Related Statutes and Rules
Since the merger with DHS’s FSRLS in July of 2016, the Department has almost total regulatory responsibility for post-harvest food, pursuant to Wis. Stat. ch. 97 and inter-related administrative rules that strive for consistency with federal laws, regulations, and guidance. Relevant administrative rules cover retail food establishments (ATCP 75 and its Appendix), food processing plants (ATCP 70), dairy plants and farms (ATCP 65), and food warehouses (ATCP 71), as well as meat and poultry inspection and processing (ATCP 55). With the proposed rule revision, the Department rule will largely mirror the 2013 FDA Model Food Code, as well as FDA Model Food Code updates accepted by the FDA since 2013.
Plain Language Analysis
The rule updates Wis. Admin. Code ch. ATCP 75 by incorporating significant rule provisions in the now-repealed Wis. Admin. Code ch. DHS 196 (Restaurants) and by repealing requirements in Wis. Admin. Code ch. ATCP 75 concerning agent programs. Agent program rules are currently found in Wis. Admin. Code ch. ATCP 74 (Local Agents and Regulation), which also incorporates provisions from the repealed Wis. Admin. Code ch. DHS 192.
The transfer of DHS’ FSRLS to DATCP’s Division of Food Safety necessitated the merger of two food safety regulatory systems. One regulatory paradox was particularly in need of resolution: Restaurant operators could not wholesale food under the DHS rules, while RFE operators under DATCP’s authority could engage in a limited amount of wholesaling without holding a food processing plant license. By statute, the Department now licenses restaurants as RFEs, and therefore, restaurants enjoy the same limited ability to wholesale food. The Department undertook the present rule-making process and by January of 2018 had developed a draft rule that for the first time included definitions of “wholesale” and “retail”. The Department initially proposed to retain certain limitations and requirements derived from Wis. Admin. Code ch. ATCP 70 (Food Processing Plants) addressed to food processing activities for wholesale conducted by an RFE. The Department presented a final draft reflecting that framework to the Board of Agriculture, Trade and Consumer Protection (“Board”) in January 2018. Although the Board approved the draft, it became apparent in the aftermath of the Board meeting that industry participants felt that less restrictive limits and definitions would still adequately protect public health.
In light of this feedback, the Department opted to form a work group comprised of industry and local health department agent program representatives to further revise the rule. During deliberations, the work group determined that the safety of many food processing activities for wholesale, when done by RFEs, could be ensured by compliance with ATCP 75 and the ATCP 75 Appendix, and thus, no additional application of ATCP 70 requirements was necessary. The work group recognized that additional training would be necessary for local health department agent personnel, along with Department sanitarians, assigned to inspect RFEs performing these food processing activities for wholesale. The Department, as part of its ongoing work to train thoroughly food safety personnel at the state and local level, is committed to providing the necessary training.
The work group extensively discussed whether an RFE conducting food processing activities for wholesale, yet exempt from having to hold a food processing plant license, should be required to develop a written recall plan (as required in ATCP 70). Dairy plants and food processing plants must develop a written recall plan, but the work group reached consensus that this requirement was poorly suited and likely ineffective for businesses predominantly engaged in retail activities. As a result, the revised rule states that RFEs are responsible for notifying their wholesale customers of any adulterated or misbranded products that the RFE may have sold to them, as deemed appropriate for the protection of public health. The RFE operator will choose the notification mechanism.
The work group’s efforts culminated in the newly revised final draft of ATCP 75, which does all of the following: a) re-defines “wholesale” and “retail”, b) clarifies the exemption for RFEs from the requirement to hold a food processing plant license when conducting limited (not more than 25% of gross annual food sales) food processing activities for wholesale, and c) re-draws boundaries on what types of food processing activities for wholesale are allowed. Perhaps the most important change in the wholesale and retail definitions is that the Department will no longer regard the transfer of food between two RFEs or food processing plants as wholesaling, so long as the same license holder operates the two businesses involved and the licensee transferring the food does not relinquish control of the food. This change reflects current guidance by the FDA and follows the United States Department of Agriculture (USDA) interpretations related to differentiating “retail” from “wholesale” transactions involving meat and poultry products.
The revised definitions for “wholesale” and “retail” reflect industry practice and the de facto usage of these terms in the marketplace, as well as the FDA’s interpretation and sanction of current industry practice. The new definitions also appear in the completed and published revision to Wis. Admin. Code ch. ATCP 70 (Food Processing Plants). The revised rule does continue to prohibit RFEs from processing canned low-acid or acidified foods for wholesale without holding a food processing plant license and complying with the requirements stated in Wis. Admin. Code ch. ATCP 70. The aim of the update definitions is to promote clarity and uniformity and ideally to facilitate enhanced business opportunities for industry participants.
RFEs operate under a wide range of business models, ranging from traditional restaurants, bakeries, and markets where all sales are made directly to consumers, on the one hand, to larger operations performing varying degrees of processing and wholesaling, on the other hand. The revisions to the rule take cognizance of a recently introduced business model in which a licensed RFE transports prepared food and conducts sales of individual meals directly to a workplace’s employees or guests of employees, for a limited number of days each week. Within boundaries delineated in the rule, an additional RFE license is not required for the workplace meal sales. The work group reviewed and approved this revision.
Some RFEs perform food processing for wholesale activities, which are regulated at the federal level by the FDA. This rule revision is calculated to ensure that these businesses do not fall outside the sweep of appropriate regulation. Wis. Admin. Code ch. ATCP 75 and its Appendix specifically govern retail sales and the internal transfer of food between businesses operated by the same license-holding entity. As revised, the rule, with the addition of federal requirements for juice and seafood processing, will apply to RFEs that conduct wholesaling only to a limited extent (< 25% of gross annual food sales). Businesses that predominantly wholesale the food they process must effectuate enhanced food safety systems, as required by provisions in Wis. Admin. Code ch. ATCP 70. With this rule revision, the Department has sought to eliminate duplication, clarify expectations, and, to the extent possible, avoid the need to procure multiple licenses for the same business. However, the Department justifiably weighed these objectives in the balance with safety concerns arising from gaps in regulation. Accordingly, this rule proposes that any business holding either a meat establishment license issued by the Department, or a grant of meat / poultry inspection from the federal government, must also obtain an RFE license if the business manufactures for retail sale any meat or poultry products that are never produced under meat inspection and never bear an inspection legend. Prior to this rule revision, meat establishments were allowed to retail up to 25% of total meat sales without holding an RFE license because of the frequent state or federal inspection of meat processing overall. However, it was adjudged during recent discussions that the available meat inspection resources are insufficient to adequately oversee meat and poultry products sold at retail without the state or federal mark of inspection and other safeguards attendant upon RFE status. Federal meat inspection staff are explicitly directed not to inspect retail meat and food operations. The rule revision eliminates the above-described exemption from the requirement to hold an RFE license. Expectations will thus be identical to those for businesses already licensed as RFEs to produce meat and poultry products only for retail sale.
The rule also defines and clarifies the rules for micro-markets, vending machines, and the vending machine commissaries defined in statute as serving both of those business types. The Department will license vending machine commissaries as food processing plants, which reflects the operations of these commissaries. In addition, the Department defines micro-markets so as to acknowledge that the latter typically operate without a human on the premises at all times to oversee operations, which is a requirement for other types of RFEs.
The revised Wis. Admin. Code ch. ATCP 75 Appendix, Wisconsin Food Code, provides greater clarification regarding variances and Hazard Analysis Critical Control Point (“HACCP”) plans, including the procedure for variance applications. New language also simplifies the protocols that establishments must follow when performing vacuum packing and sous-vide processing.
A significant change in the Wisconsin Food Code pertains to cheese curds. The Department based the revised language on a recent study of the likelihood of pathogenic bacterial growth on cheese curds. The study validates the current 24-hour-at-room-temperature limit for display of cheese curds processed under Cheddar cheese-making conditions. This scientific support of storage requirements for cheese curds allows the Department to meet Standard 1 of the FDA’s Voluntary National Retail Food Regulatory Standards Program by providing validation for any protocols that differ substantively from the FDA Model Food Code.
After evaluating local public health department agent program and industry comments, the Department originally chose to add requirements for making recent inspection results available to the public, and a prohibition against any grading or scoring of RFEs based on inspection reports or other criteria. The intent of these provisions was to avoid problems arising in the event that different jurisdictions utilized discrepant grading or scoring systems or some jurisdictions employed a grading system while others did not. The Department believes that actual inspection reports tend to be more informative than grades or scores and allow consumers to draw their own conclusions about the merits of a given RFE. The Department has been aware that the City of Milwaukee, which is an agent of the Department, received a grant from the FDA contingent upon it implementing a grading program. Milwaukee’s grading program is now entering its third year. Because there is no clear statutory authorization or prohibition of grading or scoring systems, and because ATCP 75 as currently written is silent on this issue, the Department has removed rule language pertaining to a grading or scoring system.
This revised rule also harmonizes the different requirements that previously existed across DHS and DFS rules as to mobile RFE bases. The enforcement of divergent sets of rules had created a licensing inequity as between various individual operations, depending on the agency conducting oversight. The proposed rule eliminates these inconsistencies and standardizes the requirements for those bases.
The Department is statutorily bound to base licensing fees for RFEs not serving meals on “gross receipts from food sales at the retail food establishment during the previous license year.” The Department is not statutorily prohibited from considering food safety risks associated with activities at these RFEs, as the original license fees in statute are also based on whether potentially hazardous food is processed. Statute also allows the Department to revise in rule license fees for RFEs not serving meals. In accordance with these statutory boundaries, the Department has added an additional gross food sale receipt volume range and several risk factors to the criteria for setting licensing fees for RFEs not serving meals.
Finally, the rule renumbers and consolidates many provisions in the Wisconsin Food Code so as to enable greater ease of use and to allow for the intercalation of provisions pertaining to micro-markets and vending machines.
Federal and Surrounding State Programs
Federal Programs
The FDA does not directly regulate retail food safety, but it does issue the Model Food Code for direct adoption by state programs or for use as a guide used in formulating state regulations.
Surrounding State Programs
This rule is generally consistent with rules in neighboring states. The states surrounding Wisconsin have each adopted various versions of the FDA Model Food Code. Wisconsin’s criteria for calculating RFE license fees differ somewhat from those in surrounding states as to the emphasis placed on complexity and risk of food safety hazards.
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RFEs in Illinois are licensed at the county or municipal level. Cook County does not have a separate category for mobile RFE bases. Licensing fees for RFEs are based on whether the establishment has seats for customers, and if not, the total area occupied by the business. Chicago differentiates between licenses for mobile food dispensers and mobile food preparers. •
Minnesota employs different license categories for mobile and stationary retail food businesses, with fees based on sales volume. There is no separate Minnesota license category for mobile RFE bases. RFEs (other than restaurants) in Minnesota are primarily regulated by the Department of Agriculture. Minnesota restaurants are primarily regulated by county or municipal agencies. Hennepin County, for example, sets license fees based on menu breadth, degree of hazard of menu items, and size of operation, with separate categories for mobile and itinerant businesses. •
Iowa has a separate license category for a commissary serving a mobile RFE. RFEs in Iowa include restaurants. •
Michigan includes restaurants as a type of RFE and categorizes mobile operations and mobile commissary operations separately.Data and Analytical Methodologies
The Department reviewed past changes to the FDA Model Food Code as well as pending changes adopted in recent Conference for Food Protection meetings. The Department has also reviewed Wisconsin statutes and rules for food processing plants, meat and poultry inspection, and dairy plants, as well as current industrial practices to identify areas where greater consistency can be achieved and discrepancies eliminated between the two food inspection programs existing prior to July 2016. The Department solicited feedback on the rule from members of the Food Safety Advisory Council (FSAC), a group comprised of businesspeople and local health department agent representatives. The Department tested proposed changes in license fee criteria for RFEs not serving meals by applying the criteria to businesses familiar to FSAC members and by evaluating any license fee change for each RFE in a representative county. Upon learning of industry concerns about the proposed licensing and regulatory requirements for RFEs conducting food processing for wholesale activities and/or transferring food between different businesses within a single company, a work group comprised of industry and local health department agent personnel was convened to review and revise the requirements. This work group approved the requirements in the present revised rule.
Analysis and Supporting Documents for Effect on Small Business
As noted, the Department utilized and incorporated the 2013 FDA Model Food Code where it did not conflict with the Department’s compliance and enforcement programs. The Department worked to combine the duties, activities, and expectations of both DHS and DATCP in a way that eliminates duplication, clarifies expectations, and, to the extent possible, ensures that small businesses do not need multiple licenses. Within statutory boundaries, the Department has also revised the license fee criteria for RFEs not serving meals, adding a category of gross food sale receipts volume and by considering food safety risks. The Department tested the fiscal effect of these changes by hypothetically applying the criteria to businesses in a representative county and evaluating the license fee change to each RFE.
Effect on Small Business
The rule is not anticipated to have a major economic effect on RFEs since the rule serves mainly to replace and update current rules. Already-licensed mobile RFEs serving meals will see no change in requirements, because their bases were licensed under the DHS rules that were transferred to the Department. For operators with a base, serving mobile RFEs that only sell nonperishable packaged foods, the effect will be minimal regulatory and fee changes. The only operators who may face increased regulatory requirements and associated expenses are those operators of bases who perform complex processing and preparation of potentially hazardous food.
Certain food processing activities for wholesale performed in RFEs, in which all of these activities account for not more than 25% of gross annual food sales, must also be done under the federally-mandated HACCP system. Specifically, fish and fishery products processing must be performed under a Seafood HACCP system (as required in 21 CFR 123), and juice processing must be performed under a Juice HACCP system (as required in 21 CFR 120).
The proposed rule modifies the criteria for assigning license fees. For purposes of pragmatism, the rule tethers the cost of a given license to the complexity and risk of the food safety hazards associated with the particular activity, and not solely to the size of the RFE and the dollar volume of sales. In many cases, larger RFEs that may have been paying a higher license fee because of their sales volumes will now pay lower fees if their processing is not complex or high-risk. The Department’s analyses suggest that the overall change in total license fee revenue will be negligible. The proposed licensing fee criteria more fairly reflect the time and personnel costs to the Department for inspections, as the inspection process itself is risk-based.
Eliminating the exemption from the requirement to obtain an RFE license, in order to conduct retail sales of meat or poultry products that do not bear an inspection legend, should not pose a major fiscal impact on meat establishments operating under state or federal meat inspection programs. Both meat inspection programs require all inspected products to be produced under HACCP. HACCP plans for cured or shelf-stable products, developed in compliance with state or federal meat inspection requirements, will meet requirements in the revised rule applicable to such products made only under an RFE license.
DATCP Contact
Questions and comments related to this rule may be directed to:
Steve Ingham, Administrator
Division of Food and Recreational Safety
Department of Agriculture, Trade and Consumer Protection
P.O. Box 8911
Madison, WI 53708-8911
Telephone: (608) 224-4701
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SECTION 1. ATCP 75 is repealed and recreated to read:
