3 February 2003 Source: http://www.access.gpo.gov/su_docs/aces/fr-cont.html ----------------------------------------------------------------------- [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]] ----------------------------------------------------------------------- Part IV Department of Health and Human Services ----------------------------------------------------------------------- Food and Drug Administration ----------------------------------------------------------------------- 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]] ----------------------------------------------------------------------- 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. ----------------------------------------------------------------------- SUMMARY: The Food and Drug Administration (FDA) is proposing a regulation that would require domestic and foreign facilities that manufacture, process, pack, or hold food for human or animal consumption in the United States to register with FDA by December 12, 2003. The proposed regulation would implement the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act), which requires domestic and foreign facilities to register with FDA by December 12, 2003, even in the absence of final regulations. Registration is one of several tools that will enable FDA to act quickly in responding to a threatened or actual terrorist attack on the U.S. food supply by giving FDA information about all facilities that manufacture, process, pack, or hold food for consumption in the United States. In the event of an outbreak of food-borne illness, such information will help FDA and other authorities determine the source and cause of the event. In addition, the registration information will enable FDA to notify quickly the facilities that might be impacted by the outbreak. DATES: Submit written or electronic comments by April 4, 2003. Written comments on the information collection provisions should be submitted by March 5, 2003. ADDRESSES: Submit written comments to the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to http://www.fda.gov/dockets/ecomments. Submit written comments on the information collection provisions to the Office of Information and Regulatory Affairs, the Office of Management and Budget (OMB), New Executive Office Bldg., 725 17th St. NW., rm. 10235, Washington, DC 20503, Attn: Stuart Shapiro, Desk Officer for FDA. FOR FURTHER INFORMATION CONTACT: Leslye M. Fraser, Center for Food Safety and Applied Nutrition (HFS-4), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-2378. 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://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 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 ------------------------------------------------------------------------ Table 10.--Summary of Costs for Domestic Facilities Under Option 2 Administrative worker wage (includes 25.1 overhead) ------------------------------------------------------------------------ Manager wage (includes overhead) 56.74 ------------------------------------------------------------------------ Percent with Internet access US 71% ------------------------------------------------------------------------ Research time with Internet (hours) 1 ------------------------------------------------------------------------ Research time without Internet (hours) 2 ------------------------------------------------------------------------ Research cost with Internet $3,695,000 ------------------------------------------------------------------------ Research cost without Internet $3,018,000 ------------------------------------------------------------------------ Administrative time for form (hours) 0.75 ------------------------------------------------------------------------ Manager time for form (hours) 0.25 ------------------------------------------------------------------------ Form costs $6,844,000 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ Annual facility costs $3,409,000 ------------------------------------------------------------------------ Total domestic costs $13,557,000 ------------------------------------------------------------------------ v. Foreign facility first year costs. FDA expects foreign facilities to go through the same four steps to comply with the regulation as domestic facilities: a worker must become aware of the regulation, learn the requirements, and fill out the form; the owner, operator, or agent in charge then must verify the form. There are additional fifth and sixth steps for foreign facilities to find, and then hire a U.S. agent. To estimate the cost of registration for foreign facilities, FDA assumes that they would incur the same per facility costs as [[Page 5395]] domestic facilities, plus additional costs. Costs would be higher for many foreign facilities than for domestic facilities at each step due to distance, language difficulties, and lack of Internet access. For some foreign facilities, it may be so difficult to become informed about the regulation, that rather than become informed about the requirements before shipping, some are likely to learn about the requirements at the U.S. port. For these foreign facilities, the cost of learning about the registration requirement would be a possible loss of value to their product due to a delay at the port, storage costs, and transaction costs associated with the delay. Foreign facilities may learn about the requirements through trade press, importers, U.S. business or trading partners, distributors, or their governments. Foreign facilities, like domestic facilities, then would have to find the requirements of the regulation, obtain the registration form either electronically or in hard copy, and fill out and verify the form. Costs for foreign facilities would vary depending on whether the worker entering the registration information or the owner, operator, or agent in charge of the foreign facility can read and write in English. Comments suggest that many foreign manufacturers are limited in their ability to read and write in English. Estimates of the number of people outside of countries where English is the primary language, who are able to speak English fluently vary widely, ranging from 300 to 750 million (Ref. 14). To find the number of English speakers outside of the United States, FDA adds the number of English speakers in countries where English is the primary language, excluding the United States, 151 million, the number of English speakers in countries where English is a secondary language, 300 million, and the midpoint, 525 million, of the range of the estimate of the number of speakers of English as a foreign language. FDA then divides this total number of English speakers by the world population minus the U.S. population, 5.9 billion (Ref. 15). Therefore, FDA assumes that 16 percent of foreign manufacturers read and write English well enough to research the registration requirement and fill out the form. FDA requests comments on this assumption. Registrants who do not read and write English would have to hire a translator to aid them in registering and understanding the registration requirements. Alternatively, trade groups, distributors, or the Government may provide translation services. Regardless of whether the translation is paid for directly by the registrant or a third party, for ease of computation, we assume there is a cost per registration for translation for 84 percent of foreign facilities. FDA assumes it would take facility operators who do not understand English one additional hour to fill out the form, 5 additional hours to find an agent, and 5 additional hours to read and understand the registration requirements. FDA requests comments on these assumptions. Whether a foreign facility has access to the Internet will determine, in part, the cost of learning about and complying with the registration requirements. Although 71 percent of the small businesses in the United States have Internet access, only 3 percent of the population of China, the country that has the largest number of manufacturers that export to the United States, has access to the Internet (Ref. 11). To get an idea of how many manufacturers that export to the United States have access to the Internet, FDA looked at Internet access for the 26 countries that represent 80 percent of the manufacturers that export to the United States (Ref. 4) and the percent of the population that has access to the Internet worldwide for the remaining 20 percent. A weighted average of these 26 countries by the number of manufacturers suggests that 26 percent of the population that exports to the United States has Internet access. FDA lacks data on the percent of businesses in other countries with Internet access. Because businesses are more likely to have Internet access than individuals, FDA adjusts the percent of the populations of other countries with Internet access upward by the percent difference in Internet access between individuals and small businesses in the United States. Seventy- one percent of small businesses in the United States have Internet access versus 59 percent of the population, or the percent of businesses with Internet access represents a 20 percent increase over the population. Applying this adjustment to Internet access in foreign countries increases the percent of businesses with Internet access from 26 to 31 percent. FDA therefore assumes that 31 percent of foreign manufacturers would register electronically. In option 7, FDA considers how many facilities will be registered electronically if the U.S. agent is able to register on behalf of the foreign facility. Table 11 provides a summary of the 26 countries and the percentage of their population with Internet access. The remaining 69 percent would either register by mail or would be aided in registering electronically. Regardless of whether the cost of obtaining Internet access is borne by the facility, or by a third party, for ease of computation, FDA estimates the cost per facility. FDA expects it will be more difficult for foreign facilities that do not have Internet access at their place of business than domestic facilities to access the Internet elsewhere due to the overall lower level of Internet access in foreign countries. FDA assumes it would take facility operators that do not have access to the Internet, one additional hour to fill out the form, 5 additional hours to find an agent, and 5 additional hours to find, read, and understand the registration requirements. FDA requests comments on these assumptions. Table 11.--Percent of the Population With Internet Access For the 26 Countries That Are Home to 80 Percent of Food Exporters to the United States ------------------------------------------------------------------------ Percent of Country Percent of Total Population With Manufacturers Internet Access ------------------------------------------------------------------------ China (mainland).............. 9.05................ 2.92 France........................ 8.61................ 28.39 Italy......................... 7.96................ 33.37 Canada........................ 7.78................ 52.79 Japan......................... 7.69................ 40.43 Mexico........................ 6.24................ 3.38 United Kingdom................ 3.80................ 59.88 Germany, Federal Republic of.. 3.30................ 36.37 Taiwan, Republic Of China..... 2.96................ 51.85 Korea, Republic Of (South).... 2.95................ 46.40 India......................... 2.76................ 0.67 Spain......................... 2.56................ 19.69 Thailand...................... 2.39................ 1.96 Netherlands................... 1.40................ 58.07 Australia..................... 1.30................ 54.38 Philippines................... 1.29................ 2.46 Hong Kong..................... 1.26................ 59.58 Chile......................... 1.21................ 20.02 Poland........................ 1.19................ 16.57 Brazil........................ 1.18................ 7.74 Indonesia..................... 1.06................ 1.93 Belgium....................... 0.89................ 33.14 Switzerland................... 0.86................ 46.82 Portugal...................... 0.85................ 34.37 Vietnam....................... 0.83................ 0.49 Rest of the world............. 20.00............... 9.57 ======================================================================== Weighted average.................................... 25.50 Business adjustment................................. 20.34 Percent of foreign facilities with Internet access.. 30.69 ------------------------------------------------------------------------ [[Page 5396]] vi. Foreign facility costs to hire a U.S. agent. The U.S. agent is a person residing or maintaining a place of business in the United States, whom the owner, operator, or agent in charge of a foreign facility designates as its agent. Only one U.S. agent per foreign facility is permitted. The U.S. agent acts as a communications link between the FDA and the facility and FDA would consider providing information to the U.S. agent the same as providing information directly to the foreign facility. In option 7, facilities can designate their U.S. agent as their agent in charge of the facility for purposes of registration and the agent can register in behalf of the facility. The costs and benefits of permitting the U.S. agent to register on behalf of the facility are considered in option 7. FDA has little information on how many foreign facilities already have a U.S. agent. Comments stated that many exporters do not currently have a U.S. agent; they would have to hire an agent in response to the regulation. FDA expects, however, that some foreign facilities already have a U.S. representative that can function as a U.S. agent. The U.S. representative may be a business partner, broker, U.S. lawyer, or parent company. FDA assumes that the likelihood that a foreign facility has an existing U.S. agent is related directly to the quantity of product the foreign facility exports to the United States. To estimate the number of foreign facilities that already have a U.S. agent, FDA assumes that manufacturers/processors that do more business in the United States are more likely to have an existing U.S. agent. To estimate the amount of product a foreign manufacturer/ processor exports to the United States, FDA estimates the number of line entries exported to the United States by foreign manufacturers. The term ``line entry'' refers to a group of products that are subject to the same FDA admissibility decision because they have the same FDA product code, brand name, size or packaging, manufacturer/processor, shipper, consignee, importer's product description, and country of production. One shipment may contain multiple line entries. FDA used data from OASIS on the average number of line entries and the average number of manufacturers/processors (listed in OASIS under the category ``manufacturers'') by country and product code to estimate the number of line entries for foreign manufacturers/processors. A shortcoming of these data is that entries are by product code; thus, manufacturers/processors that are exporting products in more than one product code are in the count of manufacturers/processors for every product code in which they export. A product code designates a category of product, such as cheese and cheese products. The OASIS data consequently have approximately twice as many manufacturers/processors as actually exist. To adjust for this double-counting, FDA assumed the average foreign manufacturer/processor exports in two product categories. To find an approximate number of line entries per manufacturer, FDA divided the total number of manufacturers/processors into the total number of line entries for each country and applied the average number of line entries per manufacturer/processor to all the manufacturers/processors from that country. This method will underestimate the number of very small and very large manufacturers/ processors, because it removes the variation in number of line entries exported from countries with a large number of manufacturers/processors exporting to the United States. To estimate the number of foreign facilities that would have to hire a U.S. agent, FDA assumed that foreign facilities that export more than 100 line entries each year into the United States, or 10 percent of foreign manufacturers/processors, already have a U.S. representative who can function as a U.S. agent. FDA also assumed that the 16 percent of manufacturers/processors that are exporting 10 or fewer line entries to the United States would stop exporting to the United States, rather than incur the expense of registering, hiring a U.S. agent, and providing prior notice under 21 CFR part 1, subpart I. FDA requests comments on these assumptions. Table 12 presents average numbers of line entries and the percent of foreign manufacturers/processors that export that number. Table 12.--Average Number of Line Entries From Foreign Manufacturers/ Processors ------------------------------------------------------------------------ Percent of Total Average Number of Line Number of Foreign Cumulative Percent of Entries Manufacturers/ Manufacturers/ Processors Processors ------------------------------------------------------------------------ <=10.................... 15.81................. 15.81 11-20................... 25.43................. 41.24 21-40................... 32.27................. 73.51 41-60................... 7.30.................. 80.81 61-80................... 5.88.................. 86.69 81-100.................. 3.64.................. 90.33 101-120................. 1.78.................. 92.11 121-140................. 0.72.................. 92.83 141-160................. 1.59.................. 94.42 161-180................. 0.48.................. 94.90 181-200................. 0.83.................. 95.73 200.......... 4.27.................. 100.00 ------------------------------------------------------------------------ FDA anticipates that foreign facilities would find U.S. agents through the Internet or business contacts. Finding and hiring an agent would result in labor costs for the facility. FDA requests comments on these assumptions. FDA bases the estimated cost of hiring a U.S. agent on the fees charged by U.S. agents for foreign drug, biologic, and device manufacturers. The requirements for a U.S. agent for drugs, biologics, and devices (parts 207, 607, and 807, respectively) are very similar to the requirements for a U.S. agent for foods in this proposed regulation, and many of the U.S. agents began working as a response to the drug, biologic, and device foreign facility registration regulations. FDA contacted some active U.S. agents, whose annual cost estimates for their services ranged from $700 to $2,000 (Refs. 16 and 17). vii. Annual costs for foreign facilities. Foreign facilities have to retain a U.S. agent. In the first year, the facility would incur costs to hire and retain an agent. In future years, the facility would have to pay an annual fee of approximately one thousand dollars to the agent. Like domestic facilities, foreign facilities are required to update their registration when a change occurs in any of the information previously submitted. FDA estimates the frequency of registration updates for foreign facilities as 20 percent per year. FDA requests comments on this assumption. The cost to the facility of updating would be 1 hour to find and fill out the form, including translation if necessary, and to certify the changed registration. New facilities would incur the same costs to learn about the regulation, hire a U.S. agent, and fill out the registration information in future years as existing facilities would incur in the first year. [[Page 5397]] 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 registration of new foreign facilities would equal 10 percent of the first year cost to facilities. Facilities that go out of business would need to notify FDA of the cancellation of their registration. The cost to the facility of canceling the registration would be the wage rate times 1 hour to cancel the registration. FDA estimates that 10 percent of the total, current number of facilities would go out of business each year. Table 13 presents a summary of the data used to estimate the cost to foreign facilities to comply with option 2. Table 13.--Number of Foreign Facilities Covered Under Option 2 Foreign holders and packagers 100,027 ------------------------------------------------------------------------ Foreign manufacturers/processors 125,450 ------------------------------------------------------------------------ Stops exporting 16% ------------------------------------------------------------------------ Total facilities 205,405 ------------------------------------------------------------------------ Table 14.--Summary of Costs Incurred By Foreign Facilities Under Option 2 Speaks English 16% ------------------------------------------------------------------------ Has Internet access 31% ------------------------------------------------------------------------ Has U.S. agent 10% ------------------------------------------------------------------------ Cost of U.S. agent (annual) $1,000 ------------------------------------------------------------------------ Hourly wage rate $25 ------------------------------------------------------------------------ Time to find agent (hours) 5 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year agent cost $67,340,000 ------------------------------------------------------------------------ Agent fee (annual cost) $194,868,000 ------------------------------------------------------------------------ Administrative time (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year administrative costs $44,418,929 ------------------------------------------------------------------------ Time to fill out form (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 1 ------------------------------------------------------------------------ Additional time Internet (hours) 1 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ First year form cost $12,992,000 ------------------------------------------------------------------------ Total first year costs $319,619,000 ------------------------------------------------------------------------ Total annual costs $228,370,000 ------------------------------------------------------------------------ viii. Cost due to port delays. FDA anticipates that some foreign facilities would not learn of the requirements before shipping their products to the United States. The administrative costs of learning about the registration requirements for these foreign facilities would be the cost of finding out at the port of entry. FDA requests comment on the percentage of foreign facilities that would become aware of the registration requirement at the U.S. port of entry. For these facilities, the cost of complying would be the possible one-time loss of value of their shipment and other costs of delay, in addition to the cost of registering and finding and hiring a U.S. agent. FDA estimates the cost to foreign facilities of becoming informed about the regulatory requirement is the number of foreign facilities multiplied by either the cost of information, re-exporting the shipment, or a delayed shipment at the U.S. port, whichever is lower. FDA must hold shipments at the U.S. port for as long as it takes the foreign facility to register with FDA. To register, a foreign facility first must be informed of the delay at the port by the importer, consignee, owner, or transporter. This may happen very quickly via a phone call or e-mail message, or take hours if there is a large difference in time zones. Next, the foreign facility must find and hire a U.S. agent, if it does not already have one. If the foreign facility is open during U.S. business hours and has access to the Internet and a fax machine to find an agent and sign a contract, it may find an agent quickly. If the foreign facility is not in a time zone compatible with customary business hours in the United States or does not have easy access to the Internet or fax machine, finding and hiring an agent may take longer. The cost of the delay to the foreign facility is the cost of storing the shipment and loss of value of the shipment due to the delay. For perishable products, a delay may reduce the value of the shipment significantly, perhaps even to zero. For nonperishable products, there may be transaction costs due to cancellation of a contract and finding a new buyer. FDA expects that to the extent there are significant port delays, they typically will occur with food manufactured/processed, packed or held at facilities that ship infrequently to the United States. Delays also will be longer and more likely for shipments from facilities that are more distant from the United States or have difficulty communicating with the United States. Perishables, due to their short shelf life, are more likely to be shipped from countries that are geographically close to the United States. For these reasons, FDA expects that costs arising from delays for non-perishable products may be as high or higher than costs arising from perishable products. FDA requests comments on the length of delay for shipments held while waiting for the foreign facility to register and on the costs of the delay, such as loss of product value, storage costs, and transaction costs. ix. FDA costs. FDA's costs include creating and maintaining a database, processing paper submissions, and sending annual mailings to registrants. Developing and maintaining a database includes automatically entering registrations into the database that arrive electronically and sending an electronic receipt and facility registration number back to the registrant. FDA estimates that four full time employees (FTEs) would be needed to oversee the database. An employee's wage is estimated to be equal to a GS-12, step one, in the Washington, DC metro area, which is $55,924 per year (Ref. 10). To get the cost of the labor to FDA, FDA doubles the wage rate to include overhead costs, such as health insurance, office space, and retirement benefits. Additionally, paper submissions would have to be entered manually, at an estimated cost of $10 per submission. FDA estimates that facilities that do not have access to the Internet would submit paper registrations. FDA also estimates a 10 percent error rate for paper submissions based on estimates of error rates for another FDA database (Ref. 18). Each paper submission with an error will result in an additional cost for mailing and re-processing. FDA intends to send an annual e-mail or mailing to all [[Page 5398]] registrants reminding them to keep their registrations up-to-date and verifying the mailing addresses of the registrants. FDA presents costs for the first 5 years in table 15 of this document. Wage rates and paper submission costs are increased by 3 percent each year to account for inflation. Annual costs are discounted at 7 percent. Table 15.--Yearly Cost Estimate For FDA Under Option 2 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA Costs 2003 2004 2005 2006 2007 -------------------------------------------------------------------------------------------------------------------------------------------------------- Development/modification/enhancement $8,200,000 $3,000,000 $3,300,000 $2,300,000 $2,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Maintenance/steady state $1,560,000 $3,500,000 $4,300,000 $4,300,000 $4,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of FTEs 4 4 4 2 2 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per FTE $110,588 $110,588 $110,588 $110,588 $110,588 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per paper submission $10 $10.00 $10.00 $10.00 $10.00 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of domestic paper submissions 60,124 24,050 24,050 24,050 24,050 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of foreign paper submissions 22,677 9,071 9,071 9,071 9,071 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of domestic registrations in database 207,324 207,324 207,324 207,324 207,324 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of foreign registrations in database 205,405 205,405 205,405 205,405 205,405 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to domestic facilities $1 $1.00 $1.00 $1.00 $1.00 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to foreign facilities $1 $1.00 $1.00 $1.00 $1.00 -------------------------------------------------------------------------------------------------------------------------------------------------------- Error rate for paper submissions 10% 10% 10% 10% 10% -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of errors 8,280 3,312 3,312 3,312 3,312 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per error $15 $15.00 $15.00 $15.00 $15.00 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total costs $11,279,000 $7,398,000 $8,498,000 $7,276,000 $7,276,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Discounted total costs $11,279,000 $6,914,000 $7,422,000 $5,939,000 $5,551,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- 3. Option Three: Require Registration of Domestic and Foreign Facilities That Manufacture/Process, Pack, or Hold Food That Sell Their Products in Interstate Commerce, Including Mixed-Type Facilities Option three has the same requirements as option two, but does not require domestic facilities that participate only in intrastate commerce to register. FDA tentatively concludes that this option is not legally viable. The Bioterrorism Act does not seem to limit the scope of the statute to facilities that engage only in interstate commerce. Tables 16, 17, 18, 19, and 20 of this document provide a summary of the data for cost estimates under option 3 for domestic facilities, foreign facilities, and FDA, respectively. Excluding intrastate facilities would lower the number of affected, domestic facilities from 207,324 affected facilities under option two to 107,646. This would lower the first year cost for domestic facilities from $13.6 to $7.0 million dollars. The annual cost would be lowered from $3.4 to $1.8 million dollars. Total first year costs would be lowered from $344.5 to $337.6 million dollars. Table 16.--Number of Domestic Facilities Covered Under Option 3 FACTS data 71,871 ------------------------------------------------------------------------ Mixed-type farms 25,365 ------------------------------------------------------------------------ Retail processors 10,410 ------------------------------------------------------------------------ Total domestic 107,646 ------------------------------------------------------------------------ Table 17.--Summary of Costs Incurred By Domestic Facilities Under Option 3 Administrative worker wage (includes 25.1 overhead) ------------------------------------------------------------------------ Manager wage (includes overhead) 56.74 ------------------------------------------------------------------------ Percent with Internet access US 71% ------------------------------------------------------------------------ Research time with Internet (hours) 1 ------------------------------------------------------------------------ Research time without Internet (hours) 2 ------------------------------------------------------------------------ Research cost with Internet $1,918,000 ------------------------------------------------------------------------ Research cost without Internet $1,567,000 ------------------------------------------------------------------------ Administrative time for form (hours) 0.75 ------------------------------------------------------------------------ Manager time for form (hours) 0.25 ------------------------------------------------------------------------ Form costs $3,553,000 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ Annual facility costs $1,770,000 ------------------------------------------------------------------------ Total domestic costs $7,038,000 ------------------------------------------------------------------------ [[Page 5399]] Table 18.--Number of Foreign Facilities Covered Under Option 3 Foreign holders and packagers 100,027 ------------------------------------------------------------------------ Foreign manufacturers/processors 125,450 ------------------------------------------------------------------------ Stops exporting 16% ------------------------------------------------------------------------ Total facilities 205,405 ------------------------------------------------------------------------ Table 19.--Summary of Costs Incurred By Foreign Facilities Under Option 3 Speaks English 16% ------------------------------------------------------------------------ Has Internet access 31% ------------------------------------------------------------------------ Has U.S. agent 10% ------------------------------------------------------------------------ Cost of U.S. agent (annual) $1,000 ------------------------------------------------------------------------ Hourly wage rate $25 ------------------------------------------------------------------------ Time to find agent (hours) 5 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year agent cost $67,340,000 ------------------------------------------------------------------------ Agent fee (annual cost) $194,868,000 ------------------------------------------------------------------------ Administrative time (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year administrative costs $44,418,929 ------------------------------------------------------------------------ Time to fill out form (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 1 ------------------------------------------------------------------------ Additional time Internet (hours) 1 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ First year form cost $12,992,000 ------------------------------------------------------------------------ Total first year costs $319,619,000 ------------------------------------------------------------------------ Total annual costs $228,370,000 ------------------------------------------------------------------------ Table 20.--Costs Incurred By FDA Under Option 3 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA Costs 2003 2004 2005 2006 2007 -------------------------------------------------------------------------------------------------------------------------------------------------------- Development/modification/enhancement $8,200,000 $3,000,000 $3,300,000 $2,300,000 $2,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Maintenance/steady state $1,560,000 $3,500,000 $4,300,000 $4,300,000 $4,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of FTEs 4 4 4 2 2 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per FTE $110,588 $110,588 $110,588 $110,588 $110,588 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per paper submission $10 $10 $10 $10 $10 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of domestic paper submissions 31,217 12,487 12,487 12,487 12,487 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of foreign paper submissions 22,677 9,071 9,071 9,071 9,071 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of domestic registrations in database 107,646 107,646 107,646 107,646 107,646 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of foreign registrations in database 205,405 205,405 205,405 205,405 205,405 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to domestic facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to foreign facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Error rate for paper submissions 10% 10% 10% 10% 10% -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of errors 5,389 2,156 2,156 2,156 2,156 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per error $15 $15 $15 $15 $15 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total costs $10,907,000 $7,243,000 $8,343,000 $7,122,000 $7,122,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Discounted total costs $10,907,000 $6,769,000 $7,287,000 $5,814,000 $5,433,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- [[Page 5400]] 4. Option Four: Require Registration of Domestic and Foreign Facilities That Manufacture/Process, Pack, or Hold Food That Sell Their Products in Interstate and Intrastate Commerce, Not Including Mixed-Type Facilities Option four has the same registration and U.S. agent requirements as option two, but does not require mixed-type facilities to register. Tables 21, 22, 23, 24, and 25 provide a summary of the data for cost estimates under option 4 for domestic facilities, foreign facilities, and FDA, respectively. FDA does not believe this option is legally viable, since some mixed-type facilities engage in activities (such as manufacturing/ processing for commercial distribution) that are clearly within the scope of the registration requirement as enacted by Congress. Nevertheless, we are including a discussion of this option for comparison purposes. Excluding mixed-type facilities lowers the number of affected domestic facilities, from 207,324 affected facilities under option 2 to 171,549. This would lower the first year cost for domestic facilities from $13.6 to $11.2 million dollars. The annual cost for domestic facilities would be lowered from $3.4 to $2.8 million. Total first year costs would be lowered from $344.5 to $342.0 million dollars. Table 21.--Number of Domestic Facilities Covered Under Option 4 2000 CBP 103,125 ------------------------------------------------------------------------ 1999 Nonemployer statistics 68,424 ------------------------------------------------------------------------ Total domestic 171,549 ------------------------------------------------------------------------ Table 22.--Summary of Costs Incurred By Domestic Facilities Under Option 4 Administrative worker wage (includes 25.1 overhead) ------------------------------------------------------------------------ Manager wage (includes overhead) 56.74 ------------------------------------------------------------------------ Percent with Internet access US 71% ------------------------------------------------------------------------ Research time with Internet (hours) 1 ------------------------------------------------------------------------ Research time without Internet (hours) 2 ------------------------------------------------------------------------ Research cost with Internet $3,057,000 ------------------------------------------------------------------------ Research cost without Internet $2,497,000 ------------------------------------------------------------------------ Administrative time for form (hours) 0.75 ------------------------------------------------------------------------ Manager time for form (hours) 0.25 ------------------------------------------------------------------------ Form costs $5,663,000 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ Annual facility costs $2,821,000 ------------------------------------------------------------------------ Total domestic costs $11,217,000 ------------------------------------------------------------------------ Table 23.--Number of Foreign Facilities Covered Under Option 4 Foreign holders and packagers 100,027 ------------------------------------------------------------------------ Foreign manufacturers/processors 125,450 ------------------------------------------------------------------------ Stops exporting 16% ------------------------------------------------------------------------ Total facilities 205,405 ------------------------------------------------------------------------ Table 24.--Summary of Costs Incurred By Foreign Facilities Under Option 4 Speaks English 16% ------------------------------------------------------------------------ Has Internet access 31% ------------------------------------------------------------------------ Has U.S. agent 10% ------------------------------------------------------------------------ Cost of U.S. agent (annual) $1,000 ------------------------------------------------------------------------ Hourly wage rate $25 ------------------------------------------------------------------------ Time to find agent (hours) 5 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year agent cost $67,340,000 ------------------------------------------------------------------------ Agent fee (annual cost) $194,868,000 ------------------------------------------------------------------------ Administrative time (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year administrative costs $44,418,929 ------------------------------------------------------------------------ Time to fill out form (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 1 ------------------------------------------------------------------------ Additional time Internet (hours) 1 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ First year form cost $12,992,000 ------------------------------------------------------------------------ Total first year costs $319,619,000 ------------------------------------------------------------------------ Total annual costs $228,370,000 ------------------------------------------------------------------------ Table 25.--Costs Incurred By FDA Under Option 4 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA Costs 2003 2004 2005 2006 2007 -------------------------------------------------------------------------------------------------------------------------------------------------------- Development/modification/enhancement $8,200,000 $3,000,000 $3,300,000 $2,300,000 $2,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Maintenance/steady state $1,560,000 $3,500,000 $4,300,000 $4,300,000 $4,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of FTEs 4 4 4 2 2 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per FTE $110,588 $110,588 $110,588 $110,588 $110,588 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per paper submission $10 $10 $10 $10 $10 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of domestic paper submissions 49,749 19,900 19,900 19,900 19,900 -------------------------------------------------------------------------------------------------------------------------------------------------------- [[Page 5401]] Number of foreign paper submissions 22,677 9,071 9,071 9,071 9,071 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of domestic registrations in database 171,549 171,549 171,549 171,549 171,549 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of foreign registrations in database 205,405 205,405 205,405 205,405 205,405 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to domestic facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to foreign facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Error rate for paper submissions 10% 10% 10% 10% 10% -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of errors 7,243 2,897 2,897 2,897 2,897 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per error $15 $15 $15 $15 $15 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total costs $11,145,000 $7,342,000 $8,442,000 $7,221,000 $7,221,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Discounted total costs $11,145,000 $6,862,000 $7,374,000 $5,894,000 $5,509,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- 5. Option Five: Require Registration of Domestic and Foreign Facilities That Manufacture/Process, Pack, or Hold Food That Sell Their Products in Interstate and Intrastate Commerce for Consumption in the United States, Including Mixed-Type Facilities as Defined in Option 2, but Not Including Product Categories on the Registration Form Option five covers the same facilities as option two, but requires less information from the registrants. Registrants still would be required to submit the facility's name, address, emergency contact information, name and address of the parent company, trade names, U.S. agent information (if a foreign facility), and the name of the owner, operator, or agent in charge of the facility, but would not be required to submit the general food product categories under Sec. 170.3. Tables 26, 27, 28, 29, and 30 of this document provide a summary of the data for cost estimates under option 5 for domestic facilities, foreign facilities, and FDA, respectively. Removing the product categories from the registration would decrease the frequency with which facilities have to update their registrations and reduce the amount of time required to register by 15 minutes. FDA requests comment on this estimate. FDA estimates that removing the product categories would reduce the percentage of facilities that have to update their registration from 20 percent each year to 10 percent. First year costs would be lower for foreign and domestic facilities due to facilities needing less time to fill out the form. Total first year domestic costs would be lowered from $13.6 to $12.3 million. Annual costs for domestic firms would be lowered from $3.4 to $2.3 million due to less frequent updates. Total first year foreign costs would be lowered from $319.6 to $318.3 million and total costs would be raised from $334.5 to $341.9 million. Table 26.--Number of Domestic Facilities Covered Under Option 5 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 ------------------------------------------------------------------------ Table 27.--Summary of Costs Incurred By Domestic Facilities Under Option 5 Administrative worker wage (includes 25.1 overhead) ------------------------------------------------------------------------ Manager wage (includes overhead) 56.74 ------------------------------------------------------------------------ Percent with Internet access US 71% ------------------------------------------------------------------------ Research time with Internet (hours) 1 ------------------------------------------------------------------------ Research time without Internet (hours) 2 ------------------------------------------------------------------------ Research cost with Internet $3,695,000 ------------------------------------------------------------------------ Research cost without Internet $3,018,000 ------------------------------------------------------------------------ Administrative time for form (hours) 0.5 ------------------------------------------------------------------------ Manager time for form (hours) 0.25 ------------------------------------------------------------------------ Form costs $5,543,000 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 10% ------------------------------------------------------------------------ Annual facility costs $2,334,000 ------------------------------------------------------------------------ Total domestic costs $12,256,000 ------------------------------------------------------------------------ Table 28.--Number of Foreign Facilities Covered Under Option 5 Foreign holders and packagers 100,027 ------------------------------------------------------------------------ Foreign manufacturers/processors 125,450 ------------------------------------------------------------------------ Stops exporting 16% ------------------------------------------------------------------------ Total facilities 205,405 ------------------------------------------------------------------------ Table 29.--Summary of Costs Incurred By Foreign Facilities Speaks English 16% ------------------------------------------------------------------------ Has Internet access 31% ------------------------------------------------------------------------ Has U.S. agent 10% ------------------------------------------------------------------------ [[Page 5402]] Cost of U.S. agent (annual) $1,000 ------------------------------------------------------------------------ Hourly wage rate $25 ------------------------------------------------------------------------ Time to find agent (hours) 5 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year agent cost $67,340,000 ------------------------------------------------------------------------ Agent fee (annual cost) $194,868,000 ------------------------------------------------------------------------ Administrative time (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year administrative costs $44,418,929 ------------------------------------------------------------------------ Time to fill out form (hours) 0.75 ------------------------------------------------------------------------ Additional time language (hours) 1 ------------------------------------------------------------------------ Additional time Internet (hours) 1 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 10% ------------------------------------------------------------------------ First year form cost $11,708,000 ------------------------------------------------------------------------ Total first year costs $318,335,000 ------------------------------------------------------------------------ Total annual costs $227,729,000 ------------------------------------------------------------------------ Table 30.--Costs Incurred By FDA Under Option 5 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA Costs 2003 2004 2005 2006 2007 -------------------------------------------------------------------------------------------------------------------------------------------------------- Development/modification/enhancement $8,200,000 $3,000,000 $3,300,000 $2,300,000 $2,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Maintenance/steady state $1,560,000 $3,500,000 $4,300,000 $4,300,000 $4,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of FTEs 4 4 4 2 2 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per FTE $110,588 $110,588 $110,588 $110,588 $110,588 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per paper submission $10 $10 $10 $10 $10 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of domestic paper submissions 60,124 18,037 18,037 18,037 18,037 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of foreign paper submissions 22,677 6,803 6,803 6,803 6,803 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of domestic registrations in database 207,324 207,324 207,324 207,324 207,324 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of foreign registrations in database 205,405 205,405 205,405 205,405 205,405 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to domestic facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to foreign facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Error rate for paper submissions 10% 10% 10% 10% 10% -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of errors 8,280 2,484 2,484 2,484 2,484 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per error $15 $15 $15 $15 $15 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total costs $11,279,000 $7,294,000 $8,394,000 $7,173,000 $7,173,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Discounted total costs $11,279,000 $6,817,000 $7,332,000 $5,855,000 $5,472,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- 6. Option Six: Require Registration of Domestic and Foreign Facilities That Manufacture/Process, Pack, or Hold Food That Sell Their Products in Interstate and Intrastate Commerce, Including Mixed-Type Facilities. Mixed-type facilities that engage in farming are covered if they pack or hold food not grown or raised on that facility or manufacture/ process food not for consumption on that facility. However, facilities of these types that manufacture/process food solely for direct sale to consumers from that same facility are exempt. 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. Mixed-type facilities that are required to register differ under options 2 and 6. In option 2, mixed-type facilities that manufacture/process food for consumption offsite, where offsite includes both distribution directly to consumers and distribution to nonconsumers, must register. In option 6, facilities that manufacture/process food and distribute it directly to consumers would not be included in the registration requirement. Option 6 requires registration for mixed-type facilities that pack or hold food that was not grown or raised at that facility; these facilities are not included in the option 2 definition. These changes in coverage raise the total number of affected mixed- [[Page 5403]] type facilities from 25,365 to 30,497. Facilities that engage in the activities of a retail facility but also manufacture/process food and distribute it to nonconsumers are considered as manufacturers/ processors in the count of facilities in this analysis. FDA requests comment on this categorization. Table 31 of this document shows the number of affected mixed-type facilities by category of product. Table 31.--Number of Affected Mixed-Type Facilities Under Option 6 ------------------------------------------------------------------------ Number of Percent Percent Type Farms Mixed Use Mixed Use ------------------------------------------------------------------------ Pig farms (feed mixing) 46,353 1.5 695 ------------------------------------------------------------------------ Cattle (feed mixing) 785,672 1 7,857 ------------------------------------------------------------------------ Poultry (feed mixing) 36,944 1 369 ------------------------------------------------------------------------ Other animal production 110,580 1 1,106 (feed mixing) ------------------------------------------------------------------------ Dairy 86,022 1.1 903 ------------------------------------------------------------------------ Grain, rice, and beans 462,877 1 4,629 ------------------------------------------------------------------------ Apples 10,872 1.5 163 ------------------------------------------------------------------------ Oranges 9,321 1.5 140 ------------------------------------------------------------------------ Peaches 14,459 1.5 217 ------------------------------------------------------------------------ Cherries 8,423 1.5 126 ------------------------------------------------------------------------ Pears 8,062 1.5 121 ------------------------------------------------------------------------ Other fruit 29,413 1.5 441 ------------------------------------------------------------------------ Nuts 14,500 2 290 ------------------------------------------------------------------------ Berries 6,807 1.5 102 ------------------------------------------------------------------------ Grapes 11,043 10.5 1,160 ------------------------------------------------------------------------ Olives 1,363 3.5 48 ------------------------------------------------------------------------ Vegetables and melons 31,030 0.5 155 ------------------------------------------------------------------------ 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 30,497 ------------------------------------------------------------------------ Tables 32, 33, 34, 35, and 36 of this document provide a summary of the data for cost estimates under option 6 for domestic facilities, foreign facilities, and FDA, respectively. The total number of affected domestic facilities under this option is 202,046. The total first year cost for domestic facilities is reduced from $13.6 to $13.2 million, annual cost is reduced from $3.4 to $3.2 million. Total first year cost is reduced from $344.5 to $344.1 million. The greater total cost for foreign facilities is primarily attributable to the costs associated with hiring and retaining a U.S. agent. Table 32.--Number of Domestic Facilities Covered Under Option 6 2000 CBP 103,125 ------------------------------------------------------------------------ 1999 Nonemployer statistics 68,424 ------------------------------------------------------------------------ Mixed-type facilities that engage in farming 30,497 ------------------------------------------------------------------------ Total domestic 202,046 ------------------------------------------------------------------------ Table 33.--Summary of Costs Incurred By Domestic Facilities Under Option 6 Administrative worker wage (includes 25.1 overhead) ------------------------------------------------------------------------ Manager wage (includes overhead) 56.74 ------------------------------------------------------------------------ Percent with Internet access US 71 ------------------------------------------------------------------------ Research time with Internet (hours) 1 ------------------------------------------------------------------------ Research time without Internet (hours) 2 ------------------------------------------------------------------------ Research cost with Internet $3,601,000 ------------------------------------------------------------------------ [[Page 5404]] Research cost without Internet $2,941,000 ------------------------------------------------------------------------ Administrative time for form (hours) 0.75 ------------------------------------------------------------------------ Manager time for form (hours) 0.25 ------------------------------------------------------------------------ Form costs $6,670,000 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ Annual facility costs $3,322,000 ------------------------------------------------------------------------ Total domestic costs $13,212,000 ------------------------------------------------------------------------ Table 34.--Number of Foreign Facilities Covered Under Option 6 Foreign holders and packagers 100,027 ------------------------------------------------------------------------ Foreign manufacturers/processors 125,450 ------------------------------------------------------------------------ Stops exporting 16% ------------------------------------------------------------------------ Total facilities 205,405 ------------------------------------------------------------------------ Table 35.--Summary of Costs Incurred By Foreign Facilities Under Option 6 Speaks English 16% ------------------------------------------------------------------------ Has Internet access 31% ------------------------------------------------------------------------ Has U.S. agent 10% ------------------------------------------------------------------------ Cost of U.S. agent (annual) $1,000 ------------------------------------------------------------------------ Hourly wage rate $25 ------------------------------------------------------------------------ Time to find agent (hours) 5 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year agent cost $67,340,000 ------------------------------------------------------------------------ Agent fee (annual cost) $194,868,000 ------------------------------------------------------------------------ Administrative time (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year administrative costs $44,418,929 ------------------------------------------------------------------------ Time to fill out form (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 1 ------------------------------------------------------------------------ Additional time Internet (hours) 1 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ First year form cost $12,992,000 ------------------------------------------------------------------------ Total first year costs $319,619,000 ------------------------------------------------------------------------ Total annual costs $228,370,000 ------------------------------------------------------------------------ Table 36.--Costs Incurred By FDA Under Option 6 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA Costs 2003 2004 2005 2006 2007 -------------------------------------------------------------------------------------------------------------------------------------------------------- Development/modification/enhancement $8,200,000 $3,000,000 $3,300,000 $2,300,000 $2,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Maintenance/steady state $1,560,000 $3,500,000 $4,300,000 $4,300,000 $4,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of FTEs 4 4 4 2 2 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per FTE $110,588 $110,588 $110,588 $110,588 $110,588 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per paper submission $10 $10 $10 $10 $10 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of domestic paper submissions 58,593 23,437 23,437 23,437 23,437 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of foreign paper submissions 22,677 9,071 9,071 9,071 9,071 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of domestic registrations in database 202,046 202,046 202,046 202,046 202,046 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of foreign registrations in database 205,405 205,405 205,405 205,405 205,405 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to domestic facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to foreign facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Error rate for paper submissions 10% 10% 10% 10% 10% -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of errors 5,860 2,345 2,345 2,345 2,345 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per error $15 $15 $15 $15 $15 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total costs $11,225,000 $7,376,000 $8,476,000 $7,255,000 $7,255,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Discounted total costs $11,225,000 $6,893,000 $7,403,000 $5,922,000 $5,535,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- [[Page 5405]] 7. Option Seven: Require Registration of Domestic and Foreign Facilities That Manufacture/Process, Pack, or Hold Food That Sell Their Products in Intrastate and Interstate Commerce, Including Mixed-Type Facilities, as Defined in Option 6. Permits the U.S. Agent to Register on Behalf of the Foreign Facility Permitting the U.S. agent to register on behalf of the foreign facility would reduce the number of paper registrations significantly. Foreign facilities still would have to go through administrative steps to learn about the regulation and to find and hire a U.S. agent. However, foreign facilities now would have a third option for registering. In addition to electronic and paper registration by a representative at the facility, the foreign facility can authorize its U.S. agent to register the facility. FDA assumes that U.S. agents who register on behalf of foreign facilities will register electronically. Characteristics of foreign facilities, such as access to the Internet, fluency in English, and whether they are informed about the registration requirement before their product reaches the U.S. port, determine whether foreign facilities would be registered by themselves electronically, registered by mail, or registered by their U.S. agent. FDA assumes that foreign facilities with Internet access would register directly via the Internet. Registration via the Internet would be the fastest, most reliable method for these facilities, and they would receive their confirmation of registration and facility registration number automatically. Foreign facilities that do not have Internet access or representatives who read or write in English would register through their U.S. agent. The inability to read and write in English increases the cost for foreign facilities that register directly. U.S. agents operating in response to FDA registration requirements for other FDA- regulated products market themselves to certain regions of the world. FDA anticipates these agents would speak the language of the representative of the foreign facility, as well as English, and so could register in English for the facility. Foreign facilities that do not have Internet access and do not learn of the registration requirements until their product reaches the U.S. border also are likely to register through their U.S. agent. For electronic registrations, the facility is considered registered once FDA enters the registration data into the registration system and the system generates a registration number. For paper registrations, the facility is considered registered when FDA sends the registration number to the facility. For electronic registrations, confirmation should happen almost instantly. The electronic submission would be automatically entered into the database, undergo consistency checks, and if the information is entered correctly, the confirmation of registration and the facility's registration number would be sent out electronically. Paper submissions are subject to longer lag times at several points. First, the facility may have to mail or phone in a request for a registration form. Second, the facility may have to wait to receive the form. Third, the registration takes time to travel through the mail from the facility to FDA. Fourth, FDA would require more time to process paper submissions, because the information has to be entered manually into the system. Fifth, FDA has to mail out a copy of the registration as entered, the registration confirmation, and the registration number if the facility's information is complete and legible. Sixth, the registration confirmation has to travel through the mail to the facility. At this time, the facility would know it is registered and have its registration number. Because time will be important to foreign facilities bringing products into the United States, FDA assumes that they will choose to be registered by their U.S. agent, because the registration process will be much faster. Facilities that do not have Internet access, that have representatives who can read and write in English, and learn about the registration requirements before exporting their product to the United States are most likely to register by a paper submission. These facilities already would have invested the time to learn about the registration requirements and thus are likely to have a hard copy of the form. If time were not a major consideration, a facility is likely to prefer to fill out the registration form onsite. FDA plans to conduct extensive outreach efforts to communicate the registration requirements to affected facilities both domestically and abroad, both at the proposed rule stage and at the final rule stage to minimize the number of facilities that find out about the requirements at the port. FDA does not have the information to estimate how many foreign facilities would not learn about the registration requirements until their goods are at the port. FDA instead estimates the number of foreign paper submissions to FDA as the percent of foreign facilities that do not have Internet access and whose managers are able to read and write in English. FDA requests comments on this assumption. Under this option, U.S. agents would have a larger role than under other options. U.S. agents may charge a higher fee if they register for the facility. A higher U.S. agent fee is considered in the sensitivity analysis. Port delays would be shorter under this option than under alternative options. Foreign facilities still would have delays associated with communication and finding a U.S. agent, but the process would be shortened by allowing the U.S. agent to register on behalf of the foreign facility. This would shorten the time that the product sits in storage and lower the loss of value of the product. Tables 37, 38, 39, 40, and 41 of this document provide a summary of the data for cost estimates under option 7 for domestic facilities, foreign facilities, and FDA, respectively. The first year costs to foreign facilities would be reduced from $319.6 to $311.8 million, annual costs would be reduced from $228.4 to $227.6 million. Total costs for the first year would be reduced from $344.5 to $336.2 million. Table 37.--Number of Domestic Facilities Covered Under Option 7 2000 CBP 103,125 ------------------------------------------------------------------------ 1999 Nonemployer statistics 68,424 ------------------------------------------------------------------------ Mixed-type facilities that engage in farming 30,497 ------------------------------------------------------------------------ Total domestic 202,046 ------------------------------------------------------------------------ Table 38.--Summary of Costs Incurred By Domestic Facilities Under Option 7 Administrative worker wage (includes 25.1 overhead) ------------------------------------------------------------------------ Manager wage (includes overhead) 56.74 ------------------------------------------------------------------------ Percent with Internet access US 71% ------------------------------------------------------------------------ Research time with Internet (hours) 1 ------------------------------------------------------------------------ Research time without Internet (hours) 2 ------------------------------------------------------------------------ Research cost with Internet $3,601,000 ------------------------------------------------------------------------ Research cost without Internet $2,941,000 ------------------------------------------------------------------------ Administrative time for form (hours) 0.75 ------------------------------------------------------------------------ [[Page 5406]] Manager time for form (hours) 0.25 ------------------------------------------------------------------------ Form costs $6,670,000 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ Annual facility costs $3,322,000 ------------------------------------------------------------------------ Total domestic costs $13,212,000 ------------------------------------------------------------------------ Table 39.--Number of Foreign Facilities Covered Under Option 7 Foreign holders and packagers 100,027 ------------------------------------------------------------------------ Foreign manufacturers/processors 125,450 ------------------------------------------------------------------------ Stops exporting 16% ------------------------------------------------------------------------ Total facilities 205,405 ------------------------------------------------------------------------ Table 40.--Summary of Costs Incurred By Foreign Facilities Speaks English 16% ------------------------------------------------------------------------ Has Internet access 31% ------------------------------------------------------------------------ Has U.S. agent 10% ------------------------------------------------------------------------ Cost of U.S. agent (annual) $1,000 ------------------------------------------------------------------------ Hourly wage rate $25 ------------------------------------------------------------------------ Time to find agent (hours) 5 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year agent cost $67,340,000 ------------------------------------------------------------------------ Agent fee (annual cost) $194,868,000 ------------------------------------------------------------------------ Administrative time (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 5 ------------------------------------------------------------------------ Additional time Internet (hours) 5 ------------------------------------------------------------------------ First year administrative costs $44,418,929 ------------------------------------------------------------------------ Time to fill out form (hours) 1 ------------------------------------------------------------------------ Additional time language (hours) 0 ------------------------------------------------------------------------ Additional time Internet (hours) 0 ------------------------------------------------------------------------ Percent of businesses going out of business 10% ------------------------------------------------------------------------ Percent of businesses entering 10% ------------------------------------------------------------------------ Percent of businesses with changes 20% ------------------------------------------------------------------------ First year form cost $5,135,000 ------------------------------------------------------------------------ Total first year costs $311,762,000 ------------------------------------------------------------------------ Total annual costs $227,585,000 ------------------------------------------------------------------------ Table 41.--Costs Incurred By FDA Under Option 7 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA Costs 2003 2004 2005 2006 2007 -------------------------------------------------------------------------------------------------------------------------------------------------------- Development/modification/enhancement $8,200,000 $3,000,000 $3,300,000 $2,300,000 $2,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Maintenance/steady state $1,560,000 $3,500,000 $4,300,000 $4,300,000 $4,300,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of FTEs 4 4 4 2 2 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per FTE $110,588 $110,588 $110,588 $110,588 $110,588 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per paper submission $10 $10 $10 $10 $10 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of domestic paper submissions 58,593 23,437 23,437 23,437 23,437 -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of foreign paper submissions 22,677 9,071 9,071 9,071 9,071 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of domestic registrations in database 202,046 202,046 202,046 202,046 202,046 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total number of foreign registrations in database 205,405 205,405 205,405 205,405 205,405 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to domestic facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Mailings to foreign facilities $1 $1 $1 $1 $1 -------------------------------------------------------------------------------------------------------------------------------------------------------- Error rate for paper submissions 10% 10% 10% 10% 10% -------------------------------------------------------------------------------------------------------------------------------------------------------- Number of errors 5,860 2,345 2,345 2,345 2,345 -------------------------------------------------------------------------------------------------------------------------------------------------------- Cost per error $15 $15 $15 $15 $15 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total costs $11,225,000 $7,376,000 $8,476,000 $7,255,000 $7,255,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Discounted total costs $11,225,000 $6,893,000 $7,403,000 $5,922,000 $5,535,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- [[Page 5407]] 8. Option Eight: Issue No New Regulation and Allow the Bioterrorism Act's Default Registration Requirements to Take Effect The Bioterrorism Act requires facilities to register with FDA by December 12, 2003, even if FDA has not issued final regulations by this date. Failure to do so for both foreign and domestic facilities is a prohibited act, and FDA must hold food from unregistered foreign facilities at the port of entry until they are registered. Thus, facilities have an incentive to register with FDA. Failure to issue a final regulation would result in an unworkable, chaotic system. The Bioterrorism Act also requires facilities that register in the absence of a final rule to re-register with FDA as specified in the final rule once it is issued. It is not possible to predict the costs or benefits of this option because the statute is not specific enough to predict how it would be implemented. It seems likely that many facilities will attempt to register, given the penalties for failure to register. However, if FDA receives all paper, non-standardized registrations, it will be extremely difficult for FDA to process the registrations and to use the information provided. It would also be a slow process for FDA to issue registration numbers. 9. Summary of Costs Table 42 of this document presents a summary of costs for options 2 through 7 for domestic facilities, foreign facilities, and FDA. Costs in future years are discounted at 7 percent. Table 42.--Total Cost of Options 2 Through 7 For Domestic Facilities, Foreign Facilities, and FDA. -------------------------------------------------------------------------------------------------------------------------------------------------------- Option 2 Option 3 Option 4 Option 5 Option 6 Option 7 -------------------------------------------------------------------------------------------------------------------------------------------------------- Domestic first year costs $13,557,000 $7,038,000 $11,217,000 $12,256,000 $13,212,000 $13,212,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Foreign first year costs $319,619,000 $319,619,000 $319,619,000 $318,335,000 $319,619,000 $311,762,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA first year costs $11,279,000 $10,907,000 $11,145,000 $11,279,000 $11,225,000 $11,225,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total first year costs $344,455,000 $337,564,000 $341,981,000 $341,870,000 $344,056,000 $336,199,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Domestic second year costs $3,186,000 $1,654,000 $2,636,000 $2,181,000 $3,105,000 $3,105,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Foreign second year costs $213,430,000 $213,430,000 $213,430,000 $212,831,000 $213,430,000 $212,696,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA second year costs $6,914,000 $6,769,000 $6,862,000 $6,817,000 $6,893,000 $6,893,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total second year costs $223,530,000 $221,853,000 $222,928,000 $221,829,000 $223,428,000 $222,694,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Domestic third year costs $2,978,000 $1,546,000 $2,464,000 $2,039,000 $2,902,000 $2,902,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Foreign third year costs $199,467,000 $199,467,000 $199,467,000 $198,907,000 $199,467,000 $198,782,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA third year costs $7,422,000 $7,287,000 $7,374,000 $7,332,000 $7,403,000 $7,403,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total third year costs $209,867,000 $208,300,000 $209,305,000 $208,278,000 $209,772,000 $209,087,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Domestic fourth year costs $2,783,000 $1,445,000 $2,303,000 $1,905,000 $2,712,000 $2,712,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Foreign fourth year costs $186,418,000 $186,418,000 $186,418,000 $185,895,000 $186,418,000 $185,777,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- FDA fourth year costs $5,939,000 $5,814,000 $5,894,000 $5,855,000 $5,922,000 $5,922,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- Total fourth year costs $195,140,000 $193,677,000 $194,615,000 $193,655,000 $195,052,000 $194,411,000 -------------------------------------------------------------------------------------------------------------------------------------------------------- a. Sensitivity to assumptions. A number of assumptions in the analysis significantly affect the cost estimates. To understand how these assumptions affect the cost estimates, FDA re-estimates the total costs under alternative assumptions. FDA uses option 7, the proposed option, to compare across assumptions. Table 43 summarizes the results of the sensitivity analysis. FDA looked at the number of mixed-type facilities. In option 6, FDA estimated that there are approximately 30,497 mixed-type facilities that manufacture/process food for distribution to nonconsumers or pack or [[Page 5408]] hold food received from off the facility based on data from the Census of Agriculture and information from CES (Ref. 7). Because there are over 2 million farms in the United States, small changes in assumptions about the percentage of farms that are mixed-type facilities would result in a large change in the total number of affected farms. If the total number of farms that are mixed-type facilities were 100,000, the total, first year, domestic costs increase from $13.2 to $17.8 million. Another significant source of uncertainty is the amount of time it would take facility employees to read and understand the requirements and for foreign facilities to find a U.S. agent. To test the time assumptions, FDA estimated the costs assuming all the time estimates for administrative activities were doubled. This increases the cost estimates for domestic facilities from $13.2 to $19.8 million and increases the cost estimates for foreign facilities from $311.8 to $423.5 million. Hiring and retaining a U.S. agent is a significant cost for foreign facilities. FDA tested how this affects total cost estimates by doubling the percent of foreign manufacturers that have U.S. agents from 10 percent to 20 percent. This lowers the first year cost for foreign facilities from $311.8 to $297.3 million. Also subject to a great deal of uncertainty is the number of foreign manufacturers/processors who can read and write in English. Research on the topic shows widely ranging estimates of the number of English speakers in countries where English is not the primary language. Even in countries where English is a primary or secondary language, many inhabitants may not be fluent in English (Ref. 14). However, more than one individual may work in a facility in an appropriate position to fill out the registration form. This increases the probability that an individual with English skills sufficient to fill out the registration form may be available. FDA estimated that 16 percent of foreign facilities had employees that were fluent in English. To test our assumption about the percentage of foreign facilities with employees who are fluent in English, FDA looked at the alternate assumption that 32 percent of foreign facilities would have a worker with the capability to research and fill out the form in English. This change decreases the total cost to foreign facilities from $311.8 to $303.4 million. FDA assumed that the number of foreign facilities that hold food products before exporting them to the United States is equal to the number of domestic brokers and consignees, because of the lack of data about foreign facilities holding and doing de minimis processing of food. To test this assumption, FDA looked at the costs if the number of foreign holders and de minimis processors is 160,000. Changing this assumption has a large effect on the foreign and total cost, increasing the foreign cost from $311.8 to $405.2 million and the total cost from $336.2 to $429.7 million. FDA tested the effect of changing the annual U.S. agent fee. If the average U.S. agent fee is $1,500, instead of $1,000, the costs to foreign facilities will be increased from $311.8 to $409.2 million. Finally, FDA tested the assumption that the foreign wage rate is the same as the domestic wage rate and re-estimated the costs for a foreign wage rate of $15 per hour. The total cost to foreign facilities was reduced from $311.8 to $265.0 million under this assumption. Table 43.--Sensitivity Analysis (relative to option 7) ---------------------------------------------------------------------------------------------------------------- Total Domestic Cost Total Foreign Cost Total FDA Cost First Year Costs (dollars) (dollars) (dollars) Total Cost (dollars) ---------------------------------------------------------------------------------------------------------------- Under current 13,212,000 311,762,000 11,225,000 336,199,000 assumptions\1\ ---------------------------------------------------------------------------------------------------------------- Percentage change from 0% 0% 0% 0% baseline ---------------------------------------------------------------------------------------------------------------- 100,000 mixed-type 17,756,000 311,762,000 11,484,000 341,002,000 facilities that engage in farming ---------------------------------------------------------------------------------------------------------------- Percentage change from 34% 0% 2% 1% baseline ---------------------------------------------------------------------------------------------------------------- Time costs are doubled 19,754,000 423,521,000 11,225,000 454,500,000 ---------------------------------------------------------------------------------------------------------------- Percentage change from 50% 36% 0% 35% baseline ---------------------------------------------------------------------------------------------------------------- 20 percent of foreign 13,212,000 297,257,000 11,225,000 $321,694,000 manufacturers have U.S. agents ---------------------------------------------------------------------------------------------------------------- Percentage change from 0% -5% 0% -4% baseline ---------------------------------------------------------------------------------------------------------------- 32 percent of foreign 13,212,000 303,395,000 11,474,000 $328,081,000 facilities are fluent in English ---------------------------------------------------------------------------------------------------------------- Percentage change from 0% -3% 2% -2% baseline ---------------------------------------------------------------------------------------------------------------- 160,000 foreign holders 13,212,000 405,168,000 11,304,000 429,684,000 ---------------------------------------------------------------------------------------------------------------- Percentage change from 0% 30% 1% 28% baseline ---------------------------------------------------------------------------------------------------------------- U.S. agent fee $1,500 13,212,000 409,195,000 11,225,000 433,632,000 ---------------------------------------------------------------------------------------------------------------- Percentage change from 0% 31% 0% 29% baseline ---------------------------------------------------------------------------------------------------------------- Foreign wage rate $15 13,212,000 265,004,000 11,225,000 289,441,000 ---------------------------------------------------------------------------------------------------------------- [[Page 5409]] Percentage change from 0% -15% 0% -14% baseline ---------------------------------------------------------------------------------------------------------------- \1\ 30,497 mixed-type facilities, time costs under option 7, 10 percent of foreign manufacturers/processors have U.S. agents, 16 percent of foreign facilities are fluent in English, 100,027 foreign holders and packagers, and U.S. agent fee of $1,000. b. Qualitative costs. For all of the options, except option one, there are a number of costs that FDA was unable to quantify. Loss of products from small exporters who would choose to stop exporting to the United States due to the increased cost of business may represent significant costs. Earlier in the analysis, we estimated that about 16 percent of foreign manufacturers export 10 or fewer line entries per year, and that these manufacturers would cease exporting to the United States. This could result in the elimination of some specialty products that market to very small niche markets in the United States, which would represent a loss to consumers who use these products. The cost of port delays for facilities that do not learn of the requirements before exporting is another cost FDA was unable to quantify. FDA is unable to estimate how many foreign facilities would not learn about the new requirements before exporting. For this analysis, we estimate the expected cost of learning about registration as the number of hours a worker in a foreign facility needs to learn about the requirements. However, we expect that for some facilities, the cost of learning about the requirements would be much higher than the expected cost. Facilities that do not learn about the registration requirements before reaching the United States port would still have their shipment held at the port. The loss of value may be as low as the cost of storage, or as high as the value of the shipment, if perishable. Under option 7, FDA expects this cost to be lower. If the U.S. agent registers the foreign facility, this will speed up the registration process and the product would be released into U.S. commerce faster. FDA also was unable to quantify the costs incurred by FDA, trade associations, and others for outreach about the registration requirements. FDA will undertake outreach to notify domestic and foreign facilities about registration through public meetings, satellite downlink to five continents, and providing help desk support. FDA also anticipates that trade organizations and others, such as brokers, foreign governments, and U.S. businesses, will undertake to notify facilities of the registration requirements. FDA requests comments on the size and the basis for estimating these costs. 10. Benefits These provisions would improve FDA's ability to respond to outbreaks from accidental and deliberate contamination from food and deter deliberate contamination. Based on historical evidence, a strike on the food supply has a very low probability, but would be a potentially high cost event. FDA lacks data to estimate the likelihood and resulting costs of a strike occurring. Without knowing the likelihood or cost of an event, we cannot quantitatively measure the reduction in probability of an event occurring or the possible reduction in cost of an event, associated with each regulatory option. Further hindering any quantification of benefits is the interactive effect of the other regulations that are being developed to implement title III of the Bioterrorism Act. Prior notice for imported shipments (section 307 of the Bioterrorism Act) would aid in the enforcement of registration, and in turn, registration would aid in the verification of prior notice submissions. Registration and recordkeeping also would work cooperatively. These regulations also improve FDA's ability to prevent and respond to accidental foodborne outbreaks. FDA lacks data on the number of accidental outbreaks that will be prevented or shortened from this proposed rule, as well as from registration working in conjunction with the other regulations being developed to implement title III of the Bioterrorism Act. To understand possible costs of inadvertent foodborne illness and from an intentional strike on the food supply, FDA presents five outbreaks resulting from accidental and deliberate contamination, involving both domestic and imported foods in table 44. Registration will aid FDA in preventing and shortening foodborne outbreaks, but we do not know how frequently an outbreak would occur or the size and severity of the outbreak in the absence of registration. These foodborne outbreaks also do not represent the form a terrorist attack might undertake, but merely illustrate the public health costs of foodborne disasters. It is possible that an intentional attack on the food supply that sought to disrupt the food supply and sicken many U.S. citizens would be much larger. However, the probability of an attack occurring and the exact reduction in risk resulting from registration is unknown. Therefore, FDA is unable to quantify the benefits of registration arising from preventing or lessening the impact of a foodborne outbreak. Instead, we examine four mechanisms through which each regulatory option might act and analyze how each of the options affects these mechanisms. Table 44.--Summary of five foodborne outbreaks ---------------------------------------------------------------------------------------------------------------- Confirmed or Estimated Number Total Illness Pathogen Location and Year Vehicle Reported Cases of Cases Cost (dollars) ---------------------------------------------------------------------------------------------------------------- Salmonella Minnesota 1994 Ice cream 150 cases; 30 29,100 in MN; 3,187,744,000 to enteritidis hospitalized 224,00 5,629,792,000 nationwide ---------------------------------------------------------------------------------------------------------------- Shigella sonnei Michigan 1988 Tofu salad 3,175 cases Not available 45,183,000 to 79,797,000 ---------------------------------------------------------------------------------------------------------------- [[Page 5410]] Outbreaks resulting from deliberate contamination ---------------------------------------------------------------------------------------------------------------- Salmonella Dalles, Oregon Salad bars 751 cases; 45 Not available 10,687,000 to Typhimurium 1984 hospitalized 18,875,000 ---------------------------------------------------------------------------------------------------------------- Shigella Texas 1996 Muffins and 12 cases; 4 All cases 83,000 dysentreriae doughnuts hospitalized identified type 2 ---------------------------------------------------------------------------------------------------------------- Outbreaks resulting from imported foods ---------------------------------------------------------------------------------------------------------------- Cyclospora United States and Raspberries 1465 cases Not available 3,941,000 cayaetanensis Canada 1996 (probably identified, less imported from than 20 Guatemala) hospitalized ---------------------------------------------------------------------------------------------------------------- a. Salmonella enteritidis in ice cream. In 1994, approximately 224,000 people were sickened by ice cream contaminated with Salmonella enteritidis. The source of the contamination appeared to be pasteurized pre-mix that had been contaminated during transport in tanker trailers that carried nonpasteurized eggs. There were 150 confirmed cases of salmonellosis associated with the outbreak in Minnesota. However, ice cream produced during the contamination period was distributed to 48 States. To calculate the total number of illnesses associated with the outbreak, researchers calculated an attack rate of 6.6 percent. This attack rate was extrapolated to the population that consumed the ice cream, giving a total number sickened of 224,000 (Ref. 19). Salmonellosis most commonly causes gastrointestinal symptoms. Almost 91 percent of cases are mild and cause 1 to 3 days of illness with symptoms including diarrhea, abdominal cramps, and fever. Moderate cases, defined as cases that require a trip to a physician, account for 8 percent of the cases. These cases typically have a duration of 2 to 12 days. Severe cases require hospitalization and last 11 to 21 days. In addition to causing gastroenteritis, salmonellosis also can cause reactive arthritis in a small percentage of cases. Reactive arthritis may be short or long term and is characterized by joint pain. Just over 1 percent of cases develop short-term reactive arthritis and 2 percent of cases develop chronic, reactive arthritis. FDA estimated the costs associated with salmonellosis, including medical treatment costs and pain and suffering. Table 45 of this document provides a summary of these estimates. Pain and suffering is measured by lost quality adjusted life days (QALDs). QALDs measure the loss of utility associated with an illness. A QALD is measured between zero and one, with one being a day in perfect health. The total loss of a quality adjusted life year (QALY), or the loss of a year of life is valued at $100,000, based on economic studies of how consumers value risks to life (Ref. 20). Thus, an entire lost QALD would be valued at $274 and fractions of QALDs are a fraction of the day's value. FDA presents two estimates of values of pain and suffering associated with arthritis, one based on physician estimates (Ref. 21) and another based on a regression analysis approach (Ref. 22). This gives a range of costs for the average case of salmonellosis between $14,231 and $25,133. Table 45.--The cost of a typical case of salmonellosis -------------------------------------------------------------------------------------------------------------------------------------------------------- Medical Total QALDs Health Loss Costs Weighted Severity Case Breakdown Lost per (dollars) per Case (dollars) Dollar Loss (percent) Illness (Discounted) per Case per Case (Discounted) -------------------------------------------------------------------------------------------------------------------------------------------------------- Illness................................................................................................................................................. Mild............................................................ 90.7 1.05 660 0 599 Moderate........................................................ 8.1 3.68 2,310 283 209 Severe.......................................................... 1.2 9.99 6,266 9,250 188 -------------------------------------------------------------------------------------------------------------------------------------------------------- Arthritis............................................................................................................................................... Regression approach............................................... ............... ............... .................... ............ .............. Short-term...................................................... 1.26 5.41 3,391 100 44 Long-term....................................................... 2.40 2,613.12 452,554 7,322 11,048 Direct survey approach............................................ ............... ............... .................... ............ .............. Short-term...................................................... 1.26 10.81 6,778 100 87 Long-term....................................................... 2.40 5,223.15 904,573 7,322 21,906 -------------------------------------------------------------------------------------------------------------------------------------------------------- Death............................................................. 0.04 ............... 5,000,000 ............ 2,143 ======================================================================================================================================================== Total expected loss per case............................................................................................................................ Regression approach................................................................................................................... 14,231 Direct survey approach................................................................................................................ 25,133 -------------------------------------------------------------------------------------------------------------------------------------------------------- [[Page 5411]] To estimate the economic cost due to illness associated with this outbreak, FDA used the range for the average cost per case. For 224,000 people, this is a total cost of between $3,187,744,000 and $5,629,792,000 from this accidental food disaster. b. Shigella sonnei in tofu salad. In 1988, a tofu salad at an outdoor music festival was contaminated with Shigella sonnei and sickened an estimated 3,175 people. Over 2,000 volunteer food handlers served communal meals at the festival (Ref. 23). Shigellosis causes similar symptoms and is of similar duration to salmonellosis. It also is associated with short term and chronic reactive arthritis; thus FDA assumed the average case of shigellosis has the same cost as salmonellosis. This gives a total cost of $45,183,000 to $79,797,000. c. Salmonella typhimirium in salad bars. During September and October of 1984, two outbreaks of Salmonella typhimirium occurred in association with salad bars in restaurants in The Dalles, OR. At least 751 people were affected. Members of the local Rajneeshpuram commune intentionally caused the outbreak by spraying Salmonella typhimirium on the salad bars in local restaurants. Their apparent motivation was to influence a local election by decreasing voter turnout. Intentional contamination was not suspected immediately and no charges were brought until a year after the attacks (Ref. 24). The 751 people affected primarily were identified through passive surveillance; thus the true number of people actually sickened is undoubtedly much higher. The Dalles is located on Interstate 84 in Oregon and is a frequent stop for travelers who were unlikely to be identified by passive or active surveillance for salmonellosis. However, since we do not have any estimates of the true size of the outbreak, we estimated the costs associated with known cases, recognizing this is an underestimate of the true cost of the outbreak. We use the cost estimates for salmonellosis as ranging from $14,231 to $25,133. This gives an estimated cost of known cases for the outbreak of $10,687,000 to $18,875,000. d. Shigella dysenteriae type 2 among laboratory workers. Twelve people working in a laboratory who consumed muffins left in the laboratory break room contracted shigellosis. Affected workers had diarrhea, nausea, and abdominal discomfort. Investigators concluded that the outbreak likely was the result of deliberate contamination. All twelve affected workers were treated by, or consulted with, a physician. Nine affected workers went to the emergency room, four of whom were hospitalized (Ref. 25). To estimate the cost of this outbreak, FDA assumed that the eight cases requiring consultation with a doctor, but not requiring hospitalization, had the same cost as a moderate case of salmonellosis. The four cases requiring hospitalization were estimated to have the same cost as a severe case of gastroenteritis resulting from salmonellosis. This gives a cost of $83,000 for illnesses associated with the event. Table 46 summarizes the costs associated with this outbreak. Table 46.--Summary of costs for cases of shigellosis ------------------------------------------------------------------------ Number of Cost per case Total cost Severity cases (dollars) (dollars) ------------------------------------------------------------------------ Mild 0 0 0 ------------------------------------------------------------------------ Moderate 8 2,593 21,000 ------------------------------------------------------------------------ Severe 4 15,516 62,000 ------------------------------------------------------------------------ Grand total 83,000 ------------------------------------------------------------------------ e. Cyclospora cayatanensis in imported raspberries. In 1996, 1,465 cases of cyclosporiasis were linked to consumption of raspberries imported from Guatemala. Nine hundred and seventy eight of these cases were laboratory confirmed. No deaths were confirmed and less than 20 hospitalizations were reported (Ref. 26). Case control studies indicated that raspberries imported from Guatemala were the source of the illnesses. Fifty-five clusters of cases were reported in 20 states, two Canadian provinces, and the District of Columbia (Ref. 27). Cyclosporiasis typically causes watery diarrhea, loss of appetite, weight loss, and fatigue. Less common symptoms include fever, chills, nausea, and headache. The median duration of illness associated with the outbreak was more than 14 days and the median duration of diarrheal illness was 10 days (Ref. 27). We estimated the cost of a mild case of cyclosporiasis as two and a half times higher than the cost of a mild case of gastroenteritis from salmonellosis due to the longer duration. The reports of cyclosporiasis outbreaks did not include information on the number of physician visits. We assumed that the percentage of total cases that result in physician visits would be larger than the corresponding percentage for salmonellosis illnesses, due to the longer duration of illnesses. We assumed, therefore, that 40 percent of those infected with cyclosporiasis visited a physician. Less than 20 hospitalizations were reported from the cyclosporiasis outbreak (Ref. 26). No deaths were confirmed. Table 47 summarizes the costs associated with this outbreak. Table 47.--Summary of costs for cases of cyclosporiasis ------------------------------------------------------------------------ Number of Cost per case Severity cases (dollars) Total cost (dollars) ------------------------------------------------------------------------ Mild 879 1,650 1,450,000 ------------------------------------------------------------------------ Moderate 586 3,748 2,196,000 ------------------------------------------------------------------------ Severe 19 15,516 295,000 ------------------------------------------------------------------------ Grand total $3,941,000 ------------------------------------------------------------------------ [[Page 5412]] f. Mechanisms. Requiring registration of manufacturers/processors, packers, and holders of food would aid in deterring and limiting the effects of foodborne outbreaks in four ways: (1) By requiring registration, persons who might intentionally contaminate the food supply would be deterred from entering the food production chain; (2) if FDA is aware of a specific food threat, then it would be able to inform the facilities potentially affected by the threat; (3) FDA would be able to deploy more efficiently its domestic compliance and regulatory resources and better able to identify facilities affected by future FDA actions (including possible regulations); and (4) FDA inspectors, using prior notice and registration, can better identify shipments for inspection. Registering with FDA creates a paper trail, which would, even if the information in the registration were falsified, provide evidence that could link the registration to the false registrant. By creating this paper trail, persons who might intentionally contaminate the food supply and are considering starting a business in the food supply chain would be deterred by the creation of additional evidence that might be used against them. Persons who might intentionally contaminate the food supply that refuse to register, if foreign, would risk having their product held at the port and, if foreign or domestic, would be subject to criminal sanctions. With correct contact information and product categories, FDA can quickly contact domestic and foreign facilities that may be targeted by a specific food threat. This quick communication would allow facilities to respond quickly to a threat and possibly limit the effect of a deliberate strike on the food supply, as well as public health emergencies due to accidental contamination. A complete list of facilities in the food supply chain would aid FDA in scheduling inspections and undertaking compliance activities. Domestically, a complete list of facilities with correct contact information would aid inspectors in contacting facilities, and with product information would aid in identifying facilities for inspections. Because of the turnover in the food industry and the ratio of inspectors to food facilities, FDA never has had a complete list of foreign or domestic facilities that provide food for consumption in the United States. Also, a complete list of facilities would aid FDA in understanding which facilities would be affected by future FDA actions (including possible regulations), which would result in targeting communication and outreach to these facilities. In conjunction with the prior notification requirements in 21 CFR part 1, subpart I, FDA can better identify imported food shipments for inspection at the port. The registration would identify the country of the manufacturer, which may not be the same as the country from which the product has been shipped. This information would assist FDA in identifying specific shipments to inspect, if we have information that a particular type of food or shipments from a particular country may be adulterated. Additionally, the database of registrants and products also would aid FDA in verifying that a product is correctly identified by where and by whom it was 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 shipment for verification based on the discrepancy. Because we cannot quantify the benefits, we cannot differentiate the benefits of each option in dollar terms. Instead, we look at how effectively each of the mechanisms would operate under each of the options relative to no regulation (option one). i. Registration would deter persons who might intentionally contaminate the food supply from entering the food production chain. Option 1: No impact. Option 2: This option is the most comprehensive in the registration requirements and thus would have the largest impact on deterring persons who might intentionally contaminate the food supply. Option 3: If FDA does not require intrastate facilities to register, then persons who might intentionally contaminate the food supply might be more likely to choose an intrastate facility for carrying out an attack on the food supply. However, intrastate facilities are more likely to be small, and generally do not distribute product widely or in large quantities. These are all characteristics that would make intrastate facilities less attractive to a person who would intentionally contaminate the food supply. Therefore, FDA expects that excluding intrastate facilities would reduce the function of the first mechanism, but not to a great extent. Option 4: Option four still would cover many of the same facilities as option 2. However, if mixed-type facilities are not required to register, then these types of facilities may be more vulnerable. However, many state and local agencies have registration requirements for mixed-type facilities. Some of these facilities would be covered under these State or local agencies. Persons who might intentionally contaminate the food supply might be more likely to choose a mixed-type facility that is not required to register for carrying out an attack on the food supply. Option 5: This option provides the same coverage of facilities as option 2. It does not require the inclusion of food product categories on the registration form. FDA anticipates that excluding product categories, by reducing the amount of information required by the registrant, would reduce slightly this regulation's ability to deter persons who might intentionally contaminate the food supply. Option 6: This option provides coverage of the food production chain similar to option two, and so will have a similar effect in deterring persons who might intentionally contaminate the food supply from entering the food production chain. Option 7: Option 7 would provide the same coverage of the food production chain as option 6, and so would be equally as effective in preventing persons who might intentionally contaminate the food supply from entering the food production chain. ii. FDA would be better able to inform facilities if they are affected by a threat. Option 1: No impact. Option 2: This option is the most comprehensive in its coverage and thus would have the largest effect. Option 3: Excluding intrastate facilities from registering would reduce FDA's ability to inform intrastate facilities of a specific threat. However, intrastate facilities are less likely to be the focus of a threat because of their small size and small distribution range. Option 4: FDA's ability to inform facilities would be better than without a registration system, but excluding mixed-type facilities from registering would reduce FDA's ability to inform mixed-type facilities of a specific threat. Option 5: FDA's ability to inform facilities would be better than without a registration system, but not including product categories on the registration form would significantly limit FDA's ability to inform facilities of threats related to specific foods. For example, if FDA receives credible information that persons who might intentionally contaminate the food supply have threatened foreign or domestic cheeses, [[Page 5413]] inclusion of product categories would allow FDA to communicate quickly with only those facilities impacted by this threat. Option 6: This option provides coverage of food production chain similar to option 2, and so would have a similar effect in aiding FDA in contacting facilities in response to a threat. Option 7: Option 7 would provide the same coverage of the food production chain as option 6, and thus would be as effective in aiding FDA in contacting facilities in response to a threat. iii. FDA would be more efficient in deploying its enforcement resources and better able to identify facilities affected by future FDA actions (including possible regulations). Option 1: No impact. Option 2: This option is the most comprehensive in its coverage and thus would have the largest beneficial effect of the options. Option 3: Because FDA exercises less regulatory authority over facilities that operate only in intrastate commerce, and thus seldom inspects these facilities, not requiring facilities that operate only in intrastate commerce to register will have a small effect on FDA's ability to deploy enforcement resources and identify facilities that are affected by future regulations. Option 4: FDA shares enforcement responsibilities for a number of mixed-type facilities with other Federal, State, and local agencies. Therefore, option 4 would aid FDA in its enforcement activities, though not as fully as option 2. However, FDA would be less able to identify mixed-type facilities that are affected by future regulations for outreach and other activities. Option 5: Excluding product categories would limit FDA's ability to use the registration database to deploy its enforcement resources. Although FDA still would be aided by the registration requirements under option 5, our efforts would not be as efficient as under option 2. Information from registration makes enforcement more efficient; thus, the more information provided, the greater the increase in efficiency. Option 6: This option provides similar coverage of the food production chain as option 2 and so will have a similar effect in aiding FDA in deploying enforcement resources and identifying facilities that are affected by future regulations. Option 7: Option 7 would provide the same coverage of the food production chain as option 6, and thus would be as effective in aiding FDA in deploying resources as option 6. iv. Registration, in conjunction with prior notice, would give FDA information that will aid FDA in determining which shipments to inspect. Option 1: No impact. Option 2: This option is the most comprehensive in its coverage and thus would have the largest effect. Option 3: FDA's ability to target imported foods would be unaffected by excluding intrastate facilities. Option 3 would be as effective as option 2. Option 4: FDA's ability to target imported foods would be lessened slightly by excluding mixed-type facilities. Option 5: Not including food product categories would limit FDA's ability to target specific products and country product combinations at the ports. Excluding food categories also would limit FDA's ability to evaluate as thoroughly as possible prior notifications of food imports we receive under 21 CFR part 1, subpart I. For example, if a facility registers as manufacturing/processing only canned goods and we receive a prior notice purportedly from this facility for fresh seafood, FDA would have critical information indicating that the shipment may warrant examination. Option 6: this option provides similar coverage of the food production chain as option 2, and so would have a similar effect in aiding FDA in determining which shipments to inspect. Option 7: Option 7 would be as effective as option 2 in aiding FDA in targeting import inspections. V. Initial Regulatory Flexibility Analysis A. Introduction FDA has 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 agencies to analyze regulatory options that would lessen the economic effect of the rule on small entities. FDA is unsure whether or not this proposed rule would have a significant economic impact on a substantial number of small entities, but has analyzed various regulatory options to examine the impact on small entities. The following analysis, together with other relevant sections of this document, serves as the agency's initial regulatory flexibility analysis under the Regulatory Flexibility Act. B. Economic Effect on Small Entities Of the 202,046 domestic entities covered by option 7, the proposed option, 99 percent are small according to the definitions of the Small Business Administration. Because such a large percentage of the domestic entities are small, all options considered in the Benefit-Cost Analysis in section IV.A of this document are regulatory relief options. The expected burden for most small entities is low, between $58 and $83. However, over 200,000 entities are affected by this rule. If a small percentage of these entities incur costs significantly higher than the expected cost, then a substantial number of small entities may be significantly affected. FDA requests comment on the effect of this proposed rule on small entities. C. Additional Flexibility Considered Because of the requirements of the Bioterrorism Act, FDA is precluded from selecting some of the options that typically would be considered to lessen the economic effect of the rule on small entities, including granting an exemption to small entities. FDA tentatively concludes that it would be inconsistent with section 305 of the Bioterrorism Act to allow small entities more time to register, since the Bioterrorism Act established a registration deadline that applies to all covered facilities. Although the recordkeeping provision of the Bioterrorism Act directs FDA to take into account the size of a business when issuing implementing regulations, the registration provision contains no such language. Thus, it appears that Congress intended for all facilities to be subject to the deadline established in the Bioterrorism Act. Nonetheless, the agency recognizes that the registration requirement may cause an economic burden to some small businesses; therefore, we are seeking comment on whether it would be consistent with section 305 of the Bioterrorism Act for the agency to set staggered compliance dates that would give small businesses more time to comply. However, the Bioterrorism Act does have considerable flexibility for small businesses built into the statute. First, retail facilities and farms are both exempt from registration. Many of these are small entities. Second, the economic impact on small entities is lessened by allowing entities to register either electronically or by mail. Small entities that do not have reasonable access to a computer or the Internet can submit their registration by mail. [[Page 5414]] VI. Unfunded Mandates Title II of the Unfunded Mandates Reform Act of 1995 (Public Law 104-4) requires cost-benefit and other analyses before any rule making if the rule would include a ``Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year.'' The current inflation-adjusted statutory threshold is $112.3 million. Because the total cost to the domestic private sector would be $13 million, FDA has determined that this proposed rule does not constitute a significant rule under the Unfunded Mandates Reform Act. VII. Small Business Regulatory Enforcement Fairness Act Major Rule The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 (Public Law 104-121) defines a major rule for the purpose of congressional review as having caused or being likely to cause one or more of the following: an annual effect on the economy of $100 million; a major increase in costs or prices; significant adverse effects on competition, employment, productivity, or innovation; or significant adverse effects on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets. In accordance with the Small Business Regulatory Enforcement Fairness Act, OMB has determined that this proposed rule, when final, will be a major rule for the purpose of congressional review. VIII. Paperwork Reduction Act of 1995 This proposed rule contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). A description of these provisions is given in the following paragraphs with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information. FDA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information would have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology. Title: Registration of food facilities Description: The Bioterrorism Act contains a provision requiring the Secretary to issue a regulation requiring that domestic and foreign facilities that manufacture/process, pack, or hold food intended for consumption in the United States register with FDA by December 12, 2003. The Bioterrorism Act defines foreign facilities as those that manufacture/process, pack, or hold food for export to the United States without further processing or packaging outside the United States before export. Information FDA proposes to require on the form includes the name and full address of the facility; emergency contact information, including an individual's name, title, office phone, home phone, cell phone (if available) and e-mail address; all trade names the facility uses; general food product categories under Sec. 170.3; and a certification statement that includes the name, title/position, and phone number (e-mail address and fax number if available) of the registrant. Additionally, under the proposed rule, facilities would be encouraged to submit their preferred mailing address; type of activity conducted at the facility; food categories not included under Sec. 170.3, but which are helpful to FDA for responding to an incident; type of storage, if the facility is solely a warehouse/holding facility, and approximate dates of operation if the facility's business is seasonal. Under the proposed rule, facilities would also be required to submit timely updates when any information on their registration form changes, including cancellation of the registration on a separate form. Description of Respondents: Domestic facilities that manufacture/ process, pack, or hold food for consumption in the United States are required to register. This includes facilities engaged in both interstate and intrastate commerce and mixed-type facilities as described in option 6. Foreign facilities are required to register if they are manufacture/process, pack, or hold food that is not further processed or packaged outside the United States. The number of respondents is shown in table 48. Table 48.--Respondents Foreign 205,405 ------------------------------------------------------------------------ Domestic 202,046 ------------------------------------------------------------------------ Total 407,451 ------------------------------------------------------------------------ Burden: Hour Burden Estimate FDA estimates that initially it would take an administrative worker with Internet access one hour to read and understand the registration requirements; this time is doubled to two hours of an administrative worker's time for those facilities without Internet access. Foreign facilities' workers would need one hour to read and understand the registration requirements, if they have access to the Internet and can read and write in English. An additional 5 hours would be needed if they do not have Internet access, and an additional 5 hours would be needed if they do not read or understand English. In subsequent years, facilities that enter the industry would have to register, facilities that close would have to notify FDA of their closure, and facilities that have changes in the registration information would have to provide updates to FDA. FDA estimates that annually 10 percent of covered facilities would close, 10 percent would open (Ref. 9) and 20 percent of registered facilities would have changes to their registration information. Next, FDA estimates that filling out a registration form would take a total of 1 hour: 45 minutes of an administrative worker's time and 15 minutes of a owner, operator, or agent in charge's time to certify the registration before submitting the form to FDA. Foreign facilities' workers would need 1 hour to fill out the form, if they have access to the Internet and can read and write in English. An additional 1 hour would be needed if they do not have Internet access and an additional 1 hour would be needed if they do not read or understand English. Table 49 of this document shows the burden by domestic and foreign facilities, availability of the Internet, and fluency in English. For foreign facilities, FDA only had data on the percentage of facilities with Internet access and percentage fluent in English, but no information on what percentages of facilities are both fluent in English and have Internet access. To calculate the total number of burden hours, FDA assigned the correct percentages of fluent facilities and facilities with Internet access to the total number of [[Page 5415]] facilities, but for ease of computation excluded a category of facilities that are not fluent in English and have Internet access. FDA requests comments on the number of facilities not fluent in English and without Internet access. Table 49.--Estimated Annual Reporting Burden--First Year\1\ ---------------------------------------------------------------------------------------------------------------- Annual FDA Form Number of Frequency Total Annual Hours per 21 CFR Part Number Respondents per Responses Response Total Hours Respondent ---------------------------------------------------------------------------------------------------------------- 1.241(a)\2\ FDA 3537 143,453 1 143,453 2 286,906 ---------------------------------------------------------------------------------------------------------------- 1.241(b)\3\ FDA 3537 58,593 1 58,593 3 175,779 ---------------------------------------------------------------------------------------------------------------- 1.241(a)\4\ FDA 3537 32,864 1 32,864 2 65,728 ---------------------------------------------------------------------------------------------------------------- 1.241(b)\5\ FDA 3537 30,811 1 30,811 7 215,677 ---------------------------------------------------------------------------------------------------------------- 1.241(b)\6\ FDA 3537 141,730 1 141,730 12 1,700,760 ---------------------------------------------------------------------------------------------------------------- Total hours 2,444,850 ---------------------------------------------------------------------------------------------------------------- \1\ There are no capital costs or operating and maintenance costs associated with this collection of information. \2\ Domestic facilities with Internet access \3\ Domestic facilities without Internet access \4\ Foreign facilities with Internet access and fluent in English \5\ Foreign facilities without Internet access and fluent in English \6\ Foreign facilities without Internet access and not fluent in English In the following years, new facilities will have to register with FDA. These new facilities will bear the same burden to register that facilities incurred in the first year. Based on estimates by SBA that 10 percent of all businesses are new (Ref. 8), FDA estimates that the number of new facilities each year will be equal to 10 percent of the total number of facilities. Also, facilities that go out of business will have to notify FDA to cancel their registration. FDA estimates that 10 percent of the total number of facilities will go out of business each year, also based on SBA statistics. Facilities exiting the business will have to send FDA a cancellation of their registration. FDA estimates that it will take these facilities approximately 1 hour to locate the correct form, enter their information, and send it to FDA. Finally, facilities that have a material change of information submitted in their registration will have to notify FDA of the new information. FDA estimates 20 percent of facilities will have a material change in the information submitted in their registration each year. It will take these facilities approximately 1 hour to locate the correct form, enter their information, and send it to FDA. Table 50 presents an estimate of the burden hours for new facilities, and updates and cancellations for existing facilities in future years. Table 50.--Estimated Annual Reporting Burden--Subsequent Years\1\ ---------------------------------------------------------------------------------------------------------------- Annual FDA Form Number of Frequency Total Annual Hours per 21 CFR Part 1 Number Respondents per Responses Response Total Hours Respondent ---------------------------------------------------------------------------------------------------------------- New facilities ---------------------------------------------------------------------------------------------------------------- 1.241(a)\2\ FDA 3537 14,345 1 14,345 2 28,690 ---------------------------------------------------------------------------------------------------------------- 1.241(b)\3\ FDA 3537 5,859 1 5,859 3 17,577 ---------------------------------------------------------------------------------------------------------------- 1.241(a)\4\ FDA 3537 3,286 1 3,286 2 6,572 ---------------------------------------------------------------------------------------------------------------- 1.241(b)\5\ FDA 3537 3,081 1 3,081 7 21,567 ---------------------------------------------------------------------------------------------------------------- 1.241(b)\6\ FDA 3537 14,173 1 14,173 12 170,076 ---------------------------------------------------------------------------------------------------------------- Previously registered facilities ---------------------------------------------------------------------------------------------------------------- 1.244(a)\2\ FDA 3537/ 43,036 1 43,036 1 43,036 3537a ---------------------------------------------------------------------------------------------------------------- 1.244(b)\3\ FDA 3537/ 17,578 1 17,578 1 17,578 3537a ---------------------------------------------------------------------------------------------------------------- 1.244(a)\4\ FDA 3537/ 9,859 1 9,859 1 9,859 3537a ---------------------------------------------------------------------------------------------------------------- 1.244(b)\5\ FDA 3537/ 9,243 1 9,243 1 9,243 3537a ---------------------------------------------------------------------------------------------------------------- [[Page 5416]] 1.244(b)\6\ FDA 3537/ 42,519 1 42,519 1 42,519 3537a ---------------------------------------------------------------------------------------------------------------- Grand total 366,717 ---------------------------------------------------------------------------------------------------------------- \1\ There are no capital costs or operating and maintenance costs associated with this collection of information. \2\ Domestic facilities with Internet access \3\ Domestic facilities without Internet access \4\ Foreign facilities with Internet access and fluent in English \5\ Foreign facilities without Internet access and fluent in English \6\ Foreign facilities without Internet access and not fluent in English In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the agency has submitted the information collection provisions of this proposed rule to OMB for review. Interested persons are requested to send comments regarding information collection to the Office of Information and Regulatory Affairs, OMB, New Executive Office Bldg., 725 17th St. NW., rm. 10235, Washington, DC 20503, Attn: Stuart Shapiro, FDA Desk Officer. IX. Analysis of Environmental Impact The agency has carefully considered the potential environmental effects of this action. FDA has concluded under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. X. 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 does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the agency tentatively concludes that the proposed rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement has not been prepared. XI. Comments Interested persons may submit to the Dockets Management Branch (see ADDRESSES) written or electronic comments regarding this document. Two copies of any mailed comments are to be submitted, except that individuals may submit one copy. Comments are to be identified with the docket number found in brackets in the heading of this document. FDA cannot be responsible for addressing comments submitted to the wrong docket or that do not contain a docket number. Received comments may be seen in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday through Friday. FDA notes that the comment period for this document is shorter than the 75-day period that the agency customarily provides for proposed rules that are technical or sanitary or phytosanitary (SPS) measures. FDA believes that a 60-day comment period is appropriate in this instance. Executive Order 12889, ``Implementation of the North American Free Trade Agreement'' (58 FR 69681, December 30, 1993), states that any agency subject to the Administrative Procedure Act must provide a 75-day comment period for any proposed Federal technical regulation or any Federal SPS measure of general application. Executive Order 12889 provides an exception to the 75-day comment period where the United States considers a technical regulation or SPS measures of general application necessary to address an urgent problem related to the protection of human, plant, or animal health or sanitary or phytosanitary protection. FDA has concluded that this proposed rule is subject to the exception in Executive Order 12889. The Bioterrorism Act states that it is intended ``[t]o improve the ability of the United States to prevent, prepare for, and respond to bioterrorism and other public health emergencies.'' In order to meet these objectives, section 305 of the Bioterrorism Act requires FDA to propose and issue final regulations requiring the registration of food facilities within 18 months of the Bioterrorism Act's enactment, which is by December 12, 2003. Section 305 of the Bioterrorism Act also provides that if FDA does not issue final regulations by this date, facilities still must register with FDA by December 12, 2003, subject to compliance with the final regulations when the final regulations are made effective. This expedited timeframe reflects the urgency of the U.S. Government's need to prepare to respond to bioterrorism and other food-related emergencies. In addition, section 801 of SBREFA (5 U.S.C. 801), states that a major final rule may not take effect until 60 days after the agency has published the rule and submitted it to Congress for review. A major rule for this purpose is defined in 5 U.S.C. 804 as one that the Administrator of the Office of Information and Regulatory Affairs of OMB has determined has resulted in or is likely to result in: (a) An annual effect on the economy of $100 million or more; or (b) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (c) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of U.S.-based enterprises to compete with foreign-based enterprises in domestic or export markets. OMB has determined that this proposed rule, when finalized, will be a major rule. Accordingly, FDA must publish the final registration rule no later than October 12, 2003, for it to be effective by the statutory deadline of December 12, 2003. For these reasons, FDA has concluded that the urgency of this matter is sufficient justification for shortening the public comment period for this proposal to 60 days, consistent with Executive Order 12889. FDA will not consider any comments submitted after the 60-day comment period closes and does not intend to grant any requests for extension of the comment period due to the Bioterrorism Act's requirement to have a final regulation in effect by December 12, 2003, which requires publication on or before October 12, 2003. [[Page 5417]] XII. References The following references have been placed on display in the Dockets Management Branch (see ADDRESSES) and may be seen by interested persons between 9 a.m. and 4 p.m. Monday through Friday. FDA has verified the Web site addresses in this document, but is not responsible for subsequent changes to the Web sites after this document publishes in the Federal Register. 1. U.S. Census Bureau, 2000 County Business Patterns, available at http://www.census.gov/epcd/cbp/view/cbpview.html. 2. U.S. Census Bureau, 1999 Nonemployer Statistics, available at http://www.census.gov/epcd/nonemployer/index.html. 3. U.S. Food and Drug Administration, Field Accomplishments and Compliance Tracking System (FACTS), Fiscal year 2002. 4. U.S. Food and Drug Administration, Operational and Administrative System for Import Support (OASIS), Fiscal year 2002. 5. Impact Marketing Consultants, The Rauch Packaging Guide to the U.S. Packaging Industry, the fourth edition, 2002. 6. U.S. Department of Agriculture, National Agriculture Statistics Service, 1997 Census of Agriculture-U.S. Data, available at http://www.nass.usda.gov/census/. 7. Brown, Bradley, Memorandum to the file, November 22, 2002. 8. U.S. Small Business Administration, Office of Advocacy, Small Business by the Numbers, May, 2002, available at http://www.sba.gov/advo/stats/sbfaq.html . 9. U.S. Department of Labor, Bureau of Labor Statistics, National Compensation Survey: Occupation Wages in the United States, 2000, summary 01-04, available at http://www.bls.gov/ncs/ocs/sp/ncbl0354.pdf . 10. U.S. Office of Personnel Management, Salary table 2002-DCB, available at http://www.opm.gov/oca/02tables/02DCB.pdf, accessed on 9/24/2002. 11. NUA, How Many Online? available at http://www.nua.com/surveys/how_many_online/index.html , accessed on 9/4/2002. 12. Williams, V., U.S. Small Business Administration, Office of Advocacy, E-commerce, Small Businesses Venture Online, July, 1999, available at http://www.sba.gov/advo/stats/e_comm.pdf, accessed on 9/31/2002. 13. Dun and Bradstreet, D&B, 21st Annual Small Business Survey Summary Report, available at http://sbs.dnb.com/?referrer=sbsnavcenter , accessed on 9/31/2002. 14. The English Speaking Union, Frequently Asked Questions, available at www.esu.org/faqs.html, accessed 9/4/2002. 15. U.S. Census Bureau, Popclock, available at http://www.census.gov/main/www/popclock.html , accessed on 11/22/2002. 16. Estrin, A., Memorandum to the file, 10/04/2002. 17. Jessup, A., Memorandum to the file, 11/21/2002. 18. Pope, Angela, Memorandum to the file, 10/7/2002. 19. Hennessy, T. W., C. W. Hedberg, L. Slutsker, et al., ``A National Outbreak of Salmonella enteritidis Infections From Ice Cream,'' The New England Journal of Medicine, May 16, 1996, 1281- 1286. 20. Cutler, D. and E. Richardson, 1999, ``Your Money and Your Life: The Value of Health and What Affects It,'' Working Paper 6895, National Bureau of Economic Research. 21. Zorn, D. and K. Klontz, 1998, Appendix: The Value of Consumer Loss to Foodborne Reactive Arthritis,'' 63 FR 24292-24299, 63, May 1, 1998. 22. Scharff, R. and A. Jessup, ``Valuing Chronic Disease for Heterogeneous Populations: the Case of Arthritis,'' 2002, Mimeo. 23. Lee, L. A., S. M. Ostroff, H. B. McGee, et al., ``An Outbreak of Shigellosis at an Outdoor Music Festival,'' American Journal of Epidemiology, 133:6:608-615. 24. Trook, T. J., R. V. Tauxe, R. P. Wise, et al., ``A Large Community Outbreak of Salmonellosis Caused by Intentional Contamination of Restaurant Salad Bars,'' The Journal of the American Medical Association, 278:5:389-397. 25. Kolavic S. A., A. Kimura, S. L. Simons, et al., ``An Outbreak of Shigella dysenteriae Type 2 Among Laboratory Workers Due to Intentional Food Contamination,'' The Journal of the American Medical Association, 278:5:396-403. 26. Colley D. G., Widespread Foodborne Cyclosporiasis Outbreaks Present Major Challenges (letter), Emerging Infectious Diseases, 2:4:354-356. 27. Herwaldt, B. L., M. L. Ackers, and Cyclospora Working Group, ``An Outbreak in 1996 of Cyclosporiasis Associated With Imported Raspberries,'' New England Journal of Medicine, May 29, 1997, 1548- 1556. List of Subjects in 21 CFR Part 1 Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling, Reporting and recordkeeping requirements. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR part 1 be amended as follows: PART 1--GENERAL ENFORCEMENT REGULATIONS 1. The authority citation for 21 CFR part 1 is revised to read as follows: Authority: 15 U.S.C. 1453, 1454, 1455; 21 U.S.C. 304, 321, 331, 334, 343, 350c, 350d, 352, 355, 360b, 362, 371, 374, 381, 382, 393; 42 U.S.C. 216, 241, 243, 262, 264. 2. Subpart H is added to part 1 to read as follows (subparts F and G are reserved): Subparts F-G [Reserved] Subpart H--Registration of Food Facilities General Provisions Sec. 1.225 Who must register under this subpart? 1.226 Who is exempt from this subpart? 1.227 What definitions apply to this subpart? Procedures for Registration of Food Facilities 1.230 When must you register? 1.231 How and where do you register? 1.232 What information is required in the registration? 1.233 What optional items are included in the registration form? 1.234 How and when do you update your registration information? Additional Provisions 1.240 What other registration requirements apply? 1.241 What happens if you fail to register? 1.242 What does assignment of a registration number mean? 1.243 Is food registration information available to the public? General Provisions Sec. 1.225 Who must register under this subpart? (a) You must register under this subpart if you are the owner, operator, or agent in charge of either a domestic or foreign facility, as defined in this subpart, and your facility is engaged in the manufacturing/processing, packing, or holding of food for consumption in the United States, unless you qualify for one of the exemptions in Sec. 1.226. (b) An owner, operator, or agent in charge of a domestic facility must register whether or not the food from the facility enters interstate commerce. (c) An owner, operator, or agent in charge of a foreign facility must register the facility. A foreign facility may designate its U.S. agent as its agent in charge for purposes of registering the facility. Sec. 1.226 Who is exempt from this subpart? This subpart does not apply to the following facilities: (a) Foreign facilities, if food from such facilities undergoes further manufacturing/processing (including packaging) by another foreign facility outside the United States. This exemption does not apply to a facility if the further manufacturing/processing (including packaging) conducted by the subsequent facility consists of adding labeling or any similar activity of a de minimis nature; (b) Farms; (c) Retail facilities; (d) Restaurants; (e) Nonprofit food facilities in which food is prepared for, or served directly to, the consumer; (f) Fishing vessels, including those that not only harvest and transport fish but also engage in practices such as heading, eviscerating, or freezing [[Page 5418]] intended solely to prepare fish for holding on board a harvest vessel. However, those fishing vessels otherwise engaged in processing fish, which for purposes of this section means handling, storing, preparing, heading, eviscerating, shucking, freezing, changing into different market forms, manufacturing, preserving, packing, labeling, dockside unloading, or holding are subject to all of the regulations in this subpart; and (g) Facilities that are regulated exclusively, throughout the entire facility, by the U.S. Department of Agriculture 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.). Sec. 1.227 What definitions apply to this subpart? (a) The act means the Federal Food, Drug, and Cosmetic Act. (b) The definitions of terms in section 201 of the act (21 U.S.C. 321) apply to such terms when used in this subpart. (c) In addition, for the purposes of this subpart: (1) Calendar day means every day shown on the calendar. (2) Facility means 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. A facility may consist of one or more contiguous structures. A single building may house distinct facilities if they are under separate management. (i) Domestic facility means any facility located in any State or Territory of the United States, the District of Columbia, or the Commonwealth of Puerto Rico. (ii) Foreign facility means a facility other than a domestic facility that manufactures/processes, packs, or holds food for consumption in the United States. (3) Farm means 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. The term ``farm'' includes: (i) Facilities that pack or hold food, provided that all 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, provided that all food used in such activities is consumed on that farm or another farm under the same ownership. (4) Food has the meaning given in section 201(f) of the act. Examples of food 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, bakery goods, snack foods, candy, and canned foods. (5) Holding means storage of food. Holding facilities include, but are not limited to, warehouses, cold storage facilities, storage silos, grain elevators, or liquid storage tanks. (6) Manufacturing/processing means making food from one or more ingredients, or synthesizing, preparing, treating, modifying or manipulating food, including food crops or ingredients. Examples 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. (7) Nonprofit food facility means a charitable entity that prepares, serves, or otherwise provides food to the public. The term includes, but is not limited to, food banks, soup kitchens, and nonprofit food delivery services. To qualify as a nonprofit food facility, the entity must be exempt from paying federal income tax under the U.S. Internal Revenue Code. (8) Packing means placing, putting, or repacking food into different containers without making any change to the form of the food. (9) Port of entry means 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. This port may be different than the port where the article of food is entered for U.S. Customs Service purposes. (10) Restaurant means a facility that prepares and sells food directly to consumers for immediate consumption. 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. Facilities that provide food to interstate conveyances, rather than directly to consumers, are not restaurants. (11) Retail facility means 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. (12) U.S. agent means a person residing or maintaining a place of business in the United States whom a foreign facility designates as its agent. A 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. The U.S. agent acts as a communications link between FDA and the facility. FDA will treat representations provided by the U.S. agent as those of the foreign facility, and consider information provided to the U.S. agent as the equivalent of providing the same information or documents to the foreign food facility. (13) You or registrant means the owner, operator, or agent in charge of a facility that manufactures/processes, packs, or holds food for consumption in the United States. Procedures for Registration of Food Facilities Sec. 1.230 When must you register? The owner, operator, or agent in charge of a facility that manufactures/processes, holds, or packs food for consumption in the United States must be registered no later than December 12, 2003. 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. Sec. 1.231 How and where do you register? (a) Electronic registration: To register electronically, you must register at [a Web site that will be provided in the final rule], which will be available for registration 24 hours a day, 7 days a week. This Web site will be available wherever the Internet is accessible, including libraries, copy centers, schools, and Internet cafes, as well as a foreign facility's U.S. agent if the facility makes such arrangements. FDA strongly encourages electronic registration for the benefit of both FDA and the registrant. Once you complete your registration, FDA will provide you with an automatic electronic confirmation of [[Page 5419]] registration and a permanent registration number. You will be considered registered once FDA electronically transmits your confirmation and registration number unless notified otherwise. (b) Registration by mail: (1) If you do not have reasonable access to the Internet through any of the methods provided under paragraph (a) of this section, you must register by obtaining a copy of the registration from (Office name or mail code), the Center for Food Safety and Applied Nutrition, Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740, or by phone at [toll-free number that will be provided in the final rule]. (2) When you receive the form in the mail, you must fill it out completely and legibly and mail it to the address in paragraph (b) of this section. (3) If any required information on the form is incomplete or illegible when FDA receives it, FDA will send the form back to you for completion, provided that your mailing address is legible and valid. (4) FDA will enter completed registration submissions into the system as soon as practicable, in the order received. (5) FDA will then mail to the mailing address shown on the registration form a copy of the registration as entered, confirmation of registration, and your registration number. (6) If any information you previously submitted is incorrect as entered into the system, you must update your registration as specified in Sec. 1.234. (7) You will be considered registered once FDA enters your registration data into the registration system and the system generates a registration number. (c) No registration fee is required. (d) You must submit all registration information in the English language. Sec. 1.232 What information is required in the registration? Each registrant must submit the following information through either of the methods described in Sec. 1.231: (a) The name, full address, phone number, fax number, and e-mail address of the facility; (b) The name and address of the parent company, if the facility is a subsidiary of the parent company; (c) Emergency contact information, including an individual's name, title, office phone, home phone, cell phone (if available), and e-mail address (if available); (d) All trade names the facility uses; (e) Product categories as identified in Sec. 170.3 of this chapter; (f) For a foreign facility, the name, address, phone number, fax number (if available), and e-mail address (if available) of its U.S. agent; and (g) A statement certifying that the information submitted is true and accurate, and that the person submitting the registration is authorized by the facility to register on its behalf. The statement requires the name of the person registering the facility. This statement also requires the phone number, e-mail address (if available), and fax number (if available) of the person submitting the registration. Sec. 1.233 What optional items are included in the registration form? FDA encourages, but does not require, you to submit the following optional items in your registration. These data will enable FDA to communicate more quickly with facilities that may be the target of a terrorist threat or attack, or otherwise affected by, an outbreak of foodborne illness. This information includes: (a) Preferred mailing address, if different from that of the facility; (b) Type of activity conducted at the facility (e.g., manufacturing/processing or holding); (c) Food categories not included under Sec. 170.3 of this chapter, but which are helpful to FDA for responding to an incident (e.g., infant formula, dietary supplements, and food for animal consumption); (d) Type of storage, if the facility is solely a holding facility; (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 of this chapter; and (f) Approximate dates of operation, if the facility's business is seasonal. Sec. 1.234 How and when do you update your registration information? (a) The owner, operator, or agent in charge must submit an update to the registration 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 of a facility. (b) A facility canceling its registration must do so on the cancellation of registration form. (c) The cancellation of a facility's registration must include the following information: (1) The facility's registration number; (2) Whether the facility is domestic or foreign; (3) The facility name and address; (4) The name, address, and e-mail address (if available) of the individual submitting the cancellation; and (5) A statement in which the individual submitting the cancellation will certify that the information submitted is true and accurate and the submitter is authorized by the facility to cancel its registration. Additional Provisions Sec. 1.240 What other registration requirements apply? In addition to these regulations, you must comply with the registration regulations found in part 108 of this chapter, related to emergency permit control, and any other registration requirements that apply to the facility. Sec. 1.241 What happens if you fail to register? (a) Failure of a domestic or foreign facility to register in accordance with this regulation is a prohibited act under section 301 of the act (21 U.S.C. 331). (b) Any person who imports or offers for import an article of food without complying with the requirements of section 801(l) of the act (21 U.S.C. 381(l)) as set out in this subpart, or otherwise violates any requirement under section 801(l) of the act, or any person who causes such an act, commits a prohibited act within the meaning of section 301(dd) of the act. (c) 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 prohibited acts. Under section 303 of the act (21 U.S.C. 333), the United States can bring a criminal action in Federal court to prosecute persons who commit prohibited acts. Under section 306 of the act (21 U.S.C. 335a), FDA can seek debarment of any person who has been convicted of a felony relating to importation of food into the United States. (d) If an article of food is imported or offered for import and a foreign facility that manufactured/processed, packed, or held that food has not registered in accordance with this subpart, the food must be held at the port of entry unless FDA directs its removal to a secure facility in accordance with paragraph (e) of this section. (e) Under paragraph (d) of this section, 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 approved by FDA. [[Page 5420]] (f) Under paragraph (d) of this section, 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. Transportation and storage expenses shall be borne by the owner, purchaser, importer, or consignee. (g)(1) Under paragraph (d) of this section, 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 in accordance with Sec. 1.231, and FDA has notified the U.S. Customs Service and the person who submitted the registration that the article of food no longer is subject to a hold under section 801(l) of the act. (2) Under paragraph (d) of this section, notwithstanding section 801(b) of the act (21 U.S.C. 381(b)), 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. (h) Under paragraph (d) of this section, a 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) does not mean that it will be granted admission under other provisions of the act or other U.S. laws. Sec. 1.242 What does assignment of a registration number mean? 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. Sec. 1.243 Is food registration information available to the public? (a) Registration forms submitted under this subpart, and any information contained in those forms that would disclose the identity or location of a specific registered person, is not subject to disclosure under 5 U.S.C. 552 (the Freedom of Information Act). (b) Paragraph (a) does not apply to any information obtained by other means or that has previously been disclosed to the public as defined in Sec. 20.81 of this chapter. Dated: January 27, 2003. Tommy G. Thompson, Secretary of Health and Human Services. Dated: January 27, 2003. Kenneth W. Dam, Acting Secretary of the Treasury. Note: The following appendix will not appear in the Code of Federal Regulations. BILLING CODE 4160-01-C [[Page 5421]] [GRAPHIC] [TIFF OMITTED] TP03FE03.000 [[Page 5422]] [GRAPHIC] [TIFF OMITTED] TP03FE03.001 [[Page 5423]] [GRAPHIC] [TIFF OMITTED] TP03FE03.002 [[Page 5424]] [GRAPHIC] [TIFF OMITTED] TP03FE03.003 [[Page 5425]] [GRAPHIC] [TIFF OMITTED] TP03FE03.004 [[Page 5426]] [GRAPHIC] [TIFF OMITTED] TP03FE03.005 [[Page 5427]] [GRAPHIC] [TIFF OMITTED] TP03FE03.006 [[Page 5428]] [FR Doc. 03-2443 Filed 1-29-03; 1:47 pm] BILLING CODE 4160-01-C -------------------------------------------------------------------- [Federal Register: February 3, 2003 (Volume 68, Number 22)] [Proposed Rules] [Page 5428-5468] From the Federal Register Online via GPO Access [wais.access.gpo.gov] [DOCID:fr03fe03-16] ----------------------------------------------------------------------- DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 1 [Docket No. 02N-0278] RIN 0910-AC41 Prior Notice of Imported Food Under the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 AGENCY: Food and Drug Administration, HHS. ACTION: Notice of proposed rulemaking. ----------------------------------------------------------------------- SUMMARY: The Food and Drug Administration (FDA) is proposing a regulation that would require U.S. purchasers or U.S. importers or their agents to submit to FDA prior notice of the importation of food. The proposed regulation implements the Public Health Security and Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism Act), which requires prior notification of imported food to begin by December 12, 2003. The Bioterrorism Act requires FDA to issue final regulations that specify the period of advance notice by this date or a statutory notice provision requiring not less than 8 hours prior notice and not more than 5 days prior notice will take effect until a final rule is issued. DATES: Submit written or electronic comments by April 4, 2003. Submit written or electronic comments on the collection of information by March 5, 2003. ADDRESSES: Submit written comments to the Dockets Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. Submit electronic comments to http://www.fda.gov/dockets/ecomments. Submit written comments on the information collection provisions to the Office of Information and Regulatory Affairs, 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: Mary Ayling, Center for Food Safety and Applied Nutrition (HFS-32), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-2428. SUPPLEMENTARY INFORMATION: Table of Contents I. Background and Legal Authority II. Preliminary Stakeholder Comments III. The Proposed Regulation A. Highlights of This Rule B. General Provisions 1. What Imported Food is Subject to This Subpart? (Proposed Sec. 1.276) 2. What Definitions Apply to This Subpart? (Proposed Sec. 1.277) 3. What Are The Consequences of Failing to Submit Adequate Prior Notice or Otherwise Failing to Comply With This Subpart? (Proposed Sec. 1.278) C. Requirements to Submit Prior Notice of Imported Food 1. Who is Authorized to Submit Prior Notice for an Article of Food That is Imported or Offered for Import Into the United States? (Proposed Sec. 1.285) 2. When Must the Prior Notice be Submitted to FDA? (Proposed Sec. 1.286) 3. How Must You Submit the Prior Notice? (Proposed Sec. 1.287) 4. What Information Must be Submitted in a Prior Notice? (Proposed Sec. 1.288) 5. What Changes are Allowed to a Prior Notice After it Has Been Submitted to FDA? (Proposed Sec. 1.289) 6. Under What Circumstances Must You Submit a Product Identity Amendment to Your Prior Notice After You Have Submitted it to FDA? (Proposed Sec. 1.290) 7. What is the Deadline for Product Identity Amendments Under Sec. 1.290? (Proposed Sec. 1.291) 8. How Do You Submit a Product Identity Amendment or an Arrival Update to a Prior Notice? (Proposed Sec. 1.292) 9. What Are the Consequences if You Do Not Submit a Product Identity Amendment to Your Prior Notice? (Proposed Sec. 1.293) 10. What Must You Do if the Anticipated Arrival Information (Required Under Sec. 1.288(k)(1)) Submitted in Your Prior Notice Changes? (Proposed Sec. 1.294) IV. Analysis of Economic Impacts A. Preliminary Regulatory Impact Analysis 1. Need for Regulation 2. The Reason for the Regulation 3. Proposed Rule Coverage 4. Regulatory Options Considered B. Small Entity Analysis (or Initial Regulatory Flexibility Analysis) 1. Number of Establishments Affected 2. Costs per Entity 3. Additional Flexibility Considered C. Unfunded Mandates V. Paperwork Reduction Act of 1995 VI. Analysis of Environmental Impact VII. Federalism VIII. Comments IX. 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 Bioterrorism Act, 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 307, which amends the Federal Food, Drug, and Cosmetic Act (the act) by adding section 801(m) (21 U.S.C. 381(m)). This new provision changes when FDA will receive certain information about imported foods by requiring the Secretary of Health and Human Services (the Secretary), after consultation with the Secretary of the Treasury, to issue implementing regulations by December 12, 2003, mandating prior notification to FDA of food that is imported or offered for import into the United States. Functions of the U.S. Customs Service (U.S. Customs) will soon be a part of the Department of Homeland Security (DHS). Future consultations may be with DHS instead of, or in addition to, the Department of Treasury. Section 801(a) of the act sets out procedures for imports under FDA's jurisdiction. When an FDA-regulated product is imported or offered for import, generally brokers submit entry information to the U.S. Customs on behalf of the importers of record. U.S. Customs then provides entry information and may deliver samples to FDA to enable admissibility decisions to be made. Under U.S. Customs authorities, entry of the merchandise must be made within 15 days after importation. U.S. Customs regulations provide for different kinds of entries. Commonly, merchandise is the subject of an entry for consumption (i.e., unrestricted, general use) under a basic importation and entry bond at the first port of arrival, but U.S. Customs authorities also allow for the entry of merchandise for transportation under a custodial bond from the port of arrival to another port where the consumption entry will be made. If no entry of any kind is made within 15 days, the article cannot move and the carrier or other authorized party must notify U.S. Customs and a general order (i.e., bonded or secure) warehouse that the article remains unentered. Generally, at that point, the article is moved to the bonded warehouse (or [[Page 5429]] such other facility as the U.S. Customs port director might require) and held pending the filing of an entry or other action. Accordingly, under current laws and regulations, there are times when FDA does not receive complete information about the food imports it regulates until days after the food has arrived in the U.S. and been moved from the port it arrived in. FDA receives information about imported food through its Operational and Administrative System for Import Support (OASIS). Entry information is usually provided electronically to OASIS by U.S. Customs via its Automated Broker Interface (ABI) of the Automated Commercial System (ACS). The information that is currently supplied to FDA through this system includes: the entry type, the entry number (both ACS line number and FDA line identifier); the mode of transportation; the carrier code; the name and address of the manufacturer, shipper, importer, and ultimate consignee; the country of origin; the FDA product code; a written description of the product in common business terms; and the quantity. If neither FDA nor U.S. Customs wishes to examine or detain the entry, the product is allowed to proceed. By adding section 801(m) to the act, Congress changed when information about FDA-regulated food imports must be provided to FDA. The major components of new section 801(m) of the act are: [sbull] Requires prior notice of imported food shipments beginning on December 12, 2003; [sbull] Provides that, if adequate notice is not provided, the food shall be refused admission and held until adequate notice is given; [sbull] Amends section 301 of the act to make it a prohibited act to import or offer for import an article of food in violation of any requirements under section 801(m) of the act; and [sbull] Mandates that prior notice be submitted no less than 8 hours and not more than 5 days before it is imported or offered for import, if final rules are not in effect on December 12, 2003, and until such rules become effective. In addition to section 307 of the Bioterrorism Act, which establishes the requirement for prior notice for food imported or offered for import into the U.S., 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 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 an open letter to the members of the public interested in food issues outlining the four provisions in Title III of the Bioterrorism Act that require FDA to issue regulations in an expedited time period, and FDA's plans for implementing them (see http://www.cfsan.fda.gov/[tilde]dms/sec-ltr.html). In the letter, FDA invited stakeholders to submit comments to FDA by August 30, 2002, for FDA's consideration as it developed this proposed rule. FDA also held meetings with representatives of industry, consumer groups, other Federal agencies, and foreign embassies after sending out the July 17, 2002, letter, to solicit stakeholder comments. In response to these solicitations, FDA received 37 comments regarding section 307 of the Bioterrorism Act. FDA has considered all the comments received by August 30, 2002. FDA will consider all comments we have received so far with the comments we receive during the public comment period on this proposed rule in developing the final rule. Several broad themes emerged from the comments FDA received on or before August 30, 2002, including: [sbull] Maintaining flexibility when setting the minimum time required for prior notice and taking into account different modes of transportation, the nature of perishable food, and the needs of businesses which operate close to the U.S. border; [sbull] Permitting the prior notice to be amended; [sbull] Integrating with U.S. Customs and other agencies to avoid duplication of notification requirements; [sbull] Allowing a qualified agent to submit prior notices for authorized submitters; [sbull] Providing immediate acknowledgement of the submission, if prior notice is submitted electronically; [sbull] Defining ``food'' consistent with the act's definition; [sbull] Extending FDA's hours of operation; [sbull] Complying with international trade obligations; and [sbull] Including a model of the Prior Notice screen. III. The Proposed Regulation This rule would enhance FDA's ability to inspect imported food when it arrives in the U.S. This in turn would result in a significant improvement in FDA's ability to deter, prepare for, and respond effectively to bioterrorism and other public health emergencies that might result from imported food. Additionally, should an outbreak or a bioterrorism event occur, prior notice would enhance FDA's ability to respond to the event by enhancing FDA's ability to prevent entry of shipments that appear related and to facilitate product tracking for containment. This proposed rule would facilitate product tracking because we would know, at the time of receipt of prior notice, the name and address of the actual importer and consignee in the United States. We could then use the U.S. importer and consignee information to follow-up and trace the location of the goods. FDA thus would be better able to ensure that consumers in the United States do not eat food that is contaminated (whether intentionally or otherwise). This information would also assist FDA and other authorities in determining the source and cause of problems and in communicating with affected firms. Finally, we believe that the information provided by prior notice would help us use our foreign inspection resources more effectively. 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, we believe this proposed rule is not more trade restrictive than necessary to meet the objectives of the Bioterrorism Act. A. Highlights of This Rule The key features of this proposed rule are: [bull] The purchaser or importer of an article of food (or their agent) who resides or maintains a place of business in the United States generally is responsible for submitting the notice. [bull] The notice must be submitted by noon of the calendar day before the day of arrival. [sbull] Amendments relating to product identity information are allowed under specified circumstances. [sbull] Updates about arrival information are required if plans change. [bull] The notice must be submitted electronically through the Prior Notice System unless the FDA system is not functioning. The FDA Prior Notice System will be designed to provide an automatic electronic acknowledgment of receipt of a complete prior notice submission, with a time and date ``stamp.'' The notice must contain information that identifies: [sbull] The individual and firm submitting the prior notice; [sbull] The entry type and U.S. Customs [[Page 5430]] ACS entry number or other U.S. Customs identification number associated with the import; [sbull] If the article of food is under hold under proposed Sec. 1.278, the location where it is being held; [sbull] The identity of the article of food being imported or offered for import: - The complete FDA product code; - The common or usual name or market name; - The trade or brand name, if different from the common or usual name or market name; - The quantity described from smallest package size to largest container; and - The lot or code numbers or other identifier of the food if applicable; [sbull] The manufacturer; [sbull] All growers, if known; [sbull] The country from which the article originates; [sbull] The shipper; [sbull] The country from which the article of food was shipped; [sbull] The anticipated arrival information; [sbull] Information related to U.S. Customs entry process; [sbull] The importer, owner, and consignee; and [sbull] The carrier. [bull] Amendments relating to product identity are allowed if complete information about product identity does not exist by the deadline for prior notice for the planned shipment: [sbull] Information regarding identity of the article may be amended once; [sbull] Amendments may not be used to change the nature of the article of food; [sbull] Quantity may be amended; and [sbull] Any amendments must be submitted no later than 2 hours prior to arrival. [bull] If a change occurs in the anticipated port of entry or anticipated time of arrival stated in the prior notice, the information must be updated. [bull] The proposed rule does not apply to: [sbull] Food that is carried by an individual entering the United States in that individual's personal baggage for that individual's personal use; or [sbull] Meat food products, poultry products, and egg products that at the time of importation are subject to the exclusive jurisdiction of the U.S. Department of Agriculture (USDA). B. General Provisions 1. What Imported Food is Subject to This Subpart? (Proposed Sec. 1.276) Under new section 801(m)(1) of the act, prior notice is required for all food ``being imported or offered for import into the United States.'' Accordingly, prior notice requirements apply to all food that is brought across the U.S. border (with the following four exceptions) regardless of whether the food is intended for consumption in the United States. In other words, FDA believes that food that is brought into the United States to be put into foreign trade zones, or for transshipment or reexport immediate or otherwise, is ``imported or offered for import'' and thus must comply with the prior notice requirements. The proposed rule establishes four categories of imported food that are not subject to the prior notice requirements. In each of these cases, FDA believes that the statutory language requires this result. The first category is food that individual travelers carry in their personal baggage for their own personal enjoyment. Although we believe that this food is imported into the United States, the information that section 801(m)(1) of the act requires in a prior notice, in conjunction with the purpose of the provision, demonstrates that Congress did not intend prior notice to apply to food that travelers bring into the United States in their personal baggage for personal use (i.e., consumption by themselves, family or friends, not for sale to anyone). In particular, under section 801(m)(1) of the act, a prior notice must contain the identity of the shipper of the food. When travelers bring food back from their travels in their personal baggage for their own use, we do not believe that Congress intended for us to characterize such travelers as ``shippers'' for purposes of section 801(m) of the act. We seek comment on this reasoning. However, when travelers bring food into the United States in their personal baggage to sell or otherwise distribute in a broader fashion, the travelers would seem to be acting for or on behalf of other entities. Under these circumstances, these travelers would seem to be shippers and subject to the provisions of this proposed rule. The remaining three categories of imported food not subject to the prior notice requirement are those foods within the exclusive jurisdiction of USDA. In accordance with section 801(m)(3)(B) of the act, FDA is proposing to exempt from the requirements of this regulation imported foods that, at the time of importation, are subject to USDA's exclusive jurisdiction 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.). 2. What Definitions Apply to This Subpart? (Proposed Sec. 1.277) The following definitions are used throughout the proposed rule: a. The act. The proposed rule 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 to such terms as used in the proposed rule. b. Calendar day. The proposed rule defines ``calendar day'' as ``every day shown on the calendar.'' c. Country from which the article of food was shipped. The proposed rule defines ``country from which the article of food was shipped'' as the country in which the article of food was loaded onto the conveyance that brings it to the United States. A conveyance is the means of transportation, e.g., ship, truck, car, van, plane, railcar, etc., not the shipping container that could be moved from a ship to a truck to a train bed. FDA is requesting comment on whether this term should include the countries of intermediate destination. d. Food. FDA is proposing to refer to the definition of ``food'' in section 201(f) of the act (21 U.S.C. 321(f)), which 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 examples of products that are considered food under section 201(f) of the act. Examples listed in the proposed rule include: 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. FDA already receives entry information on all these articles of food as defined in section 201(f) of the Act. With respect to articles that can be used for food and non-food uses, FDA believes that prior notice is required if the article is being imported for use as food. e. Originating country. The proposed rule defines ``originating country'' as ``the country from which the article of food originates.'' FDA is proposing this definition to be consistent with the language used in the Bioterrorism Act. [[Page 5431]] This proposed definition is also consistent with the definition that describes one of the critical data elements that brokers and other filers currently submit to FDA's OASIS via ACS when entry is made. The proposed definition refers to the country where the product that is shipped to the United States was grown or produced, depending on the kind of article. If the article is fresh produce, for example, the originating country is most likely to be the country where it is grown and harvested. If, on the other hand, the article is a processed food, e.g., canned vegetables, the originating country is likely to be the country in which the vegetables were canned. With respect to wild- caught fish or seafood that is harvested in the waters of the United States or by a U.S. flagged vessel or that is processed aboard a U.S. flagged vessel, FDA is proposing that the originating country be the United States. Otherwise, the originating country is the country under which the vessel is flagged. FDA aligned this aspect of the proposed definition of ``originating country'' with the principles proposed by USDA's Agricultural Marketing Service guidance published in the Federal Register on October 11, 2002, in response to the Farm Security and Rural Investment Act of 2002 (commonly known as the 2002 Farm Bill). FDA recognizes that this proposed definition may not be identical in all respects to the meaning of the term ``country of origin'' traditionally used by U.S. Customs. However, FDA believes that using the U.S. Customs meaning would not serve the purpose of the Bioterrorism Act. The U.S. Customs term primarily serves tariff, quota, and other trade purposes; it does not provide information needed for the evaluations that Congress has directed FDA to make under the Bioterrorism Act and the act. We seek comment on this interpretation and our proposed definition of ``originating country''. FDA also seeks comment on whether its use of a different term will have any impact, and if so, what that impact will be. f. 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 statutes, products can be imported into one port and 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 be 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. If food is imported into the United States from Mexico through Otay Mesa, CA, for transport through the United States for exportation into Canada, the port of entry under FDA's proposed definition is Otay Mesa, CA. The prior notice authority in the Bioterrorism Act is intended to give FDA better tools to deter, prepare for, and respond to bioterrorism and other food related problems. Given this purpose, ``port of entry'' must be defined as the port of arrival, that is, the location where the food first physically appeared in the United States. Allowing food that is presented for importation into the United States without prior notice to be shipped around the country and potentially lost to government oversight 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 when it first arrives in the United States. FDA requests comments on the proposed definition of ``port of entry.'' g. You. The proposed definition of ``you'' is the description of the party responsible for submitting the prior notice in proposed Sec. 1.285. FDA is proposing to define ``you'' in proposed Sec. 1.277(f) as the ``purchaser or importer of an article of food who resides or maintains a place of business in the United States, or an agent who resides or maintains a place of business in the United States acting on the behalf of the U.S. purchaser or importer'' or, ``if the article of food is imported with the intention of in-bond movement through the United States for export, i.e., Transportation for Exportation or Immediate Export entries, the arriving carrier or, if known, the in- bond carrier.'' 3. What Are the Consequences of Failing to Submit Adequate Prior Notice or Otherwise Failing to Comply With This Subpart? (Proposed Sec. 1.278) As set out in section 801(m)(1) of the act, proposed Sec. 1.278(a) provides that, if an article of food is imported or offered for import with no prior notice or inadequate prior notice, the food shall be refused admission under section 801(m) of the act. Examples of inadequacy are untimely, inaccurate, or incomplete prior notice. As set out in section 801(m)(2)(B)(i) of the act, proposed Sec. 1.278(b) provides that if the food is refused admission under section 801(m), it must be held at the port of entry unless FDA directs its removal to a secure facility. In accordance with section 801(m)(2)(B)(i), proposed Sec. 1.278(c) provides that FDA may require that an article of food be held in a secure facility as appropriate. FDA may determine such storage is appropriate because of the condition of the product, circumstances of importation, or other information available to the government, e.g., a concern with the safety or security of the article of food or space limitations in the port of entry. Examples of secure facilities include U.S. Customs Bonded Warehouses, Container Freight Stations, and Centralized Examinations Stations. Perishables, however, may not be stored in U.S. Customs Bonded Warehouses; thus, FDA may direct fresh produce or seafood that requires storage to another facility. FDA and U.S. Customs plan to issue guidance for their field offices that will identify locations of secure storage facilities that may be used for food required to be held for failure to provide adequate prior notice. In order to minimize confusion about who is responsible for making arrangements if food is refused admission under section 801(m) of the act, proposed Sec. 1.278(d) provides that if FDA requires the article of food to be held at the port of entry or in a secure facility, the carrier or the person who submitted the prior notice must arrange for the movement of the food under appropriate custodial bond and promptly notify FDA of the location. This provision also makes clear that the purchaser, owner, importer, or consignee is responsible for transportation and storage expenses. We note that when section 801(m) 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 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 Sec. 801(m), it did not intend to require FDA or U.S. Customs [[Page 5432]] to take custody of or pay for the holding of such food. We seek comment on this issue. In accordance with section 801(m)(2)(B)(i) of the act, proposed Sec. 1.278(e)(1) provides that the article of food must be held at the port of entry or in the secure facility until prior notice is submitted to FDA in accordance with this subpart, FDA has examined the prior notice, FDA has determined that the prior notice is adequate, and FDA has notified the U.S. Customs Service and the person who submitted the prior notice that the article of food no longer is subject to refusal of admission under section 801(m)(1) of the act. FDA recognizes that food may be shipped in the same container or truck with non-food items. Since articles that are not food are not subject to this proposed rule, 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 that have been refused must be dealt with before the rest of the shipment proceeds. In accordance with section 801(m)(2)(B)(i) of the act, proposed Sec. 1.278(e)(2) makes clear that food under a hold may not be delivered to the importer, owner, or consignee and that section 801(b) of the act does not apply. Therefore, delivery will not be allowed under a basic importation or entry bond. Even though delivery to them is not allowed, FDA believes that importers, owners, and consignees of food that has been refused under 801(m) of the act can make arrangements for food to be held: these arrangements can be made without taking possession of the food. The proposed rule (proposed Sec. 1.278(f)) differentiates between a refusal of admission under section 801(m)(1) of the act (prior notice) and refusal of admission under section 801(a) and other provisions of the act or other U.S. laws. The proposed rule makes clear that a determination that an article of food is no longer subject to refusal of admission under section 801(m)(1) of the act does not mean that it will be admitted to the United States. The other provisions of the act and other U.S. laws that currently apply to food imported or offered for import to the United States still apply and also govern admissibility. Although FDA believes that information in a prior notice will help facilitate admissibility decisions under section 801(a), FDA is not proposing to specify in the rule that it will make an 801(a) admissibility decision at the time it receives a prior notice. A prior notice is a pre-entry submission to comply with requirements under section 801(m). FDA will make the 801(a) decision when the complete entry information is submitted to U.S. Customs and transmitted to FDA. Normally (in about 98 percent of the cases), this is accomplished by electronically filing certified entry information with U.S. Customs ACS, which electronically transmits it to FDA's OASIS System. FDA's 801(a) admissibility decisions are transmitted from OASIS to the filer. In accordance with section 301(ee) of the act, the proposed rule (Sec. 1.278(g)) provides that it is a prohibited act to import or offer for import an article of food without complying with the requirements of section 801(m) of the act or otherwise violate any requirement under section 801(m). The proposed rule explains that, under section 302 of the act, 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, can bring a criminal action in Federal court to prosecute persons who commit a prohibited act. The proposed rule also explains that, under section 305a of the 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 notes that there are several differences between refusal of admission under sections 801(a) and (b) of the act and refusal of admission under new section 801(m). First, in section 801(m) of the act, Congress did not provide for any kind of application, petition, or appeal of FDA's determination that an article shall be refused admission for failing to comply with prior notice requirements. Congress provided that an article that has been refused admission under section 801(m) of the act can be admitted only if the necessary information is subsequently submitted, examined by FDA, and found to be adequate. Second, food refused admission under section 801(m) cannot be delivered under bond pursuant to section 801(b) and, as we describe elsewhere, must be held at the U.S. port of entry. Finally, the Bioterrorism Act does not provide specific procedures for the disposition of food refused admission under section 801(m) when no subsequent adequate notice is submitted. Section 801(a) and (b) provide that food refused admission under section 801(a) must be destroyed or reexported. 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 days after the food arrives in the United States. See 19 CFR Part 1422. If entry is not made within this timeframe, the carrier or other authorized party is required to notify U.S. Customs 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 reexported. FDA and U.S. Customs plan to develop additional guidance to explain how the agencies will handle food when it must be placed in general order warehouses due to refusal under section 801(m) of the act. C. Requirements to Submit Prior Notice of Imported Food 1. Who is Authorized to Submit Prior Notice for an Article of Food That is Imported or Offered for Import Into the United States? (Proposed Sec. 1.285) FDA is proposing that a purchaser or importer of an article of food who resides or maintains a place of business in the United States is authorized to submit prior notice. FDA is also proposing that an agent who resides or maintains a place of business in the United States acting on the behalf of the U.S. purchaser or U.S. importer is authorized to submit prior notice. FDA believes that the customs broker/filer should be authorized to be a submitter if it is the U.S. agent of the U.S. importer or U.S. purchaser. FDA is proposing that, if the article of food is imported for in- bond movement through the United States for export, the prior notice must be submitted by the arriving carrier or, if known, the in-bond carrier. The types of entries that cover these importations are known to FDA and U.S. Customs as Transportation for Exportation (T&E) and Immediate Export (IE). FDA believes that the proposed rule should specify which parties are responsible for submitting prior notice and that this specificity will minimize confusion about who should or will submit prior notice among the several parties who can be involved in importing food. Less confusion will lead [[Page 5433]] to greater compliance. Less confusion will also mean that fewer imports will be delayed for lack of prior notice. FDA chose the U.S. entities in proposed Sec. 1.285(a) for several reasons. First, we do not believe that there is importation of food to the United States that does not involve one of the U.S. entities identified, except in those instances where the food is imported with the intention of in-bond movement through the United States for export (where the proposed rule authorizes submission by the arriving carrier or, if known, the in-bond carrier). We also believe that it is the U.S. importer or U.S. purchaser who orders or buys the article of food, thereby initiating its importation into the United States. These persons thus should possess, or have the ability to obtain, the information required to be submitted in the prior notice within the time period in proposed Sec. 1.286. As U.S. businesses, these persons are also more likely to already have web access than some foreign businesses, which reduces potential costs and impacts on trade. Finally, placing responsibility on these U.S. entities will facilitate FDA's ability to conduct audits, investigations, and inspections, which will facilitate efficient enforcement of section 801(m). FDA notes that the submitter is the entity responsible for ensuring the adequacy and accuracy of the prior notice. For the reasons described above, FDA believes that these entities are in the best position to do so. FDA seeks comment on whether others should be authorized to provide prior notice and, if so, why. 2. When Must the Prior Notice be Submitted to FDA? (Proposed Sec. 1.286) Based on consideration of the factors set out in the statute, FDA is proposing that the prior notice must be submitted to FDA no later than noon of the calendar day before the day the article of food will arrive at the border crossing in the port of entry. Section 801(m)(1) of the act makes clear that a primary purpose of prior notice is to enable inspections or other FDA action upon arrival of food in the United States to protect consumers in the United States from food imports that may be at risk of intentional adulteration or that may pose other risks. Section 801(m)(2)(A) of the act states that the deadline for prior notice ``shall be no less than the minimum amount of time necessary for [FDA] to receive, review, and appropriately respond to such notification.'' In addition, section 801(m)(2)(A) provides that FDA may take other factors into consideration when deciding on the deadline for prior notice, specifically: its effect on commerce; the locations of various ports; various modes of transportation; types of food; and any other consideration. However, although the statute gives FDA some latitude in setting the deadline for prior notice, it nonetheless makes clear that we must establish a timeframe for prior notice that allows FDA to receive, review, and appropriately respond to all prior notices. Finally, section 801(m)(1) states, ``Nothing in this section may be construed as a limitation on the port of entry for an article of food.'' Reading section 801(m) as a whole and in conjunction with other provisions in the Bioterrorism Act, FDA believes that Congress intended that FDA assess the information in the prior notice to determine if inspection upon arrival or other action is appropriate. For FDA to inspect, upon arrival, food imports that may be at risk of intentional adulteration or that may pose other risks to U.S. consumers, FDA must be able to effectively deploy its staff. Although FDA inspectors are located throughout the United States, FDA does not have staff located at or near all of the 250 ports where over 4.7 million entry lines of food were entered in fiscal year (FY) 2001. Port locations are established by U.S. Customs and, under the statute, FDA cannot limit ports at which food may be imported or offered for import. Thus, FDA must have enough time, on a daily basis, to process the information in the approximately 20,000 prior notices we expect to receive and to send inspectors to any port in the United States if necessary. FDA believes that the minimum amount of time necessary to ensure it can plan and that its staff can travel to the arrival point is noon of the calendar day before the day the article arrives at the border crossing. FDA believes that this timeframe will give it the minimum time it needs to conduct its assessments and provide the information to its field offices so they can allocate their inspectional resources on a daily basis and plan any necessary travel. Before proposing this deadline FDA also considered its potential effects on imported food. FDA believes that in most circumstances information regarding imports is generated when the article to be imported is ordered or purchased, not when it is shipped to the United States. FDA has examined a selection of imported food documents and compared dates of these documents with the dates of arrival in the United States and U.S. Customs entry. FDA asked several field offices to send entry documents with invoices covering imported foods. Sixty- four packages of entry documents were received in response to this request. The dates of the invoices were compared to the dates of arrival and receipt in OASIS. In 48 cases (75 percent), the invoice date or date of sale preceded the arrival date by least 1 day. In 31 cases (48 percent), the invoice or sale date preceded the arrival date by 2 or more days. In 16 cases (25 percent), the invoice date was the same as the arrival date. FDA invites comment on the representativeness of this sampling. Based on this examination, we believe that orders are normally placed a day or more prior to shipment. See the compilation of imported food documents that FDA has placed in the administrative record and the docket (Ref. 1). FDA believes that the information required for prior notice therefore generally does exist by noon of the calendar day before the day of arrival. FDA recognizes, however, that currently one person may not possess all of the information and that some practices regarding the flow of information about food imports will have to change to ensure that the submitter has all of the information needed to submit a prior notice for the food shipment by the deadline. FDA believes that this proposed deadline will have the most impact on those who import food by truck and rail over the land borders, with less effect at airports, and almost no effect at water ports. However, even on the land borders, FDA believes that the information required by prior notice will be, in most cases, sufficiently fixed by noon of the calendar day before arrival to allow the U.S. importer or U.S. purchaser, or their U.S. agents, to submit prior notice to FDA that meets the proposed requirements without slowing down the shipment. FDA is proposing to allow submitters to amend prior notices for that portion of the product identity information that cannot be completed, because it does not yet exist by noon of the calendar day prior to arrival. We believe this may be the case with product identity for fresh products imported from countries close to the United States (e.g., Canada or Mexico). For example, fresh seafood may be ordered as ``catch-of-the-day'' from Canada or Mexico; the importer intends to import the fish the day after the order is placed, but cannot find out what exact species and quantity will arrive by the deadline for prior notice because the boat is not due back until late afternoon on the day prior notice is due. Another example is an importer who orders fresh lettuce for import the day after the order but cannot find out the exact variety and quantity of lettuce [[Page 5434]] that will be shipped by the deadline for prior notice because the field has not been harvested or the supplier has not yet received the day's harvest by the time prior notice of the planned shipment is due. In these instances, the importer knows generally what kind of product has been ordered, but not the exact type (species for fish and variety for lettuce). The proposed amendment process would allow submitters who cannot report complete product identity information to FDA by the prior notice deadline because it does not yet exist to maintain current business practices. However, it would provide FDA some of the information that it needs to begin the assessment of whether a particular shipment of food should be investigated and if so, to ensure that FDA personnel can be available when the food arrives at the port. FDA does not intend this amendment process to apply when a shipper ``tops off a container'' by filling unused space in the container or truck bed with additional different food products. FDA also recognizes that information concerning the anticipated arrival may change after the article is ordered due to unforeseen traffic or weather issues and has accommodated those potential changes by requiring updates of that information. ``Noon'' means 12:00 p.m. in the time zone in which the FDA office with responsibility over the anticipated port of entry resides. For example, if the anticipated port of entry is the Peace Bridge in the Buffalo, NY, and the anticipated date of entry is January 9, 2004, the prior notice must be submitted to the FDA Prior Notice System before noon Eastern Standard Time (EST) on January 8, 2004. FDA is proposing that prior notice may not be submitted until all of the information required by Sec. 1.288 exists except as provided in Sec. 1.288(e)(2) and Sec. 1.290, both of which relate to product identity amendments. FDA is also proposing that the prior notice may not be submitted more than 5 days before the anticipated date of arrival of the food at the anticipated port of entry. For example, if the anticipated date of arrival is January 12, 2004, the prior notice may not be submitted before January 7, 2004. This 5 day limitation is consistent with the limitation set by Congress in section 307(a)(2)(A) of the Bioterrorism Act. Such limitations are necessary to ensure that FDA's Prior Notice System is not overburdened with premature information or submissions that may need to be cancelled and resubmitted. 3. How Must You Submit the Prior Notice? (Proposed Sec. 1.287) FDA is proposing that the prior notice, amendments, and updates must be submitted electronically to FDA through FDA's Prior Notice System. The web-based FDA Prior Notice System is under development with an anticipated completion date of no later than October 12, 2003. A ``mock-up'' of the Prior Notice Screen a submitter would see once he or she accessed this system is part of this proposed rule. FDA has consulted with the U.S. Customs Service of the Department of the Treasury about this proposed rule. FDA and U.S. Customs considered modifying ACS to accommodate the new prior notice requirement. However, during these consultations, U.S. Customs determined that ACS could not be modified to accommodate the data requirements of the prior notice regulation by the December 12, 2003, statutory deadline. Currently, U.S. Customs is focusing its resources on developing the Automated Commercial Environment (ACE) as a replacement for ACS, and integrating its other electronic systems, such as the Automated Manifest System (AMS). FDA is participating in the development of ACE through the International Trade Data System (ITDS) Board and directly through integration of FDA and U.S. Customs business practices, policies, and border cooperation. FDA intends to allow prior notice to be submitted through ACE when it is fully operational. However, implementation of ACE is not expected before 2005. Given these circumstances, FDA and U.S. Customs agreed that to meet the statutory deadline, an FDA stand-alone, web-based electronic system to execute receipt of prior notice would be necessary until ACE is fully operational. FDA seeks to minimize the submission of duplicative information. The Bioterrorism Act requires certain prior notice information to be submitted to FDA. FDA seeks comments on the extent to which these proposed prior notice requirements would result in persons submitting duplicative prior notice information to more than one federal agency. 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 to the federal government under these prior notice requirements. As discussed previously, FDA and U.S. Customs are working together on their systems to allow prior notice to be submitted to FDA through U.S. Customs System when ACE is fully operational. FDA is proposing to require electronic submission of prior notice because we believe an electronic system will be the least burdensome and most efficient way to implement and enforce the requirement of section 801(m) of the act. Nationwide, in FY 2001 FDA received over 4.7 million food entry lines; therefore, we believe a paper system would be unmanageable for FDA, require a longer deadline, and could slow down imports for some food products. Moreover, we currently receive the majority of information we base admissibility decisions on electronically from U.S. Customs. Thus, we already have the electronic capability to process and screen the information. We also believe that an electronic system will mean fewer errors than a paper system. Another important benefit of electronic submission will be immediate and accurate communication between FDA offices and between FDA offices and U.S. Customs about arrivals and adequacy of the prior notice. An electronic prior notice system will have several key features that will benefit firms that export to the United States, U.S. importers, and FDA. First, the volume of submissions on a daily basis is expected to be such that electronic submission and processing are the only practical way for FDA to manage prior notice--FDA expects, upon average, 20,000 submissions per day. Second, an electronic system will be able to provide instantaneous confirmation of receipt of the prior notice. Third, an electronic system will be able to ensure that the form is filled out completely (though not accurately) by being set to reject submissions until all of the mandatory fields are completed. Finally, an electronic system will make it more likely that information in the submissions is ``legible'' to FDA. In contrast, prior notice by mail, fax, or e-mail would have several significant downsides for firms that export to the United States, U.S. importers, and FDA. All three of these methods would require FDA to input the data manually to process it, which means that FDA would need to set a longer deadline for submission or devote resources on data entry that are better spent on tasks like inspections. Those whose paper submissions were not legible or complete would not know until their shipments arrived at the port and were refused admission. Moreover, FDA believes that almost all proposed submitters have access to the Internet, either within their companies or through public libraries, copy centers, schools, or Internet cafes, as well as through agents or brokers. FDA requests comments on this assumption. Because most of the [[Page 5435]] persons responsible for submitting the prior notice must reside or maintain a place of business in the United States, the FDA Prior Notice System will be in English. This will also allow for the information to be placed in standard data elements that can then be maintained in a database, screened against standard criteria, and used for communication among field offices. In proposed Sec. 1.287(b), FDA is proposing that if its Prior Notice System is unable to receive prior notice electronically, the prior notice, amendments, and updates must be submitted using a printed version of the Prior Notice Screen delivered in person, by fax, or by e-mail to the FDA field office with responsibility over the geographical area in which the anticipated port of entry is located. If the submitter does not receive electronic acknowledgement from the FDA Prior Notice System then it should check to see if its system is working. If it is, then the submitter should assume that the FDA system might be down and attempt to contact the appropriate FDA field office to confirm. The Prior Notice System will not provide a response to the submitter of the agency's decision regarding the adequacy or timeliness of the prior notice as this assessment will turn on information that will not be available until the food arrives in the United States. FDA anticipates the system will date and time stamp an electronic confirmation of the system's receipt of each prior notice, amendment, and update, which the system will send to the submitter automatically. FDA believes that the prior notice process under section 801(m) precedes the review process under section 801(a). Thus, FDA's response to the prior notice will not constitute entry review. The section 801(a) review process will be separate from, and subsequent to, the prior notice process. Therefore, the FDA Prior Notice System's electronic confirmation of a prior notice submission is not an 801(a) admissibility decision and should never be construed as an FDA ``release'' or ``may proceed.'' If a person wishing to submit prior notice to the FDA is unable to do so because his or her own system is not operating, FDA expects the submitter to use an alternative Internet system for submission (e.g., a local library or copy-center with Internet access). FDA is developing a web-based system to reduce the likelihood that intermittent system outages will impact prior notice submissions. Although the system may be developed in a way that will allow for establishment of a personal account, users will not have to be licensed or otherwise pre-approved or have specialized software. FDA also plans to develop and provide guidance and training to potential submitters and their agents that will further describe the data elements and the submission process before December 12, 2003, which is when the requirement to provide prior notice begins. The Prior Notice Screen of FDA's Prior Notice System also identifies the information that must be submitted. 4. What Information Must be Submitted in a Prior Notice? (Proposed Sec. 1.288) Proposed Sec. 1.288 lists the information or data elements that must be included in each prior notice. Much of this list is taken directly from section 801(m)(1) of the act. The remainder of the list, although not explicitly listed in section 801(m), is information that FDA believes is necessary for the efficient enforcement of section 801(m) of the act and is thus authorized under section 701(b) of the act. We explain below why each of these items is necessary for the efficient enforcement of section 801(m). Accordingly, as set out in proposed Sec. 1.278(a), FDA is proposing that a prior notice that does not contain all of the information listed in proposed Sec. 1.288 will be considered inadequate. FDA solicits comments on this approach. Most of this information is already supplied by the filer to FDA through ACS as part of the U.S. Customs entry process, including the entry type; the entry number (both ACS line number and FDA line identifier); the FDA product code; a written description of the product in common business terms; brand name; the quantity; lot numbers; the manufacturer; country of origin; shipper; importer; ultimate consignee; and the carrier (the mode of transportation and the carrier code). Before discussing each data element in the context of prior notice, we want to emphasize that the prior notice requirement does not apply to a whole shipment; for the purpose of section 801(m) of the act, it applies to ``each article of food.'' FDA believes that in section 801(m) ``each article of food'' means each article of food produced by each manufacturer. Thus, any food product identified by a specific FDA product code and quantity description produced by a single manufacturer (or grower, if fresh) associated with a single entry line number (U.S. Customs entry number plus ACS line number plus OASIS/FDA line number) must be covered by a prior notice. Therefore, each article of food that is represented by an FDA line must be covered by a prior notice. Thus, if a shipment consists of four different kinds of food products, e.g., 1,000 cases of 48/6 oz. cans each of Brand X tuna, 240 cases of 24/15.25 oz. cans each of yellow corn, 300 cases of 24/12 oz cans each of Brand X tuna, and 1,500 cases of 48/6 oz. cans each of Brand P tuna, four prior notices are required. These four prior notices may be contained in one submission. If the shipment consists of only one product, e.g., 2,400 cases of 24/15.25 oz. cans each of yellow corn, one prior notice is required. If this corn came from two different manufacturers, however, two prior notices would be needed. In its Prior Notice System FDA will give the submitter the option of completing additional prior notices for other articles after each notice is completed. We are working with the developers of the Prior Notice System to accept ``header'' information that will permit repeated information to be automatically entered. This ``header'' would contain information consistent across several articles of food within the same submission, i.e., U.S. Customs entry. This will reduce the amount of data entry and potentially reduce typing and transcription errors. FDA plans to develop its Prior Notice System to allow submitters to automatically repeat information already entered in the submission where appropriate (e.g., all information is the same except for the identity of the article or the manufacturer). FDA is proposing to require the following information in the prior notice identifying the following details for each article of food: 2. The submitter. FDA is proposing to require the identity of the submitter and the associated submitting firm. This information is needed so that FDA may communicate the adequacy or non-adequacy of the prior notice to the responsible party and to follow up when audits, inspections, or enforcement are necessary. Generally, for all firms that the proposed rule requires to be identified in a prior notice (submitter, importer, owner, consignee, manufacturer, growers (if known), shipper), FDA is proposing that the prior notice include the firm's name, address, phone number, fax number, and e-mail address, and if the firm is required to register a facility associated with the article of food, the facility's registration number. The registration requirement is contained in a separate provision of the Bioterrorism Act (section 305). FDA believes that it needs identifying information in addition to the [[Page 5436]] registration number (if one exists) to minimize the chance that typographical errors in registration numbers will lead to prior notices being considered incorrect and thus inadequate. We are considering designing the Prior Notice System to require at least one ``confirmatory'' data element (firm name or city or country) in addition to the registration number to allow for validation edits before automatically filling in the remaining data fields. The phone and fax numbers and e-mail address are required (if they exist) so that FDA can communicate with the firm, if necessary. If the firm does not have a fax number or e-mail address, the prior notice submission should declare this. FDA plans to develop its Prior Notice System to allow submitters to repeat information already entered in the submission where appropriate (e.g., where the submitter is also the importer and consignee of the article). b. The U.S. Customs entry type. FDA is proposing to require the submission of the U.S. Customs entry type associated with the article of food being imported or offered for import (proposed Sec. 1.288(b)). Some examples of types of entries are Consumption entries, Warehouse entries, Temporary Importation Bond entries, Transportation for Exportation Bond entries, Trade Fair entries, mail entries, and baggage entries. Each of these types has a pre-designated U.S. Customs entry type code. That code must be submitted in the prior notice. This information will tell us if the article of food is intended for consumption in the U.S. or is intended for export or other uses. We need this information for proper screening of the information and identification of the appropriate articles for inspection. FDA also believes that submission of this information is critical for matching the prior notice to the corresponding U.S. Customs entry in order to assess the adequacy of the prior notice when shipments arrive and are presented for review. c. The U.S. Customs ACS entry line number or other U.S. Customs identification number. FDA is proposing to require the submission of the U.S. Customs ACS entry line number, consisting of the entry number, the U.S. Customs ACS line number, and the FDA entry line number, which will be associated with the entry of the food for U.S. Customs purposes (proposed Sec. 1.288(c)). For each entry number, there may be one or more U.S. Customs ACS lines and for each U.S. Customs ACS line there may be one or more FDA lines. For example, U.S. Customs entry number 0123456789-0 may identify an entry of peppers; the U.S. Customs ACS line 123456789-0-001 may identify fresh peppers; and the FDA entry line 0123456789-0-001-001 may identify fresh sweet peppers and FDA entry line 0123456789-0-001-002 may identify fresh hot peppers. If the article of food is not intended for consumption entry, FDA is proposing to require submission of the U.S. Customs identification number associated with that type of entry. Some examples of other types of entries are Warehouse entries, Temporary Importation Bond entries, Transportation for Exportation Bond entries, and Trade Fair entries. FDA believes that this information is necessary for proper screening of the information and identification of the appropriate articles for inspection. FDA also believes that submission of this information is critical for matching the prior notice to the corresponding U.S. Customs entry in order to assess the adequacy of the prior notice when shipments arrive and are presented for review. FDA believes that these numbers can be obtained by the proposed deadline for prior notice. We seek comment on this issue. d. The location where the food is being held under proposed Sec. 1.278, if applicable. FDA is proposing to require that, if the article of food has been refused admission due to inadequate prior notice and thus is required to be held at the port of entry or in a secure facility, the submitter of the prior notice must inform FDA both that the article is under hold, and the location where the shipment is being held (proposed Sec. 1.288(d)). Additionally, FDA is proposing to require the date that the article will arrive at that location as well as the identification of a contact at that location. This information is necessary to ensure FDA can locate the food for inspection and to ensure that the hold requirement is being compiled with. e. The product identity. Section 801(m)(1) states that a prior notice must contain the identity of the article of food being imported or offered for import. FDA is proposing the following data elements to ensure that each prior notice adequately and completely identifies the food being imported or offered for import. i. The complete FDA product code. FDA is proposing to require the submission of the complete FDA product code as an element of the identity of the product (proposed Sec. 1.288(e)(1)(i)). The FDA product code is a unique code currently used for classification and analysis of merchandise. The FDA product code is currently available via the Internet at www.accessdata.fda.gov/scripts/ora/pcb/pcb.htm as a ``buildable'' code which is used to describe the food by industry, industry class, subclass, container/packaging, process, and specific product. We will work with the developers of the FDA prior notice system to ensure that there is a link from that system to the product code builder. We are working with the developers to design the link to the product code builder which will allow the product code selected to be automatically pasted back to the Prior Notice Screen. We will also design the system so that if the submitter already knows the product code, it can be entered directly into the Prior Notice Screen. The FDA product code for canned tuna fish is 16AEE45, which translates as 16= fishery/seafood products, A= fish, E= subclass metal (cans), E= commercially sterile, 45= tuna. The filer currently submits the FDA product code to U.S. Custom's ACS when entry is made; it subsequently is transmitted to FDA's OASIS for each entry line. FDA is proposing that if all of the information concerning the product identity exists by noon of the calendar day before the article will arrive at the port of entry, it must be included in the prior notice and the prior notice may not be subsequently amended. (Proposed Sec. 1.288(e)(2)). If any of the product identity information does not exist by the deadline, the information that does exist must be provided to FDA, and the submitter must indicate that it will amend the prior notice. FDA identifies the conditions appropriate for amendments related to product identity in proposed Sec. 1.290. FDA notes that, in determining whether the information exists, the standard set out in the proposed rule is not whether the submitter knows the information when filing the prior notice, but whether the information could be known by the submitter by the noon deadline. In the discussion of proposed Sec. 1.289, we describe under what circumstances we think complete product identity will not exist. FDA solicits comment on this standard and whether it is sufficiently flexible to achieve our goals. ii. The Common or usual or market name. FDA is proposing to require the submission of the common or usual or market name of the article of food as an element of the identity of the product (proposed Sec. 1.288(e)(1)(ii)). This is a description, in common terms, detailed enough to allow the kind of product to be identified. (See 21 CFR Sec. 102.5 for additional information about common or usual names.) The filer currently submits the common or usual or market name to U.S. Custom's ACS when entry [[Page 5437]] is made, and it subsequently is transmitted to FDA's OASIS for each entry line. This information is necessary to confirm the accuracy of the product code. iii. The trade or brand name. FDA is proposing to require the submission of the trade or brand name of the article of food, if it is different than the common or usual or market name, as an element of the identity of the product (proposed Sec. 1.288(e)(1)(iii)). For example, the brand name of canned tuna would be XYZ brand tuna. This information is necessary to ensure that FDA knows the brand identity of the product, which is often a critical piece of information when making inspection decisions. The filer currently submits the trade or brand name to U.S. Custom's ACS when entry is made, and it subsequently is transmitted to FDA's OASIS for each entry line. iv. The quantity. FDA is proposing to require the submission of the quantity of food described from smallest package size to largest container as an element of the identity of the product (proposed Sec. 1.288(e)(1)(iv)). The number of container units and units of measure are to be submitted in decreasing size of packing unit (starting with the largest). Some examples of quantity descriptions are: 100 cartons of 48/6 oz. cans each of tuna; 100 pallets of 2/100 lb. totes each of frozen tuna loins for a total of 20,000 pounds; 100 pallets of 2/100 lbs. cartons each of dehydrated pig ears for a total of 20,000 lbs.; and 100 cartons of 20 lbs. of fresh watermelons each for a total of 2000 lbs. The filer currently submits the quantity of each line entry to U.S. Custom's ACS when entry is made, and it subsequently is transmitted to FDA's OASIS. FDA requests comment on whether changes in quantity will occur after the deadline for prior notice and, if so, how commonly changes occur and how significant the changes usually are. v. The lot or code numbers or other identifier. FDA is proposing to require the submission of the lot or code numbers or other identifiers that are specific to the article of food, if applicable, as an element of the identity of the product (proposed Sec. 1.288(f)(1)(v)). These numbers are the identification number or code of a production lot and are needed to more specifically identify a product. Currently, there may be more than one identifier represented in an entry line. The prior notice system will be developed to accept more than one lot identifier per article. f. The manufacturer. As provided for in section 801(m)(1), FDA is proposing to require the submission of the identity of the manufacturer of each article of food (proposed Sec. 1.288(f)). The filer currently submits the identity of the manufacturer to U.S. Custom's ACS when entry is made, and it subsequently is transmitted to FDA's OASIS. g. The growers, if known. As required by section 801(m)(1), FDA is proposing to require the submission of the identity of all growers of each article and the growing location if different from the grower's business address, if known at the time of submission of the prior notice (proposed Sec. 1.288(g)). If the submission is amended, the proposed rule provides that the identity of all growers must be provided if known at the time of the amendment (proposed Sec. 1.290(d)). FDA wants to emphasize that section 801(m)(1) of the act states that grower information must be submitted if it is known. Thus, this information is not optional: if it is known, it must be submitted. If a product is sourced from more than one grower, the prior notice must provide the identification of all growers, if known. The FDA Prior Notice System will be developed to accommodate submission of up to three different growers. FDA solicits comments on two particular aspects of the statutory requirement that the grower be identified. First, does the act give FDA any flexibility to exempt or otherwise treat differently so-called processed foods produced with products from more than one grower? Second, does the term ``grower'' include a harvester or collector of wild products, e.g., some fish and botanicals? h. The originating country. As provided for in section 801(m)(1), FDA is proposing to require the submission of the identity of the originating country of the article of food (proposed Sec. 1.288(h)). This term is defined in proposed Sec. 1.277(c)(2). i. The shipper. As provided for in section 801(m)(1), FDA is proposing to require the submission of the identity of the shipper of the article of food (proposed Sec. 1.288(i)). FDA considers the shipper to be the person who arranges for a shipment to get to its first destination in the United States. The shipper typically is responsible for initiating the bill of lading or airbill covering the transportation of the article by the carrier. The shipper is usually a foreign firm that is located or maintains an address in the country from which the article was shipped. The shipper is typically not the carrier. j. The country of shipping. As provided for in section 801(m)(1), FDA is proposing to require the submission of the identity of the country from which the article of food was shipped (proposed Sec. 1.288(j)). This term is defined in proposed Sec. 1.277(c)(3). k. Anticipated arrival information. i. The anticipated port of entry. As provided for in section 801(m)(1), FDA is proposing to require the submission of the anticipated port of entry at which the article of food will arrive in the United States (proposed Sec. 1.288(k)(1)(i)). ``Port of entry'' is defined in proposed Sec. 1.277(c)(5). ii. The anticipated date of arrival. FDA is proposing to require the submission of the anticipated date when the article of food will arrive at the port of entry in the United States (proposed Sec. 1.288(k)(1)(ii)). FDA believes that this information is necessary to plan inspections. iii. The anticipated time of arrival. FDA is proposing to require the submission of the anticipated time when the article of food will arrive at the port of entry in the United States (proposed Sec. 1.288(k)(1)(iii)). FDA believes that this information is necessary to plan inspections. FDA is proposing to require the prior notice to be updated if any of the anticipated arrival information changes after the submission of the prior notice (proposed Sec. 1.288(k)(2)). Updates are necessary so FDA can change its plan when anticipated arrival information changes. The conditions appropriate for updates are provided in proposed Sec. 1.294. l. The port where entry will be made for U.S. Customs purposes. FDA is proposing to require the submission of the identification of the port where entry will be made for U.S. Customs purposes (proposed Sec. 1.288(l)). Often, this port will be different than the port where the article of food arrived in the United States. FDA believes that this information is necessary to facilitate communication with U.S. Customs and FDA field offices concerning the adequacy of the prior notice. It is also necessary to enable FDA to coordinate resources for inspections, examinations, or sampling. m. The anticipated date of U.S. Customs entry. FDA is proposing to require the submission of the anticipated date of entry for U.S. Customs purposes (subpart 1.288(m)). FDA believes that this information is critical to enable it to allocate resources for inspecting imported food shipments and efficient communication with and between U.S. Customs and FDA field offices. n. The importer, owner, and consignee. Under section 801(m)(2)(B)(i) and proposed Sec. 1.278(e)(2), food that is offered for import with no or inadequate notice may not be delivered to the [[Page 5438]] importer, owner, or consignee. Thus, FDA is proposing to require their identities so that FDA knows who they are and can take steps to ensure that food refused admission under section 801(m) is not delivered to them illegally. FDA is proposing that only one importer, owner, and consignee can be identified for each prior notice. Under most circumstances, FDA believes the importer will be the importer of record for U.S. Customs Entry Summary purposes. o. The carrier. FDA is proposing to require the identity of each carrier or transporter firm that transports the article of food from the country from which the article was shipped into the United States. This identification includes the submission of the Standard Carrier Abbreviation Code. Identification of the carrier is necessary to enable FDA and U.S. Customs to identify the appropriate article of food for inspection or holding when the food arrives in the United States. FDA notes that a carrier typically is a different firm than the shipper. The filer currently submits carrier information to U.S. Custom's ACS when entry is made, and it subsequently is transmitted to FDA's OASIS. 5. What Changes are Allowed to a Prior Notice After it Has Been Submitted to FDA? (Proposed Sec. 1.289) FDA is allowing additional information to be supplied once a prior notice is submitted in two situations. FDA believes that under the standards in section 801(m)(2)(A) for establishing the timeframes for submission of prior notice, amendments are appropriate when complete product identity will not exist by the deadline for the submission of a prior notice. As described in more detail elsewhere, FDA believes that these situations largely involve fresh produce and fish harvested in countries close to the United States, e.g., Mexico and Canada. Second, FDA believes that it must have accurate arrival information in order to ensure it can inspect an article or take other appropriate action. In the event that other information in the prior notice must be changed, no amendment or update is permitted. The submitter must cancel the initial prior notice and submit a new one. 6. Under What Circumstances Must You Submit a Product Identity Amendment to Your Prior Notice After You Have Submitted It to FDA? (Proposed Sec. 1.290) FDA is proposing that the prior notice must be amended if all information about the identity of the food required by proposed Sec. 1.288(e)(1) does not exist by noon of the calendar day before the day of arrival. The submitter must indicate his or her intention to amend the information at the time the initial prior notice is submitted. FDA is proposing that the prior notice may be amended only once. FDA is limiting the number of times a prior notice may be amended because FDA believes that it would be an inefficient use of its review and planning resources to address intermediate, still incomplete submissions. FDA wants to encourage submissions that are as complete as possible to allow FDA to deploy its resources effectively. FDA requests comment on our proposal to restrict the number of amendments to one. FDA is proposing that only the information required by proposed Sec. 1.288(e)(1) and indicated in the initial prior notice as being subject to amendment may thereafter be amended. FDA is proposing to limit the information that may be amended in a prior notice to the product identification information required in proposed Sec. 1.288(e)(1). As we explain elsewhere in this preamble, we believe that in most situations, complete product identity will exist by noon of the calendar day before the day of arrival. However, we recognize that in certain limited circumstances, such as wild-caught fresh fish and fresh produce with many varieties that are caught or harvested close to the time of shipment in locations close to the U.S. border, this specificity may not be known by noon of the calendar day before the day of arrival. FDA is proposing that the last two digits of the FDA product code and other product identity information that provides the specific identity of the article may be amended when this information does not exist by the prior notice deadline. For example, there may be occasions when an entry of lettuce is ordered and prior notice is submitted by noon the calendar day prior to arrival, but the specific variety of lettuce that will be shipped does not exist because the growers that supply the shippers have not yet harvested their crops. At or before the time when the article is placed in the carrier for shipment, however, the complete identity of the article exists and the prior notice must be amended to identify the specific type of lettuce (e.g., romaine or leaf). A prior notice may not be amended to change completely the identity of the article, e.g., a prior notice identifying the food as lettuce may not be amended to identify the food as pears. If an article of food is not covered by a specific FDA product code, e.g., a root vegetable not more specifically described by numerical code in the FDA product code builder, then the last two numbers of the product code may be provided as ``99'' which means root vegetables, not elsewhere classified. However, this prior notice cannot be amended later to identify the product as carrots because, even though carrots are root vegetables, there is an FDA product code that is specific to carrots and thus it should have been used in the initial notice. We plan to design the prior notice system so that it will not acknowledge that a prior notice submission is completely filled out if it does not contain a seven-digit product code. The system will be designed to provide, where appropriate, a reminder about the need for amendment with the electronic message acknowledging receipt of the initial submission. The information that may be amended also includes the common or usual or trade name, brand name, lot or code or identification numbers, and quantity. FDA is proposing that, if the identity of the grower was not provided at the time the prior notice was submitted because it was not known at that time but the identity is known at the time of the amendment, the amendment must include information that identifies all known growers. 7. What is the Deadline for Product Identity Amendments Under Sec. 1.290? (Proposed Sec. 1.291) FDA is proposing a 2 hour minimum deadline for amendments submitted under proposed Sec. 1.291, or updates submitted under proposed Sec. 1.294. FDA believes that the deadline will allow submitters to provide FDA the information it needs in order to effectively assess whether a particular shipment of food needs to be investigated and if so, to ensure FDA personnel are present to do so when the food arrives at the port of entry, while allowing submitters to amend and/or update information that may not be known with exact certainty by noon of the prior calendar day. FDA considered the type of food in proposing the deadline for amendment to the product identity and updates to the anticipated arrival information. FDA believes that product identity amendments are most likely to be needed to accommodate articles imported by land or air rather than water arrivals. FDA also recognizes that this limitation on amendments may also affect the practice of ``topping off a container'' by filling unused space in the container or truck bed with last-minute shipments of other food products not covered by prior notice. [[Page 5439]] FDA notes that under its amendment proposal ``topping off'' with the article of food that is already the subject of a prior notice would be allowed. To the extent ``topping off'' with non-food items occurs, this practice would not be affected. FDA believes, however, that this limitation is dictated by the Bioterrorism Act's requirements and moreover is necessary to ensure that FDA has adequate notice of all FDA-regulated food imports such that FDA can deploy its resources effectively. In this case, a separate prior notice would be required for these foods not already covered by a prior notice. FDA solicits comment how common ``topping off'' is and the quantities of food involved. 8. How Do You Submit a Product Identity Amendment or An Arrival Update to a Prior Notice? (Proposed Sec. 1.292) FDA is proposing to limit the way in which a prior notice may be amended or updated. FDA is proposing that a product identity amendment or an arrival update to a prior notice may be submitted only in the same manner as an initial prior notice; that is, electronically to FDA through FDA's Prior Notice System. Only the information concerning product identity and grower identity can be electronically amended under proposed Sec. 1.290. Only the information concerning the anticipated location, date, and time of arrival and grower identity can be electronically updated under proposed Sec. 1.294. FDA proposes to design its Prior Notice System to require identification of the type of submission (Initial, Amended, Updated) and to be capable of differentiating amongst them. If FDA's Prior Notice System is unable to receive submissions electronically, amendments or updates may be communicated directly to FDA using a printed version of the Prior Notice Screen, and delivered either in person, by fax, or by e-mail to the FDA field office with responsibility over the geographical area in which the port of entry is located, as provided by proposed Sec. 1.287(b). If the identification of the anticipated port of entry is being updated, and the FDA system is down, the updated printed version of the Prior Notice Screen should be delivered to the FDA field office with responsibility over the port covered by the initial submission. FDA intends to issue guidance for communication between the field office receiving the initial prior notice and the field office covering the updated port of entry. 9. What Are the Consequences If You Do Not Submit a Product Identity Amendment to Your Prior Notice? (Proposed Sec. 1.293) FDA is proposing that if a U.S. importer or U.S. purchaser, or their U.S. agent, informed FDA in a prior notice that the submission would be amended, but subsequently does not amend it appropriately and within the applicable timeframe, then the prior notice is inadequate for the purposes of proposed Sec. 1.278(a). By telling FDA that the prior notice will be amended they are telling us that it is incomplete. We therefore will be waiting for complete information upon which to make our inspection decision. Without complete product identity, FDA cannot complete the assessment of whether to inspect or take other action when the food arrives in the United States. The consequences of inadequate prior notice are the same as the consequences for failing to provide prior notice; the food shall be refused admission and held at the port of entry unless FDA directs its removal to a secure facility. The consequences are more fully described previously in the discussion of proposed Sec. 1.278. 10. What Must You Do If the Anticipated Arrival Information (Required Under Sec. 1.288(k)(1)) Submitted in Your Prior Notice Changes? (Proposed Sec. 1.294) FDA is proposing to require the submitter to update anticipated arrival information submitted in a prior notice, if the anticipated information changes after the submission. The types of information FDA expects may change between submission of prior notice and actual importation are the date, time, and location of arrival. Although the statute requires only anticipated port of entry, accurate, up-to-date arrival information (if different) is necessary for FDA field offices to reschedule inspections. FDA thus believes that it has the authority to require this information. If anticipated arrival information submitted in a prior notice changes, FDA is proposing that the submitter be required to provide the new port of entry (proposed Sec. 1.294(a)(1)), and the new time of arrival in an update electronically filed in the Prior Notice System (proposed Sec. 1.294(c)). FDA is proposing that if the time of arrival is expected to be more than 1 hour earlier (proposed Sec. 1.294(a)(2)) or more than 3 hours later (proposed Sec. 1.294(a)(3)) than the anticipated time of arrival, the time of arrival must be updated. FDA is proposing that, if the identity of the grower was not provided at the time the prior notice was submitted and that identity is known at the time of the update, the amendment must include information that identifies growers (proposed Sec. 1.294(b)). The FDA Prior Notice System will be designed to accommodate updates. As stated above, FDA is proposing to design its Prior Notice System to require identification of the type of submission (Initial, Amended, Updated) and to be capable of differentiating amongst them. FDA is proposing to limit the time within which a prior notice may be updated. The proposed regulation would require updated information to be submitted in accordance with the deadline for amendments under proposed Sec. 1.291, that is, an update to a prior notice must be submitted 2 hours prior to arrival. IV. Analysis of Economic Impacts A. Preliminary 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 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. The Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121) defines a major rule for the purpose of congressional review as having caused or being likely to cause one or more of the following: An annual effect on the economy of $100 million; a major increase in costs or prices; significant adverse effects on competition, employment, productivity, or innovation; or significant adverse effects on the ability of U.S.-based enterprises to compete with foreign-based enterprises in domestic or export markets. In accordance with the Small Business Regulatory Enforcement Fairness Act, OMB has determined that [[Page 5440]] this proposed rule, when final, will be a major rule for the purpose of congressional review. 1. Need for Regulation Section 307 of the Bioterrorism Act (Public Law 107-188), requires advance notice of all food imported or offered for import into the United States. If FDA fails to issue a final regulation by December 12, 2003, section 307 of the Bioterrorism Act provides for a default minimum period of advance notice that is not fewer than 8 hours and not more than 5 days before an article of food is imported or offered for import into the United States. This regulation is needed to implement the statutory provisions. 2. The Reason for the Regulation 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 producers 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 would probably be prohibitive for any single firm or third party organization. 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 imported foods are entering the United States, where they came from, and when they will arrive. 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 deter and respond to deliberate threats to the nation's food supply as well as to other food safety problems. 3. Proposed Rule Coverage This proposed rule would apply to all FDA-regulated food for human and animal consumption imported or offered for import into the United States with the exception of food carried in a traveler's personal baggage for personal use. As required by the Bioterrorism Act, the notification must provide the identity of the article, the identity of importer, manufacturer, shipper, and grower (if known), the originating country, the country from which the article was shipped, and the anticipated port of entry. In addition, the notification must provide the identity of the person who submits the prior notice, the owner, the consignee, the carrier, the U.S. Customs entry number, anticipated time and date of arrival, and, if the food has already been refused admission and required to be held, the location where it is held. A growing percentage of food consumed in the United States is imported; the value of food imports is now close to $50 billion per year. (Ref. 2) In the aftermath of the terrorist attacks on the United States on September 11, 2001, Congress determined that the existing requirements for the importation of FDA-regulated food products were insufficient to protect the safety of the U.S. food supply. Before September 11, 2001, FDA had approximately 150 personnel in the field processing imported food entries based on FDA's programs and assignments, all using guidance documents, such as Import Alerts, Compliance Policy guides, and other manuals. After September 11, 2001, FDA hired three hundred additional counterterrorism Consumer Safety Officers primarily for food imports. This step alone is insufficient to ensure the safety of food imported or offered for import into the United States. When deciding which imported food shipments to physically inspect and sample, FDA inspectors consider, among other things, compliance programs, assignments, import alerts, and whether the product is a low- risk or high-risk food. New requirements imposed by Section 307 of the Bioterrorism Act will require importers to give notice to FDA of incoming articles of food before the shipment reaches a U.S. border, rather than when the shipment arrives at the U.S. border or as part of the official U.S. Customs entry. Requiring prior notice of imported food shipments will allow FDA inspectors to have earlier information on foods that are coming into the United States, which will enable FDA to better deploy its inspection resources and to use this increased amount of information in cases where FDA action against the food is warranted, e.g., a credible threat to the food supply is suspected. Number of Establishments Affected Using 2001 FY information from FDA's OASIS system (industry codes 02 through 52, 54, and 70 through 72), FDA has determined that there are approximately 77,427 importers and consignees who receive imported food shipments. Under the proposed rule, the U.S. importers or U.S. purchasers (or their agents) of the products will be responsible for submitting a timely and accurate prior notice to FDA. Using information from the OASIS system, FDA was also able to determine that there are approximately 100,000 foreign manufacturers (of a finished product). Foreign manufacturers are not responsible for submitting prior notice, and therefore, while not unaffected by prior notice, foreign manufacturer costs associated with this proposed rule will be assumed to be spread across the supply chain and therefore are not directly addressed in this analysis. FDA requests information on the size of establishments likely to be affected by this rule, including the foreign manufacturers of food products and the importers and consignees receiving the imported food shipments. New and closing importer establishments In addition to the U.S. importers currently in existence, in future years some new import businesses will open and some existing import businesses will close. According to the Small Business Administration Office of Advocacy, in 2001 about 10 percent of all businesses were new and 10 percent of all businesses closed. These new importers would have to become familiar with the FDA prior notice system, and some may need to obtain computer equipment and Internet access to comply with prior notice requirements. Baseline FDA considers the baseline for this analysis the current state of the world, pre-statute, and we assume this baseline has zero costs and benefits. [[Page 5441]] Current State of The World The majority of the information that will be required by section 307 of the Bioterrorism Act now is currently supplied at the time of entry by a U.S. Customs broker or self-filer, and usually is submitted electronically. Although importers already must notify U.S. Customs of entries, the Bioterrorism Act requires notification to FDA prior to the food shipment reaching the U.S. border or point of crossing. This requirement will change the current practice of notifying U.S. Customs and then subsequently FDA upon arrival (and as long as 15 days past arrival based on the time the Consumption Entry may be filed with U.S. Customs) at a U.S. port of entry. FDA's OASIS reporting system shows that approximately 2.5 million food entry lines were imported via sea and air transportation in FY 2001. Information on food-importing practices indicates that U.S. Customs and FDA are notified of imported food products traveling to the United States by vessel before the products' arrival. Vessels can notify U.S. Customs months before the actual shipping date, but U.S. Customs will not certify the entry until 5 days before the ship is expected to dock at a U.S. port. FDA is notified of the shipment then, through U.S. Customs, as early as 5 days before the vessel's arrival at a U.S. port. Importers bringing food products in by airplane can notify U.S. Customs of their intent to import food into the United States no more than 24 hours before the scheduled flight departure time, but cannot certify their cargo manifests with U.S. Customs until the plane has taken off from the airport of the exporting country (``wheels-up''). FDA is then notified through U.S. Customs of the plane's scheduled arrival. U.S. Customs has informed FDA that they receive flight information for 87.6 percent of the flights at time of ``wheels up.'' FDA's OASIS reporting system shows that around 2.2 million entry lines of food were imported into the United States via ground transportation in FY 2001. The usual practice today for food brought in by truck or train (mainly products coming directly from Canada or Mexico) is not to notify U.S. Customs and FDA until their actual arrival at a U.S. border or point of entry. (Filers can certify their entry data up to 24 hours before arrival at the border, but U.S. Customs does not give a ``screening response'' to the entry until actual arrival.) Even though these importers most likely have the invoices and orders for these products in advance, they do not currently notify U.S. Customs and FDA until their arrival at the border. 4. Regulatory Options Considered We analyzed five options for a prior notice regulation: 1. Current state of the world, pre-statute (baseline). 2. Prior notice time of 4 hours or less; electronic submission of information. This option would require the persons responsible for all food imported or offered for import into the United States to notify FDA of their intent to import articles of food through a United States based-importer or purchaser (or their U.S.-based agent). This option applies to all imported foods, except for food exclusively regulated by USDA and food imported with personal baggage for personal use, regardless of entry type or mode of transportation used for import. Submission of prior notice information (including addresses of all importers, owners, manufacturers, consignees, identity and quantity of food, originating country, country of shipping, date, expected time of arrival, expected port of entry, and grower if known) must be electronic. 3. Require all components of option 2, but lengthen the minimum prior notice time to 8 hours (statutory self-executing provision). 4. Require all components of option 2, but lengthen the prior notice time to noon of the calendar day prior to crossing the U.S. border. 5. Require all components of option 4, but allow some prior notice information to be revised prior to arrival at a U.S. port (proposed option). Option one: Current state of the world, pre-statute. Having no prior notice requirements is option 1 in our analysis. The statute requires that FDA issue prior notice regulations, so this is not a legally viable option. However, OMB cost-benefit analysis guidelines recommend discussing statutory 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. This option will serve as the baseline against which other options will be measured for assessing costs and benefits. Option two: Minimum prior notice timeframe of 4 hours or less; electronic submission of information; any change in information requires resubmission. Costs: The party responsible for transmitting prior notice to FDA will incur administrative and notification costs to comply with this proposed regulation. The responsible party likely will become aware of the prior notice requirement through normal business activities: reading the trade press, reading industry news, FDA outreach, trade outreach, or conversation with other business operators who also must comply with prior notice. Once the U.S. importer or U.S. purchaser of the food becomes aware of the regulation, he or she will need to learn the requirements of the regulation, which will require finding a copy of the prior notice requirements and reading and understanding them. To become familiar with the requirements for this rule, FDA estimates that it initially will take responsible parties with Internet access about 1 hour to research the prior notice requirements, and responsible parties without readily available Internet access about 2 hours to research the requirements. Comments from both the Produce Marketing Association (PMA) and the National Food Processors Association (NFPA) indicate that about 96 percent of the industry has readily available Internet access. FDA used wage rates from the Bureau of Labor Statistics National Compensation Survey (Ref. 3), doubled to include overhead costs, to estimate the cost of the time to research the prior notice requirement. For an administrative worker, the cost per hour is $25.10: for a manager, $56.74. FDA assumes that only the administrative worker's time will be used to research the prior notice requirements. As shown in table 1, total costs of this research activity for firms with Internet access are $1,865,683; for firms without Internet access, the total research costs are $155,469. Given the 10 percent turnover in business reported by the Small Business Administration, FDA expects 10 percent of the total search costs to be incurred in each subsequent year after prior notice is in effect as new firms enter the industry. This cost and the present value of this cost, using a 7 percent discount rate, are also shown in table 1. Table 1.--Cost to Research Prior Notice ------------------------------------------------------------------------ Cost to Research Prior Notice With Internet Access No Internet Access ------------------------------------------------------------------------ Number of Firms 74,330 3,097 ------------------------------------------------------------------------ Administrative wage rate per $25.10 $25.10 hour (including overhead) ------------------------------------------------------------------------ [[Page 5442]] Total time to research 1 hour 2 hours regulation ------------------------------------------------------------------------ First year one-time research $1,865,683 $155,469 costs ------------------------------------------------------------------------ Annual one time research $186,568 $15,547 costs for new firms entering industry in subsequent years ------------------------------------------------------------------------ Present value of cost of $2,665,257 $222,100 firms entering the industry ------------------------------------------------------------------------ Total research cost burden $4,530,940 $377,569 ------------------------------------------------------------------------ All prior notices must be submitted electronically, so we will assume that the 3,097 responsible parties without Internet access will have to purchase a computer and gain Internet access to actually transmit the information via a prior notice screen. This one-time computer cost and a recurring Internet access cost for these facilities of $7,559,777 are shown in table 2. Again, given a 10 percent turnover rate for businesses in the import industry, we expect there to be new businesses in the future that may need to purchase electronic transmitting capabilities. However, it becomes more unlikely with the passage of time that persons will be purchasing this computer equipment solely to comply with prior notice. Therefore, a present value of this cost is not calculated. Table 2.--Facilities and Responsible Parties Without Initial Internet Access Number of Facilities 3,097 ------------------------------------------------------------------------ Computer equipment cost per facility $2,000 ------------------------------------------------------------------------ Annual cost of Internet access ($20 per month $240 x 12) ------------------------------------------------------------------------ Search costs for equipment and access ($25.10 $201 x 8 hours) ------------------------------------------------------------------------ Total first year one time cost of electronic $7,559,777 transmitting capacity ------------------------------------------------------------------------ Annual one time cost of electronic $755,978 transmitting capacity for firms entering industry in subsequent years ------------------------------------------------------------------------ Total electronic transmitting costs $8,315,755 ------------------------------------------------------------------------ FDA used OASIS information to find out that 4.7 million entry lines for food were imported into the United States in FY 2001. An ``entry line'' is an FDA term used by the OASIS reporting system, which refers to a line on an invoice that reflects a certain article specific to manufacturer or packaging: e.g., 100 cases containing 48 six-ounce cans of tuna. This 4.7 million entry line total includes the 2.2 million entry lines for food that came into the United States in 2001 via ground transportation (trucks and trains) and the 2.5 million entry lines for food that came into the United States in 2001 via airplane and vessel. The entry line totals for FY 2001 do not include food brought into the United States as personal baggage with the food intended for sale or other distribution, not for personal use. Under the proposed rule, persons bringing food into the United States in this manner, however, are required to submit prior notice to the FDA. FDA does not know how common the practice is of importing food for non-personal use as part of personal baggage. For FY 2002, there were only 18 entry lines associated with food imported as U.S. mail and 486 food entry lines imported by courier. FDA believes that entries of food imported as part of personal baggage but not for personal use will fall somewhere between mail and courier entries. Since any number of entries in this range is minimal as compared with the 4.7 million total OASIS entries, FDA likewise believes the costs associated with prior notice for food in personal baggage entries will be minimal and thus these costs are not included in this analysis. FDA requests comment on this assumption. According to OASIS data, the average imported entry contains 2.6 lines, which means that there are typically more than two different articles of food per import entry: e.g., 100 cases of tuna and 50 cases of canned peaches in the same shipment. A prior notice must be filed for each of the lines in an entry. U.S. Customs Form 3461, Entry and Immediate Delivery Application, OMB No. 1515-0069, is the entry document upon which information is provided to U.S. Customs by which it makes its decision to release the merchandise. The burden estimate on U.S. Customs Form 3461 for purposes of the Paperwork Reduction Act is 15.5 minutes. The FDA calculation of average time for completion of the prior notice includes verification of accuracy of the data and supervision time. FDA estimates that it will take, on average, 1 hour to prepare a prior notice each time an import entry of 2.6 lines is submitted, including the time it takes to update or amend information for each entry line as necessary. This time is an average; some prior notices will take longer than 1 hour to complete and other prior notices will take less than 1 hour to complete. FDA requests comment on the time it will take to complete a prior notice form, including the time it will take for amendments and updates to the information. This hour includes 45 minutes of an administrative worker's time to gather information to initially complete the screen and then update the information as necessary, and then 15 minutes of the manager's time to verify that the information is correct. Assuming that there is an average of 2.6 lines per entry, and each line requires a prior notice, then each line is estimated to take about 23 minutes to complete. Using the OASIS information that the average imported entry contains 2.6 lines; we can then divide the 4.7 million OASIS lines by 2.6, which results in 1,807,692 expected import entries. Table 3 shows that the annual cost of prior notice submissions based on 1,807,692 entries would be $59,689,990. Table 3.--Cost to fill out Prior Notice screens by import entry (must be electronic) Administrative worker time at $25.10 wage 45 minutes rate ------------------------------------------------------------------------ Manager time at $56.74 wage rate 15 minutes ------------------------------------------------------------------------ Administrative worker costs per entry $18.83 ------------------------------------------------------------------------ Manager costs per entry $14.19 ------------------------------------------------------------------------ Total Cost per import entry $33.02 ------------------------------------------------------------------------ FY 2001 OASIS entry total based on 4.7 1,807,692 million lines ------------------------------------------------------------------------ Total Annual Costs of all prior notice $59,689,990 screens based in lines, and including updates and amendments to the information ------------------------------------------------------------------------ FDA Costs: We assume that FDA's information technology (IT) costs for [[Page 5443]] this option and each option hereafter are the costs of developing a stand-alone, web-based, electronic system to receive prior notice information and then to respond electronically with an acknowledgement of the transmission to the submitting party. The stand-alone prior notice system will be used until U.S. Customs new automated system, ACE, becomes operational. FDA will coordinate with U.S. Customs to develop ACE to accommodate the information required by prior notice. Once ACE is operational, it will simplify prior notice transmissions. For now, building a stand-alone IT system to handle prior notice submissions will require design, development, implementation, maintenance, modernization, and upgrades. These costs include the labor hours, hardware, and software costs needed to make the prior notice system operational. Table 4 shows that FDA estimates the costs to the agency for setting up the prior notice system to be about $4.4 million. This total cost includes FDA personnel, contractor development of the hardware and software needed, industry outreach and training, and a computer firewall. Table 4.--FDA Prior notice Systems costs Hardware $500,000 ------------------------------------------------------------------------ Analysis, Design, Implementation $3,000,000 ------------------------------------------------------------------------ Software licenses and Security $500,000 ------------------------------------------------------------------------ Network Interface $200,000 ------------------------------------------------------------------------ FTEs 2 ------------------------------------------------------------------------ Cost per FTE $110,588 ------------------------------------------------------------------------ Total FTE costs $221,176 ------------------------------------------------------------------------ Total Systems Cost $4,421,176 ------------------------------------------------------------------------ Current operating practices affected: A 4-hour minimum prior notice requirement would be less likely to change current food importing practices than would a longer minimum time requirement for prior notice submission. Some comments received indicated that it would be preferable if the minimum prior notice time were set at 4 hours or less. Comments requested the shorter minimum prior notice time because the source of some food products often is close to the U.S. border, and some products are perishable. However, it is the U.S. importer or U.S. purchaser or their U.S. agent who is responsible for submitting the prior notice, and the information required in prior notice should be sufficiently fixed after the order is placed and will not depend on the location of the source of the food product. How many business practices will be affected by prior notice requirements largely depends on how early the orders for the food products are placed compared to the time by which prior notice must be submitted. Most orders for products, even for those of a perishable nature, are often placed days or weeks if not months before the actual delivery date. Therefore, if the order for the product was sent a week, or even 1 day, before the delivery date, a minimum prior notice time of 4 hours should not cause any delay in the order. FDA requests comments on this assumption. Also important in determining how business practices will be affected by the prior notice requirements is when the prior notice was submitted compared with when the shipment corresponding to that prior notice was loaded onto a vehicle. For example, if the prior notice was submitted as soon as the order was received, or even a few hours before loading the vehicle, there is a possibility that unforeseen factors, including composition of the actual shipment, may cause the prior notice information submitted to not match the actual shipment on the vehicle. However, if the prior notice is not submitted until the vehicle is actually loaded, the probability of submitting an incomplete prior notice is greatly reduced. Thus, when the order for the shipment is received, when the prior notice is submitted, and when the vehicle is loaded play large roles in how much the requirement for prior notice will affect operating practices for those importing some perishable products from Mexico and Canada. FDA requests specific information about how business practices for all operations could change as a result of the prior notice requirement. If importers have orders for perishable products from Canada and Mexico filled more than 4 hours before scheduled arrival at a U.S. border point, then the only change in business practice that should occur is when they will submit their prior notice to FDA. There will be those shipments by vehicle, however, for which the order was not received in advance of the shipping time, those shipments for which the quantity and composition of the product has changed since the time when the prior notice was submitted, and those shipments for which other changes to the information on the prior notice must be made. Importers, whose shipments fall into this ``changed'' category, must resubmit the prior notice or risk that their products will be refused admission into the United States and held if the notice is deemed inadequate. FDA does not have information on the number of ground shipments that, under this option, would need to submit or resubmit prior notice information due to a late order or a change in the information provided on the original notice. We know that changes will occur for some percentage of all prior notices; until better information is available, we will assume that 20 percent of the fresh produce and seafood being imported to the United States from Canada and Mexico would have a reason for which their original prior notice submission must be changed and resubmitted less than 4 hours before entry. FDA chooses 20 percent as the percent of prior notices that need to be submitted based on information that most orders for products are placed well in advance of the actual shipping date, most orders are filled with the exact product and quantity the customer requests, and the 4 hour prior notice entry time is minimal when compared to when the order was actually received. Depending on the entry point, 40 to 100 percent of shipments are loaded onto vehicles less than 4 hours before entry. We chose one-half of the lower percent as the percent of prior notices that would need to be resubmitted under this option. The following paragraphs and tables outline how FDA calculated a loss in product value to account for the time that fresh produce and seafood being brought by ground transportation into the United States might have to wait to cross the border due to prior notice resubmission. This wait at the border occurs if prior notice is resubmitted with revised information regarding the shipment when the shipment is closer to the border than the 4 hours required; the transporter of the shipment must wait for the minimum prior notice time to elapse before crossing the border or risk being refused entry. Table 5 of this document shows the volume of fresh, perishable produce imported into the United States from Mexico for the calendar year 2001 (Ref. 4). Produce was included in the count if it was considered `highly or very highly perishable' (Ref. 5) and if the produce was not regulated under section 8e of the Agricultural Marketing Agreement Act of 1937 (AMAA). Importers of products currently regulated by the Agricultural Marketing Agreement Act, e.g., tomatoes, avocados, oranges, are required to notify USDA at least 1 day prior to U.S. entry to make arrangements for inspection [[Page 5444]] and certification of the product they are importing. These products therefore are not included in the count because they already have business practices in place that would accommodate the prior notice period. FDA requests comments on the perishability of the produce that is used in this count. Multiplying the volume of Mexican produce that was imported into the United States in 2001 by the current U.S. border prices per pound (Ref. 6) for these products gives an estimate of wholesale revenue. Then we convert the wholesale revenue to retail revenue using the retail price mark-up on produce in the United States, which can range from 100 percent to 600 percent (Ref. 7). We will increase the wholesale revenue by 100 percent in these estimates to represent a reasonable retail price mark-up rate across produce commodities in the United States. We will reexamine our choice of the 100 percent mark-up rate in a sensitivity analysis presented later in the costs section. Assuming that perishable produce has an average life span of 7 days, we can then estimate the value of the time lost (4 hours) for 20 percent of the imports waiting to cross the border as a 2.4 percent loss (4 hours out of 168 hours) in the product's value. Applying this percent loss in value to one-quarter of the total retail revenue of imported Mexican fresh produce results in a $16,600,920 loss in produce value. Table 5.--Fresh Produce Imported From Mexico ---------------------------------------------------------------------------------------------------------------- Current Total Volume for Wholesale Price Perishable produce from Mexico 2001 (100,000 lb per lb. (Sept. Total Revenues Wholesale units) 2002) ---------------------------------------------------------------------------------------------------------------- Cucumbers 6491 0.29 188,239,000 ---------------------------------------------------------------------------------------------------------------- Peppers (all varieties) 6088 0.53 322,664,000 ---------------------------------------------------------------------------------------------------------------- Squash 4158 0.71 295,218,000 ---------------------------------------------------------------------------------------------------------------- Mangoes 3461 0.57 197,277,000 ---------------------------------------------------------------------------------------------------------------- Papaya 1587 0.45 71,415,000 ---------------------------------------------------------------------------------------------------------------- Broccoli 1138 0.65 73,970,000 ---------------------------------------------------------------------------------------------------------------- Eggplant 887 0.40 35,480,000 ---------------------------------------------------------------------------------------------------------------- Asparagus 856 1.29 110,424,000 ---------------------------------------------------------------------------------------------------------------- Sweet Corn 828 0.26 21,528,000 ---------------------------------------------------------------------------------------------------------------- Strawberries 676 0.96 64,896,000 ---------------------------------------------------------------------------------------------------------------- Beans 559 0.58 32,422,000 ---------------------------------------------------------------------------------------------------------------- Radishes 516 0.31 15,996,000 ---------------------------------------------------------------------------------------------------------------- Fruits-Other 426 2.04 86,904,000 ---------------------------------------------------------------------------------------------------------------- Vegetables-other 365 2.80 102,200,000 ---------------------------------------------------------------------------------------------------------------- Greens 298 0.48 14,304,000 ---------------------------------------------------------------------------------------------------------------- Spinach 197 1.375 27,087,500 ---------------------------------------------------------------------------------------------------------------- Green Peas 129 2.20 28,380,000 ---------------------------------------------------------------------------------------------------------------- Okra 112 0.80 8,960,000 ---------------------------------------------------------------------------------------------------------------- Berries-misc. 78 1.67 13,026,000 ---------------------------------------------------------------------------------------------------------------- Raspberries 32 4.40 14,080,000 ---------------------------------------------------------------------------------------------------------------- Artichokes 23 1.50 3,450,000 ---------------------------------------------------------------------------------------------------------------- Mushrooms 7 1.60 1,120,000 ---------------------------------------------------------------------------------------------------------------- Endive 4 0.37 148,000 ---------------------------------------------------------------------------------------------------------------- Escarole 2 0.37 74,000 ---------------------------------------------------------------------------------------------------------------- Wholesale Value ................ ................ $1,729,262,500 ---------------------------------------------------------------------------------------------------------------- Retail Value ................ ................ $3,458,525,000 ---------------------------------------------------------------------------------------------------------------- 2.4% reduction in value for 20% of the products ................ ................ $16,600,920 ---------------------------------------------------------------------------------------------------------------- [[Page 5445]] We repeat the exercise outlined above in table 5 for Canada, as shown in table 6. Again, until FDA acquires updated information, we will assume that Canadian produce growers use business practices that are similar to those used by Mexican growers. FDA solicits comments on this assumption. While FDA acknowledges that their business practices may be different in some ways, it is possible that Canadian produce growers will also have to adjust business practices so that submitters can comply with the prior notice requirement. We seek comment on this issue. As with the Mexican produce, only Canadian produce that is highly or very highly perishable and did not fall under the purview of the Agricultural Marketing Agreement Act is included in table 6. We again calculate the 2.4 percent loss in product value due to the importer having to resubmit prior notice for 20 percent of the Canadian imported fresh produce. This loss in product value due to the 4-hour wait time totals $1,928,765. Table 6.--Fresh Produce Imported From Canada ---------------------------------------------------------------------------------------------------------------- Current Total Volume for Wholesale Price Perishable Produce from Canada 2001 (100,000 lb per lb. (Sept. Total Revenues Wholesale units) 2002) ---------------------------------------------------------------------------------------------------------------- Peppers 753 0.30 22,590,000 ---------------------------------------------------------------------------------------------------------------- Cucumbers 627 0.145 9,091,500 ---------------------------------------------------------------------------------------------------------------- Blueberries 401 1.42 56,942,000 ---------------------------------------------------------------------------------------------------------------- Mushrooms 373 1.55 57,815,000 ---------------------------------------------------------------------------------------------------------------- Lettuce-Other 243 0.50 12,150,000 ---------------------------------------------------------------------------------------------------------------- Raspberries 89 2.78 24,742,000 ---------------------------------------------------------------------------------------------------------------- Broccoli 88 0.72 6,336,000 ---------------------------------------------------------------------------------------------------------------- Cherries 37 1.30 4,810,000 ---------------------------------------------------------------------------------------------------------------- Sweet Corn 36 0.22 792,000 ---------------------------------------------------------------------------------------------------------------- Squash 27 0.17 459,000 ---------------------------------------------------------------------------------------------------------------- Spinach 24 1.30 3,120,000 ---------------------------------------------------------------------------------------------------------------- Radishes 11 0.50 550,000 ---------------------------------------------------------------------------------------------------------------- Endive 9 0.17 153,000 ---------------------------------------------------------------------------------------------------------------- Beans 7 0.50 350,000 ---------------------------------------------------------------------------------------------------------------- Strawberries 5 0.575 287,500 ---------------------------------------------------------------------------------------------------------------- Pears 4 0.39 156,000 ---------------------------------------------------------------------------------------------------------------- Green Peas 3 1.60 480,000 ---------------------------------------------------------------------------------------------------------------- Greens 2 0.30 60,000 ---------------------------------------------------------------------------------------------------------------- Eggplant 1 0.29 29,000 ---------------------------------------------------------------------------------------------------------------- Wholesale Value ................ ................ $200,913,000 ---------------------------------------------------------------------------------------------------------------- Retail Value ................ ................ $401,826,000 ---------------------------------------------------------------------------------------------------------------- 2.4% reduction in value for 20% of the products ................ ................ $1,928,765 ---------------------------------------------------------------------------------------------------------------- We used the same logic for seafood as we did for produce to account for the possibility of having to resubmit prior notice, i.e., a change in the quantity of seafood in the shipment made after the original notice was submitted, less than 4 hours before scheduled entry. We will use the reduction in the value of perishable imported seafood to account for the cost of a wait at the border while prior notice is resubmitted. We used information from the annual imported seafood statistics published by the National Marine Fisheries Service (Ref. 8) to estimate the weight and wholesale value in dollars of all fresh, perishable seafood products imported from Mexico and Canada. As we did for fresh produce, we mark-up the wholesale price of the fresh seafood by 100 percent (Ref. 9) to represent the retail value of the products. Then, assuming that perishable seafood will keep for 2 days in a consumer's refrigerator, (Ref. 10) we find that an 4-hour delay in delivery time caused by the prior notice requirement for 20 percent of the products results in a 8.3 percent loss in that seafood's value (4 hours out of 48 hours). Table 7 shows that the lost time results in a $1,863,805 loss on the value of Mexican fresh seafood imports. FDA requests comment on the perishability of the seafood used in tables 7 and 8. [[Page 5446]] Table 7.--Fresh Seafood Imported From Mexico ---------------------------------------------------------------------------------------------------------------- 2001 Fresh Mexican Seafood Products Pounds Dollars ---------------------------------------------------------------------------------------------------------------- Atka Mackerel, fresh 1,995 2,200 ---------------------------------------------------------------------------------------------------------------- Bass, fresh 1,362 2,218 ---------------------------------------------------------------------------------------------------------------- Clam live, fresh 245,498 274,942 ---------------------------------------------------------------------------------------------------------------- Crab live, fresh 405,621 489,856 ---------------------------------------------------------------------------------------------------------------- Crabmeat, fresh 287,531 1,540,130 ---------------------------------------------------------------------------------------------------------------- Flatfish flounder, fresh 1,518 2,199 ---------------------------------------------------------------------------------------------------------------- Flatfish fillet, fresh 1,705 3,100 ---------------------------------------------------------------------------------------------------------------- Flatfish, fresh 678,768 781,883 ---------------------------------------------------------------------------------------------------------------- Groundfish cod, fresh 4,000 2,400 ---------------------------------------------------------------------------------------------------------------- Grouper, fresh 4,056,054 7,399,434 ---------------------------------------------------------------------------------------------------------------- Lobster, live 8,584 50,474 ---------------------------------------------------------------------------------------------------------------- Rock lobster live, fresh 794,224 5,859,260 ---------------------------------------------------------------------------------------------------------------- Mackerel, fresh 147,334 127,873 ---------------------------------------------------------------------------------------------------------------- Marine fish fillet, fresh 2,120,250 7,395,902 ---------------------------------------------------------------------------------------------------------------- Marine fish, fresh 5,448,771 6,681,485 ---------------------------------------------------------------------------------------------------------------- Marine fish scaled, fresh 162,105 125,346 ---------------------------------------------------------------------------------------------------------------- Mollusks live, fresh 2,147 15,272 ---------------------------------------------------------------------------------------------------------------- Octopus live, fresh 31,680 24,214 ---------------------------------------------------------------------------------------------------------------- Oysters live, fresh 39,930 25,040 ---------------------------------------------------------------------------------------------------------------- Salmon Atlantic fillet farmed, fresh 405 2,552 ---------------------------------------------------------------------------------------------------------------- Sardine, sardinella, brisling, sprat, fresh 71,163 7,591 ---------------------------------------------------------------------------------------------------------------- Scallops live, fresh 472,384 1,418,302 ---------------------------------------------------------------------------------------------------------------- Sea Urchin live, fresh 10,501 67,331 ---------------------------------------------------------------------------------------------------------------- Sea Urchin roe, fresh 464,946 4,641,659 ---------------------------------------------------------------------------------------------------------------- Shark, fresh 1,500,877 711,349 ---------------------------------------------------------------------------------------------------------------- Shrimp, shell-on, fresh 452,714 861,897 ---------------------------------------------------------------------------------------------------------------- Snapper, fresh 5,835,775 9,254,300 ---------------------------------------------------------------------------------------------------------------- Squid live, fresh 88,042 39,952 ---------------------------------------------------------------------------------------------------------------- Swordfish, fresh 1,615,546 3,759,096 ---------------------------------------------------------------------------------------------------------------- Trout, fresh 82,958 131,353 ---------------------------------------------------------------------------------------------------------------- Rainbow trout farmed, fresh 80,384 161,526 ---------------------------------------------------------------------------------------------------------------- Bigeye tuna, fresh 9,819 12,200 ---------------------------------------------------------------------------------------------------------------- Bluefin tuna, fresh 82,471 332,250 ---------------------------------------------------------------------------------------------------------------- Tuna, fresh 78,747 155,069 ---------------------------------------------------------------------------------------------------------------- Yellowfin tuna, fresh 2,012,848 3,771,488 ---------------------------------------------------------------------------------------------------------------- Whitefish fillet, fresh 3,590 7,560 ---------------------------------------------------------------------------------------------------------------- Total Wholesale Value 27,302,246 56,138,703 ---------------------------------------------------------------------------------------------------------------- [[Page 5447]] Total Retail Value ....................... $112,277,406 ---------------------------------------------------------------------------------------------------------------- 8.3% reduction in value for 20% of products ....................... $1,863,805 ---------------------------------------------------------------------------------------------------------------- Table 8 shows the 4 hours of lost time due to prior notice resubmission for 20 percent of all imported Canadian fresh seafood causes a value loss of $30,929,417. Table 8.--Fresh Seafood Imported From Canada ---------------------------------------------------------------------------------------------------------------- 2001 Fresh Canadian Seafood Products Pounds Dollars ---------------------------------------------------------------------------------------------------------------- Bass, fresh 727,830 740,152 ---------------------------------------------------------------------------------------------------------------- Caviar 20,189 272,770 ---------------------------------------------------------------------------------------------------------------- Clam geoduck live, fresh 155,927 1,097,902 ---------------------------------------------------------------------------------------------------------------- Clam live, fresh 9,144,304 22,064,683 ---------------------------------------------------------------------------------------------------------------- Crab live, fresh 9,479,765 24,066,021 ---------------------------------------------------------------------------------------------------------------- Crabmeat, fresh 27,601 80,431 ---------------------------------------------------------------------------------------------------------------- Crustaceans live, fresh 148,925 574,989 ---------------------------------------------------------------------------------------------------------------- Fish liver and roe, fresh 51,154 229,569 ---------------------------------------------------------------------------------------------------------------- Flatfish flounder fillet, fresh 750,468 1,238,031 ---------------------------------------------------------------------------------------------------------------- Flatfish flounder, fresh 6,264,346 4,367,780 ---------------------------------------------------------------------------------------------------------------- Flatfish halibut Atlantic, fresh 1,948,791 7,542,598 ---------------------------------------------------------------------------------------------------------------- Flatfish halibut Pacific, fresh 12,553,266 39,850,556 ---------------------------------------------------------------------------------------------------------------- Flatfish fillet, fresh 853,224 3,536,120 ---------------------------------------------------------------------------------------------------------------- Flatfish, fresh 1,693,516 796,383 ---------------------------------------------------------------------------------------------------------------- Flatfish sole fillet, fresh 1,099,430 2,968,610 ---------------------------------------------------------------------------------------------------------------- Flatfish sole, fresh 1,062,030 1,096,079 ---------------------------------------------------------------------------------------------------------------- Flatfish turbot Greenland fillet, fresh 700,456 2,069,006 ---------------------------------------------------------------------------------------------------------------- Flatfish turbot Greenland, fresh 862,211 3,146,300 ---------------------------------------------------------------------------------------------------------------- Freshwater fish fillet, fresh 2,824,811 4,970,127 ---------------------------------------------------------------------------------------------------------------- Freshwater fish, fresh 549,956 1,008,302 ---------------------------------------------------------------------------------------------------------------- Groundfish cod Atlantic fillet, fresh 1,646,363 4,489,788 ---------------------------------------------------------------------------------------------------------------- Groundfish cod Atlantic, fresh 4,904,368 5,199,471 ---------------------------------------------------------------------------------------------------------------- Groundfish cod fillet, fresh 107,994 288,644 ---------------------------------------------------------------------------------------------------------------- Groundfish cod, fresh 239,987 249,991 ---------------------------------------------------------------------------------------------------------------- Groundfish cusk, fresh 8,281 22,060 ---------------------------------------------------------------------------------------------------------------- Groundfish cusk, pollock fillet, fresh 218,854 362,293 ---------------------------------------------------------------------------------------------------------------- Groundfish haddock fillet, fresh 708,261 2,109,607 ---------------------------------------------------------------------------------------------------------------- Groundfish haddock, fresh 17,391,202 19,469,582 ---------------------------------------------------------------------------------------------------------------- Groundfish hake fillet, fresh 160,972 93,941 ---------------------------------------------------------------------------------------------------------------- Groundfish hake, fresh 14,070,217 9,182,974 ---------------------------------------------------------------------------------------------------------------- [[Page 5448]] Groundfish ocean perch fillet, fresh 5,415,106 10,029,520 ---------------------------------------------------------------------------------------------------------------- Groundfish ocean perch, fresh 898,964 518,431 ---------------------------------------------------------------------------------------------------------------- Groundfish pollock Atlantic, fresh 2,362,637 1,595,615 ---------------------------------------------------------------------------------------------------------------- Groundfish pollock, fresh 161,121 130,308 ---------------------------------------------------------------------------------------------------------------- Herring, fresh 4,009,469 671,338 ---------------------------------------------------------------------------------------------------------------- Lingcod, fresh 612,093 812,597 ---------------------------------------------------------------------------------------------------------------- Lobster, fresh 7,707 60,030 ---------------------------------------------------------------------------------------------------------------- Lobster, live 49,200,925 244,567,173 ---------------------------------------------------------------------------------------------------------------- Rock lobster live, fresh 196,858 1,133,246 ---------------------------------------------------------------------------------------------------------------- Mackerel, fresh 943,155 595,937 ---------------------------------------------------------------------------------------------------------------- Marine fish fillet, fresh 10,272,946 24,235,390 ---------------------------------------------------------------------------------------------------------------- Marine fish, fresh 9,084,029 6,610,870 ---------------------------------------------------------------------------------------------------------------- Mollusks live, fresh 809,461 907,048 ---------------------------------------------------------------------------------------------------------------- Monkfish, fresh 89,861 154,267 ---------------------------------------------------------------------------------------------------------------- Mussels live, fresh farmed 18,545,254 13,693,263 ---------------------------------------------------------------------------------------------------------------- Mussels live, fresh wild 98,842 104,273 ---------------------------------------------------------------------------------------------------------------- Oysters live, fresh farmed 2,918,098 4,378,548 ---------------------------------------------------------------------------------------------------------------- Oysters live, fresh wild 579,011 1,236,868 ---------------------------------------------------------------------------------------------------------------- Perch fillet, fresh 529,366 2,079,677 ---------------------------------------------------------------------------------------------------------------- Perch, fresh 337,273 727,284 ---------------------------------------------------------------------------------------------------------------- Pickerel fillet, fresh 850,256 3,715,248 ---------------------------------------------------------------------------------------------------------------- Pickerel, fresh 1,682,743 3,500,552 ---------------------------------------------------------------------------------------------------------------- Pike, fresh 214,390 395,706 ---------------------------------------------------------------------------------------------------------------- Pike perch, yellow pike, fresh 125,114 197,396 ---------------------------------------------------------------------------------------------------------------- Sablefish, fresh 21,648 48,845 ---------------------------------------------------------------------------------------------------------------- Salmon Atlantic fillet, fresh farmed 28,972,418 97,270,694 ---------------------------------------------------------------------------------------------------------------- Salmon Atlantic fillet, fresh wild 404,012 1,281,582 ---------------------------------------------------------------------------------------------------------------- Atlantic Salmon, fresh farmed 107,101,696 248,809,617 ---------------------------------------------------------------------------------------------------------------- Atlantic Salmon, fresh wild 68,732 84,035 ---------------------------------------------------------------------------------------------------------------- Chinook Salmon, fresh farmed 5,752,197 10,614,163 ---------------------------------------------------------------------------------------------------------------- Chinook Salmon, fresh wild 225,509 530,368 ---------------------------------------------------------------------------------------------------------------- Salmon chum, fresh 1,651,221 1,133,029 ---------------------------------------------------------------------------------------------------------------- Salmon coho, fresh farmed 1,382,572 1,963,499 ---------------------------------------------------------------------------------------------------------------- Salmon coho, fresh wild 183,427 270,138 ---------------------------------------------------------------------------------------------------------------- Salmon fillet, fresh 1,640,485 4,361,707 ---------------------------------------------------------------------------------------------------------------- Salmon, fresh 2,820,957 5,430,272 ---------------------------------------------------------------------------------------------------------------- Pink Salmon, fresh 79,981 60,403 ---------------------------------------------------------------------------------------------------------------- [[Page 5449]] Sockeye salmon, fresh 265,505 457,427 ---------------------------------------------------------------------------------------------------------------- Salmonidae, fresh 57,787 149,760 ---------------------------------------------------------------------------------------------------------------- Scallops live, fresh 6,955,476 31,688,064 ---------------------------------------------------------------------------------------------------------------- Sea urchin live, fresh 5,053,710 4,367,434 ---------------------------------------------------------------------------------------------------------------- Sea urchin roe, fresh 11,414 94,706 ---------------------------------------------------------------------------------------------------------------- Dogfish shark, fresh 3,300,398 1,003,294 ---------------------------------------------------------------------------------------------------------------- Shark, fresh 223,788 206,838 ---------------------------------------------------------------------------------------------------------------- Shrimp peeled, fresh 5,401 27,934 ---------------------------------------------------------------------------------------------------------------- Shrimp shell-on, fresh 479,483 1,478,634 ---------------------------------------------------------------------------------------------------------------- Smelts, fresh 509,586 606,463 ---------------------------------------------------------------------------------------------------------------- Snail live, fresh 46,174 121,239 ---------------------------------------------------------------------------------------------------------------- Snapper, fresh 37,316 94,366 ---------------------------------------------------------------------------------------------------------------- Swordfish, fresh 1,809,654 6,488,992 ---------------------------------------------------------------------------------------------------------------- Trout, fresh 1,574,672 2,891,806 ---------------------------------------------------------------------------------------------------------------- Rainbow trout, fresh farmed 361,121 608,347 ---------------------------------------------------------------------------------------------------------------- Albacore tuna, fresh 25,859 70,076 ---------------------------------------------------------------------------------------------------------------- Bigeye tuna, fresh 426,547 1,448,778 ---------------------------------------------------------------------------------------------------------------- Bluefin tuna, fresh 288,361 2,464,619 ---------------------------------------------------------------------------------------------------------------- Tuna, fresh 13,429 50,299 ---------------------------------------------------------------------------------------------------------------- Yellowfin tuna, fresh 205,812 666,809 ---------------------------------------------------------------------------------------------------------------- Whitefish fillet, fresh 988,816 1,864,542 ---------------------------------------------------------------------------------------------------------------- Whitefish, fresh 8,224,484 11,262,979 ---------------------------------------------------------------------------------------------------------------- Yellow perch fillet, fresh 1,174,798 6,401,844 ---------------------------------------------------------------------------------------------------------------- Total Wholesale Value 382,663,829 931,608,947 ---------------------------------------------------------------------------------------------------------------- Total Retail Value ......................... $1,863,217,894 ---------------------------------------------------------------------------------------------------------------- 16.7% reduction in value for 20% of products ......................... $30,929,417 ---------------------------------------------------------------------------------------------------------------- Table 9 presents a summary of the costs associated with option 2. Also presented in table 9 is the present value of the costs associated with this option, calculated using the OMB-recommended discount rate of 7 percent. Table 9.--Summary of Costs for Option 2 Research costs $4,908,509 ------------------------------------------------------------------------ Computer acquisition costs $8,315,755 ------------------------------------------------------------------------ Annual costs to fill out prior notice $59,689,990 screens (including updates and amendments) ------------------------------------------------------------------------ FDA prior notice system cost $4,421,176 ------------------------------------------------------------------------ Lost value for Mexican produce $16,600,920 ------------------------------------------------------------------------ Lost value for Canadian produce $1,928,765 ------------------------------------------------------------------------ Lost value for Mexican seafood $1,863,805 ------------------------------------------------------------------------ Lost value for Canadian seafood $30,929,417 ------------------------------------------------------------------------ Total Costs for Option 2 $128,658,337 ------------------------------------------------------------------------ Present value of costs $1,603,543,969 ------------------------------------------------------------------------ [[Page 5450]] Option three: Minimum prior notice timeframe of 8 hours; electronic submission of information; any change in information requires resubmission. Option three is to allow the minimum timeframe for prior notices, as dictated by the statute, to take effect. Comments indicated that Canadian and Mexican produce growers and seafood processors are concerned that the longer the minimum time required for the prior notice, the less fresh their products will be when they reach customers. Less-than-optimal fresh (i.e., lower quality) products would result in a lower price paid for the imported produce or seafood shipments, or possibly even the loss of a customer's business to a domestic producer. For importers of perishable products such as seafood and produce, the 8-hour minimum time for prior notice might change business practices in the industry. These changes in business practices would be in addition to the costs of learning about the proposed regulation, submitting forms, and the FDA IT costs outlined in option two. How much importer, produce grower, and seafood processor business practices will be affected by prior notice requirements again will depend on how early the orders were received compared with how early prior notice must be submitted. If the order for the product was placed more than 8 hours before the truckload is scheduled to arrive at the border, then there should be no delay in the importation of the product. What is more likely to cause a wait before crossing the border is if the information on the prior notice changes after the prior notice was submitted. For example, if the prior notice is submitted just a few hours before loading the truck, unforeseen factors, including composition of the actual shipment, may cause the prior notice information submitted to not match the actual shipment on the truck. This is just one example of how information on a prior notice submission might change after the prior notice has already been submitted to FDA, thus requiring a cancellation of the prior notice and a resubmission of the corrected information. Having to resubmit a prior notice to FDA may not cause any delay of the shipment if the original submission was placed early enough. However, it is likely that the necessary corrected prior notice information will be resubmitted not long before the articles start heading for the border. Therefore it is likely that some shipments may have to wait several hours and possibly the full 8-hour minimum for the resubmitted prior notice to be accepted by FDA. If the prior notice time for submission is 8 hours instead of 4 hours, the probability of having to adjust and resubmit prior notice information will be higher. Now, instead of 20 percent of the importers of perishable products from Canada and Mexico having to resubmit their notices, we will assume that the 8-hour submission timetable means that 25 percent will have to resubmit their notices. We do not expect the number of resubmissions to increase greatly as the minimum timeframe for prior notice is still minimal and FDA expects most orders to be placed well in advance of the 8-hour timeframe. We assume that as the minimum notice time increases, the likelihood of a resubmission also increases, but less than proportionally to the change in minimum notice time. Carriers of these products may not be able to cross the border for 8 hours instead of 4 hours, which affects 4.8 percent of the produce life span (8 hours out of 168 hours) and 16.7 percent of the seafood life span (8 hours out of 48 hours). Table 10 shows the loss in value caused by the resubmitted prior notice information for the 25 percent of imported Mexican and Canadian fresh seafood and produce affected. Table 10.--Loss in Value Caused by Resubmitted Prior Notice Under Option 3 Perishable Produce ------------------------------------------------------------------------ 2001 Imported Mexican Produce Total $3,458,525,000 Retail Value ------------------------------------------------------------------------ 4.8% reduction in value for 25% of $41,502,300 Mexican produce ------------------------------------------------------------------------ 2001 Imported Canadian Produce Total $401,826,000 Retail Value ------------------------------------------------------------------------ 4.8% reduction in value for 25% of $4,821,912 Canadian produce ------------------------------------------------------------------------ Perishable Seafood ------------------------------------------------------------------------ 2001 Imported Mexican Seafood Total $112,277,406 Retail Value ------------------------------------------------------------------------ 16.7% reduction in value for 25% of $4,687,582 Mexican seafood ------------------------------------------------------------------------ 2001 Imported Canadian Seafood Total $1,863,217,894 Retail Value ------------------------------------------------------------------------ 16.7% reduction in value for 25% of $77,789,347 Canadian seafood ------------------------------------------------------------------------ Table 11 presents a summary of the costs associated with option 3. Also presented in table 11 is the present value of the costs associated with this option using the OMB-recommended discount rate of 7 percent. Table 11.--Summary of Costs for Option 3 Research costs $4,908,509 ------------------------------------------------------------------------ Computer acquisition costs $8,315,755 ------------------------------------------------------------------------ Annual costs to fill out prior notice $59,689,990 screens (including updates and amendments) ------------------------------------------------------------------------ FDA prior notice system cost $4,421,176 ------------------------------------------------------------------------ Lost value for Mexican produce $41,502,300 ------------------------------------------------------------------------ Lost value for Canadian produce $4,821,912 ------------------------------------------------------------------------ [[Page 5451]] Lost value for Mexican seafood $4,687,582 ------------------------------------------------------------------------ Lost value for Canadian seafood $77,789,347 ------------------------------------------------------------------------ Total Costs for Option 3 $206,136,571 ------------------------------------------------------------------------ Present value of costs $2,710,375,883 ------------------------------------------------------------------------ Option four: prior notice received by noon of the calendar day prior to the day of crossing; electronic submission of information; any change in information requires resubmission. This option requires that prior notification be submitted no later than noon of the calendar day prior to the expected day of crossing. Under this option, prior notice submitters will have to let FDA know of the incoming food shipment at least 12 hours before the shipment reaches a U.S. point of crossing. This fourth option would likely cause a change in importer business practices and the business practices of their clients in much the same way as option three, but the potential loss of product value is higher because the minimum prior notice time has increased. Again, how business practices will be affected by prior notice requirements depends on how early the invoice orders are received, the timeframe in which the truck was loaded, and when prior notice is submitted. FDA requests comments on any additional costs that might result from changes in business practices as a result of this proposed rule. As before, we assume that as the minimum notice time increases, the likelihood of a resubmission also increases, but less than proportionally to the change in minimum notice time. Thus, since the prior notice timeframe for submission is at least 12 hours instead of 8 hours, the probability of having to adjust and resubmit prior notice information is higher. Instead of 25 percent of the importers of perishable products from Canada and Mexico having to resubmit their notices, we will assume that the 12-hour submission timetable means that 40 percent will have to resubmit their notices. We increase the percentage of resubmission this time by 15 percent because as the prior notice timeframe increases relative to the time of entry, it becomes more likely that the prior notice information will change after the notice is submitted to FDA, thus requiring resubmission. The transporters of products with resubmitted prior notices may then have to wait as long as 12 hours, which affects 7.1 percent of the produce life span (12 hours out of 168 hours) and 25 percent of the seafood life span (12 hours out of 48 hours). Table 12 shows the loss in value caused by the resubmitted prior notice information for the 40 percent of imported Mexican and Canadian fresh seafood and produce that might be affected. As a result of having to give prior notice by noon the calendar day prior to entry, the Mexican fresh produce industry would lose $98,222,110 and the Canadian fresh produce industry would lose $11,411,858. The Mexican fresh seafood industry would lose $11,227,741 and the Canadian fresh seafood industry would lose $186,321,789 in value. Table 12.--Loss in Value Caused by Resubmitted Prior Notice Under Option Four Perishable Produce ------------------------------------------------------------------------ 2001 Imported Mexican Produce Total $3,458,525,000 Retail Value ------------------------------------------------------------------------ 7.1% reduction in value for 40% of $98,222,110 Mexican produce ------------------------------------------------------------------------ 2001 Imported Canadian Produce Total $401,826,000 Retail Value ------------------------------------------------------------------------ 7.1% reduction in value for 40% of $11,411,858 Canadian produce ------------------------------------------------------------------------ Perishable Seafood ------------------------------------------------------------------------ 2001 Imported Mexican Seafood Total $112,277,406 Retail Value ------------------------------------------------------------------------ 25% reduction in value for 40% of $11,227,741 Mexican seafood ------------------------------------------------------------------------ 2001 Imported Canadian Seafood Total $1,863,217,894 Retail Value ------------------------------------------------------------------------ 25% reduction in value for 40% of $186,321,789 Canadian seafood ------------------------------------------------------------------------ Table 13 presents a summary of the costs associated with option 4. Also presented in table 13 is the present value of the costs associated with this option using the OMB-recommended discount rate of 7 percent. Table 13.--Summary of Costs for Option 4 Research costs $4,908,509 ------------------------------------------------------------------------ Computer acquisition costs $8,315,755 ------------------------------------------------------------------------ Annual costs to fill out prior notice $59,689,990 screens (including updates and amendments) ------------------------------------------------------------------------ FDA prior notice system cost $4,421,176 ------------------------------------------------------------------------ Lost value for Mexican produce $98,222,110 ------------------------------------------------------------------------ Lost value for Canadian produce $11,411,858 ------------------------------------------------------------------------ Lost value for Mexican seafood $11,227,741 ------------------------------------------------------------------------ Lost value for Canadian seafood $186,321,789 ------------------------------------------------------------------------ Total Costs for Option 4 $384,518,928 ------------------------------------------------------------------------ Present value of costs $5,258,695,269 ------------------------------------------------------------------------ [[Page 5452]] Option five: prior notice received by noon of the calendar day prior to the day of crossing; electronic submission of information; allow changes to the prior notice submission up to two hours prior to entry (proposed option). We now take the estimates in option 4 and adjust them to account for the effects of allowing changes to the prior notice submission. Since prior notice must be submitted by noon on the calendar day prior to U.S. entry, it is reasonable to expect that not all the information required on a prior notice will be final. Allowing changes to the original submission, in the form of electronic product identity amendments and arrival updates, should improve the flow of import traffic by reducing the number of prior notice resubmissions and thereby reducing the loss of value for perishable foods, since they will not have to wait much extra time, if any at all, before crossing the U.S. border. The prior notice screen will have required fields for the addresses of the submitter, importer, owner, and consignee, as well as transporter, manufacturer, and grower if known. Required information would also include the identity of the article of food, its originating country, the country from which the food was shipped, its U.S. Customs entry number, and the date, time, and expected port of entry. Increasing the number of required fields that can be changed on the prior notice screen prior to entry reduces the likelihood that the information would have to be completely resubmitted by importers. This change would lessen the time burden, and therefore the cost, of having to submit prior notice. Allowing a 2 hour amendment and updates to prior notice would provide some flexibility for importers in industries where pieces of information, such as the quantity of the product being imported, time to port of arrival, and the anticipated port may change or is not known until just before shipping. Assuming that prior notice can be amended and updated would reduce the number of resubmissions that would normally occur. For this option then, with amendment and updates, we will assume that the number of prior notice resubmissions necessitated by changes in information on the notice will be reduced from 40 percent (as in option 4) to 5 percent. This option lowers the prior notice costs to importers (as compared to option 4) and therefore to Mexican and Canadian fresh produce growers and seafood processors, because they will not have to resubmit their prior notices when importing food to the United States as frequently. Instead they can amend or update the notices. Option 5 would save a minimum of 10 hours wait time per entry that can be amended or updated for the prior notice over the time used in option 4; the maximum time products would have to wait at the border would be 2 hours, or 1.2 percent of the fresh produce life span (2 hours out of 168 hours) and 4.2 percent of the fresh seafood life span (2 hours out of 48 hours). Table 14 shows the costs of submitting prior notice for a 12-hour minimum time, with a 2-hour amendment and updates, for Canadian and Mexican fresh produce and seafood. Table 14.--Loss in Value Caused by Resubmitted Prior Notice Under Option Five Perishable Produce ------------------------------------------------------------------------ 2001 Imported Mexican Produce Total $3,458,525,000 Retail Value ------------------------------------------------------------------------ 1.2% reduction in value for 25% of $2,075,115 Mexican produce ------------------------------------------------------------------------ 2001 Imported Canadian Produce Total $401,826,000 Retail Value ------------------------------------------------------------------------ 1.2% reduction in value for 25% of $241,096 Canadian produce ------------------------------------------------------------------------ Perishable Seafood ------------------------------------------------------------------------ 2001 Imported Mexican Seafood Total $112,277,406 Retail Value ------------------------------------------------------------------------ 4.2% reduction in value for 25% of $235,783 Mexican seafood ------------------------------------------------------------------------ 2001 Imported Canadian Seafood Total $1,863,217,894 Retail Value ------------------------------------------------------------------------ 4.2% reduction in value for 25% of $3,912,771 Canadian seafood ------------------------------------------------------------------------ Table 15 compares the reduction in the costs of this rule if an amendment and update to prior notice is allowed (option 5) as opposed to the no-amendment option 4. Table 15.--Comparison of Option Four With Option Five Perishable Mexican Produce Value loss ------------------------------------------------------------------------ Option 4-12 hour minimum notice $98,222,110 ------------------------------------------------------------------------ Option 5-12 hour notice with changes $2,075,115 ------------------------------------------------------------------------ Savings with amendment and update $96,146,995 ------------------------------------------------------------------------ Perishable Canadian Produce Value loss ------------------------------------------------------------------------ Option 4-12 hour minimum notice $11,411,858 ------------------------------------------------------------------------ Option 5-12 hour notice with changes $241,096 ------------------------------------------------------------------------ [[Page 5453]] Savings with amendment and update $11,170,762 ------------------------------------------------------------------------ Perishable Mexican Seafood Value loss ------------------------------------------------------------------------ Option 4-12 hour minimum notice $11,227,741 ------------------------------------------------------------------------ Option 5-12 hour notice with changes $235,783 ------------------------------------------------------------------------ Savings with amendment and update $10,991,985 ------------------------------------------------------------------------ Perishable Canadian Seafood Value Loss ------------------------------------------------------------------------ Option 4-12 hour minimum notice $186,321,789 ------------------------------------------------------------------------ Option 5-12 hour notice with changes $3,912,758 ------------------------------------------------------------------------ Savings with amendment and update $182,409,031 ------------------------------------------------------------------------ Table 16 presents a summary of the costs associated with option 5. Also presented in table 16 is the present value of the costs associated with this option using the OMB-recommended discount rate of 7 percent. Table 16.--Summary of Costs for Option 5 Research costs $4,908,509 ------------------------------------------------------------------------ Computer acquisition costs $8,315,755 ------------------------------------------------------------------------ Annual costs to fill out prior notice $59,689,990 screens (including updates and amendments) ------------------------------------------------------------------------ FDA prior notice system cost $4,421,176 ------------------------------------------------------------------------ Lost value for Mexican produce $2,075,115 ------------------------------------------------------------------------ Lost value for Canadian produce $241,096 ------------------------------------------------------------------------ Lost value for Mexican seafood $235,783 ------------------------------------------------------------------------ Lost value for Canadian seafood $3,912,758 ------------------------------------------------------------------------ Total Costs for Option 5 $83,800,182 ------------------------------------------------------------------------ Present value of costs $962,713,183 ------------------------------------------------------------------------ Summary of Options Table 17 gives a summary of the costs associated with the prior notice rule for each option presented. Table 17.--Summary of Costs Associated With Each Option ---------------------------------------------------------------------------------------------------------------- Costs Option 1 Option 2 Option 3 Option 4 Option 5 ---------------------------------------------------------------------------------------------------------------- Research Costs $0 $4,908,509 $4,908,509 $4,908,509 $4,908,509 ---------------------------------------------------------------------------------------------------------------- Costs of acquiring electronic $0 $8,315,755 $8,315,755 $8,315,755 $8,315,755 capacity ---------------------------------------------------------------------------------------------------------------- FDA prior notice system cost $0 $4,421,176 $4,421,176 $4,421,176 $4,421,176 ---------------------------------------------------------------------------------------------------------------- Total annual cost to submit $0 $59,689,990 $59,689,990 $59,689,990 $59,689,990 prior notice forms ---------------------------------------------------------------------------------------------------------------- Lost value for perishable $0 $51,322,907 $128,801,141 $307,183,498 $6,464,752 foods ---------------------------------------------------------------------------------------------------------------- First year cost of each $0 $128,658,000 $206,137,000 $384,519,000 $83,800,000 option ---------------------------------------------------------------------------------------------------------------- Annual cost of each option $0 $114,656,000 $192,134,000 $370,517,000 $69,798,000 ---------------------------------------------------------------------------------------------------------------- Present value total cost of $0 $1,603,544,000 $2,710,376,000 $5,258,695,000 $962,713,000 each option ---------------------------------------------------------------------------------------------------------------- Sensitivity Analysis We estimate that the social costs of the proposed rule (option 5) would be about $84 million in the first year and $70 million in later years. At a 7 percent discount rate, the present value of the costs of the proposed rule, discounted indefinitely into the future, would be about $963 million. These estimates rely on several important assumptions: [sbull] In option 4, forty percent of prior notices will need to be changed if the notice must be submitted by noon on the calendar day prior to entry. (Option 4 is the base for option 5 before amendment.) [sbull] Five percent of prior notices will still need to be changed even when the amendment option is available. [sbull] The amendment option will eliminate all but 1.2 percent of the lost value of imported fresh produce and all but 4.2 percent of the lost value of imported fresh seafood. [sbull] The amendment or update time is two hours before entry. [sbull] The retail value of imported fresh seafood and produce is 100 percent higher than its wholesale value. [[Page 5454]] [sbull] The number of import entries requiring prior notice will not increase over time. [sbull] The discount rate for calculating present value is 7 percent. We now show how our estimates of costs for the proposed option change under different assumptions. We substitute the following assumptions for those used above: [sbull] In option 4, fifty percent of prior notices will need to be changed if the notice must be submitted by noon on the calendar day prior to entry. (Option 4 is the base for option 5 before amendment.) [sbull] 15 percent of prior notices will still need to be changed even when the amendment option is available. [sbull] The amendment option will eliminate all but 5 percent of the lost value of imported fresh produce and all but 12 percent of lost value of imported fresh seafood. [sbull] The amendment or update time is 4 hours before entry. [sbull] The retail value of imported fresh seafood and produce is 200 percent higher than its wholesale value. [sbull] The number of import entries requiring prior notice will increase 3 percent per year over time. [sbull] The discount rate for calculating present value is 3 percent. Tables 18 and 19 show the results of the sensitivity analysis. The tables show that the estimated cost of the proposed rule is most sensitive to the assumed fraction of prior notices that will need to be changed. The present value of the proposed rule is most sensitive to the rate of discount. Table 18.--Sensitivity Analysis for Assumptions Made for Option 5 (Proposed Option) ---------------------------------------------------------------------------------------------------------------- Annual Cost Under Annual Cost Under Change in Annual Percent Change Test Base Assumption Test Assumption Cost (or Value) in Present Value ---------------------------------------------------------------------------------------------------------------- 50% prior notices changed $370,516,823 $447,312,699 $76,795,876 21 15% prior notices changed with $69,798,077 $71,727,578 $1,929,501 3 amendment 5% lost value for produce, 12% lost $69,798,077 $84,837,174 $15,039,097 22 value for seafood Amendment time is 4 hours $69,789,077 $123,843,623 $54,045,546 77 Retail value is 200% of wholesale $69,798,077 $73,030,451 $3,232,374 5 value Prior notice entries increase 3% in $69,798,077 $71,588,777 $1,790,700 3 second year ---------------------------------------------------------------------------------------------------------------- Table 19.--Present Values for Sensitivity Analysis for Assumptions Made for Option 5 (Proposed Option) ---------------------------------------------------------------------------------------------------------------- Present Value of Present Value of New Total Cost Change in Present Percent Change Test Base Total Cost Under Test Value in Present Value Assumption ---------------------------------------------------------------------------------------------------------------- 50% prior notices changed $5,258,695,269 $6,355,779,211 $1,097,083,942 21 15% prior notices changed with $962,713,183 $1,042,325,126 $79,611,943 8 amendment 5% lost value for produce, 12% $962,713,183 $1,177,557,426 $214,844,243 22 lost value for seafood Amendment time is 4 hours $962,713,183 $1,786,840,054 $824,126,871 86 Retail value is 200% of $962,713,183 $1,008,889,954 $46,176,771 5 wholesale value Prior notice entries increase $962,713,183 $988,294,611 $25,581,428 3 3% in second year 3% Discount rate $962,713,183 $2,222,803,507 $1,260,090,324 131 ---------------------------------------------------------------------------------------------------------------- Benefits: Requiring prior notice of imported food shipments and defining the required data elements should improve FDA's ability to detect accidental and deliberate contamination of food and deter deliberate contamination. Having notice of an imported food shipment before it reaches a U.S. border would allow FDA personnel to be ready to respond to shipments that appear to be adulterated, whether through intentional or accidental means, as well as when FDA receives credible evidence that an entry represents a serious threat to human or animal health. Historical evidence suggests that a terrorist or other intentional strike on the food supply is a low-probability, but potentially high- cost event. FDA lacks data to estimate the likelihood and resulting costs of a strike occurring. Without knowing the likelihood or cost of an event, we cannot quantitatively measure the reduction in probability of an event occurring, or the possible reduction in cost of an event associated with each regulatory option. Further hindering any quantification of benefits are the complementary effects of the other regulations that are being developed to implement Title III of the Bioterrorism Act. To understand possible costs of an intentional strike on the food supply, FDA examined five outbreaks resulting from accidental and deliberate contamination, and from both domestic and imported foods. An intentional attack on the food supply that sought to disrupt the food supply and sicken many U.S. citizens could be much larger than the examples given. Table 20.--Summary of Five Foodborne Outbreaks ------------------------------------------------------------------------ Confirmed Estimated Total Pathogen Location Vehicle or reported number of illness and year cases cases cost ------------------------------------------------------------------------ Salmonella Minnesota, Ice 150 cases; 29,100 in $3,187,7 enteritidi 1994 cream 30 MN 224,00 44,000 s hospitaliz Nationwide to ations $5,629,7 92,000 ------------------------------------------------------------------------ Shigella Michigan, Tofu 3,175 Not $45,183,0 sonnei 1988 salad cases available 00 to $79,795, 000 ------------------------------------------------------------------------ [[Page 5455]] Outbreaks resulting from deliberate contamination ------------------------------------------------------------------------ Salmonella Dalles, Salad 751 cases; Not $10,687,0 Typhimuriu Oregon bars 45 available 00 to m 1984 hospitaliz $18,875, ations 000 ------------------------------------------------------------------------ Shigella Texas, Muffins 12 cases; 4 All cases $83,000 dysentreri 1996 and hospitaliz identified ae type 2 doughnut ations s ------------------------------------------------------------------------ Outbreaks resulting from imported foods ------------------------------------------------------------------------ Cyclospora United Raspberri 1465 cases Not $3,941,00 cayaetanen States and es identified available 0 sis Canada, (probabl , less 1996 y than 20 imported hospitaliz from ation Guatemal a) ------------------------------------------------------------------------ Salmonella enteritidis in ice cream In 1994, approximately 224,000 people were sickened by ice cream contaminated with Salmonella enteritidis. The source of the contamination appeared to be pasteurized pre-mix that had been contaminated during transport in tanker trailers that previously had carried non-pasteurized eggs. There were 150 confirmed cases of salmonellosis associated with the outbreak in Minnesota. However, ice cream produced during the contamination period was distributed to 48 states. To calculate the total number of illnesses associated with the outbreak, researchers calculated an attack rate of 6.6 percent. This attack rate was extrapolated to the population that consumed the ice cream, giving a total number sickened of 224,000 (Ref. 11). Salmonellosis most commonly causes gastrointestinal symptoms. Almost 91 percent of cases are mild and cause one to three days of illness with symptoms including diarrhea, abdominal cramps, and fever. Moderate cases, defined as requiring a trip to a physician, account for 8 percent of the cases. These cases typically have duration of two to 12 days. Severe cases require hospitalization and last 11 to 21 days. In addition to causing gastroenteritis, salmonellosis also can cause reactive arthritis in a small percentage of cases. Reactive arthritis may be short or long term and is characterized by joint pain. Just over one percent of cases develop short-term reactive arthritis and two percent of cases develop chronic, reactive arthritis. In table 21, FDA estimated the costs associated with salmonellosis, including medical treatment costs and pain and suffering. Pain and suffering is measured by lost quality adjusted life days (QALDs). QALDs measure the loss of utility associated with an illness. A QALD is measured between zero and one, with one being a day in perfect health. The total loss of a Quality Adjusted Life Year (QALY), or the loss of a year of life is valued at $100,000, based on economic studies of how consumers value risks to life (Ref. 12). Thus, an entire lost QALD would be valued at $274 and fractions of QALDs are a fraction of the day's value. FDA presents two estimates of values of pain and suffering associated with arthritis, one based on physician estimates (Ref. 13) and another based on a regression analysis approach (Ref. 14). This gives a range of costs for the average case of salmonellosis between $14,231 and $25,133. Table 21.--The Cost of an Average Case of salmonellosis ---------------------------------------------------------------------------------------------------------------- Total QALDs Weighted Severity Case Breakdown Lost per Health Loss per Medical Costs per Case Dollar Loss Illness Case (Discounted) (Discounted) per Case ---------------------------------------------------------------------------------------------------------------- Illness ---------------------------------------------------------------------------------------------------------------- Mild 90.7% 1.05 $660 $0 $599 Moderate 8.1% 3.68 $2,310 $283 $209 Severe 1.2% 9.99 $6,266 $9,250 $188 ---------------------------------------------------------------------------------------------------------------- Arthritis Regression Approach ------------- Short-Term 1.26% 5.41 $3,391 $100 $44 Long-Term 2.40% 2,613.12 $452,554 $7,322 $11,048 ---------------------------------------------------------------------------------------------------------------- Direct Survey Approach ---------------------------------------------------------------------------------------------------------------- Short-Term 1.26% 10.81 $6,778 $100 $87 Long-Term 2.40% 5,223.15 $904,573 $7,322 $21,906 Death 0.04% .............. $5,000,000 ......................... $2,143 ---------------------------------------------------------------------------------------------------------------- Total .................... .............. ................. Regression Approach $14,231 Expected Direct Survey Approach $25,133 Loss per Case ---------------------------------------------------------------------------------------------------------------- [[Page 5456]] To estimate the economic cost due to illness associated with this outbreak, FDA used the range for the average cost per case. For 224,000 people, this is a total cost of between $3,187,744,000 and $5,629,792,000 from this accidental food disaster. Shigella sonnei in tofu salad In 1988, a tofu salad at an outdoor music festival was contaminated with Shigella sonnei and sickened an estimated 3,175 people. Over 2,000 volunteer food handlers served communal meals at the festival. (Ref. 15) Shigellosis causes similar symptoms and is of similar duration to salmonellosis. It also is associated with short term and chronic reactive arthritis; thus, FDA assumed the average case of shigellosis has the same cost as salmonellosis. This gives a total cost of $45,183,000 to $79,797,000. Salmonella typhimirium in salad bars During September and October of 1984, two outbreaks of Salmonella typhimirium occurred in association with salad bars in restaurants in The Dalles, Oregon. At least 751 people were affected. Members of the local Rajneeshpuram commune intentionally caused the outbreak by spraying Salmonella typhimirium on the salad bars in local restaurants. Their apparent motivation was to influence a local election by decreasing voter turnout. Intentional contamination was not suspected immediately and no charges were brought until a year after the attacks (Ref. 16). The 751 people affected primarily were identified through passive surveillance: thus the true number of people actually sickened is undoubtedly much higher. The Dalles is located on Interstate 84 in Oregon and is a frequent stop for travelers who were unlikely to be identified by passive or active surveillance for salmonellosis. However, since we do not have any estimates of the true size of the outbreak, we estimated the costs associated with known cases, recognizing this is an underestimate of the true cost of the outbreak. We use the cost estimates for salmonellosis as ranging from $14,231 to $25,133. This gives an estimated cost of known cases for the outbreak of $10,687,000 to $18,875,000. Shigella dysenteriae type 2 among laboratory workers Twelve people working in a laboratory who consumed muffins left in the laboratory break room contracted shigellosis in Texas in 1996. Affected workers had diarrhea, nausea, and abdominal discomfort. Investigators concluded that the outbreak likely was the result of deliberate contamination. All twelve affected workers were treated by, or consulted with, a physician. Nine affected workers went to the emergency room, four of whom were hospitalized (Ref. 17). To estimate the cost of this outbreak, FDA assumed that the eight cases that required consultation with a doctor, but did not require hospitalization, had the same cost as a moderate case of salmonellosis. The four cases requiring hospitalization were estimated to have the same cost as a severe case of gastroenteritis resulting from salmonellosis. This gives a cost of $82,808 for illnesses associated with the event. Table 22.--Summary of Costs for an Outbreak of Shigellosis ------------------------------------------------------------------------ Number of Severity cases Cost per case Total cost ------------------------------------------------------------------------ Mild 0 $0 $0 Moderate 8 $2,593 $20,744 Severe 4 $15,516 $62,064 ------------------------------------------------------------------------ Total 12 .................. $82,808 ------------------------------------------------------------------------ Cyclospora cayatanensis in imported raspberries In 1996, 1,465 cases of cyclosporiasis were linked to consumption of raspberries imported from Guatemala. Nine hundred and seventy eight of these cases were laboratory confirmed. No deaths were confirmed and less than 20 hospitalizations were reported (Ref. 18). Case control studies indicated that raspberries imported from Guatemala were the source of the illnesses. Fifty-five clusters of cases were reported in 20 states, two Canadian provinces, and the District of Columbia (Ref. 19). Cyclosporiasis typically causes watery diarrhea, loss of appetite, weight loss, and fatigue. Less common symptoms include fever, chills, nausea, and headache. The median duration of illness associated with the outbreak was more than 14 days and the median duration of diarrheal illness was 10 days (Ref. 20). We estimated the cost of a mild case of cyclosporiasis as two and one half times higher than the cost of a mild case of gastroenteritis from salmonellosis due to the longer duration. The reports of cyclosporiasis outbreaks did not include information on the number of physician visits. We assumed that the percentage of total cases that result in physician visits would be larger than the corresponding percentage for salmonellosis illnesses, due to the longer duration of illnesses. We assumed, therefore, that 40 percent of those infected with cyclosporiasis visited a physician. Less than 20 hospitalizations were reported from the cyclosporiasis outbreak. No deaths were confirmed. Table 23.--Summary of Costs of an Outbreak of Cyclosporiasis ------------------------------------------------------------------------ Number of Severity cases Cost per case Total cost ------------------------------------------------------------------------ Mild 879 $1,650 $1,450,000 Moderate 586 $3,748 $2,196,000 Severe 19 $15,516 $294,000 ------------------------------------------------------------------------ Total 1,465 ................. $3,941,000 ------------------------------------------------------------------------ [[Page 5457]] B. Small Entity Analysis (or Initial Regulatory Flexibility Analysis) FDA has 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 agencies to analyze regulatory options that would lessen the economic effect of the rule on small entities consistent with statutory objectives. The analysis below, together with other relevant sections of this document, serves as the agency's initial regulatory flexibility analysis under the Regulatory Flexibility Act. 1. Number of Establishments Affected FDA finds that this proposed rule would affect the 77,427 U.S. importers. Most of these importers have fewer than 500 employees, thus making them small businesses according to the definitions of the Small Business Administration. Because most of the importers affected are small, all options considered in the Benefit-Cost Analysis in section IV.A above are regulatory relief options. 2. Costs Per Entity Small businesses will be affected by this proposed rule in a couple of ways. First, this proposed rule requires importers to notify FDA of incoming products electronically before the food arrives at the U.S. border. The annual cost of doing so is about $770 per importer (see tables 1, 2, and 17 of this document). As discussed above and shown in tables 1 and 2, about 3,100 U.S. importers do not have electronic transmitting capacity and will have to obtain computer equipment (at a cost of about $2,000 per importer) and Internet access (at a cost of about $240 annually) in order to comply with this proposed rule. FDA could not provide flexibility for those importers who do not have electronic transmitting capacity, as paper notices could not be submitted and processed in the proposed prior notice timeframe and would therefore actually be more burdensome to importers because paper notices would need to be submitted earlier. Second, this proposed rule will potentially cause some loss of product value if the prior notice requirement causes perishable products to have to wait any length of time before crossing the U.S. border. The costs of lost product value vary with the required notice timeframe. We discuss the various costs associated with this possibility in the options previously outlined. FDA requests comments on the effect of this proposed rule on small entities. 3. Additional Flexibility Considered Because of the requirements of the Bioterrorism Act, FDA is precluded from selecting some of the options that typically would be considered to lessen the economic effect of the rule on small entities, including granting an exemption to small entities. FDA tentatively concludes that it would be inconsistent with section 307 of the Bioterrorism Act to allow small entities a later effective date, since the Bioterrorism Act established a deadline for beginning prior notice that applies to all FDA-regulated imported food. Although the recordkeeping provision of the Bioterrorism Act directs FDA to take into account the size of a business when issuing implementing regulations, the prior notice provision contains no such language. Thus, it appears that Congress intended for all entities to be subject to the effective date established in the Bioterrorism Act. Nonetheless, the agency recognizes that the prior notice requirement will cause an economic burden on small businesses; therefore, we are seeking comment on whether it would be consistent with section 307 for the agency to set staggered effective dates that would give small businesses more time to comply. FDA also seeks comment on how FDA could effectively distinguish between large and small businesses if it considered staggered effective dates. C. Unfunded Mandates Title II of the Unfunded Mandates Reform Act of 1995 (Public Law 104-4) requires cost-benefit and other analyses before any rule making if the rule would include a ``Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any 1 year.'' The current inflation-adjusted statutory threshold is $112 million. FDA has determined that this proposed rule does not constitute a significant rule under the Unfunded Mandates Reform Act. See table 17 for the total costs. V. Paperwork Reduction Act of 1995 This proposed rule contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). A description of these provisions is given below with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing each collection of information. FDA invites comments on: (1) Whether the proposed collection of information is necessary for the proper performance of FDA's functions, including whether the information will have practical utility; (2) the accuracy of FDA's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility, and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on respondents, including through the use of automated collection techniques, when appropriate, and other forms of information technology. Title: Prior Notice of Imported Food Description: Section 801(m) of the Federal Food, Drug, and Cosmetic Act (the Act) (21 U.S.C. 381(m)) requires prior notification to the Secretary of Health and Human Services of an article of food that is being imported or offered for import into the United States. The purpose of this notification is to enable the food to be inspected at ports of entry into the United States. Section 801(m) of the Act states that the Secretary shall by regulation identify the parties responsible for providing the notice and explain the information that the prior notice is required to contain, the method of submission of the notice, and the minimum and maximum period of advance notice required. Section 801(m)(1) of the Act states that the Secretary shall require submission of notice providing the identity of each of the following: the article of food; the manufacturer; the shipper; the grower, if known at the time of notification; the originating country; the shipping country; and the anticipated port of entry. Section 801(m)(2)(A) of the Act states that the Secretary shall by regulation prescribe the time of submission of the notification in advance of importation or the offering of the food for import, which period shall be no less than the minimum amount of time necessary for the Secretary to receive, review, and appropriately respond to such notification, but may not exceed five days. FDA's prior notification of imported food shipments proposed regulation would implement these statutory provisions. FDA estimates the burden for this information collection as follows: [[Page 5458]] Table 24.--Estimated Annual Reporting Burden ---------------------------------------------------------------------------------------------------------------- Operating 21 CFR Part No. Of Annual Total Annual Hours per Total Capital and 1, Subpart I Respondents Frequency Responses Response Costs Maintenance Total Hours per Response Costs ---------------------------------------------------------------------------------------------------------------- 1.285-1.290, 77,427 23.3 1,807,692 1-2 $6,194,000 $743,280 1,888,216 1.294\1\ ---------------------------------------------------------------------------------------------------------------- 1.278(d)\1\ 90,385 1 90,385 0.5 $0 $0 45,193 ---------------------------------------------------------------------------------------------------------------- 1.278(d), 77,427 23.8 1,844,116 0.5-1 $620,000 $817,680 1,833,822 1.285-1.290 , 1.294\2\ ---------------------------------------------------------------------------------------------------------------- Total hours ............ ............ ............ ............ .............. ............ 1,888,216 for first year ---------------------------------------------------------------------------------------------------------------- Total ............ ............ ............ ............ .............. ............ 1,833,822 recurring hours ---------------------------------------------------------------------------------------------------------------- \1\ First year burden. \2\ Recurring burden. Burden Estimate Number of Establishments Affected Using 2001 FY information from FDA's OASIS system (industry codes 02 through 52, 54, and 70 through 72), FDA has determined that there are approximately 77,427 importers and consignees who receive shipments of food for human and animal consumption into the United States. It is these 77,427 U.S. importers or U.S. purchasers (or their agents) that will be primarily responsible for submitting the prior notice information. New and Closing Importers In addition to the U.S. importers currently in existence, in future years, new import businesses will open and some existing import businesses will close. These new importers would have to become familiar with the FDA prior notice system and possibly obtain computer equipment and Internet access to comply with prior notice requirements. According to the Small Business Administration Office of Advocacy, in 2001, about 10 percent of all businesses were new and 10 percent of businesses closed. Using the 10 percent opening and closing business statistic, and given that there are currently 77,427 U.S. importers, FDA will assume, then, that on a yearly basis 7,743 importers will leave the market and 7,743 importers will enter the market. Hour Burden Estimate Researching the Prior Notice Requirement To become familiar with the requirements for this rule, FDA estimates it will initially take responsible parties with Internet access (74,330 importers) about one hour to research the prior notice requirements and responsible parties without readily available Internet access (3,097 importers) about 2 hours to research the requirements. This one-time search burden for the existing importers is 80,524 hours. In the years that follow the start-up year for prior notice, it is reasonable to expect a certain percentage of importing firms to enter and leave the market. Thus, in addition to the first year burden to research prior notice, it is expected that 8,053 hours will be spent annually researching the prior notice requirement by the anticipated 7,743 new importers entering the market annually that must learn about prior notice, 7,433 of whom are estimated to have Internet access and 310 of whom do not. Submitting Prior Notice To estimate the repetitive effort of submitting a prior notice, and updating and amending the information, as needed, FDA will assume the activity takes one hour each time an entry (based on an average of 2.6 lines, and therefore notices, per entry) must be submitted. This includes 45 minutes of an administrative worker's time to fill out the screen, including updating, and then 15 minutes of the manager's time to verify the information. FDA does not have information on how many prior notices will come from each of the 77,427 importers. However, we assume that 1,807,692 prior notices will be submitted annually (based on FY 2001 OASIS information); we can take this number and divide by the 77,427 importers to get an average response frequency per importer of 23.3 notices. Secure Storage and Notifying FDA If an article of food is imported or offered for import with no prior notice or inadequate (e.g. untimely, inaccurate, or incomplete) prior notice, the food must be held at the port of entry or in a secure facility. In these cases, the submitter or carrier must promptly notify FDA of the location where the goods are held. It is quite likely that more imported products will be held during the first year that the prior notice is required than in subsequent years as importers will learn from experience. Therefore, FDA estimates that imported products with insufficient prior notice will be held or sent to secure storage about 5 percent of the time during the first year and 2 percent of the time thereafter. This means that of the 1,807,692 prior notice entries received annually, in the first year prior notice is in effect we would expect 90,385 of the entries to be held or sent to secure storage; 36,154 entries would be held or sent to secure storage in subsequent years. Most port storage facilities and secure storage facilities located at or near ports are probably familiar to submitters or carriers; therefore it should only take one-half hour per entry to notify FDA of the shipment's location. Thus, in the first year of the regulation, submitters or carriers will spend 45,193 hours notifying FDA of secure storage locations; 18,077 hours in subsequent years. Capital Cost and Operating and Maintenance Cost Burden Since all prior notices must be submitted electronically, we will assume that the 3,097 responsible parties without Internet access will have to purchase the appropriate IT equipment and gain Internet access to actually transmit the information. Assuming computer equipment costs each firm $2,000 and yearly Internet access costs each firm $240 ($20 per month for 12 months), this results in a one-time computer cost for these facilities of $6,194,000 and a recurring Internet access cost of $743,280. For the 7,743 new firms that enter the import market each year, we can expect 310 of them to need to purchase computer equipment and obtain Internet access. Thus, on an annual basis we can expect [[Page 5459]] new importers to spend $620,000 on computers and $74,400 on Internet access to be able to submit prior notice information. In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)), the agency has submitted the information collection provisions of this proposed rule to OMB for review. Interested persons are requested to send comments regarding information collection to the Office of Information and Regulatory Affairs, OMB, New Executive Office Bldg., 725 17th St. NW., rm. 10235, Washington, DC 20503, Attn: Stuart Shapiro, FDA Desk Officer. VI. Analysis of Environmental Impact The agency has carefully considered the potential environmental effects of this action. FDA has concluded under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required. 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 does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, the agency tentatively concludes that the proposed rule does not contain policies that have federalism implications as defined in the Executive Order and, consequently, a federalism summary impact statement has not been prepared. VIII. Comments Interested persons may submit to the Dockets Management Branch (see ADDRESSES) written or electronic comments regarding this document. Submit a single copy of electronic comments to http://www.fda.gov/dockets/ecomments or two hard copies of any written comments, except that individuals may submit one hard copy. Comments are to be identified with the docket number found in brackets in the heading of this document. FDA cannot be responsible for addressing comments submitted to the wrong docket or that do not contain a docket number. Received comments may be seen in the Dockets Management Branch between 9 a.m. and 4 p.m., Monday through Friday. FDA notes that the comment period for this document is shorter than the 75-day period that the agency customarily provides for proposed rules that are technical or sanitary or phytosanitary (SPS) measures. FDA believes that a 60-day comment period is appropriate in this instance. Executive Order 12889, ``Implementation of the North American Free Trade Agreement'' (58 FR 69681, December 30, 1993), states that any agency subject to the Administrative Procedure Act must provide a 75-day comment period for any proposed Federal technical regulation or any Federal SPS measure of general application. Executive Order 12889 provides an exception to the 75-day comment period where the United States considers a technical regulation or SPS measure of general application necessary to address an urgent problem related to the protection of human, plant, or animal health or sanitary or phytosanitary protection. FDA has concluded that this proposed rule is subject to the exception in Executive Order 12889. The Bioterrorism Act states that it is intended ``[t]o improve the ability of the United States to prevent, prepare for, and respond to bioterrorism and other public health emergencies.'' In order to meet these objectives, section 307 of the Act requires the FDA to propose and issue final regulations requiring prior notice of food imported or offered for import into the United States within 18 months of the Bioterrorism Act's enactment, which is by December 12, 2003. Section 307 also provides that if FDA does not issue final regulations by this date, FDA still must receive prior notice of food imported or offered for import into the United States by December 12, 2002, of no less than 8 hours and no more than 5 days, subject to compliance with the final regulations when the final regulations are made effective. This expedited timeframe reflects the urgency of the United States government's need to prepare to respond to bioterrorism and other food- related emergencies and FDA's need to have the final rule in place, tested, and fully operational by December 12, 2003. This means that the final rule must publish in early October 2003. FDA will not consider any comments submitted after the 60-day comment period closes and does not intend to grant any requests for extension of the comment period due to the Bioterrorism Act's requirement to have a final regulation in effect by December 12, 2003, which requires publication on or before October 12, 2003. IX. References The following references have been placed on display in the Dockets Management Branch (see ADDRESSES) and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday. (FDA has verified the Web site address, but FDA is not responsible for any subsequent changes to the nonFDA Web sites after this document publishes in the Federal Register.) 1. Compilation of food entry documents, with corresponding invoices and screens, taken from FDA's Operational and Administrative System for Import Support (OASIS). 2. Bureau of Economic Analysis, http://www.bea.doc.gov 3. United States Department of Labor, Bureau of Labor Statistics, National Compensation Survey: Occupation Wages in the United States, 2000, Summary 01-04. Available at http://www.bls.gov/ncs/ocs/sp/ncbl0354.pdf . 4. USDA Agricultural Marketing Service (March 2002) Fresh Fruits and Vegetable Shipments. www.ams.usda.gov 5. Kasmire, Dr. Robert F. Vegetable Marketing Specialist, www.thepacker.com/rbcs/handbookarticles/properis.htm Accessed on September 16, 2002. 6. USDA Agricultural Marketing Service produce point price reports for various border crossings for the dates September 12, 2002 and September 16, 2002. www.ams.usda.gov 7. Florida Department of Agriculture and Consumer Services (FDACS) www.ffva.com/rps.htm. 8. National Marine Fisheries Service, Fisheries Statistics and Economics Division, www.st.nmfs.gov accessed September 2002. 9. Florida Department of Agriculture and Consumer Services, http://doacs.state.fl.us/press/1999/090999.html and www.ffva.com/ rps.htm 10. Center for Food Safety and Applied Nutrition, http://www.cfsan.fda.gov/ [tilde]dms/qa-sto8.html 11. Hennessy T.W., C.W. Hedberg, L. Slutsker, K.E. White, J.M. Besser-Wiek, M.E. Moen, J. Feldman, W.W. Coleman, L.M. Edmonson, K.L. MacDonald, M.T. Osterholm, and the Investigation Team, ``A National Outbreak of Salmonella Enteritidis Infections From Ice Cream,'' The New England Journal of Medicine, May 16, 1996, pp. 1281-1286. 12. Cutler, D., E. Richardson, 1999, ``Your Money and Your Life: The Value of Health and What Affects It,'' Working Paper 6895, National Bureau of Economic Research. 13. Zorn, D., K. Klontz, 1998, ``Appendix: The Value of Consumer Loss to Foodborne Reactive Arthritis,'' Federal Register, 63 FR 24292-24299, May 1, 1998. 14. Scharff, R., and A. Jessup, ``Valuing Chronic Disease for Heterogenous Populations: the Case of Arthritis,'' 2002, Mimeo. 15. Lee, L.A., S.M. Ostroff, H.B. McGee, D.R. Johns, F.P. Downes, D.N. Cameron, N.H. Bean, and P.M. Griffin, ``An Outbreak of Shigellosis at an Outdoor Music Festival,'' [[Page 5460]] American Journal of Epidemiology, 133:6:608-615. 16. Trook, T.J., R.V. Tauxe, R.P. Wise, J.R. Livengood, R. Sokolow, S. Mauvais, K.A. Birkness, M.R. Skeels, J.M. Horan, and L.R. Foster, ``A Large Community Outbreak of Salmonellosis Caused by Intentional Contamination of Restaurant Salad Bars,'' The Journal of the American Medical Association, 278:5:389-397. 17. Kolavic, S.A., A. Kimura, S.L. Simons, L. Slusker, S. Barth, and C.E. Haley, ``An Outbreak of Shigella Dysenteriae Type 2 Among Laboratory Workers Due to Intentional Food Contamination,'' The Journal of the American Medical Association, 278:5:396-403. 18. Colley, D.G., Widespread Foodborne Cyclosporiasis Outbreaks Present Major Challenges (letter), Emerging Infectious Diseases, 2:4:354-356. 19. Herwaldt, B.L., M.L. Ackers, and Cyclospora Working Group, ``An Outbreak in 1996 of Cyclosporiasis Associated with Imported Raspberries,'' New England Journal of Medicine, May 29, 1997, 1548- 1556. 20. Small Business Administration Office of Advocacy, ``Small Business By the Numbers,'' May 2002, http://www.sba.gov/advo/. List of Subjects in 21 CFR Part 1 Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling, Reporting and recordkeeping requirements. Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR part 1 be amended as follows: PART 1--GENERAL ENFORCEMENT REGULATIONS 1. The authority citation for 21 CFR part 1 continues to read as follows: Authority: 15 U.S.C. 1453, 1454, 1455; 21 U.S.C. 304, 321, 331, 334, 343, 350c, 350d, 352, 355, 360b, 362, 371, 374, 381, 382, 393; 42 U.S.C. 216, 241, 243, 262, 264. 2. Subpart I is added to part 1 to read as follows: Subpart I--PRIOR NOTICE OF IMPORTED FOOD General Provisions Sec. 1.276 What imported food is subject to this subpart? 1.277 What definitions apply to this subpart? 1.278 What are the consequences of failing to submit adequate prior notice or otherwise failing to comply with this subpart? Requirements to Submit Prior Notice of Imported Food Sec. 1.285 Who is authorized to submit prior notice for an article of food that is imported or offered for import into the United States? 1.286 When must the prior notice be submitted to FDA? 1.287 How must you submit the prior notice? 1.288 What information must be submitted in the prior notice? 1.289 What changes are allowed to a prior notice after it has been submitted to FDA? 1.290 Under what circumstances must you submit a product identity amendment to your prior notice after you have submitted it to FDA? 1.291 What is the deadline for product identity amendments under Sec. 1.290? 1.292 How do you submit a product identity amendment to a prior notice? 1.293 What are the consequences if you do not submit a product identity amendment to your prior notice? 1.294 What must you do if the anticipated arrival information (required under Sec. 1.288(k)(1)) submitted in your prior notice changes? General Provisions Sec. 1.276 What imported food is subject to this subpart? (a) This subpart applies to food for humans and other animals that is imported or offered for import into the United States (U.S.), including U.S. foreign trade zones, for consumption, storage, immediate export from the port of entry, transshipment through the United States to another country, or import for export. (b) This subpart does not apply to: (1) Food that is carried by an individual entering the United States in that individual's personal baggage for that individual's personal use; (2) Meat food products that at the time of importation are subject to the exclusive jurisdiction of the U.S. Department of Agriculture (USDA) under the Federal Meat Inspection Act (21 U.S.C. 601 et seq.); (3) Poultry products that at the time of importation are subject to the exclusive jurisdiction of USDA under the Poultry Products Inspection Act (21 U.S.C. 451 et seq.); and (4) Egg products that at the time of importation are subject to the exclusive jurisdiction of USDA under the Egg Products Inspection Act (21 U.S.C. 1031 et seq.). Sec. 1.277 What definitions apply to this subpart? (a) The act means the Federal Food, Drug, and Cosmetic Act. (b) The definitions of terms in section 201 of the act (21 U.S.C. 321) apply when the terms are used in this subpart. (c) In addition, for the purposes of this subpart: (1) Calendar day means every day shown on the calendar. (2) Country from which the article of food was shipped means the country in which the article of food was loaded onto the conveyance that brings it to the United States. (3) Food has the meaning given in section 201(f) of the act. Examples of food 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, bakery goods, snack foods, candy, and canned foods. (4) Originating country means the country from which the article of food originates. If the article of food is fresh produce or fresh aquacultured fish or seafood, the originating country is the country in which it is grown and harvested. If the article of food is wild-caught fish or seafood and it is harvested in the waters of the United States or by a U.S. flagged vessel or processed aboard a U.S. flagged vessel, the originating country is the United States. Otherwise, the originating country is the country in which the article of food is produced. (5) Port of entry means 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. This port may be different than the port where the article of food is entered for U.S. Customs Service purposes. (6) You means the purchaser or importer of an article of food who resides or maintains a place of business in the United States, or an agent who resides or maintains a place of business in the United States acting on the behalf of the U.S. purchaser or importer or, if the article of food is imported with the intention of in-bond movement through the United States for export, i.e., Transportation for Exportation or Immediate Export entries, the arriving carrier or, if known, the in-bond carrier. Sec. 1.278 What are the consequences of failing to submit adequate prior notice or otherwise failing to comply with this subpart? (a) If an article of food is imported or offered for import with no prior notice or inadequate (e.g., untimely, inaccurate, or incomplete) prior notice, the food shall be refused admission [[Page 5461]] under section 801(m)(1) of the act (21 U.S.C. 381(m)(1)). (b) If an article of food is refused admission under section 801(m)(1), it must be held at the port of entry unless FDA directs its removal to a secure facility in accordance with Sec. 1.278(c). (c) 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. (d) The person submitting the prior notice or the carrier must arrange for movement of the article of food, under appropriate custodial bond, within the port of entry or to the secure facility and must promptly notify FDA of the location. Transportation and storage expenses shall be borne by the owner, purchaser, importer, or consignee. (e) (1) The article of food must be held at the port of entry or in the secure facility until prior notice is submitted to FDA in accordance with this subpart, FDA has examined the prior notice, FDA has determined that the prior notice is adequate, and FDA has notified the U.S. Customs Service and the person who submitted the prior notice that the article of food no longer is subject to refusal of admission under section 801(m)(1) of the act. (2) Notwithstanding section 801(b) of the act (21 U.S.C. 381(b)), while any article of food that has been refused admission under section 801(m)(1) of the act is held at its port of entry or in a secure facility, it may not be delivered to any of its importers, owners, or consignees. (f) A determination that an article of food is no longer subject to refusal under section 801(m)(1) 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 refusal under section 801(m)(1) does not mean that it will be granted admission under other provisions of the act or other U.S. laws. (g) Any person who imports or offers for import an article of food without complying with the requirements of 21 U.S.C. 381(m) as set out in this subpart, or otherwise violates any requirement under 21 U.S.C. 381(m), or any person who causes such an act, commits a prohibited act within the meaning of 21 U.S.C. 331 (ee). Under 21 U.S.C. section 332, the United States can bring a civil action in Federal court to enjoin persons who commit prohibited acts. Under 21 U.S.C. section 333, the United States can bring a criminal action in Federal court to prosecute persons who commit prohibited acts. Under 21 U.S.C. 335a, FDA can seek debarment of any person who has been convicted of a felony relating to importation of food into the United States. Requirements to Submit Prior Notice of Imported Food Sec. 1.285 Who is authorized to submit prior notice for an article of food that is imported or offered for import into the United States? (a) A purchaser or importer of an article of food who resides or maintains a place of business in the United States, or an agent who resides or maintains a place of business in the United States acting on the behalf of the U.S. purchaser or importer, is authorized to submit to FDA prior notice of the article of food being imported or offered for import into the United States, except as specified in paragraph (b) of this section. (b) If the article of food is imported for in-bond movement through the United States for export, i.e., Transportation for Exportation or Immediate Export entries, the arriving carrier or, if known, the in- bond carrier is authorized to submit prior notice to FDA. Sec. 1.286 When must the prior notice be submitted to FDA? (a) You must submit the prior notice to FDA no later than noon of the calendar day before the day the article of food will arrive at the border crossing in the port of entry. (b) You may not submit the prior notice until all of the information required by Sec. 1.288 exists, except as provided in Sec. Sec. 1.288(e)(2) and 1.290, which both relate to product identity amendments. You may not submit prior notice more than 5 days before the anticipated date of arrival of the food at the anticipated port of entry. Sec. 1.287 How must you submit the prior notice? (a) You must submit prior notice, product identity amendments, and arrival updates electronically to FDA through FDA's Prior Notice System at [a Website that will be provided in the final rule], except as provided in paragraph (b) of this section. (b) If FDA's Prior Notice System is unable to receive prior notice electronically, you must submit prior notice, product identity amendments, and arrival updates using a printed version of the Prior Notice Screen from FDA's Prior Notice System delivered in person, by e- mail, or fax to the FDA field office with responsibility over the geographical area in which the anticipated port of entry identified in your initial prior notice is located. Sec. 1.288 What information must be submitted in the prior notice? For each article of food that is imported or offered for import into the United States, you must submit the information listed in this section. (The Prior Notice Screen of FDA's Prior Notice System also identifies the information that you must submit to FDA.) (a) The name of the individual submitting the prior notice, the submitting firm's name, address, phone number, fax number, and e-mail address, and, if the firm is required to register for a facility associated with the article of food under 21 CFR part 1, subpart H, the registration number assigned to that facility; (b) The entry type as designated by the U.S. Customs Service; (c) The U.S. Customs Service's Automated Commercial System (ACS) entry number, or if the article of food is an import that is not subject to ACS, the other U.S. Customs Service identification number associated with the importation; (d) If the article of food is under hold under Sec. 1.278, the location where it is being held, the date the article will arrive at that location, and identification of a contact at that location. (e)(1) The identity of the article of food being imported or offered for import, as follows: (i) The complete FDA product code; (ii) The common or usual name or market name; (iii) The trade or brand name, if different from the common or usual name or market name; (iv) The quantity of food described from smallest package size to largest container; and (v) The lot or code numbers or other identifier of the food if applicable. (2) If all of the information required by this subsection exists by noon of the calendar day before the day the article of food will arrive at the border crossing in the port of entry, you must include it in your prior notice and you may not amend the prior notice under Sec. 1.290. If any of this information does not exist by noon of the calendar day before the day the article of food will arrive at the border crossing in the port of entry, you must give FDA as much information as does exist at that time and tell FDA that you will amend the prior notice as required under Sec. 1.290. (f) The name, address, phone number, fax number, and e-mail address of the [[Page 5462]] manufacturer, and if it is required to register for a facility associated with the article of food under 21 CFR part 1, subpart H, the registration number assigned to that facility; (g) The name, address, phone number, fax number, and e-mail of all growers, and the growing location if different from business address, if known at time of submission of your prior notice; (h) The originating country of the article of food; (i) The name, address, phone number, fax number, and e-mail address of the shipper and, if it is required to register under 21 CFR part 1, subpart H, for a facility associated with the article of food, the registration number assigned to that facility; (j) The country from which the article of food was shipped; (k) (1) Anticipated arrival information about the article of food being imported or offered for import, as follows: (i) The anticipated port of entry and, if the anticipated port of entry has more than one border crossing, the specific anticipated border crossing where the food will be brought into the United States; (ii) The anticipated date on which the article of food will arrive at the anticipated port of entry; and (iii) The anticipated time of that arrival; (2) If any of the anticipated arrival information required under this paragraph changes after you submit your prior notice, you must update your notice in accordance with Sec. 1.294. (l) The port where entry of the article of food will be made for purposes of the U.S. Customs Service; (m) The anticipated date of entry for purposes of the U.S. Customs Service; and (n) The name, address, phone number, fax number, and e-mail address of the importer, and, if the importer is required to register for a facility associated with the article of food under 21 CFR part 1, subpart H, the registration number assigned to that facility; (o) The name, address, phone number, fax number, and e-mail address of the owner, and if the owner is required to register for a facility associated with the article of food under 21 CFR part 1, subpart H, the registration number assigned to that facility; (p) The name, address, phone number, fax number, and e-mail address of the consignee, and if the consignee is required to register for a facility associated with the article of food under 21 CFR part 1, subpart H, the registration number assigned to that facility; and (q) The names, addresses, phone numbers, fax numbers and e-mail addresses of all the carriers which are or will be carrying the article of the food from the country from which the article of food was shipped to the United States, and the carriers' Standard Carrier Abbreviation Codes (SCAC) if appropriate. Sec. 1.289 What changes are allowed to a prior notice after it has been submitted to FDA? After a prior notice has been submitted to FDA, it may only be changed as set out in Sec. 1.290 which relates to product identity amendments or Sec. 1.294 which relates to arrival updates. If other information provided in the prior notice changes, you must cancel the prior notice in the FDA Prior Notice System and submit a new prior notice to FDA. Sec. 1.290 Under what circumstances must you submit a product identity amendment to your prior notice after you have submitted it to FDA? (a) If any of the information required by Sec. 1.288(e)(1) did not exist at the time you submitted your prior notice and the prior notice you submitted was therefore incomplete, you must amend your prior notice with complete product identity information by the deadline specified in Sec. 1.291. (b) You may only amend your prior notice once. (c) You may not change the general identity of the article of food that is the subject of the prior notice by amendment. However, if the article is fresh produce or fresh, wild-caught fish, you may amend the last two digits of the product code when you do not know the specific identity of the article at the time of initial prior notice. If your initial prior notice submission identifies the product by the FDA product code for ``fresh peppers, refrigerated,'' when you amend your submission, you must give the product code that identifies with specificity the type of pepper--``fresh green bell peppers, refrigerated.'' You may also include more than one article in your amendment if the industry and class and process (of the FDA product code) are the same. A prior notice for ``refrigerated fresh fish'' may be amended as ``refrigerated fresh cod'' and ``refrigerated fresh salmon,'' but not ``refrigerated fresh cod'' and ``canned shrimp.'' You may not amend the product identity to refer to another food, e.g., apples, or another process, e.g., canned. (d) If you did not provide grower identity at the time you submitted your prior notice under this subpart, but you know the identity of the grower when you submit a product identity amendment to your prior notice, you must include in your amendment: the name, address, phone number, fax number, and e-mail of all growers, and growing location if different from business address. Sec. 1.291 What is the deadline for product identity amendments under Sec. 1.290? Your product identity amendment must be submitted no later than 2 hours prior to the time of arrival. Sec. 1.292 How do you submit a product identity amendment to a prior notice? You must submit product identity amendments in accordance with Sec. 1.287. Sec. 1.293 What are the consequences if you do not submit a product identity amendment to your prior notice? (a) If you informed FDA in your prior notice that you would be submitting a product identity amendment but you do not amend your prior notice completely, the prior notice is inadequate for the purposes of Sec. 1.278(a). (b) If you informed FDA in your prior notice that you would be submitting a product identity amendment and you submit your amendment after the deadline provided in section 1.291, the prior notice is inadequate for the purpose of Sec. 1.278(a). Sec. 1.294 What must you do if the anticipated arrival information (required under Sec. 1.288(k)(1)) submitted in your prior notice changes? (a) If any of the anticipated arrival information required under Sec. 1.288(k)(1) changes after you submit a prior notice to FDA, you must submit an arrival update updating the information in your prior notice in accordance with Sec. 1.287. Your arrival update must provide the following information: (1) If the anticipated port of entry changes, provide the updated port of entry; (2) If the time of arrival is expected to be more than 3 hours later than the anticipated time of arrival, provide the updated time of arrival; (3) If the time of arrival is expected to be more than 1 hour earlier than the anticipated time of arrival, provide the updated time of arrival. (b) If you did not provide grower identity at the time you submitted your prior notice under this subpart, but you know the identity of the grower when you update your prior notice, you must include in your update: the name, address, phone number, fax number, and e-mail of all growers, and growing location if different from business address. [[Page 5463]] (c) You must update the information in accordance with the requirements of Sec. Sec. 1.291 and 1.292. (d) If you do not submit an arrival update when one is required by paragraph (a) of this section, the prior notice is inadequate for the purposes of Sec. 1.278(a). Dated: January 27, 2003. Tommy G. Thompson, Secretary of Health and Human Services. Dated: January 27, 2003. Kenneth W. Dam, Acting Secretary of the Treasury. Note: The following form is an appendix that will not appear in the Code of Federal Regulations. BILLING CODE 4160-01-S [[Page 5464]] [GRAPHIC] [TIFF OMITTED] TP03FE03.007 [[Page 5465]] [GRAPHIC] [TIFF OMITTED] TP03FE03.008 [[Page 5466]] [GRAPHIC] [TIFF OMITTED] TP03FE03.009 [[Page 5467]] [GRAPHIC] [TIFF OMITTED] TP03FE03.010 [[Page 5468]] [GRAPHIC] [TIFF OMITTED] TP03FE03.011 [FR Doc. 03-2444 Filed 1-29-03; 1:47 pm] BILLING CODE 4160-01-C ------------------------------------------------------------------------