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An Organic Approach to Penalty Avoidance

Background

In response to a disgruntled former employee’s complaint, the USDA initiated an investigation of the shipping practices of a North American importer of organic produce. In question were several shipments of organic produce imported into the United States and then shipped into a specific state. The investigation alleged that the company illegally imported certain pests into controlled quarantine areas within the state without following proper inspection, transportation and fumigation procedures. Possible penalties ranged from $250,000 fines per violation to the criminal prosecution of the owner of the company.

Our Involvement

The Freeborn Food Industry Team leveraged its USDA regulatory experience to prepare a strategy to eliminate the risk of criminal prosecution and to mitigate any potential monetary penalties. Faced with problematic facts surrounding a couple of loads of produce, the Food Industry Team prepared and executed an audit designed specifically to identify each and every incident that could be reasonably argued as either a clear violation or a potential violation of the Plant Protection Act and the related Code of Federal Regulations.

An audit of the client’s shipping records for the past five years was conducted because the USDA’s jurisdiction is limited to that time period. In addition, the Plant Protection Act contains a single adjudication rule that places up to a $1 million cap on the amount of fines the USDA may assess in a single case. Thus, a company would be well advised to report every possible violation that may have occurred during that time to eliminate the risk of future investigations uncovering further violations leading to additional fines.

The targeted audit took nearly four months to complete and involved more than 40,000 pages of importation and shipping documents, which Freeborn maintained in a secure database. Concurrently, the Food Industry Team worked with the client to develop and implement a corrective action plan that eliminated the root cause of the alleged violations, and helped the client update its standard operating procedures and employee training materials to ensure this problem would not reoccur.

With the audit, the corrective action plan and the revised standard operating procedures complete, the Food Industry Team met the USDA in a neutral location, utilizing iPad, High Definition TV and secure, remote access technologies to present its audit results in a paperless fashion. This tactical move allowed Freeborn to maintain both command and control over the client’s documents, as well as ensuring strict confidentiality.

Results

Through strategic regulatory response planning and savvy use of technology, Freeborn & Peters helped the client avoid tens of millions of dollars in liability and any negative press associated with these allegations, and persuaded the USDA to close its file without assessing any penalties or otherwise prosecuting this matter.

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Client

A North American importer of organic produce

Related Industry