The Food and Drug Administration has a new commissioner.

It’s hard to think of a more innocuous snack than the small plastic-wrapped packages of peanut butter sandwich crackers commonly found in vending machines and grade school cafeterias. On Dec. 27, 2008, 84-year-old Massachusetts resident Mildred Williams bought Kellogg’s “Austin” brand of those very crackers, munching on them between Jan. 3 and Jan. 4. She had no idea the simple snack would lead to an eight-day stay in the hospital.

She was just one victim of this winter’s peanut butter-linked salmonella outbreak, which sickened nearly 700 people and killed nine. Eight lawsuits, including one from Williams seeking punitive and exemplary damages, have been filed against the Peanut Corporation of America (PCA), which manufactured the contaminated peanut butter used in products that companies such as Kellogg and King Nut make.

When Food and Drug Administration (FDA) inspectors visited a Texas PCA plant in February, they discovered air filters filled with feathers, roofs leaking water into production areas and rodent feces scattered throughout the kitchen–in some places, pellets “too numerous to count.”

Though the infractions seem egregious, the fact they went unreported for so long is a symptom of the problems with U.S. food safety regulation. In a radio address on March 14, President Obama reported the FDA inspects only 5 percent of the 150,000 food processing and manufacturing facilities in the U.S. each year.

“At meetings, everybody starts with the same thing: ‘The United States has the safest food supply in the world,’” says Bala Swaminathan, a food safety expert and former chief of the foodborne disease lab at the Centers for Disease Control and Prevention. “Immediately people go on to say more than 300,000 people are hospitalized and about 5,000 deaths are attributable to foodborne diseases each year. Obviously those numbers are staggering.”

A report released by the CDC in April indicates that after a steady decline between 1996 and 2003, the incidence of foodborne diseases plateaued between 2004 and 2007. And at the end of March, pistachios joined jalapenos, tomatoes and infant formula on the list of foods recalled on a massive scale during the past 12 months.

Obama is making it clear he’s ready to do something about it.

Legislation Longevity

With the creation of the Food Safety Working Group, the appointment of new FDA leadership and several bills in Congress, the president is targeting the food industry for major regulatory overhauls. “The FDA has been underfunded and understaffed in recent years,” he said in the March radio address. “That is a hazard to public health. It is unacceptable. And it will change.”

According to Neal Fortin, director of the Institute for Food Laws and Regulation at Michigan State University, the focus is sending a message to food companies to be ready for a rough ride. “And if you don’t make sure your food is safe, it’s going to be harder and harder to remain invisible for a company that’s causing illness,” he adds.

Obama launched the Food Safety Working Group to look at food regulation and pinpoint areas ripe for modernization–something the industry desperately needs, given lawmakers introduced the last key food legislation in 1906.

“Our world is entirely different now than it was back then,” says DLA Piper partner Christopher Campbell, who notes Teddy Roosevelt’s administration enacted those laws. “Now everybody is so interconnected that one small salmonella issue that gets through the cracks can have a very dramatic effect across the whole country.”

Chaired by the secretaries of Health and Human Services and the Department of Agriculture, the working group will unite senior officials from the myriad agencies governing food safety to aggressively enforce existing regulations while advising the president on upgrades.

The FDA, for example, doesn’t have the authority to mandate a food recall. But that may soon change. “They have to rely on pressuring the industry and making things public to get a company to conduct a recall,” Campbell says. “That’s one law I think will be specifically targeted, and it’s the subject of a lot of the acts that are up in Congress.”

One of those bills is the Food Safety Modernization Act (FSMA), which Rep. Rosa DeLauro, D-Conn, introduced in the House on Feb. 4. The FSMA would split the FDA into two separate agencies–one exclusively dedicated to regulating the food industry and the other specifically governing drugs and medical devices.

A key feature of the bill is its “farm to fork” approach to monitoring the food supply chain. Most companies do a very good job of testing for pathogens in products they create, Campbell says. But problems arise more often with middleman suppliers who are involved a few steps behind the brand name corporation and may not have the money or initiative to effectively screen the products they distribute. Even if contamination happens under the middleman’s watch, the brand name company also will be held strictly liable under the present regulations.

Supply chain mapping, which would become mandatory under DeLauro’s act, enables companies to track food they ultimately distribute during every step of its production, Campbell says.

“If an issue comes up and you know it’s because of a supplier two steps down the line, then [that supplier] has to step up and take responsibility [so] innocent manufacturers and retailers aren’t dragged into lawsuits when they had nothing to do with the issue to begin with,” he says.

Food Funds

Increased funding for the FDA unifies much of the legislation on the table, including the FSMA and another prominent bill, the Food and Drug Administration Globalization Act. Under the current system, funding varies from state to state, leading to tremendous inconsistencies in conducting inspections and monitoring outbreaks.

But with tougher laws to meet, the money will have to come from somewhere–and many corporate food manufacturers fear they’ll bear the brunt of that cost. Greater expenses upfront, however, can save significant cash in the long run. “You can be much more strategic because if people are paying more attention to food safety, there may not be a recall at all,” says Bill Marler, a managing partner at Marler Clark. Marler is representing plaintiffs in seven of the lawsuits against PCA. “And if somebody gets sick inadvertently, you can be much more selective about what you do recall if your paperwork is better.”

He points to the spinach ban in 2006, which cost the industry millions of dollars in lost revenue because of fears–ultimately unfounded–of mass contamination. Eventually it became clear that spinach from only one field packaged on one day contributed to the illnesses.

Economic Disaster

In the meantime, the economic toll for PCA is steep: The company, which has a facility in Georgia in addition to the one in Texas, filed for Chapter 7 bankruptcy Feb. 13. It handed its assets over to a bankruptcy trustee, further complicating the recall process (every food company that has used PCA-created products since 2005 must recall those food products). On April 9, the Texas Health Department assessed a record-breaking $14.6 million fine against the Plainview plant responsible for much of the contamination.

While Marler says he is skeptical that real change will result from all the food safety talk in Congress, he’s confident that just a few clear measures to tighten the system would go far to protect the nation’s food supply.

“There’s never one of these outbreaks that happens just ‘because,’” he says.