The U.S. Food and Drug Administration (FDA) has published an announcement of the availability of a Guidance Document, Temporary Policy During the COVID-19 Public Health Emergency Regarding the Qualified Exemption from the Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption (May 2020). Comments on the Guidance may be submitted to the agency at any time. The Guidance was released May 22, 2020.
This new guidance affects small farms that supply produce to particular types of customers such as specialty restaurants and retailers selling local produce, community supported agriculture (CSA) programs, and farmers’ markets.
The Standards for the Growing, Harvesting, Packing, and Holding of Produce for Human Consumption are commonly referred to as the Produce Safety Rule or PSR (codified at 21 C.F.R. Part 112). Certain small farms receive “qualified exemption” from some PSR requirements if they sell to “qualified end users.”
“Qualified end users” are:
- consumers of the food (direct customers that are also the consumers of the food); or
- a restaurant or retail food establishment:
- in the same State or on the same Indian reservation as the farm that produced the food; or
- not more than 275 miles away from the producing farm.
If a farm has qualified end users, they can claim the qualified exemption if:
- the average annual monetary value of food the farm sold directly to “qualified end-users” exceeds the average annual monetary value of the food the farm sold to all other buyers (the “qualified end user threshold”); and
- the average annual monetary value of all food the farm sold was less than $500,000, adjusted for inflation to when the PSR became effective (the “total food sales threshold”).
The Guidance affects only the qualified end user threshold for the duration of the public health emergency related to COVID-19 declared by the Secretary of Health and Human Services (HHS) in January 2020, including any renewals made by the HHS Secretary in accordance with section 319(a)(2) of the Public Health Service Act (PHS Act) (42 U.S.C. § 247d(a)(2)).
Under the PSR, the qualified end user threshold was generally calculated using a rolling average of the previous three years’ sales. “In order to support affected farms in selling food to all available buyers during the COVID-19 public health emergency . . . FDA does not intend to enforce the criteria for sales to qualified end-users when determining eligibility for the qualified exemption under the Produce Safety Rule, for the duration of the public health emergency.” Guidance at 6. The Guidance acknowledges that disruptions to food distribution systems arising out of the current Public Health Emergency may have deprived farms operating under the qualified exemption of their qualified end users, specifically restaurants. Id.
Under the PSR, the two threshold calculations are made using a rolling average of the previous three years’ sales. PSR § 112. There are special rules to account for farms that may not have three years of sales upon which to make the calculations. Under the Guidance, farms that met the criteria for the qualified exemption in 2020 based on sales that were made in 2017-2019, FDA does not intend to enforce the qualified end user threshold in 2020 (and any subsequent years that are affected by the COVID-19 public health emergency), provided, that the farm continues to come below the total food sales threshold, adjusted for inflation.
Farms that do not have three years of sales figures to rely upon must be able to document coming under both the qualified end user threshold and the total sales figure threshold for those years in which they have been in operation. Completely new farming operations must be able to document (e.g., through contracts with buyers) a sufficient basis to establish that, had there not been market disruption due to the COVID-19 pandemic, the average monetary value of food sold directly to qualified end users would have met the qualified end user threshold and total food sales would have come under the total sales threshold.