[Federal Register: December 2, 2004 (Volume 69, Number 231)]
[Proposed Rules]               
[Page 70082-70091]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02de04-13]                         

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 165

[Docket No. 2004N-0416]

 
Beverages: Bottled Water

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is proposing to amend 
its bottled water quality standard regulations by revising the existing 
allowable level for the contaminant arsenic. As a consequence, bottled 
water manufacturers would be required to monitor their finished bottled 
water products for arsenic at least once each year under the current 
good manufacturing practice (CGMP) regulations for bottled water. 
Bottled water manufacturers would also be required to monitor their 
source water for arsenic as often as necessary, but at least once every 
year unless they meet the criteria for the source water monitoring 
exemptions under the CGMP regulations. This proposed rule, if 
finalized, will ensure that the minimum quality of bottled water, as 
affected by arsenic, remains comparable with the quality of public 
drinking water that meets the Environmental Protection Agency's (EPA's) 
standards.

DATES: Submit written or electronic comments by January 31, 2005.

ADDRESSES: You may submit comments, identified by Docket No. 2004N-
0416, by any of the following methods:
     Federal eRulemaking Portal: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.regulations.gov. 

Follow the instructions for submitting comments.
     Agency Web site: http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fda.gov/dockets/ecomments. 

Follow the instructions for submitting comments on the agency Web site.
     E-mail: fdadockets@oc.fda.gov. Include Docket No. 2004N-
0416 in the subject line of your e-mail message.
     FAX: 301-827-6870.
     Mail/Hand delivery/Courier [For paper, disk, or CD-ROM 
submissions]: Division of Dockets Management, 5630 Fishers Lane, rm. 
1061, Rockville, MD 20852.
    Instructions: All submissions received must include the agency name 
and Docket No. for this rulemaking. All comments received will be 
posted without change to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fda.gov/ohrms/dockets/ohrms/dockets/default.htm
, including any personal information provided. For 

detailed instructions on submitting comments and additional information 
on the rulemaking process, see section VIII in the SUPPLEMENTARY 
INFORMATION section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.fda.gov/ohrms/default.htm and 

insert the docket number, found in brackets in the heading of this 
document, into the ``Search'' box and follow the prompts and/or the 
Division of Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville, 
MD 20852.

FOR FURTHER INFORMATION CONTACT: Jennifer A. Burnham, Center for Food 
Safety and Applied Nutrition (HFS-306), Food and Drug Administration, 
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-2030.

SUPPLEMENTARY INFORMATION:

I. Background

    In the Federal Register of January 22, 2001 (66 FR 6976), EPA 
published the arsenic rule to address potential public heath effects 
from the presence of arsenic in drinking water. This rulemaking 
finalized a proposed rule that EPA published in the Federal Register of 
June 22, 2000 (65 FR 38888).
    Arsenic is an element that occurs naturally in rocks, soil, water, 
air, plants, and animals. In addition to the numerous natural sources 
of arsenic, human activities may also introduce arsenic into food and 
drinking water. Major present and past sources of arsenic include wood 
preservatives, agricultural uses, industrial uses, mining and smelting. 
The human impact on arsenic levels in water depends on the level of 
human activity, the distance from the pollution sources, and the 
dispersion and fate of the arsenic that is released. Because arsenic is 
naturally occurring, the entire population is exposed to low levels of 
arsenic through food, water, air, and contact with soil. Studies have 
shown long-term exposure to inorganic arsenic in drinking water may 
result in increased risk of cancer (e.g., skin, bladder, lung, kidney, 
liver, prostate, and nasal passage) and is associated with noncancer 
effects, such as alterations in gastrointestinal, cardiovascular, 
hematological (e.g., anemia), pulmonary, neurological, immunological, 
and reproductive/developmental function (66 FR 6976 at 7001 through 
7003).
    National primary drinking water regulations (NPDWRs) are issued by 
EPA to protect the public health from the adverse effects of 
contaminants in drinking water. NPDWRs specify maximum contaminant 
levels (MCLs) or treatment techniques for drinking water contaminants. 
In addition, at the same time that it issues NPDWRs, EPA publishes 
maximum contaminant level goals (MCLGs), which are not regulatory 
requirements but rather are nonenforceable health goals that are based 
solely on considerations of protecting the public from adverse health 
effects of drinking water contamination.
    In the arsenic rule, EPA issued an NPDWR containing an MCL of 0.01 
milligram per liter (mg/L)\1\ or 10 parts per billion (ppb) and an MCLG 
of zero for arsenic. EPA based the MCL on total arsenic, because 
drinking water contains almost entirely inorganic forms, and the 
analytical methods for total arsenic are readily available and capable 
of being performed by certified laboratories at an affordable cost. 
EPA's effective date of March 23, 2001, for this rule was temporarily 
delayed for 60 days to a new effective date of May 22, 2001, in 
accordance with the memorandum of January 20, 2001, from the Assistant 
to the President and Chief of Staff, entitled ``Regulatory Review 
Plan'' (66 FR 7702, January 24, 2001). On May 22, 2001, EPA announced 
that it would further delay the effective date for the rule until 
February 22, 2002, to allow time to complete a reassessment of the 
information on which the revised arsenic standard is based. On February 
22, 2002, the arsenic MCL of 0.01 mg/L in public drinking water rule 
became effective and water systems must comply with the new standard 
for arsenic in public drinking water by January 23, 2006.
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    \1\As discussed in section II of this document, on March 25, 
2003 (68 FR 14502 at 14503), EPA revised the rule text to express 
the MCL as 0.010 mg/L.
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    Under section 410(b)(1) of the Federal Food, Drug, and Cosmetic Act 
(the act) (21 U.S.C. 349(b)(1)), not later than 180 days before the 
effective date of an NPDWR issued by EPA for a contaminant under 
section 1412 of the Safe Drinking Water Act (SDWA) (42 U.S.C. 300g-1), 
FDA is required to issue a standard of quality regulation for that 
contaminant in bottled water or make a finding that such a regulation 
is not necessary to protect the public health because the contaminant 
is contained in water in public water systems but not in

[[Page 70083]]

water used for bottled water. The effective date for any such standard 
of quality regulation is to be the same as the effective date of the 
NPDWR. In addition, section 410(b)(2) of the act provides that a 
quality standard regulation issued by FDA shall include monitoring 
requirements that the agency determines to be appropriate for bottled 
water. Further, section 410(b)(3) of the act requires a quality 
standard for a contaminant in bottled water to be no less stringent 
than EPA's MCL and no less protective of the public health than EPA's 
treatment technique requirements for the same contaminant.

II. EPA Standards

    The SDWA, as amended in 1996, requires EPA to publish an NPDWR that 
specifies either an MCL or a treatment technique requirement for 
contaminants that may ``have an adverse effect on the health of 
persons,'' are ``known to occur or [have] a substantial likelihood [of 
occurring] in public water systems with a frequency and at levels of 
public health concern,'' and for which ``regulation * * * presents a 
meaningful opportunity for health risk reduction for persons served by 
public water systems'' (SDWA section 1412(b)(1)(A)). The SDWA (section 
300g-1(a)(3)) also requires that EPA issue MCLGs at the same time it 
issues NPDWRs. MCLGs are nonenforceable health goals that are based 
solely on considerations of protecting the public from the adverse 
health effects of contaminants, and not on other considerations, such 
as potential costs of regulating contaminants and potential technical 
difficulties of achieving the health goals (59 FR 38668 at 38671). In 
general, EPA sets MCLs, the enforceable contaminant levels, as close as 
feasible to the nonenforceable MCLGs.
    In its arsenic rule (65 FR 38888), EPA proposed an MCL of 0.005 mg/
L and requested comment on the alternate MCLs of 0.003 mg/L, 0.010 mg/
L, and 0.020 mg/L for arsenic in drinking water. However, after 
conducting reanalysis of costs, benefits, and health risk reduction, 
and factoring in the uncertainties in these analyses and the degree and 
nature of risk, EPA established an MCL of 0.01 mg/L in the arsenic 
rule. EPA believed the final MCL of 0.01 mg/L represents the level that 
best maximizes health risk reduction benefits at a cost that is 
justified by the benefits and that other regulatory options considered 
in the proposal did not satisfy the statutory requirements of section 
1412(b)(6), Additional Health Risk Reduction and Cost Considerations, 
of SDWA (66 FR 6976 at 7023).
    On March 25, 2003 (68 FR 14502 at 14503), EPA revised the rule text 
in its January 2001 final rule that established the 10 ppb arsenic 
drinking water standard to express the standard as 0.010 mg/L, in order 
to clarify the implementation of the original rule. EPA made this 
change in response to a concern raised by a number of States and other 
stakeholders that State laws adopting the Federal arsenic standard as 
0.01 mg/L might allow rounding of monitoring results above 0.01 mg/L so 
that the effective standard (in consideration of rounding of results) 
would be 0.014 mg/L (or 14 ppb), not 0.010 mg/L (10 ppb).

III. FDA Standards

A. The Agency's Approach to the Bottled Water Quality Standards 
Established Under Section 410 of the Act

    Under section 401 of the act (21 U.S.C. 341), the agency may issue 
a regulation establishing a standard of quality for a food under its 
common or usual name, when in the judgment of the Secretary of Health 
and Human Services such action will promote honesty and fair dealing in 
the interest of consumers. On November 26, 1973 (38 FR 32558), FDA 
established a quality standard for bottled water that is set forth in 
Sec.  165.110 (21 CFR 165.110).
    Producers of bottled water are responsible for assuring, through 
appropriate manufacturing techniques and sufficient quality control 
procedures, that all bottled water products introduced or delivered for 
introduction into interstate commerce comply with the quality standard 
(Sec.  165.110(b)). Bottled water that is of a quality below the 
prescribed standard is required by Sec.  165.110(c) to be labeled with 
a statement of substandard quality. Moreover, any bottled water 
containing a substance at a level that causes the food to be 
adulterated under section 402(a)(1) of the act (21 U.S.C. 342(a)(1)) is 
subject to regulatory action, even if the bottled water bears a label 
statement of substandard quality.
    FDA has traditionally fulfilled its obligation under section 410 of 
the act to respond to EPA's issuance of NPDWRs by amending the quality 
standard regulations for bottled water introduced or delivered for 
introduction into interstate commerce to maintain compatibility with 
EPA's drinking water regulations. In general, FDA believes that, with 
few exceptions, EPA standards for contaminants in drinking water are 
appropriate as allowable levels for contaminants in the quality 
standard for bottled water when bottled water may be expected to 
contain the same contaminants.
    FDA generally has not duplicated the efforts of EPA in judging the 
adequacy of MCLs or treatment techniques in NPDWRs for contaminants 
when determining their applicability to bottled water in order to 
protect the public health. FDA believes that, in general, it would be 
redundant for FDA to reevaluate the drinking water standards prescribed 
by EPA. Further, because bottled water is increasingly used in some 
households as a replacement for tap water, consumption patterns 
considered by EPA for tap water can be used as an estimate for the 
maximum expected consumption of bottled water by some individuals. 
Therefore, FDA's view is that generally in cases where bottled water is 
subject to the same contaminants as tap water, FDA should establish 
standard of quality levels in bottled water at the same levels that EPA 
establishes as MCLs for such contaminants in tap water.

B. Quality Standard for Arsenic

    The quality standard for bottled water, as set forth in Sec.  
165.110(b)(4)(i)(A), prescribes that bottled water shall not contain 
arsenic in excess of 0.05 mg/L.
    FDA has evaluated the MCL for arsenic established by EPA for 
drinking water. FDA has tentatively concluded that EPA's MCL for 
arsenic, as a standard of quality level for bottled water, is adequate 
for the protection of public health. Certain waters used for bottled 
water may be expected to contain arsenic; thus, FDA believes that 
adopting EPA's MCL for arsenic will ensure that the quality of bottled 
water is equivalent to the quality of public drinking water that meets 
EPA standards.
    Therefore, FDA is proposing to establish in Sec.  
165.110(b)(4)(iii)(A), which includes allowable levels for inorganic 
substances, an allowable level for arsenic at 0.010 mg/L and remove the 
existing entry for arsenic in Sec.  165.110(b)(4)(i)(A).

C. Analytical Methods for Arsenic

    In the arsenic rule, EPA listed the analytical methods that it had 
approved for use by public water systems to determine compliance with 
the arsenic MCLs (66 FR 6976 at 6988 to 6989). Therefore, FDA is 
proposing in new Sec.  165.110(b)(4)(iii)(E)(14) to incorporate by 
reference EPA approved analytical methods (66 FR 6976 at 6988) for 
determining compliance with the quality standard for arsenic in bottled 
water. FDA believes that these methods

[[Page 70084]]

are sufficient to use for determining the level of arsenic in bottled 
water.

D. Monitoring and Recordkeeping Provisions of CGMP Regulations for 
Bottled Water

    FDA has established CGMP regulations for bottled water in part 129 
(21 CFR part 129). Under Sec.  129.35(a)(3)(i), source water must be 
analyzed by the plant as often as necessary, but at a minimum frequency 
of once each year for chemical contaminants. Bottlers would be required 
to test their source water as often as necessary, but at least once 
each year for arsenic, unless the bottlers meet the provisions in Sec.  
129.35(a)(4) for source water monitoring exemptions. Further, to ensure 
that a plant's production complies with applicable standards, Sec.  
129.80(g)(2) requires chemical analysis by the plant, at least 
annually, of a representative sample from a batch or segment of a 
continuous production run for each type of bottled water produced 
during a day's production. Under Sec.  129.80(h), records of analytical 
test results for contaminants shall be maintained at the plant for not 
less than two years and shall be available for official review at 
reasonable times. Therefore, once this rule becomes effective, bottlers 
would be required to test their finished bottled water products at 
least once a year for arsenic and maintain a record of the arsenic test 
results for at least two years. In addition, bottled water must comply 
with the allowable levels for arsenic in the quality standard for 
bottled water (Sec.  165.110(b)(4)(iii)(A)) unless the label bears a 
statement of substandard quality under Sec.  165.110(c). As stated in 
Sec.  165.110(d), bottled water is deemed adulterated if it contains a 
substance at a level considered injurious to health under section 
402(a)(1) of the act.

IV. Environmental Impact

    The agency has determined under 21 CFR 25.32(a) that this action is 
of a type that does not individually or cumulatively have a significant 
effect on the human environment. Therefore, neither an environmental 
assessment nor an environmental impact statement is required.

V. Economic Impact

A. Regulatory Impact 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, public 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. Office of Management and Budget 
(OMB) has determined that this proposed rule is a significant 
regulatory action as defined by Executive Order 12866.
1. Need for Regulation
    In the Federal Register of January 22, 2001 (66 FR 6976), EPA 
published a final rule on arsenic in drinking water. This rulemaking 
finalized a proposed rule that EPA published in the Federal Register of 
June 22, 2000 (65 FR 38888). Under section 410 of the act, when EPA 
issues a regulation establishing an MCL for a particular contaminant in 
drinking water, we are required to issue a standard of quality 
regulation governing that contaminant in bottled water or make a 
finding that such a regulation is unnecessary to protect the public 
health. Our quality standard must also include appropriate monitoring 
requirements. If we do not issue a quality standard for arsenic in 
bottled water by 180 days before the effective date of EPA's NPDWR or 
make a finding that such a regulation is not necessary to protect the 
public health, then EPA's regulation becomes applicable to bottled 
water as well as drinking water.
    We are proposing to amend the quality standard for arsenic in 
bottled water rather than taking no action to allow EPA's NPDWR for 
arsenic to become applicable to bottled water because the costs and 
benefits of requiring any given maximum arsenic level may be different 
for bottled water than for drinking water. For detailed information on 
FDA's objectives, legal basis, and compliance requirements for this 
rule, see section III in the SUPPLEMENTARY INFORMATION of this 
document.
2. Regulatory Options
    We considered five regulatory options in this analysis:
     Reestablish a quality standard for arsenic in bottled 
water that maintains the current allowable level of 0.05 mg/L.
     Take no action. Under this option, EPA's regulation on 
arsenic in drinking water would become applicable to bottled water.
     Establish a quality standard for arsenic in bottled water 
that adopts EPA's MCL for arsenic in drinking water of 0.010 mg/L. 
Under this option, bottled water producers would be subject to CGMP 
monitoring requirements in Sec. Sec.  129.35 and 129.80.
     Establish a quality standard for arsenic in bottled water 
that sets the allowable level of arsenic at 0.02 mg/L.
     Establish a quality standard for arsenic in bottled water 
that sets the allowable level of arsenic at 0.005 mg/L.
    We request comments on any other reasonable regulatory option that 
we may have overlooked.
    Data and Assumptions Applicable to all Options
    (1) The Dun's Market Identifiers database lists 378 establishments 
under North American Industry Classification System (NAICS) code 312112 
Bottled Water Manufacturing. This corresponds to 318 firms after 
restricting establishments to headquarters, ultimate locations, or 
single establishments (Ref. 1).
    (2) We assume that the regulatory options we consider will not 
affect the organoleptic qualities of bottled water and thus will not 
reduce the value that consumers place on bottled water. The cost of the 
regulation will be limited to the direct cost of abatement, monitoring, 
and other compliance activity.
    (3) We request comments on our estimate of the benefits and costs 
generated by the various regulatory options and on the assumptions and 
data on which we have based our estimates.
    Option One--Reestablish a quality standard for arsenic in bottled 
water that maintains the current allowable level of 0.05 mg/L. We 
consider this option to be the baseline for this analysis. Therefore, 
by convention, we define the costs and benefits of this option to be 
zero. Usually, we define the baseline to be the option of taking no 
action because it implies the continuation of the current regulatory 
environment. However, in this case, taking no action implies a change 
in the regulatory environment because it would mean that EPA's drinking 
water regulations would be applied to bottled water.
    Option Two--Take no action.
    Benefits of Option Two
    If we take no action, then EPA's regulations governing arsenic in 
drinking water would become applicable to bottled water. EPA

[[Page 70085]]

characterized the benefit of their regulation revising the MCL for 
arsenic in drinking water in terms of a reduction in adverse health 
effects and a reduction in the need for consumers to take relatively 
costly steps, such as purchasing bottled water, to reduce their 
exposure to arsenic. According to EPA's analysis, epidemiological 
studies have found that arsenic ingestion is associated with an 
increased risk of cancer and a variety of other adverse health effects. 
The relevant forms of cancer include skin, liver, bladder, kidney, and 
lung. The other adverse health effects include cardiovascular, 
pulmonary, immunological, neurological, endocrine, reproductive, and 
developmental effects (Ref. 2). However, EPA was only able to find 
sufficient information to quantify the benefits associated with 
reductions in the incidence of bladder and lung cancer. We have also 
limited our quantified estimate of benefits to these two types of 
cancer because we have also not found any information that would allow 
us to quantify the benefits from reducing other types of adverse health 
effects.
    Cases of Cancer Avoided
    Exposure. EPA estimated the mean daily average per capita 
consumption of community drinking water in the United States to be 1 L/
person/day and the mean daily average per capita consumption of total 
water, which includes bottled water, to be 1.2 L/person/day. Therefore, 
EPA found that bottled water represents approximately 17 percent of the 
mean daily average per capita consumption of water from all sources 
(Ref. 3).
    Risk and valuation of risk. EPA estimated the number of bladder and 
lung cancer cases that they will eliminate by reducing the MCL for 
arsenic in drinking water from 0.05 mg/L to 0.010 mg/L. The lower bound 
of their estimated range of cases did not include exposure to arsenic 
in bottled water, but the upper bound did include exposure to arsenic 
in bottled water. We extrapolated the number of cancer cases that would 
be eliminated if EPA's regulations were applied to bottled water using 
EPA's estimates for total water and bottled water consumption. We 
multiplied EPA's upper bound estimate by 17 percent ([0.2 L/person/day 
bottled water consumption]/[1.2 L/person/day total water consumption]), 
and we multiplied their lower bound estimate by 20 percent ([0.2 L/
person/day bottled water consumption])/[(1.2 L/person/day total water 
consumption - 0.2 L/person/day bottled water]). Under this approach, we 
estimate that applying EPA's arsenic regulations to bottled water would 
eliminate between 4.3 and 5.1 fatal cases of cancer per year and 
between 3.2 and 4.4 nonfatal cases of cancer per year. We used a range 
of $5 to $6.5 million for the value of a statistical life (VSL) to 
value this reduction in health risks. This range includes the VSL of 
$6.1 million that EPA used in their analysis. We used EPA's estimate of 
$607,162 for the value of avoiding a nonfatal case of bladder or lung 
cancer. Applying these values to our estimated range of eliminated 
adverse events, we estimate that the benefit of applying EPA 
regulations to bottled water would be $23 to $36 million per year.
    Sensitivity analysis. EPA considered a number of other factors in a 
sensitivity analysis. These factors included various potential latency 
periods for the relevant types of cancer (5, 10, or 20 years), the 
growth of income over the latency period using a range of income 
elasticity of demand for the willingness to pay to reduce the risk of 
death of between 0.22 and 1.0, discounting over the latency period (3 
and 7 percent), and corrections for differences in voluntariness and 
controllability of the risks from arsenic in water and the risks that 
formed the basis of their VSL. The income elasticity of demand for 
willingness to pay to reduce risk of death is the percent increase in 
willingness to pay to reduce risk of death for every 1 percent change 
in income. Accounting for these issues results in an adjusted VSL of 
$1.72 to $6.25 million (Ref. 4). The low end of the range is based on a 
latency period of 20 years, adjusting for the growth of income over the 
latency period at an income elasticity of 0.22, discounting at 7 
percent over the latency period, and adjusting for differences in 
voluntariness and controllability. The high end of the range is based 
on a latency period of 5 to 20 years (no effect on estimate) with only 
an adjustment for income growth over the latency period at an income 
elasticity of 1.0. The low end of the adjusted range of VSL falls 
outside the range of $5 to $6.5 million that we used for the VSL in the 
previous section. Expanding the range of estimated benefits to 
incorporate this adjusted lower bound results in a range of estimated 
benefits of $9 to $36 million per year.
    Costs of Option Two
    Abatement. In order to estimate abatement costs, we must first 
estimate the number of bottled water establishments producing water 
having arsenic levels over EPA's revised MCL of 0.010 mg/L. EPA 
estimated that 5.3 percent of community water systems using ground 
water sources produce water with arsenic levels higher than 0.010 mg/L 
(Ref. 5). Most bottled water establishments obtain their water from 
either a community water system or a ground water system (66 FR 16858 
at 16863; March 28, 2001). Bottled water establishments using community 
water systems would be using water that falls under EPA's drinking 
water regulations irrespective of our findings on bottled water. If the 
water systems were not in compliance with EPA's regulations, then the 
bottled water establishments might need to take steps to bring the 
water into compliance with EPA regulations. However, in the long run, 
abatement costs should devolve onto the community water system. We do 
not know how many bottled water establishments using community water 
systems would need to take short-term abatement action on their own 
behalf. About 75 percent of bottled water establishments use water that 
does not come from a community water system (66 FR at 16863, March 28, 
2001). The cost for bottled water firms using community water systems 
will probably be lower than the costs for bottled water firms using 
ground water sources because community water systems generally already 
will be in compliance with EPA's drinking water regulations. However, 
to simplify the analysis, we have based our estimated costs on the 
assumption that all bottled water establishments use ground water 
sources. Based on EPA's estimate of arsenic levels in ground water 
sources used by community water systems, we assume that 5.3 percent of 
bottled water establishments currently use source water with arsenic 
levels higher than 0.010 mg/L. Based on these assumptions and 
estimates, we estimate that 20 bottled water establishments would face 
additional arsenic abatement costs if EPA's regulations revising the 
MCL for arsenic to 0.010 mg/L were applied to bottled water.
    EPA's analysis estimated the annual costs associated with thirteen 
different methods of reducing arsenic to a level of 0.010 mg/L based on 
the initial arsenic concentration and the size of the water system 
involved, defined in terms of the number of people served by that 
system (Ref. 6). We have insufficient information to determine how many 
of the affected bottled water establishments would adopt each of the 
potential treatment methods. If any establishments could choose any 
treatment method, then we would base our cost estimate on the least 
costly treatment method. However, there may be technical reasons why a 
given establishment cannot adopt certain

[[Page 70086]]

treatment methods or cannot adopt them at the costs estimated by EPA. 
Therefore, we have used the average cost across all treatment methods. 
EPA reported cost results for two different initial arsenic 
concentrations: 0.011 mg/L and 0.050 mg/L. We do not know the 
distribution of initial concentrations of arsenic in bottled water 
establishments. We have used these two initial concentrations to 
estimate a range of treatment costs. We present our cost estimates in 
table 1 of this document. The annual costs are based on annualizing one 
time costs using an interest rate of 7 percent over 20 years and adding 
the annual costs. The costs are reported in 1999 dollars. Rounding to 
the nearest million, we estimate abatement costs to be approximately $7 
to $11 million per year.

                        Table 1.--Abatement Costs
------------------------------------------------------------------------
       Number of             Annual Cost Per
     Establishments           Establishment          Total Annual Cost
------------------------------------------------------------------------
20                       $565,925                 $11,337,739
------------------------------------------------------------------------
20                       $366,758                 $7,347,620
------------------------------------------------------------------------

    Testing. In order to consider the incremental change resulting from 
EPA's testing requirements, we must consider current testing 
requirements. Our current regulations require bottled water 
establishments to analyze source water for arsenic as often as 
necessary to ensure compliance with the maximum allowable level of 
arsenic but at least once per year, unless the establishments meet the 
provisions in Sec.  129.35(a)(4) for source water monitoring 
exemptions. The exemptions most relevant to arsenic testing allow 
establishments using community water systems to use the test results or 
compliance certifications from those systems in lieu of testing the 
source water themselves and allow firms that do not use public water 
systems as the source of their water to reduce the frequency of testing 
if they can document that such a reduction is consistent with a State-
issued waiver under EPA regulations. As we discussed previously in this 
document, our cost estimates are based on the simplifying assumption 
that all bottled water establishments use ground water sources rather 
than community water systems. Therefore, we have not adjusted the 
estimated number of tests because of the exemption for establishments 
that use community water systems. We do not know how many bottled water 
establishments currently face reduced testing requirements because they 
are able to document that such a reduction is consistent with a State-
issued waiver under EPA regulations. However, it is unlikely that all 
establishments qualify for such a waiver. Therefore, we assume that 
between 0 and 90 percent of bottled water establishments obtain waivers 
in any given year and will therefore not need to test source water for 
arsenic in that year. Finally, we assume that establishments that do 
not meet the exemption test for arsenic once per year. In addition to 
source water testing, we also require bottled water establishments to 
analyze at least once a year a batch or segment of a continuous 
production run for each type of bottled water produced during a day's 
production. We assume that each bottled water establishment produces 
only one type of bottled water. Based on these assumptions, we estimate 
that bottled water establishments collectively run 416 to 756 tests for 
arsenic per year.
    EPA's drinking water regulations require ground water systems to 
test for arsenic once every 3 years. If a test shows a violation, then 
that system must test for arsenic once every 3 months until the State 
determines that the system is reliably and consistently below the MCL 
for arsenic or until the system installs treatment technology. However, 
States can only determine that a ground water system is reliably and 
consistently below the MCL if that system has taken at least two 
samples at 3-month intervals. We do not know how many bottled water 
establishments might fail a test and need to take additional tests, nor 
do we know how many additional tests beyond the mandatory two such 
tests States would require before allowing such establishments to 
resume testing once every 3 years. We estimated above that 5.3 percent 
of firms would need to take abatement action to reduce arsenic levels 
to 0.010 mg/L. However, we expect that most bottled water 
establishments in any given year would pass the required tests. 
Therefore, we assume that between 0 and 10 percent of establishments 
that do not have waivers will be testing on a 3-month basis during a 
given year. In addition, under EPA's regulations, bottled water 
establishments would be able to apply for a 9-year waiver from the 
testing requirements, which the States may grant if the establishment 
demonstrates adequate source water protection by completing a 
vulnerability assessment and also demonstrates that three previous 
samples were below the maximum contaminant level. We do not know how 
many bottled water establishments will request waivers and how many of 
those waivers States will grant. However, it is unlikely that all 
establishments would qualify for such a waiver. Therefore, we assume 
that between 0 and 90 percent of facilities will obtain a waiver and 
will therefore not need to test for arsenic in a given year. The 
remaining facilities that do not have waivers will be testing on a 3-
year basis. Based on these assumptions, we estimate that bottled water 
establishments would collectively run approximately 5 to 101 tests for 
arsenic per year under EPA's regulation. Therefore, we estimate that 
adopting EPA's regulations would result in the elimination of between 
163 and 745 tests per year.
    Finally, EPA regulations require that ground water systems must 
begin testing by the end of 2007. Therefore, if EPA regulations were to 
become effective for bottled water at the end of 2004, then bottled 
water establishment would have a 3-year period during which they would 
not be required to test for arsenic by either us or EPA.
    For community water systems, EPA assumed that collecting a sample 
and reporting a sample would each require 1 hour of the system 
operator's time. EPA estimated the hourly rate of the system operator 
to be approximately $15 for systems serving less than 3,000 customers. 
EPA also assumed that all systems are already equipped to collect 
samples, so that no system would need to install taps, repipe wells, or 
take other actions to make sampling possible. Finally, EPA assumed that 
systems would utilize one of two laboratory methods: (1) Stabilized 
temperature platform graphite furnace atomic absorption (STP-GFAA) or 
(2) graphite furnace atomic absorption (GFAA) (Ref. 7). They estimated 
that both techniques cost $40 per sample. Therefore, they found the 
cost per sample to be approximately $70. We assume that

[[Page 70087]]

bottled water establishments would face similar monitoring costs.
    Based on the difference in the current testing requirements under 
our regulations and EPA's drinking water regulations, we estimate that 
if EPA's regulations on arsenic in drinking water became applicable to 
bottled water it would reduce arsenic testing costs by $30,000 to 
$53,000 per year for the first 3 years and by $11,000 to $52,000 for 
every year thereafter. These costs reductions round to $0 when rounded 
to the nearest million.
    State monitoring costs. EPA also discussed monitoring costs 
accruing to States for recording test sample results, issuing violation 
letters, and reviewing waiver applications. EPA estimated that for 
community water systems serving less than 10,000 customers, States 
would require 1 hour to record a testing result, 4 hours to issue a 
violation letter, and 8 hours to review a waiver application. In all 
cases, EPA estimated the relevant wage rate to be $41.47 per hour. We 
estimated the enforcement costs if States were to enforce EPA's arsenic 
regulations for bottled water establishments based on EPA's costs 
estimates for community water systems and our estimate of the number of 
tests, violative tests, and waiver applications that would be generated 
by these establishments, which we discussed in the preceding section. 
However, for the number of waiver applications, we assumed that only 
one-ninth of the establishments that we assumed would be operating 
under an approved 9-year waiver in any given year actually applied for 
that waiver in that year. Under these assumptions, we assume State 
enforcement costs would be approximately $500 to $29,000 per year. This 
cost rounds to $0 when rounded to the nearest million.
    Administrative costs. EPA also estimated administrative costs 
relating to establishing and maintaining the programs necessary to 
comply with the revised arsenic standard and the new monitoring 
requirements. For community water systems having fewer than 10,000 
customers, EPA estimated that water system employees would spend 8 
hours on reading and understanding the rule and 16 hours on training 
employees to comply with the rule. Again, EPA estimated an average 
hourly wage of $15.03 for the employees of such systems. Applying these 
cost estimates to 378 bottled water establishments results in an 
estimated one-time administrative cost of approximately $137,000. This 
cost rounds to $0 million.
    EPA also estimated one-time administrative costs for State activity 
such as developing and adopting State regulations that meet the new 
Federal arsenic requirements and training community water systems in 
the new regulations. EPA estimated these costs on the basis of full-
time equivalents (FTEs), which they assumed to cost $64,480, including 
overhead and fringe benefits. EPA estimated that States would require 
0.2 FTEs for regulation adoption and program development, 0.5 FTEs for 
system training and technical assistance for both community water 
systems and ``non-transient non-community water systems,'' and 0.12 
FTEs for system staff training. We have assumed that States would face 
comparable costs in developing a system to apply EPA's regulations to 
bottled water establishments. However, we have adjusted the total FTEs 
to include systems training and technical assistance for just one 
category of entities, which in this case is bottled water 
establishments. Under these assumptions, one-time State administrative 
costs would be approximately $4 million.
    Public notification costs. EPA regulations require community water 
systems to prepare and distribute public notifications of water 
analyses. EPA did not analyze the costs of these requirements in their 
analysis of their final rule on arsenic in drinking water because they 
already require community water systems to provide these analyses. 
However, if EPA's regulations were to be applied to bottled water 
establishments, then bottled water establishments would also need to 
prepare and send out public notifications of water analyses. It is not 
clear how EPA would adapt these regulations to bottled water 
establishments because such establishments do not have a simple way to 
identify their customers for purposes of sending out public 
notifications. Therefore, we have not attempted to quantify this cost.
    Total Costs and Benefits of Option Two
    Based on the preceding analysis, we estimate that taking no action 
and allowing EPA's arsenic regulations to become applicable to bottled 
water would generate quantified benefits of $9 to $36 million per year, 
quantified costs of $11 to $15 million in the first year and $7 to $11 
million in every year after the first year, plus any costs associated 
with public notification requirements.
    Option Three--Establish a quality standard for arsenic in bottled 
water that adopts EPA's MCL for arsenic in drinking water of 0.010 mg/
L.
    If we establish a quality standard regulation for arsenic in 
bottled water that adopts EPA's revised MCL for arsenic in drinking 
water but maintains our testing requirements and enforcement 
mechanisms, then we would maintain the quantified benefits of $9 to $36 
million per year and the abatement costs of $7 million to $11 million 
that we estimated for Option Two. In addition, this option would 
generate some additional testing costs for firms that fail to meet the 
level of 0.010 mg/L but that would have met the level of 0.05 mg/L. 
These additional testing costs would probably only take place during 
the initial transition period from 0.05 mg/L to 0.010 mg/L. Once firms 
adopt abatement procedures and establish the effectiveness of those 
procedures, then annual testing costs would probably be similar to 
current testing costs. We do not have sufficient information to 
estimate how many additional tests this option might generate. However, 
based on an estimated cost of $70 per sample that we discussed under 
Option Two, any additional testing costs would probably be small.
    Option Four--Establish a quality standard for arsenic in bottled 
water that sets the allowable level of arsenic at 0.02 mg/L.
    Benefits. Using the same approach that we used in Option Two, but 
applying EPA's benefits estimates for a revised MCL of 0.02 mg/L, we 
estimate that this option would eliminate between 1.9 and 2.0 fatal 
cases of cancer per year and between 1.5 and 1.7 nonfatal cases of 
cancer per year. This corresponds to a quantified benefit between $4 to 
$14 million per year under the expanded range of adjusted VSL estimates 
that we discussed in the sensitivity analysis section of Option Two.
    Costs. EPA did not provide detailed cost estimates for an MCL of 
0.02 mg/L; therefore, we cannot estimate costs using the same approach 
that we used in Option Two. However, EPA's estimate of the total 
abatement costs under this option was 36 percent of the estimated total 
abatement costs under an MCL of 0.010 mg/L (Ref. 8). If this 
relationship held for bottled water, then the abatement costs of this 
option would be $3 to $4 million per year. In addition, this option 
would generate some additional testing costs for firms that fail to 
meet the level of 0.02 mg/L but that would have met the level of 0.05 
mg/L. These additional testing costs would probably only accrue during 
the initial transition period from 0.05 mg/L to 0.02 mg/L. Once firms 
adopt abatement procedures and establish the effectiveness of those 
procedures, then annual testing costs would probably be

[[Page 70088]]

similar to current testing costs. We do not have sufficient information 
to estimate how many additional tests this option might generate. 
However, any additional testing costs would probably be small.
    Option Five--Establish a quality standard for arsenic in bottled 
water but that sets the allowable level of arsenic at 0.005 mg/L.
    Benefits. Using the same approach that we used in Option Two, but 
applying EPA's benefits estimates for a revised MCL of 0.005 mg/L, we 
estimate that this option would eliminate between 5.8 and 9.1 fatal 
cases of cancer per year and between 4.4 and 7.9 nonfatal cases of 
cancer per year. This corresponds to a quantified benefit of $13 to $64 
million per year under the expanded range of adjusted VSL estimates 
that we discussed in the sensitivity analysis section of Option Two.
    Costs. EPA did not provide detailed cost estimates for an MCL of 
0.005 mg/L; therefore, we cannot estimate costs using the same approach 
that we used in Option Two. However, EPA's estimate of the total 
abatement costs under this option was 233 percent of the estimated 
total abatement costs under an MCL of 0.010 mg/L (Ref. 8). If this 
relationship held for bottled water costs, then the abatement costs of 
this option would be $17 to $26 million. In addition, this option would 
generate additional testing costs for firms that fail to meet the level 
of 0.005 mg/L but that would have met the level of 0.05 mg/L. These 
additional testing costs would probably only accrue during the initial 
transition period from 0.05 mg/L to 0.005 mg/L. Once firms adopt 
abatement procedures and establish the effectiveness of those 
procedures, then annual testing costs would probably be similar to 
current testing costs. We do not have sufficient information to 
estimate how many additional tests this option might generate. However, 
any additional testing costs would probably be small.
    Summary of Benefits and Costs for Regulatory Options
    We present a summary of the estimated costs and benefits in table 2 
of this document. Option 3 (adopting EPA's MCL) appears to generate 
higher net benefits than either maintaining the current allowable level 
of arsenic in bottled water of 0.05 mg/L or taking no action and 
allowing EPA's regulations to become applicable to bottled water. The 
estimated net benefits of adopting an allowable level of 0.010 mg/L 
overlaps with the estimated benefits of adopting an allowable level of 
0.05 mg/L. The lower end of the range of potential net benefits is 
higher for 0.010 mg/L, but the higher end of the range is higher for 
0.05 mg/L.

          Table 2.--Summary of Costs and Benefits ($ millions)
------------------------------------------------------------------------
   Option            Cost              Benefit           Net Benefit
------------------------------------------------------------------------
Option 1--    Baseline           Baseline            Baseline
 Maintain
 0.05 mg/L
------------------------------------------------------------------------
Option 2--    $11 to $15 in      $9 to $36 plus      -$6 to $25 minus
 Take no       first year, $7     unquantified        notification costs
 action        to $11 every       benefits            plus unquantified
               year after first                       benefits in first
               year, plus                             year, $4 to $33
               public                                 minus notification
               notification                           costs plus
               costs                                  unquantified
                                                      benefits in
                                                      subsequent years
------------------------------------------------------------------------
Option 3--    $7 to $11          $9 to $36 plus      -$2 to $29 plus
 Adopt 0.010                      unquantified        unquantified
 mg/L                             benefits            benefits
------------------------------------------------------------------------
Option 4--    $3 to $4           $4 to $14 plus      $0 to $11 plus
 Adopt 0.02                       unquantified        unquantified
 mg/L                             benefits            benefits
------------------------------------------------------------------------
Option 5--    $17 to $26         $13 to $64 plus     -$13 to $47 plus
 Adopt 0.005                      unquantified        unquantified
 mg/L                             benefits            benefits
------------------------------------------------------------------------

B. Small Entity Analysis

    We have examined the economic implications of this proposed rule as 
required by the Regulatory Flexibility Act (5 U.S.C. 601-612). If a 
rule has a significant economic impact on a substantial number of small 
entities, the Regulatory Flexibility Act requires us to analyze 
regulatory options that would lessen the economic effect of the rule on 
small entities. We find that this rule would have a significant 
economic impact on a substantial number of small entities.
    We discussed the compliance costs that bottled water establishments 
would face as a result of proposing to amend the quality standard 
regulation for arsenic in bottled water in the Regulatory Impact 
Analysis section of this document. In this Small Entity Analysis 
section, we discuss in greater detail the impact of the proposed 
regulatory action on small entities.
    The Small Business Administration's definition of a small business 
for NAICS code 312112 Bottled Water Manufacturing is an entity with 500 
or fewer employees. Under this definition, 82 percent of the bottled 
water firms (260 of 318) identified in the Dun's Market Identifiers 
database are small firms (Ref. 1). Therefore, this rule would affect 
small bottled water manufacturers.
    A trade magazine listed a preliminary estimate of total producer 
revenues for all U.S. bottled water manufacturers in 2003 of $8,277 
million (Ref. 9). According to this magazine, the top five bottled 
water firms accounted for 69 percent of total wholesale dollar sales in 
2003. This suggests that 31 percent of total revenue, or $2,566 
million, accrues to firms other than the five largest firms. We do not 
know the portion of this revenue that accrues specifically to small 
firms. If the revenue of the 53 large firms other than the five largest 
firms were similar to the revenue of the 260 small firms, then each 
small firm would have annual revenue of $8.2 million. However, the 
revenue per firm of the large firms other than the five largest firms 
is probably greater than the revenue per firm of the small firms; so 
many small firms probably have annual revenue of less than $8.2 
million. The 1997 economic census also has some information relevant to 
estimating the revenue of small firms. A Census report based on this 
data suggests that the value of shipments per establishment for all 
establishments with less than 500 employees ranged from approximately 
$0.6 million to $20.5 million in 1997

[[Page 70089]]

(Ref. 10). To calculate this range, we subtracted the total value of 
shipments of all the establishments in the size categories for which 
the Census report provided value of shipment information from the total 
value of shipments for firms of all sizes to obtain the value of 
shipments of the establishments in the size categories for which the 
Census report did not provide value of shipments information. We then 
divided the resulting value by the number of establishments in the size 
categories for which the Census report did not produce value of 
shipments information. The Census report provided information on value 
of shipments based only per establishment. We do not know the average 
number of establishments per small firm; however, most small firms 
probably consist of only one establishment. The Census report did not 
provide information on revenue by establishment size. However, value of 
shipments is a reasonable proxy for revenue. Therefore, the estimate of 
the value of shipments per small establishment is probably a reasonable 
estimate of the revenue per small firms.
    We do not know the profit rates of small firms. According to one 
account, the median profit rate across all Fortune 500 firms in 2000 
was approximately 5 percent (Ref. 11). If we assume a profit margin of 
between 1 percent and 10 percent, then each small firm would have 
annual profit of between approximately $0.01 million and $2.1 million.
    We do not have sufficient information to estimate the proportion of 
industry compliance costs that would be borne by small firms. In the 
preceding regulatory impact analysis, we estimated that 20 
establishments would need to undertake arsenic abatement action if we 
chose Option 3, and we estimated that each establishment would face 
compliance costs of approximately $0.4 million to $0.6 million, based 
on EPA's cost estimates for community water systems. These 20 
establishments might belong to either large or small firms. Again, we 
assume that most small firms probably consist of only one 
establishment. Therefore, we estimate that 0 to 20 small firms would 
face compliance costs of approximately $0.4 million to $0.6 million per 
year. Thus, some small firms may face annual compliance costs that 
exceed estimated annual profits or that represent a considerable 
portion of estimated annual profits.
    To investigate the potential significance of these impacts, we 
entered these costs into a model prepared for us under contract by ERG. 
[Model for Estimating the Impacts of Regulatory Costs on the Survival 
of Small Businesses and its Application to Four FDA-Regulated 
Industries. Final. July 12, 2002.] The model is designed to estimate 
the percentage of small firms that would go out of business (i.e., go 
from a positive cash flow to a negative cash flow) because of given 
compliance costs if those costs accrued to all small firms in a given 
industry. However, these results can also be interpreted as the 
probability that any given small firm that faces those compliance costs 
will go out of business. According to this model, an annual cost of 
$0.4 million would generate a 56 percent probability that a small firm 
with less than 20 employees that faced those costs would go out of 
business and a 10 percent probability that any firm with 20 to 499 
employees that faced those costs would go out of business, if the 
distribution of cash flow across firms fits the normal distribution. 
Similarly, an annual cost of $0.6 million would generate a 67 percent 
probability that a small firm with less than 20 employees that faced 
those costs would go out of business and a 14 percent probability that 
any firm with 20 to 499 employees that faced those costs would go out 
of business, if cash flow across firms fits the normal distribution. 
Thus, the model suggests that these costs could have a significant 
impact on some firms under certain conditions. Therefore, in the 
absence of more detailed information on the distribution of revenues 
and costs and the profit margins of small firms, we find that this rule 
might have a significant economic impact on a substantial number of 
small entities. We request comments and information on the annual 
revenue and profit margins of small bottled water manufacturers and on 
the impact of this rule on those firms. We also request comments on our 
approach to estimating costs, which we discussed in the regulatory 
impact analysis under Option 2.
    The primary regulatory option that would reduce the burden on small 
firms would be to allow them to produce bottled water with a higher 
allowable level of arsenic than we allow larger firms to produce. This 
would reduce yearly abatement costs, which represent most of the 
compliance costs of this rule. We could also reduce the number or 
frequency of tests that we require such firms to perform. However, that 
would have only a minor impact on estimated costs. In the preceding 
regulatory flexibility analysis, we considered the option of setting 
the allowable level of arsenic in bottled water to 0.02 mg/L rather 
than the proposed 0.01 mg/L. We estimated that this option would reduce 
total compliance costs to a range of $3 million to $4 million per year. 
However, we did not discuss the number of establishments that would 
face these costs. EPA estimated that 2.0 percent of community water 
systems using ground water sources produce water with arsenic levels 
higher than 0.02 mg/L. (Ref. 5) We assumed in the regulatory impact 
analysis that all bottled water firms used ground water systems. Under 
this assumption, 2.0 percent of bottled water establishments, or 8 
establishments, currently use source water with arsenic levels higher 
than 0.02 mg/L. Therefore, we estimate that 0 to 8 small firms would 
face compliance costs of approximately $0.4 million to $0.5 million per 
year. These per firm costs remain significant in relation to estimated 
per firm profits. The reduction in the impact on small firms under this 
option occurs because fewer small firms would face these costs.
    However, allowing small firms to produce bottled water with a 
higher level of arsenic than we allow larger firms to produce might 
also reduce benefits. If all 20 of the establishments that we estimated 
would need to take abatement action to meet an allowable arsenic level 
of 0.01 mg/L were small firms, then setting the allowable arsenic 
levels for small firms to 0.02 mg/L would reduce benefits by the full 
amount that we discussed in the regulatory impact analysis in the 
context of setting the allowable arsenic levels for all firms to 0.02 
mg/L rather than 0.01 mg/L. Specifically, it would reduce estimated 
benefits from a range of $9 million to $36 million plus unquantified 
benefits to a range of $4 million to $14 million plus unquantified 
benefits. On the other hand, if none of the 20 establishments that we 
estimated would need to take abatement action to meet an allowable 
arsenic level of 0.01 mg/L were small firms, then setting the allowable 
arsenic levels for small firms to 0.02 mg/L would have no impact on 
benefits. In that case, small firms would also face no compliance 
costs. We request comments on any other reasonable alternative that 
would reduce the burden of this rule on small entities.
    We have not been able to identify any Federal rules that duplicate, 
overlap or conflict with the proposed rule. We currently regulate 
arsenic levels in bottled water. If we were to take no action, EPA's 
NPDWR for arsenic would apply to bottled water.

[[Page 70090]]

C. Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995 (Public Law 104-4), 
requiring cost-benefit and other analyses, in section 1531(a) defines a 
significant rule as ``a Federal mandate that may result in the 
expenditure by State, local, and tribal governments in the aggregate, 
or by the private sector, of $100 million (adjusted annually for 
inflation) in any 1 year.'' We have determined that this proposed rule 
does not constitute a significant rule under the Unfunded Mandates 
Reform Act.

VI. Paperwork Reduction Act

    FDA tentatively concludes that this proposed rule contains no 
collections of information. Therefore, clearance by OMB under the 
Paperwork Reduction Act of 1995 is not required.

VII. Federalism

    FDA has analyzed this proposed rule in accordance with the 
principles set forth in Executive Order 13132. FDA has determined that 
the proposed rule, if finalized as proposed, would have a preemptive 
effect on State law. Section 4(a) of the Executive order requires 
agencies to ``construe * * * a Federal Statute to preempt State law 
only where the statute contains an express preemption provision, or 
there is some other clear evidence that the Congress intended 
preemption of State law, or where the exercise of State authority 
conflicts with the exercise of Federal authority under the Federal 
statute.'' Section 403A(a)(1) of the act provides that ``no State or 
political subdivision of a State may directly or indirectly establish 
under any authority or continue in effect as to any food in interstate 
commerce--(1) any requirement for a food which is the subject of a 
standard of identity established under section 401 that is not 
identical to such standard of identity or that is not identical to the 
requirement of section 403(g) * * *.'' FDA has interpreted this 
provision to apply to standards of quality (21 CFR 100.1(c)(4)). 
Although this proposed rule, if finalized as proposed, will have 
preemptive effect in that it would preclude States from issuing 
requirements for arsenic levels in bottled water that are not identical 
to the allowable level for arsenic as set forth in this proposed rule, 
this preemptive effect is consistent with what Congress set forth in 
section 403A of the act.
    Section 4(c) of the Executive order further requires that ``any 
regulatory preemption of State law shall be restricted to the minimum 
level necessary'' to achieve the regulatory objective. Under section 
410 of the act, not later than 180 days before the effective date of an 
NPDWR issued by EPA for a contaminant under section 1412 of the SDWA 
(42 U.S.C. 300g-1), FDA is required to issue a standard of quality 
regulation for that contaminant in bottled water or make a finding that 
such a regulation is not necessary to protect the public health because 
the contaminant is contained in water in public water systems but not 
in water used for bottled water. Further, section 410(b)(3) of the act 
requires a quality standard for a contaminant in bottled water to be no 
less stringent than EPA's MCL and no less protective of the public 
health than EPA's treatment techniques required for the same 
contaminant. On January 22, 2001, EPA issued an NPDWR containing an MCL 
for arsenic (66 FR 6976). FDA has determined that the MCL for arsenic 
that EPA established for public drinking water is appropriate as a 
standard of quality for bottled water, and is issuing this proposed 
regulation consistent with section 410 of the act.
    Further, section 4(e) of the Executive order provides that ``when 
an agency proposes to act through adjudication or rulemaking to preempt 
State law, the agency shall provide all affected State and local 
officials notice and an opportunity for appropriate participation in 
the proceedings.'' Given the statutory framework of section 410 of the 
act for bottled water, EPA's issuance of an MCL for arsenic in public 
drinking water provided notice of possible FDA action for a standard of 
quality for arsenic in bottled water. FDA did not receive any 
correspondence from State and local officials regarding an arsenic 
standard for bottled water subsequent to EPA's NPDWR on the MCL for 
arsenic. Moreover, FDA is not aware of any States that have 
requirements for arsenic in bottled water that would be affected by 
FDA's decision to establish a bottled water quality standard for 
arsenic that is consistent with EPA's standard for public drinking 
water. In addition, we are providing an opportunity for State and local 
officials to comment on FDA's standard of quality for arsenic in 
bottled water in the context of this rulemaking. For the reasons set 
forth previously in this document, the agency believes that it has 
complied with all of the applicable requirements under the Executive 
order.
    In conclusion, FDA has determined that the preemptive effects of 
the final rule are consistent with Executive Order 13132.

VIII. Comments

    Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES) written or electronic comments regarding this document. 
Submit a single copy of electronic comments or two paper copies of any 
mailed comment, except that individuals may submit one paper copy. 
Comments are to be identified with the docket number found in brackets 
in the heading of this document. Received comments may be seen in the 
Division of Dockets Management between 9 a.m. and 4 p.m., Monday 
through Friday.

IX. Effective Date of the Related Final Rule

    The agency intends to make any final rule based on this proposal 
effective January 23, 2006. The agency will publish a confirmation 
document for a final rule in the Federal Register no later than 180 
days before the effective date. The agency is providing 180 days before 
the effective date to permit affected firms adequate time to take 
appropriate steps to bring their product into compliance with the 
standard imposed by the new rule.

X. References

    The following references are on display in the Division of Dockets 
Management (see ADDRESSES) and may be seen by interested persons 
between 9 a.m. and 4 p.m., Monday through Friday.
    1. Puro, E., Memo to the Record, June 22, 2004.
    2. Arsenic in Drinking Water Rule Economic Analysis, Abt 
Associates Inc. for U.S. Environmental Protection Agency, EPA 815-R-
00-026, pp. 5-7, December 2000. Available on the internet on 
November 15, 2004, at http://frwebgate.access.gpo.gov/cgi-bin/leaving.cgi?from=leavingFR.html&log=linklog&to=http://www.epa.gov/safewater/ars/econ_analysis.pdf
.

    3. Ibid. pp. 5-9.
    4. Ibid. Exhibit 5-12, pp. 5-30.
    5. Ibid. Exhibit 4-10, pp. 4-12.
    6. Ibid, pp. 6-1 to 6-38.
    7. Ibid. pp. 6-14.
    8. Ibid. Exhibit 6-10, pp. 6-28.
    9. Rodwan, J. G., ``Solid Gains Put Bottled Water in No. 2 
Spot,'' Bottled Water Reporter, p. 17, April/May 2004.
    10. Bottled Water Manufacturing, 1997 Economic Census 
Manufacturing Industry Series, EC97M-3121B, 1997, U.S. Census 
Bureau, U.S. Department of Commerce, table 4, p. 9.
    11. Drug industry most profitable, survey. CNBC and the Wall 
Street Journal-Businesses, November 30, 2001.

List of Subjects in 21 CFR Part 165

    Beverages, Bottled water, Food grades and standards, Incorporation 
by reference.
    Therefore, under the Federal Food, Drug, and Cosmetic Act and under

[[Page 70091]]

authority delegated to the Commissioner of Food and Drugs, it is 
proposed that 21 CFR part 165 be amended as follows:

PART 165--BEVERAGES

    1. The authority citation for 21 CFR part 165 continues to read as 
follows:

    Authority: 21 U.S.C. 321, 341, 343, 343-1, 348, 349, 371, 379e.
    2. Section 165.110 is amended by removing the entry for ``Arsenic'' 
in the table in paragraph (b)(4)(i)(A), by revising paragraph 
(b)(4)(iii)(A) and the introductory text of paragraph (b)(4)(iii)(E), 
and by adding paragraph (b)(4)(iii)(E)(14) to read as follows:


Sec.  165.110  Bottled water.

* * * * *
    (b) * * *
    (4) * * *
    (iii) * * *
    (A) The allowable levels for inorganic substances are as follows:

----------------------------------------------------------------------------------------------------------------
                     Contaminant                        Concentration in milligrams per liter (or as specified)
----------------------------------------------------------------------------------------------------------------
Arsenic..............................................                                                    0.010.
Antimony.............................................                                                      006.
Barium...............................................                                                        2.
Beryllium............................................                                                    0.004.
Cadmium..............................................                                                    0.005.
Chromium.............................................                                                      0.1.
Copper...............................................                                                      1.0.
Cyanide..............................................                                                      0.2.
Lead.................................................                                                    0.005.
Mercury..............................................                                                    0.002.
Nickel...............................................                                                      0.1.
Nitrate..............................................                                         10 (as nitrogen).
Nitrite..............................................                                          1 (as nitrogen).
Total Nitrate and Nitrite............................                                         10 (as nitrogen).
Selenium.............................................                                                     0.05.
Thallium.............................................                                                    0.002.
----------------------------------------------------------------------------------------------------------------

* * * * *
    (E) Analyses to determine compliance with the requirements of 
paragraph (b)(4)(iii)(A) of this section shall be conducted in 
accordance with an applicable method and applicable revisions to the 
methods listed in paragraphs (b)(4)(iii)(E)(1) through 
(b)(4)(iii)(E)(14) of this section and described, unless otherwise 
noted, in ``Methods for Chemical Analysis of Water and Wastes,'' U.S. 
EPA Environmental Monitoring and Support Laboratory (EMSL), Cincinnati, 
OH 45258 (EPA-600/4-79-020), March 1983, which is incorporated by 
reference in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies 
of this publication are available from the National Technical 
Information Service (NTIS), U.S. Department of Commerce, 5825 Port 
Royal Rd., Springfield, VA 22161, or may be examined at the Center for 
Food Safety and Applied Nutrition's Library, Food and Drug 
Administration, 5100 Paint Branch Pkwy., College Park, MD 20740, or at 
the Office of the Federal Register, 800 North Capitol St. NW., suite 
700, Washington, DC.
* * * * *
    (14) Arsenic shall be measured using the following methods:
    (i) Method 200.8--``Determination of Trace Elements in Water and 
Wastes by Inductively Coupled Plasma-Mass Spectroscopy,'' contained in 
the manual entitled ``Methods for the Determination of Metals in 
Environmental Samples--Supplement 1,'' EPA/600/R-94/111, May 1994, 
which is incorporated by reference in accordance with 5 U.S.C. 552(a) 
and 1 CFR part 51. Copies of this publication are available from NTIS, 
PB95-125472, U.S. Department of Commerce, 5825 Port Royal Rd., 
Springfield, VA 22161, or may be examined at the Center for Food Safety 
and Applied Nutrition's Library, Food and Drug Administration, 5100 
Paint Branch Pkwy., College Park, MD 20740, or at the Office of the 
Federal Register, 800 North Capitol St. NW., suite 700, Washington, DC.
    (ii) Method 200.9--``Determination of Trace Elements by Stabilized 
Temperature Platform Graphite Furnace Atomic Absorption Spectrometry,'' 
contained in the manual entitled ``Methods for the Determination of 
Metals in Environmental Samples--Supplement 1,'' EPA/600/R-94/111, May 
1994, which is incorporated by reference in accordance with 5 U.S.C. 
552(a) and 1 CFR part 51. The availability of this incorporation by 
reference is given in paragraph (b)(4)(iii)(E)(14)(i) of this section.
* * * * *

    Dated: October 6, 2004.
Jeffrey Shuren,
Assistant Commissioner for Policy.
[FR Doc. 04-26531 Filed 11-26-04; 4:44 pm]

BILLING CODE 4160-01-S