a “just in time” inventory system and will increase storage costs.
Exporters would have to deliver
merchandise to the carrier sooner than previously required, resulting in
increased internal and inventory costs, because additional personnel would be
necessary in order to process the advance cargo declarations. Containers delivered to a carrier without
sufficient time to comply with the new prior notice requirements would remain
on the dock or terminal. This would
only serve to allow additional time for our enemies to insert a
biological/chemical weapon either directly on the food product or inside the
container housing the food.
11. The List Of Facilities Subject To Registration Will Not Achieve The FDA’s Desired Goal Of Product Tracking
The number of facilities potentially
subject to registration under proposed §1.225(a) is reflected in Tables 1
through 6 of the NPRM. However, the
tables take into account only the types of facilities that are now regarded as
being “food storage or handling” locations and overlook many other facilities
that a literal reading of the provision, would have to be registered. These
facilities include, but are not limited to:
(a)
Rail yards
– where many types of shipments, including containerized (whether or not on
rail cars at the time), boxcar (both dry carton and refrigerated/frozen),
hopper car (typically grain), and bulk liquid (e.g., milk) may be held for extended periods in the course of their
through transit;
(b) Container yards – at marine terminals,
off-dock holding yards, truck terminals, rail terminals, etc.;
(c) LTL truck terminals – where cargo is
staged, consolidated, loaded, re-handled, and held for on forwarding, pick-up,
or delivery;
(d)
FTL truck
terminals – including relay points and “drop lots” where previously loaded
trailers are staged or held for pick-up or for exchange to a new power unit;
(e) Customs bonded Container Freight Stations
(CFS facilities) where containerized cargo is often held for Customs clearance
(and/or other agency release), and/or trans-loaded from international to
domestic transportation equipment;
(f) Air cargo handling agents; and
(g) Air, ocean, and truck break-bulk
terminals.
Because a single domestic U.S.
transportation company, regardless of their size, may have literally dozens or
hundreds of such locations, the separate registration of each of these as an
individual facility, through which imported food products might occasionally
pass, will be a huge and unreasonable burden on many such firms.
We recommend that the FDA only require
registration of facilities which are generally or regularly used for the
storage and handling of food products.
We accordingly suggest that proposed §1.226 be amended by adding the
following exemption:
(g) Transportation facilities at which a
shipment of food may be temporarily stored during the course of its
transportation. This would include
temporary storage at marine, truck, rail, or air carrier terminals, container
yards, container freight stations, and similar types of locations but does not
include a transportation facility that is used for the storage of food, other
than in the ordinary course of transportation or pursuant to §1.241(e) of this
part.
12. Registration Of Facilities Under The Proposed Regulations Must Be Verifiable.
Verification of the registration of a
facility cannot be verified in that proposed rule 1.243(a) makes the
information exempt from public disclosure.
Therefore, importers and other “submitters” of the prior notice have no
way of verifying if a packer, shipper, warehouse, etc., is properly
registered. This could lead to refusal
or delay of the shipment by the FDA, for reasons beyond the submitter’s
control. In addition, NVOCCs, motor
freight carriers with less-than-truckload shipments, and carriers of
consolidated shipments, would also encounter delays if they have to segregate a
refused food shipment from other cargo.
We believe it unreasonable for submitters
not to be able to confirm that a facility is registered until after the cargo
arrives. By that time, the importer
runs the risk of refusal, possible demurrage or other storage costs, and/or
“General Order” charges. It should be
incumbent on FDA to timely reject a prior notice that contains an erroneous
facility registration number.
13. The Regulations
Place An Unreasonable Burden on Carriers.
For imported food products that will
merely be transiting the United States in-bond, section 1.286(b) provides that
the arriving or in-bond carrier may submit the prior notice. Simply stated, the carriers do not have
access to this information or the expertise to prepare and submit the prior notice. It will expose them to the assessment of
sanctions for possible submission of a false notice and/or liability to the
consignee if the shipment is detained.
We suggest that this provision be deleted and “in transit” merchandise
be exempted from the rule.
14. The NPRM does not
comply with the requirements of the Regulatory Flexibility Act and E.O. 12866.
The Regulatory Flexibility Act (5 U.S.C.
601-612) requires federal agencies to consider the effects of their regulatory
actions on small businesses and other small entities and to minimize
undue
disproportionate burdens on particular business sectors. Many brokers and other participants in the
trade industry located in the U.S. have gross incomes under 18 million dollars
per year and are considered “small businesses,” as defined in the statute. Contrary to the statement contained in the
NPRM, as noted above, the proposed regulations will have a significant impact
upon these small entities and subject them to potentially crippling losses of
revenue. This, coupled with the
increased possibility for monetary penalties for non-compliance, will place the
continued existence of the many customs brokers that specialize in food
products, at risk.
In addition, we challenge the calculation
of one hour as the time required to comply with the proposed regulations. Taking into account the many variables,
which includes obtaining an entry number, determining the last port the cargo
was shipped from, ascertaining the facility registration numbers, obtaining the
names, addresses, etc. of contacts, determining the correct product code, etc.,
will take far longer than one hour. If
prepared by the importer, we estimate that the time required to acquire and
verify the information will take from four to six hours, and possibly longer.
Conclusion
The NCBFAA is anxious to see that
regulations are put in place that will help insure against bio-terrorist
attacks on our food supplies. However,
it appears that the proposed regulations go too far in trying to reach that goal
and will have the effect of interdicting the smooth flow of legitimate commerce
and economically disadvantage importers, customs brokers, transportation
companies and various other entities involved in the supply chain. Further, while security can be measurably
enhanced through the transmission of advance import shipment data, the FDA
should not strike out to achieve this.
This is certainly not the time for
federal agencies to fight “turf wars,” at the expense of the public. Rather, FDA should partner with Customs in
an effort to find one system that will satisfy the needs of both agencies, at
minimum cost to the public. To that
end, we believe the NPRMs should be withdrawn, pending substantive discussions
between FDA and Customs.
We thank you for the opportunity to
submit these comments.
Sincerely,
Federico
Zuniga,
President
Harvey Isaacs
General Counsel
/jov
ENCLOSURE
LIST OF ORGANIZATIONS ENDORSING THE NCBFAA COMMENTS
American Shipping Company, Inc.
Baltimore Customs Broker & Forwarders Association
Charleston Brokers and Freight Forwarders Association, Inc.
Customs Brokers ANC
CB&IFFA of Virginia
Columbia River Customs Brokers and Forwarders
Customs Brokers and Foreign Freight Forwarders Association of Chicago
Customs Brokers and Forwarders Association of Northern California
Detroit Customs Brokers & Freight Forwarders Association
International Freight Forwarders and Customs Brokers Association of
Charlotte, NC
International Freight Forwarders and Customs House Brokers of Atlanta,
GA
International Freight Forwarders and Customs Brokers Association of New
Orleans
Laredo Licensed U.S. Customs Brokers Assn., Inc.
Los Angeles Customs Brokers and Freight Forwarders Association
Northern Border Customs Brokers Association, Inc.
Philadelphia Customs Brokers & Forwarders Association
Rio Grande Valley Customs Brokers Association
Rodel Int’l M.D.H. Laboratories
San Diego Customs Brokers Association
UPS Supply Chain Solutions, Inc.
