[Federal Register: October 3, 2005 (Volume 70, Number 190)]
[Rules and Regulations]
[Page 57505-57509]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03oc05-10]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 1 and 20
[Docket No. 2002N-0276] (formerly Docket No. 02N-0276)
RIN 0910-AC40
Registration of Food Facilities Under the Public Health Security
and Bioterrorism Preparedness and Response Act of 2002
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
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SUMMARY: The Food and Drug Administration (FDA) is issuing a final
regulation that confirms the interim final rule entitled ``Registration
of Food Facilities Under the Public Health Security and Bioterrorism
Preparedness and Response Act of 2002'' (68 FR 58894, October 10, 2003
(interim final rule) as corrected by a technical amendment (69 FR
29428, May 24, 2004), and responds to comments submitted in response to
the request for
[[Page 57506]]
comments in the interim final rule. This final rule affirms the interim
final rule's requirement that domestic and foreign facilities that
manufacture/process, pack, or hold food for human or animal consumption
in the United States be registered with FDA by December 12, 2003. The
interim final rule implemented the Public Health Security and
Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism
Act), which requires domestic and foreign facilities to be registered
with FDA by December 12, 2003. This final rule does not make any
changes to the regulatory requirements established by the interim final
rule.
DATES: The interim final rule published at 68 FR 58894 was effective on
December 12, 2003. The technical amendment to the interim final rule
published at 69 FR 29428 was effective May 24, 2004. This final rule,
which adopts as final the interim rule as amended, is effective October
3, 2005.
FOR FURTHER INFORMATION CONTACT: Catherine L. Copp, Center for Food
Safety and Applied Nutrition (HFS-004), Food and Drug Administration,
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-1589.
SUPPLEMENTARY INFORMATION:
I. Background and Legal Authority
Section 305 of the Bioterrorism Act, which was enacted on June 12,
2002, amended the Federal Food, Drug, and Cosmetic Act (the act) to
require the Secretary to establish regulations requiring domestic and
foreign facilities that manufacture, process, pack, or hold food for
human or animal consumption in the United States to be registered with
the Secretary (section 415 of the act (21 U.S.C. 350d)). Facilities
were required to be registered by December 12, 2003. Failure to
register a facility in accordance with section 415 of the act is a
prohibited act (section 301(dd) of the act (21 U.S.C. 331(dd))).
Section 305 of the Bioterrorism Act amended the act to prohibit the
importation of food from a foreign facility that is required to
register, but has not done so (section 801(l) of the act (21 U.S.C.
381(l))).
The Department of Health and Human Services (DHHS) and the
Department of Treasury (Treasury) jointly published the proposed
registration regulation in the Federal Register on February 3, 2003 (68
FR 5378), for comment (proposed rule). On October 10, 2003, DHHS and
the Department of Homeland Security (DHS) jointly issued the interim
final rule\1\. The interim final rule implemented section 305 of the
Bioterrorism Act, and required domestic and foreign facilities to be
registered with FDA by December 12, 2003. The interim final rule
responded to comments from the public on the proposed rule, and
established a 75-day comment period on a limited set of issues
identified in the interim final rule and also set out below. In order
to ensure that those commenting on the interim final rule had the
benefit of FDA's outreach and educational efforts and had experience
with the systems, timeframes, and data elements of the registration
system, FDA reopened the comment period on the same limited set of
issues for 30 days on April 14, 2004 (69 FR 19766). FDA requested
comment only on the following issues:
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\1\The authorities of Treasury under section 701(b) of the act
to prescribe regulations for the efficient enforcement of section
801 of the act were transferred to DHS when it was created by an act
of Congress in 2002.
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1. The cost to foreign facilities of hiring and retaining a U.S.
agent. Specifically, FDA invited comment, and the submission of data or
other information, on the following:
<bullet> The costs to a foreign facility of hiring a U.S. agent;
<bullet> The number of foreign facilities that have hired a U.S.
agent or negotiated additional duties from someone with whom they have
an existing relationship in response to the interim final rule, instead
of relying on an existing relationship with a person who qualifies as a
U.S. agent;
<bullet> The number of foreign facilities that have ceased
exporting to the United States because they have decided not to hire/
retain a U.S. agent for registration purposes.
<bullet> The distribution of costs between submitting registrations
and other services offered by the U.S. agent.
<bullet> The assumptions underlying FDA's estimates of the costs of
hiring and retaining a U.S. agent.
2. The effects on domestic small businesses, if any, if some
foreign facilities cease exporting to the United States due to the U.S.
agent requirement for registration. Specifically, FDA invited comment,
and the submission of data or other information, on the following:
<bullet> The number of domestic small businesses that have been
adversely affected by trading partners that have ceased exporting to
the United States due to the U.S. agent requirement for foreign
facility registration; and
<bullet> The costs incurred by these domestic small businesses due
to the loss of these trading partners.
In addition to the provisions of the act amended by section 305 of
the Bioterrorism Act, FDA is relying on section 701(a) and (b) of the
act (21 U.S.C. 371(a) and (b)) in issuing this final rule. Section
701(a) authorizes the agency to issue regulations for the efficient
enforcement of the act, while section 701(b) of the act authorizes FDA
and Treasury jointly to prescribe regulations for the efficient
enforcement of section 801 of the act.
To the extent that 5 U.S.C. 553 applies to this action, the
agency's implementation of this action with an immediate effective date
comes within the good cause exception in 5 U.S.C. 553(d)(3) (21 CFR
10.40(c)(4)(ii)). As this final rule imposes no new regulatory
requirements, a delayed effective date is unnecessary.
II. Comments on the Interim Final Rule
FDA received approximately 200 timely submissions in response to
the interim final rule. Approximately three-quarters of the comments
FDA received addressed issues outside the scope of the interim final
rule's request for comments. FDA did not consider nonresponsive
comments in developing this final rule, and this final rule does not
address comments that are beyond the scope of the issues on which FDA
requested comment. Relevant comments did not cause FDA to significantly
revise its economic analysis of the requirement that each foreign
facility designate a U.S. agent. Because FDA's responses to the
comments below do not result in any changes to the regulatory
requirements published in the interim final rule, the governing
regulation continues to be set out in Sec. Sec. 1.225 through 1.243
and 20.100.
All of the issues on which FDA requested comment were related to
the assumptions in the economic analysis section of the interim final
rule. Accordingly, FDA is responding to all comments in section III of
this document.
III. Analysis of Economic Impacts Benefit-Cost Analysis
We have examined the economic implications of this final rule as
required by Executive Order 12866. Executive Order 12866 directs
agencies to assess all costs and benefits of available regulatory
alternatives and, when regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety, and other advantages;
distributive impacts; and equity). Executive Order 12866 classifies a
rule as significant if it meets any one of a number of specified
conditions, including having an annual effect on the
[[Page 57507]]
economy of $100 million, adversely affecting a sector of the economy in
a material way, adversely affecting competition, or adversely affecting
jobs. Executive Order 12866 also considers a rule as a significant
regulatory action if it raises novel legal or policy issues. In the
interim final rule, FDA determined that the rule was a significant
regulatory action as defined by Executive Order 12866. We have
determined that this final rule is not a significant regulatory action
as defined by Executive Order 12866, because it is not imposing any new
requirement on any entity beyond the requirements of the interim final
rule.
The scope of the analysis of economic impacts for this final rule
is limited to the costs associated with the U.S. agent requirement. For
a full discussion of all costs and benefits associated with the
registration requirement, see the proposed and interim final rules.
Summary of U.S. Agent Costs
Section 415(a)(1)(B) of the act, as established by the Bioterrorism
Act, requires that the owner, operator, or agent in charge of a foreign
facility submit in the facility's registration the name of the U.S.
agent for the facility. Section 1.232(d) requires that all foreign
facility registrations include information about the facility's U.S.
agent and implements the statutory requirement. Section 1.227(b)(13)
requires that the U.S. agent be a person residing or maintaining a
place of business in the United States, who is designated by the owner,
operator, or agent in charge of a foreign facility as the facility's
agent. FDA recognizes only one U.S. agent per foreign facility for
purposes of registration. (See 68 FR 58894 at 58915.) The U.S. agent
acts as a communications link between FDA and the facility, and FDA
considers providing information to the U.S. agent the same as providing
information directly to the foreign facility (Sec. 1.227(b)(13)(ii)).
A U.S. agent may submit a facility's registration to FDA if the owner,
operator, or agent in charge of the foreign facility authorizes the
U.S. agent (if an individual) to register on behalf of the owner,
operator, or agent in charge of the facility (Sec. 1.225(c)).
In the economic analyses of the proposed and interim final rules,
FDA estimated that more than 90 percent of foreign facilities did not
currently have a U.S. agent and that foreign facilities currently
without a U.S. agent would require 5 to 15 hours to find an agent and
would pay an annual fee of $1,000 (68 FR 5378 at 5396 and 68 FR 58894
at 58943). The $1,000 fee estimated in the proposed rule was an
estimate of an average fee for a U.S. agent under FDA regulations for
drugs, biologics, and devices (21 CFR parts 207, 607, and 807,
respectively), based on fees quoted over the phone and in Internet
advertisements. During the period from the publication of the proposed
rule to publication of the interim final rule, a number of companies
began advertising their services as a U.S. agent for foreign food
facilities on the Internet. These companies specified a range of costs,
some with discounts for multiple facilities under the same ownership,
fees that are a function of the number of shipments each year, or
additional fees for registration updates. Based on the requirements in
the proposed rule, the lowest fee quoted was $399 for representation by
a U.S. agent for 1 year; other U.S. agents charged initial fees between
$599 and $1,400. Many of the U.S. agents charged fees for additional
registration-related services, such as registration updates or
cancellations. Based on these estimates of fees, FDA concluded that
$1,000 represented a reasonable estimate of a U.S. agent fee, including
registering the foreign facility (68 FR 58894 at 58945). The total
first year cost for foreign facilities was estimated to be $306
million, and annual costs were estimated to be $229 million with a U.S.
agent fee of $1,000. However, because there was a wide range of fees
charged by U.S. agents, FDA also presented in the interim final rule an
estimate of the cost of the rule with a U.S. agent fee of $700.
Assuming this $700 fee, FDA estimated that the total first year cost
for foreign facilities would be $247.6 million and annual costs would
be $164.5 million (68 FR 58894 at 58945).
To improve the analysis involving the costs of hiring and retaining
a U.S. agent, FDA requested comments on a number of specific components
of the cost calculations, as summarized below.
A. The Costs to a Foreign Facility of Hiring and Retaining a U.S. Agent
(Comment 1) FDA received a number of comments about the costs of
hiring and retaining a U.S. agent. FDA received estimates of U.S. agent
fees ranging from $95 to $1400. Many comments mentioned a very wide
range of fees, with differences as large as $800 between the lowest and
highest fees cited in a single comment. None of the comments stated
whether there were differences in services between the low and high fee
agents, other than lower fees for ``farm'' registrations. (The comments
did not elaborate on the meaning of ``farm'' registrations.) The
majority of the comments that estimated U.S. agent fees mentioned $700
or $750 or included $700 in the range of fees. Some comments also noted
that U.S. agents charged an hourly fee for any additional, but
unspecified, services provided to the foreign facility. Some comments
did not provide a dollar estimate of the U.S. agent fee, but asserted
that FDA had underestimated the cost of a U.S. agent, while others
claimed that FDA had overestimated the cost of hiring and retaining a
U.S. agent.
(Response) In the interim final rule, FDA estimated total costs
using average U.S. agent fees of $700 and $1,000. Given the wide range
of fees reported in the comments, we now conclude that the average fee
for a U.S. agent is probably closer to $700, giving a total first year
cost for foreign facilities of $247.6 million and annual costs of
$164.5 million. Table 1 presents the revised present value and
annualized total costs of the interim final rule for a U.S. agent fee
of $700.
Table 1.--Present value and annualized costs over 20 years for a U.S. agent fee of $700 (in millions)
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Discount Rate Present Value Annualized
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7% $2,144.1 $107.2
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3% $2,861.5 $143.1
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[[Page 57508]]
B. The Number of Foreign Facilities That Have Hired a U.S. Agent or
Negotiated Additional Duties From Someone With Whom They Have an
Existing Relationship in Response to the Interim Final Rule, Instead of
Relying on an Existing Relationship With a Person Who Qualifies as a
U.S. Agent
(Comment 2) FDA did not receive any comments estimating the number
of facilities that have hired a U.S. agent or have negotiated
additional duties from someone with whom they have an existing
relationship. However, we did receive individual comments from
facilities and industry representatives reporting that some facilities
have hired a new U.S. agent. FDA also received comments reporting that
some facilities have used U.S. business partners, U.S. customers, or
U.S. brokers as U.S. agents.
(Response) From the comments we received it is clear that foreign
facilities are complying with the U.S. agent requirement both by hiring
new U.S. agents and by negotiating new duties with someone with whom
they have an existing relationship. However, it was not possible to
extrapolate from the comments how many facilities were hiring new U.S.
agents or utilizing existing relationships. Therefore, FDA has not
altered its analysis on this point. (See 68 FR 58894 at 58945.)
C. The Number of Foreign Facilities That Have Ceased Exporting to the
United States Because They Have Decided Not to Hire or Retain a U.S.
Agent for Registration Purposes
(Comment 3) FDA did not receive any estimates of the number of
foreign facilities that have ceased exporting to the United States due
to the U.S. agent requirement. FDA did receive comments from
governmental agencies and industry groups reporting that some exporters
of small value shipments may stop exporting or have stopped exporting
to the United States as a result of the cost of hiring a U.S. agent.
Other comments stated that they were unaware of any facilities that had
stopped exporting to the United States in response to the cost of
hiring a U.S. agent.
(Response) Although some comments confirmed the assumption of the
interim final rule economic analysis that some facilities would stop
exporting to the United States due to costs associated with hiring a
U.S. agent, the comments did not provide any information to estimate
how many facilities would stop exporting. Therefore, FDA has not
altered this portion of its analysis. (See 68 FR 58894 at 58943.)
D. The Distribution of Costs Between Submitting Registrations and Other
Services Offered by the U.S. Agent
(Comment 4) FDA received some comments separating the fee paid to a
U.S. agent for registration services from fees paid for ongoing
services. One comment assumed that the U.S. agent fees would be in
addition to any existing fee for services the agent may be providing
for the facility. Another comment stated that the fee to register a
facility was $350 with an additional charge of $199 per year for acting
as a facility's U.S. agent, for a total fee of $549. Most comments that
provided a U.S. agent fee did not specify what services were provided
for the fee.
(Response) FDA was unable to estimate based on the information in
the comments the distribution of costs between submitting registrations
and other services offered by the U.S. agent. Therefore, FDA has not
altered this portion of its analysis. (See 68 FR 58894 at 58945.)
E. The Assumptions Underlying FDA's Estimates of the Costs of Hiring
and Retaining a U.S. Agent
(Comment 5) FDA received comments questioning whether FDA had
included all costs associated with hiring a U.S. agent. One comment
stated that a firm had spent $1,800 per facility to register its
foreign affiliates.
(Response) The comment that provided specific costs of registration
included many activities that FDA considered in other parts of its
analysis, such as reading and understanding the rule and understanding
the implications of the requirements for their business. If only
activities related to the U.S. agent were considered, the comment's
cost estimates were consistent with FDA's cost estimates for a U.S.
agent. (See 68 FR 58894 at 58945.)
(Comment 6) Other comments that mentioned costs stated that FDA had
failed to include costs associated with entering into a legal agreement
with the U.S. agent.
(Response) FDA did include an estimate of costs to find and hire a
U.S. agent in the interim final rule, which would include the costs of
establishing an agreement between the U.S. agent and the facility.
Accordingly, FDA has not altered its assumptions about costs associated
with entering into an agreement with the U.S. agent. (See 68 FR 58894
at 58945.)
F. The Effects on Domestic Small Businesses, if Any, if Some Foreign
Facilities Cease Exporting to the United States Due to the U.S. Agent
Requirement for Registration
Specifically, FDA invited comment, and the submission of data or
other information, on the following: The number of domestic small
businesses that have been adversely affected by trading partners that
have ceased exporting to the United States due to the U.S. agent
requirement for foreign facility registration.
FDA received no comments on the number of U.S. small businesses
adversely affected by the loss of their trading partners, and thus, has
not altered this portion of its analysis. (See 68 FR 58894 at 58954 to
58955.)
G. The Effects on Domestic Small Businesses, if Any, if Some Foreign
Facilities Cease Exporting to the United States Due to the U.S. Agent
Requirement for Registration
Specifically, FDA invited comment, and the submission of data or
other information, on the following: The costs incurred by these
domestic small businesses due to the loss of these trading partners.
(Comment 7) Some comments agreed that there was a potential for
some foreign facilities to stop exporting to the United States as a
result of the U.S. agent requirement. One comment listed the following
several possible consequences for U.S. small businesses if foreign
facilities stopped exporting: (1) Need to find new suppliers; (2)
inability to supply existing customer base; (3) increase in cost of
goods; and (4) increase in cost of goods that may be passed on to U.S.
consumers. However, no comments provided any estimate of the costs of
these effects.
(Response) In the economic analysis of the interim final rule, FDA
considered the impacts on small businesses. Because no comment provided
an estimate of the costs to domestic small businesses if some foreign
facilities cease exporting to the United States due to the U.S. agent
requirement, FDA has not altered its estimate of the number of
facilities that will stop exporting to the United States or its
expectations of possible consequences for U.S. facilities. (See 68 FR
58894 at 58954 to 58955.)
IV. Regulatory Flexibility Analysis
The Regulatory Flexibility Act (5 U.S.C. 601-612) requires agencies
to analyze regulatory options that would lessen the economic effect of
the rule on small entities. Because this final rule
[[Page 57509]]
does not make any changes to existing requirements, and thus, does not
impose any new costs on facilities, the agency certifies that this
final rule will not have a significant impact on a substantial number
of small entities. Full analysis of the effect of the registration
requirement on small entities is provided in the analysis of economic
impacts set out in the preceding analysis of economic impacts and in
the preamble to the interim final rule at 68 FR 58894 at 58954.
V. Unfunded Mandates
Section 202 of the Unfunded Mandates Reform Act of 1995 (Public Law
104-4) requires that agencies prepare a written statement, which
includes an assessment of anticipated costs and benefits, before
proposing ``any rule that includes any Federal mandate that may result
in the expenditure by State, local, and tribal governments, in the
aggregate, or by the private sector, of $100,000,000 (adjusted annually
for inflation) in any one year.'' The current threshold after
adjustment for inflation is $115 million, using the most current (2003)
Implicit Price Deflator for the Gross Domestic Product. FDA does not
expect this final rule to result in any one-year expenditure that would
meet or exceed this amount.
VI. Federalism Analysis
FDA has analyzed this final rule in accordance with the principles
set forth in Executive Order 13132. FDA has determined that the final
rule does not contain policies that have substantial direct effects on
the States, on the relationship between the National Government and the
States, or on the distribution of power and responsibilities among the
various levels of government. Accordingly, the agency concludes that
the final rule does not contain policies that have federalism
implications as defined in the Executive order and, consequently, a
federalism summary impact statement is not required.
VII. The Paperwork Reduction Act of 1995
This final rule contains information collection provisions that are
subject to review by the Office of Management and Budget (OMB) under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The title,
description, and respondent description of the information collection
provisions and an estimate of the annual reporting burden were provided
in the interim final rule issued October 10, 2003 (68 FR 58894).
Included in the estimate was the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data
needed, and completing and reviewing each collection of information.
The final rule requires no new information collection. Individuals and
organizations may submit comments on the burden estimates or on any
other aspect of these information collection provisions, including
suggestions for reducing the burden, and should direct them to the
contact person identified in the FOR FURTHER INFORMATION CONTACT
section of this document. The information collection provisions in this
final rule have been approved under OMB control number 0910-0502. This
approval expires October 31, 2006. An agency may not conduct or
sponsor, and a person is not required to respond to, a collection of
information unless it displays a currently valid OMB control number.
VIII. Analysis of Environmental Impact
The agency has determined under 21 CFR 25.30(h) that this action is
of a type that does not individually or cumulatively have a significant
effect on the human environment. Therefore, neither an environmental
assessment nor an environmental impact statement is required.
List of Subjects
21 CFR Part 1
Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling,
Reporting and recordkeeping requirements.
21 CFR Part 20
Confidential business information, Courts, Freedom of information,
Government employees.
PART 1--GENERAL ENFORCEMENT REGULATIONS
PART 20--PUBLIC INFORMATION
0
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, the interim
rule amending 21 CFR parts 1 and 20, which was published at 68 FR 58894
(October 10, 2003) and amended at 69 FR 29428 (May 24, 2004), is
adopted as a final rule without change.
Dated: August 28, 2005.
Michael Chertoff,
Secretary of Homeland Security.
Dated: September 20, 2005.
Michael O. Leavitt,
Secretary of Health and Human Services.
[FR Doc. 05-19730 Filed 9-28-05; 1:53 pm]
BILLING CODE 4160-01-S
Final Rule on Registration of Food Facilities Table of Contents
