[Federal Register: October 4, 2002 (Volume 67, Number 193)]
[Rules and Regulations]
[Page 62171-62178]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04oc02-2]
 
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
 
Food and Drug Administration
 
21 CFR Part 163
 
[Docket Nos. 86P-0297 and 93P-0091]
 
 
White Chocolate; Establishment of a Standard of Identity
 
AGENCY: Food and Drug Administration, HHS.
 
ACTION: Final rule.
 
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SUMMARY: The Food and Drug Administration (FDA) is establishing a
standard of identity for white chocolate. This standard will provide
for the use of the term ``white chocolate'' as the common or usual name
of products made from cacao fat (i.e., cocoa butter), milk solids,
nutritive carbohydrate sweeteners, and other safe and suitable
ingredients, but containing no nonfat cacao solids. The standard for
white chocolate will promote honesty and fair dealing in the interest
of consumers and, to the extent practicable, will achieve consistency
with existing international standards of identity for white chocolate.
This standard is established in response to citizen petitions submitted
separately by the Hershey Foods Corp. (Hershey) and by the Chocolate
Manufacturers Association of the United States of America (CMA).
 
DATES: This rule is effective January 1, 2004. This rule is applicable
to all affected products initially introduced or initially delivered
for introduction into interstate commerce on or after January 1, 2004.
Voluntary compliance may begin immediately.
 
FOR FURTHER INFORMATION CONTACT: Geraldine A. June, Center for Food
Safety and Applied Nutrition (HFS-822), Food and Drug Administration,
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-2371.
 
[[Page 62172]]
 
 
SUPPLEMENTARY INFORMATION:
 
I. Background
 
    In the Federal Register of March 10, 1997 (62 FR 10781), FDA
published a proposal to establish a standard of identity for white
chocolate. The proposal responded to petitions submitted separately by
Hershey and by CMA. The petitions requested that FDA establish a
standard of identity for ``white chocolate.'' Both Hershey and CMA
described ``white chocolate'' as a food that deviates from the
standardized cacao products in part 163 (21 CFR part 163) in that: (1)
It is prepared without the nonfat components of the ground cacao nibs
but contains the fat (cocoa butter) expressed from the ground cacao
nibs; and (2) it may contain safe and suitable antioxidants. The
petitioners further described ``white chocolate'' as the solid or
semiplastic food prepared by mixing and grinding cocoa butter with one
or more nutritive sweeteners and one or more of the optional dairy
ingredients provided in part 163. The petitioners stated that ``white
chocolate'' contains not less than 20 percent cocoa butter, not less
than 14 percent of total milk solids, not less than 3.5 percent
milkfat, and not more than 55 percent nutritive carbohydrate
sweeteners.
    The petitioners maintained that a standard of identity for ``white
chocolate'' would provide several benefits: (1) Reducing economic
deception and promoting honesty and fair dealing in the interest of
consumers, (2) increasing the availability of products containing white
chocolate by eliminating the requirement that firms receive temporary
marketing permits (TMPs), and (3) enhancing the international
marketability of white chocolate by establishing a standard consistent
with international standards for white chocolate.
    Based on FDA's review of the information provided in the petitions,
we (FDA) tentatively concluded that it would be reasonable to establish
a standard of identity for ``white chocolate.'' We tentatively
concluded that use of the term would aid consumer recognition of the
food and would promote honesty and fair dealing in the interest of
consumers by eliminating the potential for economic fraud and consumer
deception through the substitution of cheaper ingredients for cacao-
derived ingredients. Furthermore, the agency tentatively concluded
that: (1) Consumer confusion created by the use of alternative names
for white chocolate-type confections would also be eliminated and (2)
use of the standardized term ``white chocolate'' would enhance the
international marketability of such products. Based on these tentative
conclusions, FDA published a proposed rule to establish a standard of
identity for ``white chocolate,'' consistent with the product described
in the petitions (62 FR 10781 at 10786).
    FDA received seven responses to the proposal, each containing one
or more comments. Six responses were from companies that manufacture or
market chocolate products, and the other was from a trade association.
Most of the comments supported the establishment of a standard of
identity for white chocolate. Other comments either opposed the
establishment of a standard of identity for white chocolate or
suggested modifications or revisions to various provisions of the
proposed standard.
    After considering the comments, FDA concludes that issuing a food
standard for white chocolate will promote honesty and fair dealing in
the interest of consumers. Specifically, a food standard for white
chocolate will permit the sale of a product labeled ``white chocolate''
without TMPs and ensure that such products contain cacao-derived
ingredients. The standard will distinguish white chocolate from the
other standardized chocolate products, which contain chocolate liquor.
Also, by eliminating requirements for TMPs, the standard will benefit
consumers by allowing manufacturers to introduce white chocolate more
quickly. Finally, the white chocolate food standard, which is
consistent with the standards of Canada, the European Union (EU), and
Codex Alimentarius Commission (Codex), will promote international
harmonization.
 
II. Comments and the Agency's Response
 
    (Comment 1) One comment opposed creating a standard of identity for
white chocolate. The comment contended that a TMP is not required to
sell white chocolate in the United States because the name ``white
chocolate'' is sufficiently different from the names of standardized
chocolate products. Thus, the comment contended, elimination of the TMP
process is not a valid justification for the establishment of a
standard of identity. The comment maintained that FDA is promoting the
use of TMPs for all new products that may be perceived as variations of
existing standardized products, no matter how easily distinguishable
they may be, and even though there is no consumer confusion or
deception. The comment further maintained that FDA could conserve
agency resources by giving guidance that the TMP process will no longer
be required for white chocolate products.
    We disagree with the assertion that TMPs are not needed to market
white chocolate products in the absence of a standard of identity. A
product labeled as ``white chocolate'' contains the term ``chocolate,''
an alternative nomenclature for chocolate liquor that indicates the
presence of cacao-derived ingredients. All existing chocolate standards
include the cacao-derived ingredient chocolate liquor, which contains
both the nonfat and the fat components of the cacao nibs. In contrast,
the cacao-derived ingredient contained in products that consumers have
come to know as ``white chocolate'' is cacao fat (i.e., cocoa butter),
not chocolate liquor. Because the term ``chocolate'' implies that the
product contains cacao-derived ingredients similar to those in
standardized chocolate products, in the absence of a standard of
identity or TMP, the product described in the proposed standard could
not use the term ``chocolate'' on its labeling. Specifically, a product
labeled ``white chocolate'' would purport to be chocolate, but it would
not comply with the current food standards for cacao products in part
163. Therefore, the product would be misbranded under section 403(g) of
the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 343 (g)).
    (Comment 2) The one comment that objected to the establishment of a
standard of identity for white chocolate suggested that FDA should
reconsider the need for a standard of identity and should regulate
white chocolate like other nonstandardized products. The comment
maintained that: (1) Only a few foods are currently governed by
standards of identity; (2) most existing standards were adopted more
than 25 years ago; (3) thousands of newly introduced foods have been
regulated successfully under common or usual name regulations part 102
(21 CFR part 102) and under general misbranding provisions (section 403
of the act); and (4) standards do not play the same role in the
regulatory scheme as they did many years ago when product names were
the primary source of product information for consumers. The comment
credited the success of using common or usual name regulations and
general misbranding provisions to regulate nonstandardized foods to the
additional ingredient and nutrition information now required on food
labels. The comment pointed out that even though there is a standard
for French dressing, there is no standard for ranch dressing.
Analogously, the
 
[[Page 62173]]
 
comment asserted that white chocolate is not inherently different from
the thousands of other nonstandardized foods and, therefore, there is
no need for a standard of identity for white chocolate.
    FDA does not agree that a common or usual name regulation for white
chocolate is sufficient to ensure honesty and fair dealing in the
interest of consumers. First, FDA disagrees with the assertion that
there are only a few standards of identity and that many more foods are
regulated under common or usual name regulations. There are over 280
standards of identity, but there are only 16 common or usual name
regulations.
    When deciding whether it is appropriate to establish a standard of
identity or a common or usual name regulation, FDA must consider which
is more likely to ensure that consumers are not deceived or misled.
Food standards are appropriate and necessary when there is a need to
prescribe the entire compositional requirement for a food, in addition
to the name of the food. In contrast, common or usual name regulations
are appropriate if there is a need simply to establish a uniform and
informative name for the food.
    Because products bearing the name ``chocolate'' would be expected
to contain some cacao-derived ingredients, we believe that it is
necessary to ensure that ``white chocolate'' contains cacao-derived
ingredients. If FDA establishes a common or usual name regulation for
``white chocolate,'' rather than a standard of identity, it would be
necessary to include in the common or usual name a statement of the
percentage of the characterizing ingredient, cacao fat, as provided in
Sec.  102.5(b). We disagree that establishing a common or usual name in
this manner is the appropriate way to protect consumers' interests. The
required additional labeling regarding the name and percentage of the
characterizing ingredient, cacao fat, in the common or usual name might
be confusing to consumers, especially because the amount of cacao fat
would be disclosed differently than the amount of total fat in the
nutrition label. A food standard eliminates the need for additional
labeling. Therefore, FDA concludes that the appropriate way to ensure
the composition of ``white chocolate'' and to protect consumers'
interests is by establishing a standard of identity and not a common or
usual name.
    Moreover, at the time that they were established, one of the
benefits of common or usual name provisions in part 102 was that names
of new products could be established by regulation using ``informal''
notice and comment rulemaking, rather than the lengthy formal
rulemaking procedures required for food standards. Since passage of the
Nutrition Labeling and Education Act of 1990 (Public Law 101-35), which
amended the act, FDA can establish new standards of identity for most
foods by ``informal'' notice and comment rulemaking proceedings. In
view of this change, FDA does not see any benefit to establishing a
common or usual name regulation instead of a food standard to ensure
that the product known as ``white chocolate'' contains cacao-derived
ingredients.
    Finally, FDA agrees that there are many products on the market that
are regulated without standards of identity. However, we disagree with
the comment's suggestion that requirements imposed after most of the
food standards were created have rendered food standards unnecessary.
The nutrition information that is required on the labels of
standardized and nonstandardized foods gives consumers information on
the levels of nutrients in products to assist them in making purchasing
choices related to nutrient content. Nutrition information does not
inform consumers of a product's formulation. In addition, ingredient
labeling alone may be insufficient to differentiate two standardized
products. For example, the ingredient lists for both milk chocolate and
sweet chocolate may be identical (containing chocolate, nutritive
carbohydrate sweeteners, and dairy products).
    (Comment 3) The comment that opposed creation of a food standard
further stated that, from a legal perspective, a standard of identity
is not needed to authorize the sale of white chocolate in this country
because: (1) White chocolate is an appropriately descriptive statement
of identity, independent of existing standards; (2) the name ``white
chocolate'' is sufficiently different from the names of other chocolate
products; (3) white chocolate does not purport to be a standardized
food; (4) the identity and fundamental positioning of white chocolate
are predicated on the difference between white chocolate and chocolate;
and (5) the appearance of white chocolate is in such stark contrast to
traditional chocolate, which is brown in color, as to guarantee that no
``passing-off'' issue exists. The comment contended that FDA cited no
evidence of consumer confusion with white chocolate, no evidence that
consumer confusion would exist in the absence of a standard of identity
for white chocolate, and no evidence of consumer confusion regarding
the thousands of other nonstandardized foods on the market. The comment
asserted that, in the absence of such evidence, FDA has no grounds for
creating a standard of identity for white chocolate because the
statutory threshold for regulation is not satisfied, i.e., that a
standard of identity for white chocolate would promote honesty and fair
dealing in the interest of consumers. The comment contended that FDA is
maintaining and extending food standards without consideration of their
actual utility or consumer benefit, and without regard to the labeling
requirements now in effect. Therefore, the comment urged FDA to
regulate white chocolate as a nonstandardized food and not to establish
a standard of identity for white chocolate.
    FDA disagrees with the comment's assertion that a standard of
identity is not needed to sell a product bearing the name ``white
chocolate.'' Our reasoning as to why a food standard or TMP is required
to label a product as ``white chocolate'' is set forth in response to
comment 1, section II of this document. In short, absent a food
standard or TMP, a food labeled ``white chocolate'' purports to be
chocolate, which is the subject of a food standard under Sec.
163.111(c) requiring that the product be prepared by finely grinding
cacao nibs (contains both the nonfat and fat components). The product
is misbranded in violation of section 403(g) of the act because it does
not conform to the definition and standard for chocolate in that it
does not contain the nonfat portion of the cacao nibs.
    Furthermore, we disagree with the comment that there is no legal
basis on which to establish a food standard for white chocolate. The
term ``chocolate'' has traditionally been used for standardized foods
that contain cacao-derived ingredients, specifically chocolate liquor
(Sec.  163.111). These standardized foods include sweet chocolate
(Sec.  163.123), milk chocolate (Sec.  163.130), buttermilk chocolate
(Sec.  163.135), skim milk chocolate (Sec.  163.140), mixed dairy
product chocolate (Sec.  163.145), sweet chocolate and vegetable fat
coating (Sec.  163.153), and milk chocolate and vegetable fat coating
(Sec.  163.155). Because of this longstanding practice, consumers
expect that products bearing names that include the term ``chocolate''
contain certain cacao-derived ingredients. While the product described
in the proposed standard deviates from the other standardized chocolate
products in that it contains only the cacao fat (i.e., cocoa butter)
component of chocolate liquor, consumers' expectations that the food's
basic component is derived from cacao
 
[[Page 62174]]
 
are met by establishing a standard with that requirement.
    Moreover, use of the term ``white chocolate,'' without an
accompanying food standard, does not provide consumers with sufficient
information as to the ingredients of the product. Historically, FDA has
created separate standards of identity for different kinds of chocolate
(e.g., milk chocolate, sweet chocolate). These standards ensure that
consumers who purchase products labeled as ``chocolate'' receive a
familiar product with a certain basic nature and composition. Neither
the term ``white'' nor the white appearance of the product itself is
sufficient to distinguish a white chocolate-type product that does not
contain cacao-derived ingredients from a product that does contain
cacao-derived ingredients. Use of the term ``chocolate'' in the name
``white chocolate'' implies that the product is cacao-derived. Thus,
without a standard of identity prescribing that white chocolate be made
from cocoa butter, manufacturers may produce products not containing
cacao-derived ingredients and use the term ``white chocolate'' in a
misleading manner.
    (Comment 4) The one comment that objected to establishing a
standard of identity for white chocolate stated that a standard of
identity for white chocolate is not needed because white chocolate-type
products made with ingredients not derived from cacao could be
identified as ``white chocolate-flavored'' or ``artificially flavored''
to sufficiently distinguish them from white chocolate products derived
from cacao. The comment further stated that consumers could look at the
ingredient list to discover the substitution of less expensive
ingredients not derived from cacao; thus, current regulations are
sufficient to prevent economic deception.
    FDA does not agree that identifying white chocolate products made
from cheaper noncacao ingredients as ``artificially flavored'' or
``white chocolate-flavored'' would be sufficiently descriptive with
regard to the composition of white chocolate. These terms refer to the
characterizing flavor of a food, not its composition. The terms suggest
products that are flavored to taste like white chocolate, but they do
not provide guidance as to white chocolate's composition. Thus, use of
such terms does not negate the need for a standard of identity, but
rather further supports its need because, without a definition and
standard for ``white chocolate,'' there is no way to define ``white
chocolate-flavored.'' Moreover, FDA regulations governing use of the
term ``flavored'' Sec.  101.22(i)(1)(i) (21 CFR 101.22(i)(1)(i))
provide that a product that is expected to contain an ingredient, e.g.,
``white chocolate,'' must bear the term ``flavored'' in the name of the
food if the food contains natural flavor derived from that ingredient
and either an amount of the ingredient insufficient to independently
characterize the food or none of the ingredient. Therefore, unless a
food contains the flavoring constituents derived from white chocolate,
it cannot be named ``white chocolate-flavored.''
    Once a standard for white chocolate has been established, the term
``white chocolate-flavored'' could be used to describe a food that is
commonly expected to contain the characterizing food ingredient, white
chocolate, and which contains natural flavor derived from such an
ingredient (i.e., cocoa butter or cacao fat) (Sec.  101.22(i)(1)(i)).
The term ``artificially-flavored white chocolate'' could be used in
cases where the food contains an artificial flavor that simulates,
resembles, or reinforces the characterizing flavor (Sec.
101.22(i)(2)).
    The only constituent in white chocolate that is derived from the
cacao bean is cacao fat (i.e., cocoa butter); therefore, the agency
assumes that if a cheaper ingredient that was not derived from cacao
were used to replace the cacao-derived ingredient, the substitute
ingredient would be some type of fat or oil used to replace the cacao
fat. In this case, the agency would treat such products as substitute
or imitation white chocolate products (21 CFR 101.3(e)) and would not
regulate them by requiring that they be labeled ``white chocolate-
flavored.''
    (Comment 5) The one comment that opposed issuing a standard of
identity for white chocolate argued that food standards should be
reformed. The comment stated that, in the advance notice of proposed
rulemaking (ANPRM) (60 FR 67492, December 29, 1995) that responded to
the Regulatory Reinvention Initiative, FDA acknowledged that existing
food standards of identity are the types of regulations that need
reform. The comment stated that there is no special circumstance that
justifies a reversal of regulatory direction for white chocolate.
    A few comments addressed the nature of the proposed standard of
identity for white chocolate, objecting to its being prescriptive,
recipe-based, and rigid. One of these comments, while supporting
establishment of a standard of identity for white chocolate, made
broader general statements about reforming food standards. In addition,
several comments from manufacturers who support creating a standard for
white chocolate supported FDA's intention to address all standards,
including any new standard of identity for white chocolate, as a
separate subject in accordance with the Regulatory Reinvention
Initiative.
    FDA stated in the ANPRM that standards of identity may need reform,
and we are reviewing existing food standards in response to the
Regulatory Reinvention Initiative. After deciding to establish a
standard of identity for white chocolate, FDA considered whether to:
(1) Continue the TMP process until all standards are reviewed in
response to the Regulatory Reinvention Initiative and then establish a
standard for white chocolate, (2) use different guiding principles to
issue a standard, or (3) issue a standard consistent with the
petitioners' requests and with existing standards. We concluded that
the third approach was the most reasonable and efficient, considering
our limited resources, industry's desire to establish a standard, and
recognized consumer demand for the product. This approach avoids the
time consuming task of reviewing and revising standards for a group of
foods, e.g., chocolate products, in a piecemeal fashion, especially
when no guiding principles have been published, and relieves industry
and the agency from the burdensome TMP process. Therefore, FDA
concludes that a standard for white chocolate should be issued that is
generally consistent with current standards for U.S. chocolate
products. FDA will address comments concerning the revision of the
standard for white chocolate at such time as we consider revision of
all chocolate standards.
    FDA recognizes that the proposed standard of identity is
prescriptive in nature. However, we believe that until all standards of
identity are reviewed and decisions are made regarding whether to
retain, revoke, or revise them, it is in the interest of consumers to
establish a standard of identity for white chocolate that is generally
consistent with other chocolate products in part 163. We also note that
standards of identity for white chocolate established by Canada, Codex,
and the EU are also prescriptive. Therefore, FDA finds that, at this
time, it is appropriate to retain the recipe-like nature of the
standard for white chocolate because it is consistent with current U.S.
standards for other chocolates and with international standards of
identity for white chocolate.
    (Comment 6) Two comments suggested changes to the proposed standard
to make the U.S. standard for white chocolate more consistent with
international standards. One comment
 
[[Page 62175]]
 
noted that the maximum level for emulsifiers in the proposed standard
for white chocolate is adequate, but suggested that in the interest of
international harmonization, FDA consider raising this level from 1
percent to 1.5 percent. The comment stated that if this were done, the
proposed standard would then be consistent with those of Canada and
Codex. The comment emphasized that it raised the issue solely in the
interest of international harmonization, but did not want the issue to
delay a prompt promulgation of the standard.
    We agree that international harmonization should be taken into
consideration in establishing standards and should be supported when
such support promotes honesty and fair dealing in the interest of
consumers, does not endanger the public health, and does not reduce the
integrity of the standard. FDA believes that raising the level of
permitted emulsifiers to 1.5 percent will not result in an inferior
product, and the standard for white chocolate will still promote
honesty and fair dealing in the interest of consumers. Therefore, the
agency agrees that, to reduce barriers to trade, the level of
emulsifiers should be changed to 1.5 percent.
    The other comment recommended that FDA revise the proposed standard
to permit the use of whey as an optional ingredient up to a level of 5
percent. The comment stated that whey should be listed in Sec.
163.124(b)(6) as an optional ingredient so that it would not count
toward the minimum milk solids content otherwise specified in the
standard (Sec.  163.124(b)(2)). The comment contended that whey is a
safe and suitable ingredient for use in chocolate and confectionery
products.
    The comment further stated that if the U.S. standard were adopted
without permitting whey, it would be the only major white chocolate
standard in the world that did not permit its use. According to the
comment, Canada plans to issue a standard that expressly permits the
addition of whey up to 5 percent. The comment stated that both the
Codex and the EU standards permit the addition of whey in chocolate
products. The comment asserted that the United States should include
whey in its standard for white chocolate in the interest of
international harmonization. Finally, the comment noted that delaying
consideration of the use of whey until the generalized review of
chocolate standards takes place would likely result in a delay of
several years.
    FDA agrees with the comment that whey should be permitted as an
optional ingredient up to a level of 5 percent but should not count
toward the minimum milk solids content otherwise specified in the
standard. Listing whey as a separate ingredient, as suggested by the
comment, permits the inclusion of whey in addition to, not in place of,
the total milk solids specified in Sec.  163.124(b)(2). FDA notes that
since publication of our proposed rule to establish a standard for
white chocolate, Canada has established a standard for white chocolate
that permits as an optional ingredient less than 5 percent whey or whey
products. Codex permits no more than 5 percent milk solids in its white
chocolate standard, whereas the EU permits edible substances that do
not exceed 40 percent of the total weight of the finished white
chocolate product. Thus, FDA believes that the change to the proposed
standard to permit whey as an optional ingredient would maintain the
core ingredients required in the U.S. standard while promoting
international harmonization and trade. Accordingly, FDA is modifying
the proposed standard to include whey up to a level of 5 percent as a
separate, optional ingredient in Sec.  163.124(b)(6).
    (Comment 7) One comment recommended deleting the requirement that
white chocolate contain a minimum of 23.5 percent fat (20 percent cacao
fat + 3.5 percent milkfat). The comment asserted that this high level
of fat is inconsistent with current dietary guidelines and with FDA's
stated goal to encourage the creation of products lower in fat and
calories. The comment stated that it recognized that in order for the
product to be designated as ``chocolate,'' it should contain some
cacao-derived ingredients. However, the comment contended that the
requirement to contain some minimum amount of cacao-derived ingredients
could be met by having a minimum amount of cocoa solids. The comment
argued that since milk chocolate must contain a minimum of 10 percent
cocoa solids in the form of chocolate liquor, it would be consistent
for white chocolate to contain a minimum of 10 percent cocoa solids,
albeit in the form of cocoa butter. The resulting product, according to
the comment, would contain a total of 13.5 percent fat (3.5 percent
milkfat and 10 percent cacao fat).
    FDA disagrees with changing the minimum level of fat required in
white chocolate. The purpose of a standard of identity is to promote
honesty and fair dealing in the interest of consumers. The product
labeled ``white chocolate'' that has been marketed under TMPs for more
than 10 years contains a minimum of 23.5 percent fat. We believe that
consumers have come to know the product with this composition. This
level is the same as that suggested by the petitioners and required by
international standards for white chocolate. Accordingly, FDA has not
been persuaded to change the minimum level of fat required.
    We appreciate the comment's concern regarding dietary guidelines
and note that manufacturers who wish to market products that are lower
in fat relative to the standard product may develop lower fat white
chocolate products in accordance with the provisions in 21 CFR 130.10.
 
III. Effective Date
 
    In the proposed rule, FDA proposed that the effective date for a
final rule for white chocolate be January 1, 1998 (62 FR 10781 and
10784). The only comment that addressed the proposed compliance date of
January 1, 1998, stated that if FDA acted quickly in finalizing the
proposal, the proposed compliance date would allow sufficient time for
manufacturers to make label and formula changes. Further, the comment
encouraged the FDA to state that compliance with the regulation could
begin immediately after publication of the final rule issuing the
standard.
    Due to other agency priorities and to limited resources and staff,
FDA is publishing this final rule later than it intended and after the
proposed effective date. Consequently, we are revising the effective
date of this regulation to the next uniform compliance date, i.e.,
January 1, 2004, to minimize costs associated with any necessary label
changes. However, compliance with this final regulation may begin
immediately. All affected products initially introduced or initially
delivered for introduction into interstate commerce on or after January
1, 2004, shall fully comply.
    There are many firms using TMPs to market products in the United
States that are labeled ``white chocolate'' and that comply with the
proposed standard. These products will not have to be relabeled. Other
products that are labeled with descriptive names (e.g., ``white
confection'') will have to relabel their products in compliance with
the new standard by the effective date of this rule.
 
IV. Benefit-Cost Analysis
 
    FDA has examined the economic implications of this final 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
 
[[Page 62176]]
 
regulatory approaches that maximize net benefits (including potential
economic, environmental, public health and safety, and other
advantages; distributive effects; 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 also is considered a significant regulatory action
under Executive Order 12866 if it raises novel legal or policy issues.
FDA finds that this final rule is neither an economically significant
rule nor a significant regulatory action as defined by Executive Order
12866.
    The Unfunded Mandates Reform Act of 1995 (Public Law 104-4),
requiring cost-benefit and other analyses, in section 1531(a) defines a
significant rule as ``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 million (adjusted annually for
inflation) in any one year.'' FDA has determined that this rule does
not constitute a significant rule under the Unfunded Mandates Reform
Act.
 
A. Regulatory Options
 
    FDA is establishing a standard of identity for white chocolate.
This standard will provide for the use of the term ``white chocolate''
as the common or usual name of products made from cacao fat, milk
solids, nutritive carbohydrate sweeteners, and other safe and suitable
ingredients, but containing no nonfat cacao solids. In the benefit-cost
analysis of the proposed rule, FDA considered three options:
    1. Do not establish a standard and allow manufacturers to market
products bearing the name ``white chocolate'' only with TMPs.
    2. Establish a standard for white chocolate that is consistent with
the standard described in the petitions where the levels of the
ingredients are prescribed.
    3. Establish a standard of identity for white chocolate with
different criteria than those proposed in the petitions.
    FDA received no comments that directly addressed the economic
analysis of the proposed rule. Results of benefit-cost analysis suggest
that the best choice for this proposed rule is the second option:
Establish a standard for white chocolate consistent with the standard
in the petitions where the levels of ingredients are prescribed. This
option is the best choice for several reasons.
    First, as stated in the comments that we received, the second
option eliminates the time-consuming and burdensome task to
manufacturers of applying for TMPs. By establishing a standard of
identity for white chocolate and eliminating the need for TMPs, the
proposed rule furthers a goal of the Paperwork Reduction Act by
eliminating paperwork burden.
    Second, while the standard of identity of white chocolate in the
second option is somewhat prescriptive, the comments indicated that, at
this time, the manufacturers favor a minimum of 23.5 percent total fat
in white chocolate. This ``prescriptive'' standard of identity for
white chocolate is similar to other published standards for chocolate
and will prevent fraudulent or deceptive confections from being offered
for sale as ``white chocolate.''
    Finally, the standard of identity for white chocolate proposed in
the second option is in harmony with the white chocolate standards in
use by Canada, Codex, and the EU. Comments on this rule supported the
globalization of the white chocolate standard as an important market
share-increasing tool.
 
 B. Benefits
 
    We do not estimate benefits and costs for option 1, because it is
the baseline. Although the benefits of options 2 and 3 are similar, we
expect option 2 to generate higher benefits because it will lead to
harmonization with international standards. The other benefits
associated with option 2 would also be realized with option 3.
    Currently, manufacturers must obtain TMPs if they want to use the
term ``chocolate'' to market white chocolate products that meet the
proposed standard. The TMPs are required because white chocolate
products are considered to deviate from the existing standards of
identity for chocolate products. In a recent year, FDA received more
than one dozen requests for TMPs for white chocolate. Thus, one benefit
of issuing a standard of identity for white chocolate is that it will
eliminate a manufacturer's need to prepare and submit requests for TMPs
in order to market products bearing the name ``white chocolate.'' This
will reduce the paperwork burden to white chocolate manufacturers and
reduce the burden to FDA of processing the TMPs.
    Establishment of standards of identity for a product is thought to
reduce consumer confusion and deception. Well-defined standards of
identity, which establish consistent product names, can assist
consumers in finding and comparing products by the name of the food.
The standard of identity for white chocolate will establish a new
product name that, according to the petitions, is consistent with the
name that a majority of consumers are already using to describe this
product. Comments to this rule indicated that the proposed standard of
identity is compatible with not only the perception of United States
consumers, but also aligns with the standard of identity for white
chocolate as set by Canada, Codex, and the EU. This international
harmonization of the white chocolate standard should make U.S.-produced
white chocolate more competitive with internationally produced white
chocolate, both at home and abroad.
 
C. Costs
 
    Although we cannot estimate the total costs of this final rule, we
expect that the costs of options 2 and 3 will be approximately the
same.
    The establishment of a standard of identity requires that all
products that meet the standard bear the standardized name. If there
are products that are formulated in accordance with the standard of
identity but are not currently labeled as ``white chocolate,'' then
those products will have to be relabeled.
    Because ``white chocolate'' will need to appear on each product's
principal display panel, the cost for label changes will depend on the
number of products that must be relabeled and the amount of time
manufacturers are given to complete the label changes. Many of the
large chocolate manufacturers are already marketing their white
chocolate products under TMPs and will not need to relabel their
products.
    There are approximately 250 firms that produce chocolate products
in the United States, but the number of products whose formulation
satisfies this new white chocolate standard of identity is unknown. To
estimate the labeling change costs to chocolate producers as a result
of the new white chocolate standard of identity, the ``FDA Labeling
Cost Model'' (Ref. 1) is used. This model replaces the 1990 version of
the model used in the white chocolate proposed rule estimates.
    There are 9558 stock keeping units (SKUs) for products represented
by the North American Industry Classification System (NAICS) code for
Chocolate & Confectionery Products made from cacao beans. Using this
SKU information, the ``FDA Labeling Cost Model, Final Report''
estimates the costs per product for a chocolate manufacturer to change
the standard of
 
[[Page 62177]]
 
identity on their principal display panel.
    The actual cost of relabeling will be determined largely by the
length of time between the date that the rule becomes final and date it
becomes effective (the compliance period). Given that January 1, 2004,
is the uniform compliance date for food labeling regulations that are
issued between January 1, 2001, and December 31, 2002, the cost of
relabeling per product for firms averages $4,300 for a minimum-allowed
12-month compliance period, $2,000 for a 24-month compliance period,
and $120 for the maximum-allowed 36-month compliance period. Relabeling
costs are comprised of administrative costs, printing costs, and costs
of lost label inventory.
    This final rule will not affect products that do not meet the
standard, because they may continue to be produced and marketed as they
currently are. FDA is not able to estimate the total cost of this final
rule because we received no comments that supplied the additional
information necessary.
 
V. Small Entity Analysis
 
    FDA has examined the economic implications of this final 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 final rule will have a significant
economic impact on a substantial number of small businesses.
    This final rule will establish a standard of identity for white
chocolate. Although the amount of the costs depend on the length of the
compliance period, this final rule may impose significant compliance
costs on industry, and there may be a significant impact of these
provisions on a substantial number of small businesses.
    FDA believes that the provision of this final rule most likely to
have a significant impact on a substantial number of small businesses
is the labeling requirement. There are approximately 250 firms that
produce chocolate products (NAICS code 311320) in the United States.
Almost all of these businesses have fewer than 500 employees, and thus
are small businesses, as defined by the Small Business Administration,
FDA has no data on the number of products that will meet the proposed
standard and that, therefore, may need to be relabeled.
    As discussed in section IV.C of this document, FDA has estimated
the average relabeling costs per product for firms to be $4,300,
$2,000, and $120, for a 12-month, 24-month, and 36-month compliance
period, respectively. Using these average relabeling costs and the
``Model for Estimating the Impacts of Regulatory Costs on the Survival
of Small Businesses'' (Ref. 2), the possibility of a small firm closing
due to this standard of identity regulation can be estimated. If the
compliance period is 12 months in length, the model predicts that
approximately 6 firms with less than 500 employees are likely to go out
of business. For the 24-month compliance period and the 36-month
compliance period, it is expected that no firms are likely to go out of
business.
    FDA received no comments on the effects of the proposed rule on
small businesses or on the length of the compliance period. Because so
many small entities are in the industry, we believe that the final rule
establishing a standard of identity will have a significant economic
impact on a substantial number of small businesses.
 
VI. Federalism
 
    FDA has analyzed this final rule in accordance with the principles
set forth in Executive Order 13132. FDA has determined that the 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, we have concluded that the
rule does not contain policies that have federalism implications as
defined in the Executive order and, consequently, a federalism impact
statement is not required.
 
VII. Environmental Impact
 
    FDA has previously considered the environmental effects of this
rule, as announced in the proposed rule (62 FR 10781 at 10785, March
10, 1997). No new information or comments have been received that would
affect our previous determination that there is no significant impact
on the human environment and that an environmental impact statement is
not required.
 
VIII. The Paperwork Reduction Act of 1995
 
    In the proposal, FDA stated its tentative conclusion that the
proposed rule contains no reporting, recordkeeping, labeling, or third
party disclosure requirements and asked for comments on whether the
proposed rule imposed any paperwork burden. No comments were received
addressing the question of paperwork burden. FDA concludes that the
labeling requirements in this document are not subject to review by the
Office of Management and Budget because they do not constitute a
``collection of information'' under the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.). Rather, the labeling statements are a
``public disclosure of information originally supplied by the Federal
Government to the recipient for the purpose of disclosure to the
public'' (5 CFR 1320(c)(2)).
 
IX. References
 
    The following references have been placed on display at the Dockets
Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers
Lane, rm. 1061, Rockville, MD 20852, and may be seen by interested
persons between 9 a.m. and 4 p.m., Monday through Friday.
    1. ``FDA Labeling Cost Model, Final Report;'' M. K. Muth, E. C.
Gledhill, and S. A. Karns; RTI, Health, Social, and Economics
Research, Research Triangle, NC; April 2002.
    2. ``Model for Estimating the Impacts for Regulatory Costs on
the Survival of Small Businesses and its Application to Four FDA-
Regulated Industries,'' final report, Eastern Research Group, July,
2002.
 
List of Subjects in 21 CFR Part 163
 
    Cacao products, Food grades and standards.
 
    Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR part
163 is amended as follows:
 
PART 163--CACAO PRODUCTS
 
    1. The authority citation for 21 CFR part 163 continues to read as
follows:
 
    Authority: 21 U.S.C. 321, 331, 341, 343, 348, 371, and 379(e).
    2. Section 163.124 is added to subpart B to read as follows:
 
 
Sec.  163.124  White chocolate.
 
    (a) Description. (1) White chocolate is the solid or semiplastic
food prepared by intimately mixing and grinding cacao fat with one or
more of the optional dairy ingredients specified in paragraph (b)(2) of
this section and one or more optional nutritive carbohydrate sweeteners
and may contain one or more of the other optional ingredients specified
in paragraph (b) of this section. White chocolate shall be free of
coloring material.
    (2) White chocolate contains not less than 20 percent by weight of
cacao fat as calculated by subtracting from the weight of the total fat
the weight of the milkfat, dividing the result by the weight of the
finished white chocolate,
 
[[Page 62178]]
 
and multiplying the quotient by 100. The finished white chocolate
contains not less than 3.5 percent by weight of milkfat and not less
than 14 percent by weight of total milk solids, calculated by using
only those dairy ingredients specified in paragraph (b)(2) of this
section, and not more than 55 percent by weight nutritive carbohydrate
sweetener.
    (b) Optional ingredients. The following safe and suitable
ingredients may be used:
    (1) Nutritive carbohydrate sweeteners;
    (2) Dairy ingredients:
    (i) Cream, milkfat, butter;
    (ii) Milk, dry whole milk, concentrated milk, evaporated milk,
sweetened condensed milk;
    (iii) Skim milk, concentrated skim milk, evaporated skim milk,
sweetened condensed skim milk, nonfat dry milk;
    (iv) Concentrated buttermilk, dried buttermilk; and
    (v) Malted milk;
    (3) Emulsifying agents, used singly or in combination, the total
amount of which does not exceed 1.5 percent by weight;
    (4) Spices, natural and artificial flavorings, ground whole nut
meats, ground coffee, dried malted cereal extract, salt, and other
seasonings that do not either singly or in combination impart a flavor
that imitates the flavor of chocolate, milk, or butter;
    (5) Antioxidants; and
    (6) Whey or whey products, the total amount of which does not
exceed 5 percent by weight.
    (c) Nomenclature. The name of the food is ``white chocolate'' or
``white chocolate coating.'' When one or more of the spices,
flavorings, or seasonings specified in paragraph (b)(4) of this section
are used, the label shall bear an appropriate statement, e.g., ``Spice
added'', ``Flavored with ------ '', or ``With ------ added'', the blank
being filled in with the common or usual name of the spice, flavoring,
or seasoning used, in accordance with Sec.  101.22 of this chapter.
    (d) Label declaration. Each of the ingredients used in the food
shall be declared on the label as required by the applicable sections
of parts 101 and 130 of this chapter.
 
    Dated: September 27, 2002.
Margaret M. Dotzel,
Associate Commissioner for Policy.
[FR Doc. 02-25252 Filed 10-3-02; 8:45 am]
BILLING CODE 4160-01-S