[Federal Register: February 3, 2003 (Volume 68, Number 22)]
[Proposed Rules]
[Page 5377-5428]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03fe03-15]
[[Page 5377]]
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Part IV
Department of Health and Human Services
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Food and Drug Administration
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21 CFR Part 1
Registration of Food Facilities and Prior Notice of Imported Food Under
the Public Health Security and Bioterrorism Preparedness and Response
Act of 2002; Proposed Rules
[[Page 5378]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 1
[Docket No. 02N-0276]
RIN 0910-AC40
Registration of Food Facilities Under the Public Health Security
and Bioterrorism Preparedness and Response Act of 2002
AGENCY: Food and Drug Administration, HHS.
ACTION: Notice of proposed rulemaking.
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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://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&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.
SUPPLEMENTARY INFORMATION:
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
Sec. 1.232)
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.
1.240)
2. What Happens if You Fail to Register? (Proposed Sec. 1.241)
3. What Does Assignment of a Registration Number Mean? (Proposed
Sec. 1.242)
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
D. Options
V. Initial Regulatory Flexibility Act
VI. Unfunded Mandates
VII. Small Business Regulatory Enforcement Fairness Act (SBREFA) Major
Rule
VIII. Paperwork Reduction Act of 1995
IX. Analysis of Environmental Impact
X. Federalism
XI. Comments
XII. References
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 801
of 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:
[sbull] The owner, operator, or agent in charge of a facility is
responsible for submitting the registration form to FDA;
[sbull] The registration form must include the name and address of
each facility at which, and all trade names under which, the registrant
conducts business. Foreign facilities also must include the name of the
U.S. agent for the facility;
[sbull] FDA also may require each facility to submit the general
food category (as identified under Sec. 170.3 (21 CFR 170.3)) of the
food manufactured, processed, packed, or held at the facility, if FDA
determines this submission necessary through guidance. FDA plans to
issue such guidance;
[sbull] Foreign facilities exporting food to the United States are
required to register unless the food undergoes further processing or
packaging by another facility outside the United States;
[sbull] Other facilities excluded from the registration requirement
are: farms, restaurants and other retail facilities, nonprofit food
establishments in which food is prepared for or served directly to the
consumer, and fishing vessels (except those engaged in processing as
defined in Sec. 123.3(k) (21 CFR 123.3(k)));
[sbull] FDA shall notify the registrant when it has received the
registration and assign a unique registration number to each registered
facility. This number is not subject to public disclosure under section
552 of title 5, United States Code (the Freedom of Information Act);
[sbull] FDA may encourage electronic registration; and
[sbull] Registered facilities must notify FDA in a timely manner of
changes to their registration information.
In addition to section 305 of the Bioterrorism Act, FDA is relying
on sections 701(a) and 701(b) of the act (21 U.S.C. 371(a) and (b)) in
issuing this proposed rule. Section 701(a) authorizes the agency to
issue regulations for the efficient enforcement of the act, while
[[Page 5379]]
section 701(b) of the act authorizes FDA and the Department of Treasury
to jointly prescribe regulations for the efficient enforcement of
section 801 of the act.
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://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=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:
[sbull] Defining farm to include typical post-harvesting
operations, if all food is grown on the farm;
[sbull] Including food product categories in a format that
satisfies both the requirements of the Bioterrorism Act and stakeholder
concerns;
[sbull] Allowing facilities that handle most or all of the food
categories listed to check ``most/all'' food product categories instead
of requiring them to check every product category handled by the
facility;
[sbull] Maintaining flexibility regarding qualifications for a U.S.
agent;
[sbull] Including dates the facility is in operation, if its
business is seasonal;
[sbull] Defining ``facility'' to include multiple buildings on a
single site, or buildings within the same general physical location;
[sbull] Allowing a corporate headquarters or other central
management to submit registrations for multiple facilities;
[sbull] Providing for both electronic and paper registration;
[sbull] Providing registration numbers instantaneously, if
registration is done electronically;
[sbull] Requiring only trade names of facilities, as opposed to
brand names of products the facility produces;
[sbull] Defining ``food'' consistent with the act's definition;
[sbull] Including a model of what the electronic registration
screen would look like;
[sbull] Defining ``timely updates'' to mean within 30 calendar days
of changes to information on the registration form; and
[sbull] Requiring facilities that begin to manufacture, process,
pack, or hold food for consumption in the United States on or after
December 12, 2003, to register before they begin such activities.
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:
[sbull] Owners, operators, or agents in charge of facilities
engaged in manufacturing, processing, packing, or holding food for
consumption in the United States must register the facility with FDA;
[sbull] Facilities covered under this rule must be registered by
December 12, 2003;
[sbull] Domestic facilities must register with FDA, whether or not
food from the facility enters interstate commerce;
[sbull] A foreign facility may designate its U.S. agent as its
agent in charge for purposes of registering the foreign facility;
[sbull] Foreign facilities are exempt from registering if food from
these facilities undergoes further processing or packaging by another
facility outside the United States. The facility is not exempted from
registration if the processing or packaging activities of the
subsequent facility are limited to the affixing of a label to a package
or other de minimis activity. The facility that conducts the de minimis
activity also must register.
[sbull] The following facilities are also exempt from registering:
Farms; retail facilities; restaurants; nonprofit food facilities in
which food is prepared for, or served directly to, the consumer;
fishing vessels not engaged in processing, as defined in Sec.
123.3(k); and facilities regulated exclusively, throughout the entire
facility, by the U.S. Department of Agriculture (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.);
[sbull] FDA strongly encourages electronic registration, which will
be quicker and more convenient for both facilities and FDA than
registration by mail.
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
[[Page 5380]]
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
facilities.
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
[[Page 5381]]
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
[[Page 5382]]
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
[[Page 5383]]
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
[[Page 5384]]
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
[[Page 5385]]
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 http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=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
[[Page 5386]]
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
[[Page 5387]]
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
[[Page 5388]]
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.
D. Options
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).
[sbull] Option 1 is to not impose any new regulatory or statutory
requirements.
[sbull] Option 2 requires the registration of domestic and foreign
facilities that manufacture/process, pack, or hold food for consumption
in the United States, whether or not food from the facility enters
interstate commerce. Farms, fishing vessels, nonprofit food facilities,
facilities exclusively regulated by USDA, and retail facilities are
exempted from the registration requirement. Mixed-type facilities that
perform some activities of a farm or retail facility but that also
manufacture/process food for consumption off that facility must
register under this option. Foreign facilities are also required to
have a U.S. agent to facilitate communication between the foreign
facility and FDA.
[sbull] Option 3 has the same requirements and coverage as option
2, but excludes facilities that participate only in intrastate
commerce. FDA tentatively concludes that this option is not legally
viable, as the Bioterrorism Act does not seem to exempt facilities
participating only in intrastate commerce.
[sbull] Option 4 has the same coverage and requirements as option
2, but excludes all mixed-type facilities, regardless of whether they
also manufacture/process food for consumption off the facility or pack
or hold food not grown or raised on that facility. As discussed in the
following paragraphs, FDA does not believe this option is legally
viable.
[sbull] Option 5 has the same requirements and coverage as option
2, but does not require that facilities include information about the
types of products they manufacture/process, pack, or hold on their
registration.
[sbull] Option 6 has the same requirements and coverage as option
2, but mixed-type facilities are required to register if they pack or
hold food not harvested on that facility or manufacture/process food
not for consumption on that facility. However, facilities that
manufacture/process food are exempted as retail facilities if they sell
the food directly to consumers from that facility.
[sbull] Option 7, the proposed option, requires the same coverage
of facilities as option 6. Under this option, the U.S. agent can
register on behalf of the foreign facility.
[sbull] Option 8 is to allow the registration requirement of the
Bioterrorism Act to be implemented without issuing a regulation. The
Bioterrorism Act requires facilities to register by December 12, 2003,
regardless of whether FDA issues a regulation. Due to uncertainty about
how this option would be implemented, FDA does not attempt to estimate
costs or benefits for this option.
1. Option One: Do Not Require Facilities to Register
Option one is to maintain the status quo, i.e., no statutory or
regulatory registration requirement. This option will serve as the
baseline against which other options will be measured for assessing
costs and benefits. OMB's cost-benefit analysis guidelines recommend
discussing requirements that affect the selection of regulatory
approaches. These guidelines also recommend analyzing the opportunity
cost of legal constraints that prevent the selection of the regulatory
action that best satisfies the philosophy and principles of Executive
Order 12866.
The Bioterrorism Act requires that FDA implement through regulation
registration for food facilities; therefore, this is not a legally
viable option.
2. Option Two: Comprehensive Registration of Domestic and Foreign
Manufacturers/Processors, Packers, and Holders of Food
Option two requires domestic facilities that manufacture/process,
pack, or hold food for consumption in the United States to register
with FDA, including facilities engaged in interstate and intrastate
commerce. Farms, fishing vessels, nonprofit food facilities, facilities
exclusively regulated by USDA, and retail facilities are exempted from
the registration requirement. Mixed-type facilities that perform
activities of a farm or retail facility but
[[Page 5389]]
that also manufacture/process food for consumption off that facility
must register under this option. Registration may be electronic or by
mail, although FDA strongly encourages all facilities to register
electronically. The information required on the registration includes
the facility's name, address, parent company name and address (if
applicable), emergency contact information, trade names, general food
product categories under Sec. 170.3, and certification by the owner,
operator, or agent in charge of the facility as to the accuracy of the
information and the submitter's authority to register the facility.
Under the Bioterrorism Act, foreign establishments are required to
register if they manufacture, process, pack, or hold food for
consumption in the United States without the food undergoing further
processing or packaging outside the United States. In addition to
registering, the Bioterrorism Act requires foreign facilities to have a
U.S. agent. The U.S. agent is a person residing in or maintaining a
place of business in the United States, who the owner, operator, or
agent in charge of a foreign establishment designates as its agent.
Only one U.S. agent per foreign establishment is permitted and the U.S.
agent must reside or maintain a place of business in the United States.
The U.S. agent is responsible for acting as a communications link
between FDA and the facility.
a. Coverage--i. Domestic establishments. Consistent with the
Bioterrorism Act, this proposed regulation's legal requirements apply
to facilities, as opposed to firms. A firm is composed of facilities
under common ownership. As a result, changes in behavior may occur at
the firm- or facility-level to comply with this proposed regulation.
However, for ease of analysis, FDA will focus on the facility as the
unit of analysis. For a count of domestic facilities, FDA used the 2000
County Business Patterns (CBP) (Ref. 1), 1999 Nonemployer Statistics
(Ref. 2), the FDA Field Accomplishments and Compliance Tracking System
(FACTS) (Ref. 3), and the Census of Agriculture (Ref. 4). The Census
Bureau created the 2000 CBP by analyzing data from the Business
Register, the Census Bureau's file of all known single and multi-
facility companies. These data for single-location firms are obtained
by the Census from the Economic Censuses, the Annual Survey of
Manufacturers, Current Business Surveys, and administrative records
from the Internal Revenue Service, Social Security Administration, and
the Bureau of Labor Statistics.
Table 1 of this document provides a count of businesses in the
relevant North American Industry Classification (NAICs) codes in the
2000 CBP. There are 103,125 affected facilities in the 2000 CBP under
option two. Facilities not included in the CBP are counted in the
Nonemployer Statistics, which is also from the Census Bureau (Ref. 2).
Nonemployer businesses are companies with no paid employees. The Census
Bureau primarily obtains data about nonemployer businesses from annual
business income tax returns filed with the Internal Revenue Service.
The Nonemployer Statistics dataset is less disaggregated than the CBP
dataset. As a result, including entire counts of facilities in some
NAICs codes in the Nonemployer Statistics would result in an
overestimate of the number of facilities. For example, NAICs code 4931,
warehousing and storage, includes warehouses and storage facilities
that store nonfood products, and so is too aggregated for this analysis
and includes facilities that would not be required to register. To
estimate the number of affected warehouses in NAICs 4931, FDA assumed
that the percentage of warehouses that are refrigerated and
nonrefrigerated warehouses that store farm products is the same for
both the 2000 CBP and the 1999 Nonemployer Statistics, and uses this as
an adjustment factor for the 1999 Nonemployer Statistics. With this
adjustment, there are 68,424 facilities in the relevant NAICs codes in
the 1999 Nonemployer Statistics. Table 2 of this document provides a
count of businesses in the relevant NAICs codes in the 1999 Nonemployer
Statistics. Manufacturers/processors, packers, and holders of
substances that migrate into food from food packaging or other articles
that contact food do not correspond to any single NAICs code. Tables 3
and 4 of this document provide numbers of facilities in the 2000 CBP
and 1999 Nonemployer Statistics, respectively. Broader NAICs codes,
such as 322 and 326 that include facilities that deal only in nonfood
products have only the number of facilities reported that could
reasonably be expected to deal in substances that migrate into food
from food packaging or other articles that contact food. For example,
stationery manufacturers have been removed from the estimate. The
Nonemployer Statistics have more aggregated counts than the 2000 CBP.
To get a more accurate count of facilities in the Nonemployer
Statistics, the count of facilities in each aggregated NAICs codes is
reduced by the percentage of facilities believed to be dealing with
substances that migrate into food from packaging in the 2000 CBP.
However, this number may be an overestimate as for some NAICs codes, in
which it was not clear if the facilities were producing substances for
food or nonfood use. For example, plastic forms may be made into food
packaging or may be used for other purposes. To further adjust the
number of facilities to include only facilities that manufacture/
process, pack, or hold substances that migrate into food from food
packaging or other articles that contact food, the numbers in each
category are adjusted by data reported in The Rauch Guide to the U.S.
Packaging Industry (Ref. 5). The Rauch guide reports that the packaging
of consumer products accounts for 78 percent of all packaging and that
55 percent of the total used for consumer products is used for food and
beverages. This means 43 percent of packaging is used to package food
and beverages. To reflect this data, the NAICs categories for end, or
near-end use packaging were reduced by 57 percent. NAICs categories for
explicit food use, such as kitchen utensils and cutlery were assumed to
have 100 percent of facilities manufacturing/processing, packing, or
holding food.
Basic chemicals or other components incorporated into packaging may
be intended for food or nonfood uses. FDA was unable to determine how
many of these components are intended for food use. FDA also was not
able to distinguish between manufacturers/processors, packers, or
holders of immediate food packaging, which would be considered
``substances that migrate into food from food packaging or other
articles that contact food,'' and manufacturers/processors, packers, or
holders of outer food packaging, which would not. Therefore, FDA
included for purposes of this analysis: (1) Facilities manufacturing/
processing, packing, or holding basic chemicals or other components
incorporated into packaging for both food and nonfood use, and (2)
manufacturers/processors, packers, and holders of both immediate and
outer food packaging. Because this approach results in an
overestimation of the number of facilities subject to this proposed
rule, FDA requests comments on the number of these types of facilities
that would be required to register.
Also covered under this proposed rule are slaughterhouses that
process FDA regulated meats and renderers. FDA requests comments on the
number of these facilities.
The Census data sets do not identify facilities engaged only in
intrastate
[[Page 5390]]
commerce (Refs. 1 and 2). To be considered a facility engaged only in
intrastate commerce, a facility must obtain all its ingredients and
sell all its products within a single State. FDA assumes that
facilities that participate only in intrastate commerce will be very
small and are unlikely to be warehouses or wholesalers. To determine
which facilities are in interstate commerce, FDA compared the number of
facilities in Census data sets with the number of facilities in the
FACTS database. FACTS is a database of facilities regulated by FDA that
includes data on operations accomplished by the field (e.g.,
inspections, investigations, sample collections, sample analyses, etc.)
(Ref. 3). FACTS and FDA's Operation and Administration System for
Import Support (OASIS) identify firms as workload and nonworkload
obligations for FDA. FACTS uses different product categories for
facilities than the Census datasets, making a direct comparison of the
number of firms within categories with the Census datasets difficult.
Table 5 of this document presents a count of facilities in the FACTS
database by FDA categories. The FACTS database has some facilities that
appear in more than one category, so a single facility may appear more
than once in the database. This double counting is not corrected in the
count of each type of facility, but is corrected in the total count of
facilities. Because the FACTS database gives a count of facilities that
FDA inspects, FDA assumes that all facilities in FACTS are in
interstate commerce. If we take the total count of facilities from the
CBP and Nonemployer Statistics, 171,549, and subtract the count of
facilities in FACTS, 71,871, this gives a reasonable estimate of the
number of facilities in intrastate commerce 99,678. This calculation is
presented in table 6 of this document.
Table 1.--Count of Facilities in the 2000 CBP
------------------------------------------------------------------------
NAICs Code Type of Industry Number of Facilities
------------------------------------------------------------------------
3111......................... Animal food 1,710
manufacturing.
3112......................... Grain and oilseed 913
milling.
3113......................... Sugar and 1,689
confectionery
product
manufacturing.
3114......................... Fruit and 1,796
vegetable
preserving and
specialty food
manufacturing.
3115......................... Dairy product 1,769
manufacturing.
3117......................... Seafood product 854
preparation and
packaging.
3118......................... Bakeries and 10,644
tortilla
manufacturing.
3119......................... Other food 2,994
manufacturing.
3121......................... Beverage 2,748
manufacturing.
4224......................... Grocery and 39,721
related product
wholesale.
4225......................... Farm product raw 9,546
material
wholesale.
4228......................... Beer, wine, 4,630
distilled
alcoholic
beverage
wholesale.
49312........................ Refrigerated 945
warehousing and
storage.
49313........................ Farm product 516
warehousing and
storage.
Subtotal...................................... 80,475
Substances that 22,650
contact food.
Total......................................... 103,125
------------------------------------------------------------------------
Table 2.--Count of Facilities in the 1999 Nonemployer Statistics
------------------------------------------------------------------------
Number of
NAICs Code Type of Industry Facilities
------------------------------------------------------------------------
3111........................... Animal food 642
manufacturing.
3112........................... Grain and oilseed 287
milling.
3113........................... Sugar and 1,439
confectionery
product
manufacturing.
3114........................... Fruit and vegetable 2,000
preserving and
specialty food
manufacturing.
3115........................... Dairy product 594
manufacturing.
3117........................... Seafood product 693
preparation and
packaging.
3118........................... Bakeries and 6,271
tortilla
manufacturing.
3119........................... Other food 4,725
manufacturing.
3121........................... Beverage 1,608
manufacturing.
4224........................... Grocery and related 32,050
product wholesale.
4225........................... Farm product raw 4,795
material wholesale.
4228........................... Beer, wine, 2,578
distilled alcoholic
beverage wholesale.
4931........................... Warehousing and 964
storage.
Subtotal........................................... 58,646
Substances that 9,778
contact food.
Total.............................................. 68,424
------------------------------------------------------------------------
Table 3.--Facilities That Manufacture/Process, Pack, or Hold Food Contact Substances in the Nonemployer
Statistics
----------------------------------------------------------------------------------------------------------------
Total in Adjusted by Percent Used
NAICs NAICs CBP in Food
----------------------------------------------------------------------------------------------------------------
322 Paper manufacturing 1,621 1,197 43
----------------------------------------------------------------------------------------------------------------
3251 Basic chemical manufacturing 534 385 100
----------------------------------------------------------------------------------------------------------------
[[Page 5391]]
3252 Resin, synthetic rubber, artificial and 293 293 100
synthetic fibers manufacturing
----------------------------------------------------------------------------------------------------------------
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
================================================================================================================
Total 9,778
----------------------------------------------------------------------------------------------------------------
Table 4.--Facilities That Manufacture/Process, Pack, or Hold Food
Contact Substances in the 2000 CBP
------------------------------------------------------------------------
Total Number
NAICs of Percent Used
Facilities in Food
------------------------------------------------------------------------
322 Paper manufacturing 4,308 43
------------------------------------------------------------------------
32513 Synthetic dye and pigment 204 100
manufacturing
------------------------------------------------------------------------
32518 Basic inorganic chemical 730 100
manufacturing
------------------------------------------------------------------------
32519 Basic organic chemical 818 100
manufacturing
------------------------------------------------------------------------
3252 Resin, synthetic rubber, 863 100
artificial and synthetic
fibers
------------------------------------------------------------------------
326 Plastics and rubber products 3,544 43
manufacturing
------------------------------------------------------------------------
327112 Vitreous china and other 185 100
pottery product
manufacturing
------------------------------------------------------------------------
3272 Glass and glass product 2,340 43
manufacturing
------------------------------------------------------------------------
3313 Alumina and aluminum 613 43
production and processing
------------------------------------------------------------------------
332211 Cutlery and flatware (except 166 100
precious) manufacturing
------------------------------------------------------------------------
332214 Kitchen utensil, pot and pan 72 100
manufacturing
------------------------------------------------------------------------
332431 Metal can manufacturing 242 100
------------------------------------------------------------------------
332439 Other metal container 437 100
manufacturing
------------------------------------------------------------------------
4226 Chemical and allied products 15,293 100
wholesale
========================================================================
Adjusted total 22,650
------------------------------------------------------------------------
Table 5.--Count of Facilities in FACTS
------------------------------------------------------------------------
Type of Facility Number of Facilities
------------------------------------------------------------------------
Manufacturers................................... 34,437
Repackers/packer................................ 6,204
Warehouses...................................... 34,760
Shippers........................................ 1,519
Caterers........................................ 664
Commissary...................................... 705
Subtotal........................................ 78,289
Collapsed to account for multiple firms......... 71,871
------------------------------------------------------------------------
Table 6.--Number of Facilities in Interstate and Intrastate Commerce
2000 CBP..........................................--103,125-------------
1999 Nonemployer statistics....................... 68,424
Subtotal of facilities in inter and intrastate 171,549
commerce.
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
[[Page 5392]]
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.
------------------------------------------------------------------------
Facility Percent Mixed Mixed Use
Commodity Number Use Number
------------------------------------------------------------------------
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 110,580 0 0
(feed mixing)
------------------------------------------------------------------------
Dairy 86,022 0 43
------------------------------------------------------------------------
Grain, rice, and beans 462,877 0 0
------------------------------------------------------------------------
Apples 10,872 10 1,087
------------------------------------------------------------------------
Oranges 9,321 10 932
------------------------------------------------------------------------
Peaches 14,459 10 1,446
------------------------------------------------------------------------
Cherries 8,423 10 842
------------------------------------------------------------------------
Pears 8,062 10 806
------------------------------------------------------------------------
Other fruit 29,413 10 806
------------------------------------------------------------------------
Nuts 14,500 10 1,450
------------------------------------------------------------------------
Berries 6,807 20 1,361
------------------------------------------------------------------------
Grapes 11,043 20 2,209
------------------------------------------------------------------------
Olives 1,363 3 41
------------------------------------------------------------------------
Vegetables and melons 31,030 0 0
------------------------------------------------------------------------
Organic vegetables 6,206 50 3,103
------------------------------------------------------------------------
Honey 7,688 50 3,844
------------------------------------------------------------------------
Syrup 4,850 100 4,850
------------------------------------------------------------------------
Herbs 1,776 10 178
------------------------------------------------------------------------
Total 25,365
------------------------------------------------------------------------
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
[[Page 5393]]
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
Foods..........................................--110,392----------------
Food additives................................. 2,979
Color additives................................ 378
Infant formula................................. 235
Vitamins....................................... 7,986
Animal feeds................................... 3,330
Medicated animal foods......................... 150
Total........................................ 125,450
------------------------------------------------------------------------
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
this estimate.
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
[[Page 5394]]
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
2000 CBP 103,125
------------------------------------------------------------------------
1999 Nonemployer statistics 68,424
------------------------------------------------------------------------
Mixed-type facilities that engage in farming 25,365
------------------------------------------------------------------------
Retail processors 10,410
------------------------------------------------------------------------
Total domestic 207,324
--------------------------------------------------