On 9 October 2026 FDA published a draft guidance (91 FR 64629, docket FDA-2025-D-6952, comments due 23 November 2026) saying it intends to exercise enforcement discretion for “all requirements” of the Food Traceability Rule for retail food establishments and restaurants with average annual food sales above $250,000 and up to $1,000,000. Read quickly, it sounds like a whole class of customers just left the rule. On our reading of the regulation text, a manufacturer or distributor still has the same shipping-record duties, and the part worth watching is elsewhere.

The same day, FDA published a separate notice for a virtual public meeting on 6 November 2026 about lot-level tracking. In our judgment, that agenda, not the carve-out, is where supplier obligations could move. This piece separates the three layers of relief that now exist, explains what each means for a company that has to send Key Data Elements (KDEs) downstream, and lists what we could not confirm.

The mistake to avoid is treating “exempt,” “partially exempt” and “FDA won’t enforce” as one thing. They are not, and they sit under a fourth layer, the funding bar that applies to everyone.

Tier (retail/restaurant annual food sales) Instrument Binding? What it relieves
$250,000 or less (3-year rolling average, inflation-adjusted from 2020) 21 CFR 1.1305(i) Yes, a regulation The subpart “does not apply” to the establishment
Above $250,000, up to $1,000,000 Draft guidance, enforcement discretion for all requirements; plus 21 CFR 1.1455(c)(3)(iii)(B) Guidance is non-binding; the spreadsheet relief is in the regulation Draft policy: FDA does not intend to enforce. Regulation: may answer an FDA records request in a form other than an electronic sortable spreadsheet
Above $1,000,000 Fully covered by Subpart S Yes Nothing under the rule; protected only by the funding bar below
All covered entities Public Law 119-37, Section 780 (enacted 12 November 2025) Yes, but limited to funds appropriated by that Act Per CRS, no funds to “administer or enforce” the rule before 20 July 2028

Two details in the regulation text matter. First, 1.1305(i) reads that the subpart “does not apply to retail food establishments and restaurants” with average annual food sold or provided over the previous three years of “no more than $250,000 (on a rolling basis)”. Second, the spreadsheet relief in 1.1455(c)(3)(iii)(B) applies to any retail food establishment or restaurant with average annual food sold or provided of “no more than $1 million”, so it also covers the bottom tier. Paragraph (C) of the same provision gives the same relief to a “person (other than a farm, retail food establishment, or restaurant)” at the same $1 million level, which on its face includes small manufacturers and distributors. If you are a small supplier, that is the relief that is actually yours.

The draft guidance’s own disclaimer matters just as much. It states that it “does not establish any rights for any person and is not binding on FDA or the public.” A $600,000 restaurant that relies on it is relying on a statement of agency intent that FDA can change and that has not been finalised. The $250,000 restaurant relies on a regulation.

Practical consequence: Do not mark a customer as “exempt” in your master data because of the guidance. Only the bottom tier is exempt in law. The middle tier is a draft, non-binding intention.

What the draft guidance says about who is affected

Food Safety Magazine quotes FDA as saying the flexibility “would only impact a small percentage of total food sales”. The guidance itself puts numbers on this. We read it in the PDF on the HHS guidance repository: “RFEs and restaurants with annual sales under $1,000,000 represent about 6% of all RFE and restaurant sales on an annual basis, and 50% of all RFE and restaurant establishments (see 87 FR 70910 at 70973).” The Federal Register notice identifies 87 FR 70910 as the 21 November 2022 final rule. The Federal Register page we fetched does not contain the 6% and 50% figures; they appear in the PDF.

Two readings follow from that wording, and both are ours.

First, the population is “under $1,000,000”, which includes the establishments already fully exempt below $250,000. The 6% and 50% figures do not isolate the new middle band. The figures therefore describe a wider group than the new middle band, and overstate how much the new policy adds.

Second, for a supplier the 50% establishment figure is the more interesting one. Sales share tells FDA how much of the food supply the carve-out leaves unpoliced. Establishment share tells a distributor how many of its delivery drops sit with customers who may, at least on paper, be out of scope. That is an inference from the percentages, not something the guidance says, and the guidance does not say how many of your customers fall below $1,000,000.

What a supplier still owes when the customer is exempt

This is the question operators are actually asking. The answer below is this publication’s reading of the regulation text, not an FDA statement, and it is narrower than the headline suggests.

Section 1.1340(a) says that for each traceability lot of an FTL food you ship, you “must maintain records” with eight data elements, starting with the traceability lot code, quantity and unit of measure, and product description. Section 1.1340(b) says you must provide the information in (a)(1) through (a)(7) to “the immediate subsequent recipient (other than a transporter) of each traceability lot that you ship.” In the text we read, 1.1340 does not condition that duty on the recipient’s size. The exemption in 1.1305(i) relieves the retailer. On our reading, it does not relieve you of creating the shipping record and sending the data. We found no FDA statement saying so, and we have not tested this reading against FDA’s FAQs.

The receiving side is different. FDA’s rule page says that if you receive an FTL food from an entity that is exempt from the final rule, you must assign a TLC if one has not already been assigned, unless you are a retail food establishment or restaurant. So an exempt supplier upstream can leave a gap that you fill. That is a different problem from an exempt customer downstream.

Situation Who holds the duty Source
You ship FTL food to a non-exempt customer You: keep shipping KDEs and provide the TLC and related KDEs to the recipient 1.1340(a) and (b)
You ship FTL food to a customer at or below $250,000 Not addressed in the 1.1340 text. The recipient is exempt; we found no provision that exempts the shipper 1.1305(i), 1.1340
You ship to a customer between $250,000 and $1,000,000 Same as a covered customer in law; the draft guidance says FDA does not intend to enforce against the retailer Draft guidance, 1.1340
You receive FTL food from an exempt supplier You: assign a TLC if none exists (unless you are a retailer or restaurant) FDA rule page, 1.1345(b)
Any of the above before 20 July 2028 Per the Congressional Research Service, no funds appropriated by the Act may be used to administer or enforce the rule before that date; FDA says it intends to comply Public Law 119-37, Section 780 (as described in CRS R48925 and FDA’s rule page)

Practical consequence (our reading): On the text above, we would not build a shipping system that skips KDEs for small customers. You rarely know a customer’s three-year rolling sales, the test sits with the customer, and the exemption boundary will move with inflation adjustment. Sending the same KDE payload to every FTL customer is simpler and safer than maintaining an exempt list. Treat that as our operating judgment, not an FDA statement. The draft guidance PDF, as we read it, does not describe supplier, distributor or shipping obligations.

Why we think the 6 November agenda matters more than the carve-out

The meeting notice, 2026-20720 (91 FR 64656), sets a meeting for 6 November 2026, 12:00 pm to 3:30 pm Eastern. Comments are due by 6 December 2026. General registration closes 5 November and speaker registration closes 26 October. The notice’s summary of earlier feedback is a list of the places where supplier records are hardest:

  • TLC flexibilities. “Many commenters” supported allowing “a reasonable range of TLCs or inferred TLCs” when shipping FTL foods from distribution to retail. Stakeholders asked for guardrails: documented practices, validation exercises, and a range limited to “the fewest TLCs possible.”
  • Eaches, returns, reclamations and food waste recovery. The notice records broad support for flexibility, because these are a small amount of product often separated from its original case, and support for clarity on the donated-food exemption.
  • Intracompany shipments. Confusion over required records, and requests to track incoming and outgoing TLCs with records of internal movements available on request.
  • Retail transformer shipments. Broad support for a simplified framework for retail-kitchen-to-affiliated-store shipments.
  • Data standardization. The notice reports “strong support among stakeholders for FDA to recognize GS1” as a data standard.

The notice also records the worry on the other side: some commenters feared a TLC flexibility “could reduce product-specific traceability and unnecessarily broaden the scope of a recall.” That is a supplier problem. If a distributor ships a range of TLCs instead of the exact lot on each case, the recall your plant faces may cover more product than the lot you actually made.

Congress wrote this agenda into law. FDA’s notices say Section 780 of the Act directed FDA to engage quarterly with regulated entities to identify and implement, as appropriate, additional flexibilities for the rule’s lot-level tracking requirement. CRS describes the entities as farms, restaurants, retail food establishments and warehouses, and notes that the statute bars requiring product tracking to the case level. We could not retrieve the statute’s own text for Section 780, so we paraphrase these descriptions. FDA held an earlier meeting on 15 June 2026, and the October notice says it received 26 comments on its discussion paper from industry, trade associations, and technology partners.

This is why the lot-code agenda matters more to you than the retailer carve-out. The carve-out reduces the number of retailers FDA would police; on FDA’s figure, the under-$1,000,000 group accounts for about 6% of sales. In our judgment, the lot-code decisions could determine what a shipping record from your dock must contain for every customer, including customers above $1,000,000, which on FDA’s figure account for the remainder of retail and restaurant sales. A reasonable-range TLC rule would change the design of your warehouse management and labelling output. GS1 recognition would settle which identifiers your customers’ receiving systems will accept.

Practical consequence: If you ship FTL foods to retail through distribution centres, put someone on the 26 October speaker deadline, or at least the 6 December comment deadline. The FTL scope question remains separate: only foods on the Food Traceability List are affected, and our piece on the cultivated-meat and fermentation gap shows how product definitions decide who is in at all.

The date confusion, in two lines

FDA’s rule page, current as of 8 October 2026, says in one section that “The compliance date is January 20, 2026”, while other text on the same page sets out the position described below. The page describes the 30-month extension to 20 July 2028 as “proposed”, and separately says the Act “directed FDA not to enforce the Food Traceability Rule prior to that same date” and that FDA “intends to comply with this Congressional directive.” On that wording the mechanism is a bar on enforcement, not a finalised new regulation date; our explainer on why the compliance date never moved covers it. We do not know whether the older line is an oversight; FDA has not said.

The counter-argument: the public-health case against more carve-outs

Consumer groups see the carve-out, the delay and the flexibility agenda as one pattern. The Safe Food Coalition’s letter of 12 August 2026 to congressional leaders urges Congress to “rescind the freeze on FDA’s funding related to the compliance date of the traceability rule” and calls the mandate to explore “additional flexibilities” “counterproductive”. The letter cites a cyclosporiasis outbreak, and Food Safety Magazine describes it as linked to lettuce, “a commodity included on the FTL”. Food Safety Magazine reports that the 30-month delay has been criticised for hindering outbreak investigations, and that the Coalition argued the rule could have limited the outbreak. We did not independently verify the outbreak figures cited in the letter and do not repeat them.

The argument has force on the merits. Traceability rules fail at their weakest link, and a record gap at the retail end can slow a trace-back even if the supplier’s records are clean. Relieving, on FDA’s own figure, up to half of all establishments by count (the under-$1,000,000 group, which includes the already-exempt) leaves a large number of endpoints without mandated records. The competing case, as Food Safety Magazine reports FDA’s position, is that the change “would only impact a small percentage of total food sales” and would provide “relief to numerous smaller RFEs and restaurants”. Both can be true. Whether a small outlet’s missing records matter in a given outbreak depends on what it sold, and the guidance’s sales-share figure cannot answer that.

There is also a design objection to the approach. The guidance describes itself as non-binding on FDA, so industry gets a statement of intent rather than certainty, as noted above.

Practical consequence: Expect pressure in both directions during the comment periods. A supplier’s own interest, uniform KDE flow and a defensible recall scope, is better served by the consumer-group position on lot-level precision than by the retailer-relief position.

What we could not establish

  • The vintage of the 6% and 50% figures. The PDF cites 87 FR 70910 at 70973. We did not open that page, so we cannot say whether the figures are 2022 data or updated.
  • The text of Section 780 itself. The GovInfo copy of Public Law 119-37 that we could fetch was truncated before Section 780, so we confirm only the enactment date (12 November 2025, from the GovInfo header). Descriptions of the section come from FDA’s notices, the Safe Food Coalition letter and the CRS report.
  • Verbatim eCFR text of Subpart S. The eCFR itself returned summaries or blocked automated fetches; the regulatory quotes above were checked against the Cornell LII copies of the same sections.
  • Whether FDA has a published position on a supplier’s duty when the customer is exempt. The regulation text we read (1.1340) has no recipient-size condition, and the draft guidance as summarised is silent. We did not search FDA’s FAQ for this, so a position may exist.
  • Whether the guidance’s “all requirements” language reaches a supplier’s shipping duty. It is framed around retail food establishments and restaurants, and we read it as relieving them, not their suppliers. That is our reading.
  • The Safe Food Coalition’s signer count and the outbreak numbers. We have not used them.
  • Why FDA’s page still prints 20 January 2026. We confirmed the line exists on the page we fetched (content current as of 8 October 2026). We do not know if it will be corrected.
  • What the final guidance will say. This is a draft.

What to watch

These are checkable against the dates and documents above.

  1. 26 October 2026: speaker registration for the 6 November meeting closes. General registration closes 5 November.
  2. 6 November 2026: the meeting runs 12:00 pm to 3:30 pm Eastern. Test: does FDA’s follow-up name a reasonable range of TLCs, inferred TLCs, or GS1 as accepted approaches, or only ask more questions?
  3. 23 November 2026: comments close on docket FDA-2025-D-6952. Test: do comments push to move the line from $1,000,000, or to condition relief on supplier-provided data?
  4. 6 December 2026: comments close on the lot-level meeting docket, FDA-2014-N-0053.
  5. Form of any lot-code flexibility. Test: whether it arrives as non-binding guidance or as an amendment to the regulation. Only the second changes what 1.1340 requires of you.
  6. FDA’s rule page. Test: whether the sentence reading “The compliance date is January 20, 2026” is gone by the time the guidance is finalised.
  7. 20 July 2028: the date before which, per CRS and FDA’s notices, Section 780 bars enforcement of the rule. Test: whether Congress amends or extends it, which would reopen the whole question.