S3252

This bill, S.3252, makes technical corrections to the FDA Food Safety Modernization Act (FSMA) to allow the Food and Drug Administration (FDA) to assess and collect food-related reinspection and recall fees. Specifically, it sets a base fee of $15,000 for reinspection and recall fees, adjusted annually for inflation, starting in fiscal year 2026. Small businesses receive a reduced fee of one-third of the standard amount. This legislation directly impacts the operational expenses of all food manufacturers and importers operating in the United States, as it codifies and clarifies the FDA's ability to charge for these activities. The money trail is direct: fees are paid by food companies to the FDA. These funds support the FDA's regulatory activities related to food safety. There are no grants or tax credits involved; this is a direct cost increase for businesses. Companies with a history of food safety issues or those operating in high-risk categories will face these fees more frequently. The bill does not appropriate new funds but rather clarifies the FDA's authority to collect existing types of fees, with specific amounts now defined. Historically, increased regulatory fees have translated to higher operational costs for affected industries. While direct historical precedent for this specific fee increase is limited, similar regulatory cost increases, such as those seen with environmental compliance or drug approval processes, typically lead to either price increases for consumers or reduced profit margins for companies. For example, when the FDA user fees for medical devices were increased under the Medical Device User Fee Amendments (MDUFA) in 2017, companies like Medtronic ($MDT) and Johnson & Johnson ($JNJ) absorbed these costs, which contributed to slight margin pressures in their medical device segments. Specific losers are large food manufacturers and importers. Companies such as Kellogg Company, General Mills ($GIS), Mondelez International ($MDLZ), PepsiCo ($PEP), The Coca-Cola Company ($KO), The Hershey Company ($HSY), Campbell Soup Company ($CPB), The J.M. Smucker Company ($SJM), Conagra Brands ($CAG), McCormick & Company ($MKC), Simply Good Foods Company ($SMPL), and Post Holdings ($POST) will face increased costs if they require reinspections or recalls. While the $15,000 fee per incident is not substantial for a single event, repeated incidents or widespread recalls can accumulate significant costs. Small businesses receive a discount, mitigating their impact. The bill has been referred to the Committee on Health, Education, Labor, and Pensions. Given the bipartisan sponsorship (Durbin, Blumenthal, Markey), it has moderate momentum for committee consideration and potential passage. What happens next is committee review. If passed by the Senate, it moves to the House. If enacted, the fees will apply starting in fiscal year 2026. Companies will need to factor these potential costs into their operational budgets and risk management strategies. The FDA will also publish guidance within 270 days of enactment to describe how facilities can request fee adjustments.