[Federal Register: February 3, 2003 (Volume 68, Number 22)]
From the Federal Register Online via GPO Access
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
Registration of Food Facilities Under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002
AGENCY: Food and Drug Administration, HHS.
ACTION: Notice of proposed rulemaking.
SUMMARY: The Food and Drug Administration (FDA) is proposing a regulation that would require domestic and foreign facilities that manufacture, process, pack, or hold food for human or animal consumption in the United States to register with FDA by December 12, 2003. The proposed regulation would implement the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act), which requires domestic and foreign facilities to register with FDA by December 12, 2003, even in the absence of final regulations. Registration is one of several tools that will enable FDA to act quickly in responding to a threatened or actual terrorist attack on the U.S. food supply by giving FDA information about all facilities that manufacture, process, pack, or hold food for consumption in the United States. In the event of an outbreak of food-borne illness, such information will help FDA and other authorities determine the source and cause of the event. In addition, the registration information will enable FDA to notify quickly the facilities that might be impacted by the outbreak.
DATES: Submit written or electronic comments by
April 4, 2003. Written
comments on the information collection provisions should be submitted
by March 5, 2003.
ADDRESSES: Submit written comments to the Dockets
Management Branch (HFA-305), Food and Drug Administration,
5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to http://www.fda.gov/dockets/ecomments.
Submit written comments on the information collection provisions to the Office of Information and Regulatory Affairs, the Office of Management and Budget (OMB), New Executive Office Bldg., 725 17th St. NW., rm. 10235, Washington, DC 20503, Attn: Stuart Shapiro, Desk Officer for FDA.
FOR FURTHER INFORMATION CONTACT: Leslye M. Fraser, Center for Food Safety and Applied Nutrition (HFS-4), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-2378.
Table of Contents
I. Background and Legal Authority
II. Preliminary Stakeholder Comments
III. The Proposed Regulation
A. Highlights of Proposed Rule
B. General Provisions
1. Who Must Register Under This Subpart? (Proposed Sec. 1.225)
2. Who Is Exempt From This Subpart? (Proposed Sec. 1.226)
3. What Definitions Apply to This Subpart? (Proposed Sec. 1.227)
C. Procedures for Registration of Food Facilities
1. When Must You Register? (Proposed Sec. 1.230)
2. How and Where Do You Register? (Proposed Sec. 1.231)
3. What Information is Required in the Registration? (Proposed
4. What Optional Items are Included in the Registration Form?
(Proposed Sec. 1.233)
5. How and When Do You Update Your Registration Information?
(Proposed Sec. 1.234)
D. Additional Provisions
1. What Other Registration Requirements Apply? (Proposed Sec.
2. What Happens if You Fail to Register? (Proposed Sec. 1.241)
3. What Does Assignment of a Registration Number Mean? (Proposed
4. Is Food Registration Information Available to the Public?
(Proposed Sec. 1.243)
IV. Analysis of Economic Impacts
A. Benefit-Cost Analysis
B. Need for the Regulation
C. Reason for the Regulation
V. Initial Regulatory Flexibility Act
VI. Unfunded Mandates
VII. Small Business Regulatory Enforcement Fairness Act (SBREFA) Major
VIII. Paperwork Reduction Act of 1995
IX. Analysis of Environmental Impact
I. Background and Legal Authority
The events of September 11, 2001, highlighted the need to enhance the security of the U.S. food supply. Congress responded by passing the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 ("the Bioterrorism Act'') (Public Law 107-188), which was signed into law on June 12, 2002. The Bioterrorism Act includes a provision in title III (Protecting Safety and Security of Food and Drug Supply), Subtitle A--Protection of Food Supply, section 305, which requires the Secretary of Health and Human Services (the Secretary) to develop regulations mandating domestic and foreign facilities that manufacture, process, pack, or hold food for human or animal consumption in the United States to register with FDA by December 12, 2003. The provision creates section 415 and amends sections 301 and 801of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 331 et seq.).
The major components of section 305 of the Bioterrorism Act are as follows:
II. Preliminary Stakeholder Comments
On July 17, 2002, FDA sent a letter to members of the public interested in food issues outlining the four provisions in title III of the Bioterrorism Act that require FDA to issue regulations in an expedited time period, and FDA's plans for implementing them (see
http://www.cfsan.fda.gov/[tilde]dms/sec-ltr.html). In the letter, FDA invited stakeholders to submit comments to FDA by August 30, 2002, for FDA's consideration as it developed this proposed rule. FDA also held several meetings with representatives of industry, consumer groups, other Federal agencies, and foreign embassies after sending out the July 17, 2002, letter, in order to solicit stakeholder comments. In response to these solicitations, FDA received numerous comments regarding section 305 of the Bioterrorism Act.
FDA has considered all the comments received by August 30, 2002. FDA will consider all comments received thus far along with the comments we receive during the public comment period on this proposed rule as we develop the final rule. Some of the significant comments FDA received on or before August 30, 2002, include:
III. The Proposed Regulation
This proposed rule implements the food facility registration requirements in section 305 of the Bioterrorism Act. Together with the proposed rules implementing section 307 (prior notice), section 306 (recordkeeping), and section 303 (administrative detention) of the Bioterrorism Act, registration of food facilities will enable FDA to act quickly in responding to a threatened or actual bioterrorist attack on the U.S. food supply or to other food-related emergencies.
Registration will provide FDA with information about facilities that manufacture, process, pack, or hold food for consumption in the United States. In the event of an outbreak of food-borne illness, such information will help FDA and other authorities determine the source and cause of the event. In addition, the registration information will enable FDA to notify quickly the facilities that might be impacted by the outbreak.
In establishing and implementing this proposed rule, FDA will comply fully with its international trade obligations, including the applicable World Trade Organization (WTO) agreements and the North American Free Trade Agreement (NAFTA). For example, FDA believes this proposed rule is not more trade-restrictive than necessary to meet the objectives of the Bioterrorism Act. FDA has endeavored to make the registration process as simple as possible for both domestic and foreign facilities.
A. Highlights of Proposed Rule
The key features of this proposed rule are as follows:
B. General Provisions
1. Who Must Register Under This Subpart? (Proposed Sec. 1.225) As required by the Bioterrorism Act, the proposed rule applies to facilities engaged in the manufacturing/processing, packing, or holding of food for human or animal consumption in the United States. The proposed rule applies to both domestic and foreign food facilities. Individual homes are not subject to the regulation if the food that is manufactured/processed, packed, or held in the home does not enter commerce.
FDA is proposing in Sec. 1.225(b) to require all domestic facilities that manufacture/process, pack, or hold food to register, whether or not the food from the facility enters interstate commerce. The Bioterrorism Act provides that "any facility engaged in manufacturing, processing, packing, or holding food for consumption in the United States'' must register and defines "domestic facility'' as "a facility located in any of the States or Territories.'' Therefore, FDA tentatively concludes that the statute requires all domestic facilities to register, whether or not they engage in interstate commerce. Moreover, having a central database of all domestic facilities producing food would greatly assist FDA in limiting the effects of a food-related emergency covering several States. Nonetheless, because FDA recognizes that this is an important and controversial issue, the agency is seeking comment on whether the agency has authority to exempt domestic facilities engaged only in intrastate commerce from the registration requirement and, if so, whether FDA should use that authority. FDA also seeks comment on how many intrastate facilities are not covered by one of the exemptions from the registration requirement (e.g., the farm or retail exemption). Finally, FDA invites recommendations on what screening questions the agency could ask to enable the owner, operator, or agent in charge of a facility to easily determine whether the facility is an interstate or intrastate facility.
For both domestic and foreign facilities, FDA is proposing in Sec.1.225(a) and (b) that the owner, operator, or agent in charge, register the facility. FDA is also proposing in Sec. 1.225(c) that the U.S. agent may register a foreign facility if the foreign facility has designated the U.S. agent as its agent in charge. If a foreign facility wants to designate its U.S. agent as its agent in charge for purposes of registering, FDA recommends that the facility and U.S. agent enter into a written agreement authorizing the U.S. agent to register the facility and specifying the U.S. agent's other responsibilities. There are other roles in the course of business that an agent in charge may fill. A formal written agreement between the facility and its U.S. agent would provide clarity for both. Because the proposed rule would require the U.S. agent to reside or maintain a place of business in the United States, allowing the U.S. agent to register the foreign facility will give foreign facilities reliable access to electronic registration that some facilities might not otherwise have. For example, within the United States, Internet access is readily available to members of the public at many local libraries and certain places of business (e.g., photocopying centers).
This process will allow a foreign facility to be registered much more quickly than requesting a paper registration form from FDA by mail, waiting to receive the registration form in the mail from FDA, completing the registration form and sending it to FDA by mail, waiting for FDA to enter the information manually into the electronic registration database--which could take several weeks to several months depending on the number of paper registrations FDA has received previously--and awaiting a response from FDA by mail that contains the confirmation of registration and the facility's registration number.
2. Who is Exempt From This Subpart? (Proposed Sec. 1.226)
In Sec. 1.226, FDA is proposing to exempt several types of facilities from the registration requirement. First, as noted previously, FDA is proposing in Sec. 1.226(a) to exclude foreign facilities, "if food from these facilities undergoes further manufacturing/processing (including packaging) by another foreign facility outside the United States.'' In other words, foreign facilities involved in the initial stages of manufacturing/processing food are not required to register if another facility further manufactures/processes or packs the food produced at that facility outside the United States. This exemption would not apply to facilities if the "further manufacturing/processing'' at the subsequent facility is of a de minimis nature, such as adding labeling to a package or adding plastic rings to the outside of beverage bottles to hold them together. The facility conducting the de minimis activity would also be required to register. This proposal is based on FDA's tentative conclusion that the statute's exclusion of labeling and "similar activity of a de minimis nature'' from the definition of "further processing and packaging'' applies only for purposes of the definition of "foreign facility.'' FDA tentatively concludes that this limitation does not apply to the term "processing'' as used elsewhere in the registration provision of the Bioterrorism Act. Accordingly, facilities that label food or engage in similar activities would be required to register as processors. FDA requests comment on this interpretation of the Bioterrorism Act.
The following are examples of which foreign facilities would be subject to, or exempt from, the registration requirement, based on the activities they perform:
(1) A foreign facility would be required to register if it prepares a finished food and places it into packages suitable for sale and distribution in the United States.
(2) A foreign facility distributing food to food processors outside the United States for further manufacturing/processing before the food is exported for consumption in the United States would not be required to register, unless the further manufacturing/processing entails adding
labeling or other de minimis activity. If the further manufacturing/processing is of a de minimis nature, both the facility conducting the de minimis activity and the facility immediately prior to it would be required to register.
(3) The last foreign facility that manufactures/processes an article of food before it is exported to the United States would be required to register, even if the food subsequently is held or stored at a different facility outside of the United States. FDA is proposing to require these manufacturers/processors to register because the Bioterrorism Act exempts a foreign facility from registering only if another facility subsequently processes or packages the food.
(4) Facilities located outside the United States that take possession, custody or control of finished foods for holding, packing, and/or storage prior to export to the United States, would be required to register.
Even though the last processors and packagers of food are required to register under the proposed rule, the Bioterrorism Act also requires foreign facilities that pack and/or hold food subsequent to the processing and packaging process to register with FDA. Requiring registration of foreign facilities that conduct a significant activity with respect to the food, starting with the last manufacturer/processor involved, and ending with the last facility before the food is shipped to the United States, is consistent with the Bioterrorism Act, and ensures that FDA has contact information for foreign facilities whose operations would be expected to affect food exported for consumption in the United States. This requirement achieves a balance between protecting the U.S. food supply, and not unduly burdening foreign
Consistent with the Bioterrorism Act, FDA also is proposing in Sec. 1.226(g) to exempt certain fishing vessels from the registration requirement. These vessels include "those that not only harvest and transport fish but also engage in practices such as heading, eviscerating, or freezing intended solely to prepare fish for holding on board a harvest vessel.'' However, consistent with the Bioterrorism Act's reference to Sec. 123.3(k), the proposed rule provides that "those fishing vessels otherwise engaged in processing fish, which for purposes of this section means handling, storing, preparing, heading, eviscerating, shucking, freezing, changing into different market forms, manufacturing, preserving, packing, labeling, dockside unloading, or holding are subject to all of the regulations in this subpart.''
FDA also is proposing in Sec. 1.226(h) to exempt facilities that are regulated exclusively, throughout the entire facility, by USDA under the Federal Meat Inspection Act (21 U.S.C. 601 et seq.), the Poultry Products Inspection Act (21 U.S.C. 451 et seq.), or the Egg Products Inspection Act (21 U.S.C. 1031 et seq.). Such facilities include meat and poultry slaughterhouses. This section complies with section 315 of the Bioterrorism Act entitled "Rule of Construction,'' which states that nothing in title III of the Bioterrorism Act, or an amendment made by title III, shall be construed to alter the jurisdiction between USDA and the U.S. Department of Health and Human Services under applicable statutes and regulations.
FDA is proposing in Sec. 1.226 that facilities that are jointly regulated by FDA and USDA will be required to register under this rule because they are under FDA's jurisdiction as well as that of USDA. Examples of facilities jointly regulated by FDA and USDA include slaughter facilities that slaughter cattle and deer, and food processing facilities that process meat and nonmeat products, such as frozen T.V. dinners containing both meat, which is regulated by USDA, and fish, which is regulated by FDA.
As specified in the Bioterrorism Act, FDA also is proposing to exempt several other facilities from the registration requirement. These facilities, which are discussed in the definitions section, include farms (Sec. 1.226(b)); retail facilities (Sec. 1.226(c)); restaurants (Sec. 1.226(d)); and nonprofit food facilities in which food is prepared for, or served directly to, the consumer (Sec. 1.226(e)).
3. What Definitions Apply to This Subpart? (Proposed Sec. 1.227) As specified in proposed Sec. 1.227, the following definitions are used throughout the proposed rule:
a. The act. The proposed rule (Sec. 1.227(a)) defines "the act'' as the Federal Food, Drug, and Cosmetic Act. The proposed rule applies the definitions of terms in section 201 of the act (21 U.S.C. 321) to such terms in the proposed rule.
b. Calendar day. FDA is proposing in Sec. 1.227(c)(1) to define "calendar day'' as every day shown on the calendar. This term includes weekend days.
c. Facility. FDA is proposing in Sec. 1.227(c)(2) to define a "facility'' as "any establishment, structure, or structures under one management at one general physical location, or, in the case of a mobile facility, traveling to multiple locations, that manufactures/processes, packs, or holds food for consumption in the United States. Individual homes are not facilities if the food that is manufactured/processed, packed, or held in the home does not enter commerce.'' In response to comments that FDA received during its early outreach efforts, FDA is clarifying in the proposed rule that a facility is not limited to one building, but can consist of several contiguous structures.
The definition of "facility'' also specifies that a facility must be under one management. This means that, for purposes of the proposed rule, a single building may house distinct facilities if they are under separate management. If a facility is under joint management of two or more companies, the joint management arrangement is considered one management.
A mixed-type facility performs activities of a facility that is ordinarily required to register and activities of a facility that is ordinarily exempt, such as a farm or retail facility. In order to determine whether a mixed-type facility must register, FDA will consider whether the activity that would require registration is merely incidental to the activities of an exempt facility. If these activities are merely incidental, the facility need not register. For further clarification, see the discussion of the definitions of "farm,'' "retail facility,'' and "restaurant'' that follow.
i. Domestic facility. FDA is proposing in Sec. 1.227(c)(2)(A) to define "domestic facility'' consistent with the definition of "State'' in section 201(a)(1) of the act (21 U.S.C. 321(a)(1)). That is, FDA is proposing to define a domestic facility as one that is located in any State or Territory of the United States, the District of Columbia, or the Commonwealth of Puerto Rico.
ii. Foreign facility. FDA is proposing in Sec. 1.227(c)(2)(ii) to define a foreign facility as a facility other than a domestic facility that manufactures, processes, packs, or holds food for consumption in the United States.
d. Farm. FDA is proposing in Sec. 1.227(c)(3) to define "farm'' in part as "a facility in one general physical location devoted to the growing of crops for food, the raising of animals for food (including seafood), or both.'' A farm may consist of contiguous parcels of land, ponds located on contiguous parcels of land, or, in the case of netted or penned areas located in large bodies of water, contiguous nets or pens. Some examples of farms include: Apple orchards, hog farms, dairy farms, feedlots, or aquaculture facilities.
The definition of "farm'' includes: (i) Facilities that pack or hold food, provided that all of the food used in such activities is grown or raised on that farm or is consumed on that farm; and (ii) facilities that manufacture/process food, if all of the food used in such activities is consumed on that farm or another farm under the same ownership. "Farm'' includes such facilities because they are activities incidental to farming that most farms engage in (e.g., holding and packing of harvested crops). Facilities that engage in manufacturing/processing, packing, or holding of food that is not described in the definition of "farm'' must register because such activities are not activities that most farms engage in and are thus not included in the definition of "farm.''
A farm that manufactures/processes, packs, or holds food is not required to register with FDA, if all of the food used in such activities is consumed on that farm or another farm under the same ownership. For example, a farm that manufactures/processes animal feed from ingredients obtained off the farm for consumption by animals on the farm would be exempt because most farms that raise animals engage in this activity.
This definition does not extend to facilities that grow crops and raise animals and also manufacture/process food that is sold for consumption off the facility because such activities are not incidental to farming. For example, a facility that grows oranges and manufactures/processes them into orange juice for sale to a distributor would be required to register as a manufacturing/processing facility.
A facility could meet the definition of "farm'' if all of the activities on the farm meet the description in Sec. 1.227(c)(3)(i), (c)(3)(ii), or both. For example, one farm could meet the description in Sec. 1.227(c)(3)(i) if all of the food packed or held on the farm was grown on that farm. A second farm could meet the description in Sec. 1.227(c)(3)(ii) if all of the food manufactured/processed on the farm is consumed on that farm, even if some of the food was not grown or raised on the farm (e.g., animal feed processed on the farm using materials obtained off the farm and fed to cattle on that farm).
It should be noted that the proposed retail exemption also may apply to facilities that grow crops and raise animals. Thus, a facility that grows crops and raises animals and that also manufactures/processes, packs, or holds food and sells it directly to consumers would be exempt from registering as a retail facility under Sec. 1.226(e), whether or not the food was all grown or raised on that facility. Similarly, a facility would be exempt as both a farm and a retail facility if it sold crops grown on the farm to consumers at a roadside stand.
FDA is proposing to require co-op facilities that manufacture/process, pack, or hold food, and that are not subject to the farm exemption, to register with FDA. Co-ops are organizations formed to perform activities, including manufacturing/processing or packing food, for their members. The product of these activities is distributed to the members or the public. A farm that grows wheat for distribution to co-op members would be exempt from registration, but a processing facility owned by the co-op would be required to register if it is not located on the farm and mills the wheat into flour for consumption by co-op members off the farm.
The definition of farm does not include facilities that contract with multiple farmers to grow crops or raise animals. These facilities may manufacture/process feed and distribute it to the contract farmers for feeding to animals being raised on the farm. FDA is proposing that the facilities that manufacture/process feed for the contract farmers would be required to register. The farms that grow the crops or raise the animals would be exempt from the registration requirement.
e. Food. FDA is proposing in Sec. 1.227(c)(4) to define "food'' as it is defined in section 201(f) of the act. That definition is: "* * * (1) articles used for food or drink for man or other animals, (2) chewing gum, and (3) articles used for components of any such article.'' FDA also is proposing to include some examples of products that are considered food under section 201(f) of the act. These examples include, but are not limited to: Fruits; vegetables; fish; dairy products; eggs; raw agricultural commodities for use as food or components of food; animal feed, including pet food; food and feed ingredients and additives, including substances that migrate into food from food packaging and other articles that contact food; dietary supplements and dietary ingredients; infant formula; beverages, including alcoholic beverages and bottled water; live food animals (such as hogs and elk); bakery goods; snack foods; candy; and canned foods. "Substances that migrate into food from food packaging'' include immediate food packaging or components of immediate food packaging that are intended for food use. Outer food packaging is not considered a substance that migrates into food.''
f. Holding. FDA is proposing in Sec. 1.227(c)(5) to define holding as storage of food. The proposed rule gives examples of holding facilities as including, but not being limited to: Warehouses, cold storage facilities, storage silos, grain elevators, or liquid storage tanks.
g. Manufacturing/processing. FDA is proposing in Sec. 1.227(c)(6) to define manufacturing/processing as "making food from one or more ingredients, or synthesizing, preparing, treating, modifying or manipulating food, including food crops or ingredients.'' Some examples of manufacturing/processing include, but are not limited to: Cutting, peeling, trimming, washing, waxing, eviscerating, rendering, cooking, baking, freezing, cooling, pasteurizing, homogenizing, mixing, formulating, bottling, milling, grinding, extracting juice, distilling, labeling, or packaging. FDA is defining manufacturing and processing together because the meanings of the terms overlap. For example, combining two materials into a finished product, such as macaroni and cheese, could be considered manufacturing, processing, or both. Since both manufacturers and processors are required to register with FDA, FDA does not believe it is necessary to distinguish between manufacturing and processing in the proposed rule.
h. Nonprofit food facility. FDA is proposing in Sec. 1.227(c)(7) to define a nonprofit food facility as "a charitable entity that prepares, serves, or otherwise provides food to the public.'' Examples of these facilities include: food banks, soup kitchens, and nonprofit food delivery services. FDA is proposing that in order to qualify as a nonprofit food facility, the entity must be exempt from paying income tax under the U.S. Internal Revenue Code. This requirement serves to ensure that FDA's definition of a nonprofit facility is consistent with that of other agencies of the U.S. Government.
i. Packing. FDA is proposing in Sec. 1.227(c)(8) to define packing as "placing, putting, or repacking a food into different containers without making any change to the form of the food.'' Facilities engaged in packing of food for consumption in the United States must register under the proposed rule, unless exempt.
j. Port of entry. For purposes of the proposed rule, FDA is defining "port of entry'' as "the water, air, or land port at which the article of food is imported or offered for import into the United States, i.e., the port where food first arrives in the United States.'' FDA is proposing this definition because the port where the food arrives in the United States may be different than the port where the entry of the article of food is processed for U.S. Customs purposes,
i.e., where the article is "entered.'' Under U.S. Customs Service statutes, products can be imported into one port, then transported to another port under a custodial bond before a consumption entry is filed. For example, food may be imported into the United States from Canada through Buffalo, NY, but not entered for consumption with U.S. Customs until it reaches St. Louis, MO, several days later. In this example, under FDA's proposed definition, the port of entry is Buffalo, NY.
The registration authority in the Bioterrorism Act is intended to give FDA better tools to deter, prepare for, and respond to bioterrorism. Given this purpose, "port of entry'' must be defined as the port of arrival. Allowing food from a facility that has not registered and that is presented for importation into the United States to be shipped around the country and potentially lost to Government control simply is not consistent with the Bioterrorism Act's stated purpose. FDA believes that its ability to protect U.S. consumers from terrorism or other food-related emergencies will be strongest if food can be examined, and if necessary, held at the point where it first arrives in the United States. FDA requests comment on its proposal to define "port of entry'' as the port of arrival.
k. Restaurant. FDA is proposing in Sec. 1.227(c)(10) to define a restaurant as "a facility that prepares and sells food directly to consumers for immediate consumption.'' As defined in the rule, some examples of restaurants include, but are not limited to: Cafeterias, lunchrooms, cafes, bistros, fast food establishments, food stands, saloons, taverns, bars, lounges, catering facilities, hospital kitchens, day care kitchens, and nursing home kitchens. See section III.B.3.c of this document for a discussion of mixed-type facilities, which may include restaurants.
Due to possible ambiguity in the term, "catering facilities'', FDA states in the proposed restaurant definition that facilities that provide food to interstate conveyances, such as airplanes, passenger trains, and cruise ships, rather than directly to consumers, are not restaurants. Facilities that provide food to interstate conveyances are not considered restaurants because they do not serve food directly to consumers for immediate consumption. For example, a facility that provides sandwiches to a passenger train for eventual sale to passengers would not be considered a restaurant. However, the snack bar on the train that sells the sandwiches to consumers would be considered a restaurant. FDA has historically inspected these facilities that provide food to interstate conveyances and considers them processors, rather than restaurants.
Because the proposed rule also applies to facilities that manufacture/process, pack, or hold food for animal consumption in the United States, by analogy, the term "restaurants'' also includes pet shelters, kennels, and veterinary facilities in which food is provided to animals.
l. Retail facility. In Sec. 1.227(c)(11), the proposed rule defines a retail facility as "a facility that sells food products directly to consumers only. The term includes, but is not limited to, grocery and convenience stores, vending machine locations, and commissaries. The term includes facilities that not only sell food directly to consumers, but that also manufacture/process food in that facility solely for direct sale to consumers from that same facility.''
The Bioterrorism Act does not limit the retail facility exemption to human food. However, the legislative history to the Bioterrorism Act states that the retail exemption applies to food for "human'' consumption. Therefore, FDA is taking comments on whether the retail exemption should also be applied to food for animal consumption.
The proposed rule would also require facilities that sell both directly to consumers and to distributors and wholesalers to register. Examples of these facilities are warehouse clubs. Because such facilities do not sell food directly to consumers only, they do not meet the definition of a "retail facility.''
m. U.S. agent. FDA is proposing in Sec. 1.227(c)(12) to define a U.S. agent as "a person residing or maintaining a place of business in the United States whom a foreign facility designates as its agent.'' This definition is consistent with FDA's drug, biologics, and device registration regulations found in parts 207, 607, and 807 (21 CFR parts 207, 607, and 807), respectively. In order to ensure that the U.S. agent is available to assist FDA in contacting foreign facilities, the proposed definition of U.S. agent also specifies that the U.S. agent "cannot be in the form of a mailbox, answering machine, or service, or other place where an individual acting as the foreign facility's agent is not physically present.'' FDA also is proposing to have the U.S. agent's responsibilities include acting as a communications link between FDA and the facility, such that FDA will treat representations provided by the U.S. agent to FDA as those of the foreign facility, and will consider information FDA provides to the U.S. agent as the equivalent of providing the same information or documents directly to the foreign food facility. As noted previously, FDA also is proposing to allow the U.S. agent to register on behalf of the foreign facility. FDA recommends that the U.S. agent and facility enter into a written agreement specifying the U.S. agent's responsibilities. The facility does not need to submit a copy of the agreement to FDA as part of its registration. If the foreign agent registers a facility without authorization from the facility, FDA will consider the registration to be a materially false, fictitious, or fraudulent statement to the U.S. Government under 18 U.S.C. 1001.
n. You or registrant. FDA is proposing in Sec. 1.227(c)(13) to define "you'' or "registrant'' as "the owner, operator, or agent in charge of a facility that manufactures/processes, packs, or holds food for consumption in the United States.'' FDA is proposing to use "you'' or "registrant'' throughout the proposed rule for easier readability.
C. Procedures for Registration of Food Facilities
1. When Must You Register? (Proposed Sec. 1.230) The Bioterrorism Act requires facilities subject to its requirements to be registered with FDA no later than December 12, 2003.
Proposed Sec. 1.230 would require facilities that currently manufacture/process, pack, or hold food for consumption in the United States to be registered by December 12, 2003. FDA is proposing that facilities that begin to manufacture/process, pack, or hold food for consumption in the United States on or after December 12, 2003, must be registered before they begin such activities. This also would apply to facilities engaged in seasonal activities that may not be operating in December, 2003. Before these facilities could begin to manufacture/process, pack, or hold food for consumption in the United States after December 12, 2003 (or resume operations after this date), they must be registered with FDA.
FDA is planning to have both its electronic and paper registration systems operational at least 2 months before the statutory deadline of December 12, 2003. FDA will announce the exact date these systems will be available for registration in the final rule. On or before October 12, 2003, FDA will publish in the Federal Register either a final rule setting forth the final registration requirements, or a notice providing an address to which paper registrations should be sent, if either the final rule or the electronic system for accepting registrations has not been completed by that date. Registrations should not be mailed to FDA before publication of that document in the Federal Register. Registrations mailed to FDA before the date announced in the Federal Register publication will not be accepted.
2. How and Where Do You Register? (Proposed Sec. 1.231) Although FDA is proposing to allow registration by either electronic or paper means, FDA is planning to devote most of its
resources earmarked for registration to building and maintaining an electronic food facility registration system. The majority of facilities, both in the United States and abroad, have access to the Internet, either within their companies or through public libraries, copy centers, schools, or Internet cafes, as well as through a foreign facility's U.S. agent if the facility makes such arrangements. If the U.S. agent does not have Internet access onsite, the agent may register the facility electronically from a local library or other public facility that offers Internet access either free or for a relatively small fee. In this manner, all foreign facilities would be able to obtain an automatic electronic confirmation of registration and the facility's registration number similar to domestic facilities that register electronically.
Registering electronically will benefit both facilities and FDA. FDA will be able to accept electronic registrations from anywhere in the world 24 hours a day, 7 days a week through a link on FDA's Internet Web site. Electronic registration also will enable a facility to be registered more quickly than registering by mail, since obtaining confirmation of registration and the facility's registration number online should be instantaneous once a facility fills in all required fields on the registration screen. In contrast, registration by mail may take several weeks to several months, depending on the efficiency of the mail system and the number of paper registrations that FDA will need to enter manually into the system. Registrations received by mail will be processed in the order in which they are received.
Regarding the electronic Internet-accessible system, the registrant will be able to fill out the entire form online. In order to ensure that the form is filled out completely, the electronic system will not accept a registration submission until all of the mandatory fields are completed. Because FDA intends to allow companies the option of filing registration forms on behalf of one or more of their facilities, FDA will give the registrant the option of completing additional registration forms for other facilities after the first registration form, and each subsequent registration form, is completed.
FDA is proposing in Sec. 1.231(b) that a registrant may register by mail if none of the means of electronic access mentioned previously are reasonably available. In registering by mail, a registrant also may fill out one or more forms on behalf of one or more facilities. A registrant registering by mail must pick up a copy of the form from FDA headquarters, call FDA at a toll-free number (that will be provided in the final rule) to request a copy of the form, or send FDA a written request for the form. Once the registrant receives the mailed copy of the form, the form must be filled out completely and legibly, and mailed back to FDA at the address provided in the final rule. Once FDA receives the form, an agency employee will check to make sure all mandatory fields are filled out completely and legibly. If the form is not complete or is illegible, it will be returned to the registrant for completion, provided that the registrant's mailing address is legible and valid. If the form is complete and legible, FDA will manually enter the data on the form into the system as soon as practicable, which will depend on the number of other registration forms awaiting manual entry into the system.
The Bioterrorism Act requires FDA to notify the registrant that it has received the facility's registration and to assign the facility a unique registration number. Accordingly, FDA is proposing the following: If a facility registers electronically, FDA will provide the registrant with an automatic electronic confirmation of registration, along with the facility's registration number. This notification will be similar to an automatic electronic receipt many companies provide consumers when they purchase products online (i.e., via the Internet). If the facility registers by mail, FDA will be able to provide the registrant with confirmation of registration and the facility's registration number only after FDA manually enters the registration information into the system. Depending on the number of other paper registrations FDA receives, this entry process could take several weeks to several months. After the registration information is entered into the system, FDA will mail a copy of the information entered to the registrant, along with confirmation of registration and the registration number. If any of the information that was entered into the system is incorrect, the registrant must mail an update to correct the information within 30 calendar days.
For electronic registrations, FDA is proposing in Sec. 1.231 to consider the facility registered when FDA electronically transmits the facility's registration number. If a registration is done by mail, the facility is registered once the data are entered into the registration system and the system generates a registration number. This means that the facility information will be entered into the registration system before the facility receives its registration number, if registration is done by mail. FDA strongly encourages all facilities, both foreign and domestic, to register electronically, as that minimizes the delay in having FDA mail the registrant a form, the registrant returning the completed form to FDA, FDA entering the facility's data manually into the registration system, and FDA subsequently mailing the registration number and receipt of registration to the facility. To the extent possible, all covered facilities should make every effort to register electronically or send in their registration form as far in advance as possible of the date they are intending to import their products into the United States (but not sooner than the announced date) since the Bioterrorism Act requires FDA to hold imported products of any unregistered facility at the U.S. port of entry until the facility is registered with FDA.
The Bioterrorism Act precludes FDA from requiring facilities to register electronically. Given FDA's preference for electronic registration and the ease of electronic registration for both registrants and FDA, FDA is requesting comments regarding what other means FDA should use to encourage electronic registration. FDA also is requesting comments from facilities that believe they will be unable to register electronically, as well as comments regarding data on the number of these facilities.
No registration fee is required for either the electronic or paper registration. FDA is proposing that registrants must submit all registration information in the English language. FDA is proposing to require submissions to be in English in order for FDA to understand the content of submissions and ensure that registration data are entered accurately.
3. What Information is Required in the Registration? (Proposed Sec. 1.232)
FDA is proposing in Sec. 1.232 that registrants must submit to FDA certain information, including: The name, full address, phone number, fax number, and e-mail address of the facility (paragraph (a)); the name and address of the parent company (paragraph (b)), if the facility is a subsidiary of the parent company; emergency contact information, including the contact's name, title, office phone, home phone, cell phone (if available), and e-mail address (if available) (paragraph (c)); all trade names the facility uses (paragraph (d)); and the name, address, phone number, fax number (if available), and e-mail address (if available) of the U.S. agent for foreign facilities (paragraph (f)). FDA is planning to include all of this information in the mandatory section of the registration form. At the end of the form, FDA is planning to provide a statement in which the registrant will certify that the information submitted is true and accurate, and that the individual submitting the registration is authorized by the facility to do so (paragraph (g)). This statement also will require the phone number, e-mail address (if available), and fax number (if available) of the person submitting the registration.
Section 305 of the Bioterrorism Act also states that FDA may require registrants to submit the general food categories of food produced at the facility, if FDA determines through guidance that such information is necessary. FDA plans to issue such guidance, and make it available for comment in accordance with good guidance practices (21 CFR 10.115). The guidance will address FDA's finding that such food categories are necessary. Section 305 of the Bioterrorism Act specifically provides that the food categories to be used are those provided in Sec. 170.3. FDA tentatively concludes that information on the category of food manufactured, processed, packed, or held at each facility that must register is necessary for a quick, accurate, and focused response to a bioterrorist incident or other food-related emergency, because the categories will assist FDA in conducting investigations and surveillance operations in response to such an incident. These categories will also enable FDA to quickly alert facilities potentially affected by such an incident if FDA receives
information indicating the type of food affected. For example, if FDA receives information indicating that soft drinks could be affected by a bioterrorist incident or other food related emergency, FDA would be able to alert soft drink manufacturers/processors, packers, and holders about this information. Additionally, the food categories, in conjunction with the prior notification requirements in 21 CFR part 1, subpart I, would aid FDA in verifying that imported products are correctly identified by where and by when they were produced. For example, if the registration information identifies a facility as producing only dairy products and FDA receives a prior notice purportedly from the facility for the shipment indicating that the facility is shipping nuts, FDA can target that facility for verification based on the discrepancy. FDA believes, however, that information about a facility's food product categories is a key element for both FDA and industry to allow for rapid communications to facilities directly impacted by an actual or potential bioterrorist attack or other food-related emergency. FDA, therefore, is proposing in Sec. 1.232(e) to include on the registration form as a mandatory field the categories from Sec. 170.3. For ease of use, however, the more common categories found in FDA's product code builder at www.fda.gov/search/databases.html will be listed as the main categories on the form, followed by the food product categories in Sec. 170.3 as references for each FDA product code category. For example, the registration form includes coffee and tea as a product category, which includes the products listed in Sec. 170.3(n)(3) and (n)(7). Categories not in Sec. 170.3 will be listed as optional selections.
FDA believes its proposed approach will both permit the agency to collect vital information regarding usable categories of products produced at the facility, and address industry's concern that the food product categories in Sec. 170.3 are unworkable. FDA is interested in receiving comments on whether use of FDA's product code builder categories as the primary selection, with references immediately after each entry to the food product categories in Sec. 170.3 that apply to each selection, addresses the comments' concerns regarding use of the
categories in Sec. 170.3, while complying with the requirements of the Bioterrorism Act.
FDA also is proposing to include several other fields that relate directly to the statutory requirements. The first of these is the name, address, phone number, facsimile number (if available), and e-mail address (if available) of the U.S. agent. Because the U.S. agent will act as a communications link between the facility and FDA, it is vital for FDA to have reliable contact information for the U.S. agent. FDA also is proposing that a mandatory section of the form include, if applicable, the name and address of the parent company, if the facility is owned by a parent corporation. This information is important for FDA in understanding the relationship between a facility and its parent company regardless of the name under which a facility may be operating.
FDA also is proposing to include as a mandatory section the emergency contact information for a facility, which would include an individual's name, title, office phone, home phone, and cell phone (if available). If FDA receives information regarding a potential or actual threat to the nation's food supply, or other food-related emergency, it must be able to get in touch with an individual at each potentially affected facility who could respond immediately to the threat at any hour. The emergency contact person does not have to be physically located at the facility; however he or she must be accessible and able to respond in an emergency. Thus, for example, a parent corporation can list as the emergency contact the name of an individual at headquarters who has overall responsibility for responding to emergencies at any
facility owned by the parent company.
FDA is planning to include at the end of the form a statement in which the person submitting the registration information will certify that the information submitted on the form is true and accurate and the person registering the facility is authorized to do so. If a person submits false information on the registration form, or if a person registers a facility without being authorized to do so, that registration will be considered a materially false, fictitious, or fraudulent statement to the U.S. Government under 18 U.S.C. 1001, which subjects the person to criminal penalties. FDA is including this language on the registration submission to deter individuals from either submitting false information, or registering a facility if they are not authorized by the facility to register it. This applies both to individuals who do not have any relationship with the owner, operator, or agent in charge of a facility, and to those who have a connection to the owner, operator, or agent in charge of a facility, such as the U.S. agent, but who do not have authorization from the facility to register on its behalf.
4. What Optional Items Are Included in the Registration Form? (Proposed Sec. 1.233)
FDA also is proposing in Sec. 1.233 to include several optional fields on the registration form. These items are consistent with the statutory directive, and will enable FDA to communicate more quickly with facilities that may be the target of a bioterrorist attack or other food-related emergency. These proposed fields include:
(a) a preferred mailing address, which would allow a facility's corporate headquarters to serve as the primary contact with FDA instead of the facility;
(b) the type(s) of activity conducted at the facility (e.g., manufacturing/processing, packing, or holding), which would allow FDA to target its communications in emergencies to those facilities potentially impacted based on the information FDA receives (e.g., a threat to a type of food product at manufacturing facilities);
(c) food categories not included in Sec. 170.3 (e.g., dietary supplements, infant formula, and food for animal consumption), which would be helpful to FDA for responding to a terrorist incident or other food safety emergency involving these foods;
(d) the type of storage or manufacturing/processing facility, in the event that the facility is solely a warehouse/holding facility and stores multiple types of food;
(e) a food product category of ``most/all food product categories'', if the facility manufactures, processes, packs, or holds foods in most or all of the categories under Sec. 170.3; and
(f) the approximate dates of operation, if the facility's business is seasonal.
FDA encourages all facilities to submit this optional information if it applies to the facility's operations.
5. How and When Do You Update Your Registration Information? (Proposed Sec. 1.234)
FDA is proposing in Sec. 1.234 that the owner, operator, or agent in charge must submit a timely update to FDA via the Internet (or by paper copy if no Internet access) within 30 calendar days of any change to any of the information previously submitted, including, but not limited to, the name of the owner, operator, or agent in charge. FDA is proposing 30 calendar days in order to balance the needs of both industry and FDA. In order for FDA to have accurate information for responding to terrorist threats or other food related emergencies, facilities must submit updates within an expedited timeframe. However, FDA also understands that the need to submit updates may coincide with transitions occurring at the facility in which the facility may not be able to provide updates immediately after such transitions occur. FDA believes that requiring updates within 30 calendar days of changes to the information on the initial registration submission is a reasonable balance between FDA's and industry's interests. FDA requests comments on this 30-day timeframe.
With respect to the content of the update, FDA is proposing that the update must include any changes to any information the facility previously submitted, including, but not limited to, changes to information regarding food product categories. This information, including these categories, will assist FDA in conducting investigations and surveillance operations in response to a bioterrorist incident. If this information is outdated it will interfere with FDA's ability to quickly ascertain the nature and scope of the problem and to alert affected facilities and prevent further distribution of harmful food. Therefore, for efficient and effective implementation of the Bioterrorism Act, FDA is proposing to require registrants to update previously submitted information in both the mandatory and optional categories, if the registrant originally submitted information in both categories and that information changes.
FDA requests comments on this proposed requirement and how it will affect the submission of optional information.
A facility canceling a registration must do so on a separate cancellation form electronically or by mail.
D. Additional Provisions
1. What Other Registration Requirements Apply? (Proposed Sec. 1.240) In proposed Sec. 1.240, FDA has included a provision reminding registrants that they must comply with all other applicable registration requirements, including those found in part 108 (21 CFR part 108), related to emergency permit control. FDA wants to ensure that registrants subject to the registration regulation being proposed to implement the Bioterrorism Act are aware that this registration does not take the place of that required in part 108, or any other registration requirements.
FDA seeks to minimize the burden of this rule on covered facilities and the submission of duplicative information. FDA is aware that existing registrations required by FDA and other federal agencies ask for information that may be duplicative of some of the information FDA is proposing be submitted under this rule. The Bioterrorism Act requires that certain facilities register with FDA. The Bioterrorism Act also specifies that certain information must be contained in the facilities' registration submissions. FDA seeks comments on whether there are registration requirements under which facilities must submit duplicative information to more than one Federal agency. If so, FDA also seeks comments on whether there is any way, consistent with the requirements and purpose of the Bioterrorism Act, to minimize the duplication of information required to be submitted under these registration requirements. In particular, FDA is interested in comments on whether it has authority, under the Bioterrorism Act or another regulatory mandate, to grant a partial or full exemption from the FDA registration requirement to facilities that have already registered with another Federal agency. If such authority exists, FDA is also interested in whether the goals of the Bioterrorism Act could be met if FDA does not have complete registration information.
2. What Happens if You Fail to Register? (Proposed Sec. 1.241) As provided in the Bioterrorism Act, two consequences may occur if a facility covered under these regulations fails to register. Failure of either domestic or foreign facilities to register is considered a prohibited act under section 301 of the act (21 U.S.C. 331). Under section 302 of the act (21 U.S.C. 332), the United States can bring a civil action in Federal court to enjoin persons who commit a prohibited act and, under section 303 of the act (21 U.S.C. 333), can bring a criminal action in Federal court to prosecute persons who commit a prohibited act. Under section 305a of the Bioterrorism Act, FDA can seek debarment of any person who has been convicted of a felony relating to importation of food into the United States.
FDA seeks comment on circumstances under which a firm's registration should be considered null and void and on circumstances under which a firm's registration should be revoked. FDA also seeks comment on the process for such determinations.
For foreign facilities that fail to register and attempt to import food into the United States, the Bioterrorism Act requires the food be held at the port of entry unless FDA directs its removal to a secure facility. FDA is proposing in Sec. 1.241(e) that if FDA determines that removal to a secure facility is appropriate (e.g., due to a concern with the security of the article of food or due to space limitations in the port of entry), FDA may direct that the article of food be removed to a bonded warehouse, container freight station, centralized examination station, or another appropriate secure facility that has been approved by FDA. Perishables, however, may not be stored in U.S. Customs Service's bonded warehouses; thus FDA may direct fresh produce or seafood that requires storage to another facility. FDA and the U.S. Customs Service plan to issue guidance for their field offices that will identify locations of secure storage.
In order to minimize confusion about who is responsible for making arrangements if food is held under section 801(l) of the act (21 U.S.C. 381(l)), FDA is proposing in Sec. 1.241(f) that the owner, purchaser, importer, or consignee must arrange for storage of the article of food, in an FDA-designated secure facility and must promptly notify FDA of the location. Any movement of the article to the facility must be accomplished under bond. We note that when section 801(l) of the act requires that food be held, it does not appear to mandate that the Government take actual physical custody of the goods; instead it limits both the movement of the goods and the potential storage locations, thereby making Government oversight straightforward. As described previously, U.S. Customs Service has identified a well-established network of storage facilities that are secure. When these storage facilities are used, charges are borne by the private parties. We thus believe that although Congress intended strict controls over food refused admission under section 801(l) of the act, it did not intend to require FDA or U.S. Customs Service to take custody of or pay for the holding of such food. We seek comment on this issue.
The article of food must be held at the port of entry or in the secure facility until the owner, operator, or agent in charge of the foreign facility has submitted its registration information to FDA, FDA has registered the facility, and FDA has notified the U.S. Customs Service and the person who submitted the registration that the facility is registered and the article of food no longer is subject to a hold under section 801(l)(1) of the act. Notwithstanding section 801(b) of the act, while any article of food is held at its port of entry or in a secure facility under section 801(l) of the act, it may not be delivered to any of its importers, owners, or consignees.
The Bioterrorism Act does not provide specific procedures for the disposition of food under hold under section 801(l) of the act when no subsequent registration is submitted. FDA thus believes that the general requirements of Title 19 of the United States Code and the U.S. Customs implementing regulations that apply to imports for which entry has not been made apply in these circumstances. Under 19 U.S.C. 1448 and 1484, entry of merchandise must be made within the time period prescribed by regulation, which is 15 calendar days after the food arrives in the United States. (See 19 CFR 142.2.) If entry is not made within this timeframe, the carrier or other authorized party is required to notify U.S. Customs Service and a general order warehouse. Generally, at that point the warehouse must arrange to take and store the food at the expense of the consignee. The disposition of this merchandise is governed by 19 U.S.C. 1491 and the implementing regulations at 19 CFR part 127.
Typically, after 6 months, unentered merchandise is deemed unclaimed and abandoned and can be disposed of by the United States. Before this 6 month period runs, however, such merchandise can be re-exported. FDA and U.S. Customs Service plan to develop additional guidance to explain how the agencies will handle food when it must be placed in general order warehouses due to failure to register.
Even though delivery is not allowed, FDA believes that importers, owners, and consignees of food that has been refused under section 801(l) of the act can make arrangements for food to be held: these arrangements can be made without taking possession of the food. FDA recognizes that food may be shipped in the same container or truck with nonfood items. Since articles that are not food are not subject to these regulations, when mixed or consolidated imported freight contains articles of food that must be held at the port of entry or moved to a secure facility, those articles under hold must be dealt with before the rest of the shipment proceeds.
FDA also is proposing in Sec. 1.241(h) that determination that an article of food is no longer subject to hold under section 801(l) of the act is different than, and may come before, determinations of admissibility under other provisions of the act or other U.S. laws. A determination that an article of food is no longer subject to hold under section 801(l) of the act does not mean that it will be granted admission under other provisions of the act or other U.S. laws.
3. What Does Assignment of a Registration Number Mean? (Proposed Sec 1.242)
FDA is proposing in Sec. 1.242 to state that assignment of a registration number to a facility means that the facility is registered with FDA. Assignment of a registration number does not in any way denote FDA's approval or endorsement of a facility or its products.
Therefore, any representation in food labeling that creates an impression of official approval, endorsement, or apparent safety because a facility that manufactures/processes, packs, or holds the food is registered by FDA would be misleading and would misbrand the food under section 403(a)(1) of the act (21 U.S.C. 343(a)(1)).
4. Is Food Registration Information Available to the Public? (Proposed Sec. 1.243)
The Bioterrorism Act provides that registration information and any information contained therein that would disclose the identity or location of a specific registered facility is not subject to disclosure under 5 U.S.C. 552 (the Freedom of Information Act). This provision does not apply to information obtained by other means or that has previously been disclosed to the public as defined in 21 CFR 20.81. FDA is proposing to codify this provision in Sec. 1.243.
IV. Analysis of Economic Impacts
A. Benefit-Cost Analysis
FDA has examined the economic implications of this proposed rule as required by Executive Order 12866. Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). Executive Order 12866 classifies a rule as significant if it meets any one of a number of specified conditions, including: having an annual effect on the economy of $100 million, adversely affecting a sector of the economy in a material way, adversely affecting competition, or adversely affecting jobs. A regulation is also considered a significant regulatory action if it raises novel legal or policy issues. FDA has determined that this proposed rule is a significant regulatory action as defined by Executive Order 12866.
B. Need for the Regulation
The purpose of this regulation is to ensure FDA has knowledge of all domestic and foreign facilities that manufacture/process, pack, or hold food for consumption in the United States. In the event of an actual or threatened bioterrorist attack on the U.S. food supply or other food-related public health emergency, such information will help FDA and other authorities determine the source and cause of such an event, and allow FDA to communicate with potentially affected facilities. The benefits of this regulation would be realized by accomplishing this purpose, as well as other, related benefits. For example, FDA is developing a regulation, 21 CFR part 1, subpart I, to implement prior notice provisions in section 307 of the Bioterrorism Act. Information provided to FDA in a facility's registration would be helpful in FDA's assessment of whether a shipment may present a threat of serious adverse health consequences or death to humans or animals.
C. Reason for the Regulation
FDA is proposing three regulations that will work in harmony to improve food safety. Food safety is mostly a private good. Establishments have powerful incentives to ensure that the ingredients they purchase are not contaminated and that their production processes are protected from unintentional and intentional contamination. Deliberate (intentional) contamination of food linked to a particular product or facility--particularly if the facility is considered negligent--would be extraordinarily costly to a firm. Indeed, the private incentives to avoid deliberate contamination should be similar to the private incentives for food safety. Deliberate food contamination events nonetheless differ from ordinary outbreaks of foodborne illness in that they are more likely to be low probability events with severe public health consequences.
Although private incentives lead to private efforts to protect against deliberate contamination at the facility level, there are external effects associated with privately produced protection. Private incentives fail to provide the optimal amount of information about the food production and distribution system. Getting food from the farm or sea to the plate involves a complex system of production and distribution. The system works using local knowledge and information; each participant needs to know only as much about the overall system as is necessary for his or her business. Market prices convey most of the information necessary for the ordinary production and distribution of food. In the event of an actual or suspected contamination of the food supply, however, more complete information is needed where it can be centrally used. The suspect food must be traced backward and forward through the distribution chain, both to protect consumers and to find the source and cause of the event.
No individual firm or organization has sufficient financial incentive to establish a central information system relating to food safety for the entire economy. The nation's food processors and importers as a whole would benefit from such a system because it would be easier to uncover and solve problems, but the private costs to create the system probably would be prohibitive for any single firm or third party organization.
We estimate that an effective system of information would require several hundred thousand participants to gather information and provide it to a central system. The private transactions costs to bring all the participants together voluntarily and get them to agree to create such a system would be extraordinarily high. No single organization could capture additional revenue sufficient to cover the cost. Also, because the provision of information by some participants makes it available for all, there would be a tendency for establishments to try to be free riders in the information system. But the more information and participation in the system, the more effective it is. Another way of looking at the problem of participation is in terms of marginal private benefits and marginal social benefits. By gathering and providing the information used in a food safety system, an individual establishment receives additional private benefits from enhancing the safety of its own food. In addition, participating in the system increases the effectiveness of the entire information system. In other words, the more establishments participate in the system, the better it works. The individual establishment does not capture this additional social benefit. The marginal private benefit (enhanced safety for individual establishments) is less than the marginal social benefit (the marginal private benefit plus the increased effectiveness of the entire information system). The difference between private and social benefit reduces the incentive for establishments to participate in a voluntary private system.
The events of September 11, 2001, led Congress to conclude that public creation and provision of an information system is necessary. The Bioterrorism Act and its implementing regulations would establish an information system that would allow FDA to have a more integrated picture of the food distribution system. This particular regulation addresses one important aspect of this information system: The need to know what facilities manufacture/process, pack, or hold food for consumption in the United States, what types of food each facility handles, and how each facility can be contacted. However, as stated previously, FDA is proposing three regulations to address these needs, so the costs and benefits of any one regulation will be closely associated with related provisions in other proposed rules. With the regulations in place, the agency would have the additional tools necessary to help prevent and respond to threats to the nation's food supply as well as to other food safety problems.
FDA analyzes the costs and benefits of eight regulatory options that address the goal of deterring or containing purposeful or accidental contamination of the U.S. food supply.
Option 1 is the status quo and provides the baseline against which all the other options are measured. Option 2 has the most complete coverage of domestic and foreign facilities and required information in the registration. Options 3 through 5 are each less comprehensive than option 2. Options 6 and 7 use a different definition of mixed-type facilities and option 7 permits U.S. agents to register on behalf of the foreign facility they represent. Option 7 is the proposed option. Option 8 is a discussion of the costs and benefits of the Bioterrorism Act's registration provisions becoming requirements without FDA issuing a regulation (statutory default provision).
Table 1.--Count of Facilities in the 2000 CBP
|NAICs Code||Type of Industry||Number of Facilities|
|3111||Animal food manufacturing.||1,710|
|3112||Grain and oilseed milling.||913|
|3113||Sugar and confectionery product manufacturing.||1,689|
|3114||Fruit and vegetable preserving and specialty food manufacturing.||1,796|
|3115||Dairy product manufacturing.||1,769|
|3117||Seafood product preparation and packaging.||854|
|3118||Bakeries and tortilla manufacturing.||10,644|
|3119||Other food manufacturing.||2,994|
|4224||Grocery and related product wholesale.||39,721|
|4225||Farm product raw material wholesale.||9,546|
|4228||Beer, wine, distilled alcoholic beverage wholesale.||4,630|
|49312||Refrigerated warehousing and storage.||945|
|49313||Farm product warehousing and storage.||516|
|Substances that contact food.||22,650|
Table 2.--Count of Facilities in the 1999 Nonemployer Statistics
|NAICs Code||Type of Industry||Number of Facilities|
|3111||Animal food manufacturing.||642|
|3112||Grain and oilseed milling.||287|
|3113||Sugar and confectionery product manufacturing.||1,439|
|3114||Fruit and vegetable preserving and specialty food manufacturing.||2,000|
|3115||Dairy product manufacturing.||594|
|3117||Seafood product preparation and packaging.||693|
|3118||Bakeries and tortilla manufacturing.||6,271|
|3119||Other food manufacturing.||4,725|
|4224||Grocery and related product wholesale.||32,050|
|4225||Farm product raw material wholesale.||4,795|
|4228||Beer, wine, distilled alcoholic beverage wholesale.||2,578|
|4931||Warehousing and storage.||964|
|Substances that contact food.||9,778|
Table 3.--Facilities That Manufacture/Process, Pack, or
Hold Food Contact Substances in the Nonemployer Statistics
|NAICs||Total in NAICs||Adjusted by CBP||Percent Used in Food|
|322 Paper manufacturing||1,621||1,197||43|
|3251 Basic chemical manufacturing||534||385||100|
|3252 Resin, synthetic rubber, artificial and synthetic fibers manufacturing||293||293||100|
|326 Plastics and rubber products manufacturing||5,528||1,203||43|
|3271 Clay product and refractory manufacturing||4,452||448||100|
|3272 Glass and glass product manufacturing||3,463||3,463||43|
|331 Primary metal manufacturing||3,447||335||100|
|332 Fabricated metal product manufacturing||33,202||393||100|
|4226 Chemical and allied products wholesale||5,403||5,403||100|
Table 4.--Facilities That Manufacture/Process, Pack, or
Contact Substances in the 2000 CBP
|NAICs||Total Number of Facilities||Percent Used in Food|
|322 Paper manufacturing||4,308||43|
|32513 Synthetic dye and pigment manufacturing||204||100|
|32518 Basic inorganic chemical manufacturing||730||100|
|32519 Basic organic chemical manufacturing||818||100|
|3252 Resin, synthetic rubber, artificial and synthetic fibers||863||100|
|326 Plastics and rubber products manufacturing||3,544||43|
|327112 Vitreous china and other pottery product manufacturing||185||100|
|3272 Glass and glass product manufacturing||2,340||43|
|3313 Alumina and aluminum production and processing||613||43|
|332211 Cutlery and flatware (except precious) manufacturing||166||100|
|332214 Kitchen utensil, pot and pan manufacturing||72||100|
|332431 Metal can manufacturing||242||100|
|332439 Other metal container manufacturing||437||100|
|4226 Chemical and allied products wholesale||15,293||100|
Table 5.--Count of Facilities in FACTS
|Type of Facility||Number of Facilities|
|Collapsed to account for multiple firms||71,871|
Table 6.--Number of Facilities in Interstate and
|1999 Nonemployer statistics||68,424|
|Subtotal of facilities in inter and intrastate commerce.||171,549|
|FACTS (interstate commerce)||-71,871|
|Facilities only in intrastate commerce||99,678|
ii. Mixed-type facilities. Although farms and retail facilities are
exempted from registration by the Bioterrorism Act, some mixed-type facilities
perform activities of a farm or retail facility and activities of a facility that is required to register. Under this regulatory
option, FDA would require mixed-type facilities that manufacture/process food
that is not consumed at that facility to register. Examples of manufacturing/processing include canning, freezing, cooking, pasteurization,
homogenization, irradiation, milling, grinding, chopping, slicing, cutting,
coloring, waxing, shelling of nuts, peeling, labeling, and packaging. Farms
that mix feed would be considered mixed-type facilities if they
manufacture/process feed at the facility with ingredients obtained from
another source, and the feed is then sold or transferred for final use off-farm.
To estimate the number of mixed-type facilities that grow crops or raise animals and would be subject to the proposed requirements, FDA used the 1997 USDA NASS Census of Agriculture (Ref. 6), and data obtained from various county level Cooperative Extension Service (CES) offices (Ref. 7). The Census of Agriculture provides the total number of farms producing specific commodities. To estimate the number of farms that are mixed-type facilities, FDA used a sample of counties with information from their respective CES offices. CES offices from Clay County, KS; Monterey, Sonoma, Marin, and San Diego counties in CA; Jackson County, WI; Gillespie and San Saba counties in TX; Carol County, MD; and Berks County, PA provide data on the percentage of farms producing specific commodities to be considered mixed-type facilities (Ref. 7). FDA assumes that farms that produce other commodities, including vegetables (nonorganic), other fruits, and wheat, plus feed mixing on poultry and other livestock farms are not mixed-type facilities based on CES interviews (Ref. 7). Table 7 of this document lists the numbers and percent of farms that are mixed-type by commodities. Some commodities that are not processed on mixed-type facilities are not included in the table. The total estimate of affected mixed-type facilities is 25,365. FDA requests comments on these assumptions and estimates.
Table 7.--Count of Mixed-Type Facilities That Engage in
Farming and That
Would Be Required To Register Under Option 2.
|Commodity||Facility Number||Percent Mixed Use||Number Mixed Use|
|Pig farms (feed mixing)||46,353||0.5||232|
|Cattle (feed mixing)||785,672||0||0|
|Poultry (feed mixing)||36,944||0||0|
|Other animal production (feed mixing)||110,580||0||0|
|Grain, rice, and beans||462,877||0||0|
|Vegetables and melons||31,030||0||0|
Retail facilities that manufacture/process, pack, or hold food, and then
transfer the food offsite also would be considered mixed-type facilities under
this option. Because FDA lacks data on the number of retail facilities that
manufacture/process food for distribution offsite, FDA estimated this number
using the total number of grocery stores and specialty food stores in the 2000
CBP and the 1999 Nonemployer Statistics. FDA assumes that grocery and
specialty food stores also may manufacture/process food, but that convenience
stores do not manufacture/process food. The 1999 Nonemployer Statistics
reports the combined number of grocery and convenience stores and, separately,
the number of specialty food stores. To adjust for the grouping of grocery and
convenience stores, we assume that the percentage of grocery stores out of the
combined number of grocery stores and convenience stores is the same in the
2000 CBP and the 1999 Nonemployer Statistics and reduce the number of grocery
and convenience stores from the 1999 Nonemployer Statistics by the percentage
in the 2000 CBP. FDA then assumes that 10 percent of these retail facilities
manufacture/process, in addition to direct selling to consumers. This gives a
total of 10,410 affected mixed-type retail facilities. Because the number of
retail facilities is large, the number of facilities covered is highly
sensitive to the percentage assumed to be in mixed-type facilities. FDA
requests comments on the number of attached retail facilities under Option 2.
iii. Foreign manufacturers. FDA estimates the number of foreign manufacturers that would be affected by the regulation from a count in FDA's OASIS database (Ref. 4). OASIS is an automated FDA system for processing and making admissibility determinations for shipments of foreign-origin FDA-regulated products seeking to enter domestic commerce. There are 125,450 foreign manufacturers in the OASIS database. Table 8 presents the number of foreign manufacturers by the type of food they manufacture/process.
Table 8.--Number of Foreign Facilities Exporting Food to the United
States in Fiscal Year 1999
|Medicated animal foods||150|
iv. Foreign holders. Also covered under this regulatory option are
the final food holders in the foreign country prior to export of the product.
FDA does not have any information on how many foreign facilities hold foods
that are to be exported to the United States. FDA, therefore, assumed that the
number of foreign final holders is equal to the number of consignees, brokers,
and importers of food products in the United States. The OASIS data has a
count of 77,427 U.S. importers, brokers, and consignees, so FDA assumed that
there are also 77,427 foreign final holders (Ref. 4). FDA requests comments on
v. Foreign facilities that do de minimis processing or packaging. Facilities that do de minimis processing or packaging of the food, such as affixing a label, are also required to register. Because their processing is minimal, these facilities are not included in the OASIS count of foreign manufacturers. To estimate the number of affected foreign facilities, FDA takes the number of packers/repackers in the FACTS database, 6,204, and adjusts it by the ratio of domestic manufacturers in FACTS to the number of foreign manufacturers in OASIS.
This adjustment of 3.64, (125,450 foreign facilities divided by 34,437 domestic facilities), gives the total number of de minimis processing foreign facilities as 22,600. FDA requests comments on this estimate.
vi. New and closing facilities. In addition to the facilities currently in existence, in future years, new businesses will open and some existing businesses will close. These new businesses would have to register and closing businesses would have to notify FDA to cancel their registration. According to the Small Business Administration (SBA) Office of Advocacy, in 2001, about 10 percent of all businesses were new and 10 percent of businesses closed (Ref. 8). FDA assumes that the rate of new and closing businesses is the same in other countries as in the United States. Thus, in future years 10 percent of the total count of facilities will be new facilities and 10 percent of the total count of food facilities will go out of business and will need to cancel their registration.
b. Costs--i. Market reaction. It is expected that most firms will register correctly and on time. If most facilities do not register correctly and on time, then the costs will be higher than estimated. It is also likely that some manufacturers/processors will not register prior to attempting to introduce their products into U.S. interstate commerce, which would increase the amount of time their products are held at the port. In addition, some foreign facilities may determine that registration, in conjunction with prior notice, would make it no longer profitable to continue to manufacture/process and ship food to the United States. That is, if the expected profit from exports is projected to be less than the cost of a U.S. agent, the cost of
registration, and the cost of prior notification, they would cease to export to the United States. The marginal costs and benefits that would result from these changes in manufacturer/processor behavior are estimated in the following paragraphs.
ii. Wage rates. FDA uses two hourly wage rates from the Bureau of Labor Statistics' National Compensation Survey (Ref. 9). These wage rates then are doubled to include overhead costs, such as office space, health insurance, and retirement benefits. For an administrative worker, the cost per hour is $25.10, and for a manager, who would be the owner, operator, or agent in charge, $56.74. FDA lacks wage data specific to food industry workers in each of the foreign countries that export to the United States and thus used the wage rate for an administrative worker in the United States for the foreign wage rate. We assume that the nature of the worker and the worker's wage would be about the same in foreign countries as in the United States. In open markets where trade takes place, real wage rates tend to be equal for similar work and productivity across countries. However, FDA tests this assumption in the sensitivity analysis and re-calculates the costs if the foreign wage rate is lower than the domestic wage rate.
iii. First year costs incurred by domestic facilities. Domestic facilities would incur administrative and form-associated costs to comply with the regulation. The administrative costs would be partially shared between the registration and recordkeeping rules. FDA estimates administrative costs for the recordkeeping regulation and this proposed rule separately, but this probably gives an overestimate of administrative costs. Although recordkeeping has different requirements than registration, it would affect many of the same facilities and FDA expects that the recordkeeping final rule will be published soon after the registration final rule. Individuals from facilities affected by both regulations would most likely search for information for both regulations at the same time and find information in the same places.
There are four steps associated with a domestic facility complying with the regulation. One, the facility becomes aware of the regulation; two, the facility learns what the requirements are; three, an administrative worker fills out the form; and four, the owner, operator, or agent in charge certifies the form.
First, the facility becomes aware of the regulation through normal business activities; reading trade press or industry news; FDA outreach; or conversations with other business operators. Because facility owners, operators, or agents-in-charge must be aware of the requirement to change their activity, FDA assumes that becoming aware of the regulations would occur as part of normal business practice and we thus have included no economic costs for the facility. There may be costs incurred, however, by FDA or trade organizations to undertake the outreach. FDA costs will be considered in a separate section. FDA does not quantify the costs undertaken by trade organizations, but discusses these costs in the qualitative costs section.
Second, once a representative of the facility becomes aware of the regulations, he or she would need to research the requirements of the regulation. This would require finding a copy of the requirements and reading and understanding them. Representatives of the facility may find a copy of these requirements on the Internet, in the Federal Register, in trade association meetings or mailings, or at a library. Several comments stated that many businesses might not have access to the Internet. Administrative costs would be higher for facilities that do not have access to the Internet, and would have to write to FDA or find other sources of information. In the United States, 59.10 percent of the population has accessed the Internet at least once in the three months prior to being surveyed (Ref. 11). An SBA report (Ref. 12) cites two studies that report 40 and 47 percent of small businesses had Internet access in 1998. An updated report from Dun and Bradstreet in 2002 reports 71 percent of small businesses have Internet access (Ref. 13).
Electronic registration will allow facilities an immediate confirmation and registration number. FDA believes that most domestic facilities with Internet access will register electronically. However, some may register on paper forms they receive from trade organizations, newsletters, or other sources. However, FDA believes that this number of paper submissions will be offset by registrants that choose to register electronically who do not have Internet access at their place of business. These registrants may use computers with Internet access belonging to libraries, friends, or in an Internet caf[eacute]. Therefore, FDA assumes that 71 percent of domestic registrants will research and register electronically. FDA estimates it would take facilities with Internet access 1 hour to research the requirements and
facilities without Internet access 2 hours. FDA requests comments on this assumption.
Third, once the requirements are understood, the form has to be filled out and sent to FDA, either by mail or electronically. FDA estimates it would take 45 minutes of an administrative worker's time to find the correct information and fill out the form.
Fourth, the owner, operator, or agent in charge must verify the form. This cost would be 15 minutes of the owner, operator, or agent in charge's time.
iv. Domestic facilities updates, cancellations, and new registrations (annual costs). Facilities are required to update their registration when a change occurs in any information previously submitted on the registration form. Several comments suggested the requirement to update registrations might be burdensome because some information such as product lines and facility names change frequently and, therefore, could require frequent changes to registrations. FDA does not have any data on how often changes in product lines or other information included in the registration submission would occur. However, given that 10 percent of facilities go out of business each year, FDA estimates that a higher percentage, 20 percent, of all facilities will have to update their registration each year. FDA requests comments on this assumption. FDA also considers an alternative option (option 5) where product codes are not included on the registration form.
To update a registration, a worker at the facility will have to find a copy of the form, look up the facility's registration number, fill out the form, and the owner, operator, or agent in charge will have to verify the form to update a submission. The cost to the facility of updating would be 45 minutes of an administrative worker's time and 15 minutes of a manager's time to certify the changed registration.
New facilities would incur the same costs to learn about the regulation and fill out the registration form in future years as existing facilities experience in the first year. FDA estimates the number of new facilities entering each year would be equal to 10 percent of the total current number of facilities. Thus, the annual cost for registering new facilities would equal 10 percent of the first year costs to existing facilities.
Facilities that go out of business would need to notify FDA of the cancellation of their registration. Similar to updating registration, a worker at the facility will have to find a copy of the form, look up their registration number, fill out the form, and the owner, operator, or agent in charge will have to verify the form to cancel a registration. The cost to the facility of canceling the registration would be 45 minutes of an administrative worker's time to find and fill out the form and 15 minutes of a manager's time to cancel the registration. FDA estimates that 10 percent of the total, current number of facilities would go out of business each year. Table 9 presents a summary of domestic facilities covered under option 2, and table 10 summarizes the data used to estimate the cost of complying with option 2.
Table 9.--Number of Domestic Facilities Covered Under Option 2
|1999 Nonemployer statistics||68,424|
|Mixed-type facilities that engage in farming||25,365|
Table 10.--Summary of Costs for Domestic Facilities Under Option 2
Administrative worker wage (includes 25.1overhead)
|Manager wage (includes overhead)||56.74|
|Percent with Internet access US||71%|
|Research time with Internet (hours)||1|
|Research time without Internet (hours)||2|
|Research cost with Internet||$3,695,000|
|Research cost without Internet||$3,018,000|
|Administrative time for form (hours)||0.75|
|Manager time for form (hours)||0.25|
|Percent of businesses going out of business||10%|
|Percent of businesses entering||10%|
|Percent of businesses with changes||20%|
|Annual facility costs||$3,409,000|
|Total domestic costs||$13,557,000|