L. Imports
 
1. Background
    The majority of seafood consumed in the United States is imported.
FDA's surveillance system for imports largely consists of reviewing the
customs entries for fish and fishery products being offered for entry
into the United States, engaging in wharf examinations and sample
collections for laboratory analysis, and placing products with a
history of problems on automatic detention. As with domestic
inspections, this method is basically a ``snapshot'' approach that
places a significant burden on the government to uncover problems. It
has failed to result in full compliance or consumer confidence in the
safety of imported seafood. Consequently, the agency tentatively
concluded that HACCP controls should apply to imported fish and fishery
products as well as to domestic products. Among other things, FDA
proposed that the definition of ``processor'' explicitly include those
who process seafood in foreign countries.
    In addition, FDA tentatively concluded that the importer should
share some responsibility with the foreign processor for safety. More
often than not, it is an U.S. importer, rather than the foreign
processor, who actually offers imported fish and fishery products for
entry into the United States. The preamble noted that, while many
importers are conscientious about the safety of the products that they
import, others have little understanding of the potential hazards
associated with their products. Thus, the agency tentatively concluded
that the existing system of import controls had not promoted a sense of
responsibility in the import industry.
    Therefore, in addition to proposing to require that foreign
processors that export to the United States comply with part 123, FDA
proposed that importers of fish and fishery products take steps to
ensure that their shipments are obtained from such processors.
Specifically, FDA proposed that importers: (1) Have and implement a
HACCP plan that describes how the product will be processed while under
their control; (2) maintain a copy of the foreign processor's HACCP
plan; and (3) take affirmative steps to ensure that the imported fish
or fishery product was produced in conformance with the foreign
processor's HACCP plan and with the proposed sanitation requirements.
The agency also proposed that importers need not take affirmative steps
if the fish or fishery product was imported from a country with which
FDA has a MOU documenting the equivalency of the foreign inspection
system with the U.S. system.
2. Should Imports Be Subject to These Regulations?
    115. Approximately 70 comments addressed various aspects of the
proposed requirements for imports. Approximately half of the comments
that addressed the import provisions argued that it is necessary to
subject imported products to the same regulatory requirements as
domestically processed products. These comments were submitted by
processors, trade associations, State and foreign government agencies,
professional associations, and individuals. Many of these comments
argued that exempting foreign processors from the requirements of these
regulations would put the domestic industry at an unfair economic
disadvantage. Other comments stated that the import requirements would
increase consumer confidence in seafood because they would ensure that
imported fishery products have been produced under the same HACCP
requirements and held to the same sanitation standards as domestically
produced product. A few comments suggested that imported products are
more likely to present safety hazards than domestically-produced
products because of a lack of understanding of CGMP's on the part of
foreign processors. One comment asserted that a number of countries,
including Canada, the EU, Iceland, and Thailand are in varying stages
of establishing HACCP programs for their own domestic seafood
processors.
    Most of the remaining comments (approximately one-half) did not
comment on whether HACCP controls should be required for imported fish
and fishery products but discussed aspects of the agency's proposed
approach. These comments will be addressed later in this section.
    FDA did not receive any comments that persuaded it that imports
should be exempt from the requirements of these regulations. On the
contrary, the comments reflect a nearly universal recognition that the
safety of seafood cannot be adequately ensured if the majority of
products (that is, imports) are not subject to the same controls as
domestic products.
    Therefore, the agency has not modified the regulations' basic
approach for imports.
    116. Only two comments objected to the concept that imported fish
or fishery products should meet the same requirements as those for
domestic products. One of these comments argued that FDA should be
tolerant of a foreign processor that may not have the knowledge or time
to develop a HACCP plan before its product is ready for export and
urged the agency to develop a temporary waiver system to accommodate
such firms.
    FDA is convinced that a 2-year implementation period, as discussed
in the ``Effective Date and Compliance'' section of this preamble, will
provide sufficient time for processors, both within and outside the
United States, to develop and implement HACCP plans and otherwise come
into compliance with the provisions of these regulations. The comment
provided no basis for treating foreign processors any differently than
domestic processors in this regard.
    117. Another comment suggested that raw material fish and fishery
products imported for further processing in the United States should be
exempt from the requirements of the regulations but provided no reason
to support that position.
    The exemption requested by the comment would make it difficult, if
not impossible, to control environmental hazards that may be associated
with these products. This preamble and the preamble to the proposed
regulations fully discuss the conclusions of the NAS, which identified
raw material hazards, such as microbiological contamination in
molluscan shellfish and natural toxins in both shellfish and finfish,
as among the most pressing problems that must be addressed to ensure
seafood safety. For the most part, these hazards are best addressed at
the time of harvest and by primary processors, through HACCP, at the
time of receipt. In many cases, there is little opportunity for control
beyond the latter point. Raw material fish and fishery products for
further processing comprise a substantial portion of fish
 
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and fishery products imported into the United States (Ref. 212, p. 49).
Thus, to exempt foreign processing of such products from the
requirements of these regulations would be to greatly diminish the
scope and, therefore, the overall effectiveness of these regulations.
    118. One comment that supported the need for equitable treatment of
imported and domestically produced products urged the agency to provide
the same opportunities for processors abroad to familiarize themselves
with the requirements of these regulations as it does the domestic
industry. The comment argued that just printing the regulations in the
Federal Register would not fulfill that responsibility. The comment
further suggested that FDA send copies of guidance materials to all
known foreign seafood processors, preferably in their native language.
    FDA acknowledges the difficulty in reaching foreign processors with
information about the requirements of these regulations. However, mass
mailings to, and multiple translations of, these regulations and the
Guide for all foreign seafood processors that export to the United
States would not be practicable for FDA.
    The agency intends to reach foreign processors primarily by
briefing foreign embassy staffs and by communicating with U.S.
importers during public and trade association meetings. Based on
experience in disseminating information about U.S. requirements to the
import community, the agency expects that these two groups will provide
the necessary information and guidance materials (in the appropriate
languages) to the foreign processors that they represent. This same
approach was used in disseminating information about the proposed
regulations. In fact, FDA became aware of a Japanese translation of the
proposal shortly after it issued.
    In addition, FDA traditionally has provided training and technical
assistance for foreign processors and government officials on a variety
of food control topics, within the constraints of budget and manpower.
These projects have principally been conducted in developing countries,
often those in which the agency has become aware of a particular
problem that threatens the safety of products offered for entry into
the United States. FDA anticipates that these kinds of projects will
continue, and that they will focus more closely on HACCP. FDA also
expects that HACCP training, performed in accordance with the
standardized training materials under development by the Alliance (see
the ``Training'' section of this preamble), will provide further
opportunity for foreign processors to be exposed to the requirements of
these regulations.
3. Should Importers Be Subject to These Regulations?
    119. Approximately half of those who commented on the import
provisions addressed whether the importer should be required to take
steps to ensure that its shipment originates from a foreign processor
that operates under HACCP. Approximately half of these comments favored
the concept and half opposed it, with both groups being diverse in
their representation.
    Of those who opposed it, many argued that these requirements should
be the responsibility of the government, and that FDA should not
require that importers enforce them. A number of these comments further
argued that equivalent foreign government inspection systems cannot be
presumed to be in place, and that the only way to achieve a ``level
playing field'' is for FDA to perform inspections of foreign processors
at the same frequency, and using the same standards, that the agency
applies to domestic processors. One comment suggested that it may be
necessary to obtain legislative authority to perform foreign
inspections, as a condition of importation. Another comment suggested
that FDA auditing of foreign processor compliance would give importers
assurance that the products that they obtain from such sources had been
produced in accordance with appropriate U.S. standards.
    One comment, while not opposed to mandatory importer
responsibilities, nonetheless argued that FDA should spend as much time
and effort inspecting foreign processors as it does on domestic
processors because over 50 percent of the seafood consumed in the
United States is imported. The comment continued that, ``to do any less
would be an unfair burden to domestic processors and would not
accomplish the stated goal to significantly improve the safety of
seafood consumed in the U.S.''
    One comment argued that there is no real cost savings in assigning
importers the responsibility of verifying foreign processor compliance
rather than assigning that responsibility to FDA, because importers
will merely pass along the additional costs to the consumer. Another
comment noted that many small importers obtain products from over 25
countries, and that they cannot afford to provide the surveillance
necessary to ensure compliance.
    Another comment argued that many importers function simply as
brokers, connecting a buyer with a seller, and that they lack the
expertise, manpower, and facilities to evaluate the adequacy of a
processor's HACCP controls. One comment stated, ``Many of the people
involved in importing never see the product and know nothing about
fish--these are people in a small room with a battery of phones!''
Another comment argued against placing reliance for assuring the safety
of imported seafood on persons who have a financial interest in the
product but lack the required knowledge about seafood safety.
    One comment argued that requiring importers to exercise control
over their suppliers has no parallel in the proposed domestic HACCP
scheme. The comment stated that domestic processors must control the
hazards that are introduced during their processing operations but need
not be involved in verifying the control of those hazards associated
with their supplier's operations. Some comments argued that the
responsibility for controlling hazards that are reasonably likely to
occur should be assigned to the foreign processor, while others argued
that it should be assigned to the U.S. processor to whom the importer
sells the product. One comment asserted that importers are not in a
position to exercise control over the processing of products in foreign
plants any more than they are in a position to exercise control over
how the products are handled by their customers.
    Most of those comments that supported the concept of importer
responsibility provided no reason. However, one comment stated that
requirements on importers would ensure that someone in the United
States would be legally responsible for the safety and wholesomeness of
each imported product.
    FDA recognizes that requiring importers to take steps to ensure
that foreign processors from whom they purchase seafood products are in
compliance with these regulations could necessitate significant changes
in the operations of importers who have limited their activities to
matching buyers with sellers based on product specifications that may
have had little to do with safety. However, for two reasons, FDA cannot
agree that responsibility with regard to safety is inappropriate for
importers.
    First, it has always been the importer's responsibility to offer
for entry into this country products that are not adulterated under
U.S. law. It is a prohibited act, under section 301(a) of the act, to
introduce into interstate commerce an adulterated food. Thus, an
importer would be committing a prohibited act if it failed to ensure
that
 
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the food that it is offering for import into the United States is not
adulterated under section 402 of the act, including section 402(a)(4),
one of the principal provisions on which these regulations are based.
    Currently, however, the importer is not required to operate in a
proactive manner to ensure that it is meeting this responsibility.
Rather, the importer need only offer products for entry into commerce
and thereby place the burden on the government to find a problem. Many
importers traditionally have purchased ``FDA rejection insurance'' to
hedge against that possibility. The government can shift the burden to
the importer by placing the importer's products on automatic detention
if it finds problems that warrant such a step, but in most instances
the burden remains on the government.
    Second, responsible importers understand the issues related to the
safety of the seafood products that they import and customarily require
that foreign suppliers conform to their product specifications and
applicable U.S. regulations relating to safety. These importers take
various measures to ensure that a foreign processor can comply with
their specifications and safety requirements before they agree to
purchase products from the foreign processor.
    Thus, it is feasible for importers to take steps to ensure that
they are not offering adulterated products for entry into U.S.
commerce. Requiring such measures will not be a significant added
burden for many importers, particularly as HACCP principles become more
widely used and understood in international commerce. Foreign
processors that want to participate in the export market, not only to
the United States but to the EU, Canada, and an increasing number of
other countries, will implement HACCP and sanitation control programs
and will be prepared to address an importer's needs for verification.
    FDA does not agree that there is no parallel in the domestic scheme
to the importer's responsibility to ensure that the goods it is
offering were produced under HACCP. Domestic processors, like importers
must work with their suppliers (e.g., fishermen) to ensure that all
reasonably likely hazards (e.g. natural toxins and agricultural and
industrial chemical contaminants) are controlled. FDA is confident that
importers, like processors, will realize that ensuring that foreign
processors institute preventive control systems is a cost effective
means of ensuring that the products that they offer for entry into the
United States will consistently meet FDA's entry requirements and will
be safe for consumption. FDA also disagrees with those comments that
suggested that a requirement that importers take steps to ensure that
the products they offer for entry have been produced under a HACCP plan
is an abrogation of FDA's responsibilities. As stated previously, the
industry has a responsibility to ensure that the food that it
introduces into interstate commerce is not adulterated. FDA has a
responsibility to verify that industry is meeting its obligation and to
take remedial action if industry fails to do so. Importers, who are
usually the owners of the products that they are offering into
commerce, are a part of that industry. FDA cannot accept that importers
have no responsibility to ensure that their products are not
adulterated.
    The agency recognizes that probably the most effective way for a
regulatory agency to evaluate a processor's compliance with the HACCP
and sanitation requirements is through onsite inspection of facilities,
practices, and records. FDA has performed a limited number of
inspections of foreign processors and, within its budgetary
limitations, will continue to do so to enforce these regulations.
However, such inspections are costly, and any attempt to significantly
increase their number would require additional resources.
    FDA will continue its traditional import surveillance role,
utilizing entry document review, wharf examinations, sample
collections, and automatic detentions as screening tools. These tools
indirectly evaluate the adequacy of HACCP and sanitation controls and
will continue to be useful in detecting significant problems. While
end-product testing and evaluation are not adequate substitutes for
preventive controls in ensuring the safety of a product, they can
provide verification where appropriate (Ref. 34, pp. 201-202).
    FDA has concluded that requiring HACCP controls, together with
import surveillance and periodic inspections of importers to ensure
their compliance with the requirements of Sec. 123.12, will better
ensure the safety of imports than the current system.
    In a related matter, Sec. 123.3(g) makes clear that, under ordinary
circumstances, freight forwarders, custom house brokers, carriers, or
steamship representatives will not be required to fulfill the
obligations of an importer. It is possible, although FDA has no way to
know with any certainty, that some of those that objected to being
required to fulfill those obligations would, as a result of these
clarifications, find that they would not be expected to do so.
4. Memoranda of Understanding (MOU's)
    120. Many of the comments that objected to the importer
responsibility provisions of the proposal on the grounds that the
government is the appropriate entity to ensure foreign processor
compliance, stated that the most effective means of ensuring such
compliance would be for FDA to enter into MOU's with the governments of
exporting nations. Approximately one-third of those that commented in
any way on the importer provisions urged FDA make the negotiation of
MOU's a high priority. Only one comment objected to the development of
MOU's.
    Several comments argued that FDA should develop MOU's with all
countries from which seafood is imported. One of these comments pointed
out that to do otherwise would unfairly cause the obligations of
importers to vary considerably. A few comments argued that the
existence of an MOU should be a prerequisite for the importation of
seafood products from a country. One of these comments stated that
mandatory MOU's would reduce the complexity of the present import
surveillance situation, reduce the number of countries exporting
seafood to the United States, and encourage the development of improved
food safety programs in exporting countries. Another comment asserted
that MOU development is appropriate because government-to-government
relationships and audits can be free of influence from packers and
importers, whereas foreign suppliers may be prone to provide false
assurances about their programs to prospective importers.
    One comment urged FDA to fully describe the process and criteria
for developing and evaluating MOU's and expressed concern about the
process because of the varying level of sophistication of foreign
seafood control programs. One comment stated that the foreign
government should be responsible for evaluating the foreign processor's
HACCP plan, inspecting the foreign processor, periodically analyzing
products produced by the foreign processor, and issuing health
certificates. A few comments stated that FDA should monitor the
effectiveness of the foreign government's control program in a manner
that is authorized in the MOU. These comments stated that, under the
MOU's, the foreign government should provide FDA with periodic lists of
processors that meet the requirements of these regulations, or,
alternately, that all seafood processors
 
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in the country would be required to meet the requirements.
    One comment urged FDA to publish periodic reports on the status of
MOU's on seafood products and to make them available to all importers.
This comment and others argued that it should be FDA's responsibility
to notify importers about changes in the status of MOU's, rather than
be the responsibility of the importer to find out about any changes.
One of these comments noted that, because a change in the status of an
MOU could be very detrimental to importers, there must be sufficient
lead time to allow importers to develop alternate verification
procedures when changes do occur.
    Another comment urged FDA to coordinate with U.S. importers and
exporters in developing a schedule for MOU development. The same
comment urged FDA to assign more resources to the development of MOU's.
    On the other hand, one comment stated that the MOU development
process is overly open-ended and could result in inconsistencies
between domestic and foreign requirements. The comment argued that this
inconsistency could result in an economic disadvantage for domestic
processors.
    FDA agrees with those comments that urged that the agency give high
priority to the establishment of MOU's with U.S. seafood trading
partners. In the absence of significant numbers of agency inspections
of foreign processing facilities, FDA acknowledges that an MOU can be
the most efficient and effective mechanism for ensuring that foreign
processing plants are operating in compliance with the requirements of
these regulations. FDA also agrees that the potential for signing an
MOU with FDA is likely to serve as an incentive for the improvement of
regulatory food control programs and processing conditions in seafood
exporting countries, especially where the existence of an MOU serves to
excuse the importer of products from that country from certain
verification activities.
    FDA has concluded that the development of MOU's or similar
agreements with foreign regulatory agencies is an appropriate method
for ensuring that foreign processors that export to the United States
are in compliance with the requirements of these regulations. Moreover,
as suggested by several comments, the agency has determined that, where
an MOU exists, there is no need for the importer to perform any
independent verification procedures for purposes of these regulations.
In this situation, the importer should be able to rely upon the foreign
regulatory authority to ensure compliance by foreign processors.
    FDA is therefore retaining the provision on MOU's from the proposal
but modifying it to provide that, where an importer elects to obtain a
fish or fishery product from a country with which FDA has an active MOU
or other similar agreement, the importer need not engage in any
independent verification activities.
    The agency has developed an internal protocol for developing MOU's
and is negotiating agreements with several countries. FDA is committed
to negotiating as many MOU's as possible. Also in the Federal Register
of June 15, 1995 (60 FR 31485), FDA published the notice of
availability of a new Compliance Policy Guide on MOU's.
    However, it is not reasonable to expect that an agreement could be
reached with all countries from which seafood is imported into the
United States. The barriers to achieving such a result include the
inadequacy of foreign regulatory programs and the lack of interest on
the part of some foreign governments in entering into an agreement. The
availability of FDA resources also can affect at least how long it
takes FDA to enter into a particular MOU.
    For these reasons, the existence of an MOU or similar agreement as
a requirement of entry of fish or fishery products into the United
States would result in an enormous negative economic impact to a major
segment of the U.S. seafood industry. Moreover, such a restriction is
not warranted from a public health perspective given the alternative
means of verifying the existence of HACCP controls that are provided in
these regulations.
    Experience obtained in part in the international portion of the
FDA/NMFS seafood HACCP pilot project has demonstrated that foreign
seafood regulatory programs vary considerably, both in their
capabilities and in their structures. Likewise, foreign seafood
processing conditions are highly variable. Thus, FDA cannot simply
follow a boiler plate format in negotiating MOU's. Rather, they must be
tailored to the specifics of the situation presented by a particular
country. It is possible that some agreements can provide simply for the
submission of lists of approved processors to FDA at regular intervals;
others may require much more extensive FDA involvement before and after
goods flow under the agreement. Some agreements may cover all of a
country's seafood processors, while others may be targeted to specific
species or product forms, depending on factors such as the capability
of the foreign regulatory authority.
    In any case, all agreements can be expected to provide for FDA
verification of the effectiveness of the foreign programs, including
onsite visits. FDA is principally interested in two- way agreements,
that is, agreements that acknowledge the acceptability of the U.S.
regulatory system to the foreign government as well as the
acceptability of the foreign regulatory system to the U.S. government.
    The agency will make every reasonable effort to communicate with
the industry about changes in the status of MOU's through Federal
Register notifications and other means. FDA is open to suggestions
about the best ways to communicate in this regard.
    Nevertheless, it will ultimately be the importer's responsibility
to keep appraised of any changes in the status of MOU's.
    The agency is also receptive to the views of the seafood industry
and others about how countries should be prioritized for the purpose of
negotiating MOU's. Any information that the agency receives on this
topic will be coupled with existing information concerning the
likelihood of negotiation success and the types and quantity of
products typically offered for entry from the country in question.
5. Importer Verification Procedures
    121. The remaining comments discussed specific aspects of the
proposed importer requirements. Some of these comments argued that the
responsibilities that were proposed for importers are onerous,
unworkable, and inefficient but offered nothing in support of these
assertions.
    A number of comments objected to the proposed requirement that all
importers have and implement a HACCP plan. Several of these comments
contended that an importer's plan can only address the hazards that
occur during the time that products are under the importer's control
(i.e., from the time the importer takes possession of the product until
it is shipped to its customer), and that requiring that the plan cover
this point is inconsistent with the principles of HACCP. One comment
agreed that an importer should be required to develop a plan if it also
processes the product, as in the case of an importer who stores the
product. The comment asserted that, in such a case, however, the
importer's HACCP plan would be minimal. The comment further asserted
that the foreign processor should be the party responsible for
developing a HACCP plan that addresses the hazards
 
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introduced during processing in the foreign plant. The comment
recommended that, as an alternative to having a HACCP plan, an importer
should be able to develop SOP's that outline the steps that it will
take to determine whether to purchase the product from a foreign
supplier.
    A number of comments supported the proposed requirement for
importer HACCP plans but provided no reasons for their support.
    The agency agrees that it would be inappropriate to require that
importers have and implement a HACCP plan regardless of whether they
process the products they import. As stated elsewhere in this preamble,
HACCP is a system that provides immediate feedback, through the
monitoring of CCP's, as to whether a process is under control. Unless
an importer is also a processor, there are no CCP's in the classic
sense for the importer to monitor, and from which to obtain real-time
feedback. Consequently, only where importers also process in accordance
with the definition of that term at Sec. 123.3(k) will they be required
to have and implement a HACCP plan that meets the requirements of
Sec. 123.6. Those food safety hazards that can be controlled by the
foreign processor must be addressed in the foreign processor's HACCP
plan in accordance with Sec. 123.6.
    Consequently, FDA has revised the regulations to limit the
responsibilities of importers. Instead of having to maintain their own
HACCP plan, under Sec. 123.12(a), in the absence of an MOU or similar
agreement, importers only need to maintain and implement written
verification procedures for ensuring that the fish and fishery products
that they offer for import into the United States have been processed
in accordance with the requirements of these regulations. The only
exception to this rule would be if the importer itself engages in
processing, such as holding food, in which case the importer would, as
stated above, also be a processor and subject to Sec. 123.6.
    122. In determining the nature of the verification procedures that
an importer must have and implement, FDA considered the comments that
addressed the appropriate functions and existing procedures of
importers. Several comments noted that importers routinely purchase
products according to specifications and observed that these
specifications could be the basis for reasonable control measures for
importers. The NACMCF recommended that importers be required to
maintain product specifications that are relevant to product safety for
fish and fishery products that they import. The NACMCF listed water
activity, pH, histamine content, and, perhaps, pathogen limits as
examples of specifications that importers might set in an effort to
ensure product safety.
    The agency agrees with the comments that product specifications can
be useful tools with which importers can exercise some control over the
products that they purchase and offer for entry into the United States.
In fact, FDA stated in the preamble to the proposed regulations that
the purpose of an importer's plan was, in part, to include criteria for
how the importer will decide to purchase seafood. FDA is also
encouraged by the fact that the comments generally agreed that having
product specifications would not constitute a new burden for many
importers.
    For these reasons, the agency in Sec. 123.12(a)(2)(i), is requiring
that the importer's written verification procedures include product
specifications that are designed to ensure that the product is not
adulterated under section 402 of the Federal Food, Drug, and Cosmetic
Act because it may be injurious to health or have been processed under
insanitary conditions. These are the adulteration sections that relate
to the safety of fish.
    In many cases, importers will find existing Federal food safety
standards, including tolerances and guidelines, to be useful
specifications. In other cases, specifications may need to be tailored
to the circumstances. For example, the importer might need to ensure
that the temperature of a modified atmosphere packaged product, when it
comes off a ship, is 38  deg.F (in such foods there is a risk of C.
botulinum type E growth and toxin development which can occur at
temperatures as low as 38  deg.F), although the CGMP's at
Sec. 110.80(b)(3)(i) state only that refrigerated foods should be
stored at 45  deg.F or below. The importer is encouraged to seek the
advice of qualified experts, as needed, in setting specifications. The
same resources available to help domestic processors in setting CL's
are available to importers, including the Guide; Sea Grant Institution
and other academics; Federal, State, and local food safety regulatory
agencies; consultants; the Alliance and other training courses; and
published literature.
6. Affirmative Steps: General
    As a second part of the importer's verification procedure, FDA is
essentially retaining from the proposal, in Sec. 123.12(a)(2)(ii), the
requirement that the importer take affirmative steps to ensure that the
products being offered for entry are actually being produced under
controls that meet the requirements of these regulations. In order for
product specifications to be meaningful, importers must take steps to
establish that their suppliers are in fact operating in a manner that
can reasonably be expected to produce a product that meets those
specifications. Effective verification involves scrutinizing the
standard, much like evaluating whether the HACCP plan continues to be
appropriate, and scrutinizing performance to determine whether the
standard is consistently reached, much like reviewing monitoring
records (Ref. 34, p. 201). FDA is adopting this approach in
Sec. 123.12(a)(2)(ii).
    Among the affirmative steps that FDA proposed that a processor take
were: (1) Obtaining the foreign processor's HACCP-monitoring records;
(2) obtaining a certificate from a foreign government inspection
authority certifying that the firm is operating under a valid HACCP
plan or certification on a lot-by-lot basis; (3) regularly inspecting a
supplier's facilities; (4) periodic end-product testing by the importer
or a private laboratory hired by the importer; or (5) other such
verification measures as appropriate. FDA listed these affirmative
steps as examples of the types of measures that would be acceptable to
the agency. FDA does not wish to predetermine all the possible ways
that an importer could perform affirmative steps.
    123. A number of comments objected to each of the affirmative steps
that FDA listed in the proposed regulations, and a few expressed
support for each. However, few of the comments provided any reasons for
their positions.
    One comment suggested that the best means by which an importer can
ensure that the conditions at a foreign processing facility are at
least equivalent to those required of domestic processors is for the
importer to verify the adequacy and implementation of the foreign
processor's HACCP plan during a visit to the facility. Another comment
stated that, ``without both audits and HACCP records, foreign plants
(possibly domestic facilities too) will not adhere to the letter of the
FDA regulation and assure safe product in the market.''
    Conversely, a number of comments argued that it would be unworkable
for importers to conduct inspections of foreign processors. One of
these comments stated that to justify the expense of such an
undertaking would necessitate that a highly trained, competent
individual perform the function.
    As stated earlier, FDA remains convinced that importers must
exercise
 
  Page 65157
sufficient control over the fish and fishery products that they offer
for entry into their country to ensure that the products are produced
pursuant to the requirements of these regulations. The agency
recognizes that any one of the affirmative steps may not be appropriate
or feasible for a particular importer or foreign processor. The
regulations allow importers to select an affirmative step that is
workable for their circumstances and to develop appropriate affirmative
steps other than those listed in the regulations (see
Sec. 123.12(a)(2)(ii)(F)). However, such measures must provide at least
an equivalent level of assurance of foreign processor compliance as
that provided by the listed affirmative steps.
    Additionally, FDA has modified the importer requirements to allow
for the performance of any of the affirmative steps by a competent
third party (Sec. 123.12(b)). This provision provides even greater
flexibility to importers in meeting the requirements of these
regulations.
    Thus, FDA is not persuaded that the affirmative steps are not
feasible or appropriate and has included them in these final
regulations.
    124. A comment argued that government certificates should not be
acceptable unless they are issued by countries with which FDA has
signed an MOU or similar agreement. The comment asserted that,
especially in developing countries, there may be different
interpretations of the regulations, and differences in competency,
credibility, infrastructure, intent, and uniformity that might bring
the utility of such certificates into question.
    FDA acknowledges that it is likely to have a higher level of
confidence in certificates received from a government entity with which
it has signed an agreement than with one with which no agreement
exists. However, as discussed above, it is unlikely that the agency
will be able to negotiate an MOU with every country that exports
seafood to the United States. Thus, there may be countries that have
excellent certification programs with which FDA, for a variety of
reasons, simply does not have an opportunity to enter into an
agreement. Moreover, if the agency learns, either through its own
routine surveillance activities, consumer complaints, or other means,
that there is evidence that a country is routinely issuing certificates
inappropriately, the agency will try to inform firms that import fish
or fishery products from that country that it will expect them to use
other means of verification if they want to avoid the appearance that
those products are adulterated under section 402(a)(4) of the act (see
Sec. 123.12(d)).
    125. One comment urged that certification be permitted on a
continuing basis rather than requiring lot-by-lot certification.
    FDA agrees that continuing certification is appropriate and notes
that the language and intent of the proposed regulations would have
allowed for it. Nonetheless, in an effort to further clarify this
situation, the agency provided in Sec. 123.12(a)(2)(ii)(B) that:
``Obtaining either a continuing or lot-by-lot certificate * * *'' will
be one way to satisfy the requirement that an importer take affirmative
steps to ensure that the product is produced in accordance with the
requirements of this part.
7. Foreign Processor HACCP Plans
    126. Approximately 15 comments addressed whether importers should
be required to have on file copies of the HACCP plans of each of their
foreign processors. Approximately half of these comments supported such
a requirement, although for the most part they provided no reasons for
their support. The other half objected to the requirement. One of these
comments argued that possession of a foreign processor's HACCP plan
would be cumbersome for the importer and would provide no assurance
that product shipped by that processor was processed in accordance with
the plan. One comment cautioned that it would be unrealistic to expect
that importers could make any but a rudimentary judgment as to the
adequacy of foreign processors' HACCP plans. Such judgments, these
comments asserted, should be reserved for the regulator when the plans
are assessed during inspections of importers' records.
    One comment cited the possibility of breaches in confidentiality
because commercially sensitive material would be supplied to importers.
A related comment suggested that, to solve the confidentiality problem,
the foreign processors' HACCP plans should be filed directly with FDA
rather than with importers.
    Although the agency continues to believe that a foreign processor's
HACCP plan provides a useful basis for verification, FDA is persuaded
by the comments that there are logistical and other issues that could
render the retention of HACCP plans by importers unmanageable in some
cases. FDA has also concluded that, in most cases, affirmative steps
such as those listed in Sec. 123.12(a)(2)(ii) (e.g., onsite inspection
by the importer and certification by a foreign government agency) will
be adequate to enable an importer to verify that the products being
imported are safe in accordance with the requirements of these
regulations.
    As described previously, the NACMCF recommendations describe two
primary goals of verification: (1) Ensure that the plan is adequate to
address the hazards that are likely to affect the product; and (2)
ensure that the plan is being consistently implemented. The affirmative
steps listed in Sec. 123.12(a)(2)(ii) are designed to address both of
these functions. For example, obtaining HACCP and sanitation monitoring
records from the foreign processor (Sec. 123.12(a)(2)(ii)(A)) enables
the importer to confirm that the foreign processor has addressed the
relevant hazards and sanitation concerns (i.e., those for which there
are monitoring records), and that it is monitoring to ensure that these
concerns are under control during the production of lots that are
shipped to the importer. Similarly, obtaining governmental or third
party certification of foreign processor compliance with the
requirements of these regulations (Sec. 123.12(a)(2)(ii)(B)) or
inspecting the foreign processor directly (Sec. 123.12(a)(2)(ii)(C))
enables the importer to confirm that the foreign processor has an
adequate HACCP plan and SSOP, and that the relevant sanitation and
safety concerns are being controlled for those lots that are shipped to
the importer. The affirmative step options provided for by
Sec. 123.12(a)(2)(ii)(D) and (a)(2)(ii)(E) are discussed later in this
section.
    Consequently, FDA has not included a requirement that importers of
fish and fishery products have on file the HACCP plans of each of their
foreign suppliers in these final regulations.
    Nonetheless, FDA points out that maintaining copies of these plans
could be one of several measures that an importer could incorporate
into its affirmative steps. Therefore, these final regulations in
Sec. 123.12(a)(2)(ii)(D) incorporate the concept as one of the
affirmative steps that an importer may choose to use for verification
purposes.
    127. One comment noted that the plans of foreign processors would
normally be prepared in the native language of the country of origin
and asked whether FDA would require that these documents be translated
into English. On the other hand, another comment recommended that HACCP
plans be maintained in both the language of the native country and in
English.
    FDA agrees with the comment that argued that a copy of a
processor's HACCP plan would not, by itself,
 
  Page 65158
provide adequate assurance that a given shipment of imported product
was processed in compliance with that HACCP plan or that the sanitation
requirements of Sec. 123.11 were met. One additional thing is needed to
provide such assurance: a written guarantee from the foreign processor
that the products shipped to the importer are processed in accordance
with these regulations. The guarantee is necessary to demonstrate that
the HACCP and sanitation control systems are being implemented for
products shipped to the importer. An importer should be able to make a
reasonable judgement about the validity of the guarantee through a
rudimentary review of the plan, as described below. Therefore, FDA is
including these requirements in Sec. 123.12(a)(2)(ii)(D).
    FDA is also providing in Sec. 123.12(a)(2)(ii)(D) that the foreign
processors' HACCP plans that are maintained by importers be written in
English, so that they will be meaningful to the importer and will allow
for regulatory review.
    128. As stated above, one comment cautioned the agency about the
ability of many importers to evaluate the adequacy of HACCP plans that
they might retain.
    FDA acknowledges that many importers may not have the technical
expertise to evaluate the adequacy of seafood HACCP plans. However, the
agency is convinced that, as a result of the importers' assessment of
the food safety hazards that are reasonably likely to be presented by
the product, the importer should have developed some general
expectations about the content of the HACCP plan (e.g., which hazards
should be addressed). The importer should be able to spot any obvious
shortcomings and to discuss them with the foreign processor. It is not
enough that importers simply file away the documents upon receipt.
Importers may find it advantageous to make a judgment about the
likelihood that their product specifications will be met and to insist
that they be given a guarantee that contains assurances that the
specifications will be met.
    129. Regarding the comment that complained about the potential loss
of confidentiality of foreign processor HACCP plans that are provided
to importers, since the agency has eliminated the requirement that all
importers retain copies of foreign processor plans, the significance of
this issue has been minimized. In the case where a foreign processor
does not wish to share its plan with the importer, the processor and
the importer would need to agree upon another means of providing for
importer verification.
    130. Regarding the comment that suggested that all foreign
processors file their plans with FDA, the resource demands on the
agency that would come with such an undertaking would be prohibitive.
FDA cannot accept this suggestion.
8. Other Affirmative Steps
    As a related matter, FDA has determined that, in the absence of a
requirement that importers maintain a copy of the foreign processor's
HACCP plan, finished product tests alone are insufficient as an
importer affirmative step to ensure that the foreign processor is
operating in accordance with these regulations. Finished product
testing alone has a small statistical likelihood of detecting defects
in a product, especially when the occurrence of such a defect is an
uncommon event, as is the case with most seafood hazards (Ref. 213).
The proposed requirement for the importer to obtain a copy of the
foreign processor's HACCP plan, in addition to performing finished
product testing, would have provided indirect evidence that HACCP
controls are in place and would have lent support to a conclusion,
based upon the analytical findings, that the relevant hazards are under
control. In the absence of such evidence, the importer cannot
reasonably conclude that the hazards are being controlled based solely
on a negative analytical finding. For this reason FDA has required in
Sec. 123.12(a)(2)(ii)(E) that such sampling be accompanied by a written
guarantee from the foreign processor that products being shipped to the
importer are processed in a manner consistent with the requirements of
these regulations. The guarantee provides the importer with reasonable
assurance that HACCP and sanitation controls are in place and are being
implemented, in a manner similar to the way that the foreign
processor's HACCP plan would have under the requirements of the
proposed regulations. Under this alternative, the importer would not
have to maintain a copy of the HACCP plan.
    For clarification and consistency within the document, FDA has
revised the language of two of the affirmative steps to include
reference to the sanitation provisions of the regulations. In both the
proposed regulations and these final regulations the stated purpose of
the affirmative steps is to enable the importer to verify that the fish
or fishery product was processed under conditions that meet both the
HACCP and sanitation requirements of these regulations. However, the
formulations of two of the affirmative steps in the proposal did not
make specific reference to sanitation. To avoid confusion over what the
affirmative steps should cover, Sec. 123.12(a)(2)(ii)(A) now reads
``Obtaining from the foreign processor the HACCP and sanitation
monitoring records * * *'' and Sec. 123.12(a)(2)(ii)(B) reads ``* * *
certifying that the imported fish or fishery product is or was
processed in accordance with the requirements of this part.''
    131. Several comments asked the agency to specify the frequency
with which the importer affirmative steps must be taken. A few comments
suggested that the frequency should be no greater than the frequency of
equivalent FDA verification activities.
    It would not be practical for the agency to specify frequencies for
affirmative steps that would be appropriate in all circumstances.
Consistent with the frequency of monitoring by processors, importers
should take affirmative steps to monitor their suppliers with
sufficient frequency to accomplish its purpose--that is, to provide the
importer with reasonable assurance that the foreign processor is
operating in compliance with these regulations.
    It would be inappropriate to tie importer affirmative step
frequencies to average FDA sampling and inspection frequencies. FDA
sample collection and inspection frequencies are determined, in part,
by the compliance history of individual firms, agency priorities, and
overall agency resources, not simply on a desired average minimum rate
of verification. Thus, FDA's rate of inspection has no bearing on how
frequently an importer should monitor a supplier.
    132. A number of comments urged that the agency permit importers to
contract with third parties to perform verification activities on their
behalf. Two comments opposed such a provision but did not provide
reasons for their position.
    Several comments urged that certificates by nongovernmental third
parties be accepted as an affirmative step. One of these comments, from
a trade association, suggested that an equivalent arrangement has been
accepted by FDA in controlling the importation of canned mushrooms from
the Peoples Republic of China. This same comment argued that a system
where individual importers inspect each of their suppliers is highly
inefficient. The comment suggested that a single, technically competent
party should perform the inspections. The trade association offered to
serve as a
 
  Page 65159
clearinghouse for the reports of such inspections. Likewise, the
association offered to serve as a clearinghouse for finished product
sample results for imported products, reducing the number of samples
needed when the same product is imported by a number of importers. The
comment further suggested that the association be permitted to hold
foreign processor HACCP plans for its members, and perhaps for
nonmembers. The comment argued that acceptance of this suggestion would
reduce the number of duplicate records for the same product stored by
various importers.
    The agency accepts that third party verification can be an
appropriate and efficient control mechanism. Such a system is
consistent with the use of third parties by processors for plan
development, record review, and CL deviation evaluation. Therefore, FDA
has added a new provision at Sec. 123.12(b), that reads, ``An importer
may hire a competent third party to assist with or perform any or all
of the verification activities specified in paragraph (a)(2) of this
section, including writing the importer's verification procedures on
the importer's behalf.'' It is worth pointing out that where an
importer uses the services of a third party, the importer remains
responsible for the verification procedures that are performed. The
importers must be able to demonstrate that appropriate verification
measures have been performed. This step may involve providing an FDA
investigator with a copy of the foreign processor's HACCP plan, results
of end-product sampling, results of an onsite inspection, the foreign
processor's monitoring records, or the foreign processor's written
guarantee. Third parties must, of course, be competent to perform the
duties in question, and FDA reserves the right to challenge such
competency. The agency has no objection to the use of clearinghouses
for importer verification activities, as long as the forgoing
requirements are met.
9. Importer Records
    As previously mentioned, the proposed regulations would have
required that importers develop and implement a HACCP plan. One effect
of such a requirement would have been that importers would have had to
maintain appropriate records. As has been explained, FDA is adopting
only those essential components of the proposed approach that the
agency considers to be practicable for importers. One such component is
recordkeeping. Recordkeeping is essential in documenting for the
benefit of importers and the agency the affirmative steps of importers,
in the same way that it is essential in documenting the monitoring,
corrective action, and verification activities of processors. For this
reason, the agency has retained the recordkeeping aspect of the
proposal for importers, in a manner that is consistent with the overall
approach for importers in these final regulations. Section 123.12(c),
which treats importer records identically to processor records, reads,
``The importer shall maintain records, in English, that document the
performance and results of the affirmative steps specified in paragraph
(a)(2)(ii) of this section. These records shall be subject to the
applicable provisions of Sec. 123.9.''
    133. FDA proposed that importers encourage foreign processors to
obtain HACCP training. A few comments urged the agency to make it clear
that foreign processors must comply with the same training requirements
as are applicable to domestic processors. One comment urged the agency
to permit HACCP- training courses for foreign processors to be
conducted in the country of origin by ``an official agency.''
    FDA agrees that the need for training is the same for foreign
processors as it is for domestic processors. The intended benefits of
the training requirements are fully discussed in the ``Training''
section of this preamble. Nonetheless, the agency finds that the
proposed requirement that importers encourage foreign processors to
obtain training is unnecessary. Foreign processors that ship seafood
products to the United States are advised of the training requirement
of these regulations in the same way that they are advised of the other
requirements of these regulations, through publication of the
regulations. In addition, as mentioned elsewhere in this preamble, FDA
intends to provide the embassies of seafood exporting countries with
information concerning these regulations in order that they may in turn
provide it to the processors in their countries. Consequently, FDA is
not adopting this provision.
    FDA has no objection to HACCP training being performed in the
country of origin by ``an official agency'' or other entity, as long as
the course of instruction is at least equivalent to that provided by
the standardized course under development by the Alliance.
10. Determination of Compliance
    FDA proposed to require that there be evidence that imported fish
and fishery products were processed under conditions that comply with
the requirements of these regulations, and that if assurances that this
was the case did not exist, the product would appear to be adulterated
and would be denied entry. This section of the proposed regulations
provided five types of evidence that the agency would consider as
adequate to provide such assurance.
    134. A few comments supported these provisions. However, a few
comments suggested that, if the importer is unable to provide assurance
that a HACCP system is in place, the importer should be permitted to
conduct finished product testing rather than having the product denied
entry. One comment urged that importers be held only to a ``best
efforts'' standard in determining whether their suppliers are in
compliance with these regulations. This comment suggested that if an
importer cannot determine that such compliance exists after using its
best efforts, the importer's product should not be banned from the
United States.
    The purpose of these regulations is to cause processors of fish and
fishery products, both domestic and foreign, to develop and implement
HACCP systems of preventive controls to ensure the safety of their
products. The importer requirements are designed to impose an
obligation on importers to ensure that, like domestic products, the
products that they are importing are not adulterated within the meaning
of section 402(a)(4) of the act. This requirement means that importers
must be able to satisfy themselves, and ultimately FDA, that the fish
and fishery products that they are offering for import were produced
subject to a HACCP system and sanitation controls designed to prevent
insanitary processing conditions that may render the food injurious to
health. If an importer does not have evidence that shows that the
products were produced subject to such controls, it should not offer
the product for import into this country. The lack of such evidence
creates the appearance of adulteration that cannot be overcome by the
collection and analysis of a finished product sample by an importer.
Given the problems that can arise in seafood processing if HACCP and
sanitation controls are not in place, under sections 402(a)(4), 701(a),
and 801(a) of the act, FDA is adopting Sec. 123.12(d), which provides
that if evidence does not exist that an imported fish or fishery
product has been processed under conditions that are equivalent to
those required of domestic processors, the product will appear to be
adulterated.
    Section 123.12(d) derives from proposed Sec. 123.12 (a) and (b).
FDA has combined these provisions and, as
 
  Page 65160
suggested by a comment, has used terminology consistent with the rest
of the regulation in Sec. 123.12(d). While proposed Sec. 123.12 (a)(1)
through (a)(5), which described the types of evidence that could be
used to demonstrate compliance with the proposed regulations, reflected
important principles for the importation of fish, based on the
comments, FDA finds that these provisions were causing confusion, and
that the statute can appropriately be implemented without including
them in the final rule. For this reason, FDA has not adopted these
provisions.
    135. One comment asked what documents, if any, would have to be
presented to FDA at the time of entry concerning the status of the
foreign processor. Another comment suggested that importers should note
on the entry documents that a HACCP plan is available for the foreign
processor. This comment stated that FDA would have an opportunity to
review the plan as part of its determination of whether to allow entry
of the product.
    FDA is not requiring that evidence of the importers' affirmative
steps be presented along with the existing U.S. Customs Service entry
documents as a matter of routine practice. It is possible that, in some
circumstances, such a step will be necessary (e.g., where the agency
has reason to believe that inappropriate conditions exist in the
foreign processing facility). However, typically, the importer will be
able to retain such evidence in its files and to make it available to
the agency when FDA performs an inspection at the importer's place of
business. Such a system is necessary because of the time that is
necessary for the agency to properly review the importer's
documentation of its affirmative steps and of the foreign processors'
HACCP plans. Nonetheless, the agency is willing to explore alternate
methods of implementing the import requirements of these regulations,
such as that suggested by the comment. FDA welcomes a continuing public
dialog about this matter.
    136. One comment asked whether FDA would maintain an approved list
of foreign processors.
    The agency has no plans to maintain such a list, nor is it apparent
upon what basis such a list would be prepared. A possible exception
would be as part of an MOU arrangement, where the foreign country would
agree to provide a list of ``approved'' firms to FDA. In such a
situation, FDA would use reasonable means to inform the import industry
of the purpose and contents of the list and update them as rapidly as
possible when changes are made.
    137. One comment expressed concern that the same foreign processor
HACCP plan might be reviewed by different FDA investigators in
different ports of entry, and that these investigators might reach
different conclusions as to its adequacy. The comment urged that the
agency coordinate such reviews, as well as reviews of importers'
affirmative steps, in a way that would minimize inconsistencies.
    FDA acknowledges that the situation might well arise where
different investigators review the same foreign processor HACCP plan as
a part of different importer inspections. To minimize inconsistencies
in such reviews, the agency intends to train its inspectional staff in
the requirements of these regulations and the application of HACCP
principles to seafood processing, including training on the Guide. The
agency also intends to develop guidance relative to importer
verification activities.
 
M. Guidelines or Regulations?
 
1. Background
    FDA recognizes that many processors will need guidance in the
preparation of HACCP plans, and that HACCP plans will vary in
complexity. The agency is committed to providing the industry with
technical assistance that includes general guidelines for HACCP plans
and the contents of plans for specific types of products and processes.
    As part of FDA's seafood HACCP proposal, the agency included
guidelines, in the form of appendices, on how processors of cooked,
ready-to-eat products and products involving scombrotoxin-forming
species could meet various provisions of the proposed regulations
relating to the development and implementation of HACCP plans. FDA
regards these products as being high-risk relative to other seafoods.
They involve special considerations or special hazards for which
additional guidance would likely be useful.
    Cooked, ready-to-eat fishery products present an elevated risk of a
microbiological hazard compared to most other seafood products. They
are cooked as part of processing and might not receive additional
cooking by consumers before consumption. Consequently, to be safe,
these products must not contain pathogens at a level that will cause
disease and must not be subjected to time-temperature abuse that would
allow any existing pathogens to grow to unacceptable levels.
    Scombrotoxin-forming species are fish that can form a toxin if
exposed after death for significant periods to temperatures that permit
the growth of certain bacteria. Scombrotoxin can result in a mild to
severe allergic response in humans.
    The guidelines for these products contained advice about hazards
that are reasonably likely to occur and on details for HACCP plans for
the control of these hazards. In addition to asking for comments on the
substance of the guidelines, the agency asked for comment on whether
these guidelines should remain as guidelines, or whether some or all of
them should be adopted as regulations. As regulations, they would,
essentially, tell processors that certain hazards must be controlled in
their HACCP plans, identify in advance critical points in the
processing of these products that processors must control to minimize
these hazards, and tell processors what they would have to do, at a
minimum, to maintain proper control of those critical points.
    In another appendix to the proposed regulations, FDA published
excerpts from the draft Guide, mentioned earlier in this preamble, for
the stated purposes of publicizing the existence of that draft Guide
and of providing processors with information about the types of
guidance that the agency expected would be available in it.
    One of the excerpts that FDA published was guidance on the
processing of smoked and smoke-flavored fish. These products represent
a significant hazard relative to contamination with C. botulinum,
especially when packaged in reduced oxygen atmosphere packaging. FDA
requested comment on whether this guidance should remain solely within
the Guide, whether it should be provided an appendix to the
regulations, or whether it should be adopted as regulations. The effect
of adopting these materials as regulations would be the same as for the
appendices described above.
    If these materials remained in the form of guidelines, processors
would be free to adopt them or not, so long as measures that provide an
equivalent or superior degree of safety are implemented.
    138. Approximately 55 comments responded to FDA's request for
comment on whether these materials should remain as guidelines or be
adopted as regulations. The majority of comments preferred guidelines.
A few comments suggested that FDA initially issue guidelines, then
possibly convert them to regulations after gaining experience with them
as adjuncts to a functioning HACCP system or after pilot testing them.
A few comments preferred to retain some of the materials as
 
  Page 65161
guidelines and convert others to regulations.
    Over one-third of those who commented on this subject supported
guidelines in general, without distinguishing among the three
guidelines. They argued that guidelines are in keeping with the general
philosophy of HACCP that processors assume responsibility for the
safety of their products. Some stated that detailed regulations for
processors to follow would not provide an adequate incentive to
processors to develop a full understanding of the hazards associated
with their products or processes. The result could be the development
of rote HACCP plans that might be inadequate for safety in specific
situations.
    Some comments pointed out that, while guidelines can assist
processors to identify controls, guidelines probably could never
properly identify the CCP's and limits for all processors given the
uniqueness of individual processing methods. In the case of
regulations, processors would be obliged to adhere to the presented
limits regardless of their appropriateness to the operation. Many of
these comments preferred the flexibility that guidelines provide in
permitting HACCP controls to evolve with a changing knowledge base and
new technologies. Some expressed concern that if the guidelines were
adopted as regulations, the industry would bear an unnecessary burden
of having to petition FDA for amendments in order to accommodate new
products or processes. Modifications to the regulations could take
considerable time.
    Several comments specifically objected to adopting either the
guidelines for cooked, ready-to-eat products or the guidelines for
scombroid toxin-forming species, or both, as regulations. The reasons
were generally the same as those given by those comments that supported
the use of guidelines generally.
    One comment did express the concern that adopting the scombroid
guideline as regulations would have the effect of adopting a policy
action level for histamine as a defacto regulation without a formal
notice and comment rulemaking.
    Several comments requested that guidelines only appear in the
Guide, and not in appendices to the regulations, to alleviate
confusion.
    However, FDA did receive a number of comments that urged the agency
to adopt these guidelines as regulations. These comments cited a need
for minimum enforceable standards for these products to ensure the
protection of the public health. The comments argued that minimum
standards would avoid confusion about what is enforceable, and what is
not. They pointed out that as regulations, these provisions could be
more readily enforced.
    FDA believes that all of these comments have merit. Guidelines can
provide flexibility that regulations sometimes lack. Moreover, because
they are advisory in nature, guidelines are less likely to be followed
by rote.
    FDA thus agrees that, ideally, HACCP should serve as a catalyst for
processors to develop a full understanding of the relationships between
their products and processes and human food safety and to devise
controls for ensuring safety. There may well be more than one way to
reach an appropriate safety endpoint. Regulations might not always take
such alternatives into account.
    On the other hand, in those cases involving high-risk products
where adherence to scientifically established minimum standards or
procedures is necessary to ensure a safe product by design, and those
minimums are not likely to change, there is good reason to make those
minimums something more than advisories. In those types of situations,
it makes no sense to act as if the work that scientifically established
the minimum processing conditions had not been done.
2. Cooked, Ready-To-Eat Products and Scombroid Species
    These, then, are the considerations that FDA has weighed. In the
case of cooked, ready-to-eat products and products made in whole or in
part from scombroid toxin-forming species, FDA is persuaded that the
guidelines should remain as guidelines, at least until there is enough
experience with them to determine whether a change to regulations is
warranted. The agency has concluded that processors should be given
maximum flexibility, at least initially, to identify the reasonably
likely hazards and the CCP's and CL's for those hazards that are most
appropriate for their manufacturing processes. FDA will examine over
time whether processors are achieving an adequate degree of preventive
control for these products under the guidelines, and whether they are
doing so by following the guidelines exactly or partially or by relying
on alternative approaches.
    FDA acknowledges that many comments objected to the details of the
appendices. These comments will be addressed when the first edition of
the Guide is published. FDA recognizes that these materials will be
more easily modified and improved if they remain as guidelines, at
least for the time being.
    FDA agrees that all of these guidelines should appear solely in the
Guide. There are no appendices to these final regulations.
3. Smoked and Smoke-Flavored Fishery Products
    The guidance for smoked and smoke-flavored fish contained specific
processing parameters (i.e., time and temperature of smoking and
finished product salt and nitrite concentrations) to be met in the
processing of such products, and control mechanisms for ensuring that
they are met. C. botulinum toxin production is prevented in smoked and
smoke-flavored fish by controlling these interrelated variables, as
well as by controlling the temperature of the product throughout the
chain of distribution.
    139. Approximately 25 comments addressed whether these materials
should be regulations or guidelines. About half of the comments,
representing State and Federal regulatory agencies, professional
associations, and others, urged that the materials be codified as
regulations. The remainder, representing processors and trade
associations, requested that the guidelines remain as guidelines.
    A number of the comments that urged that the smoked and smoke-
flavored fish guidelines be issued as regulations asserted that
regulations are more easily enforceable, would provide clear direction
to the industry, and would provide much needed nationwide uniformity in
the processing of smoked fish. One comment from a State regulatory
agency observed that processors are not adhering to existing
guidelines, such as the 1991 recommendations for these products by
AFDO, and are unlikely to change their operations in response to
another guideline. Several comments argued that the States need Federal
regulations to support their own efforts to regulate the industry and
to foster uniformity among the various existing State requirements. One
of these comments also stated that such regulations are needed to
ensure the safety of smoked fish, because the product has a history of
involvement in botulism outbreaks, is handled more than most other
products, increasing the risk of microbiological contamination, and is
frequently not cooked prior to consumption. One comment suggested that
the guidelines be tested in pilot programs before making them
mandatory, and that research information on smoked fish be disseminated
to industry through
 
  Page 65162
technical bulletins, workshops, and meetings.
    Several of the comments that suggested that the proposed guidelines
remain as guidelines argued that FDA has not demonstrated that present
practices in the smoked fish industry are causing risks that would
justify regulations, and that there have been no recent incidents of
botulism attributable to smoked fish. Several comments stated that most
of the problems with smoked fish in the past have resulted from abuse
of the product at retail or by the consumer.
    A few comments objected to FDA's contention that large portions of
the industry do not conduct final product testing and to the inference
that all smoked fish processors do not monitor the composition of their
products. The comments stated that responsible companies do conduct
product testing on a regular and routine schedule, have scheduled
processes, and are aware of what they are doing.
    Other comments recommended that FDA enforcement of the current
CGMP's, coupled with State and local enforcement of the Food Code for
smoked products that are produced in restaurants, retail, and food
service establishments, would make it unnecessary to treat smoked fish
products any differently than other products under these HACCP
regulations. One comment suggested that guidelines would have the same
impact as regulations because HACCP plans would be rejected by FDA if
they do not contain the recommended controls, and because States would
adopt the guidelines as regulations.
    One comment argued that the issuance of prescriptive regulations
would eliminate the diversity in the types of smoked fish products
available and result in a ``homogeneous'' market. Another comment
counseled that the issuance of a regulation would cause Alaskan native
salmon processors to abandon their traditional trade.
    The agency remains convinced that smoked and smoke-flavored fish is
a potentially hazardous food. While cases of botulism have not been
attributed to commercially prepared smoked or smoke-flavored fish in
over 30 years, the outbreaks of the 1960's clearly demonstrate the
potential for such occurrence. Virtually all the research that has been
conducted establish that processors need to control time, temperature,
and salinity (T-T-S) parameters and other matters for these products in
order to provide adequate barriers to toxin production (Ref. 214).
    As the preamble to the proposed regulations pointed out, FDA and a
number of States have longstanding concerns that the actions of a
significant portion of the smoked fish industry do not demonstrate a
full appreciation for the nature of the risks. FDA and New York State
surveys of the smoked fish industry in the late 1980's, for example,
showed that many processors did not routinely control their T-T-S
parameters.
    The comments have not persuaded FDA that, even without regulations,
processors will employ preventive controls to ensure the safety of
these products as a matter of design and not of chance. Botulism
derives from one of the most dangerous toxins known to exist. Controls
to prevent the formation of this toxin cannot be left to chance. HACCP
controls for this hazard are highly appropriate because HACCP requires
that the processor analyze its operation to determine how hazards
affecting its product can arise, and that it institute specific
controls to prevent those hazards. The majority of comments that
addressed smoked and smoke flavored fish products either supported the
concept of HACCP controls or did not argue against them.
    140. The question, therefore, is whether, in addition to requiring
HACCP plans for these products, FDA should mandate specific CCP's,
minimum CL's, monitoring frequencies, and other matters that processors
would have to include in their HACCP plans. If the agency were to
codify draft guidelines as regulations, the agency would be answering
that question in the affirmative. The preamble to the proposed
regulations identified the T-T-S parameters in the draft guidelines as
being scientifically established minimums for ensuring that toxin
produced by C. botulinum will not be produced over the shelf life of
the product under refrigerated conditions and under conditions of
moderate temperature abuse. FDA has been urged for years to mandate
such T-T-S parameters for these products. In 1988 and 1989, for
example, AFDO passed resolutions asking FDA to expedite the development
of regulations for the safe processing of smoked fish. The comments to
this rulemaking that supported regulations over guidelines support the
mandating of specific T-T-S parameters.
    However, a significant number of other comments challenged whether
some of the parameters in the guidelines were actually minimums, as FDA
had contended. They specifically objected to the minimum water-phase
salt levels in the draft guidelines for air packaged smoked and smoke-
flavored fish. Generally, these comments stated that there is little
safety concern with air-packaged smoked or smoke-flavored fish (hot or
cold smoked) containing as little as 2.5 percent water phase salt (less
than the minimum stated in the guidelines), and requested that FDA
reexamine the existing scientific data. A few comments stated that air-
packaged smoked fish has a limited shelf life in the refrigerated state
and that NMFS research has shown that spoilage occurs before toxin
production. One comment stated that NMFS, New York State Department of
Agriculture and Markets, and AFDO all consider a minimum water-phase
salt content of 2.5 percent to be acceptable for air-packaged products.
    A few comments suggested that an alternative to specifying T-T-S
parameters would be to require that all processors have a scheduled
process for air-packaged products. The comment stated that this
requirement has been successful in the State of New York and has
enabled industry to produce products with water-phase salt
concentrations that are lower than those proposed by FDA. A few
comments suggested that the high salt levels proposed by FDA for smoked
and smoke-flavored products would be counterproductive to those
government programs aimed at reducing salt in the human diet and would
be unacceptable, or only marginally acceptable, to consumers. Other
comments suggested that the necessary minimum salt levels for smoked
and smoke-flavored fish might be reduced by shortening the shelf life
of the product or by storing and distributing the product frozen.
    The comments have persuaded FDA that it may be possible for
processors to use parameters other than those in FDA's draft guidelines
and still produce a safe product. Moreover, the NACMCF has recently
endorsed AFDO's recommended parameters for smoked and smoke-flavored
fish. Most notably, these recommendations differ from those in FDA's
draft guidelines in that they provide for a minimum finished product
water phase salt content in air-packed product of 2.5 percent, whereas
the FDA proposal provided for a range of minimum values of from 2.5
percent to 3.5 percent, depending upon other processing parameters.
    The agency acknowledges, therefore, that some recommended T-T-S
parameters differ from those in FDA's draft guidelines. FDA
acknowledges the possibility that other safe T-T-S parameters exist as
well. It is reasonable to suppose that there is more to be learned
about how the development of C. botulinum toxin is controlled in these
products, given the lack of reported illnesses in recent years. Thus,
while
 
  Page 65163
FDA strongly believes that the T-T-S parameters in its draft guidelines
provide effective controls for botulism, the agency accepts that they
are not necessarily the only effective controls, or that all effective
controls have been identified.
    Consequently, the agency has concluded that, at least for now, the
most appropriate place for such guidance on T-T-S parameters and
related matters is the Guide, and that it would not be appropriate to
adopt specific parameters for the processing of smoked fish by
regulation. However, because of the extreme nature of the hazard, and
in response to comments, FDA has chosen to codify a rudimentary
performance standard for the control of botulism in these products from
the draft guidelines (item number 11). As incorporated at subpart B,
Sec. 123.16, the performance standard reads:
 
    In order to meet the requirements of subpart A of this part,
processors of smoked and smoke-flavored fishery products, except
those subject to the requirements of part 113 or 114 of this
chapter, shall include in their HACCP plans how they are controlling
the food safety hazard associated with the formation of toxin by C.
botulinum for at least as long as the shelf life of the product
under normal and moderate abuse conditions.
 
    This requirement responds in part to the comments that proposed
that FDA require that all processors scientifically establish scheduled
processes for smoked and smoke-flavored fish, rather that mandate
specific T-T-S parameters and other matters. It requires processors to
establish CL's that are both appropriate to their operation and
scientifically sound. Because botulism is undoubtedly a hazard that
must be controlled in the production of these products, subpart B of
part 123 does not impose a requirement that would not exist in its
absence. It has been included for emphasis and as a reminder to
processors. The Guide will provide processors with assistance with
regard to specific T-T-S parameters and related matters.
    141. FDA proposed that, with certain exceptions, fish to be smoked
or salted be eviscerated and free of residual viscera. The preamble to
the proposed regulations explained that salted or smoked uneviscerated
fish present a potential hazard for the development of C. botulinum
toxin production. The viscera of fish contain the majority of C.
botulinum normally present.
    One comment argued that the entire evisceration provision should be
moved to the Guide. Another comment suggested that specific
evisceration requirements be codified but not as part of sanitation.
    These regulations require in subpart B of part 123 that the
processors of smoked and smoke-flavored fish describe in their HACCP
plans how they are controlling the food safety hazard associated with
the formation of toxin by C. botulinum. Specific types of controls will
be provided in the Guide. Because evisceration is one form of control
for this toxin, it will be covered in the Guide as well and need not be
included in the regulations. Consequently, FDA has not included this
proposed provision in these final regulations.
 
N. Molluscan Shellfish
 
1. Background
    In addition to the general HACCP provisions in subpart A of part
123, FDA proposed subpart C of part 123--``Raw Molluscan Shellfish,''
which set forth specific requirements for the processing of fresh or
frozen molluscan shellfish. Proposed subpart C of part 123 described
certain types of controls that processors of these products must
include in their HACCP plans in order to meet the requirements of
subpart A of part 123.
    Specifically, FDA proposed to require that processors of raw
molluscan shellfish identify in their HACCP plans how they are
controlling the origin of the molluscan shellfish that they process.
FDA proposed to require that these controls include accepting only
molluscan shellfish that originated from growing waters that are
approved by a shellfish control authority, that are from harvesters
that are licensed or from processors that are certified by a shellfish
control authority, and that are properly tagged or labeled. In
addition, FDA proposed to require that processors maintain records to
document that each lot of raw molluscan shellfish meets these
requirements. FDA also proposed to amend Sec. 1240.60 (21 CFR 1240.60)
to provide for a system of tagging for shellstock and labeling for
shucked molluscan shellfish as a means of source identification.
    It is important to note that shellfish control authorities in the
United States are generally agencies of State governments, and that the
tagging of molluscan shellfish is an important aspect of State
shellfish control programs. As discussed below, reference to aspects of
existing State programs in these Federal regulations is not intended to
supplant or override the State programs in any way. Rather, these
provisions are intended to strengthen the Federal system in ways that
will complement, and thereby better support, State programs.
    Molluscan shellfish consumed raw or partially cooked pose unique
public health risks. As the preamble to the proposed regulations noted,
they probably cause the majority of all seafood-related illnesses in
the United States. This situation is not unexpected, given the nature
of the product and the way that it is consumed. The preamble documented
a relationship between the microbiological quality of molluscan
shellfish growing waters and the incidence of molluscan shellfish-borne
disease. It also noted that naturally occurring toxins may accumulate
in molluscan shellfish because they are filter-feeding animals.
    The NSSP was established as a cooperative program among FDA, State
regulatory agencies, and the molluscan shellfish industry, relying on
section 361 of the PHS Act (42 U.S.C. 264), to provide for the
classification and patrol of shellfish growing waters and the
inspection and certification of shellfish processors. The preamble to
the proposal reaffirmed FDA's support for the NSSP but noted the
difficulties that are associated with ensuring the safety of these
uncooked products. As the preamble stated, FDA tentatively determined
that it could strengthen and provide additional support for the
cooperative program through these regulations.
2. Should There Be Specific Requirements for Raw Molluscan Shellfish?
    FDA received approximately 45 comments about the proposed
requirements for raw molluscan shellfish. The responses were from
processors, trade associations, State and Federal government agencies,
individuals, consumer advocacy groups, and a foreign country.
Approximately half of these comments urged FDA to eliminate proposed
subpart C of part 123 and the proposed amendment to Sec. 1240.60, while
the other half acknowledged the advisability of including these kinds
of provisions but commented on, or questioned, various specifics of
them.
    The comments that generally supported the need for specific
requirements for raw molluscan shellfish were from trade associations,
molluscan shellfish industry members, consumer advocacy groups, Federal
and State government agencies, individuals, and a professional
organization. A number of comments noted that special requirements for
molluscan shellfish are warranted because of the association of these
products with illness. One
 
  Page 65164
comment in particular stated that, with respect to seafood, molluscan
shellfish ``serve as the primary source of illness due to ingestion.''
One comment noted that Federal regulations relating to source of origin
controls for raw molluscan shellfish would enable FDA to lend support
to the States in the administration of the NSSP. Another comment
suggested that the proposed regulations would improve FDA's regulatory
effectiveness with regard to molluscan shellfish control. The comment
from the ISSC stated that ``The Conference has long recognized and
supported expansion of FDA authority to assist States in assuring the
safety of molluscan shellfish.''
    The comments that suggested that subpart C of part 123 and the
amendment to Sec. 1240.60 be deleted were from State government
agencies and seafood processors. A number of the comments that
suggested deletion of the proposed provisions stated that the tagging
and labeling requirements of the NSSP are designed not to serve as a
control to prevent harvesting from closed areas but to assist States in
tracing shellfish that are implicated in illness outbreaks back to the
harvest area. The comments went on to state that harvesters who
illegally harvest from closed waters do not identify the shellfish as
originating from the closed area. The comments maintained that
preventing illegal harvesting is the key to reducing the incidence of
illness, and that the only known method to achieve this goal is through
effective law enforcement, including the patrol of closed waters.
    A number of these comments argued that increased FDA funding and
support for State molluscan shellfish control and patrol efforts would
do more than the proposed rule to deter illegal harvesting, to increase
States' compliance with the NSSP, and reduce the number of illnesses
caused by molluscan shellfish. The comments went on to state that the
proposed regulations unnecessarily duplicate the requirements now in
place in the Manual of Operations for the NSSP. They contended that
formal adoption of NSSP requirements into Federal regulations would
release State agencies from their cooperative relationship with FDA
under the NSSP.
    One comment noted that the weaknesses in State molluscan shellfish
control programs are in areas not addressed by the proposed
regulations, such as improperly classified growing waters; the ability
of State growing water classification programs to respond to breakdowns
at waste water treatment facilities or unexpected climatic events that
affect the quality of molluscan shellfish growing waters; and improper
handling by caterers and consumers. The comment concluded that the
proposed HACCP provisions for molluscan shellfish will, therefore, not
reduce the incidence of illness attributable to such products.
    As previously mentioned, FDA is a partner with State and foreign
regulatory authorities and with industry in the NSSP. The NSSP Manual
of Operations provides the standards for State and foreign molluscan
shellfish regulatory programs that belong to the cooperative program,
as well as for processors. The participating States routinely adopt
those standards as law or regulations, but the NSSP itself has neither
Federal nor State regulatory stature.
    Each participating State and foreign nation classifies and monitors
its molluscan shellfish growing waters, controls harvesting, inspects
molluscan shellfish processors, and issues certificates for those that
meet the shellfish control authority's criteria. FDA evaluates State
and foreign molluscan shellfish control programs and publishes monthly
the ``Interstate Certified Shellfish Shippers List,'' which lists the
molluscan shellfish processors that are certified under the cooperative
program. States that are in the program are not willing to receive
shellfish from noncertified shippers.
    FDA disagrees with the comments that suggest that establishment of
the proposed source controls in Federal regulations would supplant the
similar and, in some cases more stringent, requirements of
participating States and foreign nations or the standards set forth in
the NSSP. Rather, the agency is convinced that they will reinforce and
support these requirements and standards.
    The molluscan shellfish industry is subject to significant
regulatory oversight in those States that participate in the NSSP.
However, the quality and effectiveness of State laws and enforcement
activities can vary considerably as a function of the financial and
administrative support available to the responsible State units (Ref.
7, p. 15). For example, FDA documented discrepancies in State
enforcement practices during its 1994 evaluation of State programs to
determine compliance with the NSSP standards (Ref. 215). Moreover,
although all harvesting States participate in the NSSP, many other
States do not.
    Based on these factors, FDA proposed, and is now adopting, subpart
C of part 123 and amendments to Sec. 1240.60 to support and strengthen
the shellfish program in two ways. First, these provisions will
complement the efforts of the States. FDA recognizes that while States
are making significant and important efforts to ensure that all
shellfish harvested in their jurisdiction are taken only from open
waters and then properly tagged, some shellfish that do not meet these
requirements inevitably escape State control. The new provisions will
allow FDA to take action against shellfish that are not harvested from
open waters or that are not properly tagged if it encounters such
shellfish in interstate commerce and make the gravamen of such action
the origination from unopen waters or the lack of proper tagging
itself, rather than evidence that the shellfish are injurious to
health.
    Second, the regulations require that processors only use shellfish
that originate from growing waters that have been approved for
harvesting and that have been properly tagged. Failure to do so can
result in Federal regulatory action against the product or against the
processor itself. This fact should provide a significant incentive to
processors to ensure that they are not receiving shellfish that do not
meet these requirements.
    Taken as a whole, rather than diminishing in any way the importance
of State programs, FDA's regulations elevate the importance of those
programs. These regulations make proper origin and tagging--concepts
that derive directly from the NSSP--keys to the unimpeded movement of
shellfish in interstate, as well as intrastate, commerce.
    Moreover, these requirements extend these control measures to
imported products, enabling FDA to more efficiently and effectively
ensure the safety of imported raw molluscan shellfish. At present, the
agency must resort to advising State regulatory authorities of the
prospective entry of raw molluscan shellfish from an uncertified source
(Ref. 216, part V, p. 5). While States normally take action against
uncertified imported raw molluscan shellfish, FDA is aware that
uncertified imports enter interstate commerce (Ref. 107).
    FDA acknowledges that uniform Federal tagging and record-keeping
requirements will not completely eliminate illegal harvesting. The
agency agrees with the comments that rigorous enforcement of closed
area restrictions by State regulatory agencies will always be needed.
Unquestionably, increased funding would help State efforts to classify
and patrol growing areas. However, FDA does not have resources for this
purpose. Nonetheless, the agency remains convinced that there are
 
  Page 65165
significant, positive steps that can be taken to strengthen source
controls as part of HACCP, and thereby to support the cooperative
program.
    A processor's most significant safety control for raw molluscan
shellfish is at the point of receipt. If processors refuse to accept
molluscan shellfish for which there is no assurance that they have been
legally harvested, the incentive for illegal harvesting would be
eliminated. FDA participation in a number of covert investigations into
illegal molluscan shellfish harvesting in recent years has convinced
the agency that, in many cases, processors are aware of the illegal
harvesting activity of their suppliers (Ref. 217). If the provisions of
these regulations can help foster a culture change in that respect,
shellfish safety will be significantly enhanced.
    Based on these considerations, the agency proposed that, as a
universal aspect of the HACCP plans for these products, molluscan
shellfish processors engage in certain activities to ensure that the
products that they receive originate only from waters that have been
approved by a shellfish control authority (e.g., checking tags on
containers of shellstock, licenses of fishermen, and certification of
suppliers). Molluscan shellfish that are clearly improperly tagged or
from questionable sources must be rejected by processors as a
requirement of their HACCP plans. It is reasonable to conclude that, as
more processors adopt HACCP and exercise greater control over their
suppliers, the amount of illegally harvested shellfish offered for sale
will decrease, because the market for such product will decline.
    While it is true that the tagging requirements of the NSSP were
primarily designed as a means of tracing back molluscan shellfish
involved in incidences of illness to their harvest area, they have also
served as a key component in efforts by FDA and State regulators and
industry to ensure that molluscan shellfish that are placed in commerce
originate from areas that are approved by a shellfish control
authority. It is certainly true that the tags on containers of
molluscan shellfish that are harvested from closed waters are often
falsified to disguise their true origin. However, such falsification
carries potential Federal and State penalties and is a focus of current
molluscan shellfish control programs.
    Regarding the comments that pointed to weaknesses in State
programs, at retail, in the classification of molluscan shellfish
growing waters, and elsewhere, which are not directly addressed by
these regulations, the agency acknowledges that HACCP plans and
specific source control requirements cannot serve as a substitute for
improvements in the food safety system that directly address these
weaknesses. Regulatory systems will always have their strengths and
weaknesses, and research to better understand and control hazards will
always be needed. Nonetheless, these comments provide no reason for FDA
to abandon its efforts to remedy existing agency weaknesses and, in
particular, to lend support to the States in those areas to which these
regulations do relate.
    141. One comment stated that references cited in the preamble to
the proposed regulations in support of the tagging requirements (Refs.
102 through 109) do not provide convincing evidence of a need for such
a measure. The comment stated that, for the most part, the references
that FDA cited document corrective actions taken by State regulatory
agencies that would likely be the same measures that FDA officials
would take under the proposed regulations. In addition, the comment
stated that a failure to have properly tagged shellfish does not always
mean that the shellfish were harvested illegally. The comment pointed
out that the absence of a tag could mean simply that the tag was lost.
    The references in the question contain examples of problems
associated with molluscan shellfish tagging, recordkeeping, and
harvesting. FDA cited these references to demonstrate that, in some
cases, the deterrent effect of existing State tagging requirements and
sanctions is inadequate to prevent problems from arising (Refs. 102,
103, and 109). The problems documented in the references helped
persuade FDA to propose Federal source control requirements to help
deter the interstate shipment of shellfish from unapproved harvest
areas. FDA did not intend to imply that the State actions that were
documented in these references were incorrect, or that FDA would have
responded in a different manner. FDA continues to believe that the
references are relevant and supportive to its intended assertion.
    A few comments maintained that a better strategy for decreasing
illness from the consumption of molluscan shellfish would be to
increase the education efforts of FDA and of the ISSC that are directed
toward consumers and the medical community to alert susceptible
individuals to the risks associated with the consumption of raw
molluscan shellfish.
    The agency agrees that consumer education can play a vital role in
reducing illnesses associated with the consumption of raw molluscan
shellfish, particularly in medically compromised individuals. During
the period of 1984 through 1994, the agency expended nearly $1 million
to alert the public to the risks of raw molluscan shellfish consumption
by distributing brochures to consumer groups, groups that represent
those with special medical conditions, and consumers; developing a
video news release; issuing press releases; and establishing the toll-
free, FDA Seafood Hotline. Included in this expenditure is the agency's
efforts to inform the medical community about the illnesses associated
with the consumption of raw molluscan shellfish by providing
informative articles to medical bulletins and journals and by mailing
brochures and news articles to target professional groups. The agency
will continue its consumer education efforts, but such efforts alone
will be insufficient to address the hazards posed by the consumption of
raw molluscan shellfish harvested from unapproved growing waters. The
existing and planned consumer education efforts are geared toward
individuals in high-risk consumer groups, advising them to avoid
molluscan shellfish that have not been fully cooked. The risks posed by
viruses, toxins, and many bacteria are to the population as a whole.
There is little advice that the agency could provide that would enable
consumers to protect themselves from these kinds of hazards in
molluscan shellfish.
    143. Several comments questioned the validity of FDA's statement
that molluscan shellfish consumed raw or partially cooked pose unique
public health risks and probably cause the majority of all seafood-
related illnesses in the United States.
    The comments provided no data upon which to conclude that either
the NAS or FDA is wrong in this regard. FDA remains convinced that the
statements made in the preamble to the proposed regulations are valid,
and that the references support these statements.
3. Cooked Versus Raw Molluscan Shellfish
    144. Comments from a number of State agencies, trade associations,
seafood processors, and the ISSC objected to the use of the terms
``raw'' and ``fresh or frozen'' in the title of part 123 subpart C and
the text of the proposed regulations on shellfish. These comments were
concerned because these terms would have the effect of exempting canned
and any other heat- processed molluscan shellfish from the source
control, recordkeeping, and
 
  Page 65166
tagging provisions of subpart C of part 123 and Sec. 1240.60(b).
    The comments stated that limiting these provisions to raw products
would allow foreign firms to continue to heat-treat or can molluscan
shellfish that are harvested from foreign waters that do not meet NSSP
standards and to export them to the United States. The comments stated
that this situation was not in the best interest of the public health
because of the potential for the presence of heat-stable natural
toxins, such as paralytic shellfish poison or amnesiac shellfish
poison, as well as chemical contaminants. The comments also complained
that, because State laws and regulations require that all molluscan
shellfish harvested in the United States come from waters approved by a
shellfish control authority regardless of whether they are to be
consumed raw or cooked, continuing to allow foreign processors who
export cooked shellfish to the United States to use molluscan shellfish
from unapproved growing waters places the domestic shellfish industry
at a competitive disadvantage. Other comments requested that FDA
clarify whether canned shellfish were included in subpart C of part 123
but did not suggest that canned and other heat-processed shellfish be
included.
    FDA has responded to these comments generally in response to
comment 34, supra. The agency adds the following points:
    It is important to recognize that foreign processors who export
cooked molluscan shellfish to the United States now will have to have
HACCP systems through which they identify and control hazards that are
reasonably likely to occur. These hazards include heat stable toxins
and chemical contaminants that would cause these products to be
adulterated under U.S. law.
    To further clarify that the requirements of subpart C of part 123
apply only to the processing of molluscan shellfish that are not heat
treated or treated in some other manner by the processor to eliminate
microorganisms of public health concern, FDA has modified the language
at Sec. 123.20 to read, ``This subpart augments subpart A of this part
by setting forth specific requirements for processing fresh or frozen
molluscan shellfish, where such processing does not include a treatment
that ensures the destruction of vegetative cells of microorganisms of
public health concern.''
4. Shellfish Control Authorities
    FDA proposed to require that processors only process molluscan
shellfish that originate from waters approved for harvesting by a
shellfish control authority. The term ``shellfish control authority''
is defined at Sec. 123.3(o) to include foreign government health
authorities that are legally responsible for the administration of a
program that includes classification of molluscan shellfish growing
areas.
    145. Two trade associations questioned how a processor could
evaluate the competency of a foreign shellfish control authority. They
stated that FDA should require that a foreign country that exports
shellfish to the United States have an agreement with the agency that
establishes that a competent shellfish control authority exists in that
country, and that the foreign shellfish program meets NSSP standards.
One comment from a seafood processor argued that it would be
unreasonable to require processors to verify that molluscan shellfish
from all over the world are caught or cultivated in waters that meet
NSSP standards. The comment stated, moreover, that a processor could
not keep abreast of which countries have current shellfish agreements
with FDA and which countries do not.
    FDA acknowledges the merits of requiring that a foreign country
that exports shellfish to the United States have an agreement with the
agency but has concluded that, given the significance of such a
requirement and the agency's failure to raise the possibility of
imposing it in the proposal, it is beyond the scope of this rulemaking.
Even though FDA is not imposing such a requirement, it is the case that
the only means by which a processor can ensure that the molluscan
shellfish of foreign origin that it receives are in compliance with the
requirements of subpart C of part 123 of these regulations is by
determining whether the foreign shellfish control authority is formally
recognized by FDA. It is not likely that the processor could employ any
other process that would give it assurance that molluscan shellfish
harvesting waters that are approved by the shellfish control authority
are properly classified. Such a determination is appropriately
performed through government to government audit.
5. Shellfish From Federal Waters
    146. Comments from a significant number of trade associations and
seafood processors stated that a requirement that shellfish originate
only in waters ``approved for harvesting by a shellfish control
authority'' would preclude harvesting in Federal waters unless the
Federal government introduced a formal approval process for waters
under its purview through a Federal shellfish control authority.
    Under the current system, State agencies are responsible for
approving molluscan shellfish growing waters. However, State
jurisdiction extends only to waters that are within three miles of the
shore. Waters beyond that point but up to 200 miles offshore are under
the jurisdiction of the Federal government. The comments pointed out
that the harvesting of molluscan shellfish is permitted in all of the
oceanic waters under Federal control unless there is a specific Federal
action to declare an area unsafe under the provisions of the Magnuson
Fishery Conservation and Management Act. The comments further noted
that large volumes of molluscan shellfish are harvested in Federal
waters.
    How Federal waters will be classified, and by whom, has not been
fully resolved. The comments are correct that the proposed requirement,
if incorporated into the final rule, would pose significant problems
for molluscan shellfish processors who receive product harvested from
Federal waters. Therefore, FDA has modified Sec. 123.28(b) to allow for
the receipt of molluscan shellfish that are harvested in U.S. Federal
waters except where such waters are specifically closed to harvesting
by an agency of the Federal government. This provision is consistent
with the provisions of the Magnuson Act.
    It is worth noting that, by allowing Federal waters to be open
unless they are specifically closed, this system is the opposite of the
State system, under which waters are closed unless they are
affirmatively classified so as to be open. This difference is
reasonable from a public health standpoint because there is less
likelihood that Federal waters will be affected by pollution than will
near shore State waters.
    Furthermore, because there is no Federal authority to license
shellfish harvesters who fish in Federal waters, FDA has modified
Sec. 123.28(c) to require only that a harvester be in compliance with
such licensure requirements as may apply to the harvesting of molluscan
shellfish, rather than specifically requiring licensure.
6. Tagging and Recordkeeping Requirements
    147. FDA proposed recordkeeping requirements for processors to
follow with respect to shellstock and shucked molluscan shellfish in
Sec. 123.28 and requirements for the information to be included on the
shellstock tag in Sec. 1240.60. A few comments stated that
 
  Page 65167
the proposed molluscan shellfish tag and record requirements were too
specific, and that placing such requirements in the form of regulations
would make it difficult to make timely changes to these requirements as
future needs may dictate. The comments asserted that FDA or the ISSC
may wish to modify the content or form of molluscan shellfish tags or
records to improve product traceability. They suggested that FDA write
the tagging and recordkeeping requirements at Sec. 123.28 and
Sec. 1240.60 in general terms and allow the specific form and
information required on the tags to be addressed by the NSSP. The
comments went on to urge that, if the agency were determined to include
specific tagging and recordkeeping requirements as part of the final
regulations, they should be fully consistent with current NSSP
guidelines.
    It is not the agency's intent that the provisions of Sec. 123.28
and Sec. 1240.60 would preclude the ISSC or State agencies from
adopting additional recordkeeping or tagging requirements. The
recordkeeping and tagging requirements in these regulations are the
minimum necessary to ensure that shellfish can be traced through
distribution channels, back to the harvest source. FDA explained why
each of the specific requirements is necessary in the preamble to the
proposed regulations, and the comments did not take issue with the
agency's explanation with respect to any of the particulars. Therefore,
FDA disagrees with the comments that the recordkeeping or tagging
requirements are more restrictive than they need to be, or that they
would interfere with the NSSP tagging program.
    Moreover, as stated previously, the agency has drafted the
regulations broadly enough so as not to conflict with any improvements
that the ISSC may wish to make in the form that a tag may take or in
how information on tags is to be stored. The definition of the word
``tag'' at Sec. 123.3(t) (added at Sec. 1240.3(u) for consistency)
reads, in part, ``a record of harvesting information attached to a
container of shellstock * * *.'' This definition is sufficiently broad
to include such systems as bar codes, embossed plastic, or other
nontraditional methods of identification that may be used by the
industry in the future. The agency is supportive of efforts to improve
the existing methods of recording harvesting information.
    Nonetheless, it is important for the regulations to identify the
minimum specific information that must appear on a tag. During past
illness outbreaks, FDA, State regulatory agencies, and industry have
had difficulty tracing the implicated shellfish to their sources,
especially after they have been in the possession of several different
processors (Refs. 99; 100; 102-106; 109; 218; and 219, pp. 37-39).
These difficulties in tracing the shellfish have occurred because the
shellfish were not in compliance with the tagging and recordkeeping
provisions of the NSSP. The requirements at Sec. 123.28 will enable FDA
to help the States to enforce minimum tagging and recordkeeping
requirements for imported and domestic products. Moreover, the agency
believes that placing the tagging and recordkeeping requirements in
Federal regulations will emphasize the nationwide importance of this
information in protecting the public health, as described earlier.
    148. One comment noted that the NSSP does not specify that the name
of the harvester must be on a molluscan shellfish tag, but that the
proposed regulations would require this information.
    The NSSP specifies that the number assigned to the harvester by the
shellfish control authority must be listed on the tag. The agency
recognizes that there may be a variety of effective ways to identify
the harvester of the molluscan shellfish, depending on the method of
harvest, State requirements, and local tradition. For this reason, the
agency has modified Sec. 1240.60(b) to read that the tag shall
disclose:
 
* * * by whom they were harvested (i.e., the identification number
assigned to the harvester by the shellfish control authority or, if
such identification numbers are not assigned, the name of the harvester
or the name or registration number of the harvester's vessel).
 
For consistency, FDA has made a similar change in Sec. 123.28(c)(5).
     149. A significant number of comments recommended that FDA modify
Sec. 1240.60(b) to allow bills of lading or other shipping documents to
accompany bulk shipments of shellstock in lieu of tags, as long as they
provide the same information. A few comments suggested that bills of
lading or other shipping documents be used in lieu of tags on
individual containers of shellstock when a shipment consists of a large
volume of shellstock in sacks or boxes. Several comments asked for
clarification of the impact of the proposed requirements on current
repacking operations that commingle shellstock from various harvesters
into one container.
    FDA recognizes that an inconsistency existed between proposed
Sec. 123.28 and proposed Sec. 1240.60 because the former would have
allowed shipping documents to provide the required information for bulk
shipment, and the latter would not. FDA agrees with the comments that
recommended providing for the use of shipping documents and has
modified Sec. 1240.60(b) to provide the needed consistency. Under
existing industry practice the truck, cage, or vessel hold serve the
same purpose as a container for the shellstock, making tagging
impractical. In that case, the shipping document serves the same
function as the tag.
    However, the agency does not agree with the suggestion that
containers of shellstock in large shipments be allowed to be covered by
shipping documents in lieu of tags. FDA cannot justify treating
shellstock in large shipments differently than shellstock in smaller
shipments, nor could the terms ``large'' or ``small'' be readily
defined. Large shipments can be subdivided, perhaps many times, or
commingled with other lots of molluscan shellfish. The source
information would, therefore, be necessary on each container to ensure
proper identification. Without tags, the identity of individual
containers could be lost. FDA is requiring that all shellstock, even
after repacking, bear a tag that identifies the prescribed information,
including the identification of the harvesters to ensure that all
shellstock is readily traceable (Sec. 1240.60).
7. Other Considerations
    150. Comments from a few trade associations and from seafood
processors stated that FDA should require a production code on each
container of shucked molluscan shellfish. The comments suggested that
the code consist of an identifying mark that allows the processor to
determine where the remainder of the lot was shipped, and where and
when the relevant shellstock was harvested.
    FDA agrees that production codes can be useful on containers of
shucked molluscan shellfish to facilitate trace back of questionable
product. The agency encourages the use of codes by molluscan shellfish
processors. However, such a requirement is not within the scope of the
proposed regulations. The agency will consider whether such a
requirement should be pursued in a separate rulemaking.
    151. Comments from several consumer groups stated that if a warning
label is not mandated by FDA on raw molluscan shellfish to alert at-
risk consumers of the danger to health posed by the product, FDA should
require that Gulf Coast oyster processors adequately cook the product
to
 
  Page 65168
eliminate risks from Vibrio vulnificus during periods when shellfish
cannot be harvested free from this bacterium. They further stated that
cooking should not be required when the shellfish are free from this
bacterium.
    FDA agrees that effective controls are needed to protect consumers
from the hazard posed by V. vulnificus in Gulf Coast oysters during
certain times of the year. The agency is evaluating the potential
effectiveness of a variety of control mechanisms. Mandating specific
mechanisms, however, would be outside the scope of this rulemaking. FDA
is therefore taking these comments under advisement.
    152. A few comments urged that the word ``processor'' be changed to
``certified dealer and licensed harvester'' throughout Sec. 123.28 to
make the terminology consistent with the NSSP and to clarify that these
requirements apply to everyone who buys and sells shellfish before the
shellfish reach the retail marketplace. The comments also recommended
changing the word ``shipper'' to ``processor or packer'' in the
provision that is codified at Sec. 123.28(d)(3) in these final
regulations to include the shucker, repacker, shipper, reshipper, or
depurator.
    As mentioned in the ``Definitions'' section of this preamble, the
agency has concluded that the definition for ``processor'' covers all
NSSP classifications of shellfish dealers, without specifically naming
each one. For consistency throughout the regulations, use of the term
will remain unchanged.
    FDA agrees, however, that the word ``shipper,'' as the agency used
it in the proposed regulations, could cause confusion because that term
has a different meaning in the NSSP Manual of Operations. Therefore,
FDA has changed the language of the final regulations to read ``packer
or repacker.'' The certification number of the packer or repacker is
readily available to the processor since it is required, under the NSSP
standards, on each label of shucked product. For consistency, FDA has
modified Sec. 1240.60(c) to also read ``packer or repacker'' where it
had previously read ``processor.''
    153. A few comments stated that proposed Sec. 123.28(b), which
referred to molluscan shellfish that ``originate from growing areas
that are approved for harvesting,'' appears to prohibit processors from
using products from harvest waters classified under the NSSP as
``conditionally restricted.'' Under the NSSP, shellstock taken from
such waters cannot be directly marketed for human consumption but can
be ``relayed'' to an open growing area for harvest at a later date. In
addition, the comments pointed out that the word ``approved'' is a
formal classification designation used in the NSSP. These comments said
that harvesting is permitted from areas with other than ``approved''
classifications but would appear to be prohibited under the provisions
of proposed Sec. 123.28(b). The comments suggested use of the term
``open'' growing waters, which would apply to several different NSSP
harvest area classifications.
    FDA agrees that the word ``originate'', as used in proposed
Sec. 123.28(b), is too restrictive and has revised this section to say
``harvested from.'' With regard to the word ``approved,'' FDA concludes
that no change is warranted. The proposal neither adopted nor
referenced the NSSP growing water classification system. The phrase
``approved for harvesting'' should not be construed to be limited to
those waters classified by a State under the NSSP as ``approved''
areas. The phrase ``approved for harvesting'' is used in the final
regulations for its common sense meaning (i.e., those areas from which
harvesting is allowed), which FDA believes is appropriate.
    154. For clarification purposes, definitions for the terms
``certification number'', ``shellfish control authority'', and ``tag''
have been added at Sec. 1240.3(s), (t), and (u), respectively. These
definitions are taken directly from Sec. 123.3.
    155. One comment urged that the regulations be modified to
specifically state that a HACCP plan for raw molluscan shellfish that
contains the controls specified in subpart C of part 123 is deemed to
meet the requirements of Sec. 123.6.
    The agency disagrees with this comment. The requirements of subpart
C of part 123 are designed to control the environmental hazards
associated with the harvest waters from which molluscan shellfish are
taken, particularly those relating to sewage- related pathogens,
chemical contaminants, and natural toxins. For this reason, they must
be included in the HACCP plans of all raw molluscan shellfish
processors. However, they are not intended to control process-related
hazards resulting from, for example, time-temperature abuse of the
product, improper use of food additives, or metal fragments. To control
these hazards, the processor needs to follow the general approach set
out in subpart A of part 123. The agency has developed the two subparts
to be complementary and has strived to eliminate any redundancy in
their provisions. Thus, it is theoretically possible that a HACCP plan
that contains the controls specified in subpart C alone of part 123
still might not meet all the requirements of Sec. 123.6.
    FDA has made two modifications in Sec. 1240.60(b) for clarity only.
Where the proposed regulations required that the tag identify the ``* *
* place where harvested * * *,'' FDA has added, ``(by State and
site).'' This change makes Sec. 1240.60(b) consistent with
Sec. 123.28(c)(2). Additionally, where the proposed regulations stated
that improperly tagged or labeled product would be ``subject to seizure
and destruction,'' FDA has amended the language to read, ``subject to
seizure or refusal of entry, and destruction.'' This change is to make
clear that, for imported products, the appropriate regulatory procedure
is refusal of entry, rather than seizure.
 
O. Compliance and Effective Date
 
1. Effective Date
    FDA proposed that these final regulations be effective and enforced
1 year after the date that they are published in the Federal Register.
The purpose of this proposed effective date was to provide processors
with enough time to develop and implement HACCP plans. The agency
invited comment on whether 1 year would be adequate.
    156. FDA received more than 60 comments about the proposed
effective date. Virtually all comments agreed that the agency should
provide some period before the regulations become effective. The
comments either agreed with a 1-year implementation period or requested
a longer period of 2 years or more. There were also a number of
comments that responded to the agency's question about whether
implementation dates should be staggered based on such factors as size
of firm and level of risk.
    A minority of comments stated that 1 year for implementation is
adequate. These comments argued that after 1 year, the industry would
have had 3-years notice of the requirements. The comments argued that 3
years was sufficient total time to be informed about impending
regulations. Another comment stated that one year might be sufficient
for the seafood industry, but other food industries could need
considerably more time.
    Several comments recommended that FDA provide an implementation
period of longer than 1 year but did not recommend a specific
alternative. These comments were concerned that HACCP training would
not be completed in time for a 1-year implementation date; that foreign
processors would need more
 
  Page 65169
time to implement HACCP; and that 1 year after Canada required HACCP
for its seafood industry, only half of its firms had complied.
    The largest number of comments on this topic recommended that FDA
make the regulations effective 2 years after publication. The reason
most often cited was that it will be more than 1 year before most of
the affected firms can complete HACCP training. The next most
frequently cited reason was that firms and trade associations needed
more time for HACCP plan development. Several comments also discussed
the time required to modify equipment and raise capital; to respond to
initial, voluntary reviews of HACCP plans by regulatory agencies; and
for Federal, State, and local officials to understand HACCP and how to
enforce it and to arrange for cooperative enforcement. A few comments
stated that FDA needs sufficient time to develop agreements with
foreign countries.
    Several comments contended that more than 2 years should be allowed
to implement the regulation. These comments mentioned the cultural
change that HACCP will require and concern about the impact that the
regulations will have on small firms as well as on large firms with
multiple products and lines. They also mentioned the time needed for
training.
    Over 20 comments recommended that FDA stagger effective dates. A
majority of these comments stated that such a phased-in start-up should
be based on product risk. The remainder of the comments split in favor
of either considering both the size of a firm and the risk from the
products it makes or just the size of a firm.
    A smaller number of comments argued against a staggered start.
These comments expressed the view that small firms and foreign products
should not be treated differently and pointed out that all firms will
already have had 3 years of notice. Some of these comments stated that
it would be hard to justify staggering implementation based on risk
when the illness data are so incomplete. Others expressed the view that
administering a staggered start would use up valuable resources and
only result in confusion; that staggering would put some firms at a
competitive disadvantage; and that it might encourage procrastination.
    After fully considering all of these comments, FDA agrees with the
comments that suggested that a 2-year effective date is appropriate.
Based on FDA's participation with the Alliance that is developing
training materials for this program, FDA has come to realize that 2
years must be provided to establish training programs and to give
participants enough time to take them. Two years is also the minimum
time necessary to train regulatory personnel. The additional time is
also necessary so that the States will have a full opportunity to
understand and respond to the effects of these regulations. It will
also increase the likelihood that more agreements with other countries
will exist.
    The additional year will also increase the opportunity for
processors to engage in ``voluntary'' HACCP inspections in advance of
the effective date in order to obtain preliminary, nonregulatory
feedback from the agency on their progress.
    The agency acknowledges that it has urged the industry to begin
preparing for HACCP well before the issuance of these final
regulations. However, as this preamble amply demonstrates, a
significant number of questions were raised as a result of the proposal
that could not be answered until now. Moreover, the entire support
structure for HACCP, including the issuance of the first edition of the
Guide and the development of training courses, model plans, and other
forms of technical assistance that will be useful to the industry, and
especially to small businesses, will not be in place in time to permit
a 1-year effective date.
    On the other hand, more than 2 years does not appear at this time
to be warranted. The agency is concerned that additional time would
adversely affect the momentum for this program without adding
significantly to the likelihood that it will succeed.
    On the other hand, FDA is sensitive to the need to ensure that
small businesses will not incur an unreasonable threat to their
survival by an effective date that is too short. The agency intends to
monitor the progress of the industry after the regulations are
published and invites feedback on this subject. If FDA determines that
the effective date is placing a significant and unreasonable burden on
the industry, particularly on small businesses, the agency would be
willing to consider an extension for as much as one additional year or
some form of additional technical assistance. The agency would consider
whether the delay is needed for training, drafting plans, or taking
other measures that directly relate to the installation of a HACCP
system, or whether the time is needed to comply with existing CGMP's,
which are a prerequisite for HACCP. FDA will likely be reluctant to
give firms an extended period of time to achieve compliance with
existing requirements.
    FDA also finds that there is not an adequate basis at this time for
staggering the starts based on size or risk. The arguments for and
against staggering generally parallel those for and against exempting
firms from these regulations altogether on the basis of either size or
risk. These arguments are discussed in the section of this preamble
entitled ``Should Some Types of Processors Be Exempt?'' In summary, a
good case can be made that implementation by small firms should not be
delayed because such firms account for much of the products with
significant potential for risk, such as cooked, ready-to-eat products.
Moreover, most seafood processors are small firms. Risk-based, as
opposed to size-based, criteria for staggering firms would inevitably
be arbitrary to some degree because data from foodborne illness
reporting systems tend to skew the reports toward more easily
diagnosable illnesses.
    The comments received on the subject of staggering do not provide a
ready way to overcome these problems. Moreover, the 2-year effective
date (rather than 1 year as proposed), guidance, technical assistance,
and training that will be available to all processors should make
staggering much less necessary than it otherwise might have been.
    As stated above, however, the agency welcomes feedback on the
progress that processors are making to implement HACCP that could have
a bearing on whether staggering or an extension of the effective date
would be appropriate, especially for small businesses.
    157. Several comments asked for a form of staggering based on when
an inspection occurs before the effective date. These comments stated
that processors who voluntarily submit to inspection under the
regulations before the effective date and are advised that their HACCP
systems are not yet in compliance with the regulations should have at
least a 6-month grace period to correct the problems. The example given
in these comments was that of a processor who is so advised 1 day
before the effective date and thus is inevitably out of compliance on
the effective date.
    As reflected in the comments, inspections of HACCP systems before
the effective date will occur because a firm desires feedback and
volunteers for it when an FDA investigator arrives for an inspection.
That feedback will constitute informal advice only and will provide
training for the investigator as well as for the processor. There may
be some advantage to a processor to obtain feedback and training sooner
rather than
 
  Page 65170
later, but the results will have no formal status with the agency and
would not warrant an extension of the effective date.
    The agency has heard considerable concern that it will
automatically seek to seize or otherwise remove from commerce all
products being produced under a HACCP system that is determined to be
deficient in any respect. That concern is unfounded. The consequence of
being out of compliance with HACCP requirements, on the first
inspection after implementation or otherwise, is addressed throughout
this section. In summary, FDA's reaction will depend, as it does today,
on the overall public health significance of the deficiency.
2. Public Meetings
    158. One comment suggested that FDA conduct public meetings to
explain the requirements of these regulations to the seafood processing
industry between the publication date and effective date of these
regulations. The comment also encouraged a coordination of research,
training, and educational efforts between industry and FDA in order to
facilitate the implementation of this HACCP program.
    FDA fully agrees with the comment. It is the intent of the agency
to engage in a dialog with industry, through a combination of public
meetings and discussions at trade association meetings, to facilitate a
thorough understanding of the regulations. FDA's affiliation with the
Alliance reflects the agency's commitment to a cooperative relationship
among industry, government (Federal and State), and academia in the
areas of research, training, and technical assistance.
3. Penalties for Noncompliance
    159. A significant number of comments, from processors and trade
associations, requested that FDA address how noncompliance with the
mandatory sanitation control procedures will be handled. Several of
these comments also requested that FDA describe the penalties that can
be imposed upon a processor and its officers for: Failure of a
processor to have and implement a HACCP plan; noncompliance with
sanitation control procedures; and failure to meet minor requirements
of the regulations, such as the lack of a signature on a document. One
comment stated that FDA's legal authorities and enforcement procedures
do not provide a means for the agency to respond in a manner that is
related to the severity of deficiencies--that is, a less severe
response to a less significant deficiency.
    FDA has a longstanding practice of tailoring its regulatory
response to the facts. A deviation from any of the provisions of these
regulations, including those involving the control of sanitation,
carries the potential for regulatory action pursuant to section
402(a)(4) of the act. However, FDA intends to enforce these regulations
in a manner that focuses on those deviations that have the greatest
potential for causing harm. It is not FDA's intent to pursue regulatory
action against a product or a processor exclusively for clerical errors
or minor errors of omission. To do so would certainly not be an
efficient use of agency resources, nor would it be in the best
interests of the consuming public.
    The penalty provisions for food found to be adulterated are
described at ``Prohibited Acts and Penalties,'' in chapter III of the
act. The statutory sanctions that FDA may seek include seizure and
condemnation of a food and injunction and criminal penalties against a
person (i.e., a firm and its responsible management).
    FDA may also use existing administrative procedures, such as
warning letters and conferences with a processor, to bring instances of
noncompliance to the processor's attention as it frequently does under
its current inspection programs.
    The agency cannot state precisely what type of action it will take
when it detects a deficiency because FDA evaluates each deficiency on a
case-by-case basis to determine the public health significance of the
violation and the appropriate response.
4. Preapproval of HACCP Plans
    In the preamble to the proposed regulations, FDA tentatively
concluded that HACCP plans would not have to be submitted to the agency
or otherwise preapproved before their implementation by processors. The
reasons for the agency's tentative conclusion included: (1) HACCP plans
should be judged in the context of the processing plant, a process best
accomplished during routine FDA inspections of processing facilities;
and (2) the agency does not have sufficient resources to review HACCP
plans from all domestic and foreign seafood processors in advance of
either HACCP implementation by the processor or the conduct of HACCP-
based inspections by FDA.
    160. Approximately 20 comments addressed this issue. About two-
thirds of these comments, from consumer advocacy groups, processors,
trade associations, and State government agencies, contended that a
processor should be required to file a HACCP plan and obtain approval
from FDA before implementing the plan. The remaining comments, from
processors, trade associations, and a foreign government, agreed with
FDA's tentative conclusion that HACCP plans need not be submitted to
the agency or preapproved before they are implemented.
    Some of the comments favoring preapproval argued that FDA should
have control over the design of each plan before it is implemented to
ensure that all of the CCP's are identified, and that appropriate
records will be kept. Other comments contended that, in the absence of
a preapproved plan, a processor may implement a plan that FDA would
later judge to be inadequate, possibly raising concerns about the
product already produced under the plan.
    Several comments in opposition to preapproval argued that it would
be too expensive and difficult for both FDA and the processors (the
latter because implementation would be delayed while processors waited
for FDA to preapprove the plan and every subsequent change to the
plan). One comment expressed concern that, in formally approving a
HACCP plan, regulatory authorities would assume some responsibility for
the HACCP system of an individual processor.
    A few comments stated that HACCP plans will evolve as operations
are adjusted, based on the processor's verification activities. These
comments argued that a requirement for the preapproval of HACCP plans
would encumber a processor's ability to update its HACCP plan.
    The resource situation since the proposal was issued in January,
1994, has not changed in any way that would make the preapproval of
HACCP plans by FDA practicable. Thus, FDA's analysis of the comments
has focused on whether a lack of preapproval raises significant
implementation problems that the agency must address. The comments have
not convinced the agency that it does. FDA finds that a preapproval
system would unduly burden the agency's resources, without providing
significant advantages to the public health. The effectiveness of a
HACCP plan, including monitoring, recordkeeping, and verification, can
best be evaluated under actual operating conditions.
    The preapproval of HACCP plans is distinguishable from the
situation for low acid canned foods, where FDA reviews submissions of
scheduled processes and revisions to these processes without hinging
that review on a visual inspection of the facility. For
 
  Page 65171
low-acid canned foods, the submission relates solely to the adequacy of
the cooking process to control one hazard (C. botulinum). This process
lends itself to a paper evaluation.
    FDA agrees with the comments that suggested that a requirement for
agency approval of a processor's changes to an existing HACCP plan
would unnecessarily slow the process of plan improvement. The ability
to modify the plan quickly based on feedback from verification
activities is an important aspect of HACCP that could be degraded by a
preapproval requirement.
    With regard to the concern that the lack of plan preapproval will
expose a processor to risk of product loss if a HACCP plan, under which
it had been operating, is deemed by FDA to be inadequate, the agency
advises that there are several issues that should mitigate this
concern. First, the agency is committed to providing guidance, in the
form of the Guide, to assist processors in the development of HACCP
plans that are likely to be acceptable to the agency. The Guide will be
further discussed later in this section.
    Second, FDA is convinced that the training requirements of these
regulations will serve to inform the regulated industry about the
expectations of the agency with respect to HACCP plan content. FDA is
working closely with the Alliance to ensure that training reflects FDA
policy.
    Third, FDA recognizes and accepts that, for HACCP plans to be
effective and efficient, they must be tailored to the operating
conditions of the individual processor. Of necessity, this fact means
that there may be multiple ways to control an individual hazard.
Consequently, FDA investigators will be trained to objectively evaluate
the processor's HACCP plan from the standpoint of whether it
accomplishes its intended function (i.e., hazard control), rather than
whether it follows any preconceived model.
    Finally, as described earlier, for the HACCP program, FDA intends
to respond proportionally to deficiencies that it finds during
inspections. The nature of the agency's response will depend on the
totality of the situation and on the public health implications of the
deficiency. When circumstances permit, the processor will be given the
opportunity to make appropriate corrections.
5. Filing Plans With FDA
    161. A few comments stated that FDA should require processors to
file HACCP plans with the agency, not necessarily to obtain
preapproval, but to allow FDA to compile HACCP plans from all seafood
processors. The comments suggested that FDA selectively audit a sample
of processor HACCP plans from the file copies, perhaps based on product
risk, the presence or absence of certain CCP's, or other relevant
factors. Some of these comments recommended that FDA request voluntary
submission of plans prior to the implementation deadline.
    A file, or library, of HACCP plans of all seafood processors would
likely present various benefits from the standpoint of trend analysis
and program evaluation. The agency finds, however, that the burdens
would outweigh the benefits, largely for the same reasons that rule out
the preapproval of plans by FDA. For example, the library would have to
be updated every time that any processor updated its plan. Therefore,
FDA is not requiring that processors file their plans with the agency.
6. Third Party-Approval
    162. Several comments urged FDA to include a provision requiring
third-party approval of processors' HACCP plans, especially if
preapproval by FDA is not required. The comments suggested that the
lack of a requirement for a processor to use a disciplinary team
approach to develop a HACCP plan, as suggested by the NACMCF, coupled
with infrequent FDA inspections, could mean that a processor might
operate for years without an appropriate plan. The comments noted that
competent processing authorities are available to provide third-party
plan approvals and audits.
    On the other hand, one comment argued that a requirement for third
party HACCP plan approval is not necessary. This comment stated that a
nonregulatory first inspection would obviate any form of preapproval.
    FDA recognizes that some processors may benefit from obtaining
third-party assistance in developing their HACCP plans and in
evaluating their implementation. An independent audit is often helpful
in locating problems in a system and offers the benefit of bringing in
expertise not always possessed by many seafood processors. FDA is aware
that some processors have engaged in these kinds of arrangements in the
past and encourages their use.
    However, the agency cannot agree that third party assistance should
serve as an ``approval'' for regulatory purposes. First, to maximize
consistency and fair treatment, the responsibility for the initial
HACCP plan evaluation (outside of the processor's own verification
activities) belongs to FDA, through routine inspections of processing
plants. Second, establishing, certifying, and auditing a network of
third parties whose approvals FDA would automatically accept would
impose significant burdens on the agency that FDA could not
accommodate.
    As discussed above, FDA is engaging in significant efforts to
facilitate the development of appropriate HACCP plans. The overall high
level of policy guidance and technical assistance that will be
available to processors from FDA and a variety of other sources should
minimize the incidence of processors developing and implementing plans
that do not address those hazards that are reasonably likely to occur.
Therefore, FDA is not providing for third-party approval of HACCP
plans.
7. The First Inspection
    In the preamble to the proposed regulations, FDA tentatively
concluded that, after the effective date of these regulations, FDA's
review of processors' HACCP plans and procedures would occur at the
time of the routine establishment inspection. FDA requested comment on
whether the first HACCP review should be nonregulatory, even though the
inspection of the processor would otherwise be regulatory.
    163. Approximately 30 comments, mostly representing processors and
trade associations, addressed this issue. All but one of the comments
asked that the first review of a processor's HACCP plan and procedures
be nonregulatory. Approximately one-fourth of these comments further
asked that the second such evaluation also be nonregulatory.
    The comments stated that a nonregulatory visit by FDA would assist
the processor in determining deficiencies in its plan without fear of
enforcement action and would provide FDA investigators with hands-on
experience in a HACCP-based inspection. The comments suggested that
this arrangement would foster a cooperative spirit between the agency
and the industry and would provide the time necessary for the
investigator to discuss with the processor how the plan should be
tailored to address the details of the processor's operation.
    One comment stated that the initiation of a sweeping, new program
will generate many questions and will necessitate innumerable judgments
on the part of both processors and investigators. The comment suggested
that it would be preferable for these questions and judgments to occur
during nonregulatory visits.
    On the other hand, one comment suggested that the first review of a
processor's HACCP plan should be
 
  Page 65172
regulatory, because once the effective date has been reached,
compliance with the regulations should be enforced.
    FDA agrees with the comments that suggested that a smooth
transition to a mandatory HACCP system of preventive controls is more
likely the result of dialogue than regulatory action. For HACCP to
succeed, processors must be committed to it because they perceive
benefits to themselves from its use other than simply the avoidance of
regulatory sanctions.
    FDA has concluded that a 2-year effective date, rather than the 1-
year date that was proposed, will provide substantial opportunity for
dialogue. Moreover, the proportional response to problems that FDA
intends to employ, taking into account the newness of the system,
should obviate many of the comments' concerns about excessive
regulatory sanctions early in the process. Consequently, FDA concludes
that an officially designated, nonregulatory first inspection is not
necessary.
    FDA has concluded that 2 years is sufficient time for a processor
to train employees or secure properly trained consultants, perform a
hazard analysis, develop a HACCP plan, and implement and evaluate HACCP
control procedures that will comply with these regulations. The
additional year will enable the agency's field investigative force and
the industry to begin sorting out many of the issues that are likely to
develop during implementation.
    As stated earlier, the agency intends to perform informal HACCP
evaluations of willing processors during routine inspections conducted
during the 2-year implementation period. These evaluations should serve
to aid the development of both the industry's HACCP programs and the
agency's HACCP inspectional skills. They will also largely take the
place of the proposed type of nonregulatory inspections.
    FDA agrees with the comment that pointed out that the initiation of
this program will generate many questions and issues that will have to
be worked out between processors and the agency. Moreover, FDA accepts
that, despite the years of groundwork and the pilot programs that have
been the basis for agency policy decisions to date, there will be
details that will have to evolve over time as the program is
implemented. It is highly likely that this evolution will continue well
after the effective date of these regulations. FDA will take this
factor into account in its initial interactions with processors after
the effective date. The agency may find it appropriate to use its
regulatory discretion when it finds a basis for concern about a
processor's HACCP plan or procedures that relate to a matter about
which policy is still being formulated.
    However, the agency is concerned that there could be significant
problems if it officially designated its HACCP review during the first
inspection as being nonregulatory. First, such a step could create
unfair situations. For example, FDA could find itself in the position
of pursuing regulatory action against one processor for failure to
adequately control a particular hazard while, at the same time,
treating a similar deficiency by another processor as
``nonregulatory.'' Second, it could foster actions by firms to avoid
application of the regulations, such as name changes or reorganizations
to create the argument that the ``new firm'' is entitled to a
nonregulatory inspection. Third, it is not clear how long such a policy
should last. Arguably, the reasons in support of a nonregulatory first
inspection become much weaker in the case of a firm that goes into
business for the first time a number of years after the effective date
of the program.
    For all of the foregoing reasons, FDA has concluded that it can
accomplish the things that led it to inquire about the possibility of,
and the comments to support, designating the first HACCP inspection as
a nonregulatory inspection without making such a designation and
creating the problems that such a designation could cause.
8. Role of the FDA Investigator
    164. In the preamble to the proposal, FDA stated its tentative
conclusion that its investigators would, among other things, evaluate
the adequacy of processors' HACCP plans during routine inspections. A
few comments objected to this role for the investigators. These
comments stated that investigators should be responsible for verifying
that the processor has performed a hazard analysis; developed a HACCP
plan where warranted; implemented the HACCP plan; and recognized,
corrected, and recorded deviations from the HACCP plan. The comments
further stated that investigators should not be in a position to
challenge the adequacy or design of a HACCP plan.
    The comments pointed out that HACCP plans are tailored for each
operation, designed by either a company team or a knowledgeable
individual thoroughly familiar with the operation. They questioned
whether an FDA investigator would have the expertise to determine the
acceptability of the plan.
    Many FDA investigators already have considerable training in HACCP
and food science, and most have an academic background in the sciences.
They will also receive training during the implementation period that
focuses on compliance with these regulations. The investigators will be
exposed to the Guide, among other sources, for information about
potential hazards to be considered for particular products and
processes. This exposure, coupled with investigators' experience with
the industries with which they work, will give them a sound basis for
making screening determinations about the adequacy of processors' HACCP
plans. There is little doubt that the caliber of investigator screening
decisions will improve with experience with these regulations and with
exposure to more and varied processor HACCP programs. FDA is confident
that its field investigative staff will quickly adjust to the task of
fostering compliance with these regulations, as they have to past
initiatives.
    Where investigators are unsure about the adequacy of a processor's
HACCP plan, they will have ready access to, and will be encouraged to
consult with, district, regional, and headquarters experts.
Investigators will also be instructed to discuss with plant management
the reasons and scientific support for hazard analysis and HACCP plan
decisions that are in question. Where, because of the complexity of a
particular situation, the investigator cannot reach a decision about
the adequacy of a particular aspect of a processor's HACCP plan, the
investigator will be instructed to collect as much information,
including supporting data, as is necessary in order to facilitate
further agency review.
    Therefore, FDA concludes that the existing system adequately
addresses the concerns of the comments.
9. Disagreements and Appeals
    165. A significant number of comments, primarily from processors
and trade associations, stated that FDA should have a mechanism to
resolve differences between an FDA investigator and a processor
regarding the adequacy of the processor's HACCP plan, especially given
the subjective nature of the determination as to what the hazards are
that are reasonably likely to occur and that therefore must be
controlled through HACCP. The comments contended that a cooperative
discussion between FDA and the processor's HACCP experts would be
preferable to an enforcement confrontation, and that this discussion
would allow a processor to explain its decisions and procedures. Other
comments urged FDA to formalize an
 
  Page 65173
appeal process in the regulations that would establish a processor's
rights to contest any HACCP compliance action by FDA. Moreover, these
comments stated that FDA should not take enforcement action based on a
disagreement in the field between an investigator and the developers of
the plan.
    As previously mentioned, agency investigators will be instructed to
discuss their concerns about potential inadequacies in processor HACCP
plans with the management of the firm in an effort to learn the basis
of the firm's decisions. If the investigator retains concern that a
plan is inadequate in some regard even after discussing it with the
firm, the investigator will list findings on the report that is
provided to the management of the firm at the conclusion of the
inspection (Inspectional Observations, FDA483). The FDA483 only
represents the opinion of the investigator and is not necessarily the
final opinion of the agency. The investigator will document the
processor's response to, or explanation of, the findings listed on the
FDA483 report.
    It has been longstanding FDA policy to conduct an internal review
of investigators' inspectional findings before initiating regulatory
action. There is an opportunity at each stage for discussion between
the firm and the agency. These FDA review practices will not change
under a HACCP-based system.
    Based on the foregoing, the agency concludes that the concern
expressed in the comments about possible precipitous compliance action
as a result of the findings of FDA investigators is unwarranted. It is
worth repeating that the agency intends to engage in conflict
resolution through dialogue wherever possible and appropriate. Given
these facts, FDA has concluded that a provision for a special appeals
process for matters concerning these regulations is not necessary.
10. Status of the ``Guide''
    In the preamble to the proposed regulations, FDA discussed the
``five preliminary steps'' to HACCP recommended by the NACMCF. These
steps lead a processor through a logical process for identifying
hazards that are likely to occur in a product and for developing a
HACCP plan. In an effort to facilitate this process, especially for the
many small businesses involved in seafood processing, FDA is developing
the Guide, a draft of which was made available shortly after
publication of the proposed regulations. The draft Guide provides
information on hazards and appropriate controls by species and by
product type. The preamble said that the information contained in the
draft Guide is the kind of information that would likely result in a
HACCP plan that is acceptable to the agency. FDA received considerable
comment on the contents of the draft Guide and intends to publish a
redrafted first edition shortly after the publication of these
regulations.
    166. A number of comments expressed concern about how the Guide
would be used by FDA investigators when evaluating a processor's HACCP
plan. The commenters were troubled by the prospect that FDA
investigators would not be trained to evaluate HACCP plans that differ
from the Guide, and that, therefore, they would take exception to a
HACCP plan that deviates from the Guide. The comments stated that
industry experience with HACCP demonstrates the need to provide
flexibility so that HACCP plans can be tailored to the specific
operating conditions of a processor.
    Other comments stated that the Guide did not provide express
guidance on the meaning of the key phrase ``reasonably likely to
occur.'' The comments stated that the Guide should clarify whether it
is FDA's intention that the hazards identified in the Guide are the
``reasonably likely'' hazards under all conditions for the specific
species and processing operations that are listed.
    Several comments cautioned that the Guide should not be
characterized as a ``safe harbor,'' i.e., that FDA should not promote
strict adherence to the Guide regardless of the circumstances. Such a
characterization, they argued, could cause processors to omit the
critical hazard analysis step in HACCP plan development and risk
developing plans that do not fit the conditions of their processes.
    The Guide is, in the agency's opinion, a compilation of the best
available information on the subject of hazards and controls in seafood
processing. It contains FDA's recommendations as to the hazards that it
believes are ``reasonably likely'' to occur in specific species and
finished product forms under ordinary circumstances, but it also
provides information on rarer hazards as well. FDA recognizes that the
first edition of the Guide must clearly distinguish between the two.
    The term ``reasonably likely'' is now effectively defined in
Sec. 123.6(a). It is worth noting that, under Sec. 123.6(a), whether a
hazard is ``reasonably likely'' will depend, at least in part, on the
circumstances that exist at the time that the hazard analysis is
conducted. For example, a certain toxin might be rare, but if it starts
presenting itself in fish and becomes known, it may warrant a new
hazard analysis that may identify it as ``reasonably likely'' for a
period of time.
    FDA also recognizes that circumstances may occur in which hazards
will exist that are not identified in the Guide. These hazards may be
the result of a previously unidentified phenomenon (e.g., the
identification of a natural toxin in a species previously not
associated with that toxin) or of unique conditions in the way that the
product is handled by a particular processor (e.g., unusual equipment
or processing methods). Thus, a definitive determination of
``reasonably likely to occur'' can come only as a result of a carefully
conducted hazard analysis performed for a specific product under
specific processing conditions.
    FDA recognizes that a HACCP approach requires flexibility and will
endeavor to make the Guide consistent with such flexibility. FDA will
provide training to its investigators so that they will be prepared to
evaluate a HACCP plan that is not consistent with the Guide and to
evaluate the effectiveness of controls that differ from those suggested
in the Guide. The agency agrees that the Guide is not a ``safe harbor''
for all situations. Processors who utilize the Guide should compare it
to their own circumstances and make whatever adjustments in the
approach suggested in the Guide that are necessary.
11. Trade With the EU
    167. One comment suggested that, because of directives issued by
the EU, many processors may need early recognition of their HACCP
programs by FDA. The comment further suggested that early recognition
could be used by the agency as a means of training FDA inspectional
personnel.
    FDA is aware of the directives of the EU. The agency intends to
consider how it can best help processors respond to those directives,
among other factors, as it formulates its plans for implementation of
these regulations.
12. Measuring Program Success
    In the preamble to the proposed regulations, FDA asked for comment
on what tests should be used to measure the success of the HACCP
program as a whole, and how often those tests should be conducted.
    168. A significant number of comments stated that indicators of the
success of the seafood HACCP program could include: A reduction in the
number of seafood-borne illnesses; improved consumer confidence in
 
  Page 65174
seafood consumption; and a reduction in the number of violative
products that enter the marketplace. Several comments stated that
periodic inspections of, and sampling at, processors and importers by
FDA, State, and foreign officials, coupled with illness reporting from
a strengthened CDC program, would provide adequate verification of the
effectiveness of the program. However, two other comments stated that
the success of the seafood HACCP program cannot be measured solely by a
decrease in illnesses, because many food-borne illnesses are the result
of problems in the retail sector, which is neither covered by these
regulations nor adequately regulated by the States.
    The agency agrees with those comments that suggested that the
ultimate goal of these regulations should be the improved safety of
fish and fishery products--a reduction in the actual number of seafood-
related illnesses. FDA will continue to closely monitor the CDC system,
as well as reports of illness and death attributable to the consumption
of seafood that it receives from other sources, for trends that may
indicate an emerging problem or the intensification or modification of
an existing problem. However, the agency also agrees with those
comments that suggested that, because many of the seafood-related
illnesses are attributable to recreational or subsistence fishing or to
problems in the retail and food-service sectors (Ref. 7, pp. 2; 15; 27;
and 28), improvements in process controls that result from the
implementation of HACCP may not be fully reflected by a reduction in
the number of illnesses. Additionally, as has been previously
discussed, the CDC system encompasses only reported illnesses and is an
imperfect means of judging reductions in actual numbers of illnesses.
FDA is supportive of a strengthening of the CDC reporting system.
    Based in part on the comments received, the agency will be looking
at ways to assess a relationship between success of the HACCP program
and levels of consumer confidence, levels of violative product in the
marketplace, improvements in the quality and quantity of preventive
controls throughout the industry; and the results of FDA and
cooperating State and foreign inspections. As indicated in the summary
of the Regulatory Impact Analysis elsewhere in this preamble, FDA is
planning to evaluate key features of this program within the first
several years of implementation. This evaluation will include an
assessment of its effectiveness.
    169. One comment suggested that end-product testing should be used
by FDA for program surveillance purposes, particularly for imports.
This comment encouraged FDA to conduct statistically reliable baseline
and monitoring surveys, modeled after those used in the MSSP, conducted
by NMFS, to: (1) Determine how often consumer hazards occur; (2) set
specific goals, objectives, and operational strategies for the HACCP
program; and (3) provide a means by which the program's success can be
measured.
    FDA has historically collected and analyzed surveillance samples
during and outside the course of its routine inspections. The purposes
for these sample collections, in many ways, align with those suggested
by the comment. The agency is committed to continued surveillance
sampling and intends to use such sampling in an assessment of the HACCP
program.
    170. Another comment suggested that HACCP will only be successful
in improving confidence in seafood if the program is accompanied by a
consumer education effort that explains the benefits of HACCP. The
comment encouraged FDA to perform a baseline study that assesses the
level of consumer anxiety with respect to seafood consumption and
compare it to the results of a study that it performs sometime in the
future.
    FDA agrees that another major goal of these regulations is to
increase consumer confidence in the safety of seafood. The agency
recognizes that publication and enforcement of regulations aimed at
improving seafood safety alone will not achieve that goal. Consumers
must be informed of the benefits of producing products under HACCP
preventive controls. Within its budgetary constraints, the agency
intends to engage in a program of consumer education for that purpose.
The prospect of baseline and followup studies of consumer confidence
(or anxiety) will also be considered.
 
P. Other Issues
 
    FDA received a number of additional comments that did not address
any specific provision of the proposal, although some of them were in
response to invitations in the preamble to comment on various subjects.
1. Relationship to Other Programs
    In the preamble to the proposed regulations, FDA invited comment on
how FDA's HACCP program for seafood processors should mesh with
existing State HACCP programs for seafood, in order to avoid imposing
inconsistent Federal and State HACCP requirements. In the preamble, FDA
acknowledged that many States are under considerable pressure to cut
back on programs where there is an overlapping Federal program.
Nonetheless, the agency urged States to maintain, if not strengthen,
their seafood programs and to work with FDA to develop an integrated
Federal/State, HACCP-based seafood control program.
    171. Approximately 12 comments, representing processors, trade
associations, and State government agencies, recommended that FDA
coordinate its HACCP program with existing State and Federal seafood
control programs. Several comments emphasized that a coordinated effort
would ensure uniform application and interpretation of HACCP
principles, while preventing duplication of effort that wastes limited
enforcement resources. One comment stated that such a coordinated
effort would be facilitated if only a single HACCP plan were required
for each processing facility, rather than one that was designed to meet
FDA requirements and another that would meet State requirements.
Another comment noted that a multitude of differing HACCP regulations
would only serve to confuse processors and dilute the effectiveness of
the Federal program. The comment further recommended that FDA work with
AFDO to promote State laws and regulations that are compatible with
FDA's HACCP program.
    One comment suggested the formation of a task force representing
the food industry, FDA, USDA, and DOC to work towards the goal of
reducing regulatory duplication.
    The agency agrees that there is a need for Federal/State
partnership to facilitate the efficient implementation of HACCP
programs. FDA believes that coordination with the States would permit
both the agency and the States to leverage their inspectional
resources. FDA, as well as the States, would benefit by dividing the
workload and sharing data and other information. Such coordination
would also benefit industry through consistent inspections and
regulatory requirements.
    The agency has already begun to coordinate its efforts with the
States on seafood. The formation of the Alliance, to which AFDO is a
member, is one such endeavor. The Alliance is described in detail in
the ``Training'' section of this preamble.
    With FDA's support, AFDO passed a resolution supporting the
development of FDA/State partnership agreements at its 1994 meeting in
Portland, ME (Ref. 220). The resolution specifically recommended that
HACCP be the basis of such partnerships and noted the
 
  Page 65175
shared roles of FDA and State regulators in seafood safety, the limited
resources of both levels of government, and the existence and the
potential impact of the Alliance.
    Meanwhile, FDA is increasing its use of partnership agreements with
State enforcement agencies. For instance, the Northeast Region of FDA
has entered into a threeway partnership agreement with the Northeast
Food and Drug Officials Association and individual States to provide
industry with HACCP training at the retail level. FDA also expects to
enter into partnership agreements with States to implement HACCP pilot
programs for foods other than seafood. FDA's Northeast Region has
already signed such an agreement with the Commonwealth of
Massachusetts, and more are anticipated.
    These initiatives demonstrate the agency's desire to coordinate its
efforts with the States. The agency's cooperative efforts in the area
of HACCP reflect a trend. The agency has used cooperative efforts in
other areas, such as pesticide sampling and workplan sharing. FDA will
continue to explore ways to coordinate the Federal and State role in
the regulation of seafood.
    172. A number of comments recommended that States act as the
primary enforcement agencies for these HACCP regulations, while FDA's
responsibility would be to evaluate the States' compliance with HACCP
inspection protocols. Some of these comments suggested that such a
program could be patterned after the NSSP.
    FDA is adopting these HACCP regulations to implement and enforce
the act. While FDA plans to work cooperatively with the States in all
ways possible, the agency cannot delegate its authority under the act.
It is possible that in some aspects of seafood processing, the States
will serve as the primary enforcement agencies, with FDA serving
primarily an auditing function. However, responsibility for enforcing
the act and these regulations must remain with FDA.
    173. A number of comments, from processors, trade associations, and
one consumer advocacy group, maintained that FDA's HACCP regulations
should preempt any existing State HACCP programs. The comments
contended that Federal preemption would ultimately reduce confusion
caused by conflicting State programs, reduce costs, and promote
uniformity. Examples of the specific areas of conflict were not
provided by the comments.
    As was previously stated, FDA intends to work through AFDO and
through Federal/State partnerships to seek consistency in State
regulatory approaches to HACCP for seafood inspection and through the
NSSP process and the ISSC to attain this goal specifically for
molluscan shellfish. Moreover, processors in each State must comply
with Federal HACCP requirements if their product moves in interstate
commerce. For these reasons, the agency has concluded that there is no
need for Federal preemption of State regulatory requirements.
    174. Several comments encouraged FDA to work closely with NMFS to
coordinate FDA's program with the existing NMFS' HACCP program. The
comments noted that cooperation with NMFS would help the two agencies
avoid wasteful duplication of effort and would reduce the burden on
those firms already operating under the NMFS program.
    FDA agrees with these comments and notes that FDA and NMFS are
coordinating their HACCP programs to ensure compatibility. Nonetheless,
FDA advises that the NMFS program is a voluntary, fee-for-service
program and is likely to continue to include features that go beyond
the requirements of these regulations, especially in the area of
preventive controls for economic fraud and plant and food hygiene.
    A 1974 MOU between FDA and NMFS recognizes the respective roles of
the two agencies and commits the two agencies to consistency and
cooperation. FDA will continue to work with NMFS to maintain a
coordinated Federal effort.
2. ``Whistleblower'' Protection
    175. A few comments urged that these regulations include
``whistleblower'' protection for employees of seafood processors.
Whistleblower protection is designed to protect workers from being
fired or otherwise discriminated against for revealing wrongdoing by
their employers. The wrongdoing in this case, presumably, would likely
involve the falsification of HACCP records. The comments argued that:
``Whistleblowers are iispensable as the eyes and ears for overextended
FDA personnel making limited spot checks. The public's line of defense
will be no stronger than the shield protecting industry worker's rights
to obey and help enforce this law.''
    One concern that FDA has heard about the credibility of a HACCP
system is that important records can be falsified. It is alleged that,
without whistleblower protection, it is much less likely that the
agency will know about falsifications.
    While the agency is confident, based in part on its experience
reviewing records in the low-acid canned food program, that it can
detect falsification, FDA also expects from experience that it will be
alerted to possible wrongdoing from time to time by employees of
processors even in the absence of whistleblower protection. FDA has
received, and acted upon, confidential information from employees of
regulated firms for decades. This assistance has proven invaluable on
many occasions. The only protection to these employees available from
FDA has been confidentiality.
    The question raised by the comments is whether, in addition to the
actions against the product or the processor that would be available to
FDA as a result of violations of the requirements of the act and these
regulations, there must be specific protection for employees in order
for the program to succeed. The agency has concluded that, like other
FDA programs, this program can be successful in the absence of specific
whistleblower protection, and that congressional action would be
necessary to provide protection other than confidentiality.
    FDA cannot provide whistleblower protection in these regulations.
FDA believes--and case law bears out--that there must be a nexus
between the conduct being required by regulations and the focus of the
underlying statute, in this case primarily section 402(a)(4) of the
act. An analysis of the application of section 402(a)(4) of the act to
these regulations can be found in the ``Legal Basis'' section of this
preamble.
    While FDA has determined that an assessment of processing risks and
a plan that ensures that these risks are minimized has the requisite
nexus to section 402(a)(4) of the act, and that this nexus justifies
adopting these regulations, the agency does not see a sufficient nexus
between whistleblower protection and the prevention of adulteration of
food. If a firm retaliates against an employee who brings complaints or
other information about the firm to FDA, the implication of such an
action is that there is a condition at the firm that may need
investigation, not that the products produced by the firm are
necessarily adulterated. It may be the case that the products are
adulterated, but such a conclusion does not flow as directly from
section 402(a)(4) of the act as does the conclusion that seafood
products not produced under a HACCP plan have been produced under
insanitary conditions whereby they may have been rendered injurious to
health. For this reason, FDA concludes that it lacks
 
  Page 65176
clearcut authority to provide whistleblower protection in these
regulations.
3. Separation of Quality Control (QC) and Production
    176. A few comments requested that the regulations mandate
structural independence within a processing firm between ``HACCP QC
 quality control  personnel'' and ``production'' personnel. Otherwise,
according to the comments, ``HACCP QC personnel could still be hired
and fired by a production supervisor.''
    FDA does not believe that a change in the regulations would be
beneficial in this regard. It is important to recognize that, under
HACCP, production personnel are the observer/operators who perform the
initial monitoring of CCP's as well as the recordkeeping that documents
the results of this monitoring. The operation of the HACCP system must
involve the whole organization, not just QC personnel.
    However, it is reasonable to expect that, where practical,
verification activities should be performed by individuals other than
those who made the records in the first place. For verification, the
agency encourages the kind of organizational separation that is being
urged in the comments.
    The agency recognizes, however, that many seafood companies will
not be large enough to have distinct, independent organizational units
that can verify each other's work. The seafood industry is
characterized by small businesses. FDA has concluded that such a
requirement is not practical for this industry.
    It is worth noting that the regulations at parts 113 and 114 for
low-acid canned foods and acidified foods contain recordkeeping
requirements and some verification requirements that are similar to the
provisions of these regulations. In certain respects, parts 113 and 114
served as models for the seafood HACCP program. Those regulations have
succeeded even though they do not require a separation between QC
personnel and production personnel. Given this history, the agency is
reluctant to mandate the internal structure of seafood processors.
4. Education
    177. FDA received a number of comments on the subject of seafood
safety education. These comments were in response to an invitation in
the preamble to the proposed regulations for comments on risk reduction
activities that could be regarded as complementary to HACCP, primarily
directed toward postprocessing handling. In addition, FDA asked for
comment on appropriate education and information that should be
directed toward consumers and recreational fishermen, even though
education aimed at these groups is actually outside the scope of this
rulemaking. FDA made this request based on a recognition that HACCP
cannot reasonably be expected to solve every problem. The agency
recognizes that HACCP must be integrated into a comprehensive program
for seafood safety. Education is another important component of that
program. As one comment noted:
 
    * * * the responsibility for seafood safety should be met at
every level of seafood distribution, from harvesters to processors
to retailers, restaurants and, finally, the consumers themselves.
Regulations are not a substitute for informed and responsible
behavior and it is impractical to extend the scope of the proposed
regulations to everyone involved in handling and consuming seafood.
 
    The comments overwhelmingly endorsed the value of education. They
strongly supported education for: (1) Consumers on the handling and
purchasing of seafood, especially through brochures at the point of
purchase and information available at pharmacies, and on the
significance of HACCP, especially with regard to the government's
verification role; (2) recreational fishermen, provided by the State
during licensure (with guidance from the Federal government) and
through articles in popular fishing and outdoors magazines; (3)
subsistence fishermen; (4) retailers, including food service and
restaurants.
    FDA greatly appreciates these comments. The agency agrees that
education is an essential complementary activity to HACCP as well as to
other aspects of FDA's overall seafood program. The comments will be
taken into account as the agency develops its educational program.
    178. FDA also invited comment on whether the agency should consider
proposing to require handling instructions for consumers on the
labeling of seafood. Any action that FDA were to take along these lines
would be as part of a separate rulemaking.
    The agency received about 20 comments on this issue. Approximately
half of those comments supported the notion of mandatory safe handling
instructions. One business noted that safe handling instructions would
help to ensure the safety of a product through the distribution chain,
while another business said that such instructions had a real potential
to decrease seafood-related illness. One individual commented that safe
handling instructions would increase consumer confidence in these
products. One industry comment noted that a task force composed of
industry, Federal and State agencies, and consumers should agree on the
appropriate statement. Some comments indicated that safe handling
instructions might be appropriate for high-risk products.
    The remainder of the comments on this issue disagreed that safe
handling instructions for seafood should be required by FDA. Many of
these comments noted that most seafood products include such
instructions voluntarily. One trade association commented that such a
requirement would limit retailers' flexibility and creativity and
impose significant new costs on retailers and consumers. Most of those
comments noted that requiring new information would detract from other
labeling requirements.
    FDA appreciates these comments and the different points of view
that they represent. The agency will use the comments in its
deliberations on this issue.
    179. Finally, FDA described some of its educational efforts aimed
at medically compromised individuals about avoiding raw molluscan
shellfish and invited comment on types of education and information
activities that might be useful in this regard. The agency received
about a dozen comments on this subject.
    Most of these comments addressed whether there should be mandatory
warning labeling for raw molluscan shellfish. A majority of the
comments stated that the agency should require warning labeling. Three
comments from consumer groups stressed the need to protect high-risk
individuals. One State government commented that warnings for raw
molluscan shellfish should be tied to specific locations and times of
year. One professional association requested that the warning state
that the shellfish should only be eaten if it is certified and tagged.
    Three comments stated that warning labels would be inappropriate.
One comment noted that shellfish are not consumed in enough quantity to
be a problem. Another comment stated that warning labels would unduly
alarm those not at risk and that better channels exist for educating
those at risk.
    A few comments did not specifically address warning labels but
recommended that FDA target advice directly to compromised individuals.
Those comments suggested that FDA direct information to the medical
community involved in the treatment of those individuals.
 
  Page 65177
 
    Again, FDA thanks the comments for providing views on a matter that
is outside the scope of this rulemaking. FDA is working to provide
information to at-risk populations and its strategy on how best to do
so is evolving. The agency will take the comments into account as it
develops policy in this area.
    In summary, the agency agrees that education is an essential
complementary activity to HACCP as well as to other aspects of FDA's
overall seafood program. The comments relating to education will be
useful to the agency as it develops its education programs.
5. Traceback Mechanisms
    180. One comment recommended that FDA develop and incorporate
methods to trace back fish and mandate such traceback in these
regulations. The comment described the use of bar codes and computer-
based tracking numbers by a meat products company that enable it to
trace a specific cut of meat from a store or restaurant to its source.
    The agency acknowledges that traceback to the water would be useful
for certain species of fish associated with certain hazards, e.g.,
ciguatoxin. On the other hand, traceback to the water for scombrotoxin
would not be particularly useful, although traceback through the
distribution chain to find out the source of mishandling would be
useful. The agency urges the industry to consider this comment. FDA
advises that it is willing to explore this idea further, although not
as part of this rulemaking.
6. Tribal Governments
    181. FDA received a few comments on the effect of these regulations
on tribal governments. The preamble to the proposed regulations noted
that Executive Order 12875 of October 26, 1993, requires, among other
things, consultation with tribal governments before the formal
promulgation of regulations containing unfunded Federal mandates. While
FDA does not believe that these regulations impose an unfunded Federal
mandate, the agency wishes to foster consultation on matters that might
significantly affect tribal communities. Consequently, FDA requested
comment on the economic effect of the regulations on tribal
governments.
    FDA received no comments from tribal governments. One comment, from
a tribal business, stated that the impact of the regulations on tribal
governments will be beneficial because they will result in safe
products, positive consumer perceptions, and positive market impacts.
The other comment that mentioned this subject was from an academic, who
expressed the view that the regulations will have a major impact on
tribal groups involved in fisheries and contains unfunded Federal
mandates. The comment did not elaborate. Neither of these comments
justifies any change in these regulations.
    The agency remains interested in fostering consultation with tribal
communities as they see fit and encourages correspondence from tribal
governments.
7. HACCP System Improvements
    182. A comment urged that there be a process to continually amend
or update these regulations.
    FDA points out that such a mechanism exists in its regulations.
Under Sec. 10.30 (21 CFR 10.30), interested persons are provided with a
process by which they can petition the agency to amend and update these
regulations.
    From a less mechanistic viewpoint, the agency recognizes that these
regulations represent a pioneering program that has not been attempted
before. While the agency believes that sufficient groundwork has been
laid to adopt these regulations and to begin to implement them, FDA
also acknowledges that full scale implementation will reveal
modifications that may be necessary, both in the short and long terms.
Consequently, the agency will be highly receptive to feedback from all
parties who are affected by these regulations and will remain open to
changes that are necessary in the regulations. The ``Verification''
section of this preamble reflects the agency's interest in evaluating
this program.
    183. A number of comments asked for improvements in the foodborne-
illness reporting system operated by CDC. Some comments urged
collaboration between FDA and CDC. One comment advocated the creation
of an active reporting system.
    These comments are essentially outside the scope of this
rulemaking. Nonetheless, the agency recognizes that the strength of the
foodborne-illness reporting system bears directly on the ability of the
agency to measure the public health impact of HACCP. Both FDA and CDC
agree that underreporting is an undesirable feature of the current
system. FDA and CDC have been collaborating on an active-type reporting
system. The limiting factor, however, will always be resources.
Significant improvements in the current system will involve
considerable expense.
    184. One comment provided views on factors that would limit the
effectiveness of HACCP. The comment cited:
 
     P oor commitment by company management and lack of allocation
of necessary resources; improper training; lack of understanding and
planning in all stages of implementation of a plan ,  and failure to
recognize the need to understand the corporate culture change which
must accompany an effective HACCP program.
 
    FDA agrees with this comment but hopes that company management will
embrace HACCP and recognize the benefits that it offers to the firm.
 
III. Paperwork Reduction Act of 1995
 
    This final rule contains collections of information that are
subject to review by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1995 (Pub. L. 104-13). The title,
description, and respondent description of the information collections
are shown below along with an estimate of the annual recordkeeping and
periodic reporting 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 the
collection of information.
    Title: Reporting and recordkeeping requirements for processors and
importers of fish and fishery products under the provisions of 21 CFR
parts 123 and 1240. Procedures for the Safe and Sanitary Processing and
Importing of Fish and Fishery Products.
    Description: This regulation implements the use of Hazard Analysis
and Critical Control Point (HACCP) methodology to ensure that processed
and imported fish and fishery products are safe within the meaning of
sections 402(a)(1) and 402(a)(4) of the Federal Food, Drug, and
Cosmetic Act (21 U.S.C. 342(a)(1) and 342(a)(4)).
    Description of Respondents: Businesses or other for profit
organizations.
    Although the January 28, 1994, proposed rule provided a 60 day
comment period (extended to 90 days in the April 7, 1994, Federal
Register, 59 FR 16578) under the Paperwork Reduction Act of 1980, and
this final rule incorporates the comments received, as required by 44
U.S.C. section 3507(d), FDA is providing additional opportunities for
public comment under the Paperwork Reduction Act of 1995, which applies
to this final rule and was enacted after the expiration of the comment
period.
    Therefore, the agency solicits public comment on the information
collection requirements in order to: (1) Evaluate whether the proposed
collection of information is necessary for the proper
 
  Page 65178
performance of the functions of the agency, including whether the
information will have practical utility; (2) evaluate the accuracy of
the agency's estimate of the burden of the proposed collection of
information, including the validity of the methodology and assumptions
used; (3) enhance the quality, utility, and clarity of the information
to be collected; and (4) minimize the burden of the collection of
information on those who are to respond, including through the use of
appropriate automated, electronic, mechanical, or other technological
collection techniques or other forms of information technology, e.g.,
permitting electronic submission of responses.
    Individuals and organizations may submit comments on the
information collection requirements by February 16, 1996, and should
direct comments to FDA's Dockets Management Branch (address above).
    Prior to the effective date of this final rule, FDA will publish a
notice in the Federal Register when the information collection
requirements in this rule are submitted for OMB approval, and again
when OMB makes a decision to approve, modify or disapprove the
information collection requirements.
    Sections of this final rule require that certain businesses collect
information and keep records. Under Public Law 104-13 Federal agencies
are required to estimate the hours and costs attributable to
collections of information, as defined in 44 U.S.C. 3502(3), that are
required by Federal regulation. Table 1 sets forth an estimate of the
hours that are required annually for compliance with each section in
part 123 that requires regulated entities to collect or record
information.
 
               Table 1.--Estimated Average Annual Information Collection and Rec
ordkeeping Burden
--------------------------------------------------------------------------------
--------------------------------
                                                                               N
o. of
                           21 CFR                                No. of    respo
nses per   Hours per     Total
                                                              respondents  respo
ndent\1\  response\2\    hours
--------------------------------------------------------------------------------
--------------------------------
123.6(a),(b),(d)............................................       4,850
     1            16   77,600\3\
123.6(c)(5).................................................       4,850
     4           0.3       5,280
123.8(a)(1),(c).............................................       4,850
     1             4      19,400
123.12(a)(2)(ii)............................................       1,000
    80           0.2      16,000
123.6(c)(7).................................................       4,850
   280           0.3     470,400
123.7(d)....................................................       1,940
     4           0.1       1,940
123.8(d)....................................................       4,850
    47           0.1      22,795
123.11(c)...................................................       4,850
   280           0.1     135,800
123.12(c)...................................................       1,000
    80           0.1       8,000
123.12(a)(2)................................................          20
     1            20    4,000\3\
123.10......................................................          24
     1            24   116,400\3
 
                               \
    First year total burden hours...........................  ...........  .....
........  ...........    877,615
    Annual recurring total hours............................  ...........  .....
........  ...........   679,615
--------------------------------------------------------------------------------
--------------------------------
\1\Based on an estimated average of 280 working days per year.
\2\Estimated average time per 8 hour work day unless one time response.
\3\Nonrecurring burdens.
The above estimates include the information collection requirements in the follo
wing sections:
123.16 Smoked Fish--process controls (see 123.6(b))
123.28(a) Source Controls--Molluscan Shellfish (see 123.6(b))
123.28(c),(d) Records--molluscan shellfish (see 123.6(c)(7))
123.9 Records control general (see recording and records)
 
    The time and costs of these activities will vary considerably among
processors and importers of fish and fishery products, depending on the
type and number of products involved, and the nature of the equipment
or instruments required to monitor critical control points. The burdens
have been estimated using the typical small seafood processing firm as
a model because these firms represent a significant proportion of the
industry.
    The burden estimate in Table 1 includes only those collections of
information under this rule that are not already required under current
statutes and regulations and are being added by this rule. For example,
the current good manufacturing practices provisions in 21 CFR part 110
already require that all food processors ensure good sanitary practices
and conditions, monitor the quality of incoming materials, monitor and
control food temperatures to prevent bacterial growth, and perform
certain corrective actions and verification procedures.
    In addition, the estimate does not include collections of
information that are a usual and customary part of businesses' normal
activities. For example, the tagging and labelling of molluscan
shellfish (Sec. 1240.60) is a customary and usual practice among
seafood processors. Consequently, the estimates in Table 1 accounts
only for new information collection and recording requirements
attributable to part 123.
    There are no additional capital costs associated with this
regulation that are not also attributable to the preexisting
requirements of part 110.
    FDA estimated in the proposal that the total burden to all
respondents would be 2,826,850 hours. That estimate, however,
significantly overestimated the burden because it included activities
performed by domestic processors that are not related to information
collection and recordkeeping, and, more significantly, did not account
for existing regulatory requirements and usual and customary business
practices, as described above.
    The agency has recalculated the recordkeeping burden in a manner
that is more consistent with the intent of Public Law 104-13.
Therefore, the burdens presented in Table 1 are those actually
associated with collecting and recording the pertinent HACCP
information. The burdens for HACCP plan development, plan reassessment,
and record review are also included in the recalculated burden. In
estimating the time for the preparation of a HACCP plan, the agency
believes that a significant portion of the training hours can also be
characterized as time spent on preparation of the plan.
    Additionally, the agency recognizes that the regulations will place
a burden on seafood importers. For this reason, FDA has included in the
burden
 
  Page 65179
estimate the time necessary for importers to develop a written
verification plan, verify compliance of imports, and keep records of
their verification activities.
    Few comments provided information on the number of hours that a
processor would expend on information collection and recordkeeping, as
described in the preamble to the proposed regulation. One comment
estimated that the annual burden would vary from 200 to over 700 hours,
depending on the type of product, and another comment suggested that
one hour per day, or 365 hours per year, would be required. One comment
stated that the agency's estimate of 650 hours per year was reasonable.
Another comment estimated four to five hours per day, or 1,820 hours
per year as the likely burden. None of these comments provided
information to support how the commenters arrived at their estimates.
    It seems likely that the estimates suggested by the comments were
calculated based on the same errors that the agency made in the
proposal, that is, by combining the burdens associated with HACCP data
collection and recordkeeping with other HACCP activities unrelated to
information collection and recordkeeping, with usual and customary
information collection and recordkeeping practices, and with
collections of information required by the provisions of the Federal
Food, Drug, and Cosmetic Act and implementing regulations. This
conclusion is supported by the fact that some of the comments expressed
agreement with the agency's calculations. For these reasons, FDA
concludes that no changes in its corrected calculations are necessary
to respond to the comments.
 
IV. Economic Impact
 
A. Introduction
 
    In accordance with Executive Order 12866 and the Regulatory
Flexibility Act, FDA has examined the impacts of the final rule.
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 effects;
distributive impacts; and equity). The Regulatory Flexibility Act (Pub.
L. 96-354) requires analyzing options for regulatory relief for small
businesses.
    The Unfunded Mandates Reform Act (Pub. L. 104-4) requires (in
section 202) that agencies prepare an assessment of anticipated costs
and benefits before proposing any rule that may result in an annual
expenditure by State, local and tribal governments, in the aggregate,
or by the private sector, of $100,000,000 (adjusted annually for
inflation). The Unfunded Mandates Reform Act also requires (in section
205) that the agency identify and consider a reasonable number of
regulatory alternatives and, from these alternatives, select the least
costly, most cost-effective, or least burdensome alternative that
achieves the objective of the rule. Even though FDA finds that the
costs of this final rule may be below $100 million a year, estimating
these costs is a difficult task involving uncertainties. This analysis,
together with the preamble published in the Federal Register and
supporting analysis and materials, constitutes a final RIA. Therefore,
FDA has treated the final rule as an economically significant
regulatory action under Executive Order 12866. Consequently, the agency
has completed this full RIA which demonstrates that this rule is
consistent with the principles set forth in the Executive Order and in
these two statutes. In addition, this document has been reviewed by the
Office of Management and Budget as an economically significant
regulatory action under Executive Order 12866. FDA has concluded that
the net benefits of this rule (benefits minus costs) are largest for
the regulatory option selected as specified by Executive Order 12866.
FDA has also concluded that, pursuant to the Unfunded Mandates Act, the
regulatory option selected is the least burdensome option to accomplish
the goal of controlling all physical, chemical, and microbiological
hazards reasonably likely to be present in seafood.
    As a part of the preamble to the proposed regulation, FDA published
a summary of the Preliminary Regulatory Impact Analysis (PRIA) and
placed on file with FDA's Docket Managements Branch the complete PRIA.
In addition, FDA has placed the full final Regulatory Impact analysis
on file at Dockets Management Branch (address above).
    FDA has fully reviewed the information on which the PRIA was based,
the comments on the PRIA, and other available information on the costs
and benefits of HACCP for the seafood industry. Based on this review,
FDA has arrived at two estimates of the costs in this final rule as
well as upper and lower estimates of benefits. As can be seen in the
agency's summary of costs and benefits are summarized in Table 2, FDA
believes that the costs of the final rule will range from $677 million
to $1.488 while the benefits will range from $1.435 to $2.561 billion.
In its final analysis, the agency maintains that the total benefits of
this mandatory seafood HACCP rule will exceed the total costs.
Regulatory Options
    The agency raised and received comment on a number of regulatory
options in the PRIA. The most significant two options raised were
regulating only high risk products or the most serious hazards and
providing regulatory relief for small businesses. The first option is
inconsistent with the objective of this regulation, to control all
physical, chemical or microbiological hazards reasonably likely to be
found in seafood products. Although FDA has not granted relief only for
small business, the agency has extended the compliance date for all
firms from 1 year to 2 years.
 
                                  Table 2.--Summary of Total Costs and Benefits
--------------------------------------------------------------------------------
--------------------------------
                                                                  Costs adjusted
 
                                                  Costs from FDA     from NMFS
  Benefits lower  Benefits upper
                      Year                            models           model
    (millions)      (millions)
                                                    (millions)      (millions)
--------------------------------------------------------------------------------
--------------------------------
1...............................................             $69            $162
             $73            $108
2...............................................              42            9173
             108
3...............................................              41              83
              85             156
4...............................................              38              80
              87             158
                                                 -------------------------------
--------------------------------
      Total\1\..................................             677           1,482
           1,435          2,561
--------------------------------------------------------------------------------
--------------------------------
\1\The total defines the total discounted costs and benefits beyond the 4th year
 and discounted at 6 percent.
 
  Page 65180
 
B. Costs
 
    In the PRIA, FDA was reluctant to rely only on results of the
limited experience with HACCP in the seafood industry. FDA balanced the
reports of some seafood firms, which showed that the costs of HACCP
were low, with a study of the costs of HACCP that had been done under
contract with NMFS by A. T. Kearney, Inc. (Contract No. NA88AA-H-
SK006). This study showed significantly higher costs (as reflected in
the range of cost estimates summarized above) but had several flaws
that engender skepticism about its results as well. For example, none
of the plants that were the subjects of the study had actually
implemented HACCP, and the system whose costs were studied was
significantly more demanding than the system embodied in the 21 CFR
part 123. Despite these facts, the cost estimates in the PRIA were
based on the results of the NMFS study because FDA considered it to
represent the best evidence available at that time.
    As explained more fully below, FDA used modeling technique and the
experience reported about seafood firms to produce estimates that are
in general agreement and that are approximately one-fourth of those
estimated in the NMFS study reported in the PRIA.
    In estimating the costs in this PRIA, there are three checks that
have helped ensure the accuracy of the costs that would be imposed by
adoption of this regulation. The first is the cost comments, but these,
the agency's analysis revealed, were in most cases rather general, not
well supported, and of only marginal assistance. The second is modeling
by FDA experts based on their experience with the use of HACCP in the
seafood industry; working with aquatic species and the public health
problems that they present; inspecting and studying both seafood plants
and low acid canned food plants (which have operated under HACCP
principles for almost two decades); and participating in the FDA-NMFS
seafood pilot. The results of this modeling are detailed below. The
third source is information that FDA received from firms that have
actually implemented HACCP. Even though FDA finds that the costs of
this final rule may be below $100 million, estimating these costs is a
difficult task involving some uncertainties. The agency recognizes that
the rule may affect in a material way a sector of the economy.
Therefore, FDA has treated the final rule as a significant regulatory
action under Executive Order 12866. Consequently, the agency has
completed a full Regulatory Impact Analysis.
    The agency received approximately 230 comments on issues involving
the PRIA. These comments are fully summarized and addressed in the full
RIA which is included in the record as Reference 229. However, because
of the problems with these comments noted above, FDA did not generally
use them in the revised estimates reported here and in the full RIA.
The reasons for this are more fully explained in the full RIA.
    These adjusted NMFS model cost estimates result in per plant costs
for domestic manufacturers of $23,000 in the first year and $13,000 in
subsequent years. Total costs for compliance with these regulations
using the adjusted NMFS data are shown in Table 3. FDA has also
concluded that the PRIA represents a reasonable upper estimate of the
costs of HACCP. Table 3 also summarizes the specific cost estimates
that FDA arrived at using data from the NMFS model with cost
refinements received from commenters and FDA seafood industry experts.
 
         Table 3.--Disaggregated Costs From Adjusted NMFS Model
------------------------------------------------------------------------
                                                                 Million
------------------------------------------------------------------------
1st Year:
  Domestic manufacturers and Importers........................      $112
  Major plant repair and renovation...........................        13
  Sea Grant expertise.........................................         1
  Repackers and warehouses....................................        14
  Harvesters for rejected raw product.........................         1
  Shellfish vessels...........................................         3
  Foreign processors..........................................        18
                                                               ---------
      Total...................................................       162
                                                               =========
2d Year:
  Domestic manufacturers......................................        65
  Sea Grant expertise.........................................         1
  Repackers and warehouses....................................        14
  Shellfish vessels...........................................         1
  Foreign processors..........................................        10
                                                               ---------
      Total...................................................        91
                                                               =========
3d Year:
  Domestic manufacturers......................................        65
  Sea Grant expertise.........................................         1
  Repackers and warehouses....................................        14
  IQF Shellfish plants........................................         3
                                                               ---------
      Total...................................................        83
                                                               =========
4th Year:
  Domestic manufacturers......................................        65
  Sea Grant expertise.........................................         1
  Repackers and warehouses....................................        14
                                                               ---------
      Total...................................................       80
Total discounted costs beyond the 4th year and discounted at 6 percent,
 the costs are $1,482 million.
------------------------------------------------------------------------
 
1. Alternative Model for Estimating the Costs
    In addition to the cost estimate based on the NMFS modeling, FDA is
presenting a second cost estimate for these regulations. The
uncertainties associated with the choices made by seafood processors to
control hazards justify providing a range of potential costs based on
more than one model.
    In examples created by seafood experts within FDA, the cost of
compliance with these regulations was estimated for two small
hypothetical seafood processors that the agency believes to be
representative of a significant portion of the seafood industry. One of
the plants is assumed to be in substantial compliance with existing
CGMP requirements. Therefore, the costs experienced by that plant are
attributable exclusively to the establishment and maintenance of a
HACCP system. The other plant has some CGMP deficiencies that the
agency believes are typical of those displayed by seafood processors.
This plant is identical to the first plant except for the CGMP
deviations. The costs calculated for this second plant represent the
cost associated with the establishment and maintenance of HACCP as well
as costs associated with the correction and monitoring of sanitation
conditions.
    The models concern two plants that cut and package tuna which is
received frozen and that also distribute orange roughy fillets. The
complexity of the processing operations, and the nature and number of
hazards, are assumed to be roughly equivalent to that of the other
types of operations. FDA recognizes the difficulty in validating these
certain record reviews as enumerated in Sec. 123.8(a)(3). This
have costs that are significantly below the averages estimated by means
of the NMFS report. As discussed later, data received from firms that
have implemented HACCP are generally supportive of the results of this
modeling.
    a. Small plant cost example 1. This is the example of a firm that
is a processor of frozen tuna steaks and distributor of imported orange
roughy fillets who receives all fish frozen. This plant is
 
  Page 65181
located in a major seafood processing region, so there is no need for
plant personnel to travel to other cities to receive training as it
would be available locally. This processor operates 280 days per year.
The plant manager is paid $15 per hour and production workers are paid
$8.50 per hour. No food safety hazards are reasonably likely to occur
in orange roughy, so a written hazard analysis shows hazards for tuna
only. This processor has no need to make CGMP improvements so the plant
costs are limited to the following:
    (1) Training--($760). This is calculated as follows: $400 tuition
plus the opportunity cost of training time ($24 hours x $15 per hour).
The processor is expected to do most of the hazard analysis during the
class.
    (2) HACCP Plan Refinement--($240). This is calculated by taking 16
hours billed at $15 per hour using the FDA Fish and Fishery Products
Hazards and Controls Guide.
    (3) Plant Sanitation Audit--($0). This is done 3 times daily for 20
minutes each time. However, because the firm is modeled as being in
compliance with existing CGMP's, it is assumed that these audits are
already being done. It is assumed that there is a negligible cost for
recordkeeping.
    i. Critical Control Points (CCP). (4) Receiving CCP (histamine)--
($3,200). This processor gets a freezing log from the tuna harvester
and makes a visual check of the fish to see that they are frozen. The
processor keeps a copy of the freezing log and makes a note of the
visual check. The fish are then transferred to a plant freezer. The
monitoring takes 15 minutes per lot for 4 lots per day. Similar
monitoring is already occurring and the marginal cost for the
recordkeeping is negligible.
    The processor drills a representative sample of each lot and
performs an organoleptic examination for decomposition of the tuna. It
is assumed that this monitoring is not being done previous to this
regulation and takes 20 minutes per lot for 4 lots per day. Monitoring
is billed at $8.50 per hour. Also, there is a cost for a new drill
($50) and it is assumed that recordkeeping costs are negligible.
    (5) Cutting CCP (metal fragments)--($0). A worker checks the saw
blade at every break to look for broken saw teeth and keeps a log of
checking on the teeth. Monitoring takes a few minutes per break. It is
assumed that there is a negligible marginal cost for the monitoring and
recordkeeping. Fish is weighed, packed, labeled and returned to the
freezer.
    ii. Corrective actions. (6) Problems with incoming product--($0).
It is expected that product rejects in the first year would be higher
but they would return to current levels in the second year as
harvesters became aware of the processor's new requirements. The total
cost for the industry is $1 million for the first year and zero in the
following years. Because harvesters and not processors bear the cost of
rejected raw product, this cost is included in Table 4 as a separate
line item and not in Table 3 which includes only costs borne by
processors.
    (7) A saw tooth breaks every two years--($20). A worker needs to
examine potentially affected product every 2 years. This is expected to
take 4 hours billed at $8.50 to check two hours worth of cutting.
    iii. Verification. (8) Record review--($400). This involves a
review of five sanitation records, five receiving records, and a log
book for the cutting operation. These are expected to be very simple
(e.g., check mark records). Consequently, this review is expected to
take 30 minutes per week billed at $15 per hour.
    (9) Review hazard analysis & HACCP plan--($60). This is expected to
take 4 hours per year at $15 per hour.
    (10) Administrative changes--20 percent of all of the other costs
in the first year and 10 percent in the second year.
    b. Small plant cost example 2. The categories of costs that are
different from Example 1 are explained below.
    (1) Plant Sanitation Audit--($2,800). This will need to be done 3
times daily taking approximately 20 minutes for each audit. It is
assumed that some minimal sanitation assessment is already being done
once per day, but an additional 40 minutes would be required to perform
three adequate audits. Again, it is assumed that there is a negligible
cost for recordkeeping.
    (2) Extra Equipment Cleaning and Sanitizing--($2,480). This is
assumed to take 1 hour per day billed at $8.50 per hour. Also,
additional water, and cleaning and sanitizing materials are assumed to
cost $100.
    (3) Eliminate Fly Infestation--($330). Torn screens need to be
repaired taking 2 hours billed at $8.50 per hour. Also, screening
materials assumed to cost $15 are needed. An exterminator to apply
pesticides costs $300.
    Table 4 represents the models described above in tabular form.
 
                                      Table 4.--FDA Models of Small Plants
--------------------------------------------------------------------------------
--------------------------------
                                                                Small plant 1 (n
o GMP      Small plant 2 (GMP
                                                                       costs)
                 costs)
                          Category                           -------------------
--------------------------------
                                                                 Year 1      Yea
r 2--      Year 1      Year 2--
--------------------------------------------------------------------------------
--------------------------------
Training....................................................          760
     0          760            0
HACCP plan refinement.......................................          240
     0          240            0
Sanitation audit............................................            0
     0        2,800        2,800
Receiving CCP...............................................        3,200
 3,200        3,200        3,200
Cutting CCP.................................................            0
     0            0            0
Sawtooth monitoring.........................................           20
    20           20           20
Record review...............................................          400
   400          400          400
HACCP plan review...........................................           60
    60           60           60
Equipment cleaning..........................................            0
     0        2,500        2,500
Eliminate pests.............................................            0
     0          330            0
Administration..............................................          940
   370        2,100          900
    Per plant costs.........................................       $5,600
$4,000      $12,400       $9,900
--------------------------------------------------------------------------------
--------------------------------
 
    In order to estimate an average plant cost from these FDA model
plants, FDA assumed that, based on the results of the agency's 1990/
1991 survey of the seafood industry, 20 percent of small firms are
similar to the model plant that requires some GMP improvements (Small
Plant 2) and that 80 percent of the small firms are similar to the
model plant that is in compliance with current CGMP's (Small Plant 1).
The agency has also assumed that the cost of
 
  Page 65182
compliance for large firms is the same as that of small firms. There
are offsetting considerations that have led the agency to make this
assumption in this model. For example, agency experience suggests that
it is likely that small firms will, on average, have larger sanitation
costs and thus incur greater expenses to rectify existing CGMP
deviations. Large firms, on the other hand, are more likely to have a
greater number of products and processing lines, resulting in greater
costs of plan development and monitoring. However, the agency believes
that large firms are more likely to already have preventive controls,
formalized sanitation programs, and record keeping systems in place
than small firms. Additionally, large firms are more likely to take on
new monitoring regimes with their existing quality control and
production staffs than are small firms. The agency believes that these
considerations would counteract each other and should result in fairly
equal costs for large and small firms.
    To complete the FDA model, FDA assumed that exporters (one- half of
the 1,000 large firms) would only need to spend $1,000 in order to
comply with this rule. Combining the two plant total costs as reported
in Table 4 and weighting the proportion of the industry they are
assumed to represent, average plant costs are estimated to be $6,400 in
the first year and $4,800 in subsequent years.
    The foreign processor costs associated with this rule and passed on
to U.S. consumers are estimated to be 13 percent of the average
domestic plant costs. The total cost of this regulation using this
method of cost modeling is $71 million in the first year and $38
million in the fourth year and beyond.
    Total costs for compliance with these regulations using the FDA
model are shown in Table 5.
 
              Table 5.--Disaggreagated Costs From FDA Model
------------------------------------------------------------------------
 
------------------------------------------------------------------------
1st Year Costs:
Domestic manufacturers and importers..........  $32 million.
Major plant repair and renovation.............  13 million.
Sea Grant expertise...........................  1 million.
Repackers and warehouses......................  14 million.
Harvesters for rejected raw product...........  1 million.
Shellfish vessels.............................  3 million.
Foreign processors............................  5 million.
Total.........................................  69 million.
2d Year Costs
Domestic manufacturers........................  $ 23 million.
Sea Grant expertise...........................  1 million.
Repackers and warehouses......................  14 million.
Shellfish vessels.............................  1 million.
Foreign processors............................  3 million.
    Total.....................................  42 million.
3d Year Costs:
Domestic manufacturers........................  23 million.
Sea a grant expertise.........................  1 million.
Repackers and warehouses......................  14 million.
IQF Shellfish plants..........................  3 million.
    Total.....................................  41 million.
4th Year (and subsequent years) Costs
Domestic manufactures.........................  23 million.
Sea Grant expertise...........................  1 million.
Repackers and warehouses......................  14 million.
    Total.....................................  38 million.
    Total Discounted Costs:
    Beyond the 4th year and discounted at 6
     percent, the costs are $677 million.
------------------------------------------------------------------------
 
    There are a number of explanations that would account for the
uncertainty between the FDA and NMFS models. Virtually all of the
difference can be explained by the two different estimates of what it
would take to come into compliance with 21 CFR part 110 (FDA's CGMP
regulations). In the case of the NMFS study, the contractors estimated
the cost of coming into full compliance with all CGMPs. Using this
methodology, they found that approximately 80 percent of the plants
were out of compliance. On the other hand, the FDA model uses the
results of FDA's own survey of the industry, which only listed plants
as being out of compliance if the CGMP violations were related to
potential contamination of the seafood product. In this case, FDA found
that only about 20 percent of the firms were out of compliance. In
addition, the FDA cost model assumes the simplest, least expensive
corrective action to solve the CGMP violation. The NMFS model did not
use the same approach in all cases.
2. Other Cost Reports
    Reports received by FDA on the cost of implementing HACCP discussed
below appear generally to support the results of FDA modeling across
the seafood industry. While the modeling was limited to certain types
of small operations, the firms for which FDA has information on
reported costs represent a cross section of processing operation types,
including canned, fresh, frozen, smoked/salted, molluscan shellfish,
and cooked, ready-to-eat products as well as warehouses and repacking
operations. It should be noted that these costs are reported only as an
additional source of information. They were not used to generate FDA's
model plants.
    The cost information obtained from industry includes responses to a
1991 evaluation questionnaire from four firms that participated in the
FDA/NOAA seafood HACCP pilot in 1990-1991. It also includes information
provided to FDA from seven firms through the assistance of the National
Food Processors Association. (These 7 firms operate a total of 44
processing plants.) It further includes information from two seafood
trade associations, the National Fisheries Institute and the New
England Fisheries Development Association
 
  Page 65183
(NEFDA), which provided FDA with summary information about member firms
that had implemented HACCP systems. The 2 seafood trade associations
provided information on 16 firms. NEFDA operated a HACCP pilot with
member firms through a Federal grant. All of this information was
received by FDA before the publication of the proposed regulations and
was reported in the PRIA. After the publication of the proposal, FDA
received information from a large processor-exporter on its HACCP
start-up costs. This processor reported start up costs of $1,000 per
plant. In total, FDA has information on 86 plants (Refs. 129 and 223).
    Many of these firms have implemented HACCP as participants in
either pilot programs, the NOAA fee-for-service program, or the State
of Alaska program, and therefore their HACCP systems have been subject
to some form of third party verification. Virtually all of these plants
have developed HACCP plans, many of which included critical control
points for quality or economic fraud or both in addition to safety. In
this respect, many firms implemented a more extensive form of HACCP
than is being mandated by FDA.
    More complete information on start-up costs received from 22 firms
who have implemented HACCP is summarized in Table 6. Some of these
costs are for multi-plant firms and some for firms operating only one
plant.
 
                        Table 6.--Start-Up Costs
------------------------------------------------------------------------
          No. of firms                      Start-up costs ($)
------------------------------------------------------------------------
4...............................                        <1,000
15..............................                   1,000-5,000
1...............................                  5,000-10,000
1...............................                 10,000-15,000
1...............................                       >20,000
------------------------------------------------------------------------
 
    FDA notes that there are several uncertainties with these data. The
agency does not have sufficient information to extrapolate the costs
observed by these firms to the entire industry. FDA also does not know
the extent of previous HACCP-type activities in these firms so that
they may have different incremental costs than the industry average.
Additionally, for subsequent year costs, some of the firms reported
costs that exceeded the start-up costs shown in the table although some
were below, and it is not clear if costs that might be incurred in
order to comply with CGMP's are represented.
    Nevertheless, the range of reported costs, are consistent with the
FDA model for a processing operation that does not incur such costs.
Notably, the estimates developed for NMFS of the costs of operating
HACCP systems for small businesses are consistent with the FDA model
and with the reports to FDA by trade associations discussed above.\1\
Thus, three independent sources of information suggest that annual
HACCP costs, at least for small businesses, are within a range of
$3,000 to $6,000 per plant if sanitation costs are not included.
Although the HACCP cost estimates made for NMFS did not include certain
aspects of a HACCP system such as HACCP plan development, plan
verification, and taking corrective actions, the estimates did include
the costs of operating HACCP systems for quality and economic
adulteration in addition to safety. These costs were not included in
the NMFS cost estimates reported here. The FDA HACCP system involves
safety only and is therefore less expensive.
 
    \11\The costs referred to here are those estimated for NMFS for
the type of HACCP system it was studying. For the purposes of the
PRIA and RIA, FDA made adjustments to the costs estimated for NMFS
so as to be consistent with FDA's own regulation. These adjusted
costs from the NMFS models are the estimates presented earlier in
this document.
---------------------------------------------------------------------------
 
    It is also worth noting that three independent sources (FDA's own
inspection experience, NMFS inspection experience with plants
purchasing its voluntary inspection services, and the contractor's
report for NMFS) confirm the existence of sanitation deficiencies in
some seafood plants. Because FDA holds that these conditions must be
corrected under existing requirements, the costs associated with these
corrections will be borne by processors regardless of whether
sanitation provisions are included in the seafood HACCP regulations or
somewhere else. Sanitation controls for processors may address a number
of enteric pathogens discussed elsewhere in this analysis including
Salmonella, Shigella, hepatitis A, L. monocytogenes, campylobacter, and
C. botulinum. Contamination may come from either the raw product or
from poor hygiene practices such as insufficient control of vermin
(flies and rodents) or insanitary water. In addition, poor sanitation
may cause contamination of the product with pesticides, lubricants,
cleaning compounds, or other toxic substances because of improper
labeling, storage or use. The system in the seafood HACCP regulations
is based on the monitoring of sanitation conditions by processors. FDA
is not aware of any method for processors to take control of the
sanitation conditions within their plants other than by a method that
involves routine monitoring. Recording the results of these
observations, as required by the regulations, need involve only minimal
additional cost.
3. Seafood Prices
    A number of comments referred to the effect that the regulation
will have on the price of seafood that consumers experience at the
retail level. In the PRIA, it was presumed that most of the cost of
compliance of the proposed regulations would be passed on to consumers.
In the PRIA, it was calculated that if the domestic industry passed on
to consumers all of the costs estimated in the PRIA, prices for
domestically produced seafood would increase by less than 1 percent in
the first year and less than one-half of 1 percent in succeeding years.
It was noted in the PRIA that price changes of such magnitude are
unlikely to have a significant impact on general seafood purchases.
    Some commenters claimed that all of the cost of the regulation
would be born by processors, and that none of the increase in cost
would be passed on to consumers. These commenters explained that
seafood is currently at a disadvantage compared to other flesh foods
for consumers' food dollars because seafood has a higher price per
pound. If the relative price of seafood were to increase further,
consumers would eat less seafood. The commenter also explained that
domestic seafood processors are at a competitive disadvantage compared
with seafood that can be imported at low cost (i.e., lower wages). If
domestic processors were to raise their prices, seafood imports would
take an even larger part of the seafood market away from domestically
produced seafood.
    Other comments said that processors will pass on all of the cost of
the regulation, and that the regulation will cause the consumer price
of seafood to rise. Some said that the price increase would be large
enough to cause a decrease in seafood consumption.
    Both theories have some merit, although neither is completely
correct. The agency agrees that, all other things remaining the same,
an increase in the price of seafood will decrease seafood consumption
and increase the consumption of other fresh foods. However, the
decision of a consumer to purchase a product depends on a number of
factors.
    Seafood includes many invertebrate and vertebrate species which
vary in price per pound, often by over 100 percent, for a particular
species (depending, in part, on seasonal supply). Such diversity,
compared with
 
  Page 65184
meat and poultry, makes it clear that there is not perfect substitution
among the flesh foods. Nevertheless, data bases on food consumption are
equally clear at showing that as people have increased their
consumption of various seafood products, they have reduced their
consumption of meat and poultry.
    There are other nonprice factors in the consumption decision. A
consumer survey found that taste, quality, and freshness were rated
above price (``moderately important'') in decisions to order seafood in
a restaurant or to purchase for preparation at home. In a survey of
retailers' experiences, consumers ranked quality ahead of price in
making seafood selections and rated the need for information on cooking
as a concern equal to price (Refs. 244 and 225).
    Another relevant consideration is the fact that a disproportionate
percentage of seafood is consumed in restaurants as a luxury item where
the cost of the raw material is not as important a factor in the
purchasing decisions made by these consumers.
    All of this information is consistent with other data in this
analysis that suggests that a 1 percent change in price results in less
than one-half of one percent change in seafood consumption.
    Another major factor that lessens any competitive cost advantage
meat and poultry products might experience from an increase in seafood
cost is that USDA is proposing similar HACCP regulations for meat and
poultry. USDA's proposal, if finalized for meat and poultry products,
suggests that all segments of the flesh food market may face cost
increases in the near future. It is entirely possible that the price of
seafood relative to meat and poultry will not change. The agency agrees
that some seafood imports have a cost advantage over domestically
produced seafood, primarily due to lower labor and capital costs of
production. However, because the regulation applies to imports as well
as domestic products and because importers from EU member nations will
soon be under HACCP requirements and experiencing increased costs, it
is reasonable to assume that the price of imported seafood relative to
domestic seafood will not change.
    In the short run, the ability of producers to pass on cost
increases is largely determined by the elasticity of demand (the degree
to which consumers reduce their consumption of a good in response to a
given increase in price) and the elasticity of supply (the degree to
which producers increase their production of a good in response to a
given increase in price). The elasticity of demand is determined in
turn by, among other things, the presence or absence of close
substitutes. Thus, for example, if there are close substitutes and the
price of a good goes up, consumers will not continue to consume the
higher priced good but switch to one of the substitutes.
    If manufacturers know that consumers will not switch to a
substitute when there is a price increase, then they are free to pass
along all of the increased costs (from complying with the regulation)
in the form of price increases. However, where there are close
substitutes for seafood, such as other flesh foods, consumers respond
to price increases by reducing their consumption of the high priced
good. Rather than attempting to pass on all of the costs of the
regulation in the form of higher prices, producers must accept reduced
profits and bear some, if not all, of the burden of the cost increase.
    In very competitive markets, such as the market for flesh food,
where meat, fish, and poultry are considered substitutes, producers
bear the entire burden of any increases in fixed costs. Fixed costs are
costs that do not change, despite the size of the firm and changes in
the level of output. Examples of fixed costs are costs of plant,
equipment, and management; much of these costs are expected to be borne
by processors. Because large firms spread fixed costs over larger
output, they may be able to pass on these costs when smaller firms
cannot.
    In addition, also in the short run, producers may bear some portion
of the variable costs that cannot be profitably passed on to consumers.
Variable costs are costs that vary with changes in the amount of
output. Examples of variable costs are costs of raw materials and
hourly labor. However, it is likely that much of the variable costs
will be passed on to consumers.
    When firms in a competitive market cannot pass on all of a cost
increase in the short run, profits decline. Beyond some point profits
become either so low or negative that the firm is forced to close
(discussed more fully in the Regulatory Flexibility Analysis below). In
the long run, the exit of these marginal firms reduces the industry
supply (of seafood) and permits the remaining firms to raise prices to
cover the full costs of production, both variable and fixed costs.
Thus, in the long run, seafood prices will rise by the full cost of the
regulation.
    A few comments requested a better analysis of price changes. These
commenters criticized the approach used to estimate price increases in
the Executive Summary of the PRIA. Rather than dividing the estimated
domestic cost of the regulation by the total domestic production, the
commenters suggested estimating price changes for each market segment.
The advantages of this approach are that different types of seafood are
treated separately (the change in the price of raw tuna might be very
different from the change in the price of ready-to-eat shrimp cocktail)
and that different sized firms are treated separately (small firms may
be forced to raise prices more than large firms).
    FDA agrees that this method of determining price changes is more
legitimate than the method employed in the PRIA. However, FDA did not
receive any information from commenters that would enable the agency to
calculate prices in this manner. It is worth noting, however, that the
contractor that performed the study upon which many of the estimated
costs in this RIA are based did take product type into account when
estimating cost increases. That contractor estimated a range of cost
increases from negligible to 1.3 percent, depending on the product.
Again, it is important to note that that study included costs for the
control of types of hazards not covered by this final regulation.
    Finally, while the methodology used in the PRIA might not produce
accurate price changes, it suggests that overall price increases due to
this regulation could well have a negligible effect on demand.
 
C. Benefits
 
    In the PRIA, FDA estimated that the proposed option, which is being
adopted in this final rule, would: (1) Reduce the amount of foodborne
illness that results from consumption of seafood and; (2) generate
significant nutrition benefits as a result of the increased consumption
of seafood (brought about by a decrease in consumer anxiety) with a
concomitant decrease in the consumption of meat and poultry; (3) reduce
the amount of rent seeking (rent seeking is a term economists have
applied to activities which do not contribute to societal welfare but
only seek to transfer resources from one party to another); and (4)
generate export benefits by allowing U.S. exporters to continue to
export to countries requiring HACCP.
    The last benefit, the export benefit, is characterized as the
benefit to firms exporting to countries that require federal oversight
and certification of HACCP programs. In addition to the benefits cited
in the PRIA, the agency is addressing benefits derived from reduced
enforcement costs, and is discussing other unquantified benefits of
adopting the seafood HACCP
 
  Page 65185
regulations. The agency has fully considered all of the comments on
benefits. These estimates are more fully explained in the full RIA.
What follows is FDA's conclusion as to how these benefits should be
valued.
1. Safety Benefits
    In the tables below, FDA presents revised estimates of the benefits
of mandatory HACCP for seafood processors. Several changes from the
preamble to the proposal are noteworthy. First, based on the comment
that said that FDA had underestimated the number of cases, FDA has
reestimated the baseline numbers of cases for certain illnesses (Ref.
226). Next, some changes were made to the valuations of particular
cases, as better information was obtained concerning the probabilities
of death per type of illness. Finally, as mentioned above, some changes
have been made to the estimates of the percentages of the illnesses
reduced.
    Although Canada, for example, has mandatory HACCP for its seafood
processors, no data exist on the efficacy of HACCP. Therefore, for the
percentages of the illnesses reduced, FDA used three different types of
its experts (seafood experts, epidemiologists familiar with microbial
hazards, and microbiologists) to address the efficacy of seafood HACCP.
Each of these experts reviewed the literature on each type of hazard as
well as the requirements of HACCP. The ranges reflect likely upper and
lower bounds on how effective HACCP will be at controlling production
deficiencies by processors, including indirect controls exerted by
processors on the owners of harvesting vessels. In addition, the tables
reflect the fact that some of the cases of illness are not addressable
by this rule as they are caused by either consumer or restaurant
mishandling or poor fishing practices by recreational fishermen.
    In order to calculate the number of cases (annual cases resulting
from exposure to hazards associated with seafood consumption) that
would be reduced by HACCP, each of the four experts followed a series
of methodical steps. The first was to determine the types of seafood
associated with each hazard. The second step consisted of reviewing the
various aspects of the rule to determine the areas of seafood
harvesting and processing that the rule could affect. The third step
was to eliminate those cases that could not be affected by the rule.
    These would be cases that seafood processors could neither
eliminate through processing nor prevent from being introduced, either
by their own staff or by control over raw materials. Cases caused or
controlled by factors outside of the HACCP system include recreational
harvest (approximately 20 percent of all seafood harvested) that does
not pass through processing plants and problems caused by restaurant,
supermarket or consumer improper cooking or mishandling. In addition,
there will be some types of hazards that will not, for the foreseeable
future, be controllable by means other than avoiding contaminated
waters, which will not be 100 percent effective (ciguatera, for
example). Until rapid, inexpensive tests are developed, HACCP cannot be
100% effective at controlling these hazards.
    Once each expert had accounted for those cases that could not
potentially be reached by this rule, the experts then assessed the
likely effectiveness of control steps associated with broad sanitation
improvements and mandatory controls on specific hazards and specific
species.
    Ciguatera: Both the lower and upper bound reductions in illness are
relatively small in the near term because there does not yet exist a
rapid, inexpensive test for this toxin. Processors and commercial
fishermen must rely on information about whether geographic areas are
ciguatoxic. Moreover, many illnesses are attributable to recreational
harvest.
    Hepatitis A virus: This illness derives mostly from molluscan
shellfish. For molluscan shellfish, the controls are harvesting from
approved waters and good sanitation in the plant. These regulations
specifically involve both types of controls. The upper bound number is
50 percent of the total estimated number of illnesses largely because
of the problems that states have in patrolling and controlling
illegally harvested molluscan shellfish.
    Norwalk virus: This illness derives from raw molluscan shellfish
that are contaminated from human pollution in harvesting areas. Control
involves harvesting from approve waters. These regulations include this
kind of control. The upper bound number is 50 percent of the total
estimated number of illnesses largely because of the problems that
states have in patrolling and controlling illegally harvested molluscan
shellfish and because of the uncertainty of the control of sewage from
harvesting and recreational vessels.
    Vibrio vulnificus: This illness essentially derives from eating raw
molluscan shellfish from the Gulf of Mexico. Vibrio vulnificus is a
naturally occurring, ubiquitous, marine organism. The lower and upper
bound numbers reflect the fact that controls are newly emerging for
this organism and still have uncertainties associated with them.
    Table 6a sets out the new estimates of baseline cases of foodborne
disease related to HACCP and the range of cases averted by HACCP.
 
               Table 6a.--Estimate of Annual Cases Averted
------------------------------------------------------------------------
                                                 Number of    Number of
                                    Estimated      cases        cases
              Hazard                number of     averted      averted
                                     cases\1\    (lower)\2\   (upper)\1\
------------------------------------------------------------------------
Anasakis.........................          100           25           60
Campylobacter jejuni.............          200          100          150
Ciguatera........................        1,600           96          200
Clostridium botulinum............           10            3            5
Clostridium perfringens..........          200          100          150
Diphyllobothrum latum............        1,000          250          600
Giardia..........................           30           15           23
Hepatitis A Virus................        1,000          150          500
Other Marine Toxins..............           20  ...........            1
Norwalk Virus....................      100,000       15,000       50,000
Other Vibrio's...................        1,000          200          500
Paralytic Shellfish Poisoning....           10  ...........            1
Salmonella non typhi.............          200          100          150
Scombrotoxin.....................        8,000        4,000       6,000
 
  Page 65186
 
Shigella.........................          200          100          150
Vibrio vulnificus (3d year)......           60           12           30
                                  --------------------------------------
      Total......................      113,630       20,151      58,520
------------------------------------------------------------------------
\1\These numbers were determined in consultation with representatives
  from the Centers for Disease Control and Prevention.
\2\The upper and lower bounds were determined by a panel of scientists
  at CFSAN (Dr. George P. Hoskin, Dr. Karl C. Klontz, Dr. Kaye I
  Wachsmuth and Dr. Thomas C. Wilcox.
 
    Table 7 reflects revised estimates of the total cost of seafood
illness.
 
                Table 7.--Annual Cost of Seafood Illness
------------------------------------------------------------------------
                                                           Total cost of
                 Hazard                   Value per case      seafood
                                                              illness
------------------------------------------------------------------------
Anasakis................................          $1,703        $170,332
Campylobacter jejuni....................           9,390       1,877,924
Ciguatera...............................          15,247      24,395,438
Clostridium botuli num..................         223,252       2,232,524
Clostridium perfrin gens................           6,551       1,310,164
Diphyllobothrum latum...................           2,753       2,752,617
Giardia.................................           6,104         183,112
Hepatitis A Virus.......................          22,669      22,668,870
Other Marine Toxins.....................             269           5,380
Norwalk Virus...........................             575      57,500,000
Other Vibrio's..........................           2,955       2,954,842
Paralytic shellfish poisoning...........          92,356       1,200,628
Salmonella non-typhi....................           8,199       1,639,756
Scombrotoxin............................             339       2,708,755
Shigella................................          16,750       3,349,961
Vibrio vulnificus.......................       2,008,917     120,535,039
                                         -------------------------------
      Total.............................  ..............     245,485,342
------------------------------------------------------------------------
 
    Table 8 shows the estimates of the efficacy of mandatory seafood
HACCP at reducing foodborne disease in the third year following the
date of implementation (undiscounted).
 
    Table 8.--Estimate of the Efficacy of Mandatory HACCP at Reducing
                   Foodborne Disease in the Third Year
------------------------------------------------------------------------
                                            Lower bound     Upper bound
                 Hazards                   estimate (3d    estimate (3d
                                               year)           year)
------------------------------------------------------------------------
Anasakis................................         $42,583        $102,199
Campylobacter jejuni....................         938,962       1,408,443
Ciguatera...............................       1,463,726       3,049,430
Clostridium botulinum...................         558,131       1,116,262
Clostridium perfringens.................         655,082         982,623
Diphyllobothrum latum...................         688,154       1,651,570
Giardia.................................          91,556         137,334
Hepatitis A Virus.......................       3,400,331      11,334,435
Other Marine Toxins.....................  ..............             269
Norwalk Virus...........................       8,625,000      28,750,000
Other Vibrio's..........................         590,968       1,477,421
Paralytic Shellfish Poisoning...........  ..............          46,178
Salmonella non-typhi....................         819,878       1,229,817
Scombrotoxin............................       1,354,377       2,031,566
Shigella................................       1,674,981       2,512,471
Vibrio vulnificus (3d year).............      24,107,004      60,267,519
                                         -------------------------------
      Total.............................      45,010,733     116,097,537
------------------------------------------------------------------------
 
    Finally, in response to the comments, FDA has attempted in Table 9
to associate particular hazards with categories of seafood (to the
extent the data allow).
 
 
 
  Page 65187
 Table 9.--Association of Particular Hazards With Categories of Seafood
------------------------------------------------------------------------
                                    Estimated
             Hazards                number of       Affected species
                                      cases
------------------------------------------------------------------------
Anasakis.........................          100  Raw Finfish.
Campylobacter jejuni.............          200  Cooked Ready-to-Eat
                                                 Fish, Smoked Fish,
                                                 Molluscan Shellfish.
Ciguatera........................         1600  Tropical, reef
                                                 associated species of
                                                 finfish.
Clostridium botulinum............           10  Vacuum Packaged Fish,
                                                 Smoked and Salted Fish.
Clostridium perfringens..........          200  Cooked Ready-to-Eat
                                                 Fish, Smoked Fish,
                                                 Molluscan Shellfish.
Diphyllobothrum latum............         1000  Raw Finfish.
Giardia..........................           30  Cooked Ready-to-Eat
                                                 Fish, Smoked Fish,
                                                 Molluscan Shellfish.
Hepatitis A Virus................         1000  Cooked Ready-to-Eat
                                                 Fish, Smoked Fish,
                                                 Molluscan Shellfish.
Other Marine Toxins..............           20  Molluscan Shellfish.
Norwalk Virus....................      100,000  Molluscan Shellfish.
Other Vibrio's...................        1,000  Cooked Ready-to-Eat
                                                 Fish, Smoked Fish,
                                                 Molluscan Shellfish.
Salmonella non-typhi.............          200  Cooked Ready-to-Eat
                                                 Fish, Smoked Fish,
                                                 Molluscan Shellfish.
Scombrotoxin.....................        8,000  Scombroid Species of
                                                 Finfish.
Paralytic Shellfish Poisoning....           10  Molluscan Shellfish.
Shigella.........................          200  Cooked Ready-to-Eat
                                                 Fish, Smoked Fish,
                                                 Molluscan Shellfish.
Vibrio vulnificus................           60  Molluscan Shellfish.
                                  -------------
      Total......................      113,630
------------------------------------------------------------------------
 
2. Summary of Safety Benefits
    The safety benefits are shown by year in Table 10 (undiscounted).
 
                       Table 10.--Safety Benefits
------------------------------------------------------------------------
                                               Lower bound   Upper bound
                    Year                        benefits      benefits
------------------------------------------------------------------------
1...........................................    32,957,233    67,897,751
2...........................................    32,957,233    67,897,751
3...........................................    45,010,733   116,097,537
4 and beyond................................    45,010,733   116,097,537
------------------------------------------------------------------------
 
3. Nutrition Benefits From Mandatory Seafood HACCP and Increased
Consumer Confidence
    In the PRIA, FDA estimated what the potential nutrition benefits
might be if reduced consumer anxiety over seafood safety led to
increased sales. FDA hypothesized that this might lead to consumers
eating lower fat meals (on average) as they replaced higher fat meat
and poultry with lower fat seafood.
    The agency has considered this issue in greater detail in the full
RIA. FDA acknowledged in the PRIA that the entire estimate of nutrition
benefits resulting from increased sales of seafood at the expense of
meat and poultry sales is speculative. Although the agency believes
that increased consumer confidence would result from having a state-of-
the-art HACCP system in place for the seafood industry, no data were
received to confidently predict the ultimate increase in the quantity
of seafood sold as a result of this regulation. Sales data of this type
were also not available before or after the agency initiated its low
acid canned food regulations. Finally, the agency was unable to
determine if any increase in consumer confidence would offset a price
increase resulting from HACCP costs.
    The agency was equally concerned about possible nutrition benefits
as to whether there would be an exact exchange in the nutrient profile
between fish as prepared and meat and poultry. The agency finds that
some fish dishes as consumed are eaten fried or served with heavy
sauces, and that different species of fish have different fat profiles.
Thus, for some consumers who make substitutions of fish meals for meat
and poultry, it is not totally clear if there will be a favorable
decrease in fat intake. Because there are too many unknown variables
surrounding these substitutes and the lack of sales data, the agency is
unable to quantify this benefit.
4. Rent Seeking
    Rent seeking activities were characterized in the proposal as
``public and private resources (which) have been expended in attempts
to alter the level of regulatory effort toward seafood safety, as well
as alter which Federal agency should oversee the industry.'' ``Rent
seeking'' is a term economists have applied to activities that do not
contribute to societal welfare but only seek to transfer resources from
one party to another. An example often given is lobbying to change the
ownership of a government granted special privilege so that profits
change hands. In many cases, however, it is difficult to distinguish
between activities that ultimately indirectly benefit society from
those that only transfer profits. The proposal hypothesized that one
benefit of the regulation was to reduce the social costs of rent
seeking.
    One commenter noted that the reason large firms support HACCP is
because they must have HACCP to export to Europe. The commenter noted
that mandated HACCP would ``ensure that all domestic processing firms
face the same costs, thereby reducing any competitive disadvantage.''
    FDA does not agree that this is a justification for HACCP. The
reason for implementing HACCP is to reduce the incidence of foodborne
disease. However, FDA agrees that this ``rent-seeking'' argument may
explain some support for HACCP by larger exporting firms. It is
important to note, however, that there are small firms who export to
Europe as well.
5. Export Benefits
    In the PRIA, FDA asserted that one benefit (unquantified) of the
rule was to allow firms now exporting to the EU to continue to do so
because of the EU requirement for a federally overseen voluntary HACCP
program. Several commenters noted that some countries that import
seafood from the United States are beginning to require HACCP. One
commenter noted that more than 30 percent of seafood produced in the
United States is exported. The same commenter noted the disruption in
trade when French authorities did not coordinate their seafood safety
requirements with ``other officials.'' Several commenters noted the
need for more Memoranda of Understandings (MOU's) between the United
States and other countries for seafood. One suggested that such MOU's
be based upon HACCP as defined by various international bodies.
Finally, one commenter noted that FDA ``should take into account how
the international
 
  Page 65188
community is implementing HACCP before the agency imposes regulations
that may create unnecessary trade barriers.''
    As discussed in the PRIA, this program will benefit those seafood
processors who are exporting to nations requiring HACCP. However, as
also noted in the PRIA, there is in place a federally overseen HACCP
program, specifically, the program being offered to processors by the
National Marine Fisheries Service (NMFS).
    FDA has made an estimate of the cost savings to exporting firms of
being in FDA's mandatory program in lieu of the NMFS program. The
alternative to NMFS review (if FDA were not to adopt this regulation)
would be inspection of product that is offered for entry into the EU on
an entry-by-entry basis and the payment of a significant fee for these
inspection services. With approximately 2 billion pounds being exported
each year, this savings of resources amounts to, at a minimum, $20
million per year.
    In addition, although the EU has announced the requirement that
HACCP be in place by January 1, 1996, adoption of a U.S. plan reduces
some of the uncertainty for U.S. firms and firms exporting to the
United States concerning the ultimate form of an internationally agreed
upon HACCP requirement.
6. Reduced Enforcement Costs
    Comments qualitatively mentioned other benefits including fewer
product recalls and other enforcement actions. FDA agrees that there
will be fewer product recalls, seizures, injunctions and detentions of
seafood and seafood products. As examples of what benefits could have
accrued in 1994, the agency has calculated the value of each of these
actions and addressed them below.
    a. Seizures. A seizure is a civil action designed to remove
violative goods from consumer channels. Table 11 shows the actions and
their associated costs that follow a determination that a violation
exists and that goods should be seized.
 
                        Table 11.--Seizure Steps
------------------------------------------------------------------------
               Action                       Hours/Other           Cost
------------------------------------------------------------------------
Federal personnel collect and         120....................    $12,840
 analyze samples, write up
 recommendations (program and
 general counsel), review the case
 and make recommendations to the
 U.S. attorney.
U.S. attorney files complaint and     16.....................      1,712
 Court orders goods arrested.
U.S. Marshal and other federal        8......................        856
 official seizes goods at location.   Travel.................        200
Firm hires attorney to contest/       16.....................      1,712
 accept action.
Food is reconditioned by firm.......  16 firm................      1,712
                                      16 Federal lower valued      1,712
                                       food2.
Food is denatured (converted to a     16 firm................      1,712
 non-food use) or;.                   8 Federal lower valued         856
                                       food2.
Food is destroyed...................  8 firm.................        856
                                      8 Federal lost food1...       856
------------------------------------------------------------------------
\1\The rate of $107 per hour represents the cost of a loaded (including
  equipment and benefits) employee plus headquarters support of
  approximately 70 percent.
\2\Total seizure costs are calculated in Table 12.
 
    Table 12 shows the seizures in 1994. Assuming that half of all
seizures are prevented each year, the benefits are expected to be
approximately $290,000 each year.
 
                                           Table 12.--Seizures in 1994
--------------------------------------------------------------------------------
--------------------------------
                                                                        Administ
rative
                            Problem                               No.      costs
\1\      Action\2\      Total
--------------------------------------------------------------------------------
--------------------------------
Decomposition (Destroy)........................................      5        $1
7,320       $46,565     $320,925
Filth (Denature)...............................................      3         1
7,320         8,709       78,087
Chemicals (Destroy)............................................      2         1
7,320        10,108       54,856
Other (Destroyed)..............................................      4         1
7,320        14,212      126,128
                                                                ----------------
--------------------------------
      Total....................................................     14  ........
......  ...........   \3\579,996
--------------------------------------------------------------------------------
--------------------------------
\1\Costs of items (1) through (4) in the preceding Table totaled are $17,320.
\2\The actions that are typically taken for each type of hazard are listed in th
e PROBLEM column. Costs include
  the value of destroyed food multiplied by the number of actions or, in the cas
e of denaturing, it is assumed
  that 10 percent of the value of the product is retained. No food was reconditi
oned.
\3\This number may well underestimate the benefit. FDA recently completed a seiz
ure proceeding (not filed in
  1994) in which $5 million of product was condemned. Thus, preventing seizure c
an have a significantly higher
  value than that reflected in this table.
 
    b. Detentions. A detention is a procedure for preventing violative
products from entering the United States. Table 13 shows the actions
and their associated costs that follow a determination that a sample is
violative, the following actions take place.
 
                       Table 13.--Detention Steps
------------------------------------------------------------------------
                Action                        Hours/other        Cost\2\
------------------------------------------------------------------------
Federal personnel send a detention     2.......................     $214
 notice to the importer with an
 opportunity to introduce testimony.
Importer hires attorney and            16......................    1,712
 introduces evidence. Submits
 response application.
Determination of action to take......  24......................    2,568
Reshipment allowed, or...............  10......................    1,070
                                       Travel, Cost to Reship..     200
 
  Page 65189
 
Product is denatured, or.............  8, Loss of value,\2\          856
                                        Cost of denaturing,\2\,
                                        Reselling costs\2\.
Goods are destroyed under Federal      16, Loss of product\1\..
 supervision.
------------------------------------------------------------------------
\1\These costs are calculated in table 14 which gives estimates of the
  numbers and estimated costs for detentions in 1994.
\2\Seizure can have a significantly higher value than that reflected in
  this table.
 
                                          Table 14.--Detentions in 1994
--------------------------------------------------------------------------------
--------------------------------
                                            Number of
       Detention      Detention
                 Reason                    detentions    Quantity\1\   Dollars\1
\   disposition\2\    admin\3\
--------------------------------------------------------------------------------
--------------------------------
Borates.................................            25        21,484     1,827,1
73        183,017        112,350
C. botulinum............................             1       113,790       363,4
34        363,434          4,494
E.coli/coliforms........................            14       254,774       742,7
86        149,413         62,916
Histamines..............................             2    98,023,014     1,361,7
14        273,199          8,988
Lead....................................             2       102,188        87,4
40          9,044          8,988
Listeria/Other Pathogens................            51     2,792,808    21,369,6
92      4,274,794        229,194
Mercury.................................            11     7,338,900    12,720,2
72      1,272,327         49,434
Poisonous/Deleterious sub-nec...........             7       180,000       446,0
25        446,025         31,458
Salmonella/arizona......................           129   221,543,300    76,137,9
73     15,228,451        579,726
Staphylocci.............................             6        55,810       199,5
50         40,766         26,964
Sulfites................................            23       713,653     8,100,6
20        810,362        103,362
Unsafe food additives--NEC..............             5        67,160       540,2
01        540,201         22,470
                                         ---------------------------------------
--------------------------------
      Total.............................           276  ............  ..........
..     23,591,033     1,240,344
--------------------------------------------------------------------------------
--------------------------------
\1\Quantity and dollars include the total amount of both detentions and automati
c detentions and are shown to
  illustrate how detentions were calculated.
\2\Disposition included reshipping which was estimated to be 10 percent times th
e number of shipments (quantity)
  times the value per shipment (dollars/quantity); reconditioning which was esti
mated to be 20 percent of the
  value of the shipment (dollars) or destruction which was estimated to be 100 p
ercent of the value of the
  shipment.
\3\Administrative costs are estimated to be $4,494 per detention, the sum of the
 first three rows of the
  previous table.
 
    Assuming just half of these detentions are prevented by HACCP,
benefits to the federal government and industry would be approximately
$12 million per year.
    c. Automatic detentions. Automatic detentions place each lot of
imported products on detention upon arrival at the border until the
importer has demonstrated that the products do not violate the Federal
Food, Drug, and Cosmetic Act. This is normally done by the importer
hiring independent labs to sample each lot. Table 15 shows the number
and types of relevant automatic detentions that took place in 1994.
 
                 Table 15.--Automatic Detentions in 1994
------------------------------------------------------------------------
                                  Number of
            Reason                automatic      Sample        Storage
                                 detentions      cost\1\       cost\2\
------------------------------------------------------------------------
Borates.......................            53      $132,500      $182,717
C. botulinum..................           104       260,000        36,343
E.coli/coliforms..............             8        20,000        74,279
Histamines....................            63       157,500       136,171
Lead..........................             1         2,500         8,744
Listeria/Other Pathogens......           236       590,000     2,136,969
Mercury.......................           397       992,500     1,272,027
Pesticide chlorothalanil......             1         2,500            50
Poisonous and Deleterious sub-
 nec..........................             4        10,000        44,603
Salmonella/arizona............           759     1,897,500     7,613,797
Staphylocci...................             0             0        19,955
Sulfites......................            12        30,000       810,062
Underprocessed................             3         7,500        15,454
Unsafe food additives--NEC....             3         7,500        54,020
                               -----------------------------------------
      Total...................         1,644     4,110,000   12,405,191
------------------------------------------------------------------------
\1\1 Calculation of costs assumes that, for each product placed on
  automatic detention, 10 lots per year will be analyzed with 1 sample
  each at a cost of $250 per sample.
\2\Assumes storage costs equals 10 percent of the stated value of the
  goods.
 
    Again assuming that half of the above automatic detentions are
eliminated each year, then the benefits will be approximately $6
million per year.
    d. Recalls. The costs of recalls to a firm vary from inexpensive
notification
 
  Page 65190
of consignees to several million dollars, depending on the nature of
the hazard, the type of seafood, the cost and amount of product
involved, and the distribution chain of the product. The costs of a
recall include searching for the recalled products, removing them from
retail and wholesale outlets, replacing the adulterated product,
effectiveness checks, and disposal or reconditioning. In some cases
recalls cause marketing disruptions, loss of shelf space, and
subsequent losses in sales via publicity.
    FDA costs include investigative and analytical time and expenses,
administrative costs, cost of samples, and auditing time.
    FDA assumes that the costs of recalls borne by firms are directly
related to the distribution costs associated with the products and to
the size of the contaminated lots. Distribution costs account for about
one-third of the final value of seafood. FDA assumes that the firm must
bear the full amount of the distribution costs of the recall. In
addition, the other costs listed above raise the total cost of recalls
borne by firms to one-half the value of the product. FDA uses one-half
the value of the product as the base for the estimate of total recall
costs. The total recall cost of seafood processing firms in 1994 is
estimated to be $2,461,906, as shown in table 16. FDA audit checks for
seafood took 474 hours in 1994. FDA assumes that total FDA costs per
recall were proportional to audit hours. The cost per hour of an audit
check is $107, giving an FDA audit cost of $50,718 (474 x 107). FDA
collected 72 samples at $250 per sample, giving sample costs of $18,000
(72 x 250). FDA thus estimates additional costs due to recalls to be
$68,718 ($50,718 + $18,000). The total recall cost is estimated to be
$2,530,624 ($2,461,906 + $68,718). Again, the estimate for the purpose
of this benefits analysis assumes that half of all recalls will be
prevented or about $1,250,000.
 
                                           Table 16.--Recalls in 1994
--------------------------------------------------------------------------------
--------------------------------
                 Fish                              Hazards
Amount                Total
--------------------------------------------------------------------------------
--------------------------------
Canned tuna...........................  Filth, decomposed, punctured   6,599 cas
es.............         $150,687
                                         cans, short weight.
Crab..................................  L. monocytogenes.............  16,156 lb
s..............           64,624
Escolar fish..........................  Decomposed, sc ombroid,        1,719 lbs
...............            1,614
                                         illness.
Herring, salted Schmaltz..............  L. monocytogenes.............  1,200 lbs
...............            1,740
Hilsha fish...........................  Salmonella...................  2,000 lbs
...............            2,100
Lobster...............................  L. monocytogenes, salmonella.  25,920 lb
s..............          243,648
Mahi mahi, fresh......................  Decomposed...................  575 lbs..
...............              834
Nova chips............................  L. monocytogenes.............  54 lbs...
...............              157
Oysters, shellstock...................  V. vulnificus................  9,219,430
 lbs...........        1,843,886
Oysters, shucked......................  V. vulnificus................  21,944 lb
s..............           87,776
Sardines, flat fillets................  Rusty, leaky, decomposed.....  33,600, 1
3 oz cans......           50,400
Smoked catfish, salmon, sturgeon, tuna  L. monocytogenes.............  1,060 lbs
...............            2,963
Tuna steaks...........................  Decomposed...................  7,110 lbs
...............           11,477
 
                ----------------
      Total...........................  .............................  .........
...............     2,461,906.00
--------------------------------------------------------------------------------
--------------------------------
 
    e. Injunctions. Injunctions are the most severe form of domestic
penalties whereby a firm is enjoined from producing/distributing a
product until a violation is remedied. There are approximately 5
injunctions by FDA against seafood products each year costing the firm
an average of about $70,000 and FDA an average of about $30,000 each or
about $500,000 per year. These costs include court costs, analytical
testing costs, inspections costs, and lost production costs. Again, if
this rule reduced injunctions by half, societal savings would be
$250,000.
    Total enforcement benefits are the sum of all of the reduced
enforcement costs estimated to be approximately $20 million per year.
7. Other Benefits
    Commenters also mentioned benefits including better process control
(resulting in lower production costs) and improved employee morale.
    FDA believes that there may be ``re-engineering'' types of benefits
associated with these regulations. For both seafood and other foods for
which HACCP has been implemented, FDA has received information that
firms have found cost-saving innovations in other areas as they
implement HACCP. These innovations are considered trade secrets by
firms and thus, their description (actual process innovations) and
quantification is impossible as firms have not released this data into
the public domain. This phenomenon involves unexpected savings and
efficiencies as a result of establishing a new system in a processing
operation. The majority of firms that have previously instituted HACCP
reported that they believed that the advantages they derived from HACCP
were worth the costs to them in terms of better control over their
operations, better sanitation, and greater efficiencies, such as
reduced waste. Virtually all foresaw long-term benefits from operating
under HACCP.
    Improved employee morale depends on how HACCP is implemented. If,
for example, employees are (1) participating in day-to-day monitoring
of critical control points, (2) allowed through corrective action plans
to participate in corrective actions including shutting down a line
when a critical limit has been exceeded, and (3) are rewarded for this
decision rather than penalized or forced to rigorously defend their
actions, then employee morale may increase. Such an increase in morale,
if valid, may lead to greater productivity. However, it is in the
direct financial interest of every company to maintain employee morale
such that any additional benefit from this regulation is likely to be
small.
    A final benefit will be realized for finfish where processing
plants and vessels, in an effort to control for histamine formation,
keep fish cooled from harvest to retail. This will simultaneously
decrease the decomposition rate that causes seafood to be thrown out
because of organoleptic problems. The same situation exists relative to
cooked, ready-to-eat products and smoked fish. One retailer cited
losses of 4 percent to 8 percent of all seafood because of
decomposition. If some of this decomposition begins prior to arrival at
the retail level and is reduced in any degree by this
 
  Page 65191
regulation, benefits could potentially be large.
    However, FDA recognizes that there is also a short term cost (e.g.,
as molluscan shellfish harvesters attempt to supply processors with
untagged shellfish or from vessels without sanitary facilities aboard
and find the harvest rejected). The same will also be true for finfish
which have not been properly temperature controlled from harvest to
processor. These harvests will be discarded although this behavior is
not expected to occur often, or more than once in any instance.
 
D. Costs and Benefits of Sanitation
 
    A portion of the costs and benefits of this rule derive from the
improvements in the facilities and CGMP's in seafood plants. Although
all food manufacturing plants are required to produce food under
sanitary conditions now, FDA's experience, and that of others, indicate
that many seafood processors are not producing seafood under those
conditions. The sanitation, monitoring, and recordkeeping provisions of
this rule are expected to drive processors to improve their sanitation
conditions and thus reduce the need for FDA to enforce CGMP's through
regulatory actions. These provisions will produce net increases in
societal welfare with accompanying costs and benefits.
    Current goods manufacturing practices include such things as
cleanliness and habits of personnel, the conditions of buildings and
facilities, equipment, production and process controls, and conditions
of warehousing and distribution of the product. It is difficult to
differentiate between costs and benefits that are HACCP-related and
those that are sanitation-related. For example, processors are required
under HACCP to keep records that show that CGMP's such as ``Measures
such as sterilizing, irradiating, pasteurizing, freezing,
refrigerating, controlling pH or controlling aw that are taken to
destroy or prevent the growth of undesirable microorganisms,
particularly those of public health significance, shall be adequate
under the conditions of manufacture, handling, and distribution to
prevent food from being adulterated within the meaning of the act'' are
being followed (see 21 CFR 110.80(a) (2) and (4)). However, the
benefits derive from making plant and processing changes, uncovering
problems in processing due to recordkeeping and taking corrective
action which prevents hazardous seafood from being sold. Thus, HACCP
and CGMP's are inextricably intertwined and it is difficult to
calculate the marginal benefits and marginal costs of each.
 
E. Costs and Benefits Attributable to Foreign Governments
 
    FDA has reported the portion of the increased costs that are
expected to be passed on to U.S. consumers by foreign processors. The
justification for this action is that FDA has not included safety
benefits that foreign consumers may enjoy when foreign firms that
export to the United States introduce HACCP into their plants. FDA has
also included, as a benefit of this regulation, reduced enforcement
actions toward products produced by foreign firms and reduced illnesses
that U.S. consumers suffer from imported seafood.
    In a benefit-cost analysis, costs and benefits are attributable to
choices made among competing options. However, in this rule, there are
difficulties in assigning the costs and benefits to choices made by FDA
to require HACCP of domestic and foreign seafood processors. This
difficulty arises because other countries either already require HACCP
or have indicated that they will do so in the near future--for both
their domestic and imported seafood products. No costs or benefits
should be ascribed to choices made by the U.S. Government in this rule
that affect firms already complying with foreign regulations, if the
regulations are the same and no changes need to be made to be in
compliance with the U.S. regulation.
    Thus, foreign firms in those countries who export to the United
States may be required to comply first with the U.S. plan or first with
their own country's plan; the timing is impossible to predict. However,
FDA does have evidence from the European Union that the seafood
produced by the following countries (at least seafood for export) have
met the EU standard for HACCP-- Albania, Australia, Austria, Belgium,
Brazil, Canada, Chile, Columbia, Denmark, Ecuador, England, Faro Is.,
Finland, France, Germany, Greece, Holland, Iceland, Indonesia, Ireland,
Italy, Japan, Luxembourg, Mexico, Morocco, New Zealand, Norway, Peru,
Philippines, Sweden, Taiwan, Thailand, and Turkey.
 
F. Conclusion
 
    As the above analysis demonstrates, FDA finds that the estimated
benefits exceed the estimated costs. The estimated costs are
approximately one third of those in the PRIA, ranging from $677 million
to $1.488 billion. These estimated costs were based primarily on the
reports of some seafood firms and modeling done by FDA experts based on
their experience with HACCP but also considered the study done under
contract with NMFS. The benefits range from $1.435 billion to $2.561
billion and include benefits from safety, nutrition, increased consumer
confidence, rent seeking activities, exports, and reduced enforcement
costs.
 
G. Final Regulatory Flexibility Analysis
 
    The Regulatory Flexibility Act (Pub. L. 96-354) requires analyzing
options for regulatory relief for small businesses. In the PRIA, FDA
listed for comment a series of regulatory options on how to grant
regulatory relief for small firms. In that document, FDA defined small
firms as having less than $1 million in annual gross revenue (for non-
shrimp processors) and less than $2 million for shrimp processors. In
the PRIA, regulatory options for small business relief included:
    (1) Requiring HACCP-type controls for those critical control points
in individual plants that have a history of failure.
    (2) Exempting very small processors from the requirements in the
proposed regulatory option.
    (3) Allowing a longer implementation period such that HACCP
requirements may be phased in over a longer period of time.
    (4) Providing generic HACCP plans (without mandatory control
points) for certain types of operations, providing federal
verification, or less frequent monitoring of critical control points.
    FDA received a large number of comments on these options and on the
costs that small businesses would incur as a result of the proposed
option.
    The agency has fully considered all of the comments received on its
regulatory flexibility analysis and has responded to these comments in
the full RIA. What follows is a summary of FDA's major conclusions from
the analysis.
    FDA received comments on whether there should be exemptions for
processors based on either the size of the processor or the degree of
risk associated with the product or process. For example, one commenter
supported the exemption of small firms on the basis that small firms
that represent 75 percent of the industry in terms of the number of
plants, produce less than 10 percent of the seafood consumed.
    FDA has concluded that there should be no exemptions for small
firms. Small processors often engage in relatively high risk seafood
processing, and an exemption based on size could inappropriately exempt
high risk operations. An exemption based on risk might entail knowing
which seafood might be responsible for a reported and confirmed
illness. The agency finds however that because underreporting and
skewed reporting of foodborne
 
  Page 65192
illnesses occurs it is not always directly possible to relate the
reported illnesses to risk. This subject is also discussed at length in
the preambles to both the proposed and final rule.
    One comment recommended that no firms be completely exempt, but
that some firms be subject to different HACCP requirements depending on
size. The smaller the firm, the less strict the record-keeping,
testing, and monitoring requirements. The use of a short form for
recordkeeping and informal monitoring was supported in some comments.
    Again, this is a topic that is extensively covered in the preamble
to the final rule. FDA notes that HACCP depends on the degree of risk
and complexity of processing and that HACCP requirements for each plant
are calibrated based on these factors. Whether the plant is large or
small, if there are few hazards and simple processes, HACCP
requirements are inherently minimal. If there are no hazards, no HACCP
plan is required. Overall, however the agency believes that many
smaller firms are associated with simpler processes and that the HACCP
system already accommodates the commenter's concern.
    In the long run, as processors adopt HACCP and attempt to pass
costs on to consumers, the retail price of seafood will rise by less
than 1 percent. In the absence of an increase in consumer demand that
may result from this regulation, as the price of seafood rises,
consumers will purchase less seafood. As producers fail to sell all of
the seafood offered at the higher price, output must fall. Moreover,
output must decrease in the highest cost sector of the industry,
generally small processors. Although it is possible that small
processors will cut back production but stay in business, the small
profit margins of some small seafood producers strongly imply that the
reduction in output will come about because small processors go out of
business. For every one percent increase in the price of seafood,
approximately 140 small processors could go out of business. The
estimated number comes from the following calculation. FDA has
estimated that as costs are passed on, HACCP will raise the price of
seafood to consumers. The price elasticity of demand, which is the
percentage change in quantity purchased divided by the percentage
change in price, is estimated to be -0.37 for seafood (Ref. 227). A one
percent increase in the price consumers pay for seafood should
therefore reduce the quantity purchased by 0.37 percent (1 percent
times -0.37). FDA believes that the entire reduction in output
attributable to HACCP will be borne by small processors who go out of
business. Although close to 80 percent of seafood processors are
classified as small, small processors account for only 10 percent of
total industry output (Ref. 228). In the case of a 0.37 percent decline
in total processing output represents a decline in the output of small
processors of 3.7 percent (0.37 percent divided by 0.10). If the
decline in the number of processors were proportional to the decline in
the output of small processors, the reduction in the number of
processors would be 3.7 percent in the case of a 1 percent price
increase. FDA is uncertain as to what price increase will actually
occur.
    The agency finds that the number of small seafood processors that
go out of business will be determined by the cost per unit (or per
plant) of implementing HACCP, the effect of HACCP on seafood prices,
the ability of small plants to pass costs on to consumers, the current
practices of the plants and the implementation time. The analysis has
assumed that the regulation will have no positive effect on the demand
for seafood. If the regulation in fact increases consumer confidence in
seafood sufficiently to increase the demand for seafood, then the
effect on small business would be less.
    Although the economic impact on small firms is difficult to
predict, many small firms should be able to implement HACCP at low
cost, as they have already fulfilled many of its basic requirements.
The closer a firm's current practices are to HACCP, the lower the cost
of HACCP and the more likely is firm survival. Some small firms occupy
market niches that allow them to pass on more of their costs than the
industry average, increasing their likelihood of survival.
    The effect of HACCP on small seafood processors depends on their
costs of compliance and on the changes in the relative price of
seafood. FDA expects the relative price increase attributable to HACCP
to be small. For many small firms, the flexibility built into the
regulation strongly implies that HACCP costs will be low. In
consideration of small firms, the agency has extended the effective
date to 2 years from publication. FDA will also be publishing a Guide
that will provide small processors with valuable information for
developing and implementing HACCP. Additionally, the agency, in
cooperation with Sea Grant Universities and others through the Seafood
HACCP Alliance, will be providing to small firms assistance on training
and other needs.
    FDA recognizes that HACCP is an innovative regulatory system that
has not been applied on a large scale to ongoing commercial enterprises
in the United States. For this reason all of the agency's estimates of
firm behavior, costs and benefits necessarily involve substantial
uncertainty. As explained in this Regulatory Impact Analysis, FDA has
used modeling techniques and informed judgements rather than firm
empirical data to estimate many effects. In order to determine the
accuracy of these estimates, and also to assist in possible mid-course
corrections, FDA and HHS plan to conduct an evaluation study during the
first few years after the effective date of these regulations. This
study could focus on each major type of one-time or continuing
compliance cost, on different types of firms, on different sizes of
firms (with particular attention to the smallest firms), and on both
costs required by the regulation and on costs that firms may incur
unnecessarily. It could also address the ability of firms to understand
and implement HACCP properly, and any other problems that may impede
rapid and inexpensive implementation. This study could also include an
exploratory analysis of benefits, addressing both improvements in
processing as measured by elimination of hazards and, to the extent
permitted by existing data systems, early trends in reported incidence
of illness caused by seafood.
 
V. Environmental Impact
 
    The agency has previously considered the environmental effects of
this rule as announced in the proposed rule (59 FR 4142, January 28,
1994). No new information or comments have been received that would
affect the agency's previous determination that there is no significant
impact on the human environment, and that an environmental impact
statement is not required.
 
VI. References
 
    The following references have been placed on display in the Dockets
Management Branch (address above) and may be seen by interested persons
between 9 a.m. and 4 p.m., Monday through Friday.
 
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Health, Bethesda, MD, 1990.
 
  Page 65193
 
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1974.
 
  Page 65194
 
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List of Subjects
 
21 CFR Part 123
 
    Fish, Fishery products, Imports, Reporting and recordkeeping
requirements, Seafood.
 
21 CFR Part 1240
 
    Communicable diseases, Public health, Travel restrictions, Water
supply.
 
    Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, title 21 CFR
chapter I is amended as follows:
    1. New part 123 is added to read as follows:

Part III, Regulation, pp. 65197-65202