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What Corporations Should Know About USDA Investigations

Posted by Dmitry Gorin | Jun 17, 2024

Corporations operating in industries regulated by the United States Department of Agriculture (USDA) must adhere to a broad set of strict regulations.

What Corporations Should Know About USDA Investigations
Corporations regulated by the USDA must adhere to a broad set of strict of rules and regulations.

The USDA plays a vital role in overseeing various agriculture, food production, and animal health sectors.

The USDA is among the many government entities that enforce a company's legal and regulatory obligations at the federal level.

Several of its agencies and offices have operations devoted to investigating companies' operations and pursuing enforcement action for administrative, civil, and criminal violations.

The USDA's enforcement authority is extremely broad, covering food, agriculture, natural resources, rural development, nutrition, and related issues.

The USDA investigates companies and individuals involved in agriculture, farming, food production, national resource extraction and development, and selling related goods to consumers. This includes investigations and enforcement proceedings involving the following USDA agencies and offices:

  • Office of Inspector General (OIG).
  • Food Safety and Inspection Service (FSIS).
  • Animal and Plant Health Inspection Service (APHIS).
  • Commodity Credit Corporation (CCC).
  • Farm Service Agency (FSA).
  • Forest Service (FS).

The USDA also investigates private contractors for fraud under the False Claims Act (FCA).

Suppose the government has reason to believe violations of these rules have occurred. In that case, the USDA can initiate an investigation that could result in anything from civil penalties to criminal charges in some cases. If you head a corporation facing a current or pending USDA investigation, here's what you need to know to navigate this situation successfully.

Why Would the USDA Investigate?

The USDA has a broad mandate to ensure the nation's agricultural and food supply's safety, quality, and integrity. Several circumstances can trigger a USDA investigation, including:

  • Compliance Violations: Companies operating in agriculture, food processing, distribution, and retail may face investigations for failing to comply with USDA regulations. This includes violations related to the handling, labeling, and transporting of food products.
  • Food Safety Concerns: The Food Safety and Inspection Service (FSIS), a division of the USDA, conducts investigations in response to foodborne illness outbreaks, contamination incidents, and other public health threats.
  • Animal Welfare Issues: The Animal and Plant Health Inspection Service (APHIS) investigates allegations of animal cruelty, neglect, or non-compliance with animal welfare standards.
  • Environmental Violations: Infractions concerning environmental regulations, such as improper pesticide use or pollution from agricultural operations, may lead to investigations.
  • Organic Certification Compliance: Adherence to National Organic Program (NOP) standards is crucial for companies that produce or handle organic products. The USDA may investigate claims of mislabeling or fraudulent certification to maintain the organic label's integrity.
  • Agricultural Subsidy Fraud: The USDA provides various subsidies and financial assistance to farmers and agricultural businesses. Misrepresentation or fraudulent claims for these funds can lead to thorough investigations by the USDA's Office of Inspector General (OIG).
  • USDA Contractor Fraud. Like all federal government contractors, USDA contractors are subject to extensive contractual obligations, regulatory requirements, and statutory prohibitions. USDA contractors accused of inflating invoices, delivering substandard products and services, and engaging in other federal government contract fraud can face allegations under the False Claims Act and other statutes.
  • Farm Bill Violations. The Farm Bill is a piece of federal legislation establishing varied requirements and restrictions for food production, transportation, and distribution companies. Companies accused of violating the Farm Bill can face steep penalties, and executing an effective defense strategy will often be crucial to maintaining these companies' ability to operate and their eligibility for USDA programs.

What Statutes Are Used for Prosecution?

In addition to civil or criminal charges under the FCA, companies targeted in USDA investigations could face prosecution under different statutes including, but not limited to, the following:

  • Animal Welfare Act.
  • Animal Health Protection Act.
  • Horse Protection Act.
  • Honey Bee Act.
  • Food, Conservation, and Energy Act.
  • Food Security Act.
  • Agricultural Bioterrorism Protection Act.
  • Farm Bill.
  • Federal Seed Act.
  • Food Security Act.
  • Lacey Act.
  • Plant Protection Act.

What are the Possible Penalties for USDA Violations?

Violations uncovered during USDA investigations can result in significant consequences and penalties. These include, but are not limited to:

  • Product Recalls and Seizures: The USDA can mandate product recalls or seize contaminated or misbranded products, which can cause financial losses and reputational damage.
  • Operational Shutdowns: In extreme cases, the USDA can order the temporary or permanent shutdown of facilities that do not meet regulatory standards.
  • Administrative Penalties: Administrative penalties may include warnings, fines, and corrective actions. The USDA has the authority to impose fines based on the severity of the violation. Additionally, companies may be required to implement corrective measures to address the issues identified.
  • Civil Penalties: These penalties can be more substantial and may involve significant fines and the suspension or revocation of licenses and certifications. Companies found in violation may also face lawsuits from affected parties, leading to potential settlements or judgments against them.
  • Criminal Charges: In severe cases, particularly those involving fraud, misrepresentation, or egregious violations of safety and welfare standards, the USDA can refer cases for criminal prosecution. Criminal charges can result in hefty fines, restitution, and imprisonment for responsible individuals within the corporation.

What Should Companies Expect with a USDA Investigation?

When the USDA initiates an investigation, it typically follows a structured process. Companies should be prepared for the following steps:

  • Initial Notification: The USDA will formally notify the company of the investigation. This notification will outline the nature of the inquiry and the specific allegations or concerns being addressed.
  • Document and Record Requests: Companies should expect requests for documents, records, and other relevant information. This may include production logs, safety records, financial documents, and correspondence related to the investigation's focus.
  • Inspections and Audits: The USDA may conduct on-site inspections and audits to gather firsthand information. Inspectors will assess compliance with regulations, examine facilities, and interview employees as part of their investigation.
  • Interviews and Depositions: Key personnel within the company may be interviewed or deposed.
  • Preliminary Findings and Response: Once the USDA completes its investigation, it will issue preliminary findings. Companies can respond, provide additional information, and address any identified issues before making final decisions.

How Can a Federal Criminal Defense Attorney Help?

Engaging a federal criminal defense attorney is crucial if the USDA investigation indicates potential criminal activity. A good lawyer can provide several critical services, including:

  • Legal representation: The attorney will work to ensure the company's rights are protected, that any interactions with investigators or prosecutors are conducted appropriately, and to navigate the complex legal proceedings should criminal charges occur.
  • Mitigating Penalties: A skilled defense attorney will negotiate with investigators and prosecutors to reduce fines, avoid criminal charges, or minimize the impact on the company and its leadership.
  • Developing a Defense Strategy: The attorney will develop a robust defense strategy if criminal charges are pursued. This includes gathering evidence, interviewing witnesses, and presenting a compelling case in court to protect the company's interests.

Our federal criminal defense law firm represents companies nationwide in investigations and enforcement proceedings involving all substantive matters within the USDA's jurisdiction. Contact us for more information. Eisner Gorin LLP is based in Los Angeles, California.

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About the Author

Dmitry Gorin

Dmitry Gorin is a licensed attorney, who has been involved in criminal trial work and pretrial litigation since 1994. Before becoming partner in Eisner Gorin LLP, Mr. Gorin was a Senior Deputy District Attorney in Los Angeles Courts for more than ten years. As a criminal tri...

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