# US BIOTERRORISM ACT 2002: PROPOSED REGULATION

# Docket No 02N-0277 -- Establishment and Maintenance of Records

# Preamble

The Scotch Whisky Association (SWA) is the industry's officially
recognised representative body. Its 57 member companies, all of whom are
distillers, blenders, owners of proprietary brands, brokers and
exporters of Scotch Whisky, together comprise over 95% of Scotland's
distilling and blending capacity.

Each year the industry exports Scotch Whisky valued in excess of US\$3.5
billion to over 200 world markets. In 2002, goods to the value of some
US\$476 million were exported to the United States, making it the
industry's single most valuable export market.

# General Background

On 3 April 2003, the SWA filed submissions with the Food and Drug
Administration (FDA) on the proposed regulations for implementation of
the Registration and Prior Notice requirements (Docket Nos 02N-0276 and
02N-0278 refer). It does not intend to re-state the Overall Comments and
Conclusions on the Bioterrorism Act that it made therein other than to
reiterate the following.

The SWA understands that the FDA objective in formulating a strategy to
enhance the security of the US food supply is to protect US citizens
from the threat of bioterrorism and other such emergencies. It is not
opposed in principle to the imposition of new legislative requirements
governing the shipment of food products to the US, whether for import
into the US domestic market, for onward shipment outwith the US, or for
re-export from the US, **provided** that the specific requirements are
(a) appropriate and (b) proportionate to securing the desired objective.
Furthermore, it is essential that the measures are the least trade
restrictive possible.

Bearing these principles in mind, the SWA's specific comments on the
proposed regulation for the [Establishment and Maintenance of
Records]{.underline} (Docket No 02N-0277) are as follows.

### **Application 'beyond' the US Importer**

It is significant that the record keeping requirements of the Alcohol
and Tobacco Tax and Trade Bureau (TTB) do not go 'beyond' the importer.
This is expected given that the TTB, together with the Bureau of
Alcohol, Tobacco, Firearms & Explosives (ATFE), its companion law
enforcement agency, have no jursidiction 'beyond' the US border.

It has been acknowledged in the context of recent US Customs initiatives
that US Customs has no jurisdiction outwith US territory. Consequently,
mutual agreements on cooperation between US Customs and, for example,
the EU Commission have been reached in order to address responsibly
together their shared Customs security objective .

The FDA proposed regulation for the establishment and maintenance of
records as drafted 'would require the establishment ... by certain
domestic persons who ...' but then makes an assumption that 'these
requirements apply to certain foreign facilities that ...'. This is
unacceptably open-ended, and reflects the FDA's uncertainty on the
extent of its jurisdictional remit.

The SWA questions how the FDA justifies the application of its record
keeping requirement 'beyond' its Federal jurisdiction as appropriate.

## **Existing Traceability and Security 'beyond' the US Border**

The import of alcoholic beverages into the US is prohibited unless the
importer holds a Federal Basic Permit to import and an alcoholic
beverage product cannot be imported for sale in the US domestic market
without first having obtained a Certification/Exemption of Label/Bottle
Approval (COLA) from the TTB. Substantial information about a product
imported legally into the US is therefore already held in the TTB
database.

In any event, EU spirits producers hold comprehensive records that
enable full traceability for all components of their products, as well
as records for tracing key 'dry material' components, such as bottles,
capsules etc. In addition, EU legislation requires the inclusion of lot
codes on the labels for the purpose of traceability; US regulations
require tamper-proof closures on spirits and wine products; and
containers are security sealed.

The traceability and security of EU spirits and wine products is already
provided for under EU and, in some cases, national legislation and also
in standard industry practice. For example, in the UK, a licence is
required to operate a distillery; the production of Scotch Whisky (and
other UK spirits) is carried out under HM Customs & Excise control; the
entire production process is subject to strict quality controls
including chemical analysis and profiling to safeguard against, inter
alia, contamination.

Emergency procedures have also been set up in the event of a 'food
safety' emergency. A Rapid Alert System is already in place to deal with
a scenario involving illness, microbiological contamination,
contamination of a product by a foreign body or malicious contamination.

In the same way as the US Customs and EU Commission have reached an
agreement to cooperate on security initiatives within the EU, the SWA
believes that the US FDA should rely on the EU Commission to assist
quickly, efficiently and vigilantly in tracking the source of a suspect
element which is discovered in the US and traced back to the EU, through
the procedures that are already in place.

The alternative in not doing so would potentially result in two parallel
but separate tracking exercises being undertaken, wasting both time and
manpower for both investigating parties. The SWA believes the proposed
requirement is neither appropriate nor proportionate to securing the
desired objective.

## **Duplication of Records**

Alcoholic beverages are subject to strict overall regulation under the
TTB in accordance with Title 27 of the Code of Federal Regulations
(CFR). The particular regulations for the maintenance of records of
imported spirits, wine and beer are contained in 27 CFR Part 251,
Subpart I. The importer's records enable a product to be traced from the
point of importation on to its destination as well as back to its
producer/supplier.

Recently, it has been announced that the FDA and US Customs will work
together in order to enable the supply of a single set of information,
based on the information requirements of the FDA, by the importer
(exporter) to satisfy both the existing US Customs '24-hour rule' and
the FDA Prior Notice of shipment requirement under the Bioterrorism Act.
The SWA welcomes this simplification and logical solution to a
duplication of requirements.

However, a duplication of requirements occurs once again by virtue of
the (1) existing and soon to be amplified information that is/will be
required by US Customs/FDA under their respective advance notice
requirement(s) for shipments arriving in US ports and (2) this FDA
proposed regulation (Docket No 02N-0277) requiring a further set of
records on the immediate previous source of imported products.

The SWA and EU alcoholic beverage producers hold comprehensive records
that enable full traceability for all components of their products. Many
of them also hold records for tracing key 'dry material' components,
such as bottles, capsules etc.

The FDA is aware that there may be existing requirements for record
keeping and appears flexible in regard to the manner in which records
are maintained. This begs the question whether it is either appropriate
or proportionate to the desired objective for the FDA to formulate at
all another raft of recorded data requirements, most of which are
already on record in some form or another.

## 

## **Multiplicity of Data leading to Modification of Existing Records** 

The FDA proposed requirement lists a new raft of data, records for most
of which, as the FDA acknowledges, are already held in one form or
another. The SWA appreciates the FDA readiness to accept existing
records in order to cover the two sets of data which the FDA legislation
requires to be maintained by a foreign nontransporter, namely the (1)
'one-up' source and (2) 'one-down' recipient of a product. (It is
however, in contrast, clear that similar records do not require to be
maintained by foreign transporters.)

  --------------------- --------------------- ---------------------------
  One-up Nontransporter One-down              One-up/one-down Transporter
                        nontransporter        

  1.name, address,      Same of immediate     1.name, address, phone of
  phone of immediate    subsequent recipient  immediate previous source +
  previous source                             date of receipt

  2\. type of food      Type of food          2.name, address, phone of
                                              immediate subsequent
                                              recipient + date of
                                              delivery

  3\. date received     Date delivered        3.type of food

  4\. lot number /other Lot number/other ID   4.lot number/other ID
  ID                                          

  5\. quantity          Quantity              5.quantity

  6.name, address,      Name, address, phone  6.ID of each & every
  phone of transporter  of transporter from   transport mode used from
  to you                you                   transporter's receipt to
                                              delivery
  --------------------- --------------------- ---------------------------

The 'one-up' nontransporter data required to be held by an importer of
alcoholic beverages is already available to US Customs and the TTB. In
this regard, an importer of a shipment of a brand of, for example,
blended Scotch Whisky should have only one 'one-up' list to cover
(although he may have several 'one-down' lists for that shipment).

However, if applied to a foreign facility which produces, for example,
that same shipment of blended Scotch Whisky, the foreign producer may
have as many as 50 'one-up' lists to cover because as many different
Scotch malt and grain whiskies alone may be contained in the final
blended Scotch Whisky. This serves as just one instance of the
potentially endless quantity of 'lists' of data that the FDA requires
foreign facilities 'beyond' its legal jurisdiction to maintain.
Notwithstanding, the maintenance of production records by Scotch Whisky
and EU alcoholic beverage producers is a sine qua non.

If the proposed requirement were to apply to nontransporters outside of
the US, it would potentially entail the modification of existing
records. For example, documentation which records purchases (eg purchase
orders and invoices) and shipping,details (eg bills of lading and
invoices) may be inadequate for the incorporation of possible additional
information under the proposed record keeping requirement. This in turn
could entail the whole format of a company's documentation system having
to be modified in order to accommodate the extra data (although the
shipping company would be responsible for the bill of lading). As a
corollary, a company may require to obtain additional information from
its suppliers in order to ensure that it has the necessary data relating
to what it receives from them, all of which involves extra time and
administrative work for both purchaser and supplier.

Given the ability to trace product within the EU and given the existence
of Scotch Whisky and other EU alcoholic beverage producers' own records
(in addition to those of US importers), application of the proposed
regulation relating to the establishment and maintenance of records in
the case of EU producers would seem inappropriate and disproportionate
to the desired objective.

### 

## **Listing of Ingredients**

The proposed regulation requires a record of all information reasonably
available to identify the specific source of each ingredient used in
every lot of finished product.

Scotch Whisky producers are indeed concerned about the need to record a
list of the ingredients in their brands. In spite of this and the fact
that ingredients do not require to be listed on the labels of alcoholic
beverages in either the EU or the US, Scotch Whisky and other EU
alcoholic beverage producers would readily cooperate in providing
information from their own records on the source(s) of their ingredients
in the event of a health risk situation.

In the context of the FDA proposed regulation, there is a question of
interpretation as to what is meant by

'ingredients' as far as Scotch Whisky (and other distilled spirits) is
concerned. This is because the

character and chemical composition of the raw materials are
substantially changed by the distilling

process and some of these may even be absent from the final product.
This is one reason why an

ingredient list on a Scotch Whisky label would be misleading.

It has been assumed for the purpose of traceability that this is not
necessarily what the proposed

regulation intends 'ingredients' to mean. For instance, a blended Scotch
Whisky consists of various malt

and grain Scotch Whiskies blended together to produce the final Scotch
Whisky, although in turn those

individual Scotch Whiskies have been distilled from cereals, water, and
yeast.

There are potentially innumerable sources of 'ingredients' to be
recorded for a brand of Scotch Whisky, the actual number being dependent
on the particular brand. Under the proposed regulation, although it is
not entirely clear, it appears that all of these would require to be
identified. Since as many as 50 different Scotch Whiskies may be present
in a brand of Scotch Whisky, this would be extremely burdensome.

Furthermore, some ingredients may not be held in common storage. For
example, many of the say 50 different Scotch Whiskies in a blend may be
produced at different distilleries and then warehoused in several
different locations. The logistics therefore become increasingly
complex, an extreme example being 150 barrels of whisky sourced from 80
different places.

In the event that the precise ingredients and their source of a
particular brand of Scotch Whisky requires to be known, the most
efficient and acceptable way of establishing this is to locate the
importer and/or producer. Since this is most easily achieved through the
TTB's existing database, the required maintenance of any other record of
ingredients would be disproportionate to the desired objective.

## **Disclosure of Food Recipes** 

For the purposes of the proposed regulation, the FDA bases its
definition of 'recipe' on the notification of the actual quantity of
each ingredient used in the manufacture of a product and, accordingly,
assumes that it is not requesting 'recipe' information because it does
not require to know their respective quantities.

Nevertheless, the Scotch Whisky industry is extremely concerned by the
risk of disclosure of sensitive commercial information through having to
provide a 'one-up' source nontransporter record for each of the
ingredients in a Scotch Whisky product. In spite of the quantitative
ratios not being disclosed, the very listing of the source of each one
of as many as 50 individual Scotch Malt and Scotch Grain Whiskies that
produce the final blended Scotch Whisky would essentially reveal the
trade secret 'recipe' for that particular brand. Often this information
is known by only a limited few within the company itself.

This leads to the serious question of how, once the 'recipe' has
potentially passed out of the producing company's control, such
commercially sensitive information would be handled and by whom.
Furthermore, the SWA doubts that it is appropriate in the first place
and, given the stated accessibility of ingredient sources through
importer/producer details in the TTB database, believes it is
disproportionate to the desired objective.

## **Time frame for Accessing Records**

The FDA requires records to be accessible within a time-frame of not
more than 4 to 8 hours, depending on the day and time. Naturally,
companies would endeavour to supply what may be requested as fast as
possible.

This proposed time-frame is totally unrealistic for records that are
held 'beyond' the US. Local time requires to be taken into
consideration, eg a request made at 2.00pm Washington time is received
at 8.00pm in France when no-one would be present at a distillery or even
in an administrative building. A delay of 24 hours would be essential in
order to meet a request made during the working week.

In the event of a request being made during a weekend (once again, local
time of Friday 4.00 pm in Washington is already the weekend in Europe),
the industry would be in a position to respond within 72 hours.

Additional factors that require to be taken into account include the
possible storage 'off site' of records, particularly older as opposed to
recent. In such circumstances, more than 24-hours would be needed in
order to retrieve such records and a degree of indulgence is requested.

The provision of 24-hour cover to assist with emergency access to
records, whether on or off site, would be extremely costly to
businesses.

# Additional Costs

a\. [Record keeping]{.underline}

> In order to meet the record-keeping proposals fully, it is estimated
> that a large company would have to employ 1 to 2 extra full time
> persons. One Scotch Whisky company has estimated that this would cost
> some £60,000 (sterling) per year.

b\. [Emergency access]{.underline}

A specific costing has not been guesstimated for 24-hour cover to assist
with emergency access to records, whether on or off site. However, if
such cover were provided there is no doubt that it would be extremely
costly.

Given Scotch Whisky producers' existing records and the EU system for
tracing product, these additional costs which would be entailed by
application of the proposed regulation outwith the US are considered
wholly inappropriate and disproportionate to the desired objective.

## **Small and Medium-sized Companies**

The SWA appreciates that the FDA would permit a longer time-scale for
compliance with the proposed regulation for companies with 10-500
employees and for those with up to 10 employees.

Nonetheless, the burdens of record-keeping and ensuring accessibility to
records within the time-frame currently specified is considered wholly
impractical -- and disproportionate to the scale of business -- for some
smaller companies. It follows that they would entail exceptional expense
which, unfortunately, it has not been possible to quantify on a
realistic basis.

# 

# Retention of Records

The FDA proposes that records are retained for a period of 2 years.

From the point of view of Scotch Whisky, which must be aged for a
minimum 3 years, retention of records for a period of only 2 years would
be inadequate to trace a matured product right back to source.

This suggests that reliance would be best placed by the FDA upon
alcoholic beverage importers'/

producers' own existing record systems to facilitate traceability,
confirming that the proposed regulation is not appropriate nor is it
proportionate to the desired objective.

## **Inconsistency of application of the 'Requirement'**

As stated in the SWA's previous submissions on the FDA proposed
Registration and Prior Notice requirements under the Act,
notwithstanding that all alcoholic beverages are tightly regulated in
the US under the combined jurisdiction of the US Department of Treasury
(TTB) and the Department of Justice (ATFE), the FDA intends the scope of
its proposed regulations under the Bioterrorism Act to apply to them.
This is inconsistent with the fact that meat, poultry and egg products
which fall under the jurisdiction of an agency other than the FDA, viz
US Department of Agriculture, are said to be specifically exempt from
the scope of the Act.

This irregularity is heightened by the perceived intention of the FDA
that facilities 'beyond' the US border comply with the demands of its
record keeping requirements while only certain domestic products
regulated by an US agency other than the FDA are exempt from the
jurisdiction of the FDA bioterrorism legislation within the US.

**Conclusions**

The SWA recognizes the purpose of the FDA proposed regulation for the
Establishment and Maintenance of Records and the FDA's desire to set a
target to ensure prompt traceability within a certain time.

While, for all the reasons set out above, the SWA considers that the
application of the FDA proposed regulation outside the US is
inappropriate and disproportionate to the desired objective, it commends
the guiding principle of ensuring that the means exist to trace a
product source as rapidly as possible if required. In this regard, the
SWA and its members would cooperate fully.

Given that these means do already exist within the EU/UK supply chain
and that records are already held by Scotch Whisky producers, the SWA
requests that the FDA amends its proposed regulation to make it clear
that its proposed requirements do not apply outwith the US but serve
only as a guideline to facilitate a rapid response through cooperation
at inter-government and international industry levels.

On this basis, the SWA also requests that the FDA amends its proposed
requirements/guidelines for those affected in/outwith the US
respectively in the following particular regards:

-   the proposed time-frame for accessing records requires to be
    increased to a minimum of 24 hours for a request made during the
    working week and to 72 hours for one made at the weekend.

-   the need to identify brand sensitive information on each
    ingredient/source for Scotch Whisky and all other alcoholic
    beverages should be eliminated in favour of the FDA's ready access
    to this information through the producer/importer whose details are
    held in the TTB existing database.

The Scotch Whisky Association

Edinburgh EH3 8HF

Scotland, UK 8 July 2003