During Governor Chet Culver’s final address to the Iowa legislature this morning, he mentioned that his administration

provided the legislature and the new administration with a detailed summary addressing the historic egg recall last summer. This includes five proposed changes in Iowa law that will help improve food safety and employee training standards in the wake of the salmonella outbreak last summer.

I’ve posted the full text of the Culver administration’s egg safety proposals after the jump. This passage summarizes the five areas that would require legislative action:

Although the new federal egg regulatory regime is aimed at the state’s largest producers, a new, mandatory Iowa [Salmonella enteriditis] detection and prevention program should be enacted under amendments to existing law and the creation of a new Iowa Code Section 196.15 to complement the federal government’s efforts to prevent SE contaminated shell eggs from entering into the nation’s food chain from all of Iowa’s egg producers.

There are at least five issues that are not covered by the recent federal egg regulatory reforms, that Iowa law does not currently address and that, therefore, unless corrected legislatively, may leave consumers of Iowa-produced eggs vulnerable to future SE poisoning.  First, federal egg safety laws pertain only to egg farms that host at least 3,000 hens and do not cover smaller operations.  Second, under federal law, producers have no legal obligation to report positive SE testing results to any federal or state agency.   Third, there are no accreditation or certification standards for laboratories that conduct SE testing.  Fourth, there are no legal criteria that establish the minimal level of training and competency for persons who are charged with the responsibility for implementing a new mandatory SE detection and prevention program.  And, fifth, there is no clearly-identified funding stream to support an effective expansion of state egg programs.

It would take heavy lifting to get these sensible ideas passed and signed into law. Even when Democrats controlled both chambers of the Iowa legislature, few new regulations on agriculture saw the light of day. The Iowa House now has a 60-40 Republican majority, which makes passing new food safety rules even more of an uphill battle. Governor-elect Terry Branstad has repeatedly criticized what he views as excessive regulations on farms, and the Iowa Farm Bureau Federation endorsed Branstad and almost a full slate of Republican legislative candidates last year.  

MEMORANDUM

TO: GOVERNOR CHET CULVER

CC: LT GOVERNOR PATTY JUDGE

FR: JIM LAREW

RE: REVIEW OF STATE EGG LAW AND PROPOSED CHANGES

INTRODUCTION

According to the Iowa Egg Council, Iowa’s egg producers have 57 million layers producing around 14.25 billion eggs per year, which makes Iowa the leading egg production state in the nation.  In the summer of 2010, in response to widespread reports of more than 1900 persons sickened by Salmonella enteriditis (“SE”), a pathogen that infects the ovaries of chickens, causing their eggs to be internally contaminated, the federal government, working through the Center for Disease Control (CDC) and the Federal Drug Administration (FDA), identified eggs produced principally by two Iowa egg farms in North Central Iowa as a primary source for the poisoning.  In August 2010, the FDA recalled more than 300 million eggs, the largest egg recall in the history of the United States.

In response to reports of the problems and the findings that most of the diseased eggs had been produced in the State of Iowa, the Governor’s Office issued a public statement indicating that federal agencies had the primary responsibility for food safety in this area.  In addition, you directed your staff to conduct a review of applicable Iowa law and to make any recommendations for needed changes.  This review has been undertaken in a period during which, concurrently, long-delayed federal egg safety regulations have finally been put into effect.

This Memorandum summarizes the factual findings made during the course of your requested review; amendments to Iowa law are proposed that, if enacted, would both complement recent changes to federal law and enhance consumer safety with respect to the production, distribution and consumption of Iowa-produced eggs and egg products.   There are two core findings resulting from this review:  first, that, in addition to recent changes in federal law, there are also several substantive amendments that should be made to Iowa law; and, second, that food safety related to eggs and egg products could be enhanced by improved communications between and amongst federal and state agencies that have regulatory authority in the egg industry.

SUMMARY OF FINDINGS AND RECOMMENDED ACTIONS

For at least 20 years, it has been known that SE in eggs poses a threat to human health.  It is ironic, then, that the largest egg recall in our nation’s history occurred shortly before long-awaited federal egg regulations finally went into effect, in July, 2010. This outbreak, leading to investigations in at least ten states, resulted, at least in part, from the fact that regulatory jurisdiction over egg safety issues had been distributed amongst and between numerous government agencies over the two-decade period following the discovery of SE in eggs and egg products.   Lines of administrative authority-both amongst various federal agencies and between those same agencies and numerous state regulatory bodies-were often unclear and reportedly created delays in addressing known hazards posed by SE.

As set forth in new federal laws and regulations, the FDA now claims authority to inspect egg production facilities.  Under the new federal regime, the FDA has been empowered to create a stronger inspection force with the tools to require testing at farms and production facilities, to mandate recalls and to impose civil and criminal penalties for violations of federal standards.

Even in a new era of expanded and strengthened federal egg policing and enforcement powers, however, there will be a continued need for viable state government action.  Already, state agencies, such as, in Iowa, the Iowa Department of Agriculture and Land Stewardship [IDALS] and the Department of Inspections and Appeals [DIA], have some ability to protect the public with their regulatory powers.  However, it is recommended that Iowa law be enhanced to address at least five vulnerabilities that are present in the existing egg regulatory regime.  First, federal egg safety laws pertain only to egg farms that host at least 3,000 hens and do not cover smaller operations.  Second, under federal law, producers have no legal obligation to report positive SE testing results to any state agency.   Third, there are no accreditation or certification standards for laboratories that conduct SE testing.  Fourth, there are no legal criteria that establish the minimal level of training and competency for persons who are charged with the responsibility for implementing any state-mandated SE detection and prevention programs.  And, fifth, there are insufficient funding streams to support the effective enforcement of a new mandatory state egg program.

THE 2010 EGG RECALL

Problems Caused by the Absence of Uniform National Egg Inspection Standards:  Unlike the meat and poultry industries, which have nearly a century’s history of close federal inspection, the federal government has largely ignored the egg industry, even though eggs are a staple of the American diet.  Nearly 20 years ago, experts agreed that salmonella in eggs posed a potential harm to humans.  However, it was not until last July, well after the recent SE outbreak was underway, that the federal government’s first comprehensive rules on safe egg production took effect.

The threat of salmonella-tainted eggs was not recognized a generation ago. But in the early 1980s, food poisoning cases linked to a particular strain of salmonella bacteria, traced to eggs, notably increased. By 1988, scientists had discovered that although most of the 2500-known salmonella strains could be washed off egg shells, at least one type – Salmonella enteritidis – lived inside eggs, was transmitted from the ovaries of infected chickens into their eggs, and could be detected only through laboratory testing.

The actions by egg producers and consumers necessary to combat SE infections have been clearly identified.  For producers, this involves testing for the bacteria, disinfecting henhouses, refrigerating eggs, removing manure and controlling rodents.   Compliance with these practices involves some expenses. Those who, starting in the mid-1980s, complied with these protocols were placed at economic disadvantage with those producers who did not.  

In the absence of effective uniform federal regulations, a number of states, in the 1990s, adopted their own egg safety rules.  However, the lack of uniformity in state rules-on matters as fundamental as to any requirements for the refrigeration of egg products-made it difficult for national corporate egg producers to adopt consistent practices.  Moreover, consumers did not always welcome new state laws.  For example, rules enacted in some states to prohibit restaurant sales of so-called “runny eggs” to kill SE bacteria and prevent illnesses were often not popular and were frequently ridiculed.

The Situation in Iowa:  Scrambled Lines of Authority.  In Iowa, starting in the mid-1980s, much of the State of Iowa’s responsibility for licensing and inspecting egg handling operations shifted from IDALS to DIA under Iowa Code chapter 196 and its associated administrative rules.  By 2010, there would be 85 separate egg handlers that had obtained licenses from the DIA, and, for all of these facilities, the DIA performed two essential functions: to conduct pre-licensing inspections in advance of the initial licensure; and to collect annual fees, paid on a sliding scale, and based on the number of eggs produced by each respective licensee.

At every separate location eggs were graded (for size, based on weight) or candled (the examination of shells for imperfections).  The DIA had no direct authority over egg grading and candling inspections, deferring to the USDA’s performance of those functions, often through the use of third-party contractors (in some cases, the DIA served as the contractor).  No state-law administrative remedies were established for findings of SE contamination.  Under Iowa law, district court judges were provided with the jurisdiction to impose criminal penalties and were conferred the authority to suspend egg handler licenses, starting with the third conviction.    However, those powers were seldom-if ever-exercised.

Because it had no direct authority over egg grading and candling inspections the DIA deferred to the USDA’s performance of those functions and did not duplicate the USDA’s inspections of facilities; nor did the state agency routinely receive from the USDA any reports of federal law violations by any of the USDA-inspected facilities.

Licensees producing at least 3,000 eggs (roughly 21 out of 85 licensed egg producers by the Spring of 2010) were subject to USDA registration.  Those licensees were further divided into two categories: those wishing to display the “USDA” label and therefore electing to retain the USDA for grading and candling services; and those not electing to retain the USDA for these services. Licensees who registered with the USDA were required by the USDA to have quarterly surveillance.  

The USDA contracted with third parties-including, for at least 11 egg producers by the Spring of 2010, the DIA-to perform the quarterly surveillance for those larger egg producers who chose not to have the USDA perform grading and candling services.  Those surveillance activities, which were conducted entirely at shell egg processing facilities, and not at layer houses, involved testing for so-called “dirty” eggs-those eggs whose exteriors were marked with dirt or fecal matter-pursuant to guidelines established by the USDA.  However, no testing was performed by the USDA for SE or other bacteria.   The surveillance reports normally identified lots of eggs from which samples reflected higher tolerance levels beyond those permitted under USDA standards. For example, a sample might include too many cracked eggs or “dirty” eggs. If a sample were found to be out of compliance, the entire lot of eggs was “retained” until released by the person conducting the surveillance. The lot could then be immediately released if labeled “restricted,” upon which case the eggs were pasteurized before eventually being used for human consumption. Alternatively, the eggs could be returned through a grading and candling process to better cull out the non-complying eggs.

For the 11 larger licensees for whom DIA performed quarterly surveillance functions under contract with the USDA, the DIA also performed annual inspections, using DIA’s own annual inspection forms.  Similar to procedures used in its food inspections, DIA rules mandated a variety of sanitation standards, including those applicable to water quality from private wells, rodent control, specific washing facilitates, and the like.  For the remaining larger 9 facilities-including all of those owned by the DeCoster family-the USDA performed (directly or through its other contactors but not, in these instances, the DIA) the grading and candling processes, as well as the quarterly surveillances.

The Adoption of Uniform National Egg Inspection Standards-Too Late.  Problems caused by the absence of a viable standardized regime of state-based remedial laws to cope with SE threats to public health caused stakeholders at the national level to push, again, for the establishment of a uniform federal response.  The lack of a more effective federal regulatory approach to the SE problem had not resulted from egg industry pressures.  In fact, many entities in the $4.4 billion industry-ranging from egg producers to consumer groups to public health experts to economists-had sought mandatory federal regulations for years, joined in the belief that additional “red tape” and regulatory costs would be outweighed by the benefits of effective federal regulations.

Instead, many of the problems in establishing effective federal oversight had been the result of rivalries and a lack of viable communications amongst two major federal agencies and at least 13 additional federal bodies.  These entities were themselves formally engaged by the terms and conditions of at least 71 interagency agreements that directed the sharing of the primary responsibilities with respect to safe egg production, distribution and consumption in the various states.

So, for example, issues related to the health of chickens fell under the USDA, whereas the FDA was responsible for and oversaw the safety of whole eggs. Once an egg was broken and made into an “egg product,” responsibility for its safety switched back to the USDA.  The USDA was assigned responsibility for overseeing transportation of whole eggs, but the FDA determined how the eggs should be stored once they reached restaurants or stores.

In this fractured federal regulatory environment, responsibility for henhouse inspections was not clear.  The USDA has traditionally inspected packing facilities, but, because SE wasn’t making chickens sick, the USDA initially decided not to intervene in henhouses, leaving those inspection duties to the FDA.  However, the FDA rarely inspected egg farms and did not establish federal rules or standards for those production facilities.  Even upon appearing at egg farms, the FDA reportedly visited producers’ offices and did not inspect their henhouses or eggs.

The USDA and FDA did not successfully collaborate to create effective regulatory and communications strategies, on a number of fronts including, but not limited to consumer messaging strategies.  When for example, federal officials met with industry representatives, scientists and state public health officials and agreed to launch a consumer education campaign, stressing the safest ways to handle and prepare eggs.  However, the USDA and the FDA disagreed on the path forward and ended up working on separate strategies for handling eggs. Instead, each federal agency deployed its own teams of experts, ranging from economists to scientists to lawyers to policymakers; each agency prepared secretly, and then offered publicly, its own, conflicting, policy proposals.

During the Clinton Administration, federal officials progressed in establishing a new and less fragmentary regime for egg regulation.  President Clinton, himself, personally engaged in efforts to establish uniform national egg standards under the auspices of the FDA.  By the end of his Administration, it appeared that such standards would be adopted and implemented.  However, federal egg industry oversight collapsed during the George W Bush Administration as a part of its overt attacks on federal government regulations of national industries-and no federal regulations were put into effect.

Upon taking office, the Obama Administration renewed efforts to regulate the safety of the egg industry and, through the FDA, revived regulations that, years before, had been endorsed by industry and consumer groups, awaiting action.  The standards-which required producers to buy chickens that had been certified free of salmonella, to test those chickens while they were laying eggs, and, if there were positive test, to stop selling whole eggs-were set to take effect in July 2010, too late, as it turned out, to prevent the SE poisoning outbreak that occurred between May and August.  

Instead, without effective regulation in place, and despite formal agreements pledging to share information and work together, the FDA and the USDA were still not communicating with each other as recently as the Spring and Summer of 2010-to say nothing of their communications with the various state inspection agencies that had established their own, separate, regulatory regimes.  

The National Egg Recall of 2010 and the Use of New Federal Remedies.  From May to August of 2010, USDA officials reportedly did not pass along to the FDA concerns about sanitation problems that USDA inspectors had noted repeatedly in the egg processing facilities at Wright County Egg, where they were grading eggs that were being packed in cartons. Therefore, at least initially, neither the FDA nor the State of Iowa officials were notified by the USDA of information recorded in USDA daily reports, deficiencies that the egg graders had noted, such as the presence of dirty equipment, unsanitary cooler and storage areas, eggs left unrefrigerated overnight and the presence of bugs.

Wright County Egg and the USDA had noted that, in each case, the problems had been corrected by farm employees in time for the day’s egg packing and grading.  But, in fact, some of the eggs that the USDA graders were judging carried salmonella, undetected by the USDA’s inspection protocols. The contaminated eggs were shipped by the thousands to retailers and restaurants across the country.

After the FDA launched its investigation, its inspectors found Wright County Egg henhouses bulging with manure, mice and other hazards that were known to spread the SE disease, and sought a voluntary agreement from the producer to stop sending eggs into the shell egg market until they could pass inspections.

In the Fall of 2010 – armed with the new regulations and acting in the wake of the most recent outbreak – FDA inspectors began visiting the nation’s 600 biggest egg farms. Among the first farms were those with ties to Wright County Egg, including Ohio Fresh Eggs. Under the new rules, Ohio Fresh Eggs had tested and found Salmonella enteriditis in a henhouse and in eggs. FDA inspectors reviewing the farm’s paperwork discovered that the company had mistakenly shipped nearly 300,000 eggs to Cal-Maine Eggs, the country’s largest egg producer and distributor, which recalled them.

But even with the new regulations in place, FDA officials acknowledged problems created by the poor communication between and amongst federal agencies-to say nothing of state regulatory bodies. The FDA initiated a training program for  USDA inspectors to enable them to spot food-safety problems and report them to the FDA. Federal officials pledged, yet again, to try to bridge the gaps between federal and state agencies that have jurisdiction over egg safety issues.

Some state regulatory bodies, in turn, including those in Iowa, began reviewing their existing laws and regulations to determine how they might improve their abilities to protect the public from SE poisoning in light of the 2010 poisoning and recall events and in consort with the recent changes in federal law.

THE IOWA SITUATION:  PROPOSED CHANGES TO LAWS

Although the new federal egg regulatory regime is aimed at the state’s largest producers, a new, mandatory Iowa SE detection and prevention program should be enacted under amendments to existing law and the creation of a new Iowa Code Section 196.15 to complement the federal government’s efforts to prevent SE contaminated shell eggs from entering into the nation’s food chain from all of Iowa’s egg producers.

There are at least five issues that are not covered by the recent federal egg regulatory reforms, that Iowa law does not currently address and that, therefore, unless corrected legislatively, may leave consumers of Iowa-produced eggs vulnerable to future SE poisoning.  First, federal egg safety laws pertain only to egg farms that host at least 3,000 hens and do not cover smaller operations.  Second, under federal law, producers have no legal obligation to report positive SE testing results to any federal or state agency.   Third, there are no accreditation or certification standards for laboratories that conduct SE testing.  Fourth, there are no legal criteria that establish the minimal level of training and competency for persons who are charged with the responsibility for implementing a new mandatory SE detection and prevention program.  And, fifth, there is no clearly-identified funding stream to support an effective expansion of state egg programs.

Creating Stronger Oversight of Smaller Egg Operations. Notwithstanding improvements to the new federal egg regulatory regime, by design, those regulations are focused on the largest producers and there is little ongoing monitoring of smaller egg operations, principally those that have more than 250 hens, but fewer than 3,000 hens.  As a result, even in known cases of SE contamination at smaller operations, federal officials arguably have no power to shut down those operations and to prevent the dissemination of egg products into the stream of commerce.  It is both reasonable and necessary that Iowa law, pursuant to an amendment to Iowa Code section 196.9, should be made to require smaller operations to conduct SE testing and empower appropriate state agencies to inspect and perform tests upon egg laying facilities and animals and to halt the production and sale of eggs on smaller farms that have positive SE test results.  State egg program officials should have the authority to assess fines against those who violate Iowa law.  And, there should be a grant program to assist financially those smaller operations that would otherwise have difficulty in meeting the costs of compliance.

Requiring the Notification of State Agencies of Detected SE Infections. Under the new federal regulations, which is mandated for producers who have 50,000 or more layers, those operators who receive positive SE results from environmental or egg tests are not required to notify any federal or State of Iowa agency of those findings.  Under the new federal regulations, any operation with positive egg test samples must immediately stop sending shell eggs from the positive house into the shell egg supply.  Such eggs may be sent to breaker plants for pasteurization.    Even under the federal reforms, state officials may have little warning of outbreaks of SE poisoning that could easily grow into larger public health threats.  In light of the twenty years of recent history during which time federal agencies have done a poor job of communicating with each other or with relevant state agencies, it is both reasonable and necessary that producers and testing laboratories should have an independent state-imposed duty to inform state agencies upon their receipt of information that a producer has diseased eggs.

Establishing Accreditation or Certification of State Laboratories. The absence of any effective federal accreditation or certification standards for the laboratories that conduct SE testing for producers results in a system under which consumers could be vulnerable due to poor testing procedures or because producers have chosen to “forum shop” for lower-cost labs that may not be using sufficient testing methods.  Under the present system, producers may be tempted to seek alternative tests offered by less reputable laboratories when positive SE results are returned from initial testing labs.  Given the deficiencies of federal law in this area, it is both reasonable and necessary that Iowa law be amended to adopt accreditation or certification standards for the laboratories that conduct any testing of Iowa-produced egg products for SE-particularly those smaller operations that do not fall within the federal regulatory ambit.

Defining Professional Qualifications Those Running the State Egg Program.  Under existing state regulatory practices, there are no qualifications criteria established for those who are charged with coordinating the state egg program.  It is both reasonable and necessary that Iowa law should be modified to assure that only a qualified person, say, for example, a licensed veterinarian, would be retained to coordinate this kind of work.  It is also the case that additional personnel, such as several environmental specialists, will need to be hired to carry out the implementation of any expanded inspection and detection program.

Assuring a Funding Stream for an Expanded State Egg Program. Finally, if Iowa egg safety regulations are to be enhanced to include expanded mandatory or voluntary SE detection and prevention programs, reliable funding streams must be identified to pay for costs that will be associated with their implementation. It is likely that expanded mandatory regulatory efforts will require at least two new agency positions – a senior environmental specialist, who will oversee the sampling and testing of shell egg operations for the presence of salmonella, and an environmental specialist, who will conduct environmental and sanitary inspections of egg handling operations.  Additionally, it would be good policy to establish a grant program, to make available up to, say, $1,000 per egg handler for those with fewer than 3,000 laying hens to assist those businesses in participating in the SE detection and prevention program.  Approximately 70 of Iowa’s 85 licensed egg handlers have flocks with fewer than 3,000 laying hens.  Such additional annual costs related to the implementation of increased regulations and the establishment of a grant program to support compliance by smaller operations could come to approximately $300,000. It is reasonable and necessary that funding should come from the general fund (thereby imposing the costs on all Iowans) or from those who produce and sell eggs to the public (thereby imposing the costs on those who participate in and profit from the industry).  Alternatively, if the program were to be voluntary, and not mandatory, the costs would be reduced-but so, too, would the protections afforded to consumers of Iowa egg products, insofar as policy makers should assume that there will be no substantial increase in the number of egg producers who are subjected to egg safety regulation.  In such case the estimated costs in the early years would likely exceed $100,000.

CONCLUSION

The largest egg recall in our nation’s history, arising principally from Iowa-based egg producers,  occurred just as the federal government was issuing long-delayed national uniform standards that, had they been implemented earlier, might well have prevented the outbreak of widespread SE poisoning.  Anticipated for more than a decade, and supported by a broad spectrum of industry consumer and governmental entities, the new regulatory regime put into effect in July 2010 will hopefully minimize the risk of future large-scale egg-based SE poisonings.

Insofar as these new federal regulations will be principally applicable to the larger egg producers, there is a need to fill in gaps to assure that smaller producers comply with best practices designed to protect consumers of egg products.

Five issues have been identified as ones that should be addressed by proposed amendments and reforms to Iowa law.  These new state measures, if adopted, will strongly complement the new federal regulatory regime.

Finally, the importance of enhanced communications between and amongst federal and state agencies with regulatory authority over egg safety matter cannot be stressed too much.  No matter how well our laws and regulations may be written, they will be diminished in their power to protect the public if officials at all levels fail to communicate sufficiently with each other.