This proposed rule has been superceded by the Final Rule: Establishment and Maintenance of Records Under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (December 9, 2004)
This document also available in PDF
[Federal Register: May 9, 2003 (Volume 68, Number 90)]
[Proposed Rules]
[Page 25187-25240]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09my03-38]
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Part IV
Department of Health and Human Services
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Food and Drug Administration
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21 CFR Parts 1 and 11
Establishment and Maintenance of Records Under the Public Health
Security and Bioterrorism Preparedness and Response Act of 2002;
Proposed Rule
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 1 and 11
[Docket No. 02N-0277]
RIN 0910-AC39
Establishment and Maintenance of Records Under the Public Health
Security and Bioterrorism Preparedness and Response Act of 2002
AGENCY: Food and Drug Administration, HHS.
ACTION: Notice of Proposed rulemaking.
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SUMMARY: The Food and Drug Administration (FDA) is proposing
regulations that would require the establishment and maintenance of
records by certain domestic persons who manufacture, process, pack,
transport, distribute, receive, hold, or import food intended for human
and animal consumption in the United States. In addition, these
requirements apply to certain foreign facilities that manufacture,
process, pack, or hold food for human or animal consumption in the
United States. Such records are to allow for the identification of the
immediate previous sources and the immediate subsequent recipients of
food. The Proposed regulations implement the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism
Act) and are necessary to properly address credible threats of serious
adverse health consequences or death to humans and animals. FDA expects
that the requirements the agency is proposing in these regulations, if
finalized as Proposed, would result in a significant improvement in
FDA's ability to respond to and help contain threats of serious adverse
health consequences or death to humans or animals from accidental or
deliberate contamination of food.
DATES: Submit written or electronic comments by July 8, 2003. Written
comments on the information collection provisions should be submitted
by June 9, 2003.
ADDRESSES: Submit written comments to the Dockets Management Branch
(HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061,
Rockville, Maryland 20852. Submit electronic comments to http://www.fda.gov/dockets/ecomments.
The Office of Management and Budget
(OMB) is still experiencing significant delays in the regular mail,
including first class and express mail, and messenger deliveries are
not being accepted. To ensure that comments on the information
collection are received, OMB recommends that written comments be
electronically mailed to sshapiro@omb.eop.gov or faxed to the Office of
Information and Regulatory Affairs, OMB, Attn: Stuart Shapiro, Desk
Officer for FDA, FAX: 202-395-6974.
FOR FURTHER INFORMATION CONTACT: Nega Beru, Center for Food Safety and
Applied Nutrition (HFS-305), Food and Drug Administration, 5100 Paint
Branch Pkwy., College Park, MD 20740, 301-436-1400.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background and Legal Authority
A. Public Health Security and Bioterrorism Preparedness and
Response Act of 2002
B. Preliminary Stakeholder Comments
C. Highlights of the Proposed Rule
II. Description of the Proposed Regulations
A. General Provisions
1. Who is subject to this subpart? (Proposed Sec. 1.326)
2. Who is excluded from all or part of the regulations in this
subpart? (Proposed Sec. 1.327)
3. What definitions apply to this subpart? (Proposed Sec. 1.328)
4. Do other statutory provisions and regulations apply? (Proposed
Sec. 1.329)
5. Can existing records satisfy the requirements of this subpart?
(Proposed Sec. 1.330)
B. Establishment and Maintenance of Records to Identify the
Nontransporter and Transporter Immediate Previous Source of all Food
(Proposed Sec. 1.337)
C. Establishment and Maintenance of Records to Identify the
Nontransporter and Transporter Immediate Subsequent Recipient of all
Food (Proposed Sec. 1.345)
D. Requirements to Establish and Maintain Records to Trace the
Transportation of all Food
1. Who is required to establish and maintain records for tracing
the transportation of all food? (Proposed Sec. 1.351)
2. What information is required in the transportation records?
(Proposed Sec. 1.352)
E. General Requirements
1. What are the record retention requirements? (Proposed Sec.
1.360)
2. What are the record availability requirements? (Proposed Sec.
1.361)
3. What records are excluded from this subpart? (Proposed Sec.
1.362)
4. What are the consequences of failing to establish or maintain
records or make them available to FDA? (Proposed Sec. 1.363)
5. What are the compliance dates for this subpart? (Proposed Sec.
1.368)
III. Analysis of Economic Impact
A. Benefit-Cost Analysis
B. Initial Regulatory Flexibility Analysis
C. Unfunded Mandates
D. SBREFA Major Rule
IV. Paperwork Reduction Act of 1995
V. Analysis of Environmental Impact
VI. Federalism
VII. Comments
VIII. References
I. Background and Legal Authority
A. Public Health Security and Bioterrorism Preparedness and Response
Act of 2002
The events of September 11, 2001, reinforced the need to enhance
the security of the U.S. food supply. Congress responded by passing the
Public Health Security and Bioterrorism Preparedness and Response Act
of 2002 (``the Bioterrorism Act'') (Public Law 107-188), which was
signed into law on June 12, 2002. The Bioterrorism Act includes a
provision in Title III (Protecting Safety and Security of Food and Drug
Supply), Subtitle A--Protection of Food Supply, section 306 (21 U.S.C.
335a), which amends the Federal Food, Drug, and Cosmetic Act (the act)
by adding section 414, Maintenance and Inspection of Records (21 U.S.C.
350(c)). Section 414(b) of the act provides, in part, that the
Secretary of Health and Human Services (the Secretary), may by
regulation establish requirements regarding the establishment and
maintenance, for not longer than 2 years, of records by persons
(excluding farms and restaurants) who manufacture, process, pack,
transport, distribute, receive, hold, or import food. The records that
must be kept by these regulations are those that are needed by the
Secretary for inspection to allow the Secretary to identify the
immediate previous sources and immediate subsequent recipients of food,
including its packaging, in order to address credible threats of
serious adverse health consequences or death to humans or animals. In
section 306(d) of the Bioterrorism Act, Congress directed the Secretary
to issue Proposed and final regulations establishing recordkeeping
requirements under section 414(b) of the act no later than 18 months
after enactment of the Bioterrorism Act, that is, by December 12, 2003.
In addition, the Bioterrorism Act adds a new section 414(a) to the
act that
[[Page 25189]]
provides records inspection authority to FDA. Section 414(a) of the act
provides that when the Secretary has a reasonable belief that a food is
adulterated and presents a threat of serious adverse health
consequences or death to humans or animals, persons who manufacture,
process, pack, distribute, receive, hold, or import food must provide
access to records related to the food that are needed to assist the
Secretary in determining whether the food is adulterated and presents a
threat of serious adverse health consequences or death to humans or
animals. Section 306 of the Bioterrorism Act also amends section 704(a)
of the act (21 U.S.C. 374(a)) to specifically authorize FDA inspections
of all records and other information described in section 414 of the
act, when the Secretary has a reasonable belief that an article of food
is adulterated and presents a threat of serious adverse health
consequences or death to humans or animals. Also, section 301 of the
act (21 U.S.C. 331) is amended to make it a prohibited act to refuse to
permit access to, or copying of, any record as required by section 414
or 704(a) of the act; or to fail to establish or maintain any record as
required by section 414(b) of the act or to refuse to permit access to
or verification or copying of any such required record; or for any
person to use to his own advantage, or to reveal, other than to the
Secretary or officers or employees of the Department of Health and
Human Services, or to the courts when relevant in any judicial
proceeding under this act, any information acquired under authority of
section 414 of the act.
In addition to section 306 of the Bioterrorism Act, which amends
the act as described above, FDA is relying on sections 701(a) of the
act (21 U.S.C. 371(a)) in issuing this Proposed rule. Section 701(a) of
the act authorizes the agency to issue regulations for the efficient
enforcement of the act.
B. Preliminary Stakeholder Comments
On July 17, 2002, FDA sent an open letter to the members of the
public interested in food issues outlining the four provisions in Title
III of the Bioterrorism Act that require FDA to issue regulations in an
expedited time period, and FDA's plans for implementing them. In the
letter, FDA invited stakeholders to submit comments to FDA by August
30, 2002, for FDA's consideration as it developed this Proposed rule.
FDA also held meetings with representatives of industry, consumer
groups, other Federal agencies, and foreign embassies after sending out
the July 17, 2002, letter, to solicit stakeholder comments. In response
to these solicitations, FDA received a number of comments regarding
section 306 of the Bioterrorism Act.
FDA has considered all the comments received by August 30, 2002.
FDA will consider all comments we received so far with the comments we
receive during the public comment period on this Proposed rule in
developing the final rule. Some of the significant comments FDA
received on or before August 30, 2002, include:
[sbull] The regulations should be performance-based. There is no
need to specify the form or manner in which the information must be
kept by a person subject to the regulations;
[sbull] The regulations should provide flexibility for using
existing recordkeeping systems;
[sbull] The regulations should give businesses the flexibility they
need to store records in the manner they find most efficient;
[sbull] The regulations should divide food products into two
categories, perishable and nonperishable, and establish separate
recordkeeping requirements for each;
[sbull] The regulations should not have a 2-year time period for
maintenance of records for fresh fruits and vegetables;
[sbull] The regulations should not require retailers to maintain
records to identify which consumers bought specific food products;
[sbull] The regulations should make clear that the transporter of
the food and its packaging between sources and recipients should not be
considered the ``immediate previous source'' or the ``immediate
subsequent recipient'' under the Bioterrorism Act;
[sbull] The regulations should make the actual physical location of
the food the key to identifying the source and recipient, which may
differ from ownership (i.e., corporate headquarters);
[sbull] The regulations should exclude as farms those engaged in
shellfish growing and harvesting in the farm exemption;
[sbull] The regulations should define the exemption for restaurants
as businesses that prepare food at the same location where such food is
sold to individual consumers, and where such food may be eaten;
[sbull] The regulations should provide a phase-in period of at
least 6 months to allow all businesses to make any needed adjustments
to their current practices before implementation of new regulations;
[sbull] Although the regulations must take size of business into
account, the regulations should not have a general exemption for small
businesses;
[sbull] The regulations should allow for phasing-in of the
requirements based on the size of regulated companies.
C. Highlights of the Proposed Rule
This proposal is just one of several rulemaking activities
currently underway as part of the overall implementation of Title III
of the Bioterrorism Act that enhance FDA's ability effectively and
efficiently to respond to bioterrorist threats and other food-related
emergencies in a way that promotes and protects the public health. Our
intent in developing these Proposed regulations is to provide the
proper balance between ensuring that FDA has information it needs to
complete a tracing investigation and ensuring adequate and reasonable
flexibility for industry to comply with these requirements.
Section 414(b) of the act, as added by section 306(a) of the
Bioterrorism Act, provides that the Secretary ``may'' by regulation
establish recordkeeping requirements. Section 306(d) of the
Bioterrorism Act, however, provides that the Secretary ``shall'' issue
Proposed and final regulations no later than 18 months from the date of
enactment. FDA believes that Congress has directed the agency to
exercise the authority in section 414(b). However, the agency
recognizes that the use of the term ``may'' in one section of the
statute and ``shall'' in another section creates an ambiguity. We
request comments on our interpretation that we are required by section
306(d) of the Bioterrorism Act to exercise the authority in section
414(b) of the act.
In establishing and implementing this Proposed rule, FDA will
comply fully with its international trade obligations, including the
applicable World Trade Organization (WTO) agreements and the North
American Free Trade Agreement (NAFTA). For example, FDA believes this
Proposed rule is not more trade-restrictive than necessary to meet the
objectives of the Bioterrorism Act. FDA has endeavored to make the
establishment and maintenance of records process as simple as possible
for both domestic and foreign facilities.
FDA is proposing to describe the specific information a covered
entity must keep, but not specify the form or type of system in which
those records must be maintained. Some of the key provisions we are
proposing include: (1) Requirements to establish and maintain records
to identify the immediate previous source of all food, (2) requirements
to establish and maintain records to identify the immediate subsequent
recipient of all food, (3) requirements to establish and maintain
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records to trace the transportation of all food, (4) record retention
requirements, (5) record availability requirements, and (6) compliance
dates. Following is an overview of the Proposed regulations, which is
intended to highlight the content of certain sections and request
comment on those sections specifically, including comment on whether
certain requirements should be included in the final regulations.
Proposed requirements to establish and maintain records to identify
the nontransporter and transporter immediate previous sources of all
food (Sec. 1.337) would require specific persons (``you'') to
establish and maintain records that identify the sources of all food
you receive. The information that we propose as necessary to identify
the nontransporter immediate previous sources includes: (1) The name,
address, and phone number of the nontransporter immediate previous
source; (2) the type of food received; (3) the date you received the
food; (4) the lot number or other identifier of the food if available;
(5) the quantity; and (6) the name, address, and phone number of the
transporters who transported the food to you.
Proposed requirements to establish and maintain records to identify
the nontransporter and transporter immediate subsequent recipients of
all food (Sec. 1.345) would require that you keep records that
identify the nontransporter recipients of all food you release. The
information that we propose as necessary to identify the nontransporter
immediate subsequent recipients is similar to that required to identify
the nontransporter immediate previous sources.
Proposed requirements to establish and maintain records to trace
the transportation of all food (Sec. Sec. 1.351 and 1.352) would
require that you keep records that trace the transportation process of
all food you transport. The information that we propose as necessary to
trace the transportation process includes: (1) The name, address, and
phone number of the person who had the food immediately before you (the
transporter's immediate previous source), and the date you received it
from that person; (2) the name, address, and phone number of the person
who had the food immediately after you (the transporter's immediate
subsequent recipient), and the date you delivered it to that person;
(3) the type of food transported; (4) the lot number or other
identifier of the food if available; (5) the quantity; and (6)
identification of each and every mode of transportation used (e.g.,
company truck, private carrier, rail, air, etc.) from the time you
first received the food until the time you delivered it.
Proposed record retention requirements (Sec. 1.360) would require
records for perishable foods not intended to be processed into
nonperishable foods to be retained for 1 year after the date the
records were created. FDA seeks comment on whether a person subject to
these Proposed regulations always or usually knows at the time
perishable food is released whether or not it is intended to be
processed into nonperishable food. For all other food, you would be
required to retain the records for 2 years after the date the records
were created. You would be required to retain all records at the
establishment where the covered activities described in the records
occurred (onsite) or at a reasonably accessible location. The
maintenance of electronic records would be acceptable. FDA is proposing
to exempt electronic records established or maintained to satisfy the
requirements of this subpart from the requirement to comply with part
11--Electronic Records; Electronic Signatures (21 CFR part 11) and
proposing to amend part 11 to reflect this exemption.
Proposed records availability requirements (Sec. 1.361) would
require that records be made available within 4 hours of an FDA request
if the request is made between 8 a.m. and 6 p.m., local standard time,
Monday through Friday, or within 8 hours of a request if made at any
other time.
In Sec. 1.368, the agency is proposing that firms be in full
compliance with these regulations within 6 months of publishing the
final regulations. However, these Proposed requirements would not be
effective for small businesses (those employing fewer than 500 but more
than 10 full-time equivalent employees) until 12 months after
publishing the final regulations. Very small businesses that employ 10
or fewer full-time equivalent employees would have 18 months to comply.
The Bioterrorism Act directs the Secretary to take appropriate
measures to ensure that there are effective procedures to prevent the
unauthorized disclosure of any trade secret or confidential information
that is obtained by the Secretary under the new regulations. FDA is
planning to reemphasize in instructions to FDA personnel the importance
of current protections and legal requirements against the unauthorized
disclosure of any trade secret or confidential information that is
obtained.
Section 306 of the Bioterrorism Act expressly states that FDA has
authority to require recordkeeping as to ``food, including its
packaging.'' FDA interprets this section as authority to require
persons who manufacture, process, pack, transport, distribute, receive,
hold, or import food to establish and maintain records to allow for the
identification of the immediate previous sources and immediate
subsequent recipients of food packaging as well. FDA interprets
packaging in section 306 of the Bioterrorism Act to mean the outer
packaging of food that bears the label. FDA is not interpreting
packaging to include food contact substances, which are included in the
definition of ``food.'' Outer packaging would include, for example, the
outer cardboard cereal box that bears the label of the cereal, but
would not include the inner lining that holds the cereal. Outer
packaging would also not include the outer shipping box in which the
cereal boxes are shipped.
FDA has tentatively concluded that the risk to human and animal
health from contamination of outer food packaging is relatively small
compared to the risk from contamination of the immediate packaging that
comes in direct contact with food. Therefore, FDA is proposing not to
require covered persons to keep records regarding outer food packaging.
However, the agency also recognizes that there may be instances where
it may be necessary for FDA to be able to investigate agents that could
lace outer packaging and could thereby contaminate a food for which the
immediate food contact packaging may not provide an adequate barrier.
In addition, outer packaging could be intentionally diverted and used
to package food that has been tampered with. FDA seeks comment on
whether the level of risk to human and animal health from potential
contamination of outer packaging is high enough to warrant inclusion of
outer packaging in the final regulations.
In addition to the above, we seek comment on all other provisions
in the Proposed regulations, such as the Proposed definitions and
exclusions. We also invite comment on whether the final rule should
include additional provisions, such as a model form that can be used to
record all the required information.
II. Description of the Proposed Regulations
A. General Provisions
1. Who is subject to this subpart? (Proposed Sec. 1.326)
Proposed Sec. 1.326(a) describes the scope of the rule. As
required by the Bioterrorism Act, Proposed Sec. 1.326(a) would require
domestic persons who
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manufacture, process, pack, transport, distribute, receive, hold or
import food intended for human or animal consumption in the United
States to comply with the regulations in this subpart, unless you
qualify for one of the exclusions Proposed in Sec. 1.327. In addition,
foreign facilities that manufacture/process, pack, or hold food for
human or animal consumption in the United States are subject to these
regulations, unless you qualify for one of the exclusions Proposed in
Sec. 1.327.
However, even if you qualify for one of the exclusions Proposed in
Sec. 1.327, if you conduct more than one type of activity at a
location, and some of that activity is not exempt, you would be
required to keep records with respect to the statutorily covered
activities. For example, in addition to selling food to consumers, a
retail facility may have an onsite restaurant or counter that prepares
food it sells to consumers. The restaurant activity is exempt from all
of the regulations in this subpart; however, the retail activities are
covered by Sec. 1.336. Similarly, a retail facility may sell both food
and nonfood products, and may even sell primarily nonfood products.
Regardless of what proportion of the retail facility sells nonfood
products, these Proposed regulations would require the retail facility
to keep records of the immediate previous source for all food it
receives that is not exempted by an exclusion. The regulations do not
apply to the nonfood products the retail facility receives.
Proposed Sec. 1.326(b) would require compliance by persons who
engage either in interstate or in intrastate activities involving food.
The Bioterrorism Act does not limit the establishment and maintenance
of records requirement only to persons directly engaged in interstate
commerce. To the contrary, the Bioterrorism Act provides FDA with the
authority to require the establishment and maintenance of records by
all ``persons'' who engage in specified activities involving food.
Therefore, FDA tentatively concludes that the statute allows FDA to
require domestic persons to keep records, whether or not they engage in
interstate commerce. Because a bioterrorist threat involving food or
other food-related emergency would have the same effect on the public
health regardless of whether the food had originated from an out of
state source, FDA is proposing in Sec. 1.326(b) that all persons who
manufacture, process, pack, transport, distribute, receive, hold, or
import food be subject to these regulations, whether or not they
directly engage in interstate activities involving food. Nonetheless,
because FDA recognizes that this is an important and controversial
issue, the agency is seeking comment on whether its tentative
conclusion that it has authority to require recordkeeping by persons
engaged in only intrastate commerce is correct. FDA also seeks comment
on how many intrastate persons are not covered by one of the exemptions
from the recordkeeping requirement (e.g., the farm or retail exemption)
and we invite recommendations on what screening questions the agency
could ask to enable a person to easily determine whether the person is
engaged in interstate or intrastate commerce.
Proposed Sec. 1.326(a) would also require compliance by foreign
facilities that manufacture/process, pack, or hold food for human or
animal consumption in the United States unless the facilities qualify
for an exclusion under Proposed Sec. 1.327(f). FDA is proposing that
the foreign facilities that are required to register under section 305
of the Bioterrorism Act also be required to establish and maintain
records under section 306 of the Bioterrorism Act. (The foreign
facilities that would be excluded from both the Proposed registration
and recordkeeping requirements are described in the discussion of
Proposed Sec. 1.327(f).) FDA believes if these foreign firms were not
required to establish and maintain records identifying the immediate
previous sources and immediate subsequent recipients of food, trace
back of food products from outside the United States would be severely
compromised. FDA believes that this approach provides the most
efficient and effective strategy for obtaining needed information on
food from foreign countries. FDA plans to take the appropriate steps
and work closely with foreign governments to obtain access to the
needed records if a threat of serious adverse health consequences or
death to humans or animals from adulterated food necessitates
inspection of records in foreign countries.
The provisions of this Proposed rule apply to records of both human
food and animal food. FDA believes that some recordkeeping requirements
are necessary for food intended for food-producing animals, as well as
for certain food for nonfood-producing animals (e.g., pet dogs and
cats, horses, and zoo and circus animals). We define food for nonfood-
producing animals as pet food. FDA believes, however, that the
consequences of a potential terrorist attack or food-related emergency
are greater for human food than for animal food. FDA also believes that
the consequences of a potential terrorist attack or food-related
emergency are greater for food for food-producing animals than for pet
food. FDA addressed certain animal food risks in our regulation for
animal proteins prohibited in ruminant feed (21 CFR 589.2000), also
referred to as the bovine spongiform encephalopathy (BSE) rule.
Although FDA acknowledges that the risk to humans from an attack on
the animal food supply is lower than the risk to humans from an attack
on the human food supply, there is some risk to both humans and animals
from an attack on the animal food supply. Contaminated animal food can
be a link to human foodborne illness. (Ref. 32). People could be at
risk through direct contact with animal food or through unintentional
cross-contamination of cooking surfaces or utensils. Animals may also
become infected and serve as a reservoir for exposing other animals and
humans. For example, in 1996, an organochlorine pesticide was
intentionally introduced into an ingredient used in animal food,
including pet food. In 2002, dog chew treats were contaminated with
Salmonella and became a vehicle to transmit Salmonella into homes. As a
consequence, many pet owners became ill and one person died.
We propose that (1) All entities that manufacture, process, pack,
transport, distribute, receive, hold, or import food for food-producing
animals must keep records under this Proposed rule; and that (2) those
entities that manufacture, process, pack, transport, distribute,
receive, hold, or import pet food that must keep records under the BSE
rule also keep records under this rule. Because of the concern that
some pet food is diverted for use for food-producing animals, the BSE
rule recordkeeping requirements apply to pet food. We believe this
proposal to require recordkeeping under the Bioterrorism Act by pet
food entities covered by the BSE rule will provide important safeguards
needed to limit the impact of contamination of pet food while
minimizing additional costs to industry.
As discussed below, we are proposing to exempt pet food entities
that are not subject to the recordkeeping requirements of the BSE rule
from the recordkeeping requirements of this Proposed rule. We propose
that all entities involved in animal food, including the pet food
entities exempt from the recordkeeping requirements, remain subject to
the Proposed records access and availability requirements.
FDA is interested in comments on whether or not the proposal
provides adequate tools to trace animal food affected by a terrorist
attack or other food related emergency and whether an
[[Page 25192]]
alternative approach should be used. Specifically, FDA is soliciting
comments on the following questions: (1) Should we exempt all types of
animal food entities from all or part of this Proposed rule? (2) Should
we exempt all pet food entities from all or part of this Proposed rule?
(3) Should we treat pet food the same as other types of animal food by
requiring all pet food entities to meet the recordkeeping requirements
under this regulation, not just those subject to the BSE rule? (4)
Should we use criteria other than the scope of the BSE rule to
determine which pet food entities should be exempt? If so, what should
those criteria be?
2. Who is excluded from all or part of the regulations in this subpart?
(Proposed Sec. 1.327)
Proposed Sec. 1.327(a) codifies the exemption for farms. This
exemption is consistent with and required by the express language of
the Bioterrorism Act.
Proposed Sec. 1.327(b) codifies the exemption for restaurants.
This exemption is consistent with and required by the express language
of the Bioterrorism Act.
Proposed Sec. 1.327(c) would exclude certain fishing vessels from
all of the regulations in this subpart, except Sec. Sec. 1.361 and
1.363. These vessels include those that not only harvest and transport
fish, but also engage in practices such as heading, eviscerating, or
freezing intended solely to prepare fish for holding on board a harvest
vessel. The Bioterrorism Act is silent with respect to exempting
fishing vessels in section 306, the ``Maintenance and Inspection of
Records for Foods'' provision, although the ``Registration of Food
Facilities'' provision, section 305, expressly exempts fishing vessels,
except such vessels engaged in processing as defined in Sec. 123.3(k)
(21 CFR 123.3(k)).
FDA has tentatively concluded that the records of fishing vessels
as defined in Sec. 123.3(k), like those of farms, are not a necessary
component of an effective traceback investigation. Nevertheless,
because the records of ``fishing vessels otherwise engaged in
processing fish, which for purposes of this subsection means handling,
storing, preparing, heading, eviscerating, shucking, freezing, changing
into different market forms, manufacturing, preserving, packing,
labeling, dockside unloading, or holding'' are necessary to an
effective traceback investigation, these would still be subject to all
of the regulations in this subpart.
Proposed Sec. 1.327(d)(1) would exclude retail facilities from the
regulations in Sec. 1.345 of this subpart. This limited exclusion is
only from the requirement to establish and maintain records of the
immediate subsequent recipients of food when the food is sold directly
to consumers. The Bioterrorism Act expressly states that the Secretary
may require the establishment and maintenance of records by persons who
``distribute'' food, and therefore retail facilities could be subject
to all other regulations in this subpart if FDA required it. FDA has
tentatively concluded that to require retail facilities to keep records
of each individual recipient consumer would be too burdensome and not
necessary in order to address credible threats of serious adverse
health consequences or death to humans or animals.
Proposed Sec. 1.327(d)(2) would exclude retail facilities, such as
roadside stands, located in the same general physical location as
farms, as defined in Proposed Sec. 1.328, that sell unprocessed food
grown or raised on those farms directly to consumers. This exclusion
only applies to those retail facilities that employ 10 or fewer full-
time equivalent employees, which is consistent with the way FDA is
proposing to define very small businesses in Proposed Sec.
1.368(a)(2). This exclusion applies only to unprocessed food, including
fresh fruits and vegetables and other raw agricultural commodities for
use as food, such as honeycomb. The exclusion also applies to fish
raised on farms. Unprocessed food grown or raised on locations other
than farms, or on farms not located in the same general physical
location, are not excluded.
This exclusion does not apply to processed food, even if it is sold
directly to consumers from a retail facility in the same general
location as a farm, unless all of the ingredients in that processed
food were grown or raised on that farm. Processed foods include, for
example, baked goods, jams, jellies, and maple syrup. Retail facilities
would be required to establish and maintain records of the immediate
previous sources under Proposed Sec. 1.337 for processed food sold
directly to consumers if any of the ingredients of that processed food
were not grown on that farm.
FDA believes that the burden placed on these retail facilities to
establish and maintain records for unprocessed food grown or raised on
a nearby farm and sold directly to consumers would likely outweigh the
risk to the public health that follows from this Proposed exclusion.
FDA has tentatively concluded that such records are not needed in order
to address credible threats of serious adverse health consequences or
death to humans or animals. FDA believes it is necessary to narrow this
exemption only to those retail facilities that remain close to the
source farm in order to not compromise FDA's ability to trace
adulterated food that has been transported over a distance greater than
the same general physical location. The agency solicits comments on
this Proposed exemption.
FDA also is proposing in Sec. 1.327(e) to exempt from all of the
regulations in this subpart persons who manufacture, process, pack,
transport, distribute, receive, hold, or import food that is regulated
exclusively by the U.S. Department of Agriculture (USDA) under the
Federal Meat Inspection Act (21 U.S.C. 601 et seq.), the Poultry
Products Inspection Act (21 U.S.C. 451 et seq.), or the Egg Products
Inspection Act (21 U.S.C. 1031 et seq.). This section complies with
section 306(d)(2) of the Bioterrorism Act, which states that section
306 should not be construed to authorize FDA to promulgate regulations
for records governing foods within the exclusive jurisdiction of USDA.
It also complies with section 315 of the Bioterrorism Act, which states
that nothing in Title III of the Bioterrorism Act, or an amendment made
by Title III, shall be construed to alter the jurisdiction between USDA
and the U.S. Department of Health and Human Services under applicable
statutes and regulations.
This exemption is for food within the exclusive jurisdiction of the
USDA. Persons who manufacture, process, pack, transport, distribute,
receive, hold, or import food that is jointly regulated by FDA and USDA
would be required to keep records with regard to the food regulated by
FDA. An example of food that is jointly regulated by FDA and USDA is
frozen T.V. dinners containing both meat and fish.
Proposed Sec. 1.327(f) would exclude foreign facilities that are
also excluded from the requirement to register under section 305 of the
Bioterrorism Act. As discussed previously in this document, FDA
believes that requiring foreign facilities that must register to also
establish and maintain records would be the most efficient and
effective way to obtain information on food from foreign countries.
Therefore, foreign facilities would not be required to establish and
maintain records ``if food from these facilities undergoes further
manufacturing/processing (including packaging) by another foreign
facility outside the United States.'' In other words, foreign
facilities involved in the initial stages of manufacturing/
[[Page 25193]]
processing food are not required to establish and maintain records if
another facility further manufactures/processes or packs the food
produced at that facility outside the United States.
This exclusion would not apply to facilities if the ``further
manufacturing/processing'' at the subsequent facility is of a de
minimis nature, such as adding labeling to a package or adding plastic
rings to the outside of beverage bottles to hold them together. In that
case, both the facility conducting the de minimis activity and the
facility immediately prior to it would be required to register and,
therefore, would also be subject to these regulations. FDA seeks
comment on the requirement for facilities conducting de minimis
activities to keep records. The following are examples of which foreign
facilities would be subject to, or excluded from, these regulations
based on the activities they perform. As stated previously, the foreign
facilities that are subject to these regulations are the same
facilities that would be required to register under section 305 of the
Bioterrorism Act.
[sbull] A foreign facility would be subject to these regulations if
it prepares a finished food and places it into packages suitable for
sale and distribution in the United States.
[sbull] A foreign facility distributing food to food processors
outside the United States for further manufacturing/processing before
the food is exported for consumption in the United States would not be
subject to these regulations, unless the further manufacturing/
processing entails adding labeling or other de minimis activity. If the
further manufacturing/processing is of a de minimis nature, both the
facility conducting the de minimis activity and the facility
immediately prior to it would be subject to these regulations.
[sbull] The last foreign facility that manufactures/processes an
article of food before it is exported to the United States would be
subject to these regulations, even if the food subsequently is held or
stored at a different facility outside of the United States.
[sbull] Facilities located outside the United States that take
possession, custody, or control of finished foods for holding, packing,
and/or storage prior to export to the United States are subject to
these regulations.
Proposed Sec. 1.327(g) provides that persons who manufacture,
process, pack, transport, distribute, receive, hold, or import pet food
who are not subject to the recordkeeping provisions of the animal
proteins prohibited in ruminant feed regulation (21 CFR 589.2000) would
be excluded from the recordkeeping requirements of this Proposed rule.
However, these entities, like all entities involved in animal food,
remain subject to the Proposed records access and availability
requirements in Proposed Sec. 1.361 and Sec. 1.363.
3. What definitions apply to this subpart? (Proposed Sec. 1.328)
Proposed Sec. 1.328 states that the definitions of terms in
section 201 of the act (21 U.S.C. 321) apply to such terms when used in
this subpart. Section 201 of the act defines various terms that appear
throughout the act, including ``food'' (see section 201(f) of the act).
The definitions of such terms apply when we use those terms in these
regulations. In addition, Proposed Sec. 1.328 defines specific
additional terms used in the Proposed rule.
Proposed Sec. 1.328 defines ``act'' as the Federal Food, Drug, and
Cosmetic Act.
FDA is proposing in Sec. 1.328 to define ``domestic person''
consistent with the definition of ``State'' in section 201(a)(1) of the
act. That is, FDA is proposing to define a domestic person as one that
is located in any State or Territory of the United States, the District
of Columbia, or the Commonwealth of Puerto Rico.
FDA is proposing in Sec. 1.328 to define a ``foreign facility'' as
a facility other than a domestic person that manufactures, processes,
packs, or holds food for consumption in the United States.
Proposed Sec. 1.328 defines ``farm'' as a facility in one general
physical location devoted to the growing of crops for food, the raising
of animals for food (including seafood), or both. A farm may consist of
contiguous parcels of land, ponds located on contiguous parcels of
land, or, in the case of netted or penned areas located in large bodies
of water, contiguous nets or pens. The term ``farm'' includes: (a)
Facilities that pack or hold food, provided that all food used in such
activities is grown or raised on that farm or is consumed on that farm;
and (b) facilities that manufacture/process food, provided that all
food used in such activities is consumed on that farm or another farm
under the same ownership. ``Farm'' includes such facilities because
they are activities incidental to farming that most farms engage in
(e.g., holding and packing of harvested crops). Facilities that engage
in manufacturing/processing, packing, or holding of food that is not
described in the definition of ``farm'' are subject to these
regulations because such activities are not activities that most farms
engage in and are thus not included in the definition of ``farm.'' Some
examples of farms include: Apple orchards, hog farms, dairy farms,
feedlots, and aquaculture facilities.
Persons that engage in more than one type of activity may meet the
definition of farm as to some of those activities while not meeting the
definition of farm as to other activities. Persons that grow crops and
raise animals and also manufacture/process food that is sold for
consumption off the premises are not farms for purposes of this subpart
and are not exempt. For example, a person who grows oranges and
manufactures/processes them into orange juice for sale to a distributor
would need to keep records under this subpart of both the immediate
previous sources and the immediate subsequent recipients of the orange
juice. However, establishing and maintaining records of the immediate
previous sources would only be required when persons manufacture/
process food from ingredients obtained from other sources than that
farm.
Similarly, persons who manufacture/process food from ingredients
obtained from other sources only meet the definition of farm if all the
food used in such activities is consumed on that farm or another farm
under the same ownership. If a person combines oranges grown on his
farm with oranges obtained from another source, processes them into
orange juice on his premises, and consumes all of the orange juice on
those premises, he would not need to keep records regarding those
oranges. However, if the person sells that orange juice at a roadside
stand directly to consumers, that roadside stand would not meet the
definition of farm but would fall within the partial retail exclusion
provided in Proposed Sec. 1.344. Retailers need only keep records
identifying the immediate previous source.
Proposed Sec. 1.328 defines ``food'' as having the meaning given
in section 201(f) of the act, which is: ``(1) articles used for food or
drink for man or other animals, (2) chewing gum, and (3) articles used
for components of any such article.'' FDA also is proposing to include
some examples of products that are considered food under section 201(f)
of the act. Examples listed in the Proposed rule include: Fruits;
vegetables; fish; dairy products; eggs; raw agricultural commodities
for use as food or components of food; animal feed, including pet food;
food and feed ingredients and additives, including substances that
migrate into food from food packaging and other articles that contact
food; dietary supplements and dietary ingredients; infant formula;
beverages, including alcoholic beverages and bottled water; live food
animals (such as hogs and elk); bakery goods;
[[Page 25194]]
snack foods; candy; and canned foods. ``Substances that migrate into
food from food packaging'' include immediate food packaging or
components of immediate food packaging that are intended for food use.
Outer food packaging is not considered a substance that migrates into
food.
The provisions of this Proposed rule apply to records of both
nontransporters and transporters. Section 414(b) of the act provides
that FDA may require recordkeeping with regard to records that are
needed for inspection to allow the agency to identify the immediate
previous sources and the immediate subsequent recipients of food. The
Proposed rule establishes two sets of immediate previous sources and
immediate subsequent recipients, one for nontransporters and one for
transporters. For nontransporters, the Proposed rule defines immediate
previous source as the nontransporter from which the company received
the food. The immediate subsequent recipient for nontransporters is the
nontransporter to which the company sent the food. The definition of
nontransporter immediate previous source and immediate subsequent
recipient describes them as persons who own food or who hold, process,
pack, import, receive, or distribute food for purposes other than
transportation. Nontransporters are also expected to keep records of
the transporters that they receive food from and send food with.
Nontransporters will thus be required to keep records on both
transporters and nontransporters for both previous sources and
subsequent recipients.
With respect to transporters (persons who have possession, custody,
or control of food for the sole purpose of transporting it), the
Proposed rule provides for the company to establish and maintain
records about its own transportation activities and the person from
whom it received the food and the person to whom the food is delivered.
The person from whom the food is received by the transporter is the
immediate previous source. This could be a nontransporter as described
previously or another transporter. The person to whom the food is
delivered by the transporter is the immediate subsequent recipient.
This person could be another transporter or a nontransporter. These
records allow FDA to follow the chain of custody of the food through
each transportation step, which may include a variety of forms of
transportation (e.g., plane, train, and truck).
Because it is critically important for FDA to have the ability to
trace back and trace forward quickly in the event of a terrorist event
or other food-related emergency, FDA has defined for nontransporters
the immediate previous source and immediate subsequent recipient as the
previous nontransporter or next nontransporter. This will allow FDA in
most cases to efficiently and effectively determine where the food was
contaminated and to locate where the contaminated food was sent.
However, the contamination could occur during the transportation
process as well. The records of transporters will ensure that FDA has
the potential in all cases to determine the source of contamination and
trace the food back and forward through the transportation chain. FDA
recognizes that requiring nontransporters to keep records on both
previous and subsequent transporters and nontransporters is potentially
burdensome. FDA is mandating this in order to facilitate the efficient
investigation of food related emergencies (records on nontransporters)
and to increase the likelihood of a successful traceback by ensuring
all those who handle the food are examined (records on transporters).
We also recognize that there could be other interpretations of the
statute. The statute could be read to provide that at every step of the
movement of the food, the immediate previous source is the person who
had the food before they delivered it to the next person. That next
person would be the immediate subsequent recipient. Under that reading,
if company A processes the food and sends it to company B via several
modes of transportation, the chain of custody would be as follows: (1)
Company A; (2) Red Truck Co.; (3) train; (4) Blue Truck Co.; and (5)
company B. In this scenario, the immediate subsequent recipient for
company A is Red Truck Co. The immediate previous source for Red Truck
Co. is company A and the immediate subsequent recipient is the train.
The immediate previous source for the train is Red Truck Co. and the
immediate subsequent recipient is Blue Truck Co. The immediate previous
source for Blue Truck Co. is the train and the immediate subsequent
recipient is company B. If it is discovered at company B that the food
is contaminated, since company B only has records to identify Blue
Truck Co. as its immediate previous source, FDA would have to trace
back from company B to Blue Truck Co. and from there to the train, then
to Red Truck Co., until FDA finally arrives at company A, the source of
the contamination. This type of tracing would not allow the agency to
efficiently and effectively trace back from company B to company A or
get to company A quickly to trace forward other food sent out by
company A.
We are requesting comments on whether the approach with two sets of
immediate previous sources and immediate subsequent recipients in this
Proposed rule is a reasonable interpretation of the statute. We also
request comments on whether all transporters, including small
independent transporters, have the capability to maintain records for
the 1 and 2 year record retention periods. FDA also requests comment on
the extent to which the recordkeeping burden on nontransporters
(previous and subsequent transporters and nontransporters) creates new
burdens for firms. We are also interested in suggestions for
alternative recordkeeping arrangements that would allow for the
complete and efficient investigation of food-related emergencies. In
addition, we request comments on whether an approach different from the
Proposed rule that would require or create incentives for
nontransporters to obtain and keep records on all the transporters that
transport food between the nontransporters, by obtaining the records
from the transporters, would be a reasonable interpretation of the
statute.
Proposed Sec. 1.328 defines ``manufacturing/processing'' as making
food from one or more ingredients, or synthesizing, preparing,
treating, modifying or manipulating food, including food crops or
ingredients. Some examples of manufacturing/processing include, but are
not limited to, cutting, peeling, trimming, washing, waxing,
eviscerating, rendering, cooking, baking, freezing, cooling,
pasteurizing, homogenizing, mixing, formulating, bottling, milling,
grinding, extracting juice, distilling, labeling, or packaging. FDA is
defining ``manufacturing'' and ``processing'' together because the
meanings of the terms overlap. For example, combining two materials
into a finished product, such as macaroni and cheese, could be
considered ``manufacturing,'' ``processing,'' or both. Since both
manufacturers and processors are subject to these regulations, FDA does
not believe it is necessary to distinguish between manufacturing and
processing in the Proposed rule.
Proposed Sec. 1.328 defines ``nontransporter'' as a person who
owns food or who holds, processes, packs, imports, receives, or
distributes food for purposes other than transportation.
[[Page 25195]]
Proposed Sec. 1.328 defines the ``nontransporter immediate
previous source'' as a nontransporter who last had an article of food
before transferring it to another nontransporter. Nontransporter
immediate previous source includes, but is not limited to, an
individual, a partnership, a corporation, a cooperative, an
association, or a government entity. Government entities include school
systems, public hospitals, prisons, commissaries, etc.
Proposed Sec. 1.328 defines ``nontransporter immediate subsequent
recipient'' as a nontransporter who acquires an article of food from
another nontransporter. Nontransporter immediate subsequent recipient
also includes, but is not limited to, an individual, a partnership, a
corporation, a cooperative, an association, or a government entity.
Proposed Sec. Sec. 1.337(a)(1) and 1.345(a)(1) would require the
name of the firm and responsible individual, address, phone number and,
if available, the fax number and e-mail address of the nontransporter
immediate previous source and nontransporter immediate subsequent
recipient, respectively, whether domestic or foreign. We propose these
requirements to mean the address and information of the specific
location of where the statutorily covered activity occurred, and not
that of a corporate headquarters at another location than where the
activities took place. For example, a food product may be processed at
a manufacturing plant, shipped to a packing facility, and then
transported to a retail store all owned by the same corporation. The
Proposed requirements would apply to each individual location that
received or released the food, even if each facility is owned by the
same corporation. This would mean that firms would need to establish
and maintain records accessible at each specific plant, packing
facility, and retail store. FDA's intention is that these requirements
identify the physical location of the food at each step of the way as
it travels through the chain of distribution, from the farm or sea to
the consumer. FDA requests information on whether this requirement to
keep records on intra-corporate transfers will impose new burdens upon
firms or whether firms keep these records currently.
Proposed Sec. 1.328 defines ``perishable food'' as food that is
not heat-treated, not frozen, and not otherwise preserved in a manner
so as to prevent the quality of the food from being adversely affected
if held longer than 7 days under normal shipping and storage
conditions.
The ``perishable food'' definition has been modeled after the
current Regulatory Procedures Manual definition of ``perishable
commodity'' for purposes of this proposal. Examples include, but are
not limited to, fluid milk (but not ultrapasteurized), live fish,
lobster, crab, other crustaceans, shellfish, fresh fruits and
vegetables. The agency is seeking comment on whether we have best
defined ``perishable food'' for purposes of these regulations.
In addition, FDA is defining ``perishable foods'' for the purposes
of establishing a shorter record retention time for those foods as
opposed to nonperishable foods. FDA seeks comments on the Proposed
definition of perishable foods and whether the agency should use that
definition as the basis for establishing record retention times.
Proposed Sec. 1.328 defines ``pet food'' as food for nonfood-
producing animals. Nonfood-producing animals include household pets,
such as dogs and cats, and also include other nonfood-producing animals
such as horses and circus and zoo animals.
Section 306 of the Bioterrorism Act does not extend to recipes.
Proposed Sec. 1.328 defines ``recipe'' as the quantitative formula
used in the manufacturing of the food product, but not the identity of
the individual ingredients of the food. If finalized as Proposed, FDA
would have access to the records containing the ingredients used in a
food product, but would not have access to the quantities of the
ingredients used to make a product. The act currently requires
manufacturers to disclose to the public the ingredients they use on the
labels of their food products. It is critical to a tracing
investigation that the ingredients and the sources of the ingredients
are identified.
Proposed Sec. 1.328 defines ``restaurant'' as a facility that
prepares and sells food directly to consumers for immediate
consumption. As with farms, persons who engage in more than one type of
activity may meet the definition of restaurant as to some of those
activities while not meeting the definition of restaurant as to other
activities. Those persons would be required to keep records as to those
activities covered by this subsection that do not meet the definition
of restaurant.
Some examples of restaurants as defined in the Proposed regulations
include: Cafeterias, lunchrooms, cafes, bistros, fast food
establishments, food stands, saloons, taverns, bars, lounges, catering
facilities, hospital kitchens, day care kitchens, and nursing home
kitchens.
Due to possible ambiguity in the term ``catering facilities,'' FDA
states in the Proposed restaurant definition that facilities that
provide food to interstate conveyances, such as airplanes, passenger
trains, and cruise ships, rather than directly to consumers, are not
restaurants. Facilities that provide food to interstate conveyances are
not considered restaurants because they do not serve food directly to
consumers for immediate consumption. For example, a facility that
provides sandwiches to a passenger train for eventual sale to
passengers would not be considered a restaurant. However, the snack bar
on the train that sells the sandwiches to consumers would be considered
a restaurant. FDA has historically inspected these facilities that
provide food to interstate conveyances and considers them processors,
rather than restaurants.
Because the Proposed regulations also apply to persons who
manufacture, process, pack, transport, distribute, receive, hold, or
import food for animal consumption in the United States, by analogy,
the term ``restaurant'' also includes pet shelters, kennels, and
veterinary facilities in which food is provided to animals.
Proposed Sec. 1.328 defines ``retail facility'' as a facility that
sells food products directly to consumers only. The term includes, but
is not limited to, grocery and convenience stores, vending machine
locations, and commissaries. The limited exclusion from establishing
and maintaining records of the immediate subsequent recipient applies
only to food sold directly to consumers. A facility that sells food to
wholesalers and/or other retailers, in addition to consumers, would
have to keep records of the immediate subsequent recipients because
wholesalers and retailers are not considered consumers for purposes of
these Proposed regulations.
Proposed Sec. 1.328 defines ``transporter'' as a person who has
possession, custody, or control of an article of food for the sole
purpose of transporting the food. A person who owns food or who holds,
processes, packs, imports, receives, or distributes food for purposes
other than transportation is not a transporter.
Proposed Sec. 1.328 defines ``transporter's immediate previous
source'' as the person from whom a transporter receives food. This
source can be either another transporter or a nontransporter. The
transporter's immediate previous source includes, but is not limited
to, an individual, a partnership, a corporation, a cooperative, an
association, or a government entity.
[[Page 25196]]
Proposed Sec. 1.328 defines ``transporter's immediate subsequent
recipient'' as the person to whom a transporter delivered food. This
recipient can be either another transporter or a nontransporter. A
transporter's immediate subsequent recipient includes, but is not
limited to, an individual, a partnership, a corporation, a cooperative,
an association, or a government entity.
Proposed Sec. 1.328 defines ``you'' as a person or facility
subject to this subpart under Sec. 1.326. FDA is proposing to use
``you'' throughout the Proposed rule for easier readability.
4. Do other statutory provisions and regulations apply? (Proposed Sec.
1.329)
Proposed Sec. 1.329 would require that in addition to the
regulations in this subpart, you must comply with all other applicable
statutory provisions and regulations related to the establishment and
maintenance of records for foods. Regulations in this subpart are in
addition to existing recordkeeping regulations, such as the regulations
for low acid canned foods, juice, infant formula, color additives,
bottled water, animal feed, and medicated animal feed. (See 21 CFR
113.100(d); 21 CFR 120.12; 21 CFR 106.100(g); 21 CFR 80.39; 21 CFR
129.35; Sec. 589.2000; and 21 CFR 225.102 & 225.110, respectively).
5. Can existing records satisfy the requirements of this subpart?
(Proposed Sec. 1.330)
Proposed Sec. 1.330 states that the regulations in this subpart do
not require duplication of existing records if those records contain
all of the information required by this subpart. If a person subject to
the regulations keeps records of all of the information as required by
this subpart in compliance with other Federal, State, or local
regulations, or for any other reason, e.g., as a result of its own
business practices, then those records may be used to meet these
requirements. Such records may include, but are not limited to,
purchase orders, bills of lading, invoices and shipping documents. Some
current FDA regulations require records, including those for low acid
canned foods, juice, infant formula, color additives, bottled water,
animal feed, and medicated animal feed. (See 21 CFR 113.100(d); 21 CFR
120.12; 21 CFR 106.100(g); 21 CFR 80.39; 21 CFR 129.35; 21 CFR
589.2000; and 21 CFR 225.102 & 225.110, respectively). However, none of
the existing FDA regulations are sufficient alone to meet the
requirements we are proposing in these regulations. A person who has
been complying with these regulations only would have to add records
addressing the new elements. The burden is on the person subject to
these regulations to ensure it keeps all applicable records. Our intent
is to have as little impact as possible on current recordkeeping
practices if those records can meet the requirements of these Proposed
regulations. We are proposing the specific information a covered person
must keep, but we will not specify the form or type of system in which
those records must be maintained.
B. Establishment and Maintenance of Records to Identify the
Nontransporter and Transporter Immediate Previous Source of All Food
What information is required in the records established and
maintained to identify the nontransporter and transporter immediate
previous source? (Proposed Sec. 1.337)
The Bioterrorism Act authorizes FDA to require by regulation the
establishment and maintenance of records ``needed'' by the Secretary
for inspection to allow the Secretary to ``identify'' the immediate
previous sources of food. Based on FDA's interpretation of this
statutory authority and what is ``needed'' to ``identify'' the
immediate previous source, Proposed Sec. 1.337(a) would require that
you establish and maintain records for all food as follows:
[sbull] Proposed Sec. 1.337(a)(1) would require the name of the
firm and responsible individual, address, phone number and, if
available, the fax number and e-mail address of the nontransporter
immediate previous source, whether domestic or foreign;
[sbull] Proposed Sec. 1.337(a)(2) would require an adequate
description of the type of food received, to include brand name and
specific variety (e.g., brand x cheddar cheese, not just cheese; or
romaine lettuce, not just lettuce);
[sbull] Proposed Sec. 1.337(a)(3) would require the date you
received the food;
[sbull] Proposed Sec. 1.337(a)(4) would require the lot or code
number or other identifier of the food (to the extent this information
exists);
[sbull] Proposed Sec. 1.337(a)(5) would require the quantity and
how the food is packaged (e.g., 6 ct. bunches, 25 lb carton, 12 oz
bottle); and
[sbull] Proposed Sec. 1.337(a)(6) would require the name of the
firm and responsible individual, address, phone number and, if
available, the fax number and e-mail address of the transporters who
transported the food to you.
Proposed Sec. 1.337(a) would require that you include information
reasonably available to you to identify the specific source of each
ingredient that was used to make every lot of finished product, so that
incoming ingredients can be linked to the outgoing finished products.
If FDA cannot immediately narrow the trace back to a specific source,
tracing becomes much more difficult, there is an increased risk to
consumers, and some food sources are unfairly implicated. FDA believes
this is a necessary and beneficial requirement for consumers, and will
help conserve FDA's limited resources, by focusing our investigation
only on those entities who handled the at-risk food. FDA's
investigation of the unaffected sources is time consuming and may have
a negative business impact on the incorrectly implicated sources. These
sources should not be penalized by exposure to unwarranted scrutiny and
perhaps unwarranted adverse publicity because of inadequate
recordkeeping by others in the distribution chain. In addition, in a
recall situation, a business could limit the economic impact by being
able to limit its recall to only a specific group of products instead
of having to conduct a broader recall. What is reasonably available may
vary from case to case.
FDA recognizes that the food industry often relies on multiple
sources of ingredients to make food products, and that it is common
practice to commingle ingredients from different sources prior to
incorporating them into a finished product. For example, some food
processors commonly store raw materials like corn syrup and flour in
tanks and silos. In some instances, these tanks and silos are not
dedicated by suppliers, but are topped off as supplies run low,
resulting in routine commingling of raw ingredients from a number of
suppliers. Moreover, it is FDA's understanding that flour or grain silo
crowns do not uniformly dissipate, resulting in uneven distribution of
ingredients. FDA acknowledges that changing this longstanding system to
require dedicated supplier storage to facilitate source specific
recordkeeping would involve significant financial costs.
It is not FDA's intent to require the reconfiguration of each
manufacturing plant. These Proposed regulations, however, would require
you to capture the information that is reasonably available to you to
connect finished products with the immediate previous source of each of
the food products used to make that finished product. FDA understands
that in some multiple sourcing contexts this information only may allow
for a reduction in the number of potential sources for a specific food
product, but may not necessarily
[[Page 25197]]
identify one specific source of the food product.
For example, a company that bakes cookies may source flour from
five different companies rather than depend on a single company as its
supplier. The flour from the five companies may be stored in one common
silo prior to being used in the manufacture of the cookies. In this
scenario, the manufacturer could identify, depending on the date the
flour was received from each company and placed in the silo and when
the silo was emptied, the various companies that were the sources of
the flour. Under this situation, the information is not reasonably
available to determine a single source of the flour used in a
particular lot of cookies. In this case, the information reasonably
available to you would be the identity of all of the potential sources
of the flour for each finished lot of cookies.
Conversely, if the manufacturer did have dedicated silos for each
supplier of flour, then the information would be reasonably available
to the manufacturer to specify the specific source of the flour for
each finished product.
Proposed Sec. 1.337(a)(4) would require maintenance of the lot or
code number or other identifier of the food (to the extent this
information exists) to allow FDA the capability to limit its
investigation to the implicated food. For instance, if a company
repeatedly and consistently orders a particular food from a supplier,
and the threat is associated with a single shipment or some shipments
but not others, it is important to have the capability to isolate the
shipment or shipments in question from others. This would be more cost
effective and less burdensome to FDA. In addition, if the threat
affects the transporter, identifying information such as lot numbers or
other identifiers would facilitate the location and isolation of the
conveyance that may have become contaminated by the implicated food.
This cannot readily be done without information that specifically
identifies the food.
Proposed Sec. 1.337(a)(5) would require you to record the quantity
of the food and how it is packaged to assist FDA in identifying the
implicated food and also allow FDA to determine the scope of the
threat. With this information contained in the records, FDA would be
able to determine the quantity of the potentially adulterated food that
is in the stream of commerce, i.e., whether it is one crate or 1,000
crates of tomatoes. In addition, as part of a tracing investigation,
FDA would be able to identify at each location whether all of the
potentially adulterated food has been accounted for or whether any part
of a shipment had been diverted. Both the immediate previous source and
immediate subsequent recipient would be required to keep records of the
quantity of food received or released to allow FDA to determine that
the quantity of food sent was the quantity received. This would ensure
that FDA is best able to protect public health by being able to
identify and locate adulterated food that presents a threat of serious
adverse health consequences or death to humans or animals.
Proposed Sec. 1.337(a)(6) would require you to keep in your
records information to identify the transporter who transported the
food to you. This requirement to identify the transporter is in
addition to Proposed Sec. 1.337(a)(1), which requires you to keep in
your records information that identifies the nontransporter immediate
previous source.
C. Establishment and Maintenance of Records to Identify the
Nontransporter and Transporter Immediate Subsequent Recipient of All
Food
What information is required in the records established and
maintained to identify the nontransporter and transporter immediate
subsequent recipient? (Proposed Sec. 1.345)
The Bioterrorism Act authorizes FDA to require by regulation the
establishment and maintenance of records ``needed'' by the Secretary
for inspection to allow the Secretary to ``identify'' the immediate
subsequent recipient of food. Based on FDA's interpretation of this
statutory authority and what is ``needed'' to ``identify'' the
immediate subsequent recipient, Proposed Sec. 1.345(a) would require
that you establish and maintain records for all food you release that
identifies information that is substantially similar to that discussed
in the requirements to identify the nontransporter immediate previous
source.
D. Requirements to Establish and Maintain Records to Trace the
Transportation of All Food
1. Who is required to establish and maintain records for tracing the
transportation of all food? (Proposed Sec. 1.351)
The Bioterrorism Act expressly states persons who transport food
are subject to these regulations. Proposed Sec. 1.351 would require
you, if you are a domestic person, to establish and maintain records
for tracing those immediately before (transporter's immediate previous
source) and immediately after you (transporter's immediate subsequent
recipient) in the transportation process if you transport food.
2. What information is required in the transportation records?
(Proposed Sec. 1.352)
Proposed Sec. 1.352(a) would require that you establish and
maintain the following records for each food you transport:
[sbull] Proposed Sec. 1.352(a)(1) would require the name of the
firm and responsible individual, address, phone number and, if
available, the fax number and e-mail address of the person who had
possession, custody, or control of the food immediately before you, and
the date you received it from that person;
[sbull] Proposed Sec. 1.352(a)(2) would require the name of the
firm and responsible individual, address, phone number and, if
available, the fax number and e-mail address of the person who had
possession, custody, or control of the food immediately after you, and
the date you delivered it to that person;
[sbull] Proposed Sec. 1.352(a)(3) would require an adequate
description of the type of food, including brand name and specific
variety (e.g., brand x cheddar cheese, not just cheese; or romaine
lettuce, not just lettuce);
[sbull] Proposed Sec. 1.352(a)(4) would require the lot or code
number or other identifier of the food (to the extent this information
exists);
[sbull] Proposed Sec. 1.352(a)(5) would require the quantity and
how the food is packaged (e.g., 6 ct. bunches, 25 lb carton, 12 oz
bottle); and
[sbull] Proposed Sec. 1.352(a)(6) would require the identification
of each and every mode of transportation (e.g., company truck, private
carrier, rail, air, etc.), and the individual responsible, from the
time you first received the food until the time you delivered it.
The Proposed requirements are intended to provide the necessary
information to allow FDA to trace the transportation of all food. In
Proposed Sec. 1.352(a)(1) and (a)(2), the required information would
consist of whoever had the food before you and after you. This person
could be either a nontransporter or another transporter. In a multiple
transporter situation, you may be receiving the food from another
transporter and/or delivering it to another transporter. The Proposed
requirements in Sec. 1.352(a)(1) and (a)(2) are intended to capture
this information regardless of whether you receive food from a
nontransporter or another transporter, or deliver it to a
nontransporter or another transporter. You would only be responsible
for maintaining a record of the required information with respect to
the person
[[Page 25198]]
from whom you received the food from and the person to whom you gave
it. You would not be required to maintain records of transactions to
which you were not a party.
Proposed Sec. 1.352(a)(6) would require transportation companies
that use several modes of transportation within their company to record
when the food was put on which kind of vehicle and who was responsible
for it during that leg of the trip. For example, Yellow Transportation
Co. may use two different Yellow trucks and a Yellow plane. This
section would require Yellow Transportation Co. to keep records of each
and every mode of transportation and the individual responsible, from
the time the food was first received until the time it was delivered.
The ``individual responsible'' should be the person within the
transportation company who is responsible for that vehicle and the food
being transported. FDA seeks comments on whether ``individual
responsible'' should be the operator of the conveyance or whether it
can be someone within the corporation who has overall responsibility
for the vehicle and the food being transported. FDA understands that it
is common practice for one transportation company to use several
different modes of transportation within that company throughout its
possession and control over the food. The food is potentially subject
to tampering at each phase of the transportation process. If the
transportation company responsible for the food does not have complete
records identifying the mode of transportation and who was responsible
for the food throughout the entire time that company had possession and
control over the food, the tracing chain is broken and it becomes more
difficult and time consuming to determine if that shipment of food has
been diverted or tampered with. FDA believes this detailed information
regarding the food transportation would be necessary to expedite the
tracing investigation in situations when FDA has a reasonable belief
that food is adulterated and presents a threat of serious adverse
health consequences or death to humans or animals.
E. General Requirements
1. What are the record retention requirements? (Proposed Sec. 1.360)
Proposed Sec. 1.360(a) states the records required by these
regulations are to be created at the time the statutorily covered
activities take place. Proposed Sec. 1.360(b) would require records
for perishable foods not intended to be processed into nonperishable
foods to be retained for 1 year after the date the records were
created. Although perishable foods have a relatively short shelf life,
FDA is proposing a 1 year record retention period for these foods. In
some situations, the health hazard may not be immediately apparent but
may emerge months after the food has been consumed. In other
situations, the harm may have been caused by novel contaminants or
novel vehicles for known contaminants, and it may take months to
identify the sources of contamination. As an example, in 1995, there
was an investigation of an outbreak of cyclosporiasis. At the time, FDA
did not know that Cyclospora could contaminate raspberries. An
investigation concluded that water was the likely vehicle. In 1996,
there were numerous additional cyclosporiasis outbreaks in the United
States and the link was made to raspberries from Guatemala. Fresh
raspberries had been served at the site of the 1995 outbreak and then,
a year later, FDA needed to determine their source. The distributor had
no records to facilitate the traceback.
The Proposed 1-year period would not apply to perishable foods that
are intended for processing into nonperishable foods, e.g., jams and
jellies made from fruits. In those instances, the longer record
retention period of 2 years is needed to ensure the recordkeeping chain
for finished food products made using perishable foods is available
during tracing investigations. If you are uncertain whether a
perishable food is destined or intended for processing into a
nonperishable food, the 2-year record retention period applies. FDA
seeks comment on the impact of this provision.
Proposed Sec. 1.360(c) would require that you retain records for
all foods (except animal foods as discussed below) not covered by
Proposed Sec. 1.360(b) for 2 years after the date the records were
created. This Proposed requirement is consistent with the authority
given in the Bioterrorism Act. Based on information provided to FDA by
the food industry, the minimum time for processed food products to
clear the food production and distribution/retail system is 3 years. In
addition, the average distribution time between harvesting and final
retail sale of frozen fruits and vegetables is approximately 3 to 24
months. These are average times, and individual products may be in
commerce for a longer period. FDA believes that allowing anything less
than a 2-year record retention period for nonperishable food, as well
as perishable foods intended to be processed into nonperishable food,
would severely compromise a tracing investigation.
Proposed Sec. 1.360(d) would require that you retain records
required by these regulations for animal food, including pet food, for
1 year after the date the records are created. Food for food-producing
animals tends to have a faster turnover rate than many kinds of human
food. In addition, since pet foods are typically the sole source of
food for pets, such foods tend not to be stored as long as many human
foods. Therefore we propose that records for all animal food, including
pet food, be retained for only one year after the date the records are
created. This is consistent with the BSE rule.
Proposed Sec. 1.360(e) would require that you retain all records
required by these regulations at the establishment where the covered
activities described in the records occurred (onsite) or at a
reasonably accessible location. We recognize that there may be more
records than available storage space at the location where the covered
activities occur. We are therefore proposing that records may be stored
offsite, provided you can comply with the record availability
requirements in Proposed Sec. 1.361.
Proposed Sec. 1.360(f) provides that the maintenance of electronic
records is acceptable. In the Federal Register of March 20, 1997 (62 FR
13430), FDA issued regulations at part 11 that provide criteria for
acceptance by FDA of electronic records under certain circumstances. To
minimize the burden of this Proposed rule, FDA proposes to exempt
electronic records established or maintained to satisfy the
requirements of this subpart from the requirement to comply with part
11. FDA believes that a requirement that records kept under this
subpart comply with part 11 would hinder the ability of persons subject
to these regulations to utilize existing systems and records to satisfy
the requirements of these Proposed regulations as contemplated in
Proposed Sec. 1.330. If the agency decided to require all electronic
records to satisfy part 11 before they could satisfy these Proposed
recordkeeping requirements, large numbers of already existing
electronic records and recordkeeping systems would have to be recreated
and redesigned. This provision would require that records kept for some
other statutory or regulatory purpose, but which also may be used to
meet the requirements of this subpart, must comply with part 11 as
required.
[[Page 25199]]
2. What are the record availability requirements? (Proposed Sec.
1.361)
Proposed Sec. 1.361 states that when FDA has a reasonable belief
that an article of food is adulterated and presents a threat of serious
adverse health consequences or death to humans or animals, any records
or other information accessible to FDA under section 414 or 704(a) of
the act must be readily available for inspection and photocopying or
other means of reproduction. Although the statutory requirements in
section 414 and amended section 704(a) of the act regarding records
access are self-executing and are currently in effect, FDA is issuing
regulations to further refine some aspects of the food records access
requirements. Because section 306 of the Bioterrorism Act includes two
records inspection authorities, one of which, section 704(a), cross
refers to records described in section 414, we request comment on the
interconnection between the records access provisions in sections 414
and 704(a) of the act.
Proposed Sec. 1.361 would require records to be made available
within 4 hours of a request if the request is made between 8 a.m. and 6
p.m. (local standard time), Monday through Friday, or within 8 hours of
a request if made at any other time, by an officer or employee duly
designated by the Secretary who presents appropriate credentials and a
written notice. In the event of a threat of serious adverse health
consequences or death to humans or animals, FDA believes these time
limits are necessary to effectively and efficiently perform a tracing
investigation.
The most common problem encountered by the FDA in a tracing
investigation has been a lack of ready access to records. Records are
often stored offsite or are stored in a database where the records are
difficult to retrieve. In FDA's experience, rarely do firms make
records available within 24 hours. The usual timeline is 2 to 3 days.
This delay severely reduces the speed at which FDA can perform a
traceback. If every firm were to take 2 days to give FDA the needed
records, even with a short traceback (e.g., 3 firms), it could take FDA
up to 2 weeks to trace the product to its source, taking into account
time for record review and travel to the firms. This time may be
increased if the records are incomplete and FDA has to wait for missing
records to be retrieved. This possible delay would be a substantial
concern if FDA were attempting to remove adulterated food that presents
a threat of serious adverse health consequences or death to humans or
animals from commerce.
Proposed Sec. 1.361 would also require that if you store the
records required by these regulations offsite, you must be able to
retrieve and provide the records onsite within the specified time
period. Electronic records are considered to be onsite if they are
accessible from an onsite location.
3. What records are excluded from this subpart? (Proposed Sec. 1.362)
Proposed Sec. 1.362 would exclude from the Proposed regulations
recipes for food as defined in Proposed Sec. 1.328, financial data,
pricing data, personnel data, research data, or sales data (other than
shipment data regarding sales). These exclusions are consistent with
the express language in the Bioterrorism Act.
4. What are the consequences of failing to establish or maintain
records or make them available to FDA? (Proposed Sec. 1.363)
Consistent with the express language in the Bioterrorism Act,
Proposed Sec. 1.363 states (a) the failure to establish or maintain
records as required under section 414(b) of the act or to refuse to
permit access to or verification or copying of any such required record
is a prohibited act under section 301 of the act (21 U.S.C. 331) and
(b) the failure to make records or other information available to FDA
as required by section 414 or 704(a) of the act is a prohibited act
under section 301 of the act (21 U.S.C. 331).
5. What are the compliance dates for this subpart? (Proposed 1.368)
Under sections 414 and 704(a) of the act, FDA may have access to
and copy all records and other information related to an article of
food if the Secretary has a reasonable belief that the food is
adulterated and presents a threat of serious adverse health
consequences or death to humans or animals. The basic requirement that
access to records and other information be given under these
circumstances is currently in effect and does not require implementing
regulations. FDA has chosen to further define access requirements in
regulations, but can use its inspectional authority prior to the
effective date of these regulations.
FDA carefully considered the size of a business when developing
these Proposed regulations. FDA found that most products and
ingredients pass through at least one small business when moving
through the distribution process (see Initial Regulatory Flexibility
Analysis discussion in section III.B. of this document). If FDA were to
exempt small businesses from these regulations or to permit shorter
record retention times for them, the effectiveness of the regulations
would be severely compromised due to the breaks in the recordkeeping
chain during tracing investigations. Thus, FDA cannot propose totally
exempting any business based on size from these requirements. However,
FDA does propose to provide small and very small businesses additional
time to come into compliance with these regulations.
Thus, Proposed Sec. 1.368(a) would require that firms that do not
qualify as small businesses be in full compliance with these
regulations within 6 months after the publishing date of the final
rule. Proposed Sec. 1.368(a)(1) would require that small businesses
employing fewer than 500 but more than 10 full-time equivalent
employees be in full compliance with these regulations within 12 months
after the publishing date of the final rule. Proposed Sec. 1.368(a)(2)
would require that very small businesses, defined as those employing 10
or fewer full-time equivalent employees, be in full compliance with
these regulations within 18 months after the publishing date of the
final rule.
III. Analysis of Economic Impact
A. Benefit-Cost Analysis
FDA has examined the economic implications of this Proposed rule as
required by Executive Order 12866. Executive Order 12866 directs
agencies to assess all costs and benefits of available regulatory
alternatives and, when regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety, and other advantages;
distributive impacts; and equity). Executive Order 12866 classifies a
rule as significant if it meets any one of a number of specified
conditions, including: Having an annual effect on the economy of $100
million, adversely affecting a sector of the economy in a material way,
adversely affecting competition, or adversely affecting jobs. A
regulation is also considered a significant regulatory action if it
raises novel legal or policy issues. FDA has determined that this
Proposed rule is a significant regulatory action as defined by
Executive Order 12866.
Need for the regulations: The purpose of these Proposed regulations
is to enable FDA to respond to, and help contain, adulterated food that
presents a threat of serious adverse health consequences or death to
humans or
[[Page 25200]]
animals. The benefits of these Proposed regulations would be realized
by accomplishing this purpose.
Reason for the regulations: FDA is proposing several regulations
that will work in harmony to improve food safety. Food safety is mostly
a private good. Establishments have powerful incentives to ensure that
the ingredients they purchase are not contaminated and that their
production processes are protected from unintentional and intentional
contamination. Deliberate (intentional) contamination of food linked to
a particular product or plant--particularly if the plant is considered
negligent--would be extraordinarily costly to a firm. Indeed, the
private incentives to avoid deliberate contamination should be similar
to the private incentives for food safety. Deliberate food
contamination events nonetheless differ from ordinary outbreaks of
food-borne illness in that they are more likely to be low probability
events with severe public health consequences.
Although private incentives lead to the private efforts to protect
against deliberate contamination at the plant level, there are external
effects associated with privately produced protection. The most
important external effect of protection against deliberate
contamination is information. Getting food from the farm or sea to the
plate involves a complex system of production and distribution. The
system works using local knowledge and information; each participant
needs to know only as much about the overall system as is necessary for
his or her business. Market prices convey most of the information
necessary for the ordinary production and distribution of food. In the
event of an actual or suspected contamination of the food supply,
however, more complete information is needed where it can be centrally
used. The suspect food must be traced backward and forward through the
distribution chain, both to protect consumers and to find the source
and cause of the event.
No individual firm or organization has sufficient financial
incentive to establish a central information system relating to food
safety for the entire economy. The nation's food producers and
importers as a whole would benefit from such a system because it would
be easier to uncover and solve problems, but the private costs to
create the system would probably be prohibitive for any single firm or
third party organization.
We estimate that an effective system of information would require
several hundred thousand participants to gather information and provide
it to a central system. The private transaction costs to bring all the
participants together voluntarily and get them to agree to create such
a system would be extraordinarily high. No single organization could
capture additional revenue sufficient to cover the cost. Also, because
the provision of information by some participants makes it available
for all, there would be a tendency for establishments to try to be free
riders in the information system. But the more information and
participation in the system, the more effective it is.
Another way of looking at the problem of participation is in terms
of marginal private benefits and marginal social benefits. By gathering
and providing the information used in a food safety system, an
individual establishment receives additional private benefits from
enhancing the safety of its own food. In addition, participating in the
system increases the effectiveness of the entire information system. In
other words, the system works better the more establishments
participate in it. The individual establishment does not capture this
additional social benefit. The marginal private benefit (enhanced
safety for individual establishments) is less than the marginal social
benefit (the marginal private benefit plus the increased effectiveness
of the entire information system). The difference between private and
social benefit reduces the incentive for establishments to participate
in a voluntary private system.
The events of September 11, 2001, led Congress to conclude that
public creation and provision of an information system is necessary.
The Bioterrorism Act and its implementing regulations would establish
an information system that would allow FDA to have an integrated
picture of the food distribution system. This particular regulation
addresses one important aspect of this information system: The need to
keep product and ingredient distribution records. However, as stated
above, FDA is proposing several regulations to address these needs so
the costs and benefits of any one regulation will be closely associated
with related provisions in other Proposed rules. With the regulations
in place, the agency would have the additional tools necessary to help
deter and respond to deliberate threats to the nation's food supply as
well as to other food safety problems.
Baseline: FDA considers the baseline for this analysis the current
state of the world, and we assume this baseline has zero costs and
benefits. We also consider having no new recordkeeping requirements as
option 1 in our analysis. Section 414(b) of the act, as added by
section 306(a) of the Bioterrorism Act, provides that the Secretary
``may'' by regulation establish recordkeeping requirements. Section
306(d) of the Bioterrorism Act, however, provides that the Secretary
``shall'' issue Proposed and final regulations no later than 18 months
from the date of enactment. FDA believes that Congress has directed the
agency to exercise the authority in section 414(b) of the act, so the
current state of the world as considered in option 1 is not legally
viable. The agency recognizes, however, that the use of the term
``may'' in one section of the statute and ``shall'' in another section
creates an ambiguity. We request comments on our interpretation that we
are required by section 306(d) of the Bioterrorism Act to exercise the
authority in section 414(b) of the act. However, the Office of
Management and Budget (OMB) cost-benefit analysis guidelines recommend
discussing statutory requirements that affect the selection of
regulatory approaches. These guidelines also recommend analyzing the
opportunity costs of legal constraints that prevent the selection of
the regulatory action that best satisfies the philosophy and principles
of Executive Order 12866. Option 1 will serve as the baseline against
which other options will be measured for assessing costs and benefits.
Options: The following section analyzes regulatory options that
address the need for the recordkeeping regulation:
1. No recordkeeping requirements. Take no new regulatory action.
2. Require all persons that manufacture, process, pack, hold,
receive, distribute, transport, or import food destined for consumption
or use in the United States to establish and maintain records
identifying the immediate previous source and the immediate subsequent
recipient of the food, and its outer packaging. Also require all
persons that manufacture, process, pack, hold, receive, distribute,
transport, or import outer food packaging destined for use in the
United States to establish and maintain records identifying the
immediate previous source and the immediate subsequent recipient of
that outer food packaging. The records requirements apply to both
foreign and domestic persons. For domestic persons, this includes those
who engage in the specified food-related activity whether or not those
activities occur solely intrastate. Persons engaging in more than one
type of activity, some of which is covered by this Proposed
[[Page 25201]]
regulation, would be required to keep records pertaining to the covered
activity even if they are not required to keep records relating to
exempt activity. Records must include information reasonably available
to identify the specific source of each ingredient that was used to
make every lot of finished product. Required times for record-retention
would be 1 year for perishables destined for final consumption in their
perishable state, and 2 years for all other foods or food packaging.
Upon a written request, records must be made available to FDA in 4
hours, if the request is made during the normal business hours of 8
a.m. to 6 p.m., or 8 hours otherwise.
3. Require all elements of option 2, except exclude persons that
manufacture, process, pack, hold, receive, distribute, transport, or
import outer food packaging.
4. Require all components of option 3 but do not require persons
that are required to establish and maintain records on food to
establish and maintain records on the food's outer packaging.
5. Require all components of option 4, but change the required time
for responding to an FDA records request to 24 hours.
6. Require all components of option 4, but exempt intrastate
businesses.
7. Require all components of option 4, but exempt persons who
operate farms, and persons who operate restaurants, who also perform a
covered activity.
8. Require all components of option 4, but change the record
retention requirement to 1 year for all products.
9. Require all components of option 4, but change the record
retention requirement to 2 years for all products.
10. The Proposed rule. Require all components of option 4, but only
cover foreign facilities also covered by the Proposed registration
regulation published at 68 FR 5377 (February 3, 2003).
11. Require all components of option 4, but only cover foreign
facilities that are the final holder of the product before export to
the United States.
12. Require all components of option 4 but cover only domestic
persons.
13. Require all components of option 4, but the required
information would include the records necessary for facilities to be
able to link specific raw ingredients to specific outgoing finished
products for all raw ingredients and all products. This option is to
analyze the costs and benefits of requiring records that link specific
raw ingredients to specific finished products, including ingredients
from different sources that are currently commingled before being
incorporated into finished products.
In order to clearly identify the marginal cost of each provision
specified in the codified, most options represent only one modification
of a provision in another option. Option 4 is appropriate to use for
comparison with the other options, since it differs by only one
provision from almost all other options considered. As the Analysis of
Economic Impact section will reflect, FDA has examined the economic
implications of this Proposed rule by analyzing several regulatory
options that address the need for the recordkeeping regulation. FDA is
proposing option 10. FDA believes that this option would require
creation and maintenance of the records needed to address credible
threats of serious adverse health consequences or death to humans or
animals while providing adequate flexibility and minimizing industry
burden. FDA requests comments on other viable options not considered by
this analysis. Note that additional options designed to lower the
regulatory burden on small businesses are considered in the initial
regulatory flexibility analysis below.
Cost assumptions: The total cost of each of these options will
depend on the number of facilities affected and the extra burden these
options place on facilities. For all options, FDA would only specify
the information a covered entity must keep, but not specify the form or
type of system in which those records must be maintained; we expect
that for all options, if possible, firms will choose to collect the
additional information not currently included in their existing
records. Furthermore, FDA assumes that firms will choose to comply with
any new requirements by modifying shipping or purchase records such as
Bills of Lading, Invoices, or Purchase Orders. In its cost
computations, FDA does not take into account other Federal, State, or
local regulations that require similar recordkeeping practices for
small sectors of the food economy (e.g., ``the BSE rule'', Sec.
589.2000) because of the relatively large amount of uncertainty in our
knowledge of existing State and local recordkeeping requirements, and
because the effect on the cost computations from their inclusion is
likely to be very small. For this reason the analysis does not
distinguish among entities that may be covered by the recordkeeping
requirements in ``the BSE rule'' which may result in a small
overstatement of the costs of the Proposed rule. The following
discussion of facility counts and per facility costs is not tied to any
specific option, but describes the data and assumptions we use to
analyze the cost of each option.
Number of facilities and number of firms affected: FDA assumes that
for the options that do not consider exemptions, approximately
1,230,000 facilities owned by approximately 960,000 firms would be
covered. This number includes domestic facilities that manufacture,
process, transport, distribute, pack, receive, hold, or import food or
food packaging, and foreign facilities performing any of these
activities on food or food packaging destined for consumption or use in
the United States. Table 1 contains a summary and breakdown of this
estimate.
Table 1.--Affected Facility and Firm Details
------------------------------------------------------------------------
North American
Facility Industry
Type Facility to Firm Firm Classification
Estimate Adjust. Estimate System (NAICS) Codes
Factor if Applicable
------------------------------------------------------------------------
Domestic
------------------------------------------------------------------------
Manufacturers 43,376 1.17 36,948 3111-3119, 3121
------------------------------------------------------------------------
Wholesalers/ 95,745 1.24 76,952 4224, 4225, 4228,
Warehouses 49312, 49313
------------------------------------------------------------------------
Packaging\1\ 73,813 1.07 69,266 32221, 32222,
326111, 326112,
326130, 326140,
326150, 326160,
3272, 331315,
331316, 332431,
332439, 42261,
323110, 323111,
323112, 323113,
323114, 323115
------------------------------------------------------------------------
[[Page 25202]]
Transporters/ 16,773 1.11 15,171 481112, 481212,
Packers 483111, 483113,
483211, 4841,
48422, 48423,
488320, 488510,
488991
------------------------------------------------------------------------
Retail Grocery 207,657 1.35 153,277 44511, 445220,
and Specialty 445230, 44529,
Food 445310, 446191,
------------------------------------------------------------------------
Convenience 128,985 1.87 68,866 44512, 447110
Stores
------------------------------------------------------------------------
Mixed-Type 30,497 1.25 24,397 --
Facilities that
Have Farms
------------------------------------------------------------------------
Importers 5,036-32, 1.25 4,029-26 --
768 ,214
------------------------------------------------------------------------
Total Domestic 601,883-6 ........ 448,905- ....................
29,615 471,090
------------------------------------------------------------------------
Foreign
------------------------------------------------------------------------
Final Holders 77,427 1.25 61,942 ....................
------------------------------------------------------------------------
Manufacturers 125,450 1.17 106,858 ....................
------------------------------------------------------------------------
Other Facility 457,836 1.25 366,269 --
Types
------------------------------------------------------------------------
Total Foreign 660,713 ........ 535,068 ....................
------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
Data sources for the number of facilities and firms affected:
Except for the firm-to-facility adjustments explained below, the unit
of observation for all data used for this analysis is the number of
establishments performing a particular activity. To estimate the number
of establishments, FDA uses several sources: The 2000 County Business
Patterns (Ref. 1) and the 1999 Nonemployer Statistics from the U.S.
Census Bureau (Ref. 2), the FDA Field Accomplishments and Compliance
Tracking System (FACTS), the FDA Operational and Administrative System
for Import Support (OASIS), and the 1997 National Agricultural
Statistics Service (NASS) Survey (Ref. 3). All datasets used in this
analysis were the latest available as of the time of writing.
The Census Bureau creates the 2000 County Business Patterns (CBP)
by analyzing data from the Business Register, the Census Bureau's file
of all known single and multiestablishment companies with at least one
employee. Data for single-location firms are obtained from the Economic
Censuses, the Annual Survey of Manufacturers, Current Business Surveys,
and administrative records from the U.S. Internal Revenue Service,
Social Security Administration, and the Bureau of Labor Statistics.
Facilities not included in the CBP are counted in the Nonemployer
Statistics, also from the Census Bureau. Nonemployer businesses are
companies with no paid employees. The Census Bureau primarily obtains
data about nonemployer businesses from business income tax returns
filed with the Internal Revenue Service.
The FDA FACTS tracking system is an online database designed to
monitor compliance related information for each facility that is
regulated by FDA. The database contains an updated list of regulated
facilities. FACTS and the Census Bureau use different categories for
facilities, making a direct comparison of FACTS with the CBP and
Nonemployer Statistics difficult. In our estimates, FACTS facility
counts are the primary source of data on importers and foreign
facilities, and interstate manufacturers, wholesalers, and warehouses.
Manufacturing, warehouses, wholesalers, and packaging facilities:
The primary source for the total (both intrastate and interstate)
number of manufacturers, warehouses, wholesalers, and packaging
facilities is the 2000 CBP and 1999 Nonemployer Statistics for the
NAICS codes identified in table 1 of this document. The NAICS codes
identify industry groups and subgroups. Often the data are more
aggregated in the 1999 Nonemployer Statistics than in the CBP; when the
nonemployer statistics only exist for an aggregated NAICS code, we
adjust the total number of facilities identified in the aggregated
nonemployer category by the ratio of CBP counts in the relevant
subcategory and aggregated category. For example, the 1999 Nonemployer
Statistics identified 4,700 facilities under code 4931, but does not
break the total down further. Our adjustment changes the 4,700
facilities to 964 [4,700 x (1,461/7,123)] facilities in subcategories
49312 and 49313. The sum of the number of facilities under the codes
49312 and 49313 in the CBP is 1,461, and 7,123 is the number of
facilities under the aggregated code 4931 in the CBP.
The term ``packaging'' described by the data used in this analysis
varies from FDA's interpretation of ``packaging'' in section 306 of the
Bioterrorism Act because it is broader and includes food contact
substances, which fall within the act's definition of food. In this
economic analysis, we use the term ``manufacturer and distributor'' of
outer packaging to refer to all persons who manufacture, process, pack,
hold, receive, distribute, transport, or import ``packaging'' as that
term is used in the Bioterrorism Act. FDA was unable to find any data
that discriminated between outer packaging manufacturers and
distributors and those that manufacture or distribute materials that
FDA currently regulates as food contact substances, including plastic
beverage bottles and inner cereal box liners. The data used for the
analyses include the number of manufacturers and distributors of the
following types of packaging: Paperboard containers, paper
[[Page 25203]]
bags and treated paper, plastic bags, bottles, laminated plastics and
other plastic materials, polystyrene and urethane foam products, glass
products, and metal and aluminum can, sheet, plate, and products.
Furthermore, printing services and label producers are included such as
lithographic, gravure, flexographic, screen, digital, and quick
printing services.
Transporters and packers: Although the CBP and Nonemployer
statistics distinguish passenger and nonpassenger transport, they do
not separately identify establishments engaged in the transport of
food. Based on a comment received through our preliminary outreach
activities, FDA assumes that 20 percent of the specialized freight
transport industry is engaged in food transport. FDA requests comments
on this assumption. The largest category in transport and packing is
trucking.
Mixed-type facilities that engage in farming: Firms engaged in
covered activities would be required to keep records on these
activities as discussed above, even if those firms were mixed-type
facilities that engage in farming. Covered activities conducted on
mixed-type facilities that engage in farming potentially comprise a
large percentage of the activity conducted at these facilities. For
example, manufacturing or processing for farms includes canning,
freezing, cooking, pasteurization, homogenization, irradiation,
milling, grinding, chopping, slicing, cutting, coloring, waxing,
shelling of nuts, peeling, labeling, and packaging. Facilities with
farms will be considered mixed-type facilities if they alter the
general state of the commodity, use any ingredients obtained from
another source, and then sell or transfer the product for final use
offsite.
To estimate the number of mixed-type facilities that engage in
farming that would be affected by this rule, FDA uses the 1997 USDA
NASS Census of Agriculture and data obtained from various county level
Cooperative Extension Service (CES) offices. The Census of Agriculture
provides the total number of farms producing specific commodities. To
estimate the number of farms that are part of mixed-type facilities,
FDA used a sample of counties with information from their respective
CES offices. CES offices from Clay County, Kansas; Monterey, Sonoma,
Marin, and San Diego counties in California; Jackson County, Wisconsin;
Gillespie and San Saba counties in Texas; Carol County, Maryland; and
Berks County, Pennsylvania provide data on the percentage of farms
producing specific commodities that could be considered mixed-type
facilities (Ref. 4). Table 2 presents the estimated number of mixed-
type facilities that engage in farming by type of farm. While some of
the facilities described in table 2 may qualify as roadside stands for
some of the products that are sold from these facilities (and would not
be subject to recordkeeping requirements for those products), we were
not able to distinguish between facilities that would qualify as
roadside stands and mixed-type facilities that engage in farming. The
numbers of mixed-type facilities that engage in farming listed in table
2 may be overstated to the extent that they qualify as roadside stands.
The estimated total is 30,497. FDA requests comments on the methods
used to estimate the numbers of mixed-type facilities that engage in
farming and for identifying the number roadside stand facilities.
Table 2.--Mixed-Type Facilities that Engage in Farming
------------------------------------------------------------------------
Percent No. of Mixed-Type
Commodity Total No. of Mixed- Facilities that
Farms Type Engage in Farming
------------------------------------------------------------------------
Pig Farms (Feed Mixing) 46,353 1.5% 695
------------------------------------------------------------------------
Cattle (Feed Mixing) 785,672 1% 7,857
------------------------------------------------------------------------
Poultry (Feed Mixing) 36,944 1% 369
------------------------------------------------------------------------
Other Animal Production 110,580 1% 1,106
(Feed Mixing)
------------------------------------------------------------------------
Dairy 86,022 1.1% 903
------------------------------------------------------------------------
Grain, Rice, and Beans 462,877 1% 4,629
------------------------------------------------------------------------
Apples 10,872 1.5% 163
------------------------------------------------------------------------
Oranges 9,321 1.5% 140
------------------------------------------------------------------------
Peaches 14,459 1.5% 217
------------------------------------------------------------------------
Cherries 8,423 1.5% 126
------------------------------------------------------------------------
Pears 8,062 1.5% 121
------------------------------------------------------------------------
Other Fruit 29,413 1.5% 441
------------------------------------------------------------------------
Nuts 14,500 2% 290
------------------------------------------------------------------------
Berries 6,807 1.5% 102
------------------------------------------------------------------------
Grapes 11,043 10.5% 1,160
------------------------------------------------------------------------
Olives 1,363 3.5% 48
------------------------------------------------------------------------
Vegetables and Melons 31,030 0.5% 155
------------------------------------------------------------------------
Organic vegetables 6,206 50% 3,103
------------------------------------------------------------------------
[[Page 25204]]
Honey 7,688 50% 3,844
------------------------------------------------------------------------
Syrup 4,850 100% 4,850
------------------------------------------------------------------------
Herbs 1,776 10% 178
------------------------------------------------------------------------
Total 30,497
------------------------------------------------------------------------
Importers: FDA bases the number of importers on a database
collected from shipment records that list all companies that were
listed as importers or consignees for a covered product in 2001. These
data were collected through FDA's OASIS system, which is an automated
system for processing and making admissibility determinations for
shipments of FDA-regulated products seeking to enter U.S. domestic
commerce. Many of these facilities are of a type that would already be
counted in the FDA FACTS or CBP (or nonemployer statistics) data. In
order to avoid double counting, FDA assumes the following: (1) Any
facility that identifies itself through its name as being a facility
type covered by the CBP will already be counted in the CBP; (2) any
facility that is a consignee only will already be counted in the CBP
since its main business is not simply importing; (3) any facility self-
identified as an importer only is not in the CBP; and (4) all other
facilities will be considered in an uncertain range of facilities
affected. Since it is uncertain whether these facilities would already
be counted in the CBP, we will use a uniform distribution to assign a
probability of double counting in all of our cost estimates. For
example, if the uniform distribution generates a probability of 0.5,
then we will assume that half of these unclassified facilities are
already in the CBP. A uniform distribution implies that any probability
from zero to 100 is equally likely. FDA requests comments on these
assumptions.
Foreign establishments: FDA estimated the number of foreign
manufacturing establishments that will be affected by the regulation
from a count of foreign manufacturers identified in the OASIS system.
We were unable to find reliable data on the number of foreign
nonmanufacturing establishments and made the following assumptions to
estimate their numbers: For the final holders of the article before the
food or food packaging is imported into the United States, we assumed
the same number of facilities as on the domestic side of the
importation process, for a total of approximately 77,000 foreign final
holders. For other firm types, we assumed that the ratio of foreign to
domestic facilities of other types is approximately equal to the ratio
of foreign to domestic manufacturers. We also assumed that the facility
to firm ratio is the same for both foreign and domestic establishments.
We request comments on the assumptions used to arrive at these
estimates, as well as on reliable sources of data that would improve
these estimates.
Firm adjustment: Even though recordkeeping requirements apply to
each facility within a firm, some of the overall burden will be
estimated at a firm level in order to better capture the true burden of
the regulation. In order to estimate the number of firms affected, we
used the 1999 Statistics of U.S. Businesses, also from the U.S. Census
Bureau (Ref. 5). This dataset is based on the CBP and Nonemployer
Statistics, but calculates both the number of establishments and the
number of firms for each NAICS code. The Census Bureau has not updated
this dataset for the latest 2000 CBP, so we use the 1999 ratio of
establishments to firms to adjust the 2000 CBP and 1999 nonemployer
establishment count numbers to firm numbers.
Costs per facility or per firm: Some costs of the regulatory
options apply to firms, while other costs apply to individual
facilities. FDA assumes that the costs to facilities are the same for
transfers within firms as for transfers between firms. We request
comments on this assumption. Costs fall into several broad categories:
Additional record information: Any possible new regulation may
require more information on the input, output, or source ingredients
than is kept in existing food facility records. A limited amount of new
information could be accommodated by a simple redesign of existing
records, whereas requiring more new information may require a
completely new design and collection. The extreme version of this
requirement is explored under option 13: requiring all raw ingredients
to be connected through records to all final products would cause a
substantial change in recordkeeping and other business practices for
many commingled commodities.
Information Collection and Maintenance: The burden of maintaining
extra information is a direct function of the amount of information
required by this Proposed regulation that is not normally collected by
industry. This burden estimate will be substantially correlated with
the redesign burden described previously.
Storage time: A longer storage time may place more of a burden on
industry, but will also increase the probability of having records
available should an outbreak occur. The major determinant of the impact
on costs of storage time requirements is whether the Proposed storage
times will be longer than normal industry practices. FDA believes that
the storage times Proposed in option 2 are within normal industry
practices. Requiring longer retention times than those Proposed in
option 2 for records on perishable foods might impose an additional
burden. This issue is discussed in more detail below and in options 2,
8, and 9.
Records access time: As in storage time, the major determinant of
the impact of any required response time for records access is what
firms would reasonably be able to achieve in an emergency situation
with current business practices.
Data sources and cost estimates common to options:
Labor costs: For all labor costs, FDA used a wage rate for an
administrative worker of $25.10 from the Bureau of Labor Statistics
occupational wage rates for the year 2000 (Ref. 6), doubled to include
overhead costs. We assume that all labor for all options is by
administrative workers. FDA lacks wage data specific to each of the
foreign countries that export to the United States, so we used the wage
rate for an administrative worker in the United States for the foreign
wage rate. We
[[Page 25205]]
assume that the nature of the worker and the worker's wage would be
about the same in foreign countries as in the United States. In open
markets where trade takes place, real wage rates tend to be equal for
similar work and productivity across countries.
Learning costs: Foreign and domestic facilities will incur
administrative costs in order to learn how to comply with any new
regulation. Because most of the facilities covered by the Proposed
registration rule would be covered by this Proposed rule, the
administrative costs will be shared between the registration and
recordkeeping rules. Those establishments covered by both regulations
will probably search for information on both regulations at the same
time and find information in the same places. Therefore, the learning
cost estimates presented here probably overestimate the costs actually
incurred by firms covered by both rules since there is the potential
for double counting. The potential for double counting occurs in
estimates of costs for firms covered by both rules. These include
domestic manufacturers, wholesalers, warehouses, mixed-type facilities
that engage in farming, foreign final holders, foreign manufacturers,
and importers in any of these categories.
Facilities will become aware of these requirements through normal
business activities: Reading trade press, reading industry news, FDA
outreach, or conversation with other business operators. Because
facility operators or owners must be aware of the requirement to change
their activity, we assume that becoming aware of the regulations will
occur as part of normal business practice and so have no economic costs
for the facility. There may be costs incurred, however, by FDA or trade
organizations to undertake the outreach.
Once the owner or operator of the facility becomes aware of the
regulations, he or she will need to research the requirements of the
regulation, which will require searching for a copy of the requirements
and reading and understanding them. Owners or operators may search for
a copy of these requirements on the Internet or at a library. FDA
received comments indicating that many businesses might not have access
to the Internet. Searching costs will be higher for facilities that do
not have access to the Internet and have to write to FDA or find other
sources of information. In the United States, 59.1 percent of the
population accessed the Internet at least once in the 3 months prior to
being surveyed (Ref. 7). A Small Business Administration (SBA) report
cites two studies that report 40 and 47 percent of small businesses had
Internet access in 1998 (Ref. 8). An updated report from Dunn and
Bradstreet in 2002 reports that 71 percent of small businesses have
Internet access (Ref. 9). Therefore, FDA assumes that 71 percent of
domestic facilities will search for the requirements for both
regulations electronically. FDA estimates it will take domestic
facilities with Internet access 1 hour to search for the requirements,
and domestic facilities without Internet access 2 hours to search for
the requirements. FDA requests comments on these assumptions.
FDA expects foreign establishments to go through the same
searching, reading, and comprehending steps as domestic establishments.
Costs for searching, reading, and comprehending the regulation
requirements will be higher for some foreign establishments than for
domestic establishments due to distance and language differences. Costs
for searching, reading, and comprehending for some foreign
establishments may be so high that, rather than become informed about
the requirements before shipping, they learn about the requirements
after shipments to the United States have been made. Costs for
searching, reading, and comprehending for foreign facilities will vary
depending on: (1) Whether the worker researching the regulatory
requirements or the person who manufactures, processes, packs,
transports, distributes, receives, holds, or imports food or food
packaging can read and write in English; and (2) the level of Internet
access available in exporting countries.
The percent of foreign facilities with Internet access will be
lower than in the United States. Although 71 percent of the small
businesses in the United States have Internet access, only 3 percent of
the population of China, the country that has the largest number of
manufacturers that export to the United States, has access to the
Internet (Ref. 7). To get an idea of how many facilities that export to
the United States have access to the Internet, FDA looked at Internet
access for the 26 countries that represent 80 percent of the
manufacturers that export to the United States (OASIS) and the percent
of the population that has access to the Internet worldwide for the
remaining 20 percent. A weighted average of these 26 countries by the
number of manufacturers suggests that 26 percent of the population that
exports to the United States has Internet access. Because businesses
are more likely to have Internet access than individuals, FDA adjusts
the percent of the populations of other countries with Internet access
upward by the percent difference in Internet access between individuals
and small businesses in the United States. Seventy one percent of small
businesses in the United States have Internet access versus 59 percent
of the population, or the percent of businesses with Internet access
represents a 20 percent increase over the population. Applying this
adjustment to Internet access in foreign countries increases the
percent of businesses with Internet access from 26 percent to 31
percent. FDA therefore assumes that 31 percent of foreign manufacturers
would be able to research the new requirements electronically.
Regardless of whether the cost of obtaining Internet access is borne by
the facility, or by a third party, for ease of computation FDA
estimates the cost per facility. FDA expects that, due to the overall
lower level of Internet access in foreign countries, it will be more
difficult for foreign facilities without Internet access at their place
of business than it will be for domestic facilities to access the
Internet elsewhere. FDA assumes it would take foreign facility
operators that do not have access to the Internet 5 additional hours to
search for the recordkeeping requirements. FDA requests comments on
these assumptions.
In addition to search costs, there are costs for reading and
comprehending the regulation requirements. Reading costs depend on the
length of the document that describes the requirements and the reading
speed of the user. Costs for comprehending the regulation requirements
are linked to the reading speed of the user. For purposes of simplicity
FDA assumes that, on average, the user comprehends the requirements
described in the regulation after one reading. FDA requests comments on
this assumption.
The online speed-reading training course, TurboRead Speed Reading
(Ref. 10), estimates that the average reading speeds for the vast
majority of the worlds' readers is between 200 and 250 words per
minute. Dividing the approximate length of the current proposal
(approximately 44,450 words) by an average speed of 225 words per
minute yields an estimate of the time required to read the regulation
of about 3 hours and 18 minutes. Because the length of the document may
change and the approximate nature of the calculation, FDA rounds up to
the nearest half-hour to 3 1/2 hours for the time required for reading
and comprehending the requirements of this rule for all English reading
users. FDA requests comments on this assumption.
[[Page 25206]]
Users who have limited ability to read English may take longer to
read and comprehend the requirements. Comments suggest that many
foreign manufacturers are limited in their ability to read and write
English. Estimates of the number of people outside of countries where
English is the primary language who are able to speak English fluently
vary widely, ranging from 300 million to 750 million (Ref. 11). To
estimate the number of English speakers outside of the United States,
FDA adds the number of English speakers in countries where English is
the primary language, excluding the United States (151 million), the
number of English speakers in countries where English is a secondary
language (300 million), and the midpoint (525 million) of the range of
the estimate of the number of speakers of English as a foreign
language. FDA then divides this total number of English speakers by 5.9
billion--the world population minus the U.S. population (Ref. 11) to
tentatively conclude that 16 percent of foreign manufacturers read and
write English well enough to research the recordkeeping requirement
directly. FDA requests comments on this calculation. Facilities without
the capacity to read and write English would have to hire a translator
to aid them in comprehending the regulatory requirements.
Alternatively, trade groups, distributors, or the government may
provide translation services. Regardless of whether the translation is
paid for directly by the registrant or a third party, for ease of
computation we assume there is a cost for translation for 84 percent of
foreign facilities. FDA assumes it would take foreign facility
operators who do not understand English 5 additional hours to read and
comprehend the recordkeeping requirements. FDA requests comments on
these assumptions.
Table 3 summarizes these cost estimates, which do not differ across
any of the options that do not grant exemptions. These include costs
for searching, reading, and comprehending the requirements of the rule
for English and non-English speaking users, and for users with and
without Internet access.
Table 3.--Learning Costs
----------------------------------------------------------------------------------------------------------------
Average
Firm Count Cost (at labor Learning Costs
rate of $25.10) per Firm
----------------------------------------------------------------------------------------------------------------
Domestic
----------------------------------------------------------------------------------------------------------------
Manufacturers 43,376 $5,215,000 $120
----------------------------------------------------------------------------------------------------------------
Wholesalers/Warehouses 95,745 $11,511,000 $120
----------------------------------------------------------------------------------------------------------------
Packaging\1\ 73,813 $8,875,000 $120
----------------------------------------------------------------------------------------------------------------
Transporter/Packer 16,773 $2,017,000 $120
----------------------------------------------------------------------------------------------------------------
Retail Grocery and Specialty Food 207,657 $24,966,000 $120
----------------------------------------------------------------------------------------------------------------
Convenience Stores 128,985 $15,508,000 $120
----------------------------------------------------------------------------------------------------------------
Mixed-Type Facilities that Engage in Farming 30,497 $3,667,000 $120
----------------------------------------------------------------------------------------------------------------
Importer 5,036 $605,000 $120
----------------------------------------------------------------------------------------------------------------
Total Domestic 601,883 $72,364,000 $120
----------------------------------------------------------------------------------------------------------------
Foreign
----------------------------------------------------------------------------------------------------------------
Final Holders 77,427 $23,613,000 $305
----------------------------------------------------------------------------------------------------------------
Manufacturers 125,450 $38,258,000 $305
----------------------------------------------------------------------------------------------------------------
Other Facility Types 457,836 $139,624,000 $305
----------------------------------------------------------------------------------------------------------------
Total Foreign 660,713 $201,495,000 $305
----------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging material and food contact substances.
New and closing facilities: In future years new businesses will
open and existing businesses will close. Since the total number of
firms in the food industry remains stable from year to year, we assume
that the rate at which new firms enter the industry is the same as the
rate at which existing firms leave the industry. The Small Business
Administration estimates that in 2000 approximately 10 percent of all
businesses were new businesses and 10 percent of all businesses closed
(Ref. 31). FDA estimates that new businesses will also have to incur
learning costs.
New information collection costs: These costs include the burden of
redesigning records to accommodate new information specified in
possible options, and the burden of collecting and maintaining that new
information within the recordkeeping system.
Records redesign: In order to estimate the cost of adding
additional information to a firm's records, we used the Label Cost
Model developed for FDA by RTI International (Ref. 13). We modified
this model to estimate the graphic design and printing cost for adding
information onto existing records such as Bills of Lading, Invoices,
and Purchase Orders. We also used the model to estimate the cost of
designing an entirely new input-to-output ingredient record for part of
option 13.
Based on a sample of bills of lading collected through FDA's early
outreach efforts and through the Web sites of companies and trade
associations, FDA assumes that firms already collect most
[[Page 25207]]
of the information necessary to comply with options 2-12. Bills of
lading, purchase orders, or invoices typically have the full address of
all parties, the transaction date, and descriptions of the relevant
food articles. Based on the samples, FDA assumes that firms will have
to add a limited amount of new information to their standard documents.
This new information principally depends on how the precise definition
of ``description of the food article'' developed in these regulations
differs from that commonly used by industry under its current
recordkeeping practices. In some of the sample bills of lading the
description of the food article being transported did not have the
precision required under these Proposed regulations. In addition, some
bills of lading did not have a design that would allow for the
identification of other entities in custody, or control of the
transported food articles, or an official spot to record the mode of
transportation.
The FDA Labeling Cost Model was designed to estimate the costs of
designing and printing new food labels, but many of the design issues
should be similar when designing and printing a new food product
record. For example, both a label and a document designer must make
similar decisions regarding wording and spacing, and both activities
should include administrative activity, graphic design, and printing.
The model also includes cost categories, such as analytical testing and
focus groups that we do not use, since they are not relevant for
document redesign. FDA does acknowledge that these estimates are only
approximations; we believe the values this model generates are
reasonable, and request comments on all assumptions. For the purposes
of the analysis of options 2-12, FDA assumes a limited information,
one-color redesign of a paper document. For the purposes of option 13,
FDA assumes an additional full design of a new paper document.
The model also includes an estimate of central tendency, and a low
and a high estimate for each cost category included in the document
redesign cost. For each component of cost in this model, FDA's
contractor, RTI International, received a range of estimates from food
companies. The lowest of these estimates is considered the limit of the
low range, and the highest of the estimates is considered the limit of
the high range. The low and high range of total cost is calculated by
adding together all of the low and high range estimates of each
component cost, so the low and high range estimates of this model are
unlikely. The estimated cost of a limited information redesign in year
1 is $1,309, with an uncertainty range of between $897 and $2,299. The
estimated cost of a full information redesign in year 1 is $6,193, with
an uncertainty range of between $4,653 and $11,198. The label cost
model estimates an approximately 10 percent efficiency savings in
redesign costs incurred by very small firms in year 2.
The cost of redesigning product records will not be borne by all
firms. For each step in the chain of custody, copies of the same bills
of lading or invoices probably will be used for records of the
immediate previous source, records of the immediate subsequent
recipient, and transportation records. Consider the following example
of a long chain of custody for a food product: (1) Farmer, (2)
transporter, (3) bulk collection (e.g. grain silo), (4) transporter,
(5) processor, (6) transporter, (7) warehouse, (8) transporter, and (9)
retailer. The number of entities in this series is clearly limited by
the total number of transporters in the country, so FDA assumes that
all transporting firms have to redesign their records. This supply
chain should generate four sets of bills of lading and four sets of
invoices for all products. Similarly, a six-step supply chain should
generate three separate sets of records. Since farmers are exempt under
this Proposed regulation, the number of records possibly containing new
information is roughly equal to the number of facilities in the supply
chain, but FDA assumes a substantial number of nontransporters will
depend on storing only the redesigned bill of lading to comply with the
regulation. Assuming an equal probability of a firm using the bill of
lading or redesigning its own documents, FDA assumes that half of the
nontransporting firms will incur redesign costs.
We modify this estimate for convenience stores. Individual
convenience stores have a small sales volume and--according to a
comment received during FDA's early outreach efforts--only 11.4 percent
of their average total sales are for food products. In addition, the
majority of convenience stores are locally owned franchises of large
corporations, and these stores may have access to the parent
corporation to assist in redesign. FDA therefore assumes that 90
percent of convenience stores will rely on other parties for records
redesign. The total costs for other firm types may also be an
overestimate; FDA expects that trade groups may assist in the needed
redesign of existing records, further lowering the burden, but we do
not estimate the cost savings for this activity.
In addition, we make a further adjustment for foreign facilities:
According to comments received, firms exporting from the European Union
(EU) are already subject to similar recordkeeping requirements under EU
regulation 178/2002. Article 18: Traceability of the EU regulation
states: * * *
(1) The traceability of food, feed, food-producing animals, and any
other substance intended to be, or expected to be, incorporated into a
food or feed shall be established at all stages of production,
processing and distribution.
(2) Food and feed business operators shall be able to identify any
person from whom they have been supplied with a food, a feed, a food-
producing animal, or any substance intended to be, or expected to be,
incorporated into a food or feed. To this end, such operators shall
have in place systems and procedures, which allow for this information
to be made available to the competent authorities on demand.
(3) Food and feed business operators shall have in place systems
and procedures to identify the other businesses to which their products
have been supplied. This information shall be made available to the
competent authorities on demand * * *.
(Ref. 14).
Because of these regulations, FDA assumes that the firms from EU
member states (31.9 percent of all foreign firms that export to the
United States) will already be subject to recordkeeping requirements
similar to the requirements of this Proposed rule. Therefore these
foreign firms would not have to redesign their records and would not
incur a redesign burden.
Additional records maintenance: FDA expects that personnel at most
facilities will incur a burden in order to collect and maintain a
limited amount of additional information. However, as in the redesign
section previously discussed in this document, FDA assumes that one set
of records can serve as source, transportation, and recipient records,
so the estimated burden of collecting and maintaining the additional
information will be shared among more than one facility.
FDA does not have a direct estimate of this recordkeeping burden;
we rely on a previous analysis of Juice Hazard Analysis and Critical
Control Point (HACCP) recordkeeping (Ref. 15) because that analysis
also dealt with the costs of additional recordkeeping. In that analysis
an estimate of 3 minutes per hour is made of the burden that would be
incurred by some food
[[Page 25208]]
processing facilities for the additional monitoring of critical control
points and keeping HACCP system records that would be required. In this
Proposed rule the additional monitoring activities required would be
negligible since records will likely only need to be modified.
Furthermore, compared to the Juice HACCP requirements, there would be
less additional information that would need to be maintained in this
Proposed rule. If the weekly burden for additional monitoring and
recordkeeping required for Juice HACCP compliance is 120 minutes
(assuming 3 minutes per hour of additional monitoring and recordkeeping
for 8 hours a day and 5 days a week) a burden estimate of about 6
minutes per day or 30 minutes per week seems reasonable for this
Proposed rule. We request comments on this assumption. FDA treats
foreign facilities already subject to a similar recordkeeping
regulation as already in compliance, and assumes that the burden of
additional records maintenance will be shared among an average of two
covered entities, including transporters, for an average of 15 minutes
per week per facility or 13 hours per year per facility.
Grocery stores, convenience stores, and packaging producers and
distributors may have different additional records maintenance burdens.
Since, under the Proposed rule, grocery stores only have to maintain
immediate previous source records, their additional burden may be lower
but they also receive many shipment records they would need to
maintain. In a comment FDA received during our early outreach efforts,
a large retail grocery chain estimated that they received approximately
300 purchase orders per store per year, or approximately 6 purchase
orders per week per store. A purchase order could contain many invoices
and may be more of a burden to maintain, so FDA considers the estimated
additional burden of 15 minutes per week reasonable for grocery stores.
We request comments on the assumptions used to derive this estimate.
Convenience stores have a lower records maintenance burden than
grocery stores. According to comments received during our early
outreach efforts, approximately 50-70 percent of grocery store stock
keeping units (SKUs) are food products, while only 11.4 percent of the
sales of convenience stores are from food products. SKUs and sales are
not equivalent measures of size, but this comparison is a reasonable
basis to lower the estimated additional burden for convenience stores
relative to grocery stores. Dividing the grocery store burden by the
ratio of the percent of food sales for convenience stores and grocery
stores (assumed to be 60 percent, or an average between 50 percent and
70 percent of SKU totals) yields an additional records maintenance
burden of approximately 2.5 hours per year for convenience stores. We
request comments on the assumptions used to derive this estimate.
Finally, the data sources do not distinguish between facilities
that produce packaging for food and packaging for other products.
Although we assume that all packaging facilities potentially could be
producing or handling food packaging, not all of their output would be
dedicated in this way. We assume that, for the average packaging
facility, 50 percent of the output is for food packaging and that an
information collection burden of 50 percent would be required of
packaging facilities. We request comments on this assumption.
Storage costs: Although FDA does not believe the marginal burden of
storing records to the specified times in any of the options is zero,
evidence on record storage times suggests that the burden would be
minimal. Since FDA was unable to gather any evidence suggesting the
size of this extra burden, however small, and since the specified
storage time requirement in these options is well within industry
norms, we estimate the cost for extra storage time to be zero.
Many comments received in response to FDA's early outreach
supported requirements of either 1 year for perishable products or 2
years for nonperishable products, stating that the maximum allowable 2-
year requirement was both reasonable and necessary. In addition, a
survey of dietary supplement manufacturing practices conducted by FDA's
contractor, RTI International, asked a representative sample of dietary
supplement manufacturers how long they kept records of shipped
ingredients (Ref. 16). The facilities had a choice of two response
types: Keeping records a certain amount of time past the date of
expiration, and keeping records a certain amount of time past the
manufacturing date. The survey did not distinguish between perishable
and nonperishable ingredients. Because of nonresponse weighting,
stratification, and deductive disclosure problems, FDA's contractor,
RTI International, did not report confidence intervals for these
estimates, but the mean number of years that firms kept data records
was 2.31 years for facilities that reported retention from the date of
the expiration of the ingredient, and 4.57 years for facilities that
reported retention from the date of product manufacture. The lowest
mean response from any facility category was 1.94 years from the
expiration date of the ingredient, which is still probably more than 2
years from the delivery date.
Access costs: For purposes of evaluating the marginal cost of the
record access time provision, FDA considered two possible requirements:
The combination of 4 hours during normal business hours and 8 hours at
other times, or 1-day regardless of when the request was made.
Accessing records in a shorter time period than what industry is
currently capable of will impose a burden on firms and facilities, and
the shorter the required response time the larger the burden. The cost
of records access response fall into two categories: Costs that would
be incurred only in the event that FDA requests records under this
authority, and costs that would be incurred to plan for records access
and to change business practices to allow for a rapid response. The
latter costs would be incurred regardless of whether or not FDA ever
requested records under this authority.
For the first cost, FDA expects that in the event of a records
request under this authority, any access requirements less than the
current average access time of 2-3 days would impose a burden on
businesses involved in providing those records. All other things equal,
a 4-hour or 8-hour requirement would probably impose a greater burden
than the 1-day requirement. However, we cannot quantify the probability
of this burden for the same reason as the lack of quantification in the
benefits section: It is impossible to predict when FDA will have to
invoke this authority in response to an adulterated food that presents
a threat of serious adverse health consequences or death to humans or
animals.
For the second cost, FDA assumes that a 1-day records access time
requirement is approximately the shortest possible response time that
would not compel some firms to change their business practices. The
costs for a 1-day records access requirement are considered in option
5. We assume that the 4-hour or 8-hour response time required in all
options except option 5 is more likely to compel business practice
changes and preemptive emergency planning than is the 1-day response
requirement. A 1-day response time is possible with the types of
recordkeeping systems currently in use, including automated
recordkeeping technology, and offsite storage and paper retrieval.
While the average access
[[Page 25209]]
time for FDA traceback investigations is 2-3 days, we believe the same
information could be provided in one day with the types of
recordkeeping systems currently in use. Therefore, the difference
between the cost of a 2-3 day response time and a 1-day response time
is assumed to be negligible. However, the shorter access time
requirements of 4 hours or 8 hours would likely impose a new burden on
a number of firms.
FDA assumes that regardless of whether or not the firms maintain
records electronically, every firm would probably have to devise a
predetermined compliance strategy to deal with the situation where FDA
requested records under this authority. Furthermore, a comprehensive
response plan may allow firms to maintain their current business
practices, such as maintaining paper records or maintaining records
offsite, and still comply with a request, so it may be the lowest cost
solution. Therefore, as a first estimate of the potential impact of
this Proposed rule, FDA assumes a burden for each firm of devising a
response plan that could accommodate a 4-hour or 8-hour access time for
an FDA record request. Since European firms are required to supply
their tracing records on demand to the appropriate authorities, FDA
assumes that they already have in place a plan that would accommodate a
4-hour or 8-hours records required response time. (Ref. 14).
In the analysis of previous regulations, we estimated a related
planning cost for food firms. In the juice HACCP rule, (Ref. 15), we
estimated a 60-hour labor burden per firm of developing a HACCP plan.
Developing a HACCP plan is very complicated and includes the
establishment of: (1) Critical control points and critical limits for
every hazard identified, (2) protocols on how to manage deviations from
these limits, and (3) procedures for verifying and validating all
aspects of the plan. By contrast, developing a records access plan
requires: (1) Evaluating current recordkeeping practices including
records maintenances and records storage practices, which we assume
would take on average about 3 hours; and (2) identifying and planning
for any changes in recordkeeping practices that would be required,
which we assume would also take on average about 3 hours. FDA considers
the planning needed to deal with a possible records request under this
authority much less complicated than what would be needed in a HACCP
plan. If developing a HACCP plan takes 60 hours, then 6 hours of
administrative labor per firm (lowered to 3 hours per convenience store
firm) is a reasonable estimate of the burden imposed from this planning
requirement, which is far more simple than a HACCP plan. We request
comments on this assumption. FDA estimates that new businesses will
also have to incur records access costs.
FDA requests comments regarding how many firms may need to adopt a
new records retention strategy under both the 4-hour or 8-hour, and 1-
day records access time requirements, and the additional time and
capital needed to comply with these requirements. We plan to conduct
further research on all of these burden estimates before publishing the
final rule, and expect that the estimates could change.
Option 2: Comprehensive foreign and domestic coverage with 4-hour and
8-hour records access times and 1 and 2 year records retention times.
FDA assumes that facilities currently collect and keep records with
most of the information required by this option in their normal
business activities. FDA assumes that learning and redesign costs will
be incurred per firm, and that the additional records maintenance costs
will be incurred per facility. For all options the learning costs are
explained in the general cost section above.
Redesign Costs, option 2. Table 4 of this document presents the
average redesign cost calculations. For the purposes of presentation,
Table 4 only includes calculations for the mean number of exclusive
importers affected. FDA assumes that large and small firms incur all
redesign costs in the first year following the final rule, while very
small firms will incur all redesign costs in the second year following
the final rule. The label cost model estimated planning efficiencies of
10 percent for redesign processes further than 1 year in the future,
and this savings is included in the categorical totals in table 4.
Table 4.--Redesign Costs, Option 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Average Middle
Firm Count Middle Estimate Low Estimate High Estimate Cost per Firm
--------------------------------------------------------------------------------------------------------------------------------------------------------
Domestic
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturers 18,474 $22,488,000 $15,402,000 $39,497,000 $1,217
--------------------------------------------------------------------------------------------------------------------------------------------------------
Wholesalers/Warehouses 38,476 $46,601,000 $31,916,000 $81,845,000 $1,211
--------------------------------------------------------------------------------------------------------------------------------------------------------
Packaging\1\ 34,633 $42,092,000 $28,827,000 $73,926,000 $1,215
--------------------------------------------------------------------------------------------------------------------------------------------------------
Transporters/Packers 15,171 $18,243,000 $12,494,000 $32,040,000 $1,203
--------------------------------------------------------------------------------------------------------------------------------------------------------
Retail Grocery and Specialty Food 76,639 $92,308,000 $63,220,000 $162,122,000 $1,204
--------------------------------------------------------------------------------------------------------------------------------------------------------
Convenience Stores 6,887 $8,415,000 $5,763,000 $14,779,000 $1,222
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mixed-Type Facilities that Engage in Farming 12,199 $14,786,000 $10,127,000 $25,969,000 $1,212
--------------------------------------------------------------------------------------------------------------------------------------------------------
Importers 7,561 $9,165,000 $6,277,000 $16,096,000 $1,212
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Domestic 210,038 $254,098,000 $174,026,000 $446,274,000 $1,210
--------------------------------------------------------------------------------------------------------------------------------------------------------
Foreign
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Holders 21,091 $25,565,000 $17,509,000 $44,900,000 $1,212
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manufacturers 36,385 $44,103,000 $30,205,000 $77,459,000 $1,212
--------------------------------------------------------------------------------------------------------------------------------------------------------
[[Page 25210]]
Other Facility Types 124,714 $151,170,000 $103,532,000 $265,500,000 $1,212
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total Foreign 182,191 $220,838,000 $151,246,000 $387,859,000 $1,212
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
Additional records maintenance: Table 5 of this document presents
the calculations for additional records maintenance costs. Based on the
previous discussion, the annual burden per facility that is assumed in
the computation of the cost of additional records maintenance is: 13
hours for most facilities, 2.5 hours for convenience stores, and 6.5
hours for packaging facilities. A $25.10 hourly wage is also assumed in
the computation. For example, the additional records maintenance costs
for manufacturers reported in the top row of Table 5 is calculated by
multiplying the number of facilities (43,376) by the number of hours
required (13) and the hourly wage ($25.10).
In Table 5, variation in the number of importers reflects the range
of uncertainty in the data on the number of these facilities.
Additional records maintenance costs are assumed to be incurred by
facility. The estimated average cost per firm for additional records
maintenance is also reported in table 5 and is computed using the
facilities-to-firm adjustment factor reported in table 1. FDA assumes
that facilities will begin to incur the additional records maintenance
burden in the second year following the enactment of the final rule.
There is considerable nonquantified uncertainty surrounding these
estimates; FDA requests comments.
Table 5.--Additional Records Maintenance Costs, Option 2
----------------------------------------------------------------------------------------------------------------
Average Cost
Facility Count Cost per Firm
----------------------------------------------------------------------------------------------------------------
Manufacturers 43,376 $14,154,000 $383
----------------------------------------------------------------------------------------------------------------
Wholesalers/Warehouses 95,745 $31,242,000 $406
----------------------------------------------------------------------------------------------------------------
Packaging\1\ 73,813 $12,043,000 $174
----------------------------------------------------------------------------------------------------------------
Transporters/Packers 16,773 $5,473,000 $361
----------------------------------------------------------------------------------------------------------------
Retail Grocery and Specialty Food 207,657 $67,759,000 $442
----------------------------------------------------------------------------------------------------------------
Convenience Stores 128,985 $8,094,000 $118
----------------------------------------------------------------------------------------------------------------
Mixed-Type Facilities that Engage in Farming 30,497 $9,951,000 $408
----------------------------------------------------------------------------------------------------------------
Importers 5,036 $1,643,000 $408
----------------------------------------------------------------------------------------------------------------
Total Domestic 601,883 $150,359,000 $335
----------------------------------------------------------------------------------------------------------------
Foreign
----------------------------------------------------------------------------------------------------------------
Final Holders 52,728 $17,205,000 $278
----------------------------------------------------------------------------------------------------------------
Manufacturers 85,431 $27,876,000 $261
----------------------------------------------------------------------------------------------------------------
Other Facility Types 311,786 $101,736,000 $278
----------------------------------------------------------------------------------------------------------------
Total Foreign 449,945 $146,817,000 $274
----------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
Access costs: For the purposes of this analysis, as mentioned
above, FDA assumes that the 4-hour or 8-hour records access times in
option 2 imply extra planning and may imply a change in record
retention practices for many firms. FDA has little information on the
possible impact of this requirement, and requests comments. As
previously discussed, the computation of the access costs reported in
Table 6 of this document assumes a 6-hour burden per firm for
developing an access plan and a $25.10 hourly wage. FDA assumes that
all access planning costs will be incurred in the first year following
the final rule for large and small firms, and in the second year
following the final rule for very small firms. Table 6 presents the
calculations.
[[Page 25211]]
Table 6.--Access Costs Option 2
----------------------------------------------------------------------------------------------------------------
Average Cost
Firm Count Cost per Firm
----------------------------------------------------------------------------------------------------------------
Domestic
----------------------------------------------------------------------------------------------------------------
Manufacturers 36,948 $5,564,000 $151
----------------------------------------------------------------------------------------------------------------
Wholesalers/Warehouses 76,952 $11,589,000 $151
----------------------------------------------------------------------------------------------------------------
Packaging\1\ 69,266 $10,431,000 $151
----------------------------------------------------------------------------------------------------------------
Transporters/Packers 15,171 $2,285,000 $151
----------------------------------------------------------------------------------------------------------------
Retail Grocery and Specialty Food 153,277 $23,084,000 $151
----------------------------------------------------------------------------------------------------------------
Convenience Stores 68,866 $5,186,000 $75
----------------------------------------------------------------------------------------------------------------
Mixed-Type Facilities that Engage in Farming 24,397 $3,674,000 $151
----------------------------------------------------------------------------------------------------------------
Importers 4,029 $607,000 $151
----------------------------------------------------------------------------------------------------------------
Total Domestic 448,905 $62,420,000 $139
----------------------------------------------------------------------------------------------------------------
Foreign
----------------------------------------------------------------------------------------------------------------
Final Holders 42,182 $6,353,000 $151
----------------------------------------------------------------------------------------------------------------
Manufacturers 72,770 $10,959,000 $151
----------------------------------------------------------------------------------------------------------------
Other Facility Types 249,429 $37,564,000 $151
----------------------------------------------------------------------------------------------------------------
Total Foreign 364,381 $54,876,000 $151
----------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
Total quantified costs for option 2. Table 7 of this document
presents the total quantifiable startup and recurring costs for option
2, and a range of uncertainty based on the uncertain number of
exclusive importers and the range of uncertainty in design costs. We
calculated the range of uncertainty using the 5th and 95th percentiles
of the range of costs, with a uniform distribution of importers and a
separate triangular distribution of redesign costs for each facility
category and size. Both distributions represent the most amount of
information implied by the known characteristics of the uncertain
ranges. This procedure allows each component of cost uncertainty to
vary independently, but this range cannot be interpreted in
probabilistic terms.
Table 7 of this document presents the range of undiscounted annual
costs of future compliance for option 2. Costs incurred in year 1 are
learning costs for all existing firms, redesign costs for large and
small firms, and access planning costs for large and small firms. Costs
incurred in year 2 are redesign and access planning costs for very
small firms. Recurring costs are the additional records maintenance
costs incurred by all firms and learning costs and records access costs
for new firms. The mean, low, and high cost estimates presented here
characterize the known and quantifiable uncertainties as they are
defined previously. The cost estimate that is greater than 5 percent of
all other estimates generated by the model is reported as the low cost
estimate. The cost estimate that is greater than 95 percent of all
other estimates generated in the model is reported as the high cost
estimate. Table 8 presents the discounted annual costs incurred in
future years and the present value of total costs incurred for option
2. The computations are made using the mean costs, and assume no
increase in real labor cost and a 7 percent real discount rate.
Although the recurring costs reported for year 3 and later years are
the same in nominal terms ($341,669,000 reported in Table 7), they are
reported in discounted terms for each year in Table 8 to account for
the fact that a dollar in 5 years, for example, is worth less than a
dollar today. Each cell that contains only the symbol ``:'' is meant to
convey the continuation of the series depicted in the cells that
precede it from above. FDA acknowledges considerable nonquantifiable
uncertainty in the estimates presented in Table 7 and requests
comments.
Table 7.--Total Annual Costs, Option 2
----------------------------------------------------------------------------------------------------------------
Average Mean Cost
Mean Low High per Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $412,474,000 $389,256,000 $432,307,000 $415
----------------------------------------------------------------------------------------------------------------
Year 2 $737,595,000 $665,189,000 $816,183,000 $741
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $341,669,000 $327,575,000 $355,445,000 $343
----------------------------------------------------------------------------------------------------------------
[[Page 25212]]
Table 8.--Discounted Annual Costs, Option 2
Year 1 $412,474,000
------------------------------------------------------------------------
Year 2 $689,341,000
------------------------------------------------------------------------
Year 3 $298,427,000
------------------------------------------------------------------------
Year 4 $278,904,000
------------------------------------------------------------------------
Year 5 $260,658,000
------------------------------------------------------------------------
Year 6 $243,605,000
------------------------------------------------------------------------
:\1\ :
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
Year 15 $132,505,000
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
Year 30 $48,026,000
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
Present Value $5,663,484,000
------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the
continuation of the series depicted in the cells that precede it from
above.
Option 3: Require all elements of option 2 (comprehensive coverage, 4
or 8 hour records access, 1 and 2 year records retention for
perishables and all other products) except persons who manufacture,
process, pack, hold, receive, distribute, transport, or import outer
food packaging are excluded.
FDA identifies the option excluding outer packaging facilities
separately because the fundamental risk to the public from contaminated
packaging is probably different from the risk associated with
contaminated food, including inner materials that are food contact
substances.
FDA was unable to find any data that discriminated between outer
packaging manufacturers and distributors and those that manufacture or
distribute materials that FDA currently regulates as food contact
substances, including plastic beverage bottles and inner cereal box
liners. The possibility exists that some of these data describe
manufacturers and distributors of outer packaging materials only, and
the remainder describe manufacturers and distributors of both outer
packaging materials and food contact substances. To distinguish between
manufacturers and distributors of outer packaging materials and food
contact substances, we assume that the data is distributed uniformly
over the interval between 0 and 1, and each packaging facility has an
equal probability (0.5) of being either one or both types of
facilities. Based on this distributional assumption, the expected
number of manufacturers and distributors of outer packaging materials
exclusive of food contact substances is 36,906.5 (or 73,813 divided by
2). We request comments on this distributional assumption.
The range and discounted costs for option 3 are estimated to be the
same as for option 4, as explained in the following paragraphs, and are
reported in tables 9 and 10. The discount computations are made using
mean costs. Although the recurring costs reported for year 3 and later
years are the same in nominal terms (i.e., $334,682,000 reported in
table 9), they are reported in discounted terms for each year in table
10. As previously discussed, costs incurred in year 1 are learning
costs for all firms and redesign and access planning costs for large
and small firms. Costs incurred in year 2 are redesign and access
planning costs for very small firms. Recurring costs are the additional
records maintenance costs incurred by all firms, and learning costs and
records access costs for new firms. The mean, low, and high cost
estimates presented here characterize the known and quantifiable
uncertainties as they are defined previously. The cost estimate that is
greater than 5 percent of all other estimates generated by the model is
reported as the low cost estimate. That cost estimate that is greater
than 95 percent of all other estimates generated in the model is
reported as the high cost estimate.
Option 4: Require all components of option 3 (no outer packagers, 4 or
8 hour records access, 1 and 2 year records retention for perishables
and all other products) but do not require persons that are required to
establish and maintain records on food to establish and maintain
records on the food's outer packaging.
FDA is unable to distinguish between the costs incurred when these
persons are required to keep records on the food's outer packaging and
when they are not required to keep such records. Persons required to
establish and maintain records on foods will also keep records on the
food contact substances they use because these substances meet the
definition of food. Moreover, we believe that a large portion of outer
packaging materials used by persons required to establish records is
shipped to that person along with food contact substances.
Consequently, persons keeping records on food contact substances are
also likely to keep records on the food's outer packaging under current
recordkeeping practices. As a result, the cost savings from exempting
recordkeeping on outer packaging are assumed to be negligible and the
costs of this option are assumed to be the same as option 3. We request
comments on this assumption.
Tables 9 and 10 present the range and discounted cost estimates for
options 3 and 4.
Table 9: Total Annual Costs, Options 3 and 4
----------------------------------------------------------------------------------------------------------------
Average Mean Cost
Mean Low High per Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $400,491,000 $318,274,000 $404,529,000 $417
----------------------------------------------------------------------------------------------------------------
Year 2 $711,860,000 $566,254,000 $738,803,000 $741
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $334,682,000 $279,074,000 $334,079,000 $348
----------------------------------------------------------------------------------------------------------------
[[Page 25213]]
Table 10.--Discounted Annual Costs of Options 3 and 4
Year 1 $400,491,000
------------------------------------------------------------------------
Year 2 $665,290,000
------------------------------------------------------------------------
Year 3 $292,324,000
------------------------------------------------------------------------
Year 4 $273,200,000
------------------------------------------------------------------------
Year 5 $255,327,000
------------------------------------------------------------------------
Year 6 $238,624,000
------------------------------------------------------------------------
:\1\ :
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
Year 15 $129,795,000
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
Year 30 $47,044,000
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
: :
------------------------------------------------------------------------
Present Value as of Year 1 $5,534,165,000
------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the
continuation of the series depicted in the cells that precede it from
above.
Option 5: Require all components of option 4, but change the required
records access time to 24 hours.
All costs for this option will be identical to those for option 4
except for the access costs for records detailed in that section. As
mentioned previously, FDA believes that 24 hours is the least amount of
time allowable that would not cause any firms to need to plan for a
rapid response or change their business practices. While the average
access time for FDA traceback investigations is 2-3 days, we believe
the same information could be provided in 1 day with the types of
recordkeeping systems currently in use, including automated
recordkeeping technology, and offsite storage and paper retrieval.
Therefore, the difference between the cost of a 2-3 day response time
and a 1-day response time is assumed to be negligible. However, the
shorter response time requirements of 4 hours or 8 hours would likely
impose a new burden on a number of firms. Therefore, we assume that the
difference between 4 or 8 hours and 24 hours is the difference between
having to preplan a response and being able to react with normal
personnel in an emergency capacity. In order to estimate this cost
difference, FDA assumes that no firm would incur extra planning costs
detailed in option 2, and requests comments on this assumption. The
marginal cost savings of extending the records access time requirement
is approximately $715,355,000.
Table 11 of this document presents the range of undiscounted costs
of future compliance and Table 12 of this document presents the
discounted annual costs incurred in all future years and the present
value of total costs incurred for option 5. In addition, Table 12
reports the marginal savings of option 5 with respect to option 4 as
well as the discounted annual costs and the present value of total
costs. The marginal savings of option 5 with respect to option 4
reflect the cost savings realized from relaxing the records access
requirements from 4 and 8 hours in option 4 to 24 hours in option 5. As
discussed earlier in this document, discounted computations are made
using mean costs and assume no increase in real labor cost and a 7
percent real discount rate. Costs incurred in year 1 are learning costs
for all firms and redesign and access planning costs for large and
small firms. Costs incurred in year 2 are redesign and access planning
costs for very small firms. Recurring costs are the additional records
maintenance costs incurred by all firms, and learning costs and records
access costs for new firms. The mean, low, and high cost estimates
presented here characterize the known and quantifiable uncertainties as
they are defined previously. The cost estimate that is greater than 5
percent of all other estimates generated by the model is reported as
the low cost estimate. That cost estimate that is greater than 95
percent of all other estimates generated in the model is reported as
the high cost estimate.
Table 11.--Total Annual Costs, Option 5
----------------------------------------------------------------------------------------------------------------
Average Mean Cost
Mean Low High per Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $338,594,000 $288,569,000 $387,887,000 $387
----------------------------------------------------------------------------------------------------------------
Year 2 $567,921,000 $481,993,000 $659,106,000 $649
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $295,813,000 $258,715,000 $326,509,000 $338
----------------------------------------------------------------------------------------------------------------
Table 12.--Discounted Annual Costs, Present Value, and Marginal Savings of Option 5
----------------------------------------------------------------------------------------------------------------
Marginal Savings of Option 5 With Respect to
Discounted Annual Costs of Option 5 Option 4
----------------------------------------------------------------------------------------------------------------
Year 1 $338,594,000 $61,897,000
----------------------------------------------------------------------------------------------------------------
Year 2 $530,767,000 $134,523,000
----------------------------------------------------------------------------------------------------------------
Year 3 $258,375,000 $33,949,000
----------------------------------------------------------------------------------------------------------------
Year 4 $241,472,000 $31,728,000
----------------------------------------------------------------------------------------------------------------
Year 5 $225,675,000 $29,652,000
----------------------------------------------------------------------------------------------------------------
Year 6 $210,911,000 $27,713,000
----------------------------------------------------------------------------------------------------------------
:\1\ : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
[[Page 25214]]
Year 15 $114,722,000 $15,073,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 30 $41,580,000 $5,464,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Present Value $4,818,810,000 $715,355,000
----------------------------------------------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the continuation of the series depicted in
the cells that precede it from above.
Option 6: Require all components of option 4 (no outer packagers, no
recordkeeping on outer packaging, 4 or 8 hour records access, 1 and 2
year records retention for perishables and all other products) except
intrastate facilities are excluded.
In the datasets used for this analysis, it is difficult to
distinguish between interstate and intrastate facilities. In order to
be considered only engaged in intrastate commerce, a food or food
packaging facility must obtain all its ingredients and sell its entire
product within a single state. Since all food and food ingredients are
regulated in a similar manner, even one ingredient in a food not
obtained from within a particular state would make the food facility
involved in interstate commerce. None of these datasets distinguishes
facilities based on interstate or intrastate commerce. It is reasonable
to assume, however, that intrastate facilities will be very small and
are unlikely to be retailers or transporters.
The FACTS database of currently regulated facilities contains
71,781 facilities possibly engaged in manufacturing, warehousing, and
wholesale marketing of foods. Since the FACTS database gives a count of
facilities that FDA inspects, this would estimate the total number of
manufacturing, warehousing, and wholesale marketing facilities that are
engaged in interstate commerce. The count of covered facilities of
these types obtained from the CBP and non-employer statistics and
presented in table 1, is 139,121 and includes both intrastate and
interstate facilities. We estimate the number of intrastate facilities
engaged in manufacturing, warehousing, and wholesale marketing by
subtracting the number of facilities in FACTS from the number of
corresponding facilities reported in table 1. The FACTS database does
not track food packaging producers and distributors, so we assume that
the ratio of intrastate to total packaging facilities is the same as
that of the facility types (48.3 percent) that are tracked by FACTS.
This estimate may underestimate the intrastate facilities by the number
of mixed-type facilities that engage in farming and other facility
types engaged in only intrastate commerce. For the firm estimates, we
assume one firm per facility for the facilities not counted in the
FACTS data; intrastate firms are likely to be very small, and the
average number of facilities to firms for small firms in the Census
datasets is almost exactly 1.
Table 13 of this document presents the effects of excluding these
intrastate firms on the number of facilities affected, and Tables 14
and 15 of this document present the range of undiscounted costs and the
discounted annual costs, present value of total costs, and marginal
savings of option 6 with respect to option 4.
Table 13.--Number of Facilities and Firms Affected, Option 6
----------------------------------------------------------------------------------------------------------------
Type Facility Estimate Firm Estimate
----------------------------------------------------------------------------------------------------------------
Manufacturers 34,437 28,009
----------------------------------------------------------------------------------------------------------------
Wholesalers/Warehouses 37,434 30,189
----------------------------------------------------------------------------------------------------------------
Packaging\1\ 17,840 16,741
----------------------------------------------------------------------------------------------------------------
Transporters/Packers 16,773 15,171
----------------------------------------------------------------------------------------------------------------
Retail Grocery and Specialty Food 207,657 153,277
----------------------------------------------------------------------------------------------------------------
Convenience Stores 128,985 68,866
----------------------------------------------------------------------------------------------------------------
Mixed-Type Facilities that Engage in 30,497 24,397
Farming
----------------------------------------------------------------------------------------------------------------
Importers 18,902 15,122
----------------------------------------------------------------------------------------------------------------
Total Domestic 492,525 351,772
----------------------------------------------------------------------------------------------------------------
Foreign
----------------------------------------------------------------------------------------------------------------
[[Page 25215]]
Final Holders 77,427 61,942
----------------------------------------------------------------------------------------------------------------
Manufacturers 125,450 107,222
----------------------------------------------------------------------------------------------------------------
Other Facility Types 423,348 338,678
----------------------------------------------------------------------------------------------------------------
Total Foreign 626,225 507,842
----------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
Table 14.--Total Annual Costs, Option 6
----------------------------------------------------------------------------------------------------------------
Average Mean Cost
Mean Low High per Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $376,263,000 $358,454,000 $397,619,000 $424
----------------------------------------------------------------------------------------------------------------
Year 2 $648,418,000 $583,071,000 $720,849,000 $731
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $307,485,000 $286,089,000 $317,845,000 $347
----------------------------------------------------------------------------------------------------------------
Table 15.--Discounted Annual Costs, Present Value, and Marginal Savings of Option 6
----------------------------------------------------------------------------------------------------------------
Marginal Savings of Option 6 With Respect to
Discounted Annual Costs of Option 6 Option 4
----------------------------------------------------------------------------------------------------------------
Year 1 $376,263,000 $24,228,000
----------------------------------------------------------------------------------------------------------------
Year 2 $605,998,000 $59,292,000
----------------------------------------------------------------------------------------------------------------
Year 3 $268,569,000 $23,755,000
----------------------------------------------------------------------------------------------------------------
Year 4 $250,999,000 $22,201,000
----------------------------------------------------------------------------------------------------------------
Year 5 $234,579,000 $20,748,000
----------------------------------------------------------------------------------------------------------------
Year 6 $219,233,000 $19,391,000
----------------------------------------------------------------------------------------------------------------
:\1\ : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 15 $119,248,000 $10,547,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 30 $43,221,000 $3,823,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Present Value as $5,087,535,000 $446,630,000
of Year 1
----------------------------------------------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the continuation of the series depicted in
the cells that precede it from above.
Option 7: Require all components of option 4 (no outer packagers, no
recordkeeping on outer packaging, 4 or 8 hour records access, 1 and 2
year records retention for perishables and all other products) except
persons who operate mixed-type facilities that engage in farming are
excluded.
This option would exempt from recordkeeping requirements all
persons who operate mixed-type facilities that engage in farming. The
total number of mixed-type facilities that would be exempt under this
option is estimated to be 30,497, and the estimated numbers of such
facilities by commodity type are reported in table 2. Tables 16 and 17
of this document summarize the estimated range and impact of this
exemption on total costs and marginal savings into the future.
[[Page 25216]]
Table 16.--Total Annual Costs, Option 7
----------------------------------------------------------------------------------------------------------------
Average Cost per
Mean Low High Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $379,977,000 $354,015,000 $406,264,000 $406
----------------------------------------------------------------------------------------------------------------
Year 2 $689,275,000 $619,484,000 $771,484,000 $736
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $322,701,000 $309,635,000 $337,022,000 $345
----------------------------------------------------------------------------------------------------------------
Table 17.--Discounted Annual Costs, Present Value, and Marginal Savings of Option 7
----------------------------------------------------------------------------------------------------------------
Marginal Savings of Option 7 With Respect to
Discounted Annual Costs of Option 7 Option 4
----------------------------------------------------------------------------------------------------------------
Year 1 $379,977,000 $20,514,000
----------------------------------------------------------------------------------------------------------------
Year 2 $644,182,000 $21,108,000
----------------------------------------------------------------------------------------------------------------
Year 3 $281,860,000 $10,464,000
----------------------------------------------------------------------------------------------------------------
Year 4 $263,420,000 $9,780,000
----------------------------------------------------------------------------------------------------------------
Year 5 $246,187,000 $9,140,000
----------------------------------------------------------------------------------------------------------------
Year 6 $230,081,000 $8,543,000
----------------------------------------------------------------------------------------------------------------
:\1\ : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 15 $125,149,000 $4,646,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 30 $45,360,000 $1,684,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Present Value $5,332,584,000 $201,581,000
----------------------------------------------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the continuation of the series depicted in
the cells that precede it from above.
We believe that there is an even smaller number of mixed-type
facilities that have restaurants. We have assumed that the costs and
marginal savings for these facilities would be negligible. We invite
comment and information relating to this assumption.
Options 8 and 9: Require all components of option 4 (no outer
packagers, no recordkeeping on outer packaging, 4 or 8 hour records
access, 1 and 2 year records retention for perishables and all other
products) but change required records-retention times for perishables
and all other foods to 1 year (option 8), and 2 years (option 9).
FDA believes that the 1-year record retention requirement for
perishable foods not intended for processing into nonperishable foods
and the 2-year record retention requirement for all other food products
is well within industry norms (see the discussion of evidence
supporting provided in a previous section of this document). We do not
have enough information to quantify any marginal change in the cost of
record storage under a universal 1-year required storage time (option
8) or a universal 2-year required storage time (option 9). All other
things equal, FDA assumes that option 8 would be less costly than
option 4, which in turn would be less costly than option 9. Because
evidence suggests that most firms keep records for 2 years or more, FDA
also believes that the marginal difference in storage costs between all
of these options is smaller than the marginal difference in cost
between other options we consider in this analysis. Therefore, while
there may be a benefit from simplifying requirements by requiring the
same storage time for both perishable and nonperishable foods, because
the increased benefit is negligible, we assume that the marginal cost
is zero for both options 8 and 9. We explicitly specify these options
principally to request comments, including specific examples where
required record retention times may have a large impact on cost.
Option 10: Require all components of option 4 (no outer packagers, no
recordkeeping on outer packaging, 4 or 8 hour records access, 1 and 2
year records retention for perishables and all other products) but
cover only those foreign facilities also covered by FDA's Proposed
registration regulation published at 68 FR 5378, February 3, 2003.
The Proposed registration regulation (68 FR 5378, February 3, 2003)
would require certain foreign facilities that manufacture, process,
pack, and hold food for consumption in the United States to register.
Therefore, a useful alternative to explore may be to cover the same
facilities in both regulations. This exclusion implies that these
[[Page 25217]]
regulations would not cover most of the category ``Other Facility
Types'' in the last row of Table 1 of this document. Only facilities
that do de minimis processing or packaging of food, such as affixing a
label, are included in this option from the category of ``Other
Facility Types''. Because the minimal degree of processing that de
minimis processing facilities perform, they are not included in the
OASIS count of foreign manufacturers.
We assume that domestic packers and repackers are the domestic
counterpart to foreign de minimis food processing facilities. This
seems reasonable since the amount of processing performed by packers
and repackers is minimal. To estimate the number of foreign packers and
repackers, FDA takes the number of packers and repackers in the FACTS
database, 6,204, and adjusts it by the ratio of foreign manufacturers
in OASIS to the number of domestic manufacturers in FACTS. This
adjustment of 3.64 (125,450 foreign facilities divided by 34,437
domestic facilities), estimates the total number of foreign packers and
repackers (or foreign de minimis processing facilities) as 22,600. The
facilities-to-firms adjustment factor of 1.25, used to compute the
number of firms in the ``Other Facility Types'' category, indicated
that 18,080 firms were included in the foreign de minimis category.
Table 18 reports the numbers of facilities and firms that were used in
the cost estimates. FDA requests comments on these estimates.
Table 18.--Number of Facilities and Firms Affected. Option 10
----------------------------------------------------------------------------------------------------------------
Facility to Firm Adjust.
Type Facility Estimate Factor Firm Estimate
----------------------------------------------------------------------------------------------------------------
Domestic
----------------------------------------------------------------------------------------------------------------
Manufacturers 43,376 1.17 36,948
----------------------------------------------------------------------------------------------------------------
Wholesalers/ 95,745 1.24 76,952
Warehouses
----------------------------------------------------------------------------------------------------------------
Packaging\1\ 36,907 1.07 34,633
----------------------------------------------------------------------------------------------------------------
Transporters/Packers 16,773 1.11 15,171
----------------------------------------------------------------------------------------------------------------
Retail Grocery and 207,657 1.35 153,277
Specialty Food
----------------------------------------------------------------------------------------------------------------
Convenience Stores 128,985 1.87 68,866
----------------------------------------------------------------------------------------------------------------
Mixed-Type 30,497 1.25 24,397
Facilities that
Engage in Farming
----------------------------------------------------------------------------------------------------------------
Importers 18,902 1.25 15,122
----------------------------------------------------------------------------------------------------------------
Total Domestic 578,842 ............................ 425,366
----------------------------------------------------------------------------------------------------------------
Foreign
----------------------------------------------------------------------------------------------------------------
Final Holders 77,427 1.25 61,942
----------------------------------------------------------------------------------------------------------------
De minimus 22,600 1.25 18,080
Processors/
Packagers
----------------------------------------------------------------------------------------------------------------
Manufacturers 125,450 1.17 106,858
----------------------------------------------------------------------------------------------------------------
Other Facility Types 0 0 0
----------------------------------------------------------------------------------------------------------------
Total Foreign 225,477 ............................ 186,879
----------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
Since ``Other Facility Types'' is such a large and uncertain
category, the exclusion of most of the category has a significant
impact on all cost estimates.
The estimated ranges of the costs for learning, records access
planning, additional records maintenance, and records redesign, as well
as the total for this option are reported in table 19. The costs
reported in the table are identified by the applicable Code of Federal
Regulations (CFR) section and are expressed in present value terms to
account for the fact that some costs are one-time costs while others
are recurring costs. The cost estimate that is greater than 95 percent
of all other estimates generated by the model is reported as the high
value. The cost estimate that is greater than 5 percent of all other
estimates generated by the model is reported as the low value.
Table 19.--Cost Description in Present Value Terms: Option 10
----------------------------------------------------------------------------------------------------------------
21 CFR Section Mean Low High
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352, (Learning) $138,357,000 $134,017,000 $142,346,000
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352, (Redesign) $381,292,000 $326,799,000 $430,439,000
----------------------------------------------------------------------------------------------------------------
1.361 (Access Planning) $78,834,000 $73,176,000 $84,179,000
----------------------------------------------------------------------------------------------------------------
[[Page 25218]]
1.337, 1.345, and 1.352 (Additional Records $2,952,309,000 $2,817,570,000 $3,070,891,000
Maintenance)
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352, (Learning for New Firms) $13,836,000 $13,310,000 $14,328,000
----------------------------------------------------------------------------------------------------------------
1.361 (Access Preparation for New Firms) $7,883,000 $7,318,000 $8,418,000
----------------------------------------------------------------------------------------------------------------
Total\1\ $3,660,808,000 $3,478,944,000 $3,833,452,000
----------------------------------------------------------------------------------------------------------------
\1\ The totals reported at the bottom of each column differ slightly from the results that would be obtained by
adding together all of the cells in the column. This is because the computation of the totals reported here is
made assuming a joint distribution of the cost components, as described elsewhere in the analysis, rather then
by adding together the individually computed component costs.
The annual range and discounted costs for option 10 as well as the
marginal savings of option 10 with respect to option 4 are detailed in
tables 20 and 21 of this document. The mean, low, and high cost
estimates presented here characterize the known and quantifiable
uncertainties as they are defined previously. The cost estimate that is
greater than 5 percent of all other estimates generated by the model is
reported as the low cost estimate. That cost estimate that is greater
than 95 percent of all other estimates generated in the model is
reported as the high cost estimate.
Table 20.--Total Annual Costs, Option 10
----------------------------------------------------------------------------------------------------------------
Average Mean Cost
Mean Low High per Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $234,425,000 $215,030,000 $252,196,000 $383
----------------------------------------------------------------------------------------------------------------
Year 2 $507,230,000 $459,345,000 $550,801,000 $828
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $221,130,000 $212,313,000 $229,680,000 $361
----------------------------------------------------------------------------------------------------------------
Table 21.--Discounted Annual Costs, Present Value, and Marginal Savings: Option 10
----------------------------------------------------------------------------------------------------------------
Marginal Savings of Option 10 With Respect to
Discounted Annual Costs: Option 10 Option 4
----------------------------------------------------------------------------------------------------------------
Year 1 $234,425,000 $166,066,000
----------------------------------------------------------------------------------------------------------------
Year 2 $474,047,000 $191,243,000
----------------------------------------------------------------------------------------------------------------
Year 3 $193,144,000 $99,180,000
----------------------------------------------------------------------------------------------------------------
Year 4 $180,508,000 $92,692,000
----------------------------------------------------------------------------------------------------------------
Year 5 $168,699,000 $86,628,000
----------------------------------------------------------------------------------------------------------------
Year 6 $157,663,000 $80,961,000
----------------------------------------------------------------------------------------------------------------
:\1\ : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 15 $85,758,000 $44,037,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 30 $31,083,000 $15,961,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Present Value as $3,660,808,000 $1,873,357,000
of Year 1
----------------------------------------------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the continuation of the series depicted in
the cells that precede it from above.
[[Page 25219]]
Option 11: Require all components of option 4 (no outer packagers, no
recordkeeping on outer packaging, 4 or 8 hour records access, 1 and 2
year records retention for perishables and all other products) except
foreign coverage includes only facilities that are the final holders of
the product before export to the United States.
We estimate that there would be approximately 62,000 foreign
facilities covered under this option. We assumed that the number of
foreign final holding facilities is equivalent to the number of
domestic importers. Since foreign manufacturing facilities and foreign
de minimus processors/packagers would be excluded from recordkeeping
requirements, the coverage under this option is more limited than the
coverage under option 10. The rationale for specifying this option is
that final holders may be the most accessible foreign facilities in the
event of an FDA traceback investigation. In addition, foreign final
holders may be particularly at risk at this level in the food chain if
the food is clearly identified as destined for consumption in the
United States.
Tables 22 and 23 of this document present the cost estimates for
option 11. As previously discussed, discount computations are made
using mean costs and assume no increase in real labor cost and a 7
percent real discount rate. Although the recurring costs reported for
year 3 and later years are the same in nominal terms (i.e.,
$182,429,000 reported in Table 22 of this document), they are reported
in discounted terms for each year in Table 23 of this document to
account for the fact that a dollar in 5 years, for example, is worth
less than a dollar today. Each cell that contains only the symbol ``:''
is meant to convey the continuation of the series depicted in the cells
that precede it from above. Costs incurred in year 1 are learning costs
for all firms and redesign and access planning costs for large and
small firms. Costs incurred in year 2 are redesign and access planning
costs for very small firms. Recurring costs are the additional records
maintenance costs incurred by all firms, and learning costs and records
access costs for new firms. The mean, low, and high cost estimates
presented here characterize the known and quantifiable uncertainties as
they are defined previously. The cost estimate that is greater than 5
percent of all other estimates generated by the model is reported as
the low cost estimate. That cost estimate that is greater than 95
percent of all other estimates generated in the model is reported as
the high cost estimate.
Table 22.--Total Annual Costs, Option 11
----------------------------------------------------------------------------------------------------------------
Average Mean Cost
Mean Low High per Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $172,973,000 $156,033,000 $190,831,000 $355
----------------------------------------------------------------------------------------------------------------
Year 2 $413,484,000 $369,335,000 $458,871,000 $849
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $182,429,000 $174,474,000 $190,610,000 $374
----------------------------------------------------------------------------------------------------------------
Table 23.--Discounted Annual Costs, Present Value, and Marginal Savings: Option 11
----------------------------------------------------------------------------------------------------------------
Marginal Savings of Option 11 With Respect to
Discounted Annual Costs: Option 11 Option 4
----------------------------------------------------------------------------------------------------------------
Year 1 $172,973,000 $227,518,000
----------------------------------------------------------------------------------------------------------------
Year 2 $386,434,000 $278,856,000
----------------------------------------------------------------------------------------------------------------
Year 3 $159,341,000 $132,983,000
----------------------------------------------------------------------------------------------------------------
Year 4 $148,916,000 $124,284,000
----------------------------------------------------------------------------------------------------------------
Year 5 $139,174,000 $116,153,000
----------------------------------------------------------------------------------------------------------------
Year 6 $130,069,000 $108,555,000
----------------------------------------------------------------------------------------------------------------
:\1\ : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 15 $70,749,000 $59,046,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 30 $25,643,000 $21,401,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Present Value as $2,995,041,000 $2,539,124,000
of Year 1
----------------------------------------------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the continuation of the series depicted in
the cells that precede it from above.
[[Page 25220]]
Option 12: Require all components of option 4 (no outer packagers, no
recordkeeping on outer packaging, 4 or 8 hour records access, 1 and 2
year records retention for perishables and all other products) except
all foreign food facilities are excluded.
This option excludes all foreign firms from recordkeeping
requirements and has even less coverage than under option 11. Tables 24
and 25 of this document present the cost estimates. As previously
discussed, discount computations are made using mean costs and assume
no increase in real labor cost and a 7 percent real discount rate.
Although the recurring costs reported for year 3 and later years are
the same in nominal terms (i.e., $162,228,000 reported in Table 24),
they are reported in discounted terms for each year in Table 25 of this
document. Costs incurred in year 1 are learning costs for all firms and
redesign and access planning costs for large and small firms. Costs
incurred in year 2 are redesign and access planning costs for very
small firms. Recurring costs are the additional records maintenance
costs incurred by all firms, and learning costs and records access
costs for new firms. The mean, low, and high cost estimates presented
here characterize the known and quantifiable uncertainties as they are
defined previously. The cost estimate that is greater than 5 percent of
all other estimates generated by the model is reported as the low cost
estimate. That cost estimate that is greater than 95 percent of all
other estimates generated in the model is reported as the high cost
estimate.
Table 24.--Total Annual Costs, Option 12
----------------------------------------------------------------------------------------------------------------
Average Mean Cost
Mean Low High per Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $139,947,000 $125,857,000 $152,775,000 $329
----------------------------------------------------------------------------------------------------------------
Year 2 $376,310,000 $334,230,000 $421,832,000 $885
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $162,228,000 $155,337,000 $169,446,000 $381
----------------------------------------------------------------------------------------------------------------
Table 25.--Discounted Annual Costs, Present Value, and Marginal Savings: Option 12
----------------------------------------------------------------------------------------------------------------
Marginal Savings of Option 12 With Respect to
Discounted Annual Costs: Option 12 Option 4
----------------------------------------------------------------------------------------------------------------
Year 1 $139,947,000 $260,544,000
----------------------------------------------------------------------------------------------------------------
Year 2 $351,692,000 $313,598,000
----------------------------------------------------------------------------------------------------------------
Year 3 $141,696,000 $150,628,000
----------------------------------------------------------------------------------------------------------------
Year 4 $132,426,000 $140,774,000
----------------------------------------------------------------------------------------------------------------
Year 5 $123,763,000 $131,564,000
----------------------------------------------------------------------------------------------------------------
Year 6 $115,666,000 $122,958,000
----------------------------------------------------------------------------------------------------------------
:\1\ : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 15 $62,915,000 $66,880,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 30 $22,803,000 $24,241,000
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Present Value as $2,657,566,000 $2,876,599,000
of Year 1
----------------------------------------------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the continuation of the series depicted in
the cells that precede it from above.
Option 13: Facilities must be able to tie specific input ingredients to
specific products.
Most comments FDA received during its early outreach efforts for
this Proposed rule stated that tying specific raw input ingredients to
specific finished products would significantly increase the burden on
industry, which would translate into large social costs. Some comments
suggested that some facilities have systems in place that can link each
lot of raw ingredient to each lot of finished product, but such systems
are rare for bulk agricultural commodities. For example, it is common
practice in handling agricultural commodities to commingle raw
ingredients from several suppliers in a large silo or storage tank.
While this business practice would not be required to change under
options 2-12, option 13 would add the significant new burden of
requiring firms that traditionally commingle raw ingredients from
several suppliers to redesign a production or storage strategy that
would allow them
[[Page 25221]]
to identify more precisely the source of all the food products.
Most agricultural crops are traded as bulk commodities; bulk
trading operates on the premise that crops produced by different
farmers are sufficiently similar to be traded at a common price and
with a common grading specification. For various reasons, some firms
have put in place identity preservation systems, which they use to
track individual lots of products throughout production and
distribution. These identity preservations systems exist for organic
products, kosher products, and some specialty versions of bulk
products. FDA estimated the potential impact of this option by
reviewing studies of current identity preservation systems. We assume
that the identity preservation systems put in place for specialty
versions of traditionally commingled products closely resembles what
would be required to comply with the input-to-output requirement of
this option. The study we rely on for our estimates (Ref. 17) is for
corn and soybeans, the largest crops by value in the United States, but
the issues should be similar for other types of bulk products.
The cost of identity preservation consists of: (1) The cost of
segregating crops to prevent commingling, and (2) the cost of tracking
ingredients. First, commodity suppliers should incur an increase in
cost due to their inability to mix commodities in bulk. The Bender et
al (Ref. 16) study estimates costs based on responses to a small survey
of specialty elevators, grain firms, seed companies, and brokers. On
average, 35 percent of the volume handled by these firms is specialty
product, so they have ample experience in identifying cost differences,
including storage, handling and segregation, risk management,
transportation, analysis and testing, and marketing costs. Of the 84
survey responses, 55 estimated the cost of segregating and handling
specialty crops. FDA used the overall average across facility types to
estimate an average cost premium to be applied to each preprocessed
commodity: $0.17 per bushel for corn and $0.48 per bushel for soybeans.
The original estimate included a premium paid to farmers, but we
subtracted this amount out of the total. Since option 13 would only
require the identification of a particular immediate previous source,
in this case a farm, we assume no new farming activity would have to
take place. At an average price of $1.81 per bushel for corn and $4.60
per bushel for soybeans in 1999 (Ref. 18), the premium estimated for
corn is 9.4 percent and for soybeans is 10.4 percent. Due to the small
sample, standard errors were not reported in this study, but
considerable nonquantified uncertainty exists around these estimates.
These estimates may be an overestimate of premiums if economies of
scale are possible in identity preservations systems. These estimates
may be an underestimate if the reason these specialty product systems
exist is that it is easier to preserve identities for corn and soybeans
than for other products.
Table 26 of this document presents the calculations of the cost
based on these segregation premiums. We apply the premium to the 1999
farm value of commodities, not to the retail values as retail prices
include many other aspects of branding and bringing the product to
market. These are also the latest data available, and since
agricultural prices have been fairly stable, we do not adjust these
dollar amounts to 2002. The estimated corn premium from the studies is
used for all other bulk grain products, and the estimated soybean
premium is also used for nuts, sugarcane and beets, sunflowers, and
flaxseeds. Milk is assumed to have a lower cost increase; most milk
production is local and already includes a tracking system to allow for
the use of expiration dates for the final product. Vegetables destined
for final consumption in an unaltered state, vegetables used for
production, and eggs are also assumed to have a lower cost of tracking
since current commingling practices for these products are limited. The
table includes nuts, but we were unable to find a satisfactory price
estimate. FDA requests comments on these assumptions.
Table 26.--Commingling Costs Based on Specialty Premiums, Option 13
----------------------------------------------------------------------------------------------------------------
Food Type Count Unit $ Farm gate Premium % Premium $
----------------------------------------------------------------------------------------------------------------
Corn (for grain) 9,430,612,000 bushels $17,103,991,000 9.4% $1,603,204,000
----------------------------------------------------------------------------------------------------------------
Soybeans 2,653,758,000 bushels $12,205,352,000 10.4% $1,273,804,000
----------------------------------------------------------------------------------------------------------------
Milk 162,716,000,000 pounds $23,400,050,000 5.0% $1,170,003,000
----------------------------------------------------------------------------------------------------------------
Wheat 2,299,010,000 bushels $5,593,989,000 9.4% $524,340,000
----------------------------------------------------------------------------------------------------------------
Fruits 31,152,000 tons $9,345,600,000 5.0% $467,280,000
----------------------------------------------------------------------------------------------------------------
Fresh Vegetables 22,484,150 tons $7,610,780,000 5.0% $380,539,000
----------------------------------------------------------------------------------------------------------------
Eggs 82,715,000,000 eggs $4,321,859,000 5.0% $216,093,000
----------------------------------------------------------------------------------------------------------------
Sugar beets 33,420,000 tons $1,242,898,000 10.4% $129,714,000
----------------------------------------------------------------------------------------------------------------
Rice 20,602,700,000 pounds $1,231,207,000 9.4% $115,404,000
----------------------------------------------------------------------------------------------------------------
Peanuts 3,829,490,000 pounds $971,608,000 10.4% $101,401,000
----------------------------------------------------------------------------------------------------------------
Sugarcane 35,299,000 tons $941,791,000 10.4% $98,290,000
----------------------------------------------------------------------------------------------------------------
Sorghum 595,166,000 bushels $937,406,000 9.4% $87,866,000
----------------------------------------------------------------------------------------------------------------
Prod. Vegetables 15,476,230 tons $1,660,051,000 5.0% $83,003,000
----------------------------------------------------------------------------------------------------------------
Barley 280,292,000 bushels $597,038,000 9.4% $55,962,000
----------------------------------------------------------------------------------------------------------------
Sunflower 4,341,862,000 pounds $339,993,000 10.4% $35,483,000
----------------------------------------------------------------------------------------------------------------
[[Page 25222]]
Oats 146,193,000 bushels $175,172,000 9.4% $16,419,000
----------------------------------------------------------------------------------------------------------------
Honey 205,250,000 pounds $126,075,000 5.0% $6,304,000
----------------------------------------------------------------------------------------------------------------
Flaxseed 7,864,000 bushels $30,098,000 10.4% $3,141,000
----------------------------------------------------------------------------------------------------------------
Rye 11,038,000 bushels $25,084,000 9.4% $2,351,000
----------------------------------------------------------------------------------------------------------------
Nuts 1,295,700,000 pounds $0 5.0% $0
----------------------------------------------------------------------------------------------------------------
Total ................. ................. $87,860,042,000 ........... $6,370,601,000
----------------------------------------------------------------------------------------------------------------
As the second component of cost, FDA assumes that manufacturers
using bulk production processes would have to adopt a new tracking
system for their input ingredients. Having identity-preserved input
ingredients delivered from their suppliers would help in this task, but
the disruption to production practices could be substantial. FDA does
not have an estimate of the percentage of producers that may be
affected by this option, or the amount of change in production
practices that would have to take place, but we assume that a useful
lower bound of the increase in production cost would be the increase in
information design and collection costs that manufacturers would face
in this system.
For redesign costs, FDA used the Labeling Cost Model, assuming a
full new document design as opposed to simple addition of information.
FDA also assumed a doubling of information collection burden for
manufacturers when compared to other options; they would have to track
three sets of records (input sources, output sources, and input to
output tracking) instead of two, but could not share the information
collection burden with others in the production chain for these
manufacturing records. As in the other options, we assumed the design
costs would be incurred at the firm level and the additional records
maintenance costs would be incurred at the facility level. FDA
considers these design and records maintenance costs a probable
underestimate of the total cost of disruption in manufacturing possible
under this option, since it does not consider production process
changes or additional tracking costs required in the post-production
distribution chain. Table 26 of this document summarizes the redesign
and additional records maintenance burden calculations unique to option
13.
Table 27.--Additional Redesign and Records Maintenance Costs, Option 13.
----------------------------------------------------------------------------------------------------------------
Count Medium Low High
----------------------------------------------------------------------------------------------------------------
Redesign
----------------------------------------------------------------------------------------------------------------
Domestic Manufacturing Firms 36,948 $228,816,000 $171,917,000 $413,738,000
----------------------------------------------------------------------------------------------------------------
Foreign Manufacturing Firms 72,770 $450,666,000 $338,600,000 $814,880,000
----------------------------------------------------------------------------------------------------------------
Total 109,718 $679,482,000 $510,517,000 $1,228,618,000
----------------------------------------------------------------------------------------------------------------
Additional Records Maintenance
----------------------------------------------------------------------------------------------------------------
Domestic Manufacturing Facilities 43,376 $14,154,000 ................. .................
----------------------------------------------------------------------------------------------------------------
Foreign Manufacturing Facilities 85,431 $27,876,000 ................. .................
----------------------------------------------------------------------------------------------------------------
Total 128,807 $42,030,000 ................. .................
----------------------------------------------------------------------------------------------------------------
Tables 28 and 29 of this document present the estimated range and
impact of option 13 on total costs into the future. As the tables
indicate, option 13 is much costlier than any of the other regulatory
options. The numbers in parentheses in the right hand column of Table
29 reflect a negative marginal cost savings of option 13 with respect
to option 4. As previously discussed, discount computations are made
using mean costs and assume no increase in real labor cost and a 7
percent real discount rate. Although the recurring costs reported for
year 3 and later years are the same in nominal terms (i.e.,
$6,743,086,000 reported in Table 28), they are reported in discounted
terms for each year in Table 29 to account for the fact that a dollar
in 5 years, for example, is worth less than a dollar today. Each cell
that contains only the symbol ``:'' is meant to convey the continuation
of the series depicted in the cells that precede it from above. Costs
incurred in year 1 are learning costs for all firms and redesign and
access planning costs for large and small firms. Costs incurred in year
2 are redesign and access planning costs for very small firms.
Recurring costs are the additional records maintenance costs incurred
by all firms, and learning costs and records access costs for new
firms. The mean, low, and high cost estimates presented here
characterize the known and quantifiable uncertainties as they are
defined previously. The cost estimate that is greater than 5 percent of
all other estimates generated by the model is reported as the low cost
estimate. That cost estimate that is greater than 95 percent of all
other estimates generated in the model is reported as the high cost
estimate.
[[Page 25223]]
Table 28.--Annual Total Costs, Option 13
----------------------------------------------------------------------------------------------------------------
Average Mean Cost
Mean Low High per Firm
----------------------------------------------------------------------------------------------------------------
Year 1 $442,970,000 $405,800,000 $484,402,000 $445
----------------------------------------------------------------------------------------------------------------
Year 2 $2,692,790,000 $2,504,068,000 $2,921,375,000 $2,706
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $6,743,086,000 $6,702,239,000 $6,726,422,000 $6,748
----------------------------------------------------------------------------------------------------------------
Table 29.--Discounted Annual Costs, Present Value, and Marginal Savings: Option 13 (numbers in parentheses are
negative)
----------------------------------------------------------------------------------------------------------------
Marginal Savings of Option 13 With Respect to
Discounted Annual Costs: Option 13 Option 4
----------------------------------------------------------------------------------------------------------------
Year 1 $442,970,000 ($183,745,000)
----------------------------------------------------------------------------------------------------------------
Year 2 $2,516,626,000 ($1,901,433,000)
----------------------------------------------------------------------------------------------------------------
Year 3 $5,889,672,000 ($5,630,368,000)
----------------------------------------------------------------------------------------------------------------
Year 4 $5,504,367,000 ($5,262,026,000)
----------------------------------------------------------------------------------------------------------------
Year 5 $5,144,268,000 ($4,917,781,000)
----------------------------------------------------------------------------------------------------------------
Year 6 $4,807,727,000 ($4,596,057,000)
----------------------------------------------------------------------------------------------------------------
:\1\ : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 15 $2,615,085,000 ($2,499,951,000)
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Year 30 $947,827,000 ($906,097,000)
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
: : :
----------------------------------------------------------------------------------------------------------------
Present Value as $92,987,447,000 ($88,149,370,000)
of Year 1
----------------------------------------------------------------------------------------------------------------
\1\ Each cell that contains only the symbol ``:'' is meant to convey the continuation of the series depicted in
the cells that precede it from above.
Marginal analysis: As a way of comparing the options, Table 30 of
this document presents the present values of total costs and the
marginal savings of each option compared with option 4. Option 4 was
chosen for comparison since it differs by only one provision from
almost all the other options considered in the analysis. The marginal
savings for all options, except options 2 and 13, are either zero or
positive reflecting either a lower total cost or equivalent total cost
compared with option 4.
Since option 3 and options 5-12 involve a single modification of
the requirements in option 4, the marginal savings expressed for each
of those options reflects the cost savings from removing that
requirement. Furthermore, while option 2 differs from option 4 by two
provisions, rather than one provision (option 4 does not require
persons that manufacture, process, pack, hold, receive, distribute,
transport, or import outer food packaging to keep records and does not
require persons that are required to keep records on foods to keep
records on the food's outer packaging), the costs computed for both
options are equivalent. As a result, there is no loss in meaning by
comparing the costs of all options to option 4 in Table 30.
Consequently, for option 10, the marginal savings in present value
terms from relaxing the comprehensive foreign coverage requirement in
option 4 to the reduced level of coverage specified by the registration
rule is $1,873,357,000 as reported in the following table.
Table 30.--Present Value and Marginal Savings With Respect to Option 4
------------------------------------------------------------------------
Description of
Option Present Value of Marginal Savings With Option
Total Cost Respect to Option 4 Requirements
------------------------------------------------------------------------
2 $5,663,484,000 ($129,319,000)\1\ Comprehensive
coverage, 4 or
8 hour records-
access
requirement, 1
and 2-year
records-
retention
requirement
------------------------------------------------------------------------
[[Page 25224]]
3 $5,534,165,000 $0 Exclude outer
packagers
------------------------------------------------------------------------
4 $5,534,165,000 $0 Exclude outer
packagers and
recordkeeping
on outer
packaging
------------------------------------------------------------------------
5 $4,818,810,000 $715,355,000 Same as option
4 except
records-access
requirement is
relaxed to 24
hours
------------------------------------------------------------------------
6 $5,087,535,000 $446,630,000 Same as option
4 except
intrastate
facilities are
excluded
------------------------------------------------------------------------
7 $5,332,584,000 $201,581,000 Same as option
4 except mixed-
type
facilities
that engage in
farming are
excluded
------------------------------------------------------------------------
8 $5,534,165,000 $0 Same as option
4 except
universal
records
retention of 1
year
------------------------------------------------------------------------
9 $5,534,165,000 $0 Same as option
4 except
universal
records
retention of 2
years
------------------------------------------------------------------------
10 $3,660,808,000 $1,873,357,000 Proposed. Same
as option 4
but limit
foreign
coverage to be
the same as
registration.
------------------------------------------------------------------------
11 $2,995,041,000 $2,539,124,000 Same as option
4 but limit
foreign
coverage to
the final
holders prior
to export.
------------------------------------------------------------------------
12 $2,657,566,000 $2,876,599,000 Same as option
4 except all
foreign
facilities are
excluded.
------------------------------------------------------------------------
13 $93,137,167,000 ($87,603,002,000)\1\ Comprehensive
coverage.
Precise input
to output
recordkeeping
requirement.
------------------------------------------------------------------------
\1\ Numbers in parentheses are negative.
Sensitivity of cost estimates to assumptions: For all the options,
FDA attempted to quantify the uncertainty associated with redesign
costs and the number firms and facilities exclusively dedicated to
imports, but we had no basis for assigning distributions to other
uncertain components. By far the largest source of uncertainty is the
premium on products that would be subject to new identity preservation
under option 13. FDA also tested the sensitivity of other sources of
uncertainty under option 10, in order for the reader to compare various
sources of uncertainty and submit comments regarding our assumptions.
Although the dollar sensitivities to the assumptions specified in Table
31 of this document should be similar across the options, many of the
percentage sensitivities would--because of different base costs--differ
under other options. FDA believes that the ranking of the costs of
these options is not affected by any uncertainty in our estimates.
There is significant uncertainty in the estimate of the number of
mixed-type facilities that engage in farming. Based on research
described earlier, our estimate of the number of mixed-type facilities
that engage in farming that would be covered by this Proposed rule is
30,497. To determine the sensitivity of the cost estimates to changes
in the numbers of mixed-type facilities that engage in farming, a
sensitivity analysis was performed in which the number of these types
of facilities was increased by 10 percent.
Table 31 of this document presents the results of the sensitivity
analyses that we conducted. For option 13, Table 31 reports the effect
of an increase in crop premium for identity preservation of 1 percent
for all crops. For option 10, Table 31 reports the effect of a 10
percent increase in the estimate of the number of mixed-type facilities
that engage in farming, and 10 percent cost increases for each
component cost on the mean first-year total cost estimates. For
redesign costs, we assumed a 10 percent increase in the medium cost
estimate.
Finally, to be consistent with the analysis conducted for the
Registration Proposed rule, a sensitivity analysis was conducted that
accounted for the possibility that a number of foreign firms would
cease to export to the United States because of the burden imposed by
these regulations. This is particularly relevant when considering the
burden imposed on foreign firms by the Registration Proposed rule. In
the analysis of the registration Proposed rule, it was estimated that
approximately 16 percent of small manufacturers and processors (defined
in that analysis as those exporting 10 or fewer line items to the
United States) would cease exporting to the United States because of
the increase in costs due to that Proposed rule. Consistent with the
analysis of the Registration Proposed rule, we analyzed the cost
sensitivity of a 16 percent reduction in the number of foreign firms.
FDA requests comments on other desired sensitivity analyses.
[[Page 25225]]
Table 31.--Sensitivity Analysis
------------------------------------------------------------------------
Effect on Present
Test Option Value Mean Cost Percent
($) Effect
------------------------------------------------------------------------
10% increase in records 10 $276,513,000 7.02%
maintenance
------------------------------------------------------------------------
10% increase mixed-type 10 $17,061,000 0.46%
facilities that engage in
farming
------------------------------------------------------------------------
10% decrease in percent 10 $33,529,000 0.91%
European
------------------------------------------------------------------------
10% increase in redesign 10 $38,006,000 1.03%
------------------------------------------------------------------------
10% increase in learning 10 $32,185,000 0.87%
------------------------------------------------------------------------
10% increase in access 10 $18,873,000 0.51%
------------------------------------------------------------------------
16% decrease in number of 10 ($138,484,000)\1\ (3.93%)\1\
foreign firms
------------------------------------------------------------------------
1% increase in identity 13 $490,117,000 0.52%
preservation premium
------------------------------------------------------------------------
\1\ Numbers in parentheses are negative.
Benefits: These options would improve FDA's ability to address
adulterated food and food packaging that presents a threat of serious
adverse health consequences or death to humans and animals. FDA is
unable to quantify the benefits of these regulations, though we
consider them substantial. While the probability of a deliberate
contamination of the food supply may be low, the potential cost of a
deliberate contamination of the food supply may be high. Below we
present some examples to demonstrate what such a contamination may look
like. Without having any hypothesis on the likelihood of a deliberate
contamination, it is impossible to quantitatively measure the benefits
of the reduced impact due to each of these regulatory options.
Further hindering any quantification of benefits is the interactive
effect of other regulations that are being developed to implement Title
III of the Bioterrorism Act of 2002. The registration (section 305 of
the Bioterrorism Act) and recordkeeping regulations would work
cooperatively to identify and track possible sources of an outbreak.
The prior notice for imported shipments (section 307 of the
Bioterrorism Act) would allow the agency time to identify possible
sources of risk from adulterated food and its packaging that presents a
threat of serious adverse health consequences or death to humans and
animals, which could then be investigated with the aid of the new
registration and recordkeeping regulations.
To understand possible costs of an intentional attack on the food
supply, we examine five outbreaks resulting from accidental and
deliberate contamination, and from both domestic and imported foods. It
is possible that an intentional attack on the food supply that sought
to disrupt the food supply and sicken many U.S. citizens would be much
larger. Also, intentional attacks may be fundamentally more difficult
to trace than natural outbreaks due to deliberate obfuscation of the
source and possible multiple contamination events of different food
types and food facilities. We then examine mechanisms through which
each regulatory option discussed in this analysis may act and analyze
how each of the options affects the mechanisms.
Table 32.--Summary of Five Foodborne Outbreaks
----------------------------------------------------------------------------------------------------------------
Confirmed or Estimated Number Total Illness
Pathogen Location and Year Vehicle Reported Cases of Cases Cost (dollars)
----------------------------------------------------------------------------------------------------------------
Salmonella Minnesota 1994 Ice cream 150 cases; 30 29,100 in MN; 3,187,744,000 to
enteritidis hospitalized 224,00 5,629,792,000
nationwide
----------------------------------------------------------------------------------------------------------------
Shigella sonnei Michigan 1988 Tofu salad 3,175 cases Not available 45,183,000 to
79,797,000
----------------------------------------------------------------------------------------------------------------
Outbreaks resulting from deliberate contamination
----------------------------------------------------------------------------------------------------------------
Salmonella Dalles, Oregon Salad bars 751 cases; 45 Not available 10,687,000 to
Typhimurium 1984 hospitalized 18,875,000
----------------------------------------------------------------------------------------------------------------
Shigella Texas 1996 Muffins and 12 cases; 4 All cases 83,000
dysentreriae doughnuts hospitalized identified
type 2
----------------------------------------------------------------------------------------------------------------
Outbreaks resulting from imported foods
----------------------------------------------------------------------------------------------------------------
Cyclospora United States and Raspberries 1465 cases Not available 3,941,000
cayaetanensis Canada 1996 (probably identified, less
imported from than 20
Guatemala) hospitalized
----------------------------------------------------------------------------------------------------------------
[[Page 25226]]
Salmonella enteritidis in ice cream
In 1994, approximately 224,000 people were sickened by ice cream
contaminated with Salmonella enteritidis. The source of the
contamination appeared to be pasteurized premix that had been
contaminated during transport in tanker trailers that carried
nonpasteurized eggs. There were 150 confirmed cases of salmonellosis
associated with the outbreak in Minnesota. However, ice cream processed
during the contamination period was distributed to 48 states. To
calculate the total number of illnesses associated with the outbreak,
researchers calculated an attack rate of 6.6 percent. This attack rate
was extrapolated to the population that consumed the ice cream, giving
a total number sickened of 224,000 (Ref. 19).
Salmonellosis most commonly causes gastrointestinal symptoms.
Almost 91 percent of cases are mild and cause 1 to 3 days of illness
with symptoms including diarrhea, abdominal cramps, and fever. Moderate
cases, defined as cases that require a trip to a physician, account for
8 percent of the cases. These cases typically have a duration of 2 to
12 days. Severe cases require hospitalization and last 11 to 21 days.
In addition to causing gastroenteritis, salmonellosis also can cause
reactive arthritis in a small percentage of cases. Reactive arthritis
may be short or long term and is characterized by joint pain. Just over
1 percent of cases develop short-term reactive arthritis and 2 percent
of cases develop chronic, reactive arthritis.
FDA estimated the costs associated with salmonellosis, including
medical treatment costs and pain and suffering. Table 32 of this
document provides a summary of these estimates. Pain and suffering is
measured by lost quality adjusted life days (QALDs). QALDs measure the
loss of utility associated with an illness. A QALD is measured between
zero and one, with one being a day in perfect health. FDA uses the
value placed by consumers on the risks to life found in current
economic literature (See Refs. 20, 21, 22, and 23). In addition, FDA
presents two estimates of values of pain and suffering associated with
arithritis, one based on physician estimates (Ref. 24) and another
based on a regression analysis approach (Ref. 25). This gives a range
of costs for the average case of salmonellosis between $14,231 and
$25,133.
To estimate the economic cost due to illness associated with this
outbreak, FDA used the range for the average cost per case. For 224,000
people, this is a total cost of between $3,187,744,000 and
$5,629,792,000 from this accidental food disaster.
Table 33.--The Cost of a Typical Case of Salmonellosis
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medical
Total QALDs Health Loss Costs Weighted
Severity Case Breakdown Lost per (dollars) per Case (dollars) Dollar Loss
(percent) Illness (Discounted) per Case per Case
(Discounted)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Illness.................................................................................................................................................
Mild............................................................ 90.7 1.05 660 0 599
Moderate........................................................ 8.1 3.68 2,310 283 209
Severe.......................................................... 1.2 9.99 6,266 9,250 188
--------------------------------------------------------------------------------------------------------------------------------------------------------
Arthritis...............................................................................................................................................
Regression approach............................................... ............... ............... .................... ............ ..............
Short-term...................................................... 1.26 5.41 3,391 100 44
Long-term....................................................... 2.40 2,613.12 452,554 7,322 11,048
Direct survey approach............................................ ............... ............... .................... ............ ..............
Short-term...................................................... 1.26 10.81 6,778 100 87
Long-term....................................................... 2.40 5,223.15 904,573 7,322 21,906
--------------------------------------------------------------------------------------------------------------------------------------------------------
Death............................................................. 0.04 ............... 5,000,000 ............ 2,143
========================================================================================================================================================
Total expected loss per case............................................................................................................................
Regression approach................................................................................................................... 14,231
Direct survey approach................................................................................................................ 25,133
--------------------------------------------------------------------------------------------------------------------------------------------------------
Shigella sonnei in tofu salad
In 1988, a tofu salad at an outdoor music festival was contaminated
with Shigella sonnei and sickened an estimated 3,175 people. Over 2,000
volunteer food handlers served communal meals at the festival (Ref.
26). Shigellosis causes similar symptoms and is of similar duration to
salmonellosis. It also is associated with short term and chronic
reactive arthritis; thus FDA assumed the average case of shigellosis
has the same cost as salmonellosis. This gives a total cost of
$45,183,000 to $79,797,000.
Salmonella typhimirium in salad bars
During September and October of 1984, two outbreaks of Salmonella
typhimirium occurred in association with salad bars in restaurants in
The Dalles, Oregon. At least 751 people were affected. Members of the
local Rajneeshpuram commune intentionally caused the outbreak by
spraying Salmonella typhimirium on the salad bars in local restaurants.
Their apparent motivation was to influence a local election by
decreasing voter turnout. Intentional contamination was not suspected
immediately and no charges were brought until a year after the attacks
(Ref. 27).
The 751 people affected primarily were identified through passive
surveillance; thus the true number of people actually sickened is
undoubtedly much higher. The Dalles is located on Interstate 84 in
Oregon and is a frequent stop for travelers who were unlikely to be
identified by passive or active surveillance for salmonellosis.
However, since we do not have any estimates of the true size of the
outbreak, we estimated the costs associated with known cases,
recognizing this is an underestimate of the true cost of the outbreak.
We use the cost estimates for salmonellosis as ranging from $14,231 to
$25,133. This gives an estimated cost
[[Page 25227]]
of known cases for the outbreak of $10,687,000 to $18,875,000.
Shigella dysenteriae type 2 among laboratory workers
Twelve people working in a laboratory who consumed muffins left in
the laboratory break room contracted shigellosis. Affected workers had
diarrhea, nausea, and abdominal discomfort. Investigators concluded
that the outbreak likely was the result of deliberate contamination.
All twelve affected workers were treated by, or consulted with, a
physician. Nine affected workers went to the emergency room, four of
whom were hospitalized (Ref. 28).
To estimate the cost of this outbreak, FDA assumed that the eight
cases requiring consultation with a doctor, but not requiring
hospitalization, had the same cost as a moderate case of salmonellosis.
The four cases requiring hospitalization were estimated to have the
same cost as a severe case of gastroenteritis resulting from
salmonellosis. This gives a cost of $83,000 for illnesses associated
with the event.
Table 34.--Summary of Costs for Cases of Shigellosis
------------------------------------------------------------------------
Number of Cost per case Total cost
Severity cases (dollars) (dollars)
------------------------------------------------------------------------
Mild 0 0 0
------------------------------------------------------------------------
Moderate 8 2,593 21,000
------------------------------------------------------------------------
Severe 4 15,516 62,000
------------------------------------------------------------------------
Grand total 83,000
------------------------------------------------------------------------
Cyclospora cayatanensis in imported raspberries
In 1996, 1,465 cases of cyclosporiasis were linked to consumption
of raspberries imported from Guatemala. Nine hundred and seventy eight
of these cases were laboratory confirmed. No deaths were confirmed and
less than 20 hospitalizations were reported (Ref. 29). Case control
studies indicated that raspberries imported from Guatemala were the
source of the illnesses. Fifty-five clusters of cases were reported in
20 states, two Canadian provinces, and the District of Columbia (Ref.
30).
Cyclosporiasis typically causes watery diarrhea, loss of appetite,
weight loss, and fatigue. Less common symptoms include fever, chills,
nausea, and headache. The median duration of illness associated with
the outbreak was more than 14 days and the median duration of diarrheal
illness was 10 days (Ref. 30). We estimated the cost of a mild case of
cyclosporiasis as two and a half times higher than the cost of a mild
case of gastroenteritis from salmonellosis due to the longer duration.
The reports of cyclosporiasis outbreaks did not include information on
the number of physician visits. We assumed that the percentage of total
cases that result in physician visits would be larger than the
corresponding percentage for salmonellosis illnesses, due to the longer
duration of illnesses. We assumed, therefore, that 40 percent of those
infected with cyclosporiasis visited a physician. Less than 20
hospitalizations were reported from the cyclosporiasis outbreak (Ref.
29). No deaths were confirmed.
Table 35.--Summary of Costs for Cases of Cyclosporiasis
------------------------------------------------------------------------
Number of Cost per case
Severity cases (dollars) Total cost (dollars)
------------------------------------------------------------------------
Mild 879 1,650 1,450,000
------------------------------------------------------------------------
Moderate 586 3,748 2,196,000
------------------------------------------------------------------------
Severe 19 15,516 295,000
------------------------------------------------------------------------
Grand total $3,941,000
------------------------------------------------------------------------
Mechanisms: The new recordkeeping provisions we describe in the
options section would not only help FDA determine the cause of a
particular outbreak by tracing the source, they would also reduce
further adverse health effects by enabling FDA to trace forward to
locate adulterated food and its packaging that presents a threat of
serious adverse health consequences or death to humans and animals. We
expect that, working in concert with other regulations, having complete
records identifying all links in the chain of custody for a particular
product will allow FDA to more efficiently deploy its compliance and
regulatory resources in an event of an outbreak. Having complete
records increases the probabilities of FDA being able to trace back to
the source of an outbreak and of FDA being able to trace forward to
locate adulterated food and its packaging. FDA conducts approximately
20 emergency traceback investigations per year. Although no
investigation has been completely halted by a lack of adequate records
in the past several years, inadequate records have hindered
investigations. For example, FDA attempted to conduct approximately 38
tracebacks in a Cyclospora outbreak in 1997. Of those, we were able to
complete 33, and the majority of failures were due to the lack of
available records. More commonly, incomplete records severely impede
the ability of FDA to conduct effective investigations.
Faster required record access times may allow FDA to more rapidly
identify the source of an outbreak and limit its effects. Over the past
several years of FDA traceback investigations, the normal response time
between a request for data and the receipt of the records from the firm
is 2-3 days. The response times in these options would greatly speed up
the traceback process, which would be critical in limiting a deliberate
or accidental major outbreak.
[[Page 25228]]
Comparison of benefits under each option: Because we cannot
quantify these benefits, we cannot differentiate the benefits of each
option in dollar terms. Instead, we explore how effectively each of the
two mechanisms, trace back and response, would operate under each of
the options. The extent of coverage by each option is one criterion
that we use to evaluate the effectiveness of each mechanism since the
extent of coverage may influence the effectiveness of both trace-back
and response times. Tables 36 and 37 of this document present the
numbers of firms covered under each option, and the reduction in the
numbers of firms covered under each option when compared to those
covered under option 4. As in the costs section, option 4 was chosen
for comparison purposes for the sake of consistency. Foreign and
domestic coverage are presented separately in Tables 36 and 37 of this
document since there may be reason to weigh the benefits from the
inclusion of each category differently. Table 38 of this document
provides a summary of the expected effects.
Table 36.--Number of Firms Covered by Option
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option Domestic Foreign Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
2 459,998 535,432 995,431
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 425,365 449,676 875,041
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 425,365 449,676 875,041
--------------------------------------------------------------------------------------------------------------------------------------------------------
5 425,365 449,676 875,041
--------------------------------------------------------------------------------------------------------------------------------------------------------
6 351,772 449,676 801,448
--------------------------------------------------------------------------------------------------------------------------------------------------------
7 400,968 449,676 850,644
--------------------------------------------------------------------------------------------------------------------------------------------------------
8 425,365 449,676 875,041
--------------------------------------------------------------------------------------------------------------------------------------------------------
9 425,365 449,676 875,041
--------------------------------------------------------------------------------------------------------------------------------------------------------
10 425,365 186,879 612,245
--------------------------------------------------------------------------------------------------------------------------------------------------------
11 425,365 61,942 487,307
--------------------------------------------------------------------------------------------------------------------------------------------------------
12 425,365 0 425,365
--------------------------------------------------------------------------------------------------------------------------------------------------------
13 459,998 535,432 995,431
--------------------------------------------------------------------------------------------------------------------------------------------------------
Table 37.--Marginal Reduction in the Numbers of Firms Covered With Respect to Option 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option Domestic Foreign Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
2 (34,633)\1\ (85,756)\1\ (120,389)\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
3 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
4 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
5 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
6 73,594 0 73,594
--------------------------------------------------------------------------------------------------------------------------------------------------------
7 24,397 0 24,397
--------------------------------------------------------------------------------------------------------------------------------------------------------
8 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
9 0 0 0
--------------------------------------------------------------------------------------------------------------------------------------------------------
10 0 262,797 262,797
--------------------------------------------------------------------------------------------------------------------------------------------------------
11 0 387,735 387,735
--------------------------------------------------------------------------------------------------------------------------------------------------------
12 0 449,676 449,676
--------------------------------------------------------------------------------------------------------------------------------------------------------
13 (34,633)\1\ (85,756)\1\ (120,389)\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Numbers in parentheses are negative.
[[Page 25229]]
Evaluating the benefits by option using two mechanisms: (1) Complete
records (which increase the probability of a thorough trace-back
investigation), and (2) faster records access times (which may allow
for more rapid identification of the source of an outbreak and limit
its effects).
Option 1, no action: No impact.
Option 2, comprehensive coverage, 4 or 8 hour records access, 1 and
2 year records retention for perishables and all other products: This
option contains no exemptions, so it has the largest coverage of any of
the options we consider and ranks high with regard to improving the
ability to perform a thorough trace-back investigation. However, option
13 requires even greater additional record information collection,
which would aid in trace-back investigations. So, based on mechanism 1,
this option has the second highest benefits. With regard to the speed
criterion--this option also has the quickest response time specified in
any of the options. It is ranked second in overall benefits behind
option 13.
Option 3, same as option 2 except outer-packaging manufacturers and
distributors are excluded: The exclusion of outer food packagers from
recordkeeping requirements reduces the coverage and the potential to
perform a thorough trace-back investigation compared with option 2. It
is also unclear what the relative risk of outer food packaging is
compared with the risk of the food itself (including food contact
substances), but FDA assumes that the potential harm through packaging
adulteration, although serious, is lower than the potential harm
through adulteration of food. This would tend to mitigate the
consequences on potential trace-back capability from excluding these
facilities. This option also scores relatively well if rated by the
speed criterion since the records-access time is the same as in option
2. The exclusion of outer packaging manufacturers and distributors will
not reduce benefits by much compared with option 2--especially because
the risk of contamination through outer packaging is likely to be
small.
Option 4, same as option 3 except recordkeeping on outer-packaging
is excluded: The reduction in benefits from not requiring recordkeeping
on outer food packaging is assumed to be negligible compared with
option 3. Therefore, the benefits from this option are about the same
as option 3 using both the complete records criterion and the speed
criterion.
Option 5, same as option 4 except records access requirement is
relaxed to 24 hours: This option does not differ much from option 4 by
this ranking criterion, since it has the same domestic and foreign
coverage and record scope requirements. However, this option scores
relatively low by the speed criterion, since all other options would
require a much faster response time for records access.
Option 6, same as option 4 except intrastate facilities are
excluded: This option has lower benefits than many other options since
it exempts the largest number of domestic facilities of any option. The
relative ranking of options that offer exemptions will be affected by
the total number of facilities exempted and the breadth of the supply
chain these facilities cross. This intrastate exclusion would affect
many different facility types throughout the supply chain, including
approximately 91,383 domestic manufacturers, wholesalers, and
warehouses. In addition, many facilities involved only in intrastate
commerce handle food products that eventually will be introduced into
interstate commerce farther along the supply chain. While intrastate
facilities are likely to be small, if they are participants in the
chain of custody of the food that causes a major outbreak, their
exclusion could disrupt FDA's ability to identify the source of an
outbreak and limit its effects. The overall ranking of this option is
behind option 10.
Option 7, same as option 4 except mixed-type facilities that engage
in farming are excluded: There are fewer exempted facilities in this
option, owned by approximately 24,397 domestic firms, than in option 6.
Furthermore, these exempt firms are mixed-type facilities that engage
in farming and would be closer to the beginning of the chain of custody
for food products. FDA considers this option to have lower benefits
than option 5, since fewer facilities would be required to keep records
that may be needed for a traceback investigation, but higher benefits
than options 6 and 10-12, since fewer facilities would be exempt and
especially since these facilities are closer to the beginning of the
supply chain.
Option 8, same as option 4 except there is a universal records-
retention requirement of 1 year for perishables and all other products:
All other things being equal, the shorter the retention time for
records, the more likely that those records would be missing when
needed for a trace-back investigation. Most nonperishable products and
perishable products that are processed into finished food products may
be in the supply chain for longer than a year, but it is very likely
that the effects of a contamination of nonperishable goods would be
seen within a year of being introduced in the market. FDA considers
this option to have higher benefits than options 6 and 7, and higher
benefits than the other exemptions offered in options 10-12. Option 8
is ranked lower than option 9 because of the nonzero probability that a
nonperishable food is adulterated and that adulteration is not
discovered until more than a year after the event.
Option 9, same as option 4 except there is a universal records-
retention requirement of 2 years for perishables and all other
products: Once again, all other things being equal, the longer the
record retention the better, so this option probably has more benefits
than option 2. While option 9 has the benefit of simplicity in that
there is only one retention requirement for all records, in practical
terms the danger from a perishable good will be known soon after that
good is consumed. Consequently, keeping records longer than one year
for perishable goods that are consumed in an unaltered state would most
likely exceed the time period of many tracing investigations.
Therefore, based on the ability to conduct a thorough investigation,
FDA ranks the benefits of this option as roughly equal to option 4,
especially since the longer records-retention requirement should not
affect the speed of an investigation.
Option 10, same as option 4 except that foreign coverage is the
same as for the registration Proposed rule: The Proposed option would
generate more benefits than other options that exempt foreign
facilities. Since the foreign coverage is progressively lower for
options 10, 11, and 12, the benefits also decrease for those options
accordingly. However, the benefit from improved recordkeeping practices
by a given set of facilities also depends on the amount of food
produced by those facilities. Because imported food accounts for a
small percentage of total domestic food consumption, the average amount
of domestically consumed food from foreign facilities is smaller than
that from domestic facilities. Under this option, the reduction in the
number of foreign facilities that are covered is proportionally greater
than the reduction in the amount of food covered. As a result, the
incremental reduction in potential costs caused by the exemption of
foreign facilities should be larger than the incremental reduction in
benefits. The exemption of foreign facilities under this option
[[Page 25230]]
would likely hamper trace-back capability by less than an exemption of
the same number of domestic facilities.
Moreover, option 10 has the added benefit of simplicity in that the
foreign coverage would be the same as that covered under the
registration rule. This parallel coverage to the registration rule
would make monitoring both recordkeeping and registration practices
less costly.
Option 11, same as option 4 except that foreign coverage includes
only the final holders before export: In addition to the exemptions in
option 10, this option exempts an additional single category in the
middle of the foreign supply chain and with a large number of
facilities. Consequently, the benefits under this option are lower than
under option 10 by both the speed criterion and the thorough
investigation criterion. However, as we explained in the discussion of
option 10, the proportionally smaller importance of imported foods in
the domestic food supply implies that the exemption should have
relatively little effect on benefits.
Option 12, same as option 4 except that all foreign facilities are
excluded: This option exempts all foreign suppliers from record-keeping
requirements. When compared to options 10 and 11, the number of foreign
firms covered under this option is the lowest. As such, the benefits of
this option, when compared to the other two, are the lowest as well
using both the speed criterion and the ability to conduct a thorough
investigation.
Option 13, comprehensive coverage that requires facilities to be
able to tie specific input ingredients to specific products: This
option generates the highest benefits. A complete list of the specific
source of all ingredients would be available for all processed and raw
foods, greatly aiding traceback and trace forward investigations. In
addtion, of all the options, this would allow investigators to most
quickly identify candidate traceback facilities, since it would allow
FDA to effectively narrow our search to specific entities.
Table 38 of this document presents the overall ranking of each
option based on the previous summary. Option 13, requiring input
ingredients to be connected to output ingredients through records, has
the highest absolute benefits, followed by option 2. The lowest ranked
option in terms of absolute benefits is the baseline, option 1, and the
lowest benefits of the possible interventions would be the Proposed
rule with a complete foreign facility exemption, due to the large
number of foreign facilities where adulteration might occur. FDA
requests comments on this ranking.
Table 38.--Ranking of Effectiveness of Each Mechanism Under Each Option
------------------------------------------------------------------------
Overall
Option: Benefit 1 Benefit 2 Ranking
------------------------------------------------------------------------
1) No action 13 13 13
------------------------------------------------------------------------
2) 4 or 8 hour records access 2 2 2
------------------------------------------------------------------------
3) Outer packaging exemption 3 3 3
------------------------------------------------------------------------
4) Exclude recordkeeping on outer 3 3 3
packaging
------------------------------------------------------------------------
5) 24-hour records access 7 9 8
------------------------------------------------------------------------
6) Intrastate exemption 10 10 10
------------------------------------------------------------------------
7) Mixed-type facilities that 5 5 5
engage in farming
------------------------------------------------------------------------
8) 1-year record retention 7 7 7
------------------------------------------------------------------------
9) 2-year record retention 6 6 6
------------------------------------------------------------------------
10) Proposed. Same foreign 8 8 8
coverage as Registration
------------------------------------------------------------------------
11) Cover only final foreign 11 11 11
holders
------------------------------------------------------------------------
12) Exempt all foreign suppliers 12 12 12
------------------------------------------------------------------------
13) Input to output requirement 1 1 1
------------------------------------------------------------------------
B. Initial Regulatory Flexibility Analysis
FDA has examined the economic implications of this Proposed rule as
required by the Regulatory Flexibility Act (5 U.S.C. 601-612). If a
rule has a significant economic impact on a substantial number of small
entities, the Regulatory Flexibility Act requires agencies to analyze
regulatory options that would lessen the economic effect of the rule on
small entities. FDA finds that this Proposed rule would have a
significant economic impact on a substantial number of small entities.
Impact per firm: We define small as employing fewer than 500 full-
time-equivalent workers. The SBA uses several criteria for identifying
a small firm based on its NAICS code, but having less than 500
employees is the most common SBA small definition in the food industry
(Ref. 31). We also consider two definitions of very small: Less than 20
employees and less than 10 employees. The great majority of firms are
considered small when classified by any of these definitions. Table 39
presents the percent of firms in each of these categories. Not included
in this table are farm numbers. We calculated farm percentages using
the Agricultural census through the NASS, but the Agricultural census
only classifies farm size by sales and acreage, not by the number of
employees (Ref. 19). Fifty percent of farms have less than $10,000 in
annual sales. Neither SBA definitions nor employee data exist for
exclusive food importers; we assume that the percentage of small firms
in this category is similar to the percentage in other food categories.
We do not include foreign firms in this analysis because the Regulatory
Flexibility Act does not
[[Page 25231]]
apply to foreign entities. It is clear from Table 39 of this document
that any provision in this regulation that takes the size of the
facility into account would cover a significant percent of food
businesses.
Table 39.--Percentage of Small and Very Small Firms
----------------------------------------------------------------------------------------------------------------
Type < 500 Employees < 20 Employees < 10 Employees
----------------------------------------------------------------------------------------------------------------
Manufacturers 98.0% 85.3% 77.0%
----------------------------------------------------------------------------------------------------------------
Wholesalers/Warehouses 99.3% 89.4% 82.2%
----------------------------------------------------------------------------------------------------------------
Packaging\1\ 98.6% 87.0% 78.7%
----------------------------------------------------------------------------------------------------------------
Transporter/Packers 99.5% 94.8% 89.5%
----------------------------------------------------------------------------------------------------------------
Grocery and other Retail 99.7% 93.9% 87.8%
----------------------------------------------------------------------------------------------------------------
Convenience Stores 99.6% 88.9% 73.1%
----------------------------------------------------------------------------------------------------------------
Mixed-Type Facilities that Have Farms -- -- --
----------------------------------------------------------------------------------------------------------------
Importers -- -- --
----------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
In Tables 40 and 41 of this document, FDA presents the average and
maximum possible burden placed on each small and very small firm
following the adoption of the final rule. We explain these costs in
detail in the preliminary regulatory impact analysis. Costs fall into
four categories: learning about the regulation, redesigning records to
accommodate new information, collecting and maintaining new
information, and planning for a rapid response in the event of a
records request from FDA under this authority. The average mean startup
costs reported in the table are approximately $888, and the average
mean recurring costs reported in the table are approximately $222.
Based on our assumptions, average maximum startup costs are
approximately $2569 and the average maximum recurring costs reported in
the table are $521. We also acknowledge considerable nonquantifiable
uncertainty in these estimates, so the true burden of the regulation on
small businesses could be higher or lower.
The estimated burden on convenience stores is lower since: (1) We
assume that most convenience stores will depend on either a corporate
parent or other facility in the supply chain for document redesign, and
(2) only a small percentage of convenience stores sales (11.4 percent
according to a comment received through FDA's early outreach) is for
food products, so the volume of food products for which they would have
to collect information and prepare access is relatively small.
Transporters and Packing firm costs are larger since we assume that
transporting firms would not be able to share records redesign costs
with firms up or down the supply chain. We also assumed that packaging
producers and distributors would have to maintain relatively less
additional information since not all of their products will be used to
pack food. In subsequent years, all firms will only incur the
additional records maintenance burden.
Table 40.--Average Startup and Recurring Costs Per Firm
----------------------------------------------------------------------------------------------------------------
Transporter/ Convenience
Cost Packer Store Packaging\1\ Other
----------------------------------------------------------------------------------------------------------------
Startup
----------------------------------------------------------------------------------------------------------------
Learning $120 $120 $120 $120
----------------------------------------------------------------------------------------------------------------
Redesign $1,211 $121 $606 $606
----------------------------------------------------------------------------------------------------------------
Access Preparation $151 $75 $151 $151
----------------------------------------------------------------------------------------------------------------
Total Startup $1,482 $317 $876 $876
----------------------------------------------------------------------------------------------------------------
Recurring
----------------------------------------------------------------------------------------------------------------
Additional Records Maintenance $326 $63 $163 $326
----------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
The maximum first year costs per firm are calculated using the
following assumptions: First, a firm may not have Internet access, so
it may have a 5 1/2 hour learning burden. Next, a firm may incur the
largest value in the distribution of redesign costs, and may not be
able to share the redesign burden with other facilities. Finally, the
firm may not receive records with any additional information previously
collected that is required in this Proposed rule. Thus they may incur
the entire burden of additional records maintenance. We assume access
preparation costs do not vary.
[[Page 25232]]
Table 41.--Maximum Startup and Recurring Costs Per Firm
----------------------------------------------------------------------------------------------------------------
Transporter/ Convenience
Cost Packer Store Packaging\1\ Other
----------------------------------------------------------------------------------------------------------------
Startup
----------------------------------------------------------------------------------------------------------------
Learning $138 $138 $138 $138
----------------------------------------------------------------------------------------------------------------
Redesign $2,299 $2,299 $2,299 $2,299
----------------------------------------------------------------------------------------------------------------
Access Preparation $151 $75 $151 $151
----------------------------------------------------------------------------------------------------------------
Total Startup $2,588 $2,512 $2,588 $2,588
----------------------------------------------------------------------------------------------------------------
Recurring
----------------------------------------------------------------------------------------------------------------
Additional Records Maintenance $653 $126 $653 $653
----------------------------------------------------------------------------------------------------------------
\1\ Includes both outer packaging and food contact substances.
In order to get a rough estimate of the impact of higher
recordkeeping costs on small businesses, we ran the small business
simulation model that was developed by FDA's contractor, RTI
International (Ref. 31), for the candy and ready-to-eat food sectors.
In the simulation, we used the high annual costs of the second year
per-firm recordkeeping costs (about $850) to see the impact on revenues
and cash flow. The results from the simulation indicate that when firm
size (by number of employees) is assumed to be normally distributed,
the recordkeeping costs in the second year would result in pre-tax
costs being greater than cash flow for 0.1 percent of firms with fewer
than 20 employees in the candy industry. For the ready-to-eat sector,
the results indicate that the high second year per-firm recordkeeping
costs would not result in pre-tax costs being greater than cash flow
for any firms.
Additional flexibility considered: Agencies can consider three
basic small business regulatory options: First, if the implementing
statute allows, an agency could exempt small businesses from all
regulatory requirements. In addition, an agency could modify the
regulatory requirements for small businesses, including offering an
exemption from part of the regulation. Finally, an agency could specify
a longer effective compliance date for small businesses. In this
Proposed rule, FDA considers each of these possibilities. We designed
several provisions to lower the impact on small firms, some of which
apply to small firms exclusively, and some of which apply to all firms.
First, FDA proposes a staggered effective compliance date for this
regulation. The compliance dates are the following: 6 months for large
firms, 12 months for small firms, defined as having less than 500 but
more than 10 full-time equivalent employees, and 18 months for very
small firms, defined as having 10 or fewer full-time equivalent
employees. Only one of the cost estimates we explained in detail in the
preliminary regulatory impact analysis directly depends on the
compliance date; records redesign cost. We estimated using the FDA
Label Cost Model that very small firms would save an average of 10
percent in their redesign costs by having longer than a year to comply.
The medium 1-year redesign cost estimate is $1,309 per redesign. We
assume this cost is shared between two firms, since a single set of
records can serve as source, recipient, and transport records. The
average redesign cost per firm is $655 for firm types other than
transporters and convenience stores. The median 18-month redesign cost
estimate is $1,190 per redesign, for an average cost of $595 per firm.
The estimated medium redesign burden would drop by $60 per firm, or 8
percent of the estimated average first startup burden of the
regulation. Also, present value considerations will result in reduced
future cost estimates. Thus, the later compliance dates specified in
the Proposed rule will reduce the total cost for all small firms. FDA
requests comments regarding these assumptions.
In addition, FDA is proposing to describe the specific information
a covered entity must keep, but not specify the form or type of system
in which those records must be maintained, which will allow firms to
comply with the regulation in a manner that is cost effective. Mandated
structural changes to records or required retention technology probably
would not be the most cost effective solution for every firm, so not
specifying the form or type of system in which the records must be
maintained almost certainly would impose a smaller burden on industry,
including small businesses. Comments to FDA's preliminary outreach
generally agreed with this position. FDA believes that describing the
specific information a covered entity must keep, but not specifying the
form or type of system in which those records must be maintained is the
most flexible means of proposing this regulation for all businesses.
However, FDA also believes that each provision in this Proposed rule is
necessary to tracing investigations, so we do not propose any
additional flexibility for small or very small businesses.
Finally, FDA is proposing several exemptions based on facility
type. Since the majority of facilities of each type are small
businesses, these exemptions will reduce the small business burden of
this regulation. In the Proposed rule, FDA exempts retail facilities
from having to maintain records of final consumers who purchase retail
food products. Requiring firms to collect and maintain consumer
information would increase the burden on retail facilities by at least
the amount of the current redesign burden and current additional
records maintenance burden summarized in Table 40 of this document.
Without this exemption, retail firms (including small retail firms)
would have to design and maintain an entirely new recordkeeping system.
Most other small business exemptions are infeasible for this
regulation because we believe records held by these businesses are an
important link in the chain of custody for the food products. As shown
in Table 39 of this document, a large percentage of the food industry
would be exempt under any blanket small business exemption. Even
nonemployee businesses (who have no paid employees, the smallest
exemption possible) still constitute a substantial proportion of the
food industry. Any type of exemption in the middle of the
[[Page 25233]]
supply chain very likely would make records unavailable and therefore
would break the chain of custody of many products during tracing
investigations.
The Bioterrorism Act exempts farms and restaurants. Because most
farms and restaurants are small businesses, this exemption provides
regulatory relief to small entities. In addition, in this Proposed rule
the term ``farm'' includes facilities that pack or hold food, provided
that all food used in such activities is grown or raised on that farm
or is consumed on that farm; ``farm'' also includes facilities that
manufacture or process food, provided that all food used in such
activities is consumed on that farm or another farm under the same
ownership. Most of these facilities are small entities. The statutory
exemptions provide considerable relief to small entities without
compromising the purpose of the recordkeeping regulation. FDA will
continue to conduct research regarding possible further exemptions, and
requests comments regarding possible exemptions that would provide
additional relief for small businesses while still accomplishing the
goals of the Bioterrorism Act.
C. Unfunded Mandates
Title II of the Unfunded Mandates Reform Act of 1995 (Public Law
104-4) requires cost-benefit and other analyses before any rule making
if the rule would include a ``Federal mandate that may result in the
expenditure by State, local, and tribal governments, in the aggregate,
or by the private sector, of $100,000,000 or more (adjusted annually
for inflation) in any 1 year.'' The current inflation-adjusted
statutory threshold is $112,300,000. FDA has determined that this
Proposed rule does constitute a significant rule under the Unfunded
Mandates Reform Act.
Most of the requirements of the Unfunded Mandates are fulfilled in
the Executive Order 12866 analysis, above. The requirements under the
Unfunded Mandates Act of 1995 include assessing the rule's effects on
future costs; productivity; particular regions, communities, or
industrial sectors; economic growth; full employment; job creation; and
exports.
Future costs: The future costs from the recordkeeping rule include
the recurring costs, which reach their long-term value in the third
year after the Proposed rule would become final. These costs would be
incurred by domestic facilities that manufacture, process, pack,
transport, distribute, receive, hold, or import food, and the foreign
facilities that are subject to this Proposed rule (foreign
manufacturers, processors, packers, and holders of food that would be
required to register).
Recurring costs from collecting new information would be incurred
in each future year. The estimates of these costs were modeled using
the previous analysis of the juice HAACP regulation as a frame of
reference. An hourly burden of 30 minutes a week was used for the
additional monitoring and recordkeeping that would be required from
this Proposed rule. This hourly burden estimate was modified for
foreign facilities and convenience stores to allow for structural
differences assumed in their operations. For a fuller illustration of
the future costs of the Proposed rule, see Table 20 of this document.
Table 42.--Future Costs
----------------------------------------------------------------------------------------------------------------
Mean Low High
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $221,130,000 $212,313,000 $229,680,000
----------------------------------------------------------------------------------------------------------------
Particular regions, communities, or industrial sectors: The costs
of the recordkeeping requirement will be shared among domestic
manufacturers, processors, packers, transporters, receivers, holders,
and importers of food, and the foreign facilities that would be subject
to this Proposed rule (foreign holders, packers, manufacturers, and
processors that would be required to register) as well as domestic
consumers. The higher costs incurred by domestic and foreign suppliers
as a result of these regulations will mostly be passed on to consumers
in the form of higher food prices. Since consumer demand for food is
highly inelastic almost all of the higher costs incurred by food
suppliers will be passed on to consumers. Consequently, higher food
prices will reduce real incomes for all consumers. However, we believe
that the benefits from these regulations will justify the reduction in
real incomes. These benefits are measured as an improved ability by the
FDA to respond to and contain threats of serious adverse health
consequences from accidental or deliberate contamination of food.
National productivity, economic growth, job creation, and full
employment: Although this Proposed regulation is costly, we do not
expect it to substantially affect national productivity, growth, jobs,
or full employment. The total costs will be small relative to the
economy, and will be offset by benefits. The improved ability to
respond to, and contain, serious adverse health consequences means less
illness and fewer sick days taken by employees, and lower adjustment
costs by firms that would otherwise need to hire replacement employees.
Exports: This Proposed rule would require additional records to be
kept throughout the production and distribution chain for food. The
additional recordkeeping costs would increase the total costs of
production and distribution for all of the regulated products,
including products sold within the United States and across national
borders. These increased costs will be largely passed on to consumers
in the form of higher prices, which will tend to reduce the quantity
demanded of the regulated products. The increased prices of U.S.
exports could reduce the quantity of U.S. exports demanded,
particularly in comparison with exports from countries that do not
implement similar recordkeeping regulations. We expect this effect to
be insignificant, because under the Proposed rule (option 10, described
above), the increases in the price of U.S. exports (and resulting
decreases in quantity demanded) would be quite small.
D. SBREFA Major Rule
The Small Business Regulatory Enforcement Fairness Act of 1996
(Public Law 104-121) defines a major rule for the purpose of
congressional review as having caused or being likely to cause one or
more of the following: An annual effect on the economy of $100 million;
a major increase in costs or prices; significant adverse effects on
competition, employment, productivity, or innovation; or significant
adverse effects on the ability of United States-based enterprises to
compete with foreign-based enterprises in domestic or export markets.
In accordance with the Small Business Regulatory Enforcement Fairness
Act, OMB has determined that
[[Page 25234]]
this Proposed rule, when final, will be a major rule for the purpose of
congressional review.
IV. Paperwork Reduction Act of 1995
This Proposed rule contains information collection provisions that
are subject to review by OMB under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501-3520). A description of these provisions is given below
with an estimate of the annual recordkeeping burden. Included in the
estimate is the time for reviewing instructions, searching existing
data sources, gathering and maintaining the data needed, and completing
and reviewing each collection of information.
FDA invites comments on: (1) Whether the Proposed collection of
information is necessary for the proper performance of FDA's functions,
including whether the information would have practical utility; (2) the
accuracy of FDA's estimate of the burden of the Proposed collection of
information, including the validity of the methodology and assumptions
used; (3) ways to enhance the quality, utility, and clarity of the
information to be collected; and (4) ways to minimize the burden of the
collection of information on respondents, including through the use of
automated collection techniques, when appropriate, and other forms of
information technology.
Title: Recordkeeping and Records Access Requirements for Food
Facilities
Description: The Bioterrorism Act contains a provision authorizing
the Secretary to develop regulations requiring food facilities that
manufacture, process, pack, hold, receive, distribute, transport, or
import food to establish and maintain records identifying the immediate
previous sources and immediate subsequent recipients of food, animal
food, or food ingredients. Records for nontransporters must include the
name and full contact information of sources, recipients, and
transporters, an adequate description of the food including the
quantity and the way that it is packaged, and the receipt and shipping
dates. Records for transporters must include similar information about
the food or food packaging, sources, and recipients, identification of
all modes of transportation, and responsible individuals, while the
food or food packaging is in the custody of the transporter.
Description of Respondents: Facilities that manufacture, process,
pack, hold, receive, distribute, transport, or import food are required
to establish and maintain records, including facilities in both
interstate and intrastate commerce. Foreign manufacturers, processors,
packers, and holders of food that would be required to register are
required to maintain records if they ship food to the United States.
Burden: FDA estimates that the paperwork burden of this rule will
be incurred by the number and types of firms and facilities listed in
Table 43 of this document. FDA assumes that, approximately 841,000
facilities owned by approximately 646,000 firms would be covered. This
number includes domestic facilities that manufacture, process,
transport, distribute, pack, receive, hold, or import food, and the
foreign facilities that manufacture, process, package, or hold food
destined for consumption or use in the United States that would be
required to register. Some of the recordkeeping burden will be incurred
at the firm level and some of the burden will be incurred at the
facility level.
Table 43.--Affected Facility and Firm Details
----------------------------------------------------------------------------------------------------------------
Type Facility Estimate Firm Estimate
----------------------------------------------------------------------------------------------------------------
Manufacturers 43,376 36,948
----------------------------------------------------------------------------------------------------------------
Wholesalers/Warehouses 95,745 76,952
----------------------------------------------------------------------------------------------------------------
Packaging\1\ 36,907 34,633
----------------------------------------------------------------------------------------------------------------
Transporters/Packers 16,773 15,171
----------------------------------------------------------------------------------------------------------------
Retail Grocery and Specialty Food 207,657 153,277
----------------------------------------------------------------------------------------------------------------
Convenience Stores 128,985 68,866
----------------------------------------------------------------------------------------------------------------
Mixed-Type Facilities That Have Farms 30,497 24,397
----------------------------------------------------------------------------------------------------------------
Importers 18,902 15,122
----------------------------------------------------------------------------------------------------------------
Total Domestic 578,842 425,366
----------------------------------------------------------------------------------------------------------------
Final Holders 77,427 61,942
----------------------------------------------------------------------------------------------------------------
De minimus Processors/Packagers 22,600 18,080
----------------------------------------------------------------------------------------------------------------
Manufacturers 125,450 106,858
----------------------------------------------------------------------------------------------------------------
Other Facility Types .................................. ..................................
----------------------------------------------------------------------------------------------------------------
Total Foreign 225,477 186,879
----------------------------------------------------------------------------------------------------------------
\1\ Including outer packaging and food contact substances.
The recordkeeping burden for Sec. Sec. 1.337, 1.345, and 1.352
includes learning about the regulation requirements, the redesign of
records, and records maintenance including information collection for
these records. The burden for Sec. 1.361 is associated with planning
for and executing an FDA request for records. Because it is difficult
to estimate with any degree of precision the burden incurred from
executing a records access request, we only compute the burden for
firms to prepare for a potential records access request from FDA.
[[Page 25235]]
The burden for learning the regulatory requirements of this
Proposed recordkeeping rule may be shared by firms that also need to
learn the regulatory requirements of the Proposed rule entitled
``Registration of Food Facilities'' (68 FR 5378, February 3, 2003). The
learning burden presented in Table 44 of this document includes the
total number of hours needed to learn and understand the records
required for compliance. This is a one-time burden that covered firms
will incur in the first year following enactment of the final rule.
The records redesign burden presented in Table 44 of this document
reflects the burden that some firms will incur by adding a limited
amount of new information to their records. Some firms will not already
be keeping the required information in a readily accessible form. The
records redesign burden includes labor and capital costs associated
with modifying existing forms so that they are better suited to meet
the recordkeeping requirements. This is assumed to be a one-time burden
incurred by each covered firm in the first and second years following
implementation of the final rule.
The records access preparation burden presented in Table 44 of this
document reflects the burden of preparing a plan for modifying current
business practices in order to be able to respond to an FDA records
request in the 4-hour or 8-hour required timeframe. The estimate of the
records access planning burden is a one-time burden that would be
incurred in the first and second years following enactment of the final
rule. We assume that this burden will be incurred by each facility.
FDA expects that personnel at most facilities will incur a records
maintenance burden due to collecting, recording, and checking for
accuracy the limited amount of additional information required by the
Proposed rule. The burden from this activity is reported in table 45 of
this document and is assumed to be incurred by all facilities in each
subsequent year following enactment of the final rule. Finally, new
firms are assumed to incur burdens from learning and records access
preparation in each subsequent year following enactment of the final
rule. These burdens for new firms are reported in table 44 of this
document.
Table 44.--Estimated Annual Recordkeeping Burden--One-Time Burden\1\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Annual
21 CFR Section No. of Frequency per Total Annual Hours per Capital Costs Total Hours
Recordkeepers Record Records Record
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352, (Learning) 804,319 1 804,319 6.853 .............. 5,512,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352, (Redesign) 278,858 1 278,858 29.607 $130,582,000 8,256,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
1.361 (Access Preparation) 552,630 1 552,630 5.626 .............. 3,109,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total 16,877,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ There are no operating and maintenance costs associated with this collection of information.
Table 45.--Estimated Annual Recordkeeping Burden--Subsequent Years\1\
----------------------------------------------------------------------------------------------------------------
Annual
21 CFR Section No. of Frequency per Total Annual Hours per Total Hours
Recordkeepers Record Records Record
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352 772,410 1 772,410 10.625 8,207,000
(Additional Records
Maintenance)
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352, 80,432 1 80,432 6.853 551,000
(Learning for New Firms)
----------------------------------------------------------------------------------------------------------------
1.361 (Access Preparation for 55,263 1 55,263 5.626 311,000
New Firms)
----------------------------------------------------------------------------------------------------------------
Total 9,069,000
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
information.
In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C.
3507(d)), the agency has submitted the information collection
provisions of this Proposed rule to OMB for review. Interested persons
are requested to send comments regarding information collection to OMB
(see ADDRESSES).
V. Analysis of Environmental Impact
The agency has carefully considered the potential environmental
effects of this action. FDA has concluded under 21 CFR 25.30(h) that
this action is of a type that does not individually or cumulatively
have a significant effect on the human environment. Therefore, neither
an environmental assessment nor an environmental impact statement is
required.
VI. Federalism
FDA has analyzed this Proposed rule in accordance with the
principles set forth in Executive Order 13132. FDA has determined that
the Proposed rule does not contain policies that have substantial
direct effects on the States, on the relationship between the National
Government and the States, or on the distribution of power and
responsibilities among the various levels of government. Accordingly,
the agency tentatively concludes that the Proposed rule does not
contain policies that have federalism implications as defined in the
Executive order and, consequently, a federalism summary impact
statement is not required.
VII. Comments
Interested persons may submit to the Dockets Management Branch (see
ADDRESSES) written or electronic comments regarding this document.
Submit a single copy of electronic comments or two paper copies of any
mailed comments, except that individuals may submit one paper copy.
Comments are to be identified with the docket number found in brackets
in the
[[Page 25236]]
heading of this document. FDA cannot be responsible for addressing
comments submitted to the wrong docket or that do not contain a docket
number. Received comments may be seen in the Dockets Management Branch
between 9 a.m. and 4 p.m., Monday through Friday.
FDA notes that the comment period for this document is shorter than
the 75-day period that the agency customarily provides for Proposed
rules that are technical or sanitary or phytosanitary (SPS) measures.
FDA believes that a 60-day comment period is appropriate in this
instance. Executive Order 12889, ``Implementation of the North American
Free Trade Agreement'' (58 FR 69681, December 30, 1993), states that
any agency subject to the Administrative Procedure Act must provide a
75-day comment period for any Proposed Federal technical regulation or
any Federal SPS measure of general application. Executive Order 12889
provides an exception to the 75-day comment period where the United
States considers a technical or SPS measure of general application
necessary to address an urgent problem related to the protection of
human, plant, or animal health. FDA has concluded that this Proposed
rule is subject to the exception in Executive Order 12889.
The Bioterrorism Act states that it is intended ``[t]o improve the
ability of the United States to prevent, prepare for, and respond to
bioterrorism and other public health emergencies.'' In order to meet
these objectives, section 306 of the act requires FDA to propose and
issue final regulations requiring the establishment and maintenance of
records within 18 months of the Bioterrorism Act's enactment, which is
by December 12, 2003. This expedited timeframe reflects the urgency of
the U.S. Government's need to prepare to respond to bioterrorism and
other food-related emergencies. Accordingly, FDA has concluded that the
urgency of this matter is sufficient justification for shortening the
public comment period for this proposal to 60 days, consistent with
Executive Order 12889.
FDA will not consider any comments submitted after the 60-day
comment period closes and does not intend to grant any requests for
extension of the comment period due to the Bioterrorism Act's December
12, 2003, deadline.
VIII. References
The following references have been placed on display in the Dockets
Management Branch (see ADDRESSES) and may be seen by interested persons
between 9 a.m. and 4 p.m., Monday through Friday. FDA has verified the
Web site addresses in this document, but is not responsible for
subsequent changes to the Web sites after this document publishes in
the Federal Register.
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List of Subjects
21 CFR Part 1
Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling,
Reporting and recordkeeping requirements.
21 CFR Part 11
Administrative practice and procedure, Computer technology,
Reporting and recordkeeping requirements.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, it is
Proposed that 21 CFR parts 1 and 11 be amended as follows:
PART 1--GENERAL ENFORCEMENT REGULATIONS
1. The authority citation for 21 CFR part 1 continues to read as
follows:
Authority: 15 U.S.C. 1453, 1454, 1455; 21 U.S.C. 304, 321, 331,
334, 343, 350c, 350d, 352, 355, 360b, 362, 371, 374, 381, 382, 393;
42 U.S.C. 216, 241, 243, 262, 264.
2. Subpart J is added to part 1 to read as follows:
Subpart J--Establishment, Maintenance, and Availability of Records
General Provisions
Sec.
1.326 Who is subject to this subpart?
1.327 Who is excluded from all or part of the regulations in this
subpart?
1.328 What definitions apply to this subpart?
1.329 Do other statutory provisions and regulations apply?
1.330 Can existing records satisfy the requirements of this subpart?
Requirements to Establish and Maintain Records to Identify the
Nontransporter and Transporter Immediate Previous Source of All Food
1.337 What information is required in the records you must establish
and maintain to identify the nontransporter and transporter
immediate previous source?
Requirements to Establish and Maintain Records to Identify the
Nontransporter and Transporter Immediate Subsequent Recipient of All
Food
1.345 What information is required in the records you must establish
and maintain to identify the nontransporter and transporter
immediate subsequent recipient?
Requirements to Establish and Maintain Records to Trace the
Transportation of All Food
1.351 Who is required to establish and maintain records for tracing
the transportation of all food?
1.352 What information is required in the transportation records?
General Requirements
1.360 What are the record retention requirements?
1.361 What are the record availability requirements?
1.362 What records are excluded from this subpart?
1.363 What are the consequences of failing to establish or maintain
records or make them available to FDA?
Effective Dates
1.368 What are the compliance dates for this subpart?
Subpart J--Establishment, Maintenance, and Availability of Records
General Provisions
Sec. 1.326 Who is subject to this subpart?
(a) Domestic persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food intended for consumption in
the United States are subject to the regulations in this subpart,
unless you qualify for one of the exclusions in Sec. 1.327. In
addition, foreign facilities that manufacture/process, pack, or hold
food for human or animal consumption in the United States are subject
to these regulations, unless you qualify for one of the exclusions in
Sec. 1.327. If you conduct more than one type of activity at a
location, you are required to keep records with respect to those
activities covered by this subpart, but are not required by this
subpart to keep records with respect to activities that fall within one
of the exclusions in Sec. 1.327.
(b) Persons subject to the regulations in this subpart must keep
records whether or not the food enters interstate commerce.
Sec. 1.327 Who is excluded from all or part of the regulations in
this subpart?
(a) Farms are excluded from all of the regulations in this subpart;
(b) Restaurants are excluded from all of the regulations in this
subpart;
(c) Fishing vessels including those that not only harvest and
transport fish but also engage in practices such as heading,
eviscerating, or freezing intended solely to prepare fish for holding
on board a harvest vessel are excluded from all of the regulations in
this subpart, except Sec. 1.361 and Sec. 1.363. However, those
fishing vessels otherwise engaged in processing fish, which for
purposes of this subsection means handling, storing, preparing,
heading, eviscerating, shucking, freezing, changing into different
market forms, manufacturing, preserving, packing, labeling, dockside
unloading, or holding, are subject to all of the regulations in this
subpart;
(d)(1) All retail facilities are excluded from Sec. 1.345 of this
subpart;
(2) Retail facilities that employ 10 or fewer full-time equivalent
employees that:
(i) Are located in the same general physical location as a farm;
and
(ii) Sell unprocessed food grown or raised on that farm or on
another farm located in the same general physical location are excluded
from all of the regulations in this subpart, except Sec. 1.361 and
Sec. 1.363, with respect to that unprocessed food.
(e) Persons who manufacture, process, pack, transport, distribute,
receive, hold, or import food that is within the exclusive jurisdiction
of the U.S. Department of Agriculture under the Federal Meat Inspection
Act (21 U.S.C. 601 et seq.), the Poultry Products Inspection Act (21
U.S.C. 451 et seq.), or the Egg Products Inspection Act (21 U.S.C. 1031
et seq.) are excluded from all of the regulations in this subpart with
respect to that food.
(f) Foreign facilities are excluded from all the regulations in
this subpart, if food from such facilities undergoes further
manufacturing/processing (including packaging) by another foreign
facility outside the United States. This exclusion does not apply to a
foreign facility if the further manufacturing/processing (including
packaging) conducted by the subsequent facility consists of adding
labeling or any similar activity of a de minimis nature.
(g) Persons who manufacture, process, pack, transport, distribute,
receive, hold, or import pet food who are not subject to the
recordkeeping provisions of the animal proteins prohibited in ruminant
feed regulation (Sec. 589.2000 of this chapter) are, with respect to
pet food records, excluded from all the regulations in this subpart
except for Sec. 1.361 and Sec. 1.363.
Sec. 1.328 What definitions apply to this subpart?
The definitions of terms in section 201 of the Federal Food, Drug,
and Cosmetic Act apply to such terms when used in this subpart.
In addition, for the purposes of this subpart:
Act means the Federal Food, Drug, and Cosmetic Act.
Domestic person means any person located in any State or Territory
of the
[[Page 25238]]
United States, the District of Columbia, or the Commonwealth of Puerto
Rico.
Farm means a facility in one general physical location devoted to
the growing of crops for food, the raising of animals for food
(including seafood), or both. The term ``farm'' includes:
(1) Facilities that pack or hold food, provided that all food used
in such activities is grown or raised on that farm or is consumed on
that farm; and
(2) Facilities that manufacture/process food, provided that all
food used in such activities is consumed on that farm or another farm
under the same ownership.
Food has the meaning given in section 201(f) of the act (21 U.S.C.
321(f)). Examples of food include, but are not limited to: Fruits;
vegetables; fish; dairy products; eggs; raw agricultural commodities
for use as food or components of food; animal feed, including pet food;
food and feed ingredients and additives, including substances that
migrate into food from food packaging and other articles that contact
food; dietary supplements and dietary ingredients; infant formula;
beverages, including alcoholic beverages and bottled water; live food
animals; bakery goods; snack foods; candy; and canned foods.
Foreign facility means a facility other than a domestic person that
manufactures/processes, packs, or holds food for consumption in the
United States.
Manufacturing/processing means making food from one or more
ingredients, or synthesizing, preparing, treating, modifying or
manipulating food, including food crops or ingredients. Examples
include, but are not limited to: Cutting, peeling, trimming, washing,
waxing, eviscerating, rendering, cooking, baking, freezing, cooling,
pasteurizing, homogenizing, mixing, formulating, bottling, milling,
grinding, extracting juice, distilling, labeling, or packaging.
Nontransporter means a person who owns food or who holds,
processes, packs, imports, receives, or distributes food for purposes
other than transportation.
Nontransporter immediate previous source means a person that last
had an article of food before transferring it to another
nontransporter.
Nontransporter immediate subsequent recipient means a
nontransporter that acquires an article of food from another
nontransporter.
Perishable food means food that is not heat-treated, not frozen,
and not otherwise preserved in a manner so as to prevent the quality of
the food from being adversely affected if held longer than 7 days under
normal shipping and storage conditions.
Pet food means food for nonfood-producing animals.
Recipe means the quantitative formula used in the manufacturing of
the food product, but not the identity of the individual ingredients of
the food.
Restaurant means a facility that prepares and sells food directly
to consumers for immediate consumption. Restaurants include, but are
not limited to, cafeterias, lunchrooms, cafes, bistros, fast food
establishments, food stands, saloons, taverns, bars, lounges, catering
facilities, hospital kitchens, day care kitchens, and nursing home
kitchens. Facilities that provide food to interstate conveyances,
rather than directly to consumers, are not restaurants.
Retail facility means a facility that sells food products directly
to consumers only. The term includes, but is not limited to, grocery
and convenience stores, vending machine locations, and commissaries.
Transporter means a person who has possession, custody, or control
of an article of food for the sole purpose of transporting the food. A
person who owns food or who holds, processes, packs, imports, receives,
or distributes food for purposes other than transportation is not a
transporter.
Transporter's immediate previous source means a person from whom a
transporter received an article of food. This source can be either
another transporter or a nontransporter.
Transporter's immediate subsequent recipient means a person to whom
a transporter delivered an article of food. This recipient can be
either another transporter or a nontransporter.
You means a person or facility subject to this subpart under Sec.
1.326.
Sec. 1.329 Do other statutory provisions and regulations apply?
(a) In addition to the regulations in this subpart, you must comply
with all other applicable statutory provisions and regulations related
to the establishment and maintenance of records for foods except as
described in paragraph (b) of this section. For example, the
regulations in this subpart are in addition to existing recordkeeping
regulations for low acid canned foods, juice, seafood, infant formula,
color additives, bottled water, animal feed, and medicated animal feed.
(b) Records established or maintained to satisfy the requirements
of this subpart that meet the definition of electronic records in Sec.
11.3(b)(6) of this chapter are exempt from the requirements of part 11
of this chapter. Records that satisfy the requirements of this subpart
but that are also required under other applicable statutory provisions
or regulations remain subject to part 11 of this chapter.
Sec. 1.330 Can existing records satisfy the requirements of this
subpart?
The regulations in this subpart do not require duplication of
existing records if those records contain all of the information
required by this subpart. If a covered person keeps records of all of
the information as required by this subpart in order to comply with
other Federal, State, or local regulations, or for any other reason,
then those records may be used to meet these requirements.
Requirements to Establish and Maintain Records to Identify the
Nontransporter and Transporter Immediate Previous Source of All
Food
Sec. 1.337 What information is required in the records you must
establish and maintain to identify the nontransporter and transporter
immediate previous source?
(a) If you are a nontransporter, you must establish and maintain
the following records for all food you receive. Your records must
include information reasonably available to you to identify the
specific source of each ingredient that was used to make every lot of
finished product.
(1) The name of the firm and responsible individual, address, phone
number and, if available, the fax number and e-mail address of the
nontransporter immediate previous source, whether domestic or foreign;
(2) An adequate description of the type of food received, to
include brand name and specific variety (e.g., brand x cheddar cheese,
not just cheese; or romaine lettuce, not just lettuce);
(3) The date you received the food;
(4) The lot or code number or other identifier of the food (to the
extent this information exists);
(5) The quantity and how the food is packaged (e.g., 6 ct. bunches,
25 lb carton, 12 oz bottle); and
(6) The name of the firm and responsible individual, address, phone
number and, if available, the fax number and e-mail address of the
transporters who transported the food to you.
Requirements to Establish and Maintain Records to Identify the
Nontransporter and Transporter Immediate Subsequent Recipient of
All Food
Sec. 1.345 What information is required in the records you must
establish and maintain to identify the nontransporter and transporter
immediate subsequent recipient?
(a) If you are a nontransporter, you must establish and maintain
the
[[Page 25239]]
following records for all food you release:
(1) The name of the firm and responsible individual, address, phone
number and, if available, the fax number and e-mail address of the
nontransporter immediate subsequent recipient, whether domestic or
foreign;
(2) An adequate description of the type of food released, to
include brand name and specific variety (e.g., brand x cheddar cheese,
not just cheese; or romaine lettuce, not just lettuce);
(3) The date the food was released;
(4) The lot or code number or other identifier of the food (to the
extent this information exists);
(5) The quantity and how the food is packaged (e.g., 6 ct. bunches,
25 lb carton, 12 oz bottle); and
(6) The name of the firm and responsible individual, address, phone
number and, if available, the fax number and e-mail address of the
transporters who transported the food from you.
(b) [Reserved]
Requirements to Establish and Maintain Records to Trace the
Transportation of All Food
Sec. 1.351 Who is required to establish and maintain records for
tracing the transportation of all food?
If you are a domestic person and you are a transporter of food, you
are required to establish and maintain records containing information
not only about your transportation activities but also about the person
from whom you received the food (the transporter's immediate previous
source) and the person to whom you delivered it (the transporter's
immediate subsequent recipient), as specified in Sec. 1.352.
Sec. 1.352 What information is required in the transportation
records?
(a) You must establish and maintain the following records for each
food you transport:
(1) The name of the firm and responsible individual, address, phone
number and, if available, the fax number and e-mail address of the
person who had the food immediately before you, and the date you
received it from that person;
(2) The name of the firm and responsible individual, address, phone
number and, if available, the fax number and e-mail address of the
person who had the food immediately after you, and the date you
delivered it to that person;
(3) An adequate description of the type of food, including brand
name and specific variety (e.g., brand x cheddar cheese, not just
cheese; or romaine lettuce, not just lettuce);
(4) The lot or code number or other identifier of the food (to the
extent this information exists);
(5) The quantity and how the food is packaged (e.g., 6 ct. bunches,
25 lb carton, 12 oz bottle);
(6) Identification of each and every mode of transportation (e.g.,
company truck, private carrier, rail, air, etc.), and the individual
responsible, from the time you first received the food until the time
you delivered it.
(b) [Reserved]
General Requirements
Sec. 1.360 What are the record retention requirements?
(a) You must create the required records at the time the activity
occurs.
(b) You must retain for 1 year after the date the records were
created all required records for perishable foods not intended for
processing into nonperishable foods.
(c) You must retain for 2 years after the date the records were
created all required records for all other foods, except animal foods.
(d) You must retain for 1 year after the date the records were
created all required records for animal food, including pet food.
(e) You must retain all records required by these regulations at
the establishment where the covered activities described in the records
occurred (onsite) or at a reasonably accessible location.
(f) The maintenance of electronic records is acceptable.
Sec. 1.361 What are the record availability requirements?
When FDA has a reasonable belief that an article of food is
adulterated and presents a threat of serious adverse health
consequences or death to humans or animals, any records and other
information accessible to FDA under section 414 or 704(a) of the act
must be readily available for inspection and photocopying or other
means of reproduction. Such records and other information must be made
available within 4 hours of a request if the request is made between 8
a.m. and 6 p.m., Monday through Friday, or within 8 hours of a request
if made at any other time, by an officer or employee duly designated by
the Secretary who presents appropriate credentials and a written
notice. If records and other information are stored offsite, the
records must be retrieved and provided onsite within the specified time
period. Electronic records are considered to be onsite if they are
accessible from an onsite location.
Sec. 1.362 What records are excluded from this subpart?
The establishment and maintenance of records as required by this
subpart does not extend to recipes for food, financial data, pricing
data, personnel data, research data, or sales data (other than shipment
data regarding sales).
Sec. 1.363 What are the consequences of failing to establish or
maintain records or make them available to FDA?
(a) The failure to establish or maintain records as required by
section 414(b) of the act or the refusal to permit access to or
verification or copying of any such required record is a prohibited act
under section 301 of the act (21 U.S.C. 331).
(b) The failure to make records or other information available to
FDA as required by section 414 or 704(a) of the act is a prohibited act
under section 301 of the act.
Effective Dates
Sec. 1.368 What are the compliance dates for this subpart?
(a) The regulations in this subpart shall be effective 6 months
after the date of publication of the final rule in the Federal
Register. However, this subpart is not binding on small and very small
businesses until the dates listed in paragraphs (a)(1) and (a)(2) of
this section.
(1) The regulations in this subpart are binding 12 months after the
date of publication of the final rule in the Federal Register, for
small businesses employing fewer than 500 but more than 10 full-time
equivalent employees.
(2) The regulations are binding 18 months after the date of
publication of the final rule in the Federal Register, for very small
businesses that employ 10 or fewer full-time equivalent employees.
(b) [Reserved]
PART 11--ELECTRONIC RECORDS; ELECTRONIC SIGNATURES
3. The authority citation for 21 CFR part 11 continues to read as
follows:
Authority: 21 U.S.C. 321-393; 42 U.S.C. 262.
4. Section 11.1 is amended to add paragraph (f) to read as follows:
Sec. 11.1 Scope.
* * * * *
(f) This part does not apply to records required to be established
or maintained by Sec. Sec. 1.326 through 1.368 of this chapter.
Records that satisfy the requirements of Part 1, Subpart J of this
chapter but that are also required under other applicable statutory
provisions or regulations remain subject to this part.
[[Page 25240]]
Dated: May 1, 2003.
Mark B. McClellan,
Commissioner of Food and Drugs.
Dated: May 2, 2003.
Tommy G. Thompson,
Secretary of Health and Human Services.
[FR Doc. 03-11460 Filed 5-5-03; 5:08 pm]
BILLING CODE 4160-01-S
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