As c-store retailers grapple with a new relationship with the U.S. Food and Drug Administration (FDA)—a reality nearly two decades in the making—one can almost decipher the five stages of grief. First came denial: FDA oversight of tobacco had been struck down before, and it would be again. Then came anger as industry associations, retailers, manufacturers and their lobbyists fought relentlessly against federal oversight, which was picking up support in Congress. Bargaining began as NACS sat down with legisla-tive representatives to make the Fam-ily Smoking Prevention and Tobacco Control Act more palatable to retail-ers. And then there was depression, as the rest of the industry realized the inevitability of the act’s passage.
Now, as FDA tobacco regulation rolls out at a breakneck pace and over-sight of foodservice looms, it seems the industry has reached a begrudging acceptance—a sentiment that every-one’s just trying to do their jobs, so we might as well try to do it together.
This is true progress, as therapists might say. Consider that not only does the retail channel loathe regula-tion, but that the FDA, by overseeing tobacco and fresh food, now has veto power over two categories that gener-ate more than 56% of c-store retail-ers’ inside sales and more than 47% of their take-home profit, according to the NACS State of the Industry Report of 2009 data.
With this reality, it may be time to drop the “Us vs. Them” mentality, both retail representatives and gov-ernment officials say.
Learning how to work with the FDA, rather than merely castigate its existence, is crucial for the c-store channel to prosper and maximize its two most robust offerings. Lobby and litigate against specific measures? Absolutely. But in the meantime, open up communication. And that is precisely what is happening. Both sides are showing an early desire to open the lines of communication, from the drafting of regulations to enforcement and inspections. Despite the goodwill, many unknowns remain as the FDA continues to finalize and update its regulatory policy. They include:
- How will regulations affect tobacco discount programs, or loyalty programs?
- When will menu-labeling man-dates be finalized?
- With state regulators likely to act as enforcers for the FDA, how will fair-ness and consistency be guaranteed?
With heightened foodservice regulatory authority only recently signed—without appropriations for enforcement—where will the money come from? The pressure to answer these and other questions are compacted by aggressive timetables from Congress. And these looming unknowns make communicating with federal, state, local and tribal regulators and inspec-tors all the more crucial for successful compliance.
If you haven’t already, it’s time to meet your regulators.
‘UNDERSTANDING COMPLEXITIES’
In exclusive interviews with CSP magazine, FDA officials from both the Center for Tobacco Products (CTP) and the Center for Food Safety and Applied Nutrition (CFSAN) stressed their wishes to better understand and work with the c-store industry. This is especially true for the tobacco side— an altogether new focus for the agency.
“I want us, FDA, to be seen as a good partner, and supporting what [retailers’] needs are, supporting their ability to implement and enforce the laws that they are now required to do, and I want them to see us as their partners—not as their big brother,” says Dr. Lawrence Deyton, director of the CTP.
Deyton is a fervent believer in the CTP’s mission and speaks with an enthusiasm for its goal—preventing the sale of tobacco to minors—that reflects his medical background. He formerly oversaw public health programs, including tobacco con-sumption, at the U.S. Department of Veterans Affairs, and still sees patients one day each week.
“I think it’s a phenomenal set of responsibilities we have,” he says, and cites the CTP’s first regulatory muscle flex—a ban on fruit- and candy-flavored cigarettes—as an especially powerful example of its potential impact.
“As soon as we put that in place, we started getting calls and letters from retailers who said, ‘Thank you—we don’t want to sell these products to kids,’ ” he says. “That’s where I understood very early the incredible power, the role the nation’s retailers have in being success-ful in implementing this law, and that they want to do the right thing.”
Despite agreeing with Deyton on the goal of barring youth access to tobacco, retail groups continue to voice concern about what future measures the FDA will adopt—from potentially barring menthol from cigarettes to imposing additional marketing restrictions—which can have a dramatic effect on this largest of in-store categories. At the same time, they are quick to praise the CTP for fostering a culture of two-way communication.
Thomas Briant, executive direc-tor of the National Association of Tobacco Outlets (NATO), Minne-apolis, has met with Deyton and staff from the CTP on two separate occa-sions with a group including sup-plier and retailer representatives, and found them “very open to working with tobacco retailers and the tobacco industry on these new tobacco regu-lations,” he says via e-mail.
Besides considering their com-ments on proposed regulations and guidance documents, the CTP has also met with the group to discuss how regulations will be administered and enforced. “I believe we have opened a real dialogue that will lead to a greater understanding of how the tobacco industry works and how to reach a shared goal of ensuring compliance with the new tobacco regulations,” Briant says.
Dave Riser, vice president of exter-nal relations, trade marketing, for R.J. Reynolds Tobacco Co., Winston- Salem, N.C., was a participant in those meetings, and he seconds Briant’s take. “In our meeting, and in training ses-sions I’ve listened in on and been a part of, they want to ensure success of guidance and provisions that are implemented,” he says. “They were very sincere, in my opinion, on listen-ing to retailers and wholesalers, and us as manufacturers.” While R.J. Reynolds and other manufacturers have disagreed with the FDA on some tobacco regulatory efforts, such as the requirement that all advertising be in black and white, Riser adds, “They have a job to do, just like we do.”
And while differences of opinion will likely characterize future talks, so will items of common interest. “We have common goals with FDA on youth tobacco prevention, on informing the public,” he says.
“We as a company want to work with FDA to provide information where we can— science-based information—to work together.
“They’re very open,” Riser contin-ues. “When it comes to the retail and wholesale community, they’re trying to be as visible as possible and learn about this industry, to work together and to ensure success of implementa-tion of the provisions.” This period of education will require patience from both retailers and the CTP.
“They’ve started regulating, but it takes an even longer period of time to get to know both the subject matter and industry in a fulsome way,” says Douglas Kantor, partner with Steptoe & Johnson LLP, a Washington, D.C.- based law firm that advises NACS on FDA regulatory law. “They have a lot of folks within the [CTP] with different levels of experience with either this industry or the product, and it takes some time, and will continue to take time for them to understand all of the complexities out there.”
And here is where retailers can play a role, in a situation where they might otherwise feel powerless.
“I want a vigorous response from the nation’s retailers and conve-nience-store owners, because that’s their voice in this process,” Deyton says. “We are going to be successful when we develop and implement regulations and rules that they under-stand and feel they’ve had a part in.”
STREAMLINED AND CALIBRATED
Meanwhile, on the foodservice side—a part of the industry the FDA already has an established relationship with, since the 1906 Pure Food and Drugs Act—the agency is trying to streamline enforcement. It’s pushing for a uni-form adoption of the Food Code and increased interaction with industry.
“There’s a desire on our part, and I think the industry’s part as well, to get more uniform adoption of the code itself. And there has been a lot of progress with that. … But there’s still some cherry picking that goes on,” says Donald Kraemer, acting deputy director for operations for CFSAN.
“We’re very committed to that pro-cess of making state and locals feel like they own the Food Code as well, not just FDA saying, ‘Here it is, this is your code,’ ” says Kevin Smith, director of the Retail Foods and Cooperative Pro-grams Coordination Staff for CFSAN.
The Food Code is a thick tome (just under 700 pages, if you count the annexes) that gives state, local and tribal jurisdictions a “scientifi-cally sound technical and legal basis for regulating the retail and food-service segment of the industry,” as it’s defined by the FDA. A new Food Code is released every four years, with a Food Code Supplement of amend-ments published in the interim.
But here’s the rub: When a new Food Code is released, it’s up to the state to automatically adopt the new code, accept parts of it, or continue to follow an older version. Such a patch-work of regulations causes a logistical nightmare for even the best of mul-tistate chains. Most retailers in this situation will adopt the strictest ver-sion of the interpretation and make it uniform throughout the company.
“It’s patchy, but at least it’s get-ting a science-based code adopted in some shape or form,” says David Ludwig, manager of the Environ-mental Health Division of Maricopa County’s Environmental Services Department, Ariz. He oversees the county’s 115 inspectors. “A lot of the time it’s very hard for regulatory authorities to, every two years, go and get a new code adopted,” he says. He points to the state of Ari-zona: “They really aren’t thinking about legislative issues with the Food Code right now; they’re thinking money matters with how to correct the budget.” The last Food Code was released in 2009, and Ludwig says it has gotten increasingly more industry-sensitive.
“A lot of the changes that I’ve seen in the last 20 years in the Food Code is that it’s not up to the inspector to make a judgment call,” he says. “It’s more black and white and not just common sense.” Such changes include more complete requirements for sanitizing equipment and sur-faces, and, for the first time, time and temperature-control requirements for cut leafy greens. The FDA, retailers and manufac-turers alike want regulations based more on science, not on subjective interpretation of individual inspec-tors. Thus, on the foodservice side, the agency is in the process of stan-dardizing how it trains inspectors to reduce such variances, including a set of “voluntary retail food regulatory program standards” for state, local and tribal regulating departments.
“This is the gold standard for the enforcement people,” says Kraemer. “It’s voluntary, but we are working to encourage state and local authorities to adopt or try to meet those standards.”
Further, while the FDA Food Safety Modernization Act, signed into law Jan. 4, will directly affect manufactur-ers and processors more than retail-ers, the structure clearly advances the mission of science-based food-safety enforcement.
“The new Modernization Act, as it’s written in its current format, looks like they’re going to use a science- based approach to figure out risk, literally,” says Jay Ellingson, director of food safety and quality assurance for Kwik Trip Inc., La Crosse, Wis.
“That is a part of the act that I think is a positive thing,” he says. “But where the rubber meets the road is if the government, whether local, state or federal officials, come out and actually see how it runs at the ground level.”
UNANSWERED QUESTIONS
For the FDA’s CTP, the rubber has already met the road, and what have surfaced are numerous gray areas within the regulations. The origin of these is not only the fact that the agency has an aggressive timetable set by Congress to meet in rolling out regulations, but that it is also still get-ting up to speed on the business of tobacco retail.
One major gray area for the CTP, says Kantor of Steptoe & Johnson, is the sometimes complex framework of retailers’ tobacco discount pro-grams. “I don’t think FDA has any expertise on the diversity of discount programs,” he says.
Questions also loom over loyalty programs—for example, whether, as part of a points-based loyalty pro-gram, a tobacco purchase can count toward earning a nontobacco reward. “No question,” says Kantor, “that’s a complicated area, and more guidance there would be helpful.” To address many of these gray areas directly, and ensure that retail-ers are comfortable with regulations passed thus far, the CTP has held a series of educational sessions in major cities, as well as one at the 2010 NACS Show. Ann Simoneau, director of the CTP’s Office of Compliance and Enforcement, says the agency has not come to a final determination on loyalty programs, and realizes that a lack of concrete answers can make retailers anxious.
“With a new law, it’s always sub-ject to interpretation in some areas,” Simoneau acknowledges. The FDA’s Office of Chief Counsel reviews and evaluates many of the legal questions that pop up as the regulations are refined, and works with the CTP on reaching a final interpretation.
On the foodservice side, money and manpower stand in the way of regula-tions trickling down, an indication of how the country got to such a patch-work of regulations in the first place.
Big questions also surround menu labeling as the industry awaits final pro-visions from the FDA. Congress gave the agency one year, until March 23, to publish the final proposals for the provisions. As CSP went to press, no final proposals had been released, leav-ing retailers in a tricky holding pattern.
“They make federal regulations, but they don’t give the money or wherewithal for people to enforce it,” says Ludwig. “It’s those unfunded mandates that make us all pull our hair out.”
While the FDA received specific direction from Congress on the enforcement of tobacco legislation, little direction was offered on menu labeling. And while NACS has sub-mitted official comments a number of times in an effort to educate the agency on the c-store industry, menu- labeling legalese is still written largely through the lens of quick-service and sit-down restaurants.
“It makes compliance for out industry very questionable at this point because we offer in such a different manner,” says Julie Field, director of government relations for NACS.
Beyond how it will be enforced, big calories
Likewise, initial excitement from Modernization wasn’t determined before the bill was signed into law.
Enforcement on the tobacco side is in various stages of rollout in 15 states with which the FDA has so far contracted with state regulatory agencies. This may partly explain why there has not been a tidal wave of enforcement activity immediately following June 22, 2010, the date when several of the Family Smoking Prevention and Tobacco Control Act’s provisions went into effect. “I think FDA has exercised some discretion early on, knowing that some things are not 100% clear, and it takes a little time to get familiar with regulations and implement them,” says Kantor. His office, which typically catches wind of any unfairness in enforcement, had heard no complaints as of press time.
The hope is to have enforcement contracts signed with all 50 states by 2012. Throughout the fall of 2010, regulators in the state of Mississippi, one of the first under contract with the FDA, had made several initial retailer visits and issued warning letters, mainly on selling cigarettes or smokeless products to minors. A list of these retailers and the warn-ing letters detailing the violations were posted on CTP’s website, in addition to the many retailers who passed compliance checks. Simoneau says the FDA will post these lists on a monthly basis. Having state regulators carry out tobacco enforcement seems, at first glance, to be a win for the industry, because retailers already have an established relationship with their local regulators. However, as with food-safety regulations, some are concerned about the potential for inconsistent enforcement state by state. For one, these FDA inspectors, who will primarily be focused on fed-eral violations, will also be empow-ered to monitor state regulations.
“If the information they gather at inspection also determines there can be a state law violation,” Simoneau says, “then they can pursue a separate violation, and enforcement under state law.” Possibly the biggest area of retailer consternation is age verification, specifically the requirement for store clerks to ask for ID from anyone who appears younger than 27; this is in addition to the requirement that a retailer not sell tobacco to anyone younger than 18. A store could poten-tially be hit with two violations. “It is a tough rule and people ought to play it safe. And if it means checking IDs of people older than 27, well, that’s probably the price you need to pay to protect yourself under the current rules,” says Kantor.
THE MORE YOU KNOW
Opening the lines of communication begins at the federal level and trickles down to state and city officials and inspectors.
“One of the best ways for retailers to protect their business is to keep up to date on the FDA regulations and how the regulations will be administered,” says NATO’s Briant, who recommends regularly checking the FDA website for developments. He also recommends submitting comments on proposed guidance documents or new rules.
“When we met with FDA officials, they stressed the importance of submitting comments because all of the comments are reviewed by FDA staff and used to shape how the agency will administer a regulation,” he says, citing that NATO routinely submits comments to the FDA on behalf of its retail members.
Lou Maiellano, of tobacco retail consultancy TAZ Marketing & Consulting Group, Sevierville, Tenn., is concerned that some retailers may be following directives by their corporate offices not to participate in commenting periods or advisory committees, due to vague liability concerns or general privacy policies. “The reality is that you’re in a situation where retailers need to become incredibly involved in this,” he says. “But, from my own experience, some small and large retailers have restraints from within on this.”
This, he says, would be a grave mistake: “If we don’t say and do the things we need to do, there won’t be reasonable rules or regulations.”
The food-safety side offers helpful insights for how to communicate with state and local FDA inspectors. “It’s all about relationships,” says Kwik Trip’s Ellingson. “The time is now to start engaging and opening the lines of communication with your local, state and federal officials in your jurisdiction.”
Because the three states Kwik Trip does business in (Wisconsin, Minnesota and Iowa) all have different food-safety laws, the 410-store chain adheres to the strictest regulations among the three. Ellingson recommends getting face time with state officials to show them your food-safety plan and ask, “Where you do you see risk?”
Kwik Trip also brings in a third party to audit its facilities, and it invites the state inspectors to come in and observe the process.
Tara Paster, president of food-safety training firm Paster Training, Pottsville, Pa., turns to state and local chapters of FDA officials, such as the Association of Food and Drug Officials, to help her understand new regulations. “Talk to them and build the relationships prior to any law changes: ‘What’s your interpretation of it? How is your jurisdiction going to interpret this information?’ ” she says. “Having the relationships built ahead of time with the regulatory community definitely helps when trying to maneuver through the regulations.”
If there is a critical violation, the Maricopa County Environmental Services Department will offer to conduct a risk-control plan, in which they discuss not only how the problem can be corrected, but also how to ensure it won’t happen again.
“If you have a good [inspector], you’re going to know it from the get-go,” Ludwig says. “They’re going to ask questions, they’re going to communicate well with you and they’re going to ask for your reasoning behind things.
“The bottom line,” he says, “is I hope inspectors can be approachable. It’s not about getting into a fight and arguing with them about a violation; it’s asking them to explain so you can do a better job. If you’re open with an inspector that way, it will help.”
Paster stresses the importance of training hourly employees on regulations—not only for general safety, but also to pass inspection. “They are asking employees questions, so operators need to make sure they talk to employees about some of the questions that inspectors may ask,” she says.
Paster’s sentiments on the Food Safety Modernization Act reflect the overall climate of the growing relationship between the FDA and the industry: Overall, it’s for the good.
“But the devil’s in the details,” she says. “How is this going to happen, how are we going to execute it, what’s the follow-up, what’s the monitoring, what’s the verification, how are we going to make this happen?”
How to Build a Strong Food-Safety Program
- Engage and open lines of communication with local, state and federal official in your jurisdiction.
- Get face time with state officials to show them your food-safety plan and ask, “Where do you see risk?”
- If you have a commissary, have a third part audit your foodservice facilities, and invite state inspectors to observe the process.
- Ask state and local chapters of FDA officials, such as the Association of Food and Drug officials, to help understand new reguations.
- When a violation has occurred conduct a risk -control plan to determine how the problem can be corrected and how ot prevent it from happening again.
FDA Defined
Center for Tobacco Products: Oversees the implementation of the Family Smoking Prevention and Tobacco Control Act. The CTP currently has a staff of around 200, which is anticipated to grow to 400 to 500 employees once it is fully established, and a 2011 bud-get of $421 million. Some of the Agency’s responsibilities under the law include setting performance standards, reviewing premar-ket applications for new and modified-risk tobacco products, requiring new warning labels, and establishing and enforcing adver-tising and promotion restrictions.
Center for Food Safety and Applied Nutrition: Responsible for promoting and protecting the public’s health by ensuring that the nation’s food supply is safe, sanitary, wholesome and honestly labeled, and that cosmetic products are safe and properly labeled. Eight hundred people work for the CFSAN, including chemists, microbiologists, toxicologists, food technologists, patholo-gists, molecular biologists, pharmacologists, nutritionists, epidemiologists, mathemati-cians, sanitarians, physicians and veterinar-ians, as well as support staff.
Food Safety Modernization Act: Signed into law in January, it gives the FDA a more proactive and less reactionary role in ensuring safety and sanitation in food pro-cessing plants. It empowers FDA to demand food recalls; requires larger food processors and manufacturers to register with FDA and create detailed food-safety plans; and greatly increases the number of inspections the FDA must conduct of processing plants.
Basics for the Industry: In January, the FDA launched a new website for regulated industries in a larger push toward more transparency. The website, www.fda.gov/ FDABasicsforIndustry, includes basic informa-tion about the regulatory process, including information that is frequently requested.
Nutrition-Disclosure Provision: As part of the 2010 Patient Protection and Affordable Care Act, foodservice operations with more than 20 locations must post calorie counts on menus and menu boards, a succinct statement concerning suggested daily caloric intake, and referral statement regarding the availability of additional nutrition informa-tion. The FDA must propose regulations within one year (ending March 23, 2011); mandatory requirements are not expected to take effect until after FDA finalizes the regulations.
Age Verification & You
- Have a company policy on age verification for the sale of tobacco products—and follow it without exception. “The important thing is to have a policy, and follow the policy,” says Dave Gaudet, presi-dent of the BARS Program, which provides compliance training pro-grams to retailers.
- With FDA regulations requiring retailers to ask for age verification from anyone who appears 27 years old or younger with each tobacco purchase, it’s best to play it safe, says Gaudet. He suggests clients consider a policy to card anyone who appears younger than 35 for tobacco and alcohol purchases.
- Some retailers may worry that they will anger repeat customers if they ask them for age verification with each tobacco purchase. As Gaudet warns, even your competi-tion must follow this regulation. With FDA threatening a $250 fine whenever a retailer does not card anyone who appears 27 years old or younger—regardless of whether they actually are of legal age to purchase tobacco—do not let employees get complacent.
- At the same time, do not card all customers, regardless of age— that’s not only a waste of resources but also a reason to give business to your competitors, Gaudet says. “A 55-year-old man will not be doing a sting for the government, but people with tattoos and a ring out of the nose very well could be.”
Key Issues for 2011
Compliance checks to ensure retailers are following FDA regulation on tobacco sales will step up as the agency continues to sign contracts with the rest of the 35 states.
The future of menthol flavoring in cigarettes and whether tobacco can be included in a loyalty program will likely be decided. The regulatory future of cigars will also be under scrutiny.
Final mandates on the nutrition-disclosure provi-sion (e.g., calorie counts) is due from the FDA March 23, though a due date on compli-ance has not been issued.
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