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RISK INSIGHT: Federal Ruling on Sanitary Food Transportation

Food & Agribusiness, Property & Casualty, Transportation

On April 6, 2016, the Food & Drug Administration (FDA) announced the final ruling on Sanitary Transportation of Human and Animal Food.

This ruling impacts businesses that transport food – such as, raw materials, ingredients, USDA-regulated foods such as meats, poultry, and eggs – in the United States. In short, anyone transporting edible materials intended for distribution in and consumption by U.S. markets are required to use, and provide documentation of, regulated sanitary practices designed to maintain food safety during transportation.

Motor carriers will be responsible for working with shippers to meet the new written procedures requirements. Wash records, previous load records, training records, and written procedures must be kept by the transporter for 12 months.

When? Compliance Deadlines

A business not classified as small or is not otherwise exempt would have to comply one year after the publication of the final rule (April 2017).

Recognizing that small businesses may need more time to comply with the requirements, the compliance dates are adjusted accordingly. Small businesses – those employing fewer than 500 persons and motor carriers with less than $27.5 million in annual receipts— have two years to comply (April 2018).

Penalties for Non-Compliance

Failure to comply with this ruling, including the record-keeping requirements, is a prohibited act. Violations can result in civil enforcement including strict liability and criminal penalties, potentially resulting in jail time in the event of serious food related deaths. In addition, the Food Safety Modernization Act (FSMA) has broad product recall authority which is extremely expensive for the business involved.

Who is exempt from the rule?

Certain organizations and activities are exempt from this ruling, including shippers, receivers, or carriers engaged in food transportation operations that have less than $500,000 in average annual revenue from food-related activity. Transportation activities performed by a farm as well as organizations which transport food which will not be consumed or distributed in the United States are also exempt.

Additionally the agency intends to publish waivers for milk haulers who hold valid permits and are currently being inspected under the National Conference of Interstate Milk Shipments, FDA, and State of Wisconsin Oversight Committee.

How M3 Can Help

While insurance will not help your business with criminal fines or penalties, we can assist you in customizing your insurance program to include coverages for: product recall, product liability, completed operations, ocean cargo, and domestic transit/rejected government shipments.

Our capable risk management staff can also assist you with your Department of Transportation and FSMA risk management compliance efforts. Contact your M3 Account Executive to discuss.

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