[Federal Register: October 11, 2006 (Volume 71, Number 196)]
[Rules and Regulations]
[Page 59653-59669]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11oc06-3]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 189 and 700
[Docket No. 2004N-0257]
RIN 0910-AF48
Recordkeeping Requirements for Human Food and Cosmetics
Manufactured From, Processed With, or Otherwise Containing, Material
From Cattle
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
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SUMMARY: The Food and Drug Administration (FDA) is requiring that
manufacturers and processors of human food and cosmetics that are
manufactured from, processed with, or otherwise contain, material from
cattle establish and maintain records sufficient to demonstrate that
the human food or cosmetic is not manufactured from, processed with, or
does not otherwise contain, prohibited cattle materials. These
recordkeeping requirements provide documentation for the provisions in
FDA's interim final rule entitled ``Use of Materials Derived From
Cattle in Human Food and Cosmetics.'' FDA is requiring recordkeeping
because manufacturers and processors of human food and cosmetics need
records to ensure that their products do not contain prohibited cattle
materials, and records are necessary to help FDA ensure compliance with
the requirements of the interim final rule.
DATES: This rule is effective on January 9, 2007.
FOR FURTHER INFORMATION CONTACT: Rebecca Buckner, Center for Food
Safety and Applied Nutrition (HFS-306), Food and Drug Administration,
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-1486.
SUPPLEMENTARY INFORMATION:
[[Page 59654]]
I. Background
On July 14, 2004, FDA proposed a rule entitled ``Recordkeeping
Requirements for Human Food and Cosmetics Manufactured From, Processed
With, or Otherwise Containing, Material From Cattle'' (the proposed
rule) (69 FR 42275) to require that manufacturers and processors of
human food and cosmetics that are manufactured from, processed with, or
otherwise contain, material from cattle establish and maintain records
sufficient to demonstrate the food or cosmetic is not manufactured
from, processed with, or does not otherwise contain, prohibited cattle
materials. The proposed rule was a companion rulemaking to FDA's
interim final rule (IFR) entitled ``Use of Materials Derived From
Cattle in Human Food and Cosmetics'' (the IFR) (69 FR 42256). We
believe that records sufficient to demonstrate the absence of
prohibited cattle materials in human food and cosmetics are critical
for manufacturers, processors, and FDA to ensure compliance with the
ban on prohibited cattle materials. Therefore, we are finalizing the
proposed rule to require that manufacturers and processors of human
food and cosmetics that are manufactured from, processed with, or
otherwise contain, material from cattle establish and maintain records
sufficient to demonstrate that human food and cosmetics are not
manufactured from, processed with, or do not otherwise contain,
prohibited cattle materials. We also are finalizing the provision in
the proposed rule that these records must be made available to FDA for
inspection and copying. FDA notes that the requirement in the IFR that
existing records relevant to compliance be made available to FDA
remains and has been incorporated into the final record provisions.
In response to the December 2003 finding of an adult cow--imported
from Canada--that tested positive for bovine spongiform encephalopathy
(BSE) in the State of Washington, FDA published the IFR requiring that
specified risk materials (SRMs), small intestine of all cattle, tissue
from nonambulatory disabled cattle, tissue from cattle not inspected
and passed for human consumption, and mechanically separated beef (MS
beef) not be used for FDA-regulated human food and cosmetics.\1\ SRMs
include the brain, skull, eyes, trigeminal ganglia, spinal cord,
vertebral column (excluding the vertebrae of the tail, the transverse
process of the thoracic and lumbar vertebrae, and the wings of the
sacrum), and dorsal root ganglia of cattle 30 months and older, as well
as the tonsils and distal ileum of the small intestine of all cattle.
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\1\ In June 2005, USDA confirmed the second case of BSE in the
United States in a cow born in Texas.
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The U.S. Department of Agriculture (USDA) also published an IFR (69
FR 1862, January 12, 2004) to prohibit certain cattle material from use
in human food. FDA's IFR extended the protection from BSE provided
under USDA's BSE IFR to FDA-regulated human food and cosmetics. On
September 7, 2005, both FDA (70 FR 53063) and USDA (70 FR 53043)
published amendments to their respective IFRs to allow the use of small
intestine in human food and cosmetics provided the distal ileum has
been removed. This final rule on recordkeeping will help ensure
compliance with the provisions of FDA's IFR and, thereby, will serve as
an additional safeguard to reduce human exposure to the agent that
causes BSE that may be present in human food and cosmetics that are
manufactured from, processed with, or otherwise contain, material from
cattle.
FDA believes that these recordkeeping requirements are necessary
for manufacturers and processors to ensure that all cattle material
they use is free from prohibited cattle materials. Furthermore, these
requirements are necessary for FDA to ensure compliance with the
provisions of the IFR. There is currently no validated premortem test
to reliably detect the presence of the BSE agent or the presence of
prohibited cattle material in human food and cosmetics. Once cattle
material such as brain or spinal cord is separated from the source
animal, it may not be possible to determine the age of the animal from
which the material came without records and, therefore, whether the
material is an SRM. In addition, without records, it may not be
possible to determine whether a product contains material from cattle
that were not inspected and passed for human consumption. Also, a
product might contain MS beef without its presence being evident from
the appearance of the product.
FDA received 32 responses, each containing one or more comments,
from industry, consumers, and other stakeholder groups in response to
the proposed rule. We have responded in this document to the comments
that were within the scope of this rulemaking. We received several
comments that pertained to the prohibitions on the cattle materials
themselves, as opposed to the recordkeeping requirements, and other
issues that are covered in the IFR. We will be responding to those
comments when we finalize the IFR.
II. Response to Comments
A. Who Has to Keep Records? (Sec. Sec. 189.5(c)(1) and 700.27(c)(1)
(21 CFR 189.5(c)(1) and 700.27(c)(1)))
(Comment) We received several comments stating that only the
manufacturer or processor of a finished product should have to maintain
the required records. Conversely, other comments suggested that only
the manufacturer or processor of an ingredient that directly
incorporates cattle material from a slaughterhouse or a rendering
establishment should have to keep records. The comments requesting that
finished product manufacturers keep records stated that it was
appropriate that the recordkeeping responsibility should be placed at
the finished product stage because, in some cases, an ingredient
manufacturer would be making an ingredient that may or may not be
incorporated into a food or cosmetic; therefore, the ban on the use of
prohibited cattle materials should not apply to the ingredient at the
time of production. The comments that stated the opposite view
maintained that only the ingredient manufacturers who are obtaining
cattle material from slaughterhouses or rendering establishments know
whether or not prohibited cattle materials were incorporated into the
ingredient, so it is appropriate that the records be maintained by
those who have firsthand knowledge of the source of the cattle
material.
Comments also requested that rendering establishments and other
similar establishments maintain additional records because they handle
prohibited cattle materials. These records would include plans to
prevent cross-contamination and cleaning and disinfection records.
We also received several comments requesting that we clarify that
manufacturers and processors of certain cattle-derived products (e.g.,
tallow derivatives and milk and milk products) do not have to keep
records because their products are exempt in the IFR.
(Response) We believe that manufacturers and processors of human
food and cosmetics as well as ingredients used to produce human food
and cosmetics must maintain records. To ensure that a finished human
food or cosmetic does not contain prohibited cattle materials, it is
necessary to ensure that all of the ingredients are free of prohibited
cattle materials. This
[[Page 59655]]
requires information from ingredient suppliers as well as from the
finished product manufacturer. A buyer who purchases cattle material
from its producer or manufacturer (e.g., from a slaughter or rendering
establishment) is in a better position than subsequent purchasers
further downstream in the distribution chain to ensure that the
purchased cattle material is free from prohibited cattle material.
Manufacturers and processors who use ingredients made of cattle
material and incorporate it into final products can only ensure that
the final products are free of prohibited cattle material if the
upstream suppliers have done the same. Therefore, we have concluded
that manufacturers and processors of finished human food and cosmetic
products, as well as the manufacturers and processors who supply
ingredients (e.g., tallow or gelatin) for those finished products, must
maintain records.
We are not specifying particular additional records that must be
kept by establishments that handle both prohibited and nonprohibited
cattle materials. We note that food establishments are subject to the
current good manufacturing practice requirements in 21 CFR part 110 and
that the failure to take adequate measures to prevent cross-
contamination could result in unsanitary conditions whereby the food
may be rendered injurious to health and, therefore, adulterated under
section 402(a)(4) of the Federal Food, Drug, and Cosmetic Act (the Act)
(21 U.S.C. 342(a)(4)).
Comments asked that we clarify that manufacturers and processors of
certain cattle-derived products (e.g., tallow derivatives and milk and
milk products) are exempt from the recordkeeping requirements because
these products are exempt from the provisions of the IFR. In the
Federal Register of September 7, 2005 (70 FR 53063), FDA published
amendments to the IFR. In that document, we also clarified that milk
and milk products, hides and hide-derived products, and tallow
derivatives are excluded from the definition of prohibited cattle
materials. We are not requiring that records be kept for cattle
materials that are specifically exempted from the definition of
``prohibited cattle material'' without restrictions, such as milk and
milk products, hides and hide-derived products, and tallow derivatives.
Although Sec. Sec. 189.5(a)(1) and 700.27(a)(1) exclude tallow that
contains no more than 0.15 percent insoluble impurities from the
definition of prohibited cattle materials, tallow is not exempt from
records requirements because there are restrictions on either the
amount of insoluble impurities it contains or the cattle material from
which it is sourced.
B. What Type of Records Must Manufacturers and Processors of Human Food
and Cosmetics Keep? (Sec. Sec. 189.5(c)(1) and 700.27(c)(1))
(Comment) We received several comments related to the type of
records that must be kept. Most stated that a requirement for lot-by-
lot records for human food and cosmetics was overly burdensome relative
to the risk posed by BSE. Many comments suggested that maintenance of a
continuing letter of guarantee, renewable annually, would be sufficient
to ensure that manufacturers and processors are not using prohibited
cattle materials in their products.
Other comments stated that lot-by-lot records were necessary,
particularly for imports. Some comments suggested that lot-by-lot
records should be kept and should contain enough information to allow
downstream tracing of the product and upstream tracing of products or
ingredients.
(Response) We are requiring in Sec. Sec. 189.5(c)(1) and
700.27(c)(1) that manufacturers and processors of human food and
cosmetics manufactured from, processed with, or that otherwise contain,
material from cattle maintain records sufficient to demonstrate that
the human food and cosmetics are not manufactured from, processed with,
or otherwise contain, prohibited cattle material. We recommend that
manufacturers and processors accomplish this in part by maintaining
records, which they renew at least annually, from suppliers of cattle
materials and of products that are manufactured from, processed with,
or otherwise contain, cattle material documenting that the products
obtained from the supplier do not contain prohibited cattle materials.
In addition, we recommend that manufacturers and processors maintain a
record of the source, type, volume, and date of receipt for the cattle
material or product manufactured from, processed with, or otherwise
containing, cattle material. We intend to publish guidance describing
in detail the types of records we recommend that manufacturers and
processors maintain to demonstrate compliance with the ban on
prohibited cattle materials.
Because we do not easily have access to records maintained at
foreign establishments, we have included in this final rule a
requirement, in Sec. Sec. 189.5(c)(6) and 700.27(c)(6), that when
filing entry with U.S. Customs and Border Protection, the importer of
record of a human food or cosmetic manufactured from, processed with,
or otherwise containing, cattle material must affirm that the human
food or cosmetic is manufactured from, processed with, or otherwise
contains, cattle material and must affirm that the human food or
cosmetic was manufactured in accordance with the applicable
requirements. In addition, if a human food or cosmetic is manufactured
from, processed with, or otherwise contains, cattle material, the
importer of record must, if requested, provide within 5 days records
sufficient to support the affirmation (i.e., to demonstrate that the
human food or cosmetic is not manufactured from, processed with, or
does not otherwise contain, prohibited cattle material). The importer
of record must retain or have access to the same records that domestic
manufacturers and processors must maintain to demonstrate compliance.
We have made several changes to the import provision in the
proposed rule. First, we have clarified that the import provision is
applicable to the importer of record because the importer of record is
responsible for compliance with import requirements. Second, we have
added a requirement for the importer of record to affirm that a human
food or cosmetic is manufactured from, processed with, or otherwise
contains, cattle material. FDA believes that the addition of this
affirmation will minimize the number of importers affirming compliance
based on the complete absence of cattle material and will help FDA
focus its compliance efforts on products manufactured from, processed
with, or otherwise containing, cattle material. We have also changed
the time period for providing records from a ``reasonable time'' to 5
days. FDA believes that providing a specific time period will eliminate
ambiguity and thereby facilitate compliance. FDA further believes that
5 days is a reasonable amount of time for the importer of record to
provide the records while still allowing FDA sufficient time to review
the documents to make an initial admissibility decision before the
conditional release period for the product expires. If the importer of
record fails to provide adequate records within 5 days, the product
will be subject to detention because it appears to be adulterated under
section 801 of the act (21 U.S.C. 381), and the owner or consignee will
be afforded notice and an opportunity for hearing in accordance with
section 801(a) of the act.
With regard to the comments that stated that the records required
should allow tracing of the product in the event
[[Page 59656]]
of a recall, we agree that it is beneficial to have records that will
allow for trace-back or trace-forward activities. We intend to
recommend records in a guidance document that, in addition to being
essential to ensure compliance, will provide useful information in the
event of trace-back or trace-forward activities. We note that some
manufacturers and processors of human food may already be maintaining
such records as part of ordinary business practices to comply with
FDA's recordkeeping requirements in ``Establishment and Maintenance of
Records Under the Public Health Security and Bioterrorism Preparedness
and Response Act of 2002'' (the Bioterrorism Act recordkeeping rule)
(69 FR 71562, December 9, 2004).
C. Should There Be a Requirement That Records Be Certified?
(Comment) Several comments suggested that any records required
should be certified by an appropriate government authority or that the
required records be traceable to a record certified by a government
authority. Other comments requested that FDA accept the certification
of records by foreign governments, if those authorities choose to
certify compliance with our records requirements. One comment suggested
that records be certified for compliance through independent audit,
though not necessarily by a government, and that FDA require
documentation of the certification.
(Response) We do not agree that records need to be certified by an
appropriate authority, governmental or otherwise. We did not propose
certification in the proposed rule because we did not believe it was
necessary to ensure compliance with the rule. In addition, we do not
traditionally require certification for other FDA-regulated human food
and cosmetic products with records requirements (e.g., seafood and
juice hazard analysis critical control points (HACCP) records).
D. How Long Must the Records Be Kept? (Sec. Sec. 189.5(c)(2) and
700.27(c)(2))
(Comment) We received several comments regarding the length of time
that records must be retained. Several comments stated that the
required records should be maintained for 1 year after the date they
were created to be consistent with USDA's IFR. One comment suggested
that the required records be maintained for 3 years after the date they
were created to cover the potential shelf life of the products and any
potential need to trace back products. Another comment suggested that
records be retained for 40 years after the date they were created
because variant Creutzfeldt-Jakob disease (vCJD) has a long incubation
period, and the records retention requirement should be commensurate
with the potential for outbreak of disease. Finally, several comments
requested that the records retention requirement vary with the expected
shelf life of the human food or cosmetic, but should be no longer than
2 years.
(Response) We proposed in Sec. Sec. 189.5(c)(2) and 700.27(c)(2)
that all required records be retained for 2 years after the date the
records were created. The comments received have not persuaded us to
change this requirement. The recordkeeping requirement is intended to
ensure compliance with the ban on the use of prohibited cattle
material. FDA will verify compliance during inspections of facilities
that use cattle material directly or that use human food or cosmetics
manufactured from, processed with, or that otherwise contain, cattle
material. We believe that a 2-year record retention requirement is an
appropriate length of time for achieving the goal of this rulemaking. A
2-year record retention requirement will create a compliance history
for the establishment. Furthermore, many of the products (e.g., canned
soups, gelatin, dietary supplements, and cosmetics) that include
material from cattle have shelf lives of several years. A 2-year record
retention period will enable FDA to determine compliance of products on
the market.
We do not agree that the records retention time should vary with
the shelf life of the product as it does in the Bioterrorism Act
recordkeeping rule. It is the goal of that rule to allow for trace-back
or trace-forward activities of food in an emergency; thus, shelf life
of products was the critical determinant of the records retention
period. In contrast, our goal in this rulemaking is to ensure
compliance with the ban on the use of prohibited cattle material. As
stated previously, the 2-year record retention requirement will enable
creation of a compliance history for establishments over an extended
period of time. Finally, we do not agree that the long incubation
period of vCJD necessitates that records be retained for 40 years. This
rulemaking is not intended to create a consumption or use history for
individuals. Because vCJD has a long incubation period, potentially
decades, it would be impractical to try to match disease development
with previous consumption or use of a specific commodity.
It will be necessary for inspectors to review and copy records
during an inspection. A review of records is one way that we can
determine whether an establishment is complying with the ban on the use
of prohibited cattle material. It is also important that we be able to
copy the required records. We may consider it necessary to copy records
when, for example, our investigators need assistance in reviewing a
certain record from relevant experts in our headquarters. If we are
unable to copy records, we would have to rely solely on our
investigator's notes and reports when drawing conclusions. Finally,
copying records will facilitate followup regulatory actions.
E. When Do Manufacturers and Processors Have to Comply With the
Recordkeeping Requirements?
(Comment) We received several comments requesting that industry be
given 90 days after publication of this final rule to comply with the
recordkeeping requirements, rather than the proposed 30 days. The
comments requested the additional time because they stated that 30 days
was not long enough to implement a new recordkeeping protocol in their
establishments.
(Response) As we stated in the proposed rule, the agency believes
that recordkeeping and records access requirements are necessary
immediately. However, because we recognized that recordkeeping systems
could not be put in place immediately, we did not include such
provisions in the IFR but rather proposed them. The requirements in
this rule are no more than are necessary for manufacturers, processors,
and importers of record to ensure their compliance with the rule, and
we informed industry of the anticipated timeframe for implementation in
the proposed rule. These recordkeeping requirements are vital to
ensuring compliance with the ban on the use of prohibited cattle
material, and we strongly encourage industry to begin keeping them as
soon as possible. However, in light of these comments we have decided
to make these recordkeeping requirements become effective 90 days after
the publication of this final rule in the Federal Register.
F. Legal Authority
(Comment) We received a comment that maintained that FDA has no
authority to require manufacturers to disclose company records to
inspectors.
(Response) We disagree with this comment because the agency has
authority under the act both to require maintenance of records and to
compel official access to such records for the
[[Page 59657]]
efficient enforcement of the act. The act's statutory scheme, taken as
a whole, including provisions related to adulteration, prohibited acts,
injunction, and seizure, makes clear that FDA has authority to issue a
regulation requiring recordkeeping and access to the records that are
kept. Viewing the act in its entirety, the United States Court of
Appeals for the District of Columbia Circuit has found that the agency
has authority to require records notwithstanding the act's lack of
express, general authority for records. (National Confectioners Ass'n
v. Califano, 569 F.2d 690 (DC Cir. 1978)). The Supreme Court has
recognized that FDA has authority that ``is implicit in the regulatory
scheme, not spelled out in haec verba'' in the statute (Weinberger v.
Bentex Pharmaceuticals, Inc., 412 U.S. 645, 653 (1973)). Indeed, ``it
is a fundamental principle of administrative law that the powers of an
administrative agency are not limited to those expressly granted by the
statutes, but include, also, all of the powers that may fairly be
implied therefrom. * * * In the construction of a grant of powers, it
is a general principle of law that where the end is required the
appropriate means are given and that every grant of power carries with
it the use of necessary and lawful means for its effective execution''
(Morrow v. Clayton, 326 F.2d 35, 44 (10th Cir. 1963)).
In Toilet Goods Ass'n, Inc. v. Gardner (387 U.S. 158 (1967)),
cosmetic manufacturers and distributors challenged an FDA regulation,
issued under authority of the Color Additive Amendments of 1960 and
section 701(a) of the act (21 U.S.C. 371(a)),\2\ authorizing FDA to
stop certifying the color additives of any person who had refused to
provide FDA with access to its manufacturing facilities, processes, and
formulae. The cosmetic manufacturers and distributors argued that the
regulation exceeded FDA's statutory authority and maintained that FDA
had long sought Congressional authorization for the access required by
the regulation but had been denied that power, except for prescription
drugs (id. at 162). In finding that the controversy was not ripe for
review, the Supreme Court set forth an approach to determining FDA's
rulemaking authority under section 701(a) that extends beyond
consideration of whether a specific section of the act includes a
particular requirement. Rather, the approach extends to consideration
of the act as a whole and the need to accomplish its purposes:
\2\ Section 701(a) provides that ``[t]he authority to promulgate
regulations for the efficient enforcement of this Act, except as
otherwise provided in this section, is hereby vested in the
Secretary.''
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Whether the regulation is justified thus depends, not only, as
petitioners appear to suggest, on whether Congress refused to
include a specific section of the Act authorizing such inspections,
although this factor is to be sure a highly relevant one, but also
on whether the statutory scheme as a whole justified promulgation of
the regulation. This will depend not merely on the inquiry into
statutory purpose, but concurrently on an understanding of what
types of enforcement problems are encountered by the FDA, the need
for various sorts of supervision in order to effectuate the goals of
the Act, and the safeguards devised to protect legitimate trade
secrets.
Id. at 163-64 (internal citation omitted).
In National Confectioners Ass'n v. Califano (569 F.2d 690 (DC Cir.
1978)), the United States Court of Appeals for the District of Columbia
Circuit cited Toilet Goods in upholding an FDA regulation, issued under
the authority of sections 701(a) and 402(a)(4) of the act,\3\ requiring
recordkeeping by candy manufacturers (id. at 691). The Association
challenged FDA's recordkeeping requirement on several grounds,
including that it exceeded FDA's statutory authority. The DC Circuit
rejected the Association's analysis of FDA's statutory authority as
``unreasonably cramped'' and considered enforcement practicalities as
suggested by the Supreme Court in Toilet Goods:
\3\ Section 402(a)(4) states that a food shall be deemed
adulterated ``if it has been prepared, packed, or held under
insanitary conditions whereby it may have become contaminated with
filth, or whereby it may have been rendered injurious to health.''
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There is no persuasive evidence that Congress intended to
immunize food manufacturers from * * * record-keeping. Therefore, in
assessing the validity of regulations promulgated under section
701(a) for the efficient enforcement of the Act, we must consider
``whether the statutory scheme as a whole justified promulgation of
the regulation.'' Toilet Goods Ass'n v. Gardner, 387 U.S. 158, 163
(1967). The consideration concerns ``not merely an inquiry into
statutory purpose'' but also practicalities, such as ``an
understanding of what types of enforcement problems are encountered
by the FDA (and) the need for various sorts of supervision in order
to effectuate the goals of the Act.'' Id. at 163-64. The Act is not
concerned with purification of the stream of commerce in the
abstract. The problem is a practical one of consumer protection, not
dialectics. United States v. Urbuteit, 335 U.S. 355, 357-58 (1948).
Id. at 613 (footnote omitted).
In National Confectioners, the DC Circuit considered the act's
statutory scheme as a whole, specifically citing certain of the act's
provisions relating to adulteration, prohibited acts, injunction, and
seizure. Viewing the act in its entirety, the court found no basis to
distinguish between FDA's roles in preventing and in remedying commerce
in adulterated foods (id. at 693). The court concluded that FDA's
intention to prevent the introduction of adulterated foods into
commerce and to hasten their removal from circulation once there
``reflect the objective of the Act and carry out its mandate'' (id. at
694). The regulation upheld in National Confectioners required the
creation and retention of records by candy makers of the initial
distribution of candy. Although FDA's access to the records was not
explicitly addressed, the DC Circuit implicitly recognized that FDA had
the authority to access those records: In particular, the court stated
that ``[r]egulations that require source codes and distribution records
may be based legitimately on the need to expedite seizure when
voluntary recalls are refused'' (id. at 695). The only way for records
to expedite seizure is if FDA has access to them.
The comment questioning FDA's authority to inspect records cites
the Bioterrorism Act's specific grant of authority to FDA to access
certain records as ``proof that neither FDA nor Congress believes that
the agency has general statutory power to require records inspection
for food.'' FDA's belief in its statutory power to inspect food records
is evident in the records requirements it has previously issued, such
as regulations that provide FDA with access to records for fish and
fishery products (21 CFR 123.9(c)) and records for juice (21 CFR
120.12(e)). Further, the Bioterrorism Act provides in section 306 (21
U.S.C. 414), Maintenance and Inspection of Records, that ``[t]his
section shall not be construed * * * to limit the authority of the
Secretary to inspect records or to require establishment and
maintenance of records under any other provision of this Act.'' In
addition, Congress indicated its understanding of FDA's records
authority in the legislative history of the Bioterrorism Act. The
Conference Committee responsible for the Bioterrorism Act acknowledged
FDA's recordkeeping authority independent of the Bioterrorism Act in a
joint explanatory statement:
The Managers did not adopt a Senate proposal to authorize the
Secretary to require the maintenance and retention of other records
for inspection relating to food safety, because the Secretary has
authority under section 701(a) of the [Act] to issue regulations for
the ``efficient enforcement of this Act'' and this authority, in
combination with other
[[Page 59658]]
provisions (such as section 402), gives the Secretary the authority
to require appropriate record keeping in food safety regulations.
H.R. Conf. Rep. No. 107-481, at 135 (2002).
The comment questioning FDA's authority to inspect food records
further argues that ``if Congress had intended FDA to have broad
records inspection authority, section 703, [Records of Interstate
Shipment], would have been completely superfluous and meaningless.'' As
FDA recognized in a previous rulemaking, the National Confectioners
court concluded that ``the narrow scope of section 703 of the act is
not a limitation on the right of the agency to require recordkeeping
and have access to records that are outside the scope of section 703 of
the act, so long as [1] the recordkeeping requirement is limited, [2]
clearly assists the efficient enforcement of the act, and [3] the
burden of recordkeeping is not unreasonably onerous'' (60 FR 65096 at
65100 (citing National Confectioners, 569 F.2d at 693 n.9)).
The recordkeeping requirement in this rule satisfies the three
criteria in National Confectioners for the agency to require records
and have access to records. First, the requirement is limited to only
manufacturers and processors of human food and cosmetics that are
manufactured from, processed with, or otherwise contain, material from
cattle and to importers of record of human food and cosmetics that are
manufactured from, processed with, or otherwise contain, material from
cattle. FDA has excluded all of the other persons who may be involved
in the distribution of human food or cosmetics before they reach
consumers but who do not manufacture or process the food.
Second, the recordkeeping requirement not only clearly assists the
efficient enforcement of the act, but is critical to its enforcement
because it is vital to determining compliance with the ban on
prohibited cattle material. There is currently no test to detect
reliably the presence of prohibited cattle material in human food and
cosmetics. If FDA cannot require and access records demonstrating
compliance, FDA may not be able to determine whether a human food or
cosmetic contains cattle material that is prohibited. For example,
without records, FDA may not be able to determine whether cattle
material that may be specified risk material (e.g., brain or spinal
cord) came from an animal that was less than 30 months old, whether the
source animal for cattle material was inspected and passed, whether the
source animal for cattle material was nonambulatory disabled, and
whether tallow in a human food or cosmetic contains less than 0.15
percent insoluble impurities.
Under the IFR, failure of a manufacture or processor to operate in
compliance with the ban on prohibited cattle materials renders a food
or cosmetic adulterated as a matter of law. The introduction or
delivery for introduction into interstate commerce of an adulterated
food or cosmetic is a prohibited act under section 301(a) of the act
(21 U.S.C. 331(a)), and the adulteration of any food or cosmetic in
interstate commerce violates section 301(b) of the act (21 U.S.C.
331(b)). Thus, in order for us to determine whether a human food or
cosmetic is adulterated and whether a manufacturer or processor has
committed a prohibited act, we must have access to the manufacturer or
processor's records.
Third, the burden of the recordkeeping requirement in this rule is
not unreasonably onerous. The only records that must be retained are
those sufficient to demonstrate that a human food or cosmetic is not
manufactured from, processed with, or does not otherwise contain,
prohibited cattle materials. First and foremost, FDA believes that it
is only requiring records that a manufacturer or processor itself would
need to keep to ensure its compliance with the rule. Just as there is
no way for FDA to determine whether a product contains prohibited
cattle material because there is currently no test to detect such
material, there is no way for a manufacturer or processor to know
without records. For example, without records, a manufacturer or
processor of human food or cosmetics manufactured from, processed with,
or otherwise containing, cattle material cannot determine whether
cattle material that may be specified risk material (e.g., brain or
spinal cord) came from an animal that was less than 30 months old,
whether the source animal for cattle material was inspected and passed,
whether the source animal for cattle material was nonambulatory
disabled, and whether tallow in a human food or cosmetic contains less
than 0.15 percent insoluble impurities.
Further, the rule does not dictate specific records but allows for
covered manufacturers and processors to comply in the way that is least
burdensome for them while demonstrating compliance. Also, many of the
records that covered manufacturers and processors of human food may
choose to retain are similar to those that are required by FDA's
Bioterrorism Act recordkeeping rule. Finally, by allowing for efficient
enforcement of the requirements that minimize human exposure to
materials that scientific studies have demonstrated are highly likely
to contain the BSE agent in cattle infected with the disease, FDA's
recordkeeping rule ``reflect[s] the objective of the [Federal Food,
Drug, and Cosmetic] Act and carr[ies] out its mandate'' (National
Confectioners, 569 F.2d at 694).
III. Summary of Requirements
The recordkeeping provisions of this rule apply to food and
cosmetics covered by the IFR, including food additives, dietary
supplements, and dietary ingredients.
As discussed in section II of this document, we have modified the
codified section based on comments we received on the proposed rule. In
this final rule, in Sec. Sec. 189.5(c)(1) and 700.27(c)(1), we are
requiring that manufacturers and processors of human food and cosmetics
that are manufactured from, processed with, or otherwise contain,
material from cattle establish and maintain records sufficient to
demonstrate that the human food or cosmetic is not manufactured from,
processed with, or does not otherwise contain, prohibited cattle
materials. We intend to publish guidance that will describe in detail
the records we recommend that manufacturers and processors maintain to
demonstrate compliance with the ban on the use of prohibited cattle
materials.
In Sec. Sec. 189.5(c)(2) and 700.27(c)(2), we specify the period
of time (2 years) that records must be retained. In Sec. Sec.
189.5(c)(3) and 700.27(c)(3), we require that records be maintained at
the manufacturing or processing establishment or at a reasonably
accessible location. Sections 189.5(c)(4) and 700.27(c)(4) provide that
maintenance of electronic records is acceptable and that electronic
records are considered to be reasonably accessible if they are
accessible from an onsite location. Sections 189.5(c)(5) and
700.27(c)(5) provide that records required by these sections and
existing records relevant to compliance with these sections must be
available to FDA for inspection and copying.
Because we do not easily have access to records maintained at
foreign establishments, we are requiring in Sec. Sec. 189.5(c)(6) and
700.27(c)(6), respectively, that when filing entry with U.S. Customs
and Border Protection, the importer of record of a human food or
cosmetic manufactured from, processed with, or otherwise containing,
cattle material must affirm that the human food or cosmetic is
manufactured from, processed with, or otherwise contains, cattle
material and must affirm that the human food or cosmetic was
[[Page 59659]]
manufactured in accordance with this rule. In addition, if a human food
or cosmetic is manufactured from, processed with, or otherwise
contains, cattle material, then the importer of record must, if
requested, provide within 5 days records sufficient to demonstrate that
the human food or cosmetic is not manufactured from, processed with, or
does not otherwise contain, prohibited cattle material.
Sections 189.5(c)(7) and 700.27(c)(7) provide that records
established or maintained to satisfy the requirements of this subpart
that meet the definition of electronic records in part 11 (21 CFR part
11) in Sec. 11.3(b)(6) are exempt from the requirements of part 11.
Records that satisfy the requirements of this rulemaking, but that are
also required under other applicable statutory provisions or
regulations, remain subject to part 11.
IV. Regulatory Impact Analysis
A. 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 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 the following conditions: 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 final rule is a significant regulatory action
because it raises novel policy issues; however, we have determined that
this final rule is not an economically significant regulatory action.
The Regulatory Flexibility Act requires agencies to analyze
regulatory options that would minimize any significant impact of a rule
on small entities. FDA finds that this final rule will have a
significant economic impact on a substantial number of small entities.
Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires
that agencies prepare a written statement, which includes an assessment
of anticipated costs and benefits, before proposing ``any rule that
includes any 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 one year.'' The current threshold after adjustment
for inflation is $122 million, using the most current (2005) Implicit
Price Deflator for the Gross Domestic Product (Ref 1). FDA does not
expect this final rule to result in any 1-year expenditure that would
meet or exceed this amount.
The Small Business Regulatory Enforcement Fairness Act of 1996
(Public Law No. 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
or more; a major increase in costs or prices; significant adverse
effects on competition, employment, productivity, or innovation; or
significant adverse effects on the ability of U.S.-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 this final rule will not be a major rule
for the purpose of congressional review.
1. Need for Regulation
As explained in this document, USDA's amended BSE IFR requires that
SRMs, tissue from nonambulatory disabled cattle, material from cattle
not inspected and passed for human consumption, and MS beef not be used
for human food. SRMs include the brain, skull, eyes, trigeminal
ganglia, spinal cord, vertebral column (excluding the vertebrae of the
tail, the transverse process of the thoracic and lumbar vertebrae, and
the wings of the sacrum), and dorsal root ganglia of cattle 30 months
and older, as well as the tonsils and distal ileum of the small
intestine of all cattle. USDA's BSE IFR requires that all of the
prohibited materials be destroyed or sent to inedible rendering. This
final rule implements recordkeeping for the provisions of the IFR on
use of materials from cattle and responds to the same public health
concerns. This final rule will not affect the incidence of BSE in
cattle, which is addressed in other FDA regulations. This final rule
will serve as an additional safeguard to reduce human exposure to the
agent that causes BSE that may be present in cattle-derived products
from domestic and imported sources. Without the recordkeeping
requirements in this final rule manufacturers and processors might not
establish and maintain records to ensure that cattle material does not
contain prohibited cattle materials, it may not be possible to
determine whether cattle material that may be specified risk material
(e.g., brain or spinal cord) came from an animal that was less than 30
months old, it may not be possible to determine whether the source
animal for cattle material was inspected and passed, and a product
might contain MS beef without its presence being evident.
2. Final Rule Coverage
This final rule will require recordkeeping to ensure and document
compliance with the provisions of the IFR (on use of materials from
cattle) that prohibit the use of ``prohibited cattle materials.'' This
final rule will require that manufacturers and processors of human
foods and cosmetics that are manufactured from, processed with, or
otherwise contain, cattle materials maintain records indicating that
prohibited cattle materials have not been used in the manufacture or
processing of a human food or cosmetic, and make such records available
to FDA for inspection and copying. Because we do not easily have access
to records maintained at foreign establishments, we have included in
this final rule a requirement that, when filing entry with U.S. Customs
and Border Protection, importers of human food and cosmetics
manufactured from, processed with, or otherwise containing, cattle
material must affirm that the food or cosmetic was manufactured from,
processed with, or otherwise contains, cattle material and must affirm
that the food or cosmetic was manufactured in accordance with this
rule. In addition, if a human food or cosmetic is manufactured from,
processed with, or otherwise contains, cattle material, then the
importer of record must, if requested, provide within 5 days records
sufficient to demonstrate that the human food or cosmetic is not
manufactured from, processed with, or does not otherwise contain,
prohibited cattle material.
3. Comments Received on the Proposed Rule
(Comment) We received several comments that stated that FDA
underestimated the economic impact of the proposed rule by omitting
entire industries that would be subject to the rule. According to the
comments, FDA had only estimated the costs of the rule to end-users of
cattle material and had not considered the costs of the rule to those
persons that produce intermediate
[[Page 59660]]
cattle-derived products. Specifically, manufacturers of collagen
casings, intestinal casings, flavoring extracts, and gelatin are not
appropriately accounted for in the proposed rule analysis.
(Response for gelatin) In the case of gelatin, FDA did estimate the
impact of the proposed rule on food manufacturers of intermediate
products that are from cattle-derived gelatin. Depending on the
product, FDA had information on cattle-derived materials manufactured
by intermediate producers (e.g., input suppliers to cosmetics
manufacturers) or information on end products that contained cattle
materials (e.g., foods). Whether our information was on intermediate
manufacturers or end products, we estimated the impact of the rule on
both the upstream and downstream facilities. FDA did not include
estimates of bovine gelatin use in cosmetics in the analysis of the
proposed rule. We have included these estimates in the final analysis.
(Response for small intestine) FDA did not estimate any costs,
other than recordkeeping, for the requirement that the distal ileum be
removed from the small intestine because costs other than recordkeeping
are linked to the prohibition in FDA's IFR.
(Response for flavoring extracts) In the case of flavoring
extracts, manufacturers and the buyers of flavoring extracts for use in
food products were accounted for in the proposed rule. We assessed
recordkeeping costs for the 32 facilities (out of 127 facilities) that
we estimated were likely to manufacture flavoring extracts using
cattle-derived materials and for the buyers of these flavoring
extracts. FDA assumed three scenarios for sensitivity analyses: (1)
Recordkeeping costs are borne entirely by the flavoring extract
manufacturers as the input supplier, (2) recordkeeping costs are borne
entirely by the manufacturers of products that use flavoring extracts
as an ingredient in their products, and (3) recordkeeping costs are
shared between the two types of firms.
(Response for collagen) FDA did not estimate the impacts of our
proposed rule on collagen manufacturers or collagen casing
manufacturers. This rule does not require recordkeeping for hide-
derived collagen. Therefore we do not include the costs of
recordkeeping to manufacturers who use hide-derived collagen. We do
include costs for some collagen use in cosmetic manufacturing.
4. Costs and Benefits of the Final Rule
This final rule will require manufacturers and processors of FDA-
regulated human food and cosmetics manufactured from, processed with,
or otherwise containing, cattle material to maintain records
demonstrating that prohibited cattle materials are not used in their
products. This final rule will require that the manufacturer or
processor retain records for 2 years from the date they were created.
Records must be kept at the manufacturing or processing establishment
or another reasonably accessible location. Manufacturers and processors
must provide FDA with access to the required records and other records
relevant to compliance for inspection and copying.
a. Costs of final rule to domestic facilities. FDA used
establishment data from the FDA Small Business Model (which includes
information on all establishments in a manufacturing sector regardless
of size) (Ref. 2) to determine the number of food manufacturers and
processors that will need to comply with the proposed recordkeeping
requirements. The model contains information on the number of
establishments in certain food producing sectors, but does not have
information on specific ingredients used by the food establishments in
making products. Data from the model indicates that 181 establishments
produce spreads, 127 establishments produce flavoring extracts, 40
establishments produce canned soups and stews, 625 establishments
produce nonchocolate candy, 88 establishments produce yogurt, and 451
establishments produce ice cream. FDA cannot verify that all of these
establishments actually use cattle materials that fall under the
jurisdiction of this final rule; many may not. It is likely that some
of the 132 establishments that produce fats and oils currently use
tallow or tallow derivatives,\4\ so FDA assumes that records will be
required to be kept by only 75 percent of the facilities (99 of 132) in
this establishment group. We assume that only 25 percent of the
establishments from the remaining production sectors listed previously
actually produce food that is manufactured from, processed with, or
otherwise contains, material from cattle and are therefore required to
keep records. We include only 25 percent of the establishments in our
estimates because most of the manufacturers likely do not use cattle-
derived materials in their products.
---------------------------------------------------------------------------
\4\ Tallow derivatives are exempt from recordkeeping.
---------------------------------------------------------------------------
FDA research shows that 42 establishments with U.S. addresses
supply cattle-derived ingredients that are used in cosmetics (Ref. 3).
These cattle-derived ingredients include bovine serum albumin,
cholesterol and cholesterol compounds, fibronectin, sphingolipids,
spleen extract, tallow, gelatin, and keratin and keratin compounds.
From FDA's dietary supplement database (Ref. 4), we are able to tell
that there are about 131 U.S.-based dietary supplement brand names that
use cattle material as ingredients in their products. We assume that
each brand name represents a facility that produces multiple dietary
supplement products containing cattle-derived ingredients.
Recordkeeping costs to domestic facilities. USDA's BSE rule
requires that those establishments that slaughter cattle or that
process the carcasses or parts of carcasses of cattle maintain daily
records sufficient to document the implementation and monitoring of
procedures for removal, segregation, and disposition of SRMs. USDA's
BSE requirements will reduce, but likely not eliminate, the startup
costs of recordkeeping required by this final rule. We do not expect
the USDA rule to completely eliminate start-up costs to recordkeeping
for this rule because the beef products under USDA's jurisdiction
differ from the food products under FDA's jurisdiction. To the extent
that manufacturers of products containing cattle-derived materials
produce a variety of food products, some of which are under USDA
jurisdiction and some of which are under FDA jurisdiction, the
following estimates of recordkeeping costs (for foods only) are likely
an over estimate.
Recordkeeping costs include one-time costs and recurring costs.
One-time costs include the costs of designing records and training
personnel in the maintenance of the records. The recurring costs are
the costs of ensuring that the records adequately document that the
shipment of cattle materials to an FDA-regulated facility is free of
prohibited cattle materials. The costs of retaining records and
planning for an FDA request for records access are assumed to be
negligible. Current business practices already dictate that records are
kept for at least 1 year for tax purposes and product liability
purposes. FDA has found that records are usually kept much longer for
internal business purposes; therefore, in most cases the marginal
private benefits to facilities from retaining records for a second year
are apparently greater than the private marginal costs, so they keep
most records. Because records retention is already standard practice in
many cases, we assume that the additional retention costs associated
with this final
[[Page 59661]]
rule are approximately zero. The rule provides no specific time period
for providing records, except for importers of record, who are given 5
days. In research conducted for FDA's Bioterrorism Act recordkeeping
rule (69 FR 71562, December 9, 2004), FDA found that record request
costs are not a significant burden under that rule's requirement to
submit records to FDA within 24 hours of a request. Therefore, we
assume the cost to provide records to FDA under the requirements of
this final rule is approximately zero.
We assume that the one-time training burden incurred for each
facility is approximately one-third of an hour. This time includes both
the training required for personnel to learn how to verify that the
appropriate records have been received or created, and the training
required for personnel to learn how to file and maintain those records.
As part of current business practices, personnel are familiar with
recordkeeping. Therefore, the requirement to maintain additional
records will be learned quickly. This training burden estimated for
recordkeeping in this final rule is consistent with the recordkeeping
training burden in the analysis for the Bioterrorism Act recordkeeping
rule and the records maintenance burden in the analysis of the juice
hazard analysis critical control points (HACCP) rule (66 FR 6137-6202).
Consistent with the analysis conducted for the Bioterrorism Act
recordkeeping rule, FDA assumes an hourly cost of an administrative
worker, $25.10 per hour, which includes overhead costs.
We use the FDA Labeling Cost Model to estimate the one-time records
design costs per facility of $1,190 per stock keeping unit (SKU) (Ref.
5). It is likely that facilities using cattle-derived ingredients,
whether the ingredients are for human food or cosmetics, will take
advantage of their economies of scope and produce more than one product
with these ingredients. It is probable that each establishment has
several SKUs associated with products containing cattle-derived
ingredients that will now require recordkeeping. To account for
additional products and SKUs we take the record design costs per
facility times 1.5 for a total design cost per facility of $1,785
($1,095 in labor costs and $690 in capital costs).
We multiplied the cost per product per SKU by 1.5 to account for
the additional records design required for the additional SKUs. The
record design cost for the first affected product or SKU will be more
expensive than the marginal cost of adding records for additional SKUs.
This marginal cost of record design for additional SKUs could be
negligible, or it could come close to doubling the costs. We therefore
pick 1.5, the midpoint of 1 and 2, to be the cost multiplier.
Consistent with the analysis conducted for the Bioterrorism Act
recordkeeping rule, this record design cost is assumed to be shared
between two facilities--the upstream facility and the downstream
facility--as both will need to be involved in record production that
meets the needs of both the supplier and customer for the product
containing cattle-derived material.
Unlike for the analysis of the Bioterrorism Act recordkeeping rule
(69 FR 71562, December 9, 2004), we do not have direct information on
all the facilities covered; we do not have data on all the intermediate
cattle material suppliers or finished product manufacturers that make
use of cattle-derived material for human food and cosmetics under FDA
jurisdiction. Using information on the number of human food
manufacturers and cosmetic ingredient suppliers that may use cattle-
derived ingredients subject to this final rule, we can account for the
total shared records costs by assuming that each food manufacturer or
processor in table 1 of this document procures ingredients from one
upstream input supplier for particular cattle-derived ingredients. Even
if multiple input suppliers are used by the manufacturing facility, or
an input supplier is used by multiple manufacturing facilities, the
marginal record setup costs would decrease for additional suppliers or
additional manufacturers. Once a facility has designed the required
records, it is less costly to generate records for additional input
suppliers or additional end product manufacturers. Table 1 of this
document shows estimated set-up costs for U.S. facilities. Dietary
supplement facilities listed represent end product manufacturers of
dietary supplements that contain cattle-derived material; cosmetics
facilities are represented by intermediate cattle-derived ingredients
used in cosmetics products from domestic cosmetic input suppliers.
Table 1.--First-Year Records Costs for Domestic Facilities
----------------------------------------------------------------------------------------------------------------
Costs per
Number of Costs per facility for
facilities facility for training (\1/ Total setup
Type of product using cattle material estimated to designing 3\ hour x costs
use cattle records $25.10 per
materials hour)
----------------------------------------------------------------------------------------------------------------
Canned soups and stews.......................... 10 $1,785 $8.37 $17,934
Fats and oils................................... 99 1,785 8.37 177,544
Flavoring extracts.............................. 32 1,785 8.37 57,388
Spreads......................................... 45 1,785 8.37 80,702
Candy........................................... 156 1,785 8.37 279,766
Yogurt.......................................... 22 1,785 8.37 39,454
Ice cream....................................... 113 1,785 8.37 202,651
Small intestine-derived casings................. 47 1,785 8.37 84,288
Dietary supplements............................. 131 1,785 8.37 234,931
Cosmetics....................................... 42 1,785 8.37 75,322
Color additives................................. 0 1,785 8.37 ..............
---------------------------------------------------------------
Total....................................... 697 1,785 8.37 1,249,978
----------------------------------------------------------------------------------------------------------------
Startup Costs Annualized over 10 years (7%)..................................................... 177,969
Startup Costs Annualized over 10 years (3%)..................................................... 146,536
----------------------------------------------------------------------------------------------------------------
[[Page 59662]]
The recurring recordkeeping cost is the cost of ensuring that
appropriate records document the absence of prohibited cattle materials
in human food and cosmetics. The framework for estimating the amount of
time required for FDA-regulated facilities to ensure adequate records
for each shipment of materials is based on the regulatory impact
analysis of the Bioterrorism Act recordkeeping rule (69 FR 71562,
December 9, 2004). In that analysis we estimated that 30 minutes per
week would be needed to ensure that records on each shipment to and
from a facility contain adequate information regarding the contents of
the package, the transporter, supplier, and receiver.
The recordkeeping requirements of this final rule will cover only a
small fraction of all ingredients used in food and cosmetic
manufacturing and only require that records of cattle-derived
ingredient origin from the input supplier be verified and maintained by
the food or cosmetic manufacturer and processor. Because this
recordkeeping requirement is less complex than the recordkeeping
requirements under the Bioterrorism Act and affects fewer ingredients,
we estimate the average burden per facility to be about one-half of the
burden estimated for the Bioterrorism Act recordkeeping rule: 15
minutes per week, or 13 hours per year. FDA assumes that this
recordkeeping burden will be shared between two entities (i.e., the
ingredient supplier and the manufacturer of finished products
containing cattle-derived ingredients). For facilities using records
that are renewable annually, the time pattern of the burden may be
different from the assumed 15 minutes per week. We are, however, unable
to quantify by how much time, if any, the annual burden will fall for
those facilities using that option.
In addition to the recurring costs to domestic firms in the
industry, as new firms enter the industry they will bear one-time
costs. As in the analysis of the Bioterrorism Act recordkeeping rule,
we assume that the average annual rate of turnover is 10 percent. We
therefore estimate the annual one-time costs for new domestic firms
entering the industry to be 10 percent of the one-time costs of
existing domestic firms estimated in table 1 of this document.
Table 2 of this document shows the recurring recordkeeping costs
that would be incurred by food and cosmetics input suppliers and
manufacturers to comply with this final rule. As stated earlier,
information on food producing facilities in table 2 represents U.S.
facilities; dietary supplement facilities listed represent end product
manufacturers of dietary supplements that contain cattle-derived
material and cosmetics facilities are represented by intermediate
cattle-derived ingredients used in cosmetics products from domestic
cosmetic input suppliers.
Table 2.--Recurring Annual Records Costs for Domestic Facilities
----------------------------------------------------------------------------------------------------------------
Annual costs
per facility
of ensuring
that
appropriate Total
Type of product (from raw or rendered material that needs Number of records recurring
accompanying documentation) facilities accompany each annual costs
shipment
received (13
hours x $25.10/
hour)
----------------------------------------------------------------------------------------------------------------
Canned soups and stews.......................................... 10 $326.30 $3,263
Fats and oils................................................... 99 326.30 32,304
Flavoring extracts.............................................. 32 326.30 10,442
Spreads......................................................... 45 326.30 14,684
Candy........................................................... 156 326.30 50,903
Yogurt.......................................................... 22 326.30 7,179
Ice Cream....................................................... 113 326.30 36,872
Small intestine-derived casings................................. 47 326.30 15,336
Dietary supplements............................................. 131 326.30 42,745
Cosmetics....................................................... 42 326.30 13,705
Color additives................................................. 0 .............. ..............
-----------------------------------------------
Total recurring costs for existing firms........................ 697 326.30 227,430
----------------------------------------------------------------------------------------------------------------
One-time costs for new firms.................................................................... 124,998
Total annual costs.............................................................................. 352,428
Total costs of recordkeeping for domestic firms (annualized startup costs (7%) + annual costs).. 530,397
Total costs of recordkeeping for domestic firms (annualized startup costs (3%) + annual costs).. 498,964
----------------------------------------------------------------------------------------------------------------
b. Costs of final rule to importers. This final rule requires that,
when filing entry with U.S. Customs and Border Protection, importers of
record of human food and cosmetics that are manufactured from,
processed with, or otherwise contain, cattle material must affirm that
the food or cosmetic was manufactured from, processed with, or
otherwise contains, cattle material and must affirm that the human food
or cosmetic was manufactured in accordance with this rule. If a human
food or cosmetic is manufactured from, processed with, or otherwise
contains, cattle material, then the importer of record must, if
requested, provide within 5 days records sufficient to demonstrate that
the human food or cosmetic is not manufactured from, processed with, or
does not otherwise contain, prohibited cattle material.
The affirmation that foods or cosmetics are manufactured from,
processed with, or otherwise contain, cattle material and are
manufactured in accordance with the rule will be made by the importer
of record to FDA through the Agency's Operational and Administrative
System for Import Support (OASIS). Table 3, using OASIS data from
fiscal year 2004, shows 2,195,000 entry lines of food and cosmetics for
the product codes that FDA expects may contain products with cattle
materials entered the U.S.; 0 to
[[Page 59663]]
100 percent of these imported product lines will be for products that
actually do contain cattle material and require affirmation. We use the
information in table 3 to generate recordkeeping costs to importers (in
tables 4 and 5) whose products actually do contain cattle-derived
materials.
Table 3.--Annual Lines per FDA Industry Product Code for Which Importers
Must Verify Use of Cattle-Derived Materials \1\
------------------------------------------------------------------------
Fiscal year
Industry description FDA industry 2004 line
product code count
------------------------------------------------------------------------
Bakery products, dough, mix, and icing.. 03 700,222
Macaroni and noodle products............ 04 24,011
Milk, butter, and dried milk products... 09 12,228
Cheese and cheese products.............. 12 2,712
Ice cream products...................... 13 2,698
Filled milk and imitation milk products. 14 990
Fishery and seafood products............ 16 4,775
Meat, meat products and poultry......... 17 5,322
Vegetable protein products.............. 18 16,702
Fruit and fruit products................ 20 16,410
Fruit and fruit products................ 21 13,112
Fruit and fruit products................ 22 1,532
Nuts and edible seeds................... 23 24,216
Vegetables and vegetable products....... 24 323,004
Vegetables and vegetable products....... 25 321,032
Vegetable oils.......................... 26 1,532
Dressings and condiments................ 27 16,386
Spices, flavors, and salts.............. 28 203
Candy (except chocolate candy), chewing 33 275,733
gum....................................
Chocolate and cocoa products............ 34 126,719
Gelatin, rennet, pudding mix, pie 35 22,485
filling................................
Multiple food dinners, gravy, and sauces 37 82,105
Soup.................................... 38 37,923
Prepared salad products................. 39 13,357
Baby food products...................... 40 576
Dietary convenience foods and meal 41 18,189
replacements...........................
Food additives (human use).............. 45 23,877
Food additives (human use).............. 46 14,699
Miscellaneous food related items........ 52 1,501
Cosmetics............................... 53 27,867
Vitamins, minerals, proteins, 54 63,184
unconventional dietary specialties.....
-------------------------------
Total annual lines.................. .............. 2,195,302
------------------------------------------------------------------------
\1\ Note that not every import within each two-digit FDA product code
will be required to make an affirmation of bovine materials in their
products.
Recordkeeping costs to foreign facilities. Facilities producing
products required to give affirmation on import into the U.S. whose
products actually do contain cattle-derived materials will have to
create and maintain records of cattle-derived materials used in product
production. Therefore, a certain percentage of the firms whose products
are listed in Table 3 above will have to incur startup and recurring
recordkeeping costs, as domestic facilities do, to comply with the
recordkeeping requirements of this final rule.
We do not expect many imported food products under FDA jurisdiction
will actually contain cattle-derived materials. Table 4 below revises
table 3 to only include the percentage (10 percent) of certain imported
products likely to contain cattle materials and whose manufacturing
firms will keep records. We do not include the categories of food from
table 3 where affirmation could be required but it is not likely that
products from that category actually contain cattle-derived materials.
We estimate only 10 percent of lines rather than 25 percent or 75
percent as we did for domestic products because import category codes
tend to be broader in scope than the categories we used for determining
the number of domestic facilities that produced products using cattle-
derived materials.
To estimate the number of foreign firms associated with the 10
percent of line entries listed in table 4, we take all foreign firms
registered in the Food Facilities Registration Database as of the end
of the fiscal year 2004 (approximately 125,000) and divide that number
of firms by all imported food entry lines for fiscal year 2004
(7,486,650).\5\ The result is a multiplier (0.0167) that we apply to
entry lines to estimate the average number of firms by product category
that exported food or cosmetics to the U.S. in fiscal year 2004, and
whose products actually contained cattle-derived materials for which
records would need to be kept.
---------------------------------------------------------------------------
\5\ Cosmetic lines have been subtracted from the line total
because cosmetics manufacturers do not have to register.
---------------------------------------------------------------------------
Table 4 below shows that about 916 foreign firms will need to keep
records of cattle-derived materials. The startup costs to keeping these
records will be about $1.6 million. Since we do not have good
information on the number of firms that actually produce and export
products that contain cattle-derived materials to the U.S., the costs
in table 4 below may overestimate recordkeeping costs to firms in some
product categories and may
[[Page 59664]]
underestimate recordkeeping costs to firms in other product categories.
Table 4.--First Year Records Costs for Foreign Facilities
----------------------------------------------------------------------------------------------------------------
Fiscal year Total setup
Industry description 2004 line 10 percent of Number of costs ($1,793
count lines facilities per firm)
----------------------------------------------------------------------------------------------------------------
Milk, butter, and dried milk products........... 12,228 1,223 20 $36,614
Ice cream products.............................. 2,698 270 5 8,079
Meat, meat products and poultry................. 5,322 532 9 15,936
Vegetable oils.................................. 1,532 153 3 4,587
Dressings and condiments........................ 16,386 1,639 27 49,065
Spices, flavors, and salts...................... 203 20 0 0
Candy (except chocolate candy), chewing gum..... 275,733 27,5723 460 825,630
Gelatin, rennet, pudding mix, pie filling....... 22,485 2,249 38 67,327
Multiple food dinners, gravy, and sauces........ 82,105 8,211 137 245,848
Soup............................................ 37,923 3,792 63 113,553
Baby food products.............................. 576 58 1 1,725
Cosmetics....................................... 27,867 2,787 47 83,442
Vitamins, minerals, proteins, unconventional 63,184 6,318 106 189,192
dietary specialties............................
---------------------------------------------------------------
Total....................................... .............. .............. 916 1,640,999
----------------------------------------------------------------------------------------------------------------
Startup Costs Annualized over 10 years (7%)..................................................... 233,641
Startup Costs Annualized over 10 years (3%)..................................................... 192,375
----------------------------------------------------------------------------------------------------------------
The recurring recordkeeping cost to importers whose products
contain cattle-derived materials is the cost of ensuring that
appropriate records document the absence of prohibited cattle materials
in human food and cosmetics. We use the same method and rationale to
calculate the recurring recordkeeping cost burden to foreign facilities
that we used for domestic facilities.
In addition to the recurring costs to foreign firms in the
industry, as new firms enter the industry they will bear one-time
costs. As in the analysis of the Bioterrorism Act recordkeeping rule,
we assume that the average annual rate of turnover is 10 percent. We
therefore estimate the annual one-time costs for new foreign firms
entering the industry to be 10 percent of the one-time costs of
existing foreign firms estimated in table 4.
Also shown in table 5 are the annual costs to importers to affirm
that the human food or cosmetics that they are importing do contain
cattle material and are in compliance with this rule. Importers of
approximately 54,825 lines of food and cosmetics are expected to affirm
annually that the products they are importing contain cattle materials.
This total represents 10 percent of the total lines imported for fiscal
year 2004 for products under FDA product codes that FDA will be looking
to for importer affirmation. Using an importer hourly wage cost of
$46.58 (Ref. 6), which includes overhead, FDA estimates that importer
affirmation will take about two minutes per line at a cost of $1.55 per
affirmation for total annual affirmation costs of $84,979.
Table 5.--Recurring Annual Records Costs for Foreign Facilities
----------------------------------------------------------------------------------------------------------------
Total
Fiscal year recurring
Industry description 2004 line 10 percent of Number of annual costs
count lines facilities ($326.30 per
firm)
----------------------------------------------------------------------------------------------------------------
Milk, butter, and dried milk products........... 12,228 1,223 20 $6,663
Ice cream products.............................. 2,698 270 5 1,470
Meat, meat products and poultry................. 5,322 532 9 2,900
Vegetable oils.................................. 1,532 153 3 835
Dressings and condiments........................ 16,386 1,639 27 8,929
Spices, flavors, and salts...................... 203 20 0 111
Candy (except chocolate candy), chewing gum..... 275,733 27,573 460 150,253
Gelatin, rennet, pudding mix, pie filling....... 22,485 2,249 38 12,253
Multiple food dinners, gravy, and sauces........ 82,105 8,211 137 44,741
Soup............................................ 37,923 3,792 63 20,665
Baby food products.............................. 576 58 1 314
Cosmetics....................................... 27,867 2,787 47 15,185
Vitamins, minerals, proteins, unconventional 63,184 6,318 106 34,430
dietary specialties............................
---------------------------------------------------------------
Total....................................... .............. 54,825 916 298,638
----------------------------------------------------------------------------------------------------------------
Total Annual Importer Affirmation Costs ($1.55 per line for 54,825 lines)....................... 84,979
One-time costs for new firms.................................................................... 164,100
Total annual costs.............................................................................. 547,717
Total costs of recordkeeping for foreign firms (annualized startup costs (7%) + annual costs.... 781,358
Total costs of recordkeeping for foreign firms (annualized startup costs (3%) + annual costs)... 740,092
----------------------------------------------------------------------------------------------------------------
[[Page 59665]]
c. Benefits of the final rule. The benefits of this final rule are
derived from the benefits of the interim final rule on use of material
from cattle, which are the value of the public health benefits. The
public health benefit is the reduction in the risk of the human illness
associated with consumption of the agent that causes BSE.
If we define the baseline risk as the expected annual number of
cases of variant Creutzfeldt-Jakob disease (vCJD) per year, then the
annual benefits of banning prohibited cattle materials for use in foods
and cosmetics would be: (baseline annual cases of vCJD -annual cases of
vCJD under FDA IFR on use of materials from cattle) x (value of
preventing a case of vCJD).
An alternative way to characterize benefits is:
(reduction in annual cases in vCJD under FDA IFR on use of materials
from cattle) x (value of preventing a case of vCJD).
We do not know the baseline expected annual number of cases. But
based on the epidemiology of vCJD in the United Kingdom, we anticipate
much less than one case of vCJD per year in the United States. Because
the IFR on use of materials from cattle and this final rule will
reduce, rather than eliminate, risk of exposure to BSE infectious
materials, the reduction in the number of cases will be some fraction
of the expected number. The value of preventing a case of vCJD is the
value of a statistical life plus the value of preventing a year-long or
longer illness that precedes certain death for victims of vCJD. In a
recent rulemaking regarding labeling of trans fatty acids (68 FR 41434,
July 11, 2003), we used a range of $5 million to $6.5 million for the
value of a statistical life. The value of preventing a vCJD case may be
similar. FDA uses the concept of the Value of a Statistical Life (VSL)
in order to describe the value of preventing a case of vCJD. This term
refers to the sum of risk reductions expected in a population exposed
to small changes in risk. It has no application to identifiable
individuals or large reductions in risk. Most recent studies suggest
values ranging from about $1 million to $10 million. In recent
rulemakings, we have used $5 million and $6.5 million as the value of a
statistical life, and we believe it is reasonable to use a similar VSL
to value the cases of vCJD avoided.
As discussed in FDA's IFR on use of materials from cattle, the
Harvard-Tuskegee study has stated that a ban on SRMs, including cattle
brains, spinal cord, and vertebral column, from inclusion in human and
animal food would reduce the very few potential BSE cases in cattle by
88 percent and potential human exposure to infectivity in meat and meat
products by 95 percent (Ref. 7). The FDA IFR on use of materials from
cattle, in conjunction with USDA's BSE IFR, will help achieve this
reduction in potential human exposure. FDA's IFR on use of materials
from cattle will also reduce potential human exposure to BSE
infectivity in other human food not covered by the Harvard-Tuskegee
study and from cosmetics. This final rule will help ensure that the
provisions of the IFR on use of materials from cattle are carried out.
For example, this final rule will require documentation that a
domestically-produced or foreign-produced dietary supplement or
ingredient contains cattle material (e.g., brain) only from animals of
an appropriate age.
d. Summary of costs and benefits of the final rule. For this final
rule, the costs are to set up and then to maintain a recordkeeping
system to document that cattle-derived ingredients used in FDA-
regulated food and cosmetics do not contain prohibited cattle material.
The first year costs of this final rule are about $1.2 million to
domestic facilities and about $1.6 million to foreign facilities. The
annual costs of this final rule are about $352 thousand in
recordkeeping costs to domestic facilities, $548 thousand in
recordkeeping costs to foreign facilities. Costs of this final rule
annualized at 7 percent over 10 years are about $530 thousand to
domestic facilities and $781 thousand to foreign facilities; costs
annualized at 3 percent over 10 years are $500 thousand to domestic
facilities and $740 thousand to foreign facilities.
The benefits of this final rule are to ensure that cattle-derived
products that may possibly be contaminated with BSE do not find their
way into food and cosmetic products, thus further reducing the risk of
vCJD to humans.
Table 6.--Summary of Costs and Benefits
----------------------------------------------------------------------------------------------------------------
Total costs Total costs
Number of Start-up Recurring annualized at annualized at
facilities recordkeeping recordkeeping 7% for 10 3% for 10
costs costs years years
----------------------------------------------------------------------------------------------------------------
Costs to Domestic Facilities.... 697 $1,249,978 $352,428 $530,397 $498,964
Costs to Foreign Facilities..... 916 $1,640,999 $547,717 $781,358 740,092
-------------------------------------------------------------------------------
Total....................... 1613 $2,890,977 $900,145 $1,311,755 1,239,056
----------------------------------------------------------------------------------------------------------------
Benefits--To ensure that cattle-derived products that may possibly be contaminated with BSE do not find their
way into food and cosmetic products, thus further reducing the risk of vCJD to humans.
B. Regulatory Flexibility 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 entities.
First-year costs of this final rule are about $1,800 per facility
pair, with this cost divided between the upstream facility (ingredient
input supplier) and downstream facilities (manufacturers of food or
cosmetics). FDA cannot determine if the cost sharing between the two
firms would be equal. If the cost sharing is equal, then each facility
would have to bear about a $900 first-year cost to comply with the
recordkeeping required by the final rule; if the cost sharing is not
equal, then one facility in the partnership may bear zero costs all the
way up to the total first-year costs of $1,800. Recurring costs of this
final rule are about $326 per facility relationship, which may be borne
by only one facility or may be shared between facilities.
Using FDA's Small Business Model, we can estimate, when
recordkeeping costs are shared and when they are not shared, the number
of facilities that may go out of business as a result of this final
rule. Table 7 of this document shows
[[Page 59666]]
that if facilities are only responsible for one-half of the
recordkeeping cost burden (the burden is equally shared between the
upstream and downstream facilities), then only two very small
facilities (fewer than 20 employees) may be affected by having to
comply with this final rule. If the recordkeeping cost burden is borne
by only one facility in the business relationship (either the upstream
or the downstream firm), then six very small facilities (fewer than 20
employees) may have trouble complying with this final rule and staying
in business. The option to use a continuing letter of guarantee,
however, may introduce sufficient flexibility to reduce the burden on
some small facilities, which may reduce the number of very small
facilities that will have trouble staying in business. Facilities with
20 to 499 employees and facilities with at least 500 employees that
must comply with this final rule are not in danger of having to stop
operating as a result of the final rule.
Table 7.--Potential for Domestic Facility Shutdown
----------------------------------------------------------------------------------------------------------------
Regulation
Estimated burden on each Number of
number of facility facilities in
Industry facilities (shared industry that
affected burden or may shut down
total burden)
----------------------------------------------------------------------------------------------------------------
Canned soups and stews.......................................... 10 $900 0
Canned soups and stews.......................................... 10 1,800 0
Fats and oils................................................... 99 900 0
Fats and oils................................................... 99 1,800 0
Flavoring extracts.............................................. 32 900 0
Flavoring extracts.............................................. 32 1,800 0
Spreads......................................................... 45 900 0
Spreads......................................................... 45 1,800 1
Candy........................................................... 156 900 1
Candy........................................................... 156 1,800 2
Yogurt.......................................................... 22 900 0
Yogurt.......................................................... 22 1,800 0
Ice cream....................................................... 113 900 0
Ice cream....................................................... 113 1,800 1
Small intestine-derived casings................................. 47 900 0
Small intestine-derived casings................................. 47 1,800 0
Dietary supplements............................................. 131 900 1
Dietary supplements............................................. 131 1,800 2
Cosmetics....................................................... 42 900 0
Cosmetics....................................................... 42 1,800 0
----------------------------------------------------------------------------------------------------------------
We would expect the potential for small business shutdown would be
similar for foreign firms that continue to import their products with
cattle-derived materials into the United States. It is possible that
some foreign firms would choose to cease doing business with the United
States if the recordkeeping requirements of this rule are too
burdensome.
V. Paperwork Reduction Act Analysis
This final 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 follows 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.
Title: Recordkeeping Requirements for Human Food and Cosmetics
Manufactured From, Processed With, or Otherwise Containing, Material
from Cattle.
Description: This final rule will require records on FDA-regulated
human food, including dietary supplements, and cosmetics that are
manufactured from, processed with, or otherwise contain, material
derived from cattle. This final rule implements recordkeeping for the
provisions of FDA's interim final rule entitled ``Use of Materials
Derived From Cattle in Human Food and Cosmetics.'' This final rule will
require that manufacturers and processors of human food and cosmetics
manufactured from, processed with, or that otherwise contain, material
from cattle maintain records demonstrating that the food or cosmetic
has not been manufactured from, processed with, or does not otherwise
contain, prohibited cattle materials and make such records available to
FDA for inspection and copying.
These requirements are necessary because, once materials are
separated from an animal, it may not be possible without records to
know the following: (1) Whether cattle material that may be specified
risk material (e.g., brain or spinal cord) came from an animal that was
less than 30 months old, (2) whether the source animal for cattle
material was inspected and passed, (3) whether the source animal for
cattle material was nonambulatory disabled, and (4) whether tallow in a
human food or cosmetic contains less than 0.15 percent insoluble
impurities. Under the final rule, manufacturers and processors must
retain records for 2 years at the manufacturing or processing
establishment or another reasonably accessible location.
A. Information Collection Burden Estimate
FDA estimates the burden for this information collection as
follows:
[[Page 59667]]
Table 8.--Estimated Annual Recordkeeping Burden \1\
----------------------------------------------------------------------------------------------------------------
Annual Total Total
21 CFR Section Number of frequency annual Hours per capital Total hours
recordkeepers per record records record costs
----------------------------------------------------------------------------------------------------------------
189.5(c) and 700.27(c)........ 697 1 697 44.33 $480,930 30,898
189.5(c) and 700.27(c)........ 697 52 36,244 0.25 0 9,061
189.5(c)(6) and 700.27(c)(6).. 54,825 1 54,825 0.033 0 1,809
189.5(c) and 700.27(c)........ 69.7 1 69.7 44.33 48,093 3,090
---------------------------------------------------------------------------------
Total one time burden ............... ........... ........... ........... ........... 30,898
hours....................
Total recurring burden ............... ........... ........... ........... ........... 13,960
hours....................
----------------------------------------------------------------------------------------------------------------
\1\ There are no operating and maintenance costs associated with this collection of information.
B. Hour Burden Estimate
FDA has determined that there are 697 domestic facility
relationships, consisting of the following facilities: An input
supplier of cattle-derived materials that require records (the upstream
facility) and a purchaser of cattle-derived materials requiring
documentation--this may be a human food or cosmetic manufacturer or
processor. Together, the upstream and downstream facilities are
responsible for designing records, verifying records, and storing
records that contain information on sources of cattle materials.
In this hour burden estimate, as in the economic analysis, we treat
these recordkeeping activities as shared activities between the
upstream and downstream facilities. It is in the best interests of both
facilities in the relationship to share the burden necessary to comply
with this final rule; therefore we estimate the time burden of
developing these records as a joint task between the two facilities.
C. One Time Burden
The one-time burden of the final recordkeeping requirement consists
of the facilities training their employees on how to keep the records
necessary to comply with this rule and designing the records. The one-
time training burden incurred for each facility is assumed to be
approximately one-third of an hour. This time includes both the
training required for personnel to verify that appropriate records have
been received or created, and also the training required by personnel
to file and maintain those records. Therefore, the total one-time
training burden is 697 x 0.33 hrs = 230 hours.
We use the FDA Labeling Cost Model to estimate the one-time records
design costs per facility of $1,785 (Ref. 5). This cost includes the
costs of designing records for multiple products and consists of $1,095
in labor costs (and $690 in capital costs which we deal with in the
next section of this document). Dividing the $1,095 of labor costs by
the hourly wage for workers of $25.10 (doubled to include overhead), we
have a design-time burden per facility of about 44 hours; we multiplied
the burden per facility by 697 facilities to get an estimated total
training and design burden of 30,668 hours.
Row 1 of table 8 of this document shows the total hour burden from
training and records design to be 44.33 hours per facility x 697
recordkeepers = 30,898 hours for the year.
D. Recurring Burden
The recurring recordkeeping burden is the burden of sending and
verifying documents regarding shipments of cattle material that is to
be used in human food and cosmetics. We estimate that this recurring
recordkeeping burden will be about 15 minutes per week, or 13 hours per
year. FDA assumes that this recordkeeping burden will be shared between
two entities (i.e., the ingredient supplier and the manufacturer of
finished products). Therefore the total recurring burden will be 13
hours x 697 = 9,061 hours, as shown in row 2 of table 8 of this
document.
There will also be a recurring recordkeeping burden for importers
of human food and cosmetics that are manufactured from, processed with,
or otherwise contain, cattle material. Importers of these products must
affirm that the food or cosmetic is not manufactured from, processed
with, or does not otherwise contain, prohibited cattle materials.
Affirmation by importers is expected to take approximately 2 minutes
per entry line. Row 3 of table 8 of this document shows that 54,825
lines of food and cosmetics that likely contain cattle materials are
imported annually. This total represents 10 percent of the total lines
imported for fiscal year 2004 for products under FDA product codes that
FDA will be looking to for importer affirmation. The annual reporting
burden of affirming whether import entry lines contain cattle-derived
materials is estimated to take 1,809 hours annually (54,825 lines x 2
minutes per line).
In addition, there will be an annual burden associated with new
firms entering the industry. As in the analysis of the Bioterrorism Act
recordkeeping rule, we assume that the average annual rate of turnover
is 10 percent. We therefore estimate (row 4 of table 8 of this
document) the annual one-time burden for new firms entering the
industry to be 10 percent of the one-time burden of existing firms
estimated.
E. Capital Cost and Operating and Maintenance Cost Burden
We use the FDA Labeling Cost Model to estimate the one-time record
design costs per facility of $1,875 per facility, based on the facility
producing multiple products with ingredients that now require records
(Ref. 5). Over $1,000 of the record design cost is due to labor, but
$690 of the records design represents capital costs to each facility.
The total capital costs for records design for all facilities is $690 x
697 = $480,930. These one time costs are shown in row 1 of table 5 of
this document. We estimate the annual capital costs for new firms
entering the industry to be 10 percent of the one-time burden of
existing firms, or $48,093. These annual costs are shown in row 4 of
table 8.
The information collection provisions of this final rule have been
submitted to OMB for review. Prior to the effective date of this final
rule, FDA will publish a notice in the Federal Register announcing
OMB's decision to approve, modify, or disapprove the information
collection provisions in this final rule. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number.
VI. Federalism
FDA has analyzed this final rule in accordance with the principles
set forth in Executive Order 13132. FDA has determined that the final
rule does not
[[Page 59668]]
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 concludes that the final 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. References
The following references have been placed on public display in the
Division of Dockets Management (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, but FDA is not responsible
for any subsequent changes to the Web sites after this document
publishes in the Federal Register.)
1. Department of Commerce, Bureau of Economic Analysis, National
Economic Accounts, http://www.bea.gov/bea/dn.1.htm.
2. Model for Estimating the Impacts of Regulatory Costs on the
Survival of Small Businesses and its Application to Four FDA-
Regulated Industries, Final Report, Eastern Research Group, July
2002.
3. CTFA International Buyer's Guide, produced by the Cosmetic,
Toiletry, and Fragrance Association (CTFA), http://www.ctfa-buyersguide.org
.
4. FDA Database of Dietary Supplement Products that Contain
Animal Ingredients (DSPD-A), RTI International, September 2002.
5. FDA Labeling Cost Model, Final Report, RTI International,
January 2003.
6. May 2004 Occupational Employment and Wage Estimates, National
Cross-Industry estimates, U.S. Department of Labor, Bureau of Labor
Statistics, accessed October 2, 2006, http://www.bls.gov/oes/oes_dl.htm
.
7. Harvard Center for Risk Analysis, Harvard School of Public
Health, ``Evaluation of the Potential for Bovine Spongiform
Encephalopathy in the United States,'' accessed online at http://www.hcra.harvard.edu/pdf/madcow.pdf
, 2003.
List of Subjects
21 CFR Part 189
Food additives, Food packaging, Reporting and recordkeeping
requirements.
21 CFR Part 700
Cosmetics, Packaging and containers, Reporting and recordkeeping
requirements.
0
Therefore, under the Federal Food, Drug, and Cosmetic Act, and under
authority delegated to the Commissioner of Food and Drugs, the Food and
Drug Administration amends 21 CFR parts 189 and 700 as follows:
PART 189--SUBSTANCES PROHIBITED FROM USE IN HUMAN FOOD
0
1. The authority citation for 21 CFR part 189 is revised to read as
follows:
Authority: 21 U.S.C. 321, 342, 348, 371, 381.
0
2. Section 189.5 is amended by revising paragraph (c) to read as
follows:
Sec. 189.5 Prohibited cattle materials.
* * * * *
(c) Records. (1) Manufacturers and processors of a human food that
is manufactured from, processed with, or otherwise contains, material
from cattle must establish and maintain records sufficient to
demonstrate that the food is not manufactured from, processed with, or
does not otherwise contain, prohibited cattle materials.
(2) Records must be retained for 2 years after the date they were
created.
(3) Records must be retained at the manufacturing or processing
establishment or at a reasonably accessible location.
(4) The maintenance of electronic records is acceptable. Electronic
records are considered to be reasonably accessible if they are
accessible from an onsite location.
(5) Records required by this section and existing records relevant
to compliance with this section must be available to FDA for inspection
and copying.
(6) When filing entry with U.S. Customs and Border Protection, the
importer of record of a human food manufactured from, processed with,
or otherwise containing, cattle material must affirm that the food was
manufactured from, processed with, or otherwise contains, cattle
material and must affirm that the food was manufactured in accordance
with this section. If a human food is manufactured from, processed
with, or otherwise contains, cattle material, then the importer of
record must, if requested, provide within 5 days records sufficient to
demonstrate that the food is not manufactured from, processed with, or
does not otherwise contain, prohibited cattle material.
(7) 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.
* * * * *
PART 700--GENERAL
0
3. The authority citation for 21 CFR part 700 continues to read as
follows:
Authority: 21 U.S.C. 321, 331, 352, 355, 361, 362, 371, 374.
0
4. Section 700.27 is amended by revising paragraph (c) to read as
follows:
Sec. 700.27 Use of prohibited cattle materials in cosmetic products.
* * * * *
(c) Records. (1) Manufacturers and processors of a cosmetic that is
manufactured from, processed with, or otherwise contains, material from
cattle must establish and maintain records sufficient to demonstrate
that the cosmetic is not manufactured from, processed with, or does not
otherwise contain, prohibited cattle materials.
(2) Records must be retained for 2 years after the date they were
created.
(3) Records must be retained at the manufacturing or processing
establishment or at a reasonably accessible location.
(4) The maintenance of electronic records is acceptable. Electronic
records are considered to be reasonably accessible if they are
accessible from an onsite location.
(5) Records required by this section and existing records relevant
to compliance with this section must be available to FDA for inspection
and copying.
(6) When filing entry with U.S. Customs and Border Protection, the
importer of record of a cosmetic manufactured from, processed with, or
otherwise containing, cattle material must affirm that the cosmetic was
manufactured from, processed with, or otherwise contains, cattle
material and must affirm that the cosmetic was manufactured in
accordance with this section. If a cosmetic is manufactured from,
processed with, or otherwise contains, cattle material, then the
importer of record must, if requested, provide within 5 days records
sufficient to demonstrate that the cosmetic is not manufactured from,
processed with, or does not otherwise contain, prohibited cattle
material.
(7) 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
[[Page 59669]]
provisions or regulations remain subject to part 11 of this chapter.
* * * * *
Dated: October 4, 2006.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. E6-16830 Filed 10-10-06; 8:45 am]
BILLING CODE 4160-01-P