Inspections, Compliance, Enforcement, and Criminal Investigations
9-14 - Priority Enforcement Strategy for Problem Importers
To provide guidance for dealing with importers or other individuals who engage in business practices that appear designed to evade the lawful regulation of imports. The procedures outlined in this chapter should not be considered all-inclusive, nor are they intended to limit local options. Situations that appear to involve criminal activity (e.g. smuggling, falsification of records) should also be referred to the Office of Criminal Investigations for their information and follow-up, as appropriate.
This guidance represents the agency's current thinking on dealing with problem importers. It does not create or confer any rights for or on any person and does not operate to bind FDA or the public.
Priority attention should be given to firms with a history of any of the following actions:
- Distributing imported articles in domestic commerce following receipt of a Notice of FDA Action specifying the intention of Sampling, or the Detention or Refusal of the articles; or prior to receipt of a Notice of FDA Action specifying the articles are Released.
- Repeatedly importing violative articles.
- Falsifying documents at time of entry, reconditioning, or re-export, including misdeclaring articles to avoid detention without physical examination or other regulatory action.
- Re-entering previously refused articles into the United States.
- Failing to recall or redeliver to CBP, at its request, an article for which a Notice of FDA Action specifying that the article was refused by FDA has been issued.
- Introducing or delivering for introduction into domestic commerce (after entry) any article which is adulterated or misbranded, or which is a new drug without an approved New Drug Application.
- Committing any prohibited act (see 21 USC 331).
In developing the Operational and Administrative System for Import Support (OASIS), the specific forms "May Proceed Notice," "Release Notice," "Notice of Sampling," "Notice of Detention and Hearing," and "Notice of Refusal" have been replaced by the issuing of "Notices of FDA Action," which includes a description of the specific FDA action (May Proceed, Release, Sampling or Intention of Sampling, Detention, or Refusal) identified for the specific line in the entry. The use of the designations "Product May Proceed," "Product Released by FDA," "Product Collected by FDA," "Product Detained by FDA," or "Product Refused Entry by FDA," or similar wording should be considered as meeting the standard, "giving notice thereof to the owner or consignee." (See 21 USC 381(a); 21 CFR 1.94.)
In 1988, the Agency conducted a short-term enforcement operation aimed at determining the disposition of food articles refused admission. Thirteen percent of articles refused admission for non-labeling violations had been distributed in interstate commerce, rather than redelivered for export or destruction.
In 1990, the Agency discovered an importer of ceramic dinnerware circumventing detention without physical examination by declaring the entries as statuary, a non-regulated article.
Between 1990 and 1992, New York District, in conjunction with the CBP, investigated and documented an importer's history of violative practices regarding the importation of frozen seafood products. Practices included repeatedly importing violative articles; falsifying documents and manipulating articles to avoid detention without physical examination; refusing or not permitting timely inspection of entries; importing previously refused articles; and smuggling. As a result of the investigation, in 1992 the firm's president was indicted by the U.S. District Court in New Jersey. He was subsequently convicted on 138 counts for submitting false documents to FDA and for illegally re-importing previously rejected salmonella contaminated seafood. On February 5, 1993, all frozen seafood products imported by the firm were placed on detention without physical examination.
Between 1992 and 1995, Florida District and the Office of Criminal Investigations, in conjunction with CBP, investigated and documented an importer's history of violative practices regarding the importation and handling of frozen shrimp. Practices included repeatedly importing violative articles; falsifying documents to avoid detention without physical examination; manipulating articles in attempts to have packers removed from detention without physical examination; and laboratory shopping (sending samples of product that is detained without physical examination to different private labs and then submitting to FDA only the analysis which shows the product in compliance, even though the other lab found the product violative). Further, Florida District identified three shipments of shrimp imported by the firm which were seized because of decomposition. Prior to the seizures, the firm attempted to sell the decomposed shrimp, which had been rejected by eight consignees and the National Marine Fisheries Service. The firm also was discovered washing decomposed, imported shrimp with a copper sulfate solution in an attempt to conceal the decomposition. On March 10, 1995, all frozen shrimp imported by the firm was placed on detention without physical examination. As a further result of the investigation, the firm and its top management were indicted by the U.S. District Court in Florida. The firm's vice president was convicted on 12 felony counts, including conspiracy, obstructing justice, violating CBP law, and tainting shrimp and selling it with the intent to defraud and mislead.
The following enforcement approaches have general applicability. They should be considered when dealing with firms engaged in the types of practices listed in the "Purpose" section above, when conventional import coverage and enforcement avenues appear insufficient to address the problem. The approaches include review and approval of reconditioning proposals (FD-766), the use of Warning Letters (sequential, when appropriate), recall, seizure, injunction, or prosecution.
As always, use of enforcement discretion by the district should be considered in determining the appropriate regulatory response. When egregious actions are encountered, a sequential approach may not be appropriate. Also, situations that appear to involve criminal activity (e.g., smuggling, falsification of records) should be referred to the Office of Criminal Investigations for their information and follow-up, as appropriate.
Issuance of Warning Letters to remind firms of their responsibilities to import articles that comply with the provisions of the Federal Food, Drug, and Cosmetic Act and other laws enforced by FDA, and to assure that only non-violative articles enter domestic commerce in the United States, is often an appropriate first action. (Refer to RPM Subchapter, "Warning Letters.") Warning Letters may be issued to the importer of record, owner, or consignee (if other than the importer of record) with copies to CBP, and may be issued for the following reasons:
- Failure to hold an entry intact pending receipt of a Notice of FDA Action specifying that the article was Released by FDA. A copy of the Warning Letter should be attached to the redelivery request sent to CBP when such a request is made.
- The first documented attempted entry with misleading information. Misleading information includes, for example, low-acid canned foods from a non-registered plant entered under another processor's Food Canning Establishment (FCE) number; or articles from firms subject to detention without physical examination; or articles declared as non-regulated articles to avoid detention without physical examination or other agency action.
- The first documented instance of submission of a foreign government certification document or private laboratory analytical report that does not match the entry in question.
- An importer's failure to provide FDA with information regarding the availability for sampling or location of an entry for which a Notice of FDA Action specifying FDA's intention of sampling has been issued.
- To inform an importer that FDA has requested that CBP deny it permission to file an entry bond, thus restricting its shipments to CBP's custody until admissibility has been determined.
- Consistently importing violative articles not already subject to detention without physical examination. The importer should be notified that this practice may result in future entries being detained without physical examination.
- Any other situation which warrants an official notification to the firm and further opportunity for compliance before other action is taken.
The Warning Letter should state that any distribution of refused articles or articles sampled or intended for sampling that were distributed prior to release are in violation of the Federal Food, Drug, and Cosmetic Act or other applicable acts enforced by FDA, and may result in domestic seizure or other sanctions, including injunction or prosecution.
The Federal Food, Drug, and Cosmetic Act provides that when an article submitted for entry is found to be violative, the importer has the option of exporting it, destroying it, rendering it not subject to the Act, or requesting permission from the agency to attempt to bring it into compliance with the Act.
If the importer of record decides to attempt to recondition a detained article, section 801(b) of the Act (21 USC 381 (a)) provides that the owner or consignee (by practice, FDA also accepts applications from an importer of record, with a properly posted bond, as the agent of the owner or consignee) may submit to the FDA a written application (Form FD-766 or other acceptable means) requesting permission to bring into compliance an article that is adulterated, misbranded, or in violation of Section 505 (see 21 USC 381 (a)(3)). The owner or consignee may bring the article into compliance by relabeling or other action, or by rendering it other than a food, drug, device, or cosmetic. (Refer to RPM Subchapter 9-10, "Reconditioning.")
The approval of the reconditioning application is at FDA's discretion. The Agency should require appropriate controls and provisions as a part of any application before it approves the reconditioning. The application is an agreement between the importer (or other appropriate party submitting the application) and the Agency.
If FDA has documented an importer's practice of consistently importing violative articles not already subject to detention without physical examination and only attempting to recondition the articles after detention, the District may require, as part of any reconditioning application, that the importer agree to destroy any article not brought into compliance during reconditioning, in lieu of permitting re-export of the violative article.
Districts should consult and obtain the concurrence of both the OEIO/Division of Import Operations (DIO) and the appropriate Center Compliance Office before initiating a policy requiring a specific importer to destroy rather than re-export violative articles as part of every reconditioning process. The information supplied should include, but not be limited to, the following:
- Documentation of the firm's pattern of importing violative articles.
- Documentation of prior warning to the firm of their obligation to import the article in compliance with the Federal Food, Drug, and Cosmetic Act or other acts enforced by FDA.
- Documentation which may establish that the article can be imported in compliance and thus would not require reconditioning after importation.
REQUESTS FOR VOLUNTARY RECALLS
Although requests for voluntary recalls duplicate a request for redelivery action to some degree, they also offer definite advantages. Experience indicates that requesting the firm to initiate a voluntary action, such as a recall, may result in a more favorable response by the firm than a demand for redelivery. A recall may occur more promptly because it can be initiated in a matter of days, while redelivery may not take place for 90 days or more. This is especially significant in hazard-to-health situations. A recall may provide FDA with further knowledge of the status of the violative merchandise being returned and usually makes it easier to maintain control of the article. This ultimately leads to improved consumer protection.
District management should very carefully encourage the firm to consider a voluntary recall under the following situations:
- When a potential health hazard situation exists.
- When there is evidence of distribution of detained or refused merchandise.
When an importer fails to respond fully or in a timely manner to a Warning Letter, or we are notified by CBP that an Importer has not responded to a Notice of FDA Action Specifying Refusal of the product, it may be an indication the goods are no longer intact. A visit to the importer may be appropriate and, if articles are missing, attempt to determine the firm's intentions with respect to corrective action.
When a potential health hazard situation exists and the article has been illegally distributed, appropriate press coverage may issue naming firm, product, and country of origin. Issuance of all publicity must be in accordance with guidelines.
Import recalls are to be conducted in full accordance with the guidelines in RPM Subchapter, "Recall Procedures." Supervision of the disposition of returned articles may be made either by FDA or CBP. If disposition will be by destruction, it is suggested that FDA provide the supervision. If the articles are to be exported, CBP or FDA may handle the supervision.
Seizure is another enforcement approach that may be considered to gain control over violative imported articles. Seizure is an action against an article. Consequently, it will be necessary to show, through laboratory analysis or otherwise, that the article seized is actually violative. An importer's history of illegal actions, while relevant, is not itself sufficient to support seizure. Whatever the importer's previous history, it will be necessary to show that the article itself is violative. Seizure may be considered for an article which:
- Represents a potential hazard to health and has been or is likely to be distributed in domestic commerce following receipt of a Notice of FDA Action specifying that the article is Detained or Refused; or
- Has been fraudulently identified/represented in documents submitted to the Agency; or
- Is identified by the Agency as a previously refused article.
When an imported article is seized, and condemned, it is subject to the provisions of section 304(d) (21 USC 334(d)) which may allow for re-exportation of the article, provided specified conditions are met. Under 21 USC 334(d), certain condemned imported articles may be re-exported under limited circumstances. Re-exportation is not available for condemned unapproved new drugs (see 21 USC 355), or foods in violation of the emergency permit control provision (see 21 USC 344). Such articles must be destroyed.
In order to be able to re-export condemned imported articles, the party seeking re-export must satisfy several threshold conditions:
- The violation did not occur after the article was imported.
- The party seeking re-export "had no cause for believing that it was adulterated, misbranded, or in violation before it was released from CBP custody."
- The party seeking re-export must "establish that the article was intended for export at the time the article entered commerce." An example of where it may be possible to demonstrate that a product was intended for export at the time it entered commerce would be when products are imported for purpose of transshipment to a destination outside the U.S.
- Compliance with 21 USC 381 (e) (1):
- Intended for export.
- Accords with the specifications of the foreign purchaser (unless the article is to be exported to the original foreign supplier, in which case there is no need to comply with this requirement).
- May not be in conflict with the laws of the country to which it is intended for export (unless the article is to be exported to the original foreign supplier, in which case there is no need to comply with this requirement).
- Labeled on the outside of the shipping package that it is intended for export.
- Not sold or offered for sale in domestic commerce.
Therefore, there are circumstances where the seizure of an article may not accomplish more than detention and refusal of the article, other than stricter control over the goods before re-export and compliance with the applicable requirements of Section 801(e) (21 USC 381(e).
Consequently, in evaluating whether a seizure is an appropriate course of action, a district should consider whether the facts in the case would justify recommending to a court that re-export of the article would be an unsatisfactory resolution. Among the points to consider are:
- Does a potential health hazard exist?
- Does the previous history of the person in possession of the articles indicate that the person may attempt to re-enter the articles into the United States at a later date?
- Did the violation occur after the article was imported?
- Did the importer have cause to believe that the article was in violation before entry?
- Does the article meet the legal specifications of the country to which it would be exported?
- Was any portion of the article sold or offered for sale in domestic commerce?
- Is the article in violation of 21 USC 342(a)(1), (2), or (6), 344, 351(a)(3), 352(j), 355 or 361(a) or (d)?
- If the article is a drug will it be re-exported to the original foreign supplier?
Under certain circumstances, the district may recommend seizure of violative articles under 21 USC 334 while the articles are still under import status, rather than allow re-export as provided under 21 USC 381 (a). Generally, seizure of articles while in import status may be appropriate if the articles must be destroyed (pose a serious health hazard or it is likely that the articles will be reintroduced into the United States), or the public health requires that certain conditions be imposed (e.g., conditions in 21 USC 381(e)(1)).
As with citation, prosecution, and injunction, samples collected for seizure consideration should, whenever possible, include a 702(b) portion (see 21 USC 372 (b)). Such samples should be collected, sealed, analyzed, and otherwise handled in accordance with procedures normally applied to domestic samples.
State embargo authority and CBP holds are alternative methods to gain control over violative articles. CBP may also release an article at our request so that an immediate domestic seizure may be conducted. Moreover, if a violative article represents evidence of a crime, it may be seized pursuant to a criminal search and seizure warrant. These avenues should also be considered, especially if an importer is likely to attempt to quickly re-export the article.
If injunction is the action of choice, the case should be developed in accordance with the procedures set forth in RPM Subchapter 6-2, "Injunctions." Injunctions may require a pattern of actual violations with some recognizable danger of a recurrence. The monitoring of an injunction is resource intensive. These facts should be taken into consideration when evaluating this course of action. Also consider that an injunction often results in a hearing more quickly than does a prosecution, particularly if a Temporary Restraining Order (TRO) is requested. This can result in quick corrective action as well as more rapid and efficient redelivery if this response is requested in the injunction. Also, the burden of proof is less in civil cases than in criminal cases, and injunction does not preclude subsequent prosecution for the same violation.
When developing an injunction case against an importer or consignee, there must be a well-documented history of an illegal practice.
A TRO requires a heightened showing of harm. See RPM Subchapter 6-2, "Injunctions" regarding the prerequisites for a TRO in conjunction with an injunction action.
Citation/prosecution should be used when conventional import enforcement approaches are determined to be inadequate to correct violative practices, or the violation is sufficiently egregious to warrant punishment.
When citation/prosecution is the action of choice, refer to RPM Subchapter 6-5, "Citations" and "Prosecution" for the appropriate procedures.
Districts should consider the potential impact of developing citation/prosecution recommendations as the action of choice in the following instances:
- Where there is repetitive illegal distribution of articles after issuance of a Notice of FDA Action specifying the intention of Sampling or Detention; or
- Where the importer submits false or misleading entry documents; or
- Where the importer submits false or misleading private laboratory analytical results or false certifications; or
- Where the importer submits false or misleading export documents; or
- Where the importer repeatedly brings previously refused articles into the United States; or
- Where evidence of other fraud exists.
This list is not all inclusive and there may be other situations where citation/prosecution is appropriate.
Any recommendation for citation, prosecution, or injunction must be supported by fully documented instances of attempts to circumvent normal import procedures. For a felony prosecution recommendation, there must be a fully documented attempt to do the same, with evidence of the intent to defraud or mislead. It is not necessary, in developing a citation/prosecution recommendation, to show that each specific entry is actually violative. However, physical evidence that documents the violative nature of an entry (or of several entries) would be useful to highlight the likely result of the firm's pattern of behavior.
It is important to remember that sample collection and analytical procedures in these cases, as for seizures and injunctions, should differ from routine import work. The Office of Chief Counsel has consistently advised us that when an import physical sample is collected for use in an anticipated legal action, a sealed 702(b) portion should be available (21 USC 372 (b). This request is further supported by guidance provided in the RPM. Proper chain of custody should also be maintained for these samples. Ordinarily, check analyses should be conducted on such samples. In instances where Compliance Policy Guides exist and instructions differ for domestic legal actions as opposed to import detention, districts should follow the guidance for domestic legal actions in terms of types of analyses, check analyses, etc.
Importers of articles detained without physical examination should not feel free to distribute and sell such articles without risk of criminal penalty. Criminal action may be possible against importers violating FDA's detention without physical examination actions or who routinely ship articles without a Notice of FDA Action indicating the articles are Released. Refusal to allow inspection is a violation of the Federal Food, Drug, and Cosmetic Act. Subsequent entry pursuant to an inspection warrant may yield evidence providing the basis for a felony violation for refusal to allow inspection. Distribution of an article prior to receipt of a Notice of FDA Action indicating the article May Proceed or is Released should be considered refusal to permit inspection, as authorized by section 704 (21 USC 374).
In addition to charges under the Federal Food, Drug, and Cosmetic Act and CBP law, Title 19 (note especially, 19 USC 1592 and 1595a), and/or Title 18 charges may also be considered. These include 18 USC 1001, false statements; 18 USC 1505, obstruction of justice (when a firm knowingly and willingly interferes with an FDA inspection by distributing imported articles not released by FDA from import status); 18 USC 542, entry by use of a false statement; 18 USC 545, smuggling; and 18 USC 371, conspiracy.