[Federal Register Volume 69, Number 236 (Thursday, December 9, 2004)]
[Rules and Regulations]
[Pages 71562-71655]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-26929]
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Part IV
Department of Health and Human Services
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Food and Drug Administration
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21 CFR Parts 1 and 11
Establishment and Maintenance of Records Under the Public Health
Security and Bioterrorism Preparedness and Response Act of 2002;
Establishment and Maintenance of Records for Foods; Notice of Public
Meeting; Availability of Draft Guidance for Records Access Authority;
Final Rules and Notice
Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 /
Rules and Regulations
[[Page 71562]]
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DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Parts 1 and 11
[Docket No. 2002N-0277]
RIN 0910-AC39
Establishment and Maintenance of Records Under the Public Health
Security and Bioterrorism Preparedness and Response Act of 2002
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
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SUMMARY: The Food and Drug Administration (FDA) is issuing a final
regulation that requires the establishment and maintenance of records
by persons who manufacture, process, pack, transport, distribute,
receive, hold, or import food in the United States. Such records are to
allow for the identification of the immediate previous sources and
immediate subsequent recipients of food. The final rule implements the
Public Health Security and Bioterrorism Preparedness and Response Act
of 2002 (the Bioterrorism Act), and is necessary to help address
credible threats of serious adverse health consequences or death to
humans or animals. The requirement to establish and maintain records is
one of several tools that will help improve FDA's ability to respond
to, and further contain, threats of serious adverse health consequences
or death to humans or animals from accidental or deliberate
contamination of food. In the event of an outbreak of foodborne
illness, such information will help FDA and other authorities determine
the source and cause of the event. In addition, the information will
improve FDA's ability to quickly notify the consumers and/or facilities
that might be affected by the outbreak.
DATES: Effective Date: This final rule is effective February 7, 2005.
Compliance Dates: The compliance date is December 9, 2005; except
that for small businesses employing fewer than 500, but more than 10
full-time equivalent employees, the compliance date is June 9, 2005;
and except that for very small businesses that employ 10 or fewer full-
time equivalent employees, the compliance date is December 11, 2006.
FOR FURTHER INFORMATION CONTACT: Nega Beru, Center for Food Safety and
Applied Nutrition (HFS-305), Food and Drug Administration, 5100 Paint
Branch Pkwy., College Park, MD 20740, 301-436-1400.
SUPPLEMENTARY INFORMATION:
Table of Contents
I. Background and Legal Authority
II. Highlights of the Final Rule and Summary of the Significant Changes
Made to the Proposed Rule
A. Highlights of This Final Rule
B. Significant Changes FDA Made to the Proposed Rule
III. Comments on the Proposed Rule
A. General Comments
B. Foreign Trade Issues
C. Comments on Who is Subject to This Subpart? (Proposed Sec.
1.326)
D. Comments on Who is Excluded From All or Part of the Regulations
in this Subpart? (Proposed Sec. 1.327)
E. Comments on What Definitions Apply to this Subpart? (Proposed
Sec. 1.328)
F. Comments on Do Other Statutory Provisions and Regulations Apply?
(Proposed Sec. 1.329)
G. Comments on Can Existing Records Satisfy the Requirements of
this Subpart? (Proposed Sec. 1.330)
H. Comments on What Information is Required in the Records You Must
Establish and Maintain to Identify the Nontransporter and Transporter
Immediate Previous Source and Immediate Subsequent Recipients?
(Proposed Sec. Sec. 1.337 and 1.345)
I. Comments on Who is Required to Establish and Maintain Records
for Tracing the Transportation of All Food? (Proposed Sec. 1.351)
J. Comments on What Information is Required in the Transportation
Records? (Proposed Sec. 1.352)
K. Comments on What Are the Record Retention Requirements?
(Proposed Sec. 1.360)
L. Comments on What Are the Record Availability Requirements?
(Proposed Sec. 1.361)
M. Comments on What Records Are Excluded From this Subpart?
(Proposed Sec. 1.362)
N. Comments on What Are the Consequences of Failing to Establish
and Maintain Records or Make Them Available to FDA as Required By This
Subpart? (Proposed Sec. 1.363)
O. Comments on What Are the Compliance Dates for This Subpart?
(Proposed Sec. 1.368)
IV. Analysis of Economic Impacts--Final Regulatory Impact Analysis
A. Summary of the Costs and Benefits of the Final Rule
B. Description of Proposed Rule
C. General Comments
D. The Tradeoff Between Costs and Risk Reduction
E. Estimating the Benefits
F. Costs
G. Summary of the Costs and Benefits of the Final Rule and Policy
V. Final Regulatory Flexibility Analysis
VI. Unfunded Mandates
VII. SBREFA
VIII. Paperwork Reduction Act of 1995
IX. Analysis of Environmental Impact
X. Federalism
XI. References
I. Background and Legal Authority
The events of September 11, 2001, have highlighted the need to
enhance the security of the infrastructure of the United States,
including the food supply. Congress responded by enacting 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 306, which amends the Federal Food,
Drug, and Cosmetic Act (the FD&C Act) by adding section 414,
Maintenance and Inspection of Records (21 U.S.C. 350c). (In the
regulation itself, which is codified in title 21 of the Code of Federal
Regulations, the Federal Food, Drug, and Cosmetic Act is referred to as
``the act.'' Thus, when the regulation is quoted in this preamble, the
term ``the act'' will be used to refer to the Federal Food, Drug, and
Cosmetic Act. However, in this preamble, we refer to the Federal Food,
Drug, and Cosmetic Act as ``the FD&C Act'' to distinguish it from the
Bioterrorism Act.) Section 414(b) of the FD&C Act provides, in part,
that the Secretary of Health and Human Services (the Secretary), may by
regulation establish requirements regarding the establishment and
maintenance, for not longer than 2 years, of records by persons
(excluding farms and restaurants) who manufacture, process, pack,
transport, distribute, receive, hold, or import food. The records that
are required to be kept by these regulations are those needed by the
Secretary for inspection to allow the Secretary to identify the
immediate previous sources and immediate subsequent recipients of food,
including its packaging, to address credible threats of serious adverse
health consequences or death to humans or animals. Section 306(d) of
the Bioterrorism Act provides that the Secretary ``shall'' issue
regulations establishing recordkeeping requirements under section
414(b) of the FD&C Act no later than 18 months after enactment of the
Bioterrorism Act, that is, by December 12, 2003.
In addition, the Bioterrorism Act adds a new section 414(a) to the
FD&C Act
[[Page 71563]]
that provides records inspection authority to FDA. Section 414(a) of
the FD&C Act provides that, if the Secretary has a reasonable belief
that an article of food is adulterated and presents a threat of serious
adverse health consequences or death to humans or animals, persons who
manufacture, process, pack, distribute, receive, hold, or import food
must provide access to records related to the food that are needed to
assist the Secretary in determining whether the food is adulterated and
presents a threat of serious adverse health consequences or death to
humans or animals.
Section 306 of the Bioterrorism Act also amends section 704(a) of
the FD&C Act (21 U.S.C. 374(a)) to authorize FDA inspections of all
records and other information described in section 414 of the FD&C Act,
when the Secretary has a reasonable belief that an article of food is
adulterated and presents a threat of serious adverse health
consequences or death to humans or animals.
In addition, section 306(c) of the Bioterrorism Act amends section
301 of the FD&C Act (21 U.S.C. 331) to make it a prohibited act to
refuse to permit access to, or copying of, any record as required by
section 414 or 704(a) of the FD&C Act; or to fail to establish or
maintain any record as required by section 414(b) of the FD&C Act; or
to refuse to permit access to, or verification or copying of, any such
required record; or for any person to use to his own advantage, or to
reveal, other than to the Secretary or officers or employees of the
Department of Health and Human Services, or to the courts when relevant
in any judicial proceeding under the FD&C Act, any information acquired
under authority of section 414 of the FD&C Act.
To implement these provisions, on May 9, 2003 (68 FR 25188), FDA
issued a proposed rule to require the establishment and maintenance of
records to identify the immediate previous sources and immediate
subsequent recipients of food. In addition to section 306 of the
Bioterrorism Act, which amends the FD&C Act as described previously,
FDA is relying on section 701(a) of the FD&C Act (21 U.S.C. 371(a)) in
issuing this final rule. Section 701(a) authorizes the agency to issue
regulations for the efficient enforcement of the FD&C Act.
II. Highlights of the Final Rule and Summary of the Significant Changes
Made to the Proposed Rule
A. Highlights of this Final Rule
The highlights of this final rule are described briefly in the
following paragraphs, and are discussed in more detail later in the
preamble of this document:
Persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food in the United States are
subject to the regulations in part 1 (21 CFR part 1) subpart J of this
final rule (i.e., recordkeeping and access requirements);
The following persons or facilities are excluded from all
of the regulations in subpart J of this final rule: Farms; restaurants;
those performing covered activities when the food is subject to the
exclusive jurisdiction of the U.S. Department of Agriculture (USDA)
under the Federal Meat Inspection Act (FMIA) (21 U.S.C. 601 et seq.),
the Poultry Products Inspection Act (PPIA) (21 U.S.C. 451 et seq.), or
the Egg Products Inspection Act (EPIA) (21 U.S.C. 1031 et seq.); and
foreign persons, except foreign persons who transport food in the
United States.
The following persons or facilities are excluded from the
requirement to establish and maintain records in Sec. Sec. 1.337 and
1.345 of subpart J of this final rule, but are subject to the record
availability requirements in Sec. Sec. 1.361 and 1.363 for existing
records: (1) Fishing vessels not engaged in processing as defined in
Sec. 123.3(k) (21 CFR part 123.3(k)); (2) retail food establishments
that employ 10 or fewer full-time equivalent employees; (3) nonprofit
food establishments that prepare or serve food directly to the consumer
or otherwise provide food or meals for consumption by humans or animals
in the United States; and (4) persons who manufacture, process, pack,
transport, distribute, receive, hold, or import food contact substances
other than the finished container that directly contacts the food.
Persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food are subject to Sec. Sec.
1.361 and 1.363 with respect to its packaging (the outer packaging of
food that bears the label and does not contact the food). All other
persons who manufacture, process, pack, transport, distribute, receive,
hold, or import packaging are excluded from all of the requirements of
this subpart J of this final rule.
Persons who place food directly in contact with its
finished container are subject to all of the requirements of subpart J
of this final rule as to the finished container that directly contacts
that food. All other persons who manufacture, process, pack, transport,
distribute, receive, hold, or import the finished container that
directly contacts the food are excluded from the requirements of
subpart J of this final rule as to the finished container, except
Sec. Sec. 1.361 and 1.363.
Persons who distribute food directly to consumers are
excluded from the requirement in Sec. 1.345 to establish and maintain
records to identify the immediate subsequent recipients as to those
transactions. The term ``consumers'' does not include businesses.
Persons who operate retail food establishments that
distribute food to persons who are not consumers are subject to all of
the requirements in subpart J of this final rule. However, the
requirements in Sec. 1.345 to establish and maintain records to
identify the nontransporter and transporter immediate subsequent
recipients that are not consumers applies as to those transactions only
to the extent the information is reasonably available.
Persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food for personal consumption are
excluded from all of the requirements of subpart J of this final rule.
Persons who receive or hold food on behalf of specific
individual consumers and who are not also parties to the transaction
and who are not in the business of distributing food are excluded from
all of the requirements of subpart J of this final rule.
The regulations in subpart J of this final rule do not
require duplication of existing records if those records contain all of
the information required by the subpart. Furthermore, persons can
supplement existing records with any new information required by this
final rule instead of creating an entirely new record containing both
existing and new information.
Persons who manufacture, process, pack, distribute,
receive, hold, or import food in the United States must establish and
maintain the following records to identify the immediate previous
sources and immediate subsequent recipients for all food they receive
and release, unless otherwise excluded from the requirements of subpart
J of this final rule:
Name, address, telephone number and, if available, fax
number, and e-mail address of the immediate previous source and
subsequent recipient;
Adequate description;
Date received or released;
For persons who manufacturer, process, or pack food, the
lot or code number or other identifier;
Quantity and how the food is packaged; and
Name, address, telephone number and, if available, fax
number, and e-mail
[[Page 71564]]
address of the transporter who transported the food to and from you.
Persons who have possession, custody, or control of food
in the United States for the sole purpose of transporting the food, or
foreign persons who transport food in the United States, regardless of
whether they have possession, custody, or control of the food for the
sole purpose of transporting that food (transporters), can meet the
requirements of subpart J of this final rule by:
(1) Establishing and maintaining the records listed in Sec.
1.352(a); or
(2) Establishing and maintaining specified information that is in
the records required of roadway interstate transporters by the
Department of Transportation's (DOT's) Federal Motor Carrier Safety
Administration (FMCSA) contained in 49 CFR 373.101 and 373.103 as of
the date of publication of this final rule; or
(3) Establishing and maintaining specified information that is in
the records required of rail and water interstate transporters by the
DOT's Surface Transportation Board (STB) contained in 49 CFR 1035.1 and
1035.2 as of the date of publication of this rule; or
(4) Establishing and maintaining specified information that is in
the records required of international air transporters on air waybills
by the Warsaw Convention as Amended at the Hague, 1995 and by Protocol
No. 4 of Montreal, 1975 (Warsaw Convention); or
(5) Entering into an agreement with a nontransporter immediate
previous source (if located in the United States) or immediate
subsequent recipient (if located in the United States) to establish,
maintain, or establish and maintain, the required records in options 1
or 2 of the previous paragraphs. The agreement must contain certain
elements specified in Sec. 1.352(e).
If you are a nontransporter, you must retain for 6 months
after the dates you receive and release the food all required records
for any food for which a significant risk of spoilage, loss of value,
or loss of palatability occurs within 60 days after the date you
receive or release the food.
If you are a nontransporter, you must retain for 1 year
after the dates you receive and release the food all required records
for any food for which a significant risk of spoilage, loss of value,
or loss of palatability occurs only after a minimum of 60 days, but
within 6 months, after the date you receive or release the food.
If you are a nontransporter, you must retain for 2 years
after the dates you receive and release the food all required records
for any food for which a significant risk of spoilage, loss of value,
or loss of palatability does not occur sooner than 6 months after the
date you receive or release the food, including foods preserved by
freezing, dehydrating, or being placed in a hermetically sealed
container.
If you are a nontransporter, you must retain for 1 year
after the dates you receive and release the food all required records
for animal food, including pet food.
Transporters of food (or specified persons who agree to
establish and maintain required records under agreements with
transporters) in the United States must retain records for 6 months for
any food having a significant risk of spoilage, loss of value, or loss
of palatability within 60 days after the date the transporter receives
or releases the food.
Transporters of food (or specified persons who agree
to establish and maintain required records under agreements with
transporters) in the United States must retain records for 1 year for
any food having a significant risk of spoilage, loss of value, or loss
of palatability only after a minimum of 60 days after the date the
transporter receives or releases the food.
Records must be made available as soon as possible, not to
exceed 24 hours from the time of receipt of the official request.
Failure to establish or maintain records or refusal to
permit access to or verification or copying of any record is a
prohibited act under section 301 of the FD&C Act.
The compliance date for the records establishment and
maintenance requirements is December 9, 2005, except that the
compliance date for small businesses employing fewer that 500, but more
than 10 full-time equivalent employees is June 9, 2005, and the
compliance date for very small businesses that employ 10 or fewer full-
time equivalent employees is December 11, 2006.
B. Significant Changes FDA Made to the Proposed Rule
FDA made the following significant changes to the proposed rule:
All foreign persons, except foreign persons who transport
food in the United States, are excluded from all of the requirements in
subpart J of this final rule. A foreign person transporting food in the
United States is subject to the requirements for transporters in the
subpart.
Persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food are subject to Sec. Sec.
1.361 and 1.363 with respect to its packaging (the outer packaging of
food that bears the label and does not contact the food). All other
persons who manufacture, process, pack, transport, distribute, receive,
hold, or import packaging are excluded from all of the requirements of
subpart J of this final rule. Persons who manufacture, process, pack,
transport, distribute, receive, hold, or import food contact substances
other than the finished container that directly contacts the food are
excluded from all of the requirements of subpart J, except Sec. Sec.
1.361 and 1.363.
Persons who place food directly in contact with its
finished container are subject to all of the requirements of subpart J
of this final rule as to the finished container that directly contacts
that food. All other persons who manufacture, process, pack, transport,
distribute, receive, hold, or import the finished container that
directly contacts the food are excluded from the requirements of
subpart J as to the finished container, except Sec. Sec. 1.361 and
1.363.
Persons who receive or hold food on behalf of specific
individual consumers and who are not also parties to the transaction
and who are not in the business of distributing food are excluded from
all of the requirements of subpart J.
Transporters can meet their obligation to establish and
maintain records in the following ways: (1) Keeping the records listed
in Sec. 1.352(a); (2) keeping the records listed in Sec. 1.352(b),
which contain information also currently required of roadway interstate
transporters under the FMCSA regulations as of the date of publication
of this final rule; (3) keeping the records listed in Sec. 1.352(c),
which contain information also currently required of rail and water
interstate transporters under the STB regulations as of the date of
publication of this final rule; (4) keeping the records listed in Sec.
1.352(d), which contain information also currently required of
international air transporters on air waybills under the Warsaw
Convention; or (5) entering into an agreement with a nontransporter
immediate previous source in the United States or a nontransporter
immediate subsequent recipient in the United States to keep records for
them. The agreement must contain certain elements specified in Sec.
1.352(c). Intrastate transporters must also establish and maintain
records under this final rule and can meet this obligation by complying
with either Sec. 1.352(a), (b), (c), (d), or (e).
Foreign persons who transport food in the United States,
whether or not
[[Page 71565]]
they have possession, custody, or control of the food for the sole
purpose of transporting, must comply with Sec. 1.352 of subpart J of
this final rule.
The exclusion for pet food not subject to the
recordkeeping provisions of the animal proteins prohibited in ruminant
feed regulation (BSE rule) (62 FR 30935, June 5, 1997) has been
deleted.
The definition of ``farm'' now states that washing,
trimming of outer leaves, and cooling produce are part of harvesting.
The definition of ``farm'' now includes facilities that
pack or hold food, provided that all food used in such activities is
grown, raised, or consumed on that farm or another farm under the same
ownership.
``Holding'' has been defined and means ``storage of
food.'' Holding facilities include warehouses, cold storage facilities,
storage silos, grain elevators, and liquid storage tanks.
``Packaging'' has been defined and means ``the outer
packaging of food that bears the label and does not contact the food.
Packaging does not include food contact substances as they are defined
in section 409(h)(6) of the FD&C Act (21 U.S.C. 348(h)(6)).''
Recipe has been defined to mean the formula, including
ingredients, quantities, and instructions, necessary to manufacture a
food product. Because a recipe must have all three elements, a list of
the ingredients used to manufacture a product without quantity
information and manufacturing instructions is not a recipe.
The partial exclusion for retail food establishments has
been replaced with a partial exclusion for persons who distribute food
directly to consumers. Persons who distribute food directly to
consumers are excluded from establishing and maintaining records
required by Sec. 1.345 to identify the nontransporter and transporter
immediate subsequent recipients as to those transactions. Persons who
distribute food to businesses must establish and maintain records to
identify the nontransporter and transporter immediate subsequent
recipients to the extent that information is reasonably available, for
example when the purchaser has an established commercial account.
The exclusion for retail facilities that are located in
the same general physical location as a farm has been replaced with an
exclusion for all retail food establishments that employ 10 or fewer
full-time equivalent employees.
An exclusion has been added for nonprofit food
establishments.
``Nonprofit food establishment'' has been defined and
means:
* * * a charitable entity that prepares or serves food directly
to the consumer or otherwise provides food or meals for consumption
by humans or animals in the United States. The term includes central
food banks, soup kitchens, and nonprofit food delivery services. To
be considered a nonprofit food establishment, the establishment must
meet the terms of section 501(c)(3) of the U.S. Internal Revenue
Code (26 U.S.C. 501(c)(3)).
The requirement to record a ``responsible individual''
when identifying the immediate previous source, immediate subsequent
recipient, and transporters has been deleted.
The requirement to record ``lot or code number or other
identifier'' has been deleted for all covered entities, except persons
who manufacture, process, or pack food.
The definition of perishable food has been deleted.
The record retention periods for nontransporters have been
changed to: (1) 6 months for food for which a significant risk or
spoilage, loss of value, or loss of palatability occurs within 60 days
after the date you receive or release the food; (2) 1 year for food for
which a significant risk of spoilage, loss of value, or loss of
palatability occurs only after a minimum of 60 days, but within 6
months, after the date you receive or release the food; and (3) 2 years
for food for which a significant risk of spoilage, loss of value, or
loss of palatability does not occur sooner than 6 months after the date
you receive or release the food, including foods preserved by freezing,
dehydrating, or being placed in a hermetically sealed container.
The record retention periods for transporters (or
specified persons who agree to establish and maintain required records
under agreements with transporters) have been changed to 6 months for
any food having a significant risk or spoilage, loss of value, or loss
of palatability within 60 days after the date the food is received or
released and 1 year for any food having a significant risk or spoilage,
loss of value, or loss of palatability only after a minimum of 60 days
after the date the food is received or released.
The record availability requirements have been changed
from 4 hours/8 hours to ``as soon as possible, not to exceed 24 hours
from the time of receipt of the official request.''
The compliance date for these regulations has changed to
December 9, 2005. Small businesses have June 9, 2005, of this final
rule to come into compliance with these regulations, and very small
businesses have December 11, 2006, of this final rule to come into
compliance with these regulations.
The qualifying language ``food intended for consumption in
the United States'' has been removed from this final rule to ensure
that all persons that manufacture, process, pack, transport,
distribute, receive, hold, or import food in the United States that is
intended for consumption are subject to this final rule unless
otherwise exempt.
III. Comments on the Proposed Rule
FDA received approximately 212 timely submissions in response to
the proposed rule, which raised approximately 220 major issues. To make
it easier to identify comments and FDA's responses to the comments, the
word ``Comment'' will appear in parentheses before the description of
the comment, and the word ``Response'' will appear in parentheses
before FDA's response. FDA has also numbered each comment to make it
easier to identify a particular comment. The number assigned to each
comment is purely for organizational purposes and does not signify the
comment's value or importance or the order in which it was submitted.
A. General Comments
(Comment 1) Some comments state that it would be beneficial for the
agency to provide the food industry with a model form that could be
used to record all the required information, with the option for the
industry to use this form or established recordkeeping systems. One
comment requests that the agency develop and provide respective
freeware that could be available as a compact disc (CD) or downloaded
from the FDA Web site well in advance of the compliance date of the
final rule. A few comments request that the regulations make clear that
the model form is guidance and is not mandatory. One comment suggests
that as a way to show that the model form is guidance, the agency
should place the model form in an appendix to the regulations.
Several comments object to the inclusion of a model form in the
regulations. The comments oppose using any ``one-size fits all''
generic form as an example or requirement. The comments suggest that
affected businesses should decide the format in which the required
records should be kept as dictated by specific business practices. The
comments express concern that example forms might become informal
requirements out in the field even though originally only meant as
guidance.
One comment recommends that the agency provide further examples of
[[Page 71566]]
scenarios, rather than model forms, where records would be in
compliance and noncompliance with the final regulations.
In addition, several comments state that most food companies
currently maintain the chain-of-distribution information that is
required by these regulations. However, the diversity and complexity of
the food industry means that the information is maintained in many
different ways and formats, ranging from computerized records systems
to file folders of paper records. The recordkeeping systems are
designed to provide the necessary information to remove food from the
market and prevent more food presenting the same risk from entering the
market. The comments state that the regulations should not prescribe
any specific manner or form of maintaining the information.
(Response) The provisions describe the specific information a
covered entity must keep, but do not specify the form or type of system
in which those records must be maintained. As stated in both the
proposed and final Sec. 1.330, these provisions do not require
duplication of existing records if those records contain all of the
information required by subpart J of this final rule. If a person
subject to these provisions keeps records of all of the information as
required by subpart J in compliance with other Federal, State, or local
regulations, or for any other reason, e.g., as a result of its own
business practices, then those records may be used to meet these
requirements. Such records may include, but are not limited to,
purchase orders, bills of lading, invoices, and shipping documents.
Moreover, entities do not have to keep all of the information required
by this final rule in one set of records. If they have records
containing some of the required information, they may keep those
existing records and keep, either separately or in a combined form, any
new data required by this final rule. There is no obligation to create
an entirely new record or compilation of records containing both
existing and new information, even if the records containing some of
the required information were not created at the time the food was
received or released.
Our intent is to have as little impact as possible on current
recordkeeping practices if those records can meet the requirements of
these regulations. FDA received numerous comments, as discussed further
in section III.G of this document on ``Can existing records satisfy the
requirements of this subpart?'' that agreed with this approach to not
specify the type and format of the records and to allow flexibility to
use existing recordkeeping systems. In addition, comments state that
individual companies are in a better position to decide in what format
records are needed based on knowledge of applicable business practices
and cost structures. For these reasons, FDA has not included a model
form in this final rule.
(Comment 2) Several comments state that the food industry has
repeatedly demonstrated the ability to identify and remove product from
grocery store shelves very quickly. The comments suggest that the
diversion of substantial resources that would be necessary to implement
the agency's proposed regulations would not further food security, but
instead would diminish the overall efficiency of the food distribution
system, which is necessary to serve food safety and security needs and
commercial purposes.
Further, some comments assert that the regulations are directed
toward enabling the Government to trace a product, rather than ensuring
that companies are able to trace the product through all the links in
the chain of custody of a food ingredient or product. The comments
state that the intent of the Bioterrorism Act was to ensure the
existence of a system that fully engages the institutional knowledge
and logical procedures that already enable the companies responsible
for the production and distribution of food to maintain an orderly and
efficient nationwide supply chain and that also currently make it
possible to effect rapid recalls when necessary. The comments state
that the proposed regulations fail to capitalize on the efficiencies of
time and resources available through effective public/private
coordination, exemplified by the efforts that currently support
effective recalls.
(Response) FDA recognizes that some of the food industry currently
has existing records that may satisfy all or part of these regulations;
however, not all of the food industry is currently able to conduct such
traceback investigations. Notwithstanding the ability of some of the
food industry to conduct such investigations, Congress authorized FDA
through the Bioterrorism Act to issue regulations requiring the
establishment and maintenance of records by persons who manufacture,
process, pack, transport, distribute, receive, hold or import food to
enable FDA to identify the immediate previous sources and immediate
subsequent recipients of food, including its packaging, to address
credible threats of serious adverse health consequences or death to
humans or animals. FDA believes the information required to be
established and maintained in records in these regulations is necessary
to enable FDA to conduct an efficient and effective tracing
investigation, independent of what the food industry may be able to do.
FDA reiterates that it is not dictating the form or type of system to
be used to satisfy these requirements in these regulations. If the food
industry already keeps all of the information required by this final
rule, then existing records can be used to comply with this final rule.
Further, FDA anticipates working closely with the food industry in any
tracing investigation.
In addition, recently FDA was significantly hampered in identifying
the source of contaminated food during a trace back investigation
following a Hepatitis A outbreak due to contaminated green onions. This
outbreak involved a distributor who purchased green onions from a
variety of firms in no predictable pattern and distributed them without
recording brand and lot information. The distributor did not keep
records of the previous sources of the green onions, which might have
indicated a particular supplier of green onions during the specified
exposure time period. It was impossible for investigators to determine,
from the distributor, the identity of the supplier of the green onions
that were sent to the implicated restaurant, and therefore FDA had to
spend time investigating all potential suppliers of the green onions to
identify the one supplier that supplied the restaurant. Speedy trace
back would have enabled FDA to prevent further distribution of
contaminated products sooner, thereby preventing more illnesses.
Further, 20 percent of all tracing investigations are prematurely
terminated due to deficiencies in recordkeeping. A reduction of just
one premature termination could prevent at least 53 people from
becoming ill. Requiring adequate records to complete a tracing
investigation reduces trace-back times by 8 days. This increased
efficiency facilitates preventive action in 15 to 18 percent of
outbreaks. The speed with which a tracing investigation can be
conducted is of vital importance in reducing the number of people who
could potentially become ill. Access to records that do not exist or
that do not contain sufficient information (with no requirement to
retain them or make them available in a timely fashion) is not an
efficient and effective way to conduct a tracing investigation during a
public health emergency involving
[[Page 71567]]
serious adverse health consequences or death to humans or animals.
(Comment 3) One comment states that established industry practice
with regard to investigating product defects and conducting product
recalls is consistent with the terms of the Bioterrorism Act allowing
for the rapid identification of the immediate previous source and
immediate subsequent recipient of foods. The comment asserts that the
industry's response to the events of September 11, 2001, has
strengthened these existing practices. The comment explains that as an
inevitable result of industry's commitment to Responsible Care Security
Code No. 7 and increased requests from customers, emphasis is now
shifting from security at fixed plant sites and major distribution
centers to security of products throughout the value chain. This shift
in emphasis enhances industry's existing traceback capabilities. The
comment asserts that the controls needed to effectively trace the
source and recipient of foods are already in place.
(Response) As explained in the response to comment 2, these
provisions are intended to help ensure that FDA has the information it
needs to identify the immediate previous sources and immediate
subsequent recipients of food to address credible threats of serious
adverse health consequences or death to humans or animals.
(Comment 4) One comment asserts that when food presents a risk of
serious adverse health consequences or death to humans or animals, a
class I recall is used and can quickly eliminate problems, whereas
recordkeeping, at best, will get a message to the retail locations
where products were placed on sale to consumers. The comment questions
the benefit of the copious amounts of information and possible
implementation of an intricate new product tracking system required by
the regulations. The comment asserts that class I recalls will continue
to be the appropriate means by which a potential hazard is handled and
that requiring the expenditure of significant resources to develop a
new system in the absence of a Congressional mandate or a genuine need
is questionable. The comment recommends that FDA continue to rely upon
the proven capabilities of class I recalls and cooperation with the
food industry. The comment suggests that FDA should develop a system to
contact the appropriate companies to engage their assistance in
addressing threats to the food supply, rather than requiring the
onerous recordkeeping specified in the regulations.
(Response) This comment assumes that the contaminated food and its
whereabouts are known completely, which may not always be the case. As
such, the need exists for records to be able to trace forward fully to
all locations where the food was shipped, as well as trace backwards to
locate any similarly contaminated food shipped to all other locations.
Moreover, class I recalls are voluntary measures only. In the
Bioterrorism Act, Congress has given FDA the means both to establish
requirements for establishment and maintenance of records, and to
administratively detain, on its own initiative, food for which FDA has
credible evidence or information that the food presents a threat of
serious adverse health consequences or death to humans or animals
(section 303 of the Bioterrorism Act). In addition, the records are
needed not only to help remove contaminated food from the market place,
but also to help identify the source of the contamination.
(Comment 5) A few comments state that, in the event of a serious
product issue or life-threatening situation, the only responsible
action to take is to warn the public through the media to prevent
further use or distribution of the product. The communication vehicle
used to disseminate the warning should be based on the severity of
potential harm or health consequences. Use of the media also is
necessary to influence facilities to check their store stock and for
consumers to check their refrigerators and pantries for the affected
product.
(Response) FDA agrees that the use of warnings to the public about
specific products is important. Indeed, FDA has used this approach many
times. Nonetheless, records will ensure that FDA can perform trace
forward to remove the problem food from the market and traceback to
identify the source of the problem. These recordkeeping requirements
will also enable FDA to identify the problem food more specifically
and, thus, FDA can target its public warnings on the specific
problematic food.
(Comment 6) A few comments request that the agency add a ``pipeline
provision'' that allows the use of NA (not available) in place of
information where ingredient records were not maintained. The comments
state that many ongoing processing operations will have some
ingredients on site that have been purchased and housed in facilities
for some time prior to the implementation of these regulations. In
these cases, it would be a significant manpower burden (or perhaps not
possible at all) to obtain or attempt to recreate all the required
information on the source of those ingredients. The comments note that
these ingredients have been used in food production without incident
and it would be unlikely they would be involved in an act of terrorism.
(Response) There is no requirement to establish and maintain
records for food ingredients you received before the compliance date of
these regulations. Under that scenario, however, you must establish and
maintain records of that food when you release it after the compliance
date of the regulations. For example, if a commercial bread bakery
receives flour, eggs, and salt before the compliance date of this final
rule, it does not need to keep records of the immediate previous source
of when it received that food. Once the bakery uses these ingredients
to bake the bread and releases the bread to nonconsumers after the
compliance date of the rule, the bakery must keep the records required
by Sec. 1.345 of this final rule regarding the immediate subsequent
recipients of the bread.
(Comment 7) One comment recommends the use of United Code Council
standards, a system of globally recognized and implemented standards
that enables traceability of products and identification of trading
parties/recipients, through all locations of the supply chain.
(Response) FDA does not agree. The agency has determined that the
least burdensome way of issuing the recordkeeping requirements is to
specify the information that must be contained in the records, but not
the format in which the records are kept. Indeed, the agency received
numerous comments that argued that covered entities should be allowed
to use existing records and systems.
(Comment 8) One comment requests that source labeling, including
country-of-origin labeling, be required as a component of an effective
traceback program in the event of a food emergency. The comment states
that some industries have already developed technologies such as
barcodes, stamps, stickers, or tags to identify the source of produce
as well as software to assist in more accurate traceback to the grower/
packer level.
(Response) FDA does not agree. At this time, FDA does not believe
this information is necessary to enable a traceback. FDA believes the
requirements of the final regulations for the establishment and
maintenance of records to identify the immediate previous sources and
immediate subsequent recipients of food in order to address credible
threats of serious
[[Page 71568]]
adverse health consequences or death to humans or animals are
sufficient.
(Comment 9) Some comments ask that the agency generate more
publicity on the regulations and provide the industry with educational
materials and training. One comment states that because food wholesale
distributors have no significant contact with FDA personnel and
procedures, they have a limited understanding of the requirements. One
comment asks that the agency help promote and educate the industry
abroad on the recordkeeping regulations. Another comment asks that FDA
provide materials in other languages. One comment asks that the agency
develop a strong communications program to disseminate the new
regulations once they become final because the fresh produce industry
and its transportation partners are highly diverse and fragmented. The
comment states that independent truckers in particular need to be made
aware of the regulations because the fresh produce industry in the
United States relies heavily on independent truckers to move fresh
fruits and vegetables to market quickly.
(Response) FDA conducted extensive outreach on the proposed
recordkeeping rule, including having relevant FDA staff attend 6
international meetings and more than 100 domestic meetings to ensure
that affected parties were aware of the Bioterrorism Act requirements.
On May 7, 2003, FDA held a public meeting (via satellite downlink) to
discuss the recordkeeping and administrative detention proposed rules.
See 68 FR 16998 (April 8, 2003) or http://www.cfsan.fda.gov/dms/
fsbttraz.html. Nearly 1,000 participants in North and South America and
the Caribbean viewed that live broadcast. The meeting was later
rebroadcast to Europe, Asia, Africa, and the Pacific (areas in
different time zones). FDA has also provided transcripts of the
broadcast in English, French, and Spanish (the three official World
Trade Organization languages) on the agency's Web site. In addition to
this outreach to the affected industry, FDA has conducted outreach on
the proposed rule to States.
FDA plans similar outreach directed to stakeholders following
publication of the final rule implementing the recordkeeping provisions
of the Bioterrorism Act. Our outreach will include the following:
Materials and events for the media;
Domestic outreach meetings to States and industry;
International outreach to U.S. trading partners;
Presentations by FDA officials and exhibits at
professional and trade conferences and meetings to inform industry and
State and local government representatives of the new regulations and
their requirements; and
Cooperative arrangements with other Federal agencies to
ensure that information on the final regulations and their requirements
is disseminated to affected companies and individuals.
More specifics regarding each of these will be included on FDA's
Web site at http://www.fda.gov/oc/bioterrorism/bioact.html.
(Comment 10) Several comments suggest that, to lessen the burden to
the food industry, FDA needs to coordinate with other local, Federal,
and State government security programs in establishing the final
recordkeeping regulations.
(Response) In issuing these recordkeeping regulations, FDA has
stated that records established and maintained as a result of local,
State, or other Federal regulations, or as a matter of routine business
practice, need not be duplicated if the records contain all the
information required by these regulations. Further, if existing records
contain some, but not all, of the required information, persons may
supplement existing records with the additional information required
under this final rule.
(Comment 11) One comment asks that the final rule require that
upstream entities provide all the required information to downstream
entities in the food distribution system. The comment states that
distribution centers that receive and store food and retail outlets
that hold and sell food do not know and should not be required to
determine many of the information items required under the proposed
regulation. The comment states that requiring that any information be
passed through the system from the first point of distribution,
preferably through electronic means, would alleviate some of the burden
of the recordkeeping requirements on downstream entities.
(Response) The agency does not agree completely that distribution
centers and retail outlets do not know many of the information items.
The agency agrees, however, that including information pertaining to
lot or code numbers of foods in the required records is not practical
for distribution centers and retail outlets, given current business
practices. FDA has, therefore, deleted this requirement. Instead, the
final regulation now only requires that persons who manufacture,
process, or pack food keep records on the lot or code number or other
identifier of the food, and only to the extent this information exists.
Moreover, to minimize the burden this regulation may have on affected
parties, FDA is not specifying the form or format of the records that
must be established and maintained and is not requiring electronic
records.
(Comment 12) Several comments applaud the agency's efforts in
proposing a rule that appears to be designed to work with the food
industry as efficiently and effectively as possible to address credible
threats without imposing undue burdens. One comment urges the agency to
issue the final regulations as expeditiously as possible to enhance
compliance with the provisions of the Bioterrorism Act. The comment
states that, by finalizing the regulations in conjunction with the
interim final rules entitled ``Registration of Food Facilities Under
the Public Health Security and Bioterrorism Preparedness and Response
Act of 2002'' (the registration interim final rule) (68 FR 58894,
October 10, 2003) and ``Prior Notice of Imported Food Under the Public
Health Security and Bioterrorism Preparedness and Response Act of
2002'' (the prior notice interim final rule) (68 FR 58974, October 10,
2003), the education and training that will be necessary for compliance
with the regulations can be done together and the internal policy and
procedures for companies can be designed to meet all of the obligations
under the final rule. The comment further states that this is the
reason that Congress intended regulations to be issued within 18 months
of the effective date of the Bioterrorism Act.
(Response) The agency has acted expeditiously in issuing all of the
regulations under the Bioterrorism Act and has developed and published
final regulations as quickly as possible. With respect to education and
training, as stated previously, the agency intends to conduct extensive
outreach to stakeholders for this final rule that is similar to
outreach the agency conducted for the registration and prior notice
interim final rules.
(Comment 13) One comment requests clarification regarding the level
of recordkeeping that will be expected at each facility maintained by a
vertically integrated company. The comment explains that a vertically
integrated company has various facilities involved in the growing and
processing of bulk ingredients as well as the manufacturing and
marketing of finished products. Some of the requirements for
recordkeeping could result in duplication of effort if each facility
within the company is required to
[[Page 71569]]
maintain separate records, even though the overall records are
available at company headquarters or some central location. One comment
requests that the final rule clarify what is meant by the term
``released'' and the relationship of this term to holding legal title,
or ownership of the food. Another comment suggests that FDA clarify
that only at such time as the food leaves the possession and control of
one firm and enters into the possession and control of another firm,
whether or not via a transporter, would the recordkeeping requirement
apply. The comment maintains that any other interpretation of the
statute would impose a crushing burden of internal tracking systems and
paperwork that would detract from most firms' abilities to do business
and is well beyond the intent of the Bioterrorism Act.
(Response) The records required by these regulations are those that
FDA needs for inspection to identify the immediate previous sources and
the immediate subsequent recipients of food. ``Immediate previous
source'' has been defined in Sec. 1.328 of the final rule to mean ``a
person who owns food or who holds, processes, packs, imports, receives,
or distributes food or food packaging, and that last had an article of
food before transferring it to another person.'' Unless otherwise
exempt (i.e., a farm), a ``vertically integrated company'' would be
required to identify the sources of all food received from its
immediate previous sources. Once the vertically integrated company
receives the food and keeps information on its immediate previous
sources, that vertically integrated company does not need to keep
additional records until it releases the food to another person. Unless
otherwise exempt, at the time the vertically integrated company
releases the food, it is required to identify the immediate subsequent
recipients of that food.
As an example, if a company buys food from its immediate previous
source (company A), then the company further processes the food, holds
the food, transports the food, and distributes the food to a grocery
store, then the vertically integrated company would only have to keep
records on its immediate previous source (company A) and its immediate
subsequent recipient (grocery store). The vertically integrated company
need not keep records of all the covered activities (manufacturing,
processing, packing, transporting, etc.) conducted by that company
while it has the food.
Of course, when the integrator has any records or other information
available to FDA under sections 414 and 704(a) of the FD&C Act, then
FDA would have access to those records if FDA has a reasonable belief
that the food is adulterated and presents a threat of serious adverse
health consequences or death to humans or animals.
B. Foreign Trade Issues
(Comment 14) Several comments representing foreign governments and
international associations agree in principle to the recordkeeping
requirements provided the requirements are based on a sound risk
assessment and do not restrict trade more than necessary to effectively
address potential risks. Some comments note that there is no risk
assessment provided to justify the proposed measures required by the
World Trade Organization Agreement on the Application of Sanitary and
Phytosanitary Measures (SPS agreement). Several comments representing
foreign governments and businesses request that FDA work with foreign
governments to develop common standards and requirements and to
facilitate trade flow. Some foreign comments argue that the result of
the onerous recordkeeping burden in the regulations will be the
elimination of many legitimate and safe food distribution businesses
and a serious reduction in global food trade. One comment suggests that
the regulations will adversely impact trade, as they are likely to
increase uncertainty and costs for foreign exporters. Small and medium
sized foreign companies in particular may be prevented from continuing
to export to the United States for these reasons. One comment is
concerned that the regulations may lead to the unintended consequence
of foreign countries imposing the same requirements of U.S. goods in
foreign trade.
(Response) FDA considers that these foreign trade comments are now
moot, given the scope of these final regulations. These final
regulations do not apply to foreign persons, except foreign persons
transporting food in the United States, who are treated no differently
than domestic food transporters under these final regulations. FDA does
not believe that foreign persons who transport food in the United
States will incur additional costs as a result of these regulations,
because FDA assumes that they will choose to comply with Sec. 1.352 of
this final rule by establishing and maintaining the records already
required by FMCSA. See the response to comment 82, later in this
document.
C. Comments on Who is Subject to This Subpart? (Proposed Sec. 1.326)
1. General
(Comment 15) Several comments seek clarification on who is covered
by the proposed regulation. Comments ask if the provisions of the
regulations apply to port facilities, such as warehouses, or storage
and inspection facilities in land, sea, or airports that belong to
private companies and government bodies for food control in the country
of shipping and/or origin.
(Response) Persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food in the United States are
subject to these regulations. ``Person'' is defined in section 201(e)
of the FD&C Act (21 U.S.C. 321 (e)) and includes any ``individual,
partnership, corporation, and association.'' Therefore, any person
located in any State or Territory of the United States, the District of
Columbia, or the Commonwealth of Puerto Rico who manufactures,
processes, packs, transports, distributes, receives, holds, or imports
food is included within the term ``person''. ``Holding'' has been
defined in Sec. 1.328 of the final rule to mean ``storage of food.
Holding facilities include warehouses, cold storage facilities, storage
silos, grain elevators, and liquid storage tanks.'' Accordingly, port
facilities, such as warehouses, or storage facilities that are located
in any State or Territory of the United States, the District of
Columbia, or the Commonwealth of Puerto Rico are subject to these
regulations as they are ``persons'' who are holding food.
(Comment 16) One comment seeks clarification on whether the
proposed regulation applies to a carrier's freight brokers. The comment
states that, although these brokers never have actual physical
possession of freight, they act as the middleman for carriers and
shippers and have knowledge of where the freight came from and where it
went. A few comments ask that FDA clarify that customs brokers are
excluded from the regulations. The comment indicates that because Sec.
1.326 of the proposed regulations applies to, inter alia, persons that
``import'' food, it could be interpreted to include customs brokers,
who act only as agents for the importer. A comment notes that customs
brokers have only the information needed to file an entry on behalf of
the actual importer and to obtain release of the food from U.S. Customs
and Border Protection (CBP). However, according to the comment, customs
brokers do not own food or hold, process, pack, import, receive, or
distribute food for purposes other than
[[Page 71570]]
transportation. The comment notes that applying the recordkeeping
requirements to customs brokers would cause redundant and burdensome
recordkeeping requirements for them.
(Response) FDA clarifies that the recordkeeping requirements do not
apply to brokers who act only to facilitate distribution, sale, or
transportation of food by processing information or paperwork
associated with these functions. Brokers who do not directly
manufacture, process, pack, transport, distribute, receive, hold, or
import food are not subject to the requirements of the regulation.
(Comment 17) One comment asks that FDA specify whether the
regulation applies to the importer of record or to the initial U.S.
recipient when the merchandise enters the country. The comment notes
that this clarification could affect who is responsible for the
establishment and maintenance of records.
(Response) The final rule applies to persons who manufacture,
process, pack, transport, distribute, receive, hold, or import food in
the United States, unless the person qualifies for an exclusion in
Sec. 1.327 of the final rule. An importer of record or an initial U.S.
recipient that is involved in one or more of the identified activities
must establish and maintain the required records.
(Comment 18) Several comments express concern because the proposed
regulation applies only to domestic, for-hire transporters, and foreign
transporters that enter the United States, as well as domestic private
transporters, are not covered. Comments state that the regulation
should apply uniformly to all transporters, foreign and domestic, for-
hire and private, to ensure that no group has an unfair competitive
advantage.
(Response) All persons transporting food in the United States must
meet the requirements of subpart J of this final rule, regardless of
whether they are ``for hire'' or ``private.'' FDA notes, however, that
if a manufacturer located in the United States transports the food in
its own company trucks, then it must comply with the recordkeeping
requirements for nontransporters as opposed to those applicable to
transporters because FDA does not need the facility to keep duplicative
records of the food while it is in that facility's control. However, if
a foreign person, such as a person who manufactures food, transports
food in the United States, it must comply with the requirements for
transporters, even if it transports the food in the United States
itself. This ensures that FDA will have the ability to traceback the
food that is transported in the United States, even if the facility
from which the food originates is an exempt foreign facility under
subpart J.
(Comment 19) One comment notes that CBP's current requirements
apply to trucking companies that transport imported food into the
United States. The comment suggests that FDA coordinate with CBP to get
data from them in the event of a threat to the nation's food supply,
rather than develop its own distinct recordkeeping regulations.
(Response) The records required to be kept by these regulations are
those FDA needs to help identify the immediate previous sources and
immediate subsequent recipients of food. Section 1.361 of the final
rule allows FDA access to transporters' existing records when FDA has a
reasonable belief that an article of food is adulterated and presents a
threat of serious adverse health consequences or death to humans or
animals. When conducting a traceback, FDA needs access to the required
records at each point in the distribution chain for the implicated
food. Thus, FDA will expect to obtain applicable records from
transportation companies in the distribution chain. Although FDA may
contact, and coordinate tracebacks with, other Federal agencies,
including CBP, the agency expects transportation companies to comply
with the recordkeeping and access provisions of these regulations. FDA
notes that entities keeping records to satisfy CBP's regulations may
use those same records to satisfy some or all of the requirements of
this final rule if those records contain some or all of the information
required by subpart J of this final rule. Entities also can supplement
existing records with any new data required by this regulation, instead
of creating an entirely new record containing both existing and new
information.
(Comment 20) A few comments ask FDA to clarify what constitutes
``holding'' food, who FDA considers to be ``holders of food,'' and
under what circumstances food is being held in transport. The comment
notes that the lack of clarity leaves a carrier's terminal operating
facility, gas stations, truck stops, and even trucks themselves
vulnerable to being considered as ``holders of food'' and thereby
subject to burdensome reporting requirements. Comments also ask FDA to
exclude trucks, truck terminals, and facilities from the definition of
``holding,'' stating that this would be consistent with the intent of
the law and the realities of the trucking industry's business
practices. One comment asks whether food held for short periods of time
in a trucking terminal during cross-dock operations meets the
definition of ``holding.'' One comment states that there are certain
areas in the supply chain that provide temporary space for food during
transit and that these areas should not be considered to be ``holding''
or ``storing'' food and subject to the recordkeeping requirements. The
comment notes that some sites serve as transitory staging areas where
produce is momentarily held before transportation and that, because of
the perishable nature of the product and the desire to transport the
fresh commodity rapidly, produce moves from these staging areas as
quickly as possible.
(Response) ``Holding'' means storage of food. Holding facilities
include warehouses, cold storage facilities, storage silos, grain
elevators, and liquid storage tanks. The recordkeeping requirements in
Sec. Sec. 1.337 and 1.345 of this final rule apply to persons who
``hold'' food for purposes other than transportation. As defined in
Sec. 1.328 of this final rule, a ``transporter'' is:
* * * a person who has possession, custody, or control of an
article of food in the United States for the sole purpose of
transporting the food, whether by road, rail, water, or air.
Transporter also includes a foreign person that transports food in
the United States, regardless of whether that person has possession,
custody, or control of that food for the sole purpose of
transporting the food.* * *
Truck terminals or similar facilities that are part of the
transportation process and merely provide a location for trucks to
transfer possession, custody, or control to another entity are not
subject to the requirements in Sec. Sec. 1.337 and 1.345 of the final
rule, unless possession, custody, or control is transferred to that
terminal or facility.
(Comment 21) One comment seeks clarification on whether a
``customer,'' such as an office complex, would be required to maintain
records if it receives and stores a food, such as bottled water, in the
customer's own storage area for subsequent distribution to the various
offices within the complex. The comment also asks whether, for bottled
water, such a customer would also be the immediate previous source for
bottles that are returned to the bottler for reuse.
(Response) FDA has added an exclusion to the final rule for persons
who receive or hold food on behalf of specific individual consumers and
who are not also parties to the transaction and who are not in the
business of distributing food. This exclusion covers person such as a
hotel concierge, the reception desk in an apartment building, and an
office complex that
[[Page 71571]]
receives bottled water as described by the comment. FDA has added this
exclusion because such persons are not parties to the transaction and
records from such person are not necessary to identify the immediate
previous sources and immediate subsequent recipients of food to address
credible threats of serious adverse health consequences or death.
The comment also asks whether, for bottled water, such a customer
would also be the immediate previous source for bottles that are
returned to the bottler for reuse. A customer who returns bottles to
the bottler would be the nontransporter immediate previous source of
the bottles (Sec. 1.328 of the final rule). As with other sources of
its bottles (e.g., a bottle manufacturer), the bottler would be
required to keep records of bottles received from customers for reuse.
(Comment 22) One comment asks that FDA clarify in the regulation
that domestic grain-handling, feed manufacturing/ingredient or
processing facilities dedicated solely to exporting bulk or processed
agricultural commodities to other countries are exempt from the
recordkeeping requirement unless the commodities, products, or
byproducts they handle are introduced into U.S. commerce. The comment
states that this clarification would be consistent with the statutory
language and FDA's proposed regulations.
(Response) The proposed rule applied to persons who manufacture,
process, pack, transport, distribute, receive, hold, or import food
intended for consumption in the United States, unless the person
qualifies for an exclusion in Sec. 1.327. This provision has been
changed in the final rule. The Bioterrorism Act does not limit the
recordkeeping authority to food that is consumed in the United States.
FDA's intent in the proposed rule was to apply the recordkeeping
provisions to the full reach of section 306 of the Bioterrorism Act
with respect to domestic persons. In contrast, the registration interim
final rule that FDA issued under section 305 of the Bioterrorism Act
only requires those facilities that manufacture, process, pack, or hold
food for consumption in the United States to register. The proposed
recordkeeping rule inadvertently added the same qualifier as is in the
registration interim final rule: That is, it only applied to food that
was ``intended for consumption in the United States.'' FDA is removing
this qualifying language from the final rule to ensure that all persons
that manufacture, process, pack, transport, distribute, receive, hold,
or import food in the United States are subject to this final rule
unless otherwise exempt. FDA believes this coverage is necessary
because foods intended for export could easily be diverted into
domestic commerce. In addition, not everyone in the food supply chain
may know if the food is intended for consumption in the U.S. or
intended solely for export. Therefore, such a limitation in this
rulemaking could create holes in a tracing investigation. Further, FDA
is concerned that exempting foods intended for export from the
recordkeeping regulations could lead to such foods being targeted for
tampering and reintroduction into domestic commerce because they would
prove more intractable to tracing investigations.
(Comment 23) One comment asks whether small growers who provide a
raw agricultural commodity to a cooperative must keep records and
whether the cooperative must list all of the growers.
(Response) Growers of raw agricultural commodities that meet the
definition of ``farm'' in Sec. 1.328 are excluded from the
requirements of subpart J of this final rule. A cooperative that
accumulates raw agricultural commodities from growers, and does not
meet the exemption for retail food establishments that employ 10 or
fewer full-time equivalent employees in Sec. 1.327(f) of the final
rule, is subject to the requirements in Sec. 1.337 of the final rule
regarding the immediate previous sources of food. Distribution of food
from the cooperative directly to consumers is excluded from the
requirements of Sec. 1.345 of the final rule regarding the immediate
subsequent recipients of food.
2. Intrastate
(Comment 24) One comment agrees that the requirement for U.S.
domestic firms, whether shipping interstate or intrastate, to establish
and maintain records as provided in the proposed regulation will
maximize FDA's capability to implement traceback procedures within the
borders of the United States. Another comment states that a finding
that a certain food is intentionally contaminated--even if only
distributed or sold locally--could have widespread, nationwide, even
international, economic implications. The comment states that the
recent ``mad cow'' episode in Canada demonstrates that restrictions
might be imposed on the distribution and sale of implicated products,
or consumers across the country may decide not to buy the products thus
impacting the economy as a whole. As a result, the comment states that
FDA is correct in concluding that all persons who manufacture, process,
pack, transport, distribute, receive, hold, or import food should be
subject to the recordkeeping requirements whether or not they directly
engage in interstate activities involving food.
However, another comment states that FDA's intent to assert
jurisdiction over food, whether or not it enters interstate commerce,
may be unconstitutional. The comment notes that this assertion of power
to regulate food in intrastate commerce is inconsistent with
limitations imposed by the Commerce Clause of the U.S. Constitution,
which generally authorizes Congress to regulate purely interstate
commerce only. The comment further states that FDA should have assumed
that Congress did not intend to violate the Constitution, and should
revise the proposed rule accordingly. Another comment states that the
FDA is proposing that domestic persons must maintain appropriate
records as stipulated by the proposed regulations regardless of whether
their food enters interstate commerce. The comment adds that
appropriate State, local, and municipal regulatory bodies have
authority to regulate domestic persons who manufacture, process, pack,
transport, distribute, receive, or hold food intended for human or
animal consumption, when intended solely for intrastate commerce in the
United States. The comment argues that the proposed regulations
regarding recordkeeping should not be expanded beyond what has been set
forth in the Bioterrorism Act.
Another comment states that the FMCSA has guidelines for
determining whether carriers and drivers are engaged in interstate
commerce and provides the following definition in 49 CFR part 390.5:
Interstate commerce means trade, traffic, or transportation in
the United States--(1) Between a place in a State and a place
outside of such State (including a place outside of the United
States);
(2) Between two places in a State through another State or a
place outside of the United States; or
(3) Between two places in a State as part of trade, traffic, or
transportation originating or terminating outside the State or the
United States.
(Response) In the preamble to the proposed rule, FDA sought
comments on its tentative conclusion that it has authority to require
recordkeeping by persons engaged only in intrastate commerce. FDA also
sought comments on how many intrastate persons would not be covered by
one of the exclusions
[[Page 71572]]
from the recordkeeping requirements (e.g., the farm or restaurant
exemption). Based on consideration of the received comments and further
review of the provision of the Bioterrorism Act that provides FDA with
the authority to require the establishment and maintenance of records
by all ``persons'' who engage in specified activities involving food,
FDA has concluded that the Bioterrorism Act gives FDA authority to
require persons to establish and maintain records, whether or not they
engage in interstate commerce, as long as they fall within Congress's
power to legislate in this area.
FDA is mindful that its interpretation of the Bioterrorism Act
should not cast doubt on the constitutionality of the statute. (See
Solid Waste Agency of Northern Cook County v. U.S., 531 U.S. 159
(2001).) The agency has considered the relevant provisions of the
Bioterrorism Act, the comments submitted on this issue, FDA's
responsibilities in implementing the Bioterrorism Act, and the law
interpreting the Commerce Clause of the Constitution (Article I,
section 8). Based on these considerations, FDA is retaining Sec.
1.326(b) as proposed, with the result that all persons that
manufacture, process, pack, transport, distribute, receive, hold, or
import food in the United States (unless otherwise exempt) must
establish and maintain records, even if food from the facility does not
enter interstate commerce.
The plain language of new section 414 of the FD&C Act does not
exclude a facility from recordkeeping because food from such facility
does not enter interstate commerce. Notably, sections 301 and 304 (21
U.S.C. 331 and 334) of the FD&C Act demonstrate that Congress has
included a specific interstate commerce nexus (e.g., has explicitly
required interstate commerce) in the provisions of the FD&C Act when
that is its intent. Accordingly, it is reasonable to interpret the
Bioterrorism Act as not limiting recordkeeping only to those persons
with a direct connection to interstate commerce. Congress's power to
legislate under the Commerce Clause is very broad. We acknowledge that
such power is not without limits, see United States v. Lopez, 514 U.S.
549, 567 (1995); U.S. v. Morrison, 529 U.S. 598, 618 (2000), but these
limits have to be construed in light of relevant and enduring
precedents.
In particular, in Lopez, supra, the Supreme Court acknowledged the
continuing vitality of Wickard v. Filburn, 317 U.S. 111 (1942), noting
that:
* * * although Filburn's own contribution to the demand for
wheat may have been trivial by itself, that was not `enough to
remove him from the scope of federal regulation where, as here, his
contribution, taken together with that of many others similarly
situated, is far from trivial.'* * *
(Lopez, 514 U.S. at 556.) This principle applies squarely to the
recordkeeping provision of the Bioterrorism Act. Accordingly, given the
collective impact on commerce of intrastate manufacturing, processing,
packing, transporting, distributing, receiving, or holding of food in
the United States, FDA has concluded that the requirement to establish
and maintain records should apply regardless of whether the food enters
interstate commerce. Thus, FDA is retaining Sec. 1.326(b) as proposed.
See also response to comment 82 below for an expanded discussion of the
collective impact on commerce of intrastate transportation of food.
This is consistent with section 709 of the FD&C Act (21 U.S.C.
379a), which states that, in any action to enforce the FD&C Act's
requirements respecting foods, drugs, devices, and cosmetics, any
necessary connection with interstate commerce is presumed. Likewise,
this outcome is consistent with Congress's goal in enacting the
Bioterrorism Act, because the potential harm from bioterrorist attacks
or other food-related emergencies can be great, whether or not the food
moves from one State to another. The usefulness of recordkeeping also
can be significant in food emergencies where interstate shipment has
not occurred.
3. Foreign Facilities
(Comment 25) Several comments assert that FDA lacks the statutory
authority to apply the recordkeeping and records inspection provisions
of the Bioterrorism Act to foreign facilities. According to the
comments, section 306 of the Bioterrorism Act does not indicate,
expressly or by inference, that Congress intended the provisions of
that section to apply to overseas persons or facilities. They also
contend that nothing in the legislative history of the Bioterrorism Act
indicates Congress intended that section 306 of the Bioterrorism Act
should apply to foreign facilities. The comments point out that there
is a longstanding presumption in the law that legislation does not
apply outside the borders of the United States, unless Congress clearly
and expressly states such an intent. The comments state that, under
governing case law, FDA may not infer legislative intent to give a
statute extraterritorial reach.
A few comments indicated that FDA failed to provide legal
justification for applying the regulation to foreign facilities. The
comments pointed out that FDA's stated belief that this was the most
efficient and effective strategy for obtaining needed information on
food from foreign countries cannot overcome the clear indications that
Congress did not intend section 306 of the Bioterrorism Act to apply to
foreign entities.
One comment suggests that FDA clarify that the recordkeeping
requirements do not apply outside of the United States, but serve only
as a guideline to facilitate a rapid response through cooperation at
intergovernment and international industry levels. One comment states
that it has been acknowledged in the context of recent CBP initiatives
that CBP has no jurisdiction in foreign countries. The comment notes
that, consequently, mutual agreements on cooperation between CBP and
some foreign governments have been reached to address together their
shared security objectives. Comments suggested that FDA pursue a
similar approach for safety and security of foods.
One comment asks what action FDA can take against foreign companies
that do not establish and maintain the records required under section
306 of the Bioterrorism Act. A few comments state that the fact that
section 306 of the Bioterrorism Act does not provide any mechanisms for
enforcement of the recordkeeping and records access requirements
against foreign persons supports the position that Congress did not
intend that section to apply to foreign entities.
(Response) Because FDA has decided, for policy reasons, to exempt
foreign facilities that do not manufacture, process, pack, distribute,
hold, or import food in the United States from the requirements of the
rule, FDA does not need to decide this jurisdictional issue. FDA is
exempting all foreign persons (except for foreign persons who transport
food in the United States) from the final regulation because FDA does
not believe such records would be needed. Much of this information is
available to the Secretary from facilities required to provide prior
notice under part 1, subpart I. FDA intends to work with the competent
authorities in foreign countries to access records during public health
emergencies to obtain additional information, if necessary. However,
the final rule explicitly provides that persons who transport food in
the United States are subject to subpart J of this final rule.
(Comment 26) One comment questions FDA's determination that it can
perform its Bioterrorism Act
[[Page 71573]]
mission of tracking shipments by exempting Mexican and Canadian motor
carriers from the recordkeeping requirements while requiring U.S. motor
carriers to comply with the recordkeeping requirements. The comment
notes that, based on CBP figures for Mexico-domiciled carriers,
referenced in the ``Economic Impact Estimates'' section of the proposed
rule, 63,000 out of 80,000 carriers operating across the southern
border are Mexico-domiciled. The comment points out that, therefore,
the majority of cross-border FDA-regulated shipments at the southern
border may be exempt from the requirements of the regulation.
(Response) FDA agrees. The final rule provides that foreign persons
who transport food in the United States are subject to this final rule.
A ``transporter'' is now defined as:
* * * a person who has possession, custody, or control of an
article of food in the United States for the sole purpose of
transporting the food, whether by road, trail, water, or air.
Transporter also includes a foreign person that transports food in
the United States, regardless of whether the foreign person has
possession, custody, or control of that food for the sole purpose of
transporting that food.* * *
Thus, even if a foreign manufacturing facility transports its own
manufactured food into the United States, it is considered a
``transporter'' under subpart J of this final rule and must comply with
the requirements applicable to transporters.
(Comment 27) One comment seeks clarification regarding application
of the recordkeeping requirements to certain ownership-partnership
relationships involving a U.S. trucking company and a Canadian or
Mexican trucking company. The comment asks, for example, whether a
Canadian subsidiary of a U.S. trucking company is subject to the
recordkeeping requirements. The comment states that a Canadian trucking
company may be in partnership with a U.S. company, and the percentage
of U.S. ownership is established in each partnership. Another example
provided by the comment is that a Mexican motor carrier may have a
contractual or interline relationship with a U.S. company. The comment
asks whether the recordkeeping requirements apply to the foreign
transporters with these U.S. relationships.
(Response) The final rule applies to persons who manufacture,
process, pack, transport, distribute, receive, hold, or import food in
the United States. Thus, any person who transports food in the United
States is subject to these recordkeeping requirements with respect to
that food that enters the United States. The partnership or contractual
status with a U.S. company does not affect the application of these
requirements to a foreign person if they are transporting food in the
United States, because such persons are already covered by this final
rule by virtue of transporting food in the United States.
(Comment 28) One comment seeks clarification on whether residency
in a territory of the United States affects applicability of the
regulation. One comment questions FDA's authority to apply the proposed
regulation to the Caribbean jurisdictions of the U.S. Virgin Islands
and the Commonwealth of Puerto Rico. The comment contends that the
regulations would be burdensome to grocery operators or other retailers
in the Caribbean jurisdictions who do not export to the Continental
United States, but would not deter bioterrorism acts in the Continental
United States or in the Caribbean jurisdictions. The comment asserts
that the proposed regulation will jeopardize the island economies of
the Caribbean jurisdictions by increasing unnecessary expenses to the
food retailing activity, which is already more expensive than in the
Continental United States, by adding, among other expenses, the
maritime transportation cost to the goods.
(Response) The final rule applies to persons that manufacture,
process, pack, hold, transport, distribute, receive, or import food in
the United States. Section 201(a)(1) of the FD&C Act defines the term
``State'' as, ``any State or Territory of the United States, the
District of Columbia, and the Commonwealth of Puerto Rico'', and
section 201(a)(2) of the FD&C Act defines the term ``Territory'' as,
``any Territory or possession of the United States, including the
District of Columbia, and excluding the Commonwealth of Puerto Rico and
the Canal Zone).'' Accordingly, any person in the 50 States of the
United States, or in any Commonwealth or Territory of the United
States, that performs a covered activity is subject to the requirements
of this final rule. This includes both Puerto Rico (because, for
purposes of the FD&C Act, it is considered a State) and the U.S. Virgin
Islands (because, as a U.S. territory, it is considered a State for
purposes of the FD&C Act).
D. Comments on Who is Excluded From All or Part of the Regulations in
This Subpart? (Proposed Sec. 1.327)
1. General
(Comment 29) Several comments argue that because the Bioterrorism
Act specifically excludes those foods under the jurisdiction of USDA,
alcoholic beverages should also be excluded, as they are already
regulated by the Department of Treasury's Alcohol and Tobacco Tax and
Trade Bureau (TTB) as well as by CBP. One comment requests that FDA
secure a legislative amendment to the Bioterrorism Act that exempts
wines and spirits and other alcoholic beverages from its application,
in the same way meat, poultry, and egg products under the jurisdiction
of the USDA are excluded from its scope.
Another comment states that the importer's records enable a product
to be traced from the point of importation to its destination, as well
as back to the producer/supplier. The comment states that substantial
information about a product imported legally into the United States is
already held in the TTB database.
(Response) Unlike products regulated under the exclusive
jurisdiction of USDA under the FMIA, the PPIA, or the EPIA, Congress
did not exempt alcoholic beverages from the scope of the recordkeeping
requirements. FDA has not excluded alcoholic beverages from the scope
of this final rule because FDA believes that these records are needed
to help the Secretary to identify the immediate previous sources and
the immediate subsequent recipients of food to address credible threats
of serious adverse health consequences or death to humans or animals.
Further, FDA reiterates that, to the extent that you already keep the
information required by this final rule to comply with TTB
requirements, or for any other reason, you do not need to establish and
maintain duplicative records.
In addition, securing a ``legislative amendment'' to the
Bioterrorism Act, as the comment suggests, is beyond the scope of this
rulemaking.
(Comment 30) One comment suggests that FDA add an exclusion that
covers persons who transport food for the U.S. military and U.S.
Government agencies with respect to that food. Those entities are
sophisticated and able to establish their own requirements.
Transporters of food for those entities should not be subject to
potentially duplicative FDA standards.
(Response) Congress did not provide for an exemption for food that
is transported for the U.S. military or any other U.S. Government
agency from the scope of the recordkeeping requirements. FDA believes
that these records are needed to help the Secretary identify the
immediate previous sources and the immediate subsequent recipients of
food to address credible threats of serious adverse health consequences
or death to humans or
[[Page 71574]]
animals. Again, with respect to the comment's assertion that
transporters of food for those entities should not be subject to
potentially duplicative FDA standards, FDA agrees. There is no
requirement to keep duplicative records. FDA reiterates that to the
extent that you already keep the information required by this final
rule, you do not need to establish and maintain duplicative records.
(Comment 31) One comment questions whether there are provisions for
the exemption of beekeepers who bottle and sell small amounts of honey
and other beehive products, even if they keep their hives on the
property of others, as is frequently done for pollination purposes or
the production of honey from sites other than the beekeepers' own
property.
(Response) Congress did not provide for an exemption for beekeepers
who bottle and sell small amounts of honey and other beehive products.
FDA believes that these records are needed to help the Secretary
identify the immediate previous sources and the immediate subsequent
recipients of food to address credible threats of serious adverse
health consequences or death to humans or animals. Unless these
entities fall within a specified exemption, they are subject to the
requirements of this final rule. For example, some of the beekeepers
may fall within the exemption for farms or retail food establishments
that employ 10 or fewer full-time equivalent employees. In addition,
beekeepers are not required to keep records of sales directly to
consumers.
(Comment 32) One comment requests clarification on how imported
food samples that do not enter commerce will be handled based on the
regulations. These food samples have the intended end use of analysis,
experimentation, and/or subsequent destruction within approved company
premises. The samples may be carried into the United States as personal
baggage of company representatives or sent unaccompanied. The comment
points out that food carried in personal baggage is exempt from the
registration interim final rule only if the food is for personal
enjoyment/use. Another foreign comment states that the recordkeeping
requirement should not apply to commercial samples. The comment states
that new exporters cannot be expected to engage in recordkeeping
requirements concerning exports before testing marketing opportunities.
(Response) Persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food in the United States that is
intended for consumption by humans or animals are subject to these
regulations. The recordkeeping requirements would not apply to food
samples that are used for quality assurance, research or analysis
purposes, as long as the food samples are not consumed by humans or
animals. Samples of food are considered to be for quality assurance,
research or analysis purposes, rather than human consumption, when they
are in small quantities (i.e., quantities consistent with the quality
assurance, research, or analysis purposes) and the entire sample is
used up by the analysis, destroyed after analysis, or destroyed
following a reasonable retention period after analysis. The analysis
may include sensory examination, such as organoleptic examination for
determining tea quality or detecting the presence of histamines.
Evidence that an article of food is for quality assurance, research, or
analysis purposes only might include, among other evidence, markings on
the food and shipping documents. Food samples intended for consumption
via test marketing, such as tasting at trade shows or product
promotional tasting events, are subject to this subpart.
The recordkeeping rule, however, exempts all foreign persons,
except foreign persons who transport food in the United States.
Therefore, the foreign exporter of the samples mentioned by the
comment's is not required to establish and maintain records under this
final rule. With respect to the comments assertion that the
registration interim final rule exempts food carried in personal
baggage for personal use, FDA notes that it is the prior notice interim
final rule (part 1, subpart I) that exempts these products, not the
registration interim final rule (part 1, subpart H). The registration
interim final rule applies to all domestic and foreign facilities that
manufacture, process, pack, or hold food that will be consumed in the
United States, unless otherwise exempted. This includes facilities
performing covered activities with respect to commercial samples if
those samples will be consumed in the United States. See response to
comment 67 at 68 FR 58911 through 58912 (October 10, 2003). As detailed
in the response to comment 22, this final rule does not distinguish
between food consumed in the United States and food that is exported.
(Comment 33) One comment indicates that the proposal is silent as
to whether firms producing finished food products or food additives and
ingredients intended solely for export must comply with the
recordkeeping requirements. The comment argues that because this
regulation applies to foods for consumption in the United States,
producers of such products should be exempt from the recordkeeping
requirements.
(Response) Persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food in the United States are
subject to these regulations. If the food is intended solely for
export, the person producing that food in the United States would still
be subject to these regulations with respect to that food.
2. Farms
(Comment 34) Several comments ask if foreign farms, including fish
farms (aquaculture) fall under the regulation's farm exemption.
(Response) Section 306 of the Bioterrorism Act specifically exempts
farms from these regulations. The definition of a farm includes
aquaculture facilities. In addition, foreign persons (except for
foreign persons who transport food in the United States), including
foreign farms, are excluded from all of these regulations.
(Comment 35) One comment states that FDA has not clarified whether
producers who ship live food animals to the United States will be
required to keep records on their farm operations, as their products
will be ``finished'' in another country, may have been raised on more
than one farm, and may not be considered as going directly to the
consumer for consumption. The comment strongly urges the FDA not to
require farmers shipping live animals to the United States to incur the
additional cost, time, and work involved in maintaining records, beyond
those which are currently being maintained for their operations, solely
for the purpose of this regulation.
(Response) Farms are excluded from these regulations, as are
foreign persons, except for foreign persons who transport food in the
United States. Therefore, foreign farmers who ship live food animals to
the United States are exempt from this final rule (unless they
transport the animals into the United States themselves). FDA notes,
however, that although foreign exporters of food into the United States
are exempt from these recordkeeping requirements, they must comply with
the prior notice regulations issued under the Bioterrorism Act (part 1,
subpart I). FDA also notes that an importer of live food animals into
the United States would be required to establish and maintain records
under these regulations given
[[Page 71575]]
that importers are not exempt from this final rule.
(Comment 36) One comment states that, although the proposed rule
exempts farms, it may still result in a recordkeeping burden for them.
The comment states that, in practice, the farmer will be expected to
generate paperwork so that those delivering and dropping products off
at the farm will be able to comply with the final rule. Although farms
may be exempt on the face of the rule, the comment states that, in
reality, farmers will have to generate large amounts of paperwork for
their suppliers, truckers, and buyers. The comment states that the
final rule needs to make clear that farmers will not be responsible, or
expected to generate, paperwork for those complying with this rule.
(Response) Farms are specifically exempted from the requirements of
these regulations. Only those persons subject to these regulations must
establish and maintain records of the immediate previous sources and
immediate subsequent recipients of food that they manufacture, process,
pack, transport, distribute, receive, hold, or import. This final rule
does not require a farm to establish or maintain records for those who
are subject to this regulation.
3. Restaurants
(Comment 37) Several comments state that retail food stores offer a
variety of services and conveniences to consumers, including foods that
are prepared in-store and ready for immediate consumption, and that the
restaurant-type facilities in the retail store should be excluded from
the recordkeeping requirements.
One comment notes that the proposed rule includes an exemption for
restaurants, which are defined as facilities that sell food directly to
consumers for immediate consumption. The comment asserts that many
convenience stores make such sales of prepared foods, but convenience
stores are included in the proposed rule's definitions as an example of
retail facilities. In the comment's view, convenience stores that sell
food for immediate consumption should be exempt from the proposed rule.
There is no reason why convenience stores that sell prepared foods
should have greater regulatory burdens than any other type of entity
that sells prepared foods. The comment further states that the
restaurant exemption as currently proposed leads to results that are
difficult to justify. The comment asks why, for example, should a
convenience store that sells lunchmeat be required to comply with a
costly system of recordkeeping, while a delicatessen that sells
precisely the same product to the same consumer is exempt? The comment
states that the only sensible answer to these unjustifiable
inconsistencies is to exempt retailers that sell food to consumers for
immediate consumption from the requirements of the regulation.
(Response) FDA agrees with these comments. Section 306 of the
Bioterrorism Act exempts restaurants from recordkeeping requirements.
There is no similar exemption in section 306 for retail facilities. In
the proposed rule, FDA exercised the agency's discretion and proposed
excluding retail facilities from the requirement to establish and
maintain records of the immediate subsequent recipients of food when
the food is sold directly to consumers (68 FR 25188 at 25192). As
explained therein, the Bioterrorism Act expressly states that the
Secretary may require the establishment and maintenance of records by
persons who ``distribute'' food, and therefore retail facilities could
be subject to all of the provisions in subpart J of this final rule if
FDA thought it was necessary to address credible threats of serious
adverse health consequences or death to humans or animals.
FDA recognizes that some facilities that are predominantly retail
distribute some food to businesses (that then may further distribute
the food before it is consumed) and that some facilities that are
predominantly nonretail distribute some food to consumers. FDA
concludes that to require such facilities to keep records of each
individual recipient consumer would be too burdensome, and not
necessary to help address credible threats of serious adverse health
consequences or death to humans or animals. If a traceback or trace
forward is necessary, FDA can learn from sickened consumers the sources
of the food they purchased, or notify consumers generally about food
that presents a threat. Therefore, FDA is changing the final rule from
the proposal so that it does not require records of subsequent
recipients for sales directly to consumers, regardless of whether the
seller is a retailer or another type of entity. The final rule excludes
persons who distribute food directly to consumers from keeping records
of those transactions. Moreover, if a person prepares and sells food
directly to consumers for immediate consumption, then those sales
qualify for the restaurant exemption.
However, persons who operate retail food establishments that
distribute food to persons who are not consumers are subject to all of
the requirements in subpart J of this final rule. However, the
requirements in Sec. 1.345 of the final rule to establish and maintain
records to identify the nontransporter and transporter immediate
subsequent recipients that are not consumers applies as to those
transactions only to the extent the information is reasonably
available.
Furthermore, retail food establishments that employ 10 or fewer
full-time equivalent employees are excluded from all of the
requirements of subpart J of this final rule, except the record access
provisions for existing records under Sec. Sec. 1.361 and 1.363.
4. Fishing Vessels
FDA received no comments on this issue and has made no changes to
the definition for fishing vessels or to the exemption in the final
rule.
5. Retail Facilities
(Comment 38) One comment states that it operates a business that is
essentially the same as any other retailer (although they sell to
restaurants). Sales to its customers are recorded using a checkout
register, and thus, it should not be required to keep records of
individual items purchased by customers. Requiring such records from
it, but not requiring retailers to keep such records, would be unfair
and would be extremely burdensome.
(Response) The business described in the comment is not treated
differently than other retailers. Persons who distribute food to
businesses do not qualify for the exclusion for sales to consumers in
Sec. 1.327(d) of the final rule. Thus, sales of food to restaurants
require the establishment and maintenance of records of the immediate
subsequent recipient, as codified in Sec. 1.345 of the final rule, to
the extent that information is reasonably available to you. Information
is reasonably available to you if you have a system in place to capture
the information. FDA does not intend to require the reconfiguration of
business operations. Thus, for example, information is reasonably
available to you when the purchaser has an established commercial
account to which the food purchases are charged in an identifiable
manner. Accordingly, Sec. 1.327(e) of the final rule provides that
persons who operate retail food establishments that distribute food to
persons who are not consumers are subject to all of the requirements in
subpart J of this final rule. However, the requirements in Sec. 1.345
of the final rule to establish and maintain records to identify the
nontransporter and transporter immediate subsequent recipients that are
not consumers applies as to those transactions only to
[[Page 71576]]
the extent the information is reasonably available. For purposes of
this section, ``retail food establishment'' is defined to mean an
establishment that sells food products directly to consumers as its
primary function. The term ``consumers'' does not include businesses. A
retail food establishment may manufacture/process, pack, or hold food
if the establishment's primary function is to sell from that
establishment food, including food that it manufactures/processes,
packs, or holds, directly to consumers. A retail food establishment's
primary function is to sell food directly to consumers if the annual
monetary value of sales of food products directly to consumers exceeds
the annual monetary value of sales of food products to all other
buyers. A ``retail food establishment'' includes grocery stores,
convenience stores, and vending machine locations.
In addition, a retail food establishment that employs 10 or fewer
full-time equivalent employees is excluded from all of the requirements
of this subpart, except the records access provisions for existing
records under Sec. Sec. 1.361 and 1.363. Given the large number of
establishments that would be excluded and the significant cost
reduction, FDA has analyzed the impact on its ability to efficiently
and effectively conduct a tracing investigation to address credible
threats of serious adverse health consequences or death. FDA believes
the information as to the source of the food of concern sold at these
establishments may be obtainable from a larger retail food
establishment that is covered by the regulations and sold the same
food. Specifically, many of the foods sold at very small retail food
establishments are nationally distributed and are also sold at covered
retail establishments. If there is an outbreak and product could also
be traced to a covered retailer, then FDA could use that retailer's
records to identify the source of the food.
Moreover, given the relatively small size of the exempted
establishments, the exempted establishments are likely to have fewer
products and suppliers than other retail establishments and are
therefore more likely to be able to provide FDA with source information
even if they are exempted from records establishment requirements. With
larger retailers, the records of immediate previous sources are more
critical to isolating quickly potential sources of food that poses a
threat of serious adverse health consequences or death to humans or
animals. The exclusion is based on the number of employees at each
retail food establishment and not the entire company, which may own
numerous retail stores.
(Comment 39) One comment argues that distributors for direct
selling companies should be exempt from the requirement to maintain
records concerning immediate subsequent recipients. The proposed
regulation would have a significant impact on the direct selling
industry. Independent distributors sell product not only to consumers,
but also to other independent distributors in their network to support
each others' businesses and enable them to fulfill customer orders.
In addition, FDA should acknowledge the unique, closed distribution
model of the direct selling business and exempt independent
distributors in a direct selling organization from the requirement to
maintain records concerning the immediate previous source. In the
closed distribution model of direct selling, the direct selling company
is the source of all products sold by its distributors. Distributors
typically obtain the products they redistribute directly from the
direct selling company with which they are associated. Under the
proposed regulations, the direct selling company will maintain records
that identify the carriers and the distributors who are the immediate
subsequent recipients of the product. Any records maintained by the
distributor regarding the immediate previous source for such shipments
would be wholly duplicative of the records held by the direct selling
company.
(Response) Whether these ``independent distributors'' are subject
to the requirement to establish and maintain records to identify the
immediate subsequent recipients depends on the nature of their
customers. Section 1.327(d) of this final rule excludes persons who
distribute food directly to consumers from the requirement in Sec.
1.345 of this final rule to establish and maintain records of the
nontransporter and transporter immediate subsequent recipients. As
discussed in response to comment 37, FDA concluded that to require such
records would be too burdensome and not necessary to help address
credible threats of serious adverse health consequences or death to
humans or animals. Thus, independent distributors are not required to
maintain records of subsequent recipients who are consumers.
Independent distributors, however, are required to keep records of
subsequent recipients who are not consumers. However, an independent
distributor who qualifies as a retail food establishment under Sec.
1.327(e) of the final rule that also distributes food to persons who
are not consumers is required to identify the nontransporter and
transporter immediate subsequent recipients as to those transactions
only to the extent the information is reasonably available. FDA needs
such records to quickly and effectively traceback and trace forward in
the event of a food-related emergency. However, an independent
distributor who qualifies as a retail food establishment that employs
10 or fewer full-time equivalent employees is excluded from all of the
requirements in this subpart, except the record access provisions for
existing records under Sec. Sec. 1.361 and 1.363.
(Comment 40) One comment asserts that there is no added public
health protection from requiring retailers to establish and maintain
records of the immediate previous holder of a food product. The
proposed rule ensures that all information desired by FDA (e.g., the
product and lot number going to a particular retail store) is already
recorded by both the distributor of the product and by the transporter
of the product. Therefore, traceability of a product will exist without
requiring the retailer to also keep that information. The comment
believes that the added burden of requiring retailers to establish and
maintain records on immediate previous sources of the food it receives
is not necessary based on the limited public health and safety benefit
that would result.
(Response) As discussed in response to comment 37 of this document,
the Bioterrorism Act did not exempt retail food establishments from
recordkeeping requirements. FDA decided to exclude persons who
distribute food directly to consumers from the requirement to establish
and maintain records of subsequent recipients because sick consumers
can provide information as to where they obtained food in a traceback,
and FDA can notify consumers of a food threat in a trace forward. In
the case of a traceback from a retailer, the retailer's records of the
immediate previous sources are needed by FDA to address credible
threats of serious adverse health consequences or death to humans or
animals. In a traceback, it is unlikely that a retailer's source for
certain foods would be apparent. Accordingly, in order for FDA to be
able to identify the retailer's immediate previous nontransporter and
transporter sources, to gain access to those sources records and
identify its sources or other recipients of the food, the retailer has
to have records identifying those sources. Therefore, the final rule
requires retailers to establish
[[Page 71577]]
and maintain records containing this information. However, retail food
establishments that employ 10 or fewer full-time equivalent employees
are excluded from all of the requirements in subpart J of the final
rule, except Sec. Sec. 1.361 and 1.363. (See response to comment 38 of
this document for a further discussion of FDA's rationale underlying
this exclusion.)
(Comment 41) One comment states that a ``retail facility'' is
defined as a facility that sells food directly to consumers only. Thus,
a warehouse store or ``cash and carry'' store that sells food both to
consumers and to commercial accounts would not qualify for this
exemption. As the name implies, a ``cash and carry'' store sells food
products to anyone who wishes to buy bulk quantities in cash
transactions (e.g., from an individual consumer planning a party or
providing for a large family to intermittent supply to restaurants).
Such stores typically do not retain detailed records of cash sales. For
cash and carry stores that do engage in regular commercial
transactions, or which provide credit to commercial customers, ordinary
business practices should normally generate records that could be
tailored to serve the requirements of the proposed rule. FDA should
clarify that, if an entity conducts both exempt and nonexempt
activities at the same location, it would be required to retain records
only with respect to its nonexempt activities. Under such a
clarification, a ``cash and carry'' store that sells food to individual
consumers would not be required to maintain records regarding its
retail sales to consumers. The comment requests that the agency adopt
and confirm this interpretation.
(Response) FDA agrees. Section 1.327(d) of the final rule excludes
persons who distribute food directly to consumers from the requirement
to establish and maintain records of the immediate subsequent
recipients of food. Therefore, a ``cash and carry'' store is not
required to maintain records regarding its sales to consumers. However,
under Sec. 1.327(e) of the final rule, persons who operate retail food
establishments that distribute food to persons who are not consumers
are subject to all of the requirements in subpart J of this final rule.
However, for retail food establishments, the requirements in Sec.
1.345 of the final rule to establish and maintain records to identify
the nontransporter and transporter immediate subsequent recipients that
are not consumers applies as to only those transactions involving
nonconsumers and only to the extent the information is reasonably
available. For purposes of this section of this document, retail food
establishment is defined to mean an establishment that sells food
products directly to consumers as its primary function. The term
``consumers'' does not include businesses. A retail food establishment
may manufacture/process, pack, or hold food if the establishment's
primary function is to sell from that establishment food, including
food that it manufactures/processes, packs, or holds, directly to
consumers. A retail food establishment's primary function is to sell
food directly to consumers if the annual monetary value of sales of
food products directly to consumers exceeds the annual monetary value
of sales of food products to all other buyers. A ``retail food
establishment'' includes grocery stores, convenience stores, and
vending machine locations. In addition, retail food establishments that
employ 10 or fewer full-time equivalent employees are excluded from all
of the requirements in subpart J of this final rule, except record
access provisions for existing records under Sec. Sec. 1.361 and
1.363.
(Comment 42) One comment states that, in the case of control state
retail operations, keeping detailed information on the immediate
subsequent recipients would impose an administrative burden. Although
retailers are generally exempt from keeping records pertaining to their
customers, the exemption is lost when, as is the case with control
states, retail stores sell to other retailers, in this case
restaurants, taverns, and bars who subsequently resell the alcoholic
beverages being purchased to end-use customers. The retail store
transactions are essentially the same type of ``over the counter''
transactions that take place between the stores and individual
consumers. Some information is usually and customarily maintained
(e.g., the information pertaining to the licensed purchaser and what is
being purchased), although in some cases such information is not
generally secured and retained. The comment further notes that some of
the information sought (e.g., lot and other product identifiers) is
neither generally secured, nor is it maintained.
(Response) Section 1.327(d) of the final rule excludes persons who
distribute food directly to consumers from the requirement to establish
and maintain records of the immediate subsequent recipients of food. As
discussed in response to comment 37 of this document, such sales are
excluded because FDA can learn from sickened consumers about the
sources of food they purchased or notify consumers generally about food
that presents a threat. However, this rationale is not applicable when,
as described in the comment, retail stores sell to other retail stores.
Under Sec. 1.327(e) of the final rule, persons who operate retail food
establishments that distribute food to persons who are not consumers
are subject to all of the requirements in subpart J of this final rule.
However, for retail food establishments, the requirements in Sec.
1.345 of this final rule to establish and maintain records to identify
the nontransporter and transporter immediate subsequent recipients that
are not consumers applies as to only those transactions and only to the
extent the information is reasonably available. In addition, a retail
food establishment that employs 10 or fewer full-time equivalent
employees is excluded from all of the requirements in subpart J of this
final rule, except Sec. Sec. 1.361 and 1.363. (See response to comment
38 of this document for a further discussion of FDA's rationale
underlying this exclusion.)
In regard to lot identification numbers, retailers are not required
to maintain this information. The final rule only requires that persons
who manufacture, process, or pack food record lot or code numbers or
other identifiers of that food (and only to the extent this information
exists) (Sec. Sec. 1.337(a)(4) and 1.345(a)(4) of the final rule).
(Comment 43) One comment argues that the proposed retail exemption
(Sec. 1.327(d)) must be a complete exemption, including an exemption
from recordkeeping regarding suppliers, identical to the exemption
given to restaurants. The comment states that today retailers and
restaurants compete in the burgeoning take home and carryout market.
FDA's proposal gives an unfair and unnecessary advantage to
restaurants, which are expanding out of in-restaurant dining into areas
formerly served by retailers and carryout establishments. A full
exemption for retailers presents no lessening of food safety
safeguards.
(Response) ``Restaurant'' is defined to mean ``a facility that
prepares and sells food directly to consumers for immediate
consumption.'' This means that an establishment that prepares and sells
food that is capable of being eaten immediately, with no further
preparation, is considered a restaurant. This definition and the
corresponding exemption for restaurants in Sec. 1.327(b) of the final
rule includes activities such as a restaurant preparing and selling
food to a consumer to be consumed at a later time, as long as the food
is
[[Page 71578]]
capable of being immediately consumed without further preparation or
processing. For example, a restaurant may prepare and sell pies from a
counter that consumers purchase and take home for later consumption.
This activity qualifies for the restaurant exemption as long as the
food is prepared and sold directly to a consumer for immediate
consumption.
In addition, a restaurant/retail facility is excluded from all of
the requirements in subpart J of this final rule if its sales of food
it prepares and sells to consumers for immediate consumption are more
than 90 percent of its total food sales. FDA notes that many facilities
that otherwise would be excluded as restaurants under the final rule
sell a small amount of food that they do not prepare for immediate
consumption. For example, some restaurant/retail facilities have small
packaged goods gift shop areas that sell food. The entire facility is
excluded from all of the requirements in subpart J if its sales of food
it prepares and sells to consumers for immediate consumption are more
than 90 percent of its total food sales. FDA exercised its discretion
and excluded restaurant/retail facilities whose nonrestaurant food
sales are less than 10 percent of their total food sales because many
facilities that would otherwise qualify as restaurants make such sales
as an incidental activity (Ref. 14). FDA believes that, were it not to
provide such an exclusion, the exemption for restaurants would be
undermined because many facilities that prepare and sell a high
percentage of their food for immediate consumption also sell a small
amount of packaged goods that they do not prepare themselves for sale
to consumers (e.g., beverages, chips, candy, condiments, and
sweeteners) and otherwise would be subject to the rule as to those
sales.
Conversely, if a restaurant/retail facility's sales of food it does
not prepare and sell for immediate consumption are 10 percent or more
of its total food sales, FDA believes that such sales are a significant
portion of the facility's activities. Such a facility's retail food
sales are exempt only from the requirement to establish and maintain
records of sales to consumers. The restaurant/retail facility's sales
of food it prepares and sells for immediate consumption remain exempt
from all of the requirements of subpart J of this final rule. As noted
earlier, retail facilities are required to keep records of sales to
nonconsumers only to the extent that information is reasonably
available.
Section 306 of the Bioterrorism Act specifically exempts
restaurants, but not retailers. FDA believes persons, including
retailers, must establish and maintain records of immediate previous
sources to ensure that FDA can quickly and effectively conduct a
traceback in a food-related emergency. However, a retail food
establishment that employs 10 or fewer full-time equivalent employees
is excluded from all of the requirements of this final rule, except
Sec. Sec. 1.361 and 1.363. (See response to comment 38 of this
document for a further discussion of FDA's rationale underlying this
exclusion.)
(Comment 44) Several comments state that, although they make every
effort to provide food to their customers in a timely and efficient
manner, a small percentage of the food that is in a grocery store is
sent to a reclamation center from which it is either returned to the
manufacturer or sent to food banks. Reclamation centers are currently
the largest single source of food donations for food banks. Food may be
sent to reclamation centers if its packaging is damaged or if it is
past the ``best if used by'' date. The system for sending food to
reclamation centers is simple: The unsaleable products are collected in
banana cartons and then shipped to the center where the food is sorted
and either donated to charitable organizations, such as food banks, or
returned to the manufacturers. No records are kept by the store of the
foods shipped to the reclamation center.
The comment states that FDA's regulations should consider
reclamation centers and food banks to be ``consumers'' for purposes of
the recordkeeping regulations. Specifically, food retailers do not
currently track the foods that are sent to reclamation centers, nor is
there a mechanism available to do so. The requirement to develop and
implement new recordkeeping systems would be a serious disincentive to
corporate food donations and, again, would serve no purpose with
respect to food security. If it is not necessary to track product to
individual consumers to enhance food security, no purpose is served by
monitoring those products that are sent through reclamation centers to
consumers. Any products that are returned to the manufacturer are
removed from the food distribution system so they will not reach
consumers and their whereabouts need not be accounted for. Accordingly,
FDA should broaden the exclusion for retailers to include food products
that are routed to consumers through reclamation centers.
(Response) FDA agrees. FDA is exempting nonprofit food
establishments that prepare or serve food directly to the consumer or
otherwise provide food or meals for consumption by humans or animals in
the United States. ``Nonprofit food establishment'' has been defined to
mean:
* * *a charitable entity that prepares or serves food directly
to the consumer or otherwise provides food or meals for consumption
by humans or animals in the United States. The term includes central
food banks, soup kitchens, and nonprofit food delivery services. To
be considered a nonprofit food establishment, the establishment must
meet the terms of section 501(c)(3) of the U.S. Internal Revenue
Code (26 U.S.C. 501(c)(3)).* * *
Congress gave FDA the discretion to issue regulations regarding the
establishment and maintenance of records under section 306 of the
Bioterrorism Act. Charitable food establishments, such as food banks,
stand in place of the consumer and FDA will treat them as consumers for
purposes of this final rule. Therefore, grocery stores, catering
facilities, and others giving a charitable donation of food to a food
bank, soup kitchen, or other similar charitable entity are not required
to keep records of the immediate subsequent recipients of the food, and
the charitable food establishment does not need to keep records of the
immediate previous sources of that food or the immediate subsequent
recipients of that food. FDA has determined that it does not need
records of food donated to food banks to address credible threats of
serious adverse health consequences or death to humans or animals. In
the event of a traceback investigation, FDA believes that it is likely
to have the ability to trace the immediate previous source of
contaminated food by other means. Unless the source of the
contamination is at the food bank itself, other consumers of that same
food obtained from a grocery store are likely to identify that grocery
store as a link in the chain-of-distribution of the contaminated
product. In the case of a trace forward investigation, records will
likely exist from the donor of the food to the charitable food
establishment. FDA believes that the likelihood of the existence of
such records is great given the tax benefits available to the persons
donating goods to establishments that are 501(c)(3) establishments
under the Internal Revenue Code. Therefore, FDA does not believe that
exempting such charitable entities from these requirements would
interfere with the goals of the Bioterrorism Act or subpart J of this
final rule.
With respect to the ``reclamation centers'' mentioned by the
comment, FDA understands that most reclamation centers are actually
owned by the
[[Page 71579]]
grocery store or grocery chain. Such reclamation centers will be
treated as if they are part of the grocery store and must keep the
records that must be kept by the grocery store. For instance, if food
from the reclamation center is donated to a food bank, the exclusion
described previously applies. If food is sold to consumers, the
exclusion for foods sold directly to consumers applies. If food is
returned to the manufacturer, or sold to another nonconsumer, the
reclamation center must keep records of the immediate subsequent
recipients of food, to the extent this information is reasonably
available.
(Comment 45) Several comments state that, although retailers will
not be required to keep track of foods sold to consumers, retailers
will be required to keep records on those immediate subsequent
recipients who are wholesalers or other retailers. The comments add
that, unless the recordkeeping exclusion applies to all foods that are
sold from the store, it is essentially meaningless. Food retailers do
not know whether a person who comes into a store and buys food will be
using the food for personal consumption or for a business purpose. To
cover the possibility that a purchase was intended for business
purposes would essentially require a retailer to record all consumer
transactions. The comments state that this would not increase food
security or consumer confidence. The comments also state that the trust
of consumers is of tantamount importance and requiring documentation of
all consumer transactions will diminish that trust without furthering
the goal of food security.
(Response) Although retailers must keep records of immediate
subsequent recipients of food who are not consumers, retailers are not
required to do so unless that information is reasonably available, for
example, when the purchaser has an existing commercial account. (See
response to comment 38 of this document.) Retailers need not ask the
status of each purchaser, and retailers will not be required to record
every consumer transaction. Under Sec. 1.327(e) of this final rule,
persons who operate retail food establishments that distribute food to
persons who are not consumers are subject to all of the requirements in
subpart J of this final rule. However, the requirements in Sec. 1.345
of this final rule to establish and maintain records to identify the
nontransporter and transporter immediate subsequent recipients that are
not consumers applies as to those transactions only, and only to the
extent the information is reasonably available.
FDA notes that there is an exclusion with respect to food that is
manufactured, processed, packed, held, received, or transported for
personal consumption. Such activities are excluded from the rule
because if a traceback or trace forward investigation is necessary, FDA
can learn from sickened consumers the sources of the food they
purchased, or notify consumers generally about food that presents a
threat. Whether food is for personal consumption depends on many
factors, but FDA would consider food prepared in a private home and
transported for other than business purposes to qualify for this
exclusion. An example of food covered by this exclusion includes food
prepared for ``pot luck'' suppers.
(Comment 46) One comment believes that direct marketing facilities
should be explicitly exempted from maintaining records of immediate
subsequent recipients. The comment believes that direct marketers that
sell their food directly to consumers are functionally no different
than brick-and-mortar retail establishments. Moreover, FDA's proposal
already explicitly exempts other entities that sell food directly to
consumers (farms, some roadside stands, and restaurants). Direct
marketers thus should be exempt from another and different mandated
recordkeeping protocol. Direct marketers already must meet the
recordkeeping requirements of taxing authorities. Adding another
enormous, needless recordkeeping requirement for consumers who purchase
their food directly would do nothing to achieve the aims of the
Bioterrorism Act at the expense of increased costs to marketers and,
thus, their customers. The comment urges FDA to revise the exclusion
for retail facilities by explicitly stating that direct marketing
facilities are likewise exempt from the one-down requirements of Sec.
1.345.
(Response) Neither the proposed nor final rule distinguishes
between persons that sell to consumers as direct marketers, including
those selling products over the Internet, and other persons selling to
consumers from establishments. Therefore, if a direct marketer sells
food directly to a consumer, he or she is exempt from establishing and
maintaining records of the immediate subsequent recipients of that
food. Under Sec. 1.327(e) of this final rule, persons who operate
retail food establishments that distribute food to persons who are not
consumers are subject to all of the requirements in subpart J of this
final rule. However, for retail food establishments, the requirements
in Sec. 1.345 to establish and maintain records to identify the
nontransporter and transporter immediate subsequent recipients that are
not consumers applies as to those transactions only, and only to the
extent the information is reasonably available. In addition, retail
food establishments that employ 10 or fewer full-time equivalent
employees are excluded from all of the requirements of subpart J of
this final rule, except the record access provisions for existing
records under Sec. Sec. 1.361 and 1.363. (See response to comment 38
of this document for a further discussion of FDA's rationale underlying
this exclusion.) For a further discussion of ``direct sellers''
responsibilities under this rulemaking, see response to comment 50 in
the following paragraphs.
(Comment 47) One comment states it is not clear in the proposed
regulations whether retail bakeries and delicatessens are subject to
these regulations. Although the registration requirements exempt them
entirely, the recordkeeping rule only contains an exemption from
establishing and maintaining records with the names of ``immediate
subsequent recipients of foods sold directly to consumers.'' This
implies that they still need to keep track of ingredient lots used in
each production. In such operations, production usually consists of a
wide variety of products made daily and in very small quantities.
Keeping track of ingredients used in each and every product made daily
is virtually impossible, and if required, would financially break every
retail bakery or delicatessen, most of which are already struggling to
compete in the dwindling market being taken over by supermarket chains.
The comment requests that FDA look seriously at totally exempting any
retail food operation with 10 or less employees from any of the
requirements of the proposed regulations, particularly recordkeeping.
If this is not possible, the comment proposes that FDA consider an
alternative choice if they do not keep records of ingredients used in
products, that if any contaminated ingredient is found, or brought to
their attention, that they agree to destroy all manufactured products
currently in stock (made from this ingredient or not). This alternative
would have the same safety effect, but would be a lot less costly than
keeping records.
(Response) A bakery or delicatessen is excluded from all of the
requirements in subpart J of this final rule if its sales of food it
prepares and sells to consumers for immediate consumption are more than
90 percent of its total food sales.
[[Page 71580]]
Food is for immediate consumption when the food is capable of being
eaten immediately with no further preparation. However, if the bakery
or delicatessen does not qualify for the restaurant/retail facility
exclusion in Sec. 1.327(b) of this final rule, there is also an
exclusion for retail food establishments that may apply. Under Sec.
1.327(f) of this final rule, retail food establishments that employ 10
or fewer full-time equivalent employees are excluded from all of the
requirements in this subpart, except the record access requirements for
existing records. The exclusion is based on the number of full-time
equivalent employees at each retail food establishment and not the
entire business, which may own numerous retail stores.
(Comment 48) One comment states it appears that rather than
exempting convenience stores that sell food for immediate consumption,
FDA has proposed a partial exemption such that records need be kept
only for the nonexempt activities, but that is not clear in the
proposed rule. FDA should either take a functional approach that allows
facilities that sell food to consumers for immediate consumption to
have a full exemption, or FDA should clarify that convenience stores
and other facilities that make sales for immediate consumption need not
maintain records for that part of their operation.
(Response) Convenience stores and other covered facilities that
sell to consumers are an example of a mixed-type facility. Food that
the convenience store prepares and sells directly to consumers for
immediate consumption (i.e., hot dogs, hot pretzels), is exempt from
subpart J of this final rule under the restaurant exemption. Under
Sec. 1.337 of this final rule, the facility is required to keep
records of the nontransporter and transporter immediate previous
sources for all other food. The facility is not required to establish
and maintain records to identify the nontransporter and transporter
immediate subsequent recipients for sales of food to consumers, but
must establish and maintain records to identify immediate subsequent
recipients of food who are not consumers, as required by Sec. 1.345 of
this final rule, when such information is reasonably available, as
discussed in response to comment 38. In addition, retail food
establishments that employ 10 or fewer full-time equivalent employees
are excluded from all of the requirements of subpart J in this final
rule, except the record access provisions for existing records under
Sec. Sec. 1.361 and 1.363. (See response to comment 38 of this
document for a further discussion of FDA's rationale underlying this
exclusion.)
(Comment 49) Some comments state they are engaged in marketing
products directly to the consumer through direct sales, mail order,
Internet sales, and/or retail sales and urge FDA to clarify the scope
of ``retail facilities'' to include independent distributors in direct
sales forces, mail order companies, or Internet sales operations,
because it is apparent that neither Congress nor FDA intended for the
recordkeeping requirement to encompass records of individual sales to
consumers.
(Response) As described in response to comment 37, persons are not
required to establish and maintain records to identify the
nontransporter and transporter subsequent recipients of food
distributed directly to consumers (Sec. 1.327(d) of this final rule).
Further, as described in response to comment 50, these regulations do
not distinguish between direct marketers and others selling food from a
retail establishment. In addition, retail food establishments that
employ 10 or fewer full-time equivalent employees are excluded from all
of the requirements of subpart J of this final rule, except Sec. Sec.
1.361 and 1.363. (See response to comment 38 of this document for a
further discussion of FDA's rationale underlying this exclusion.)
(Comment 50) One comment states that because direct sellers might
also sell to other direct sellers either for consumption or for resale
to other consumers, it is possible that the proposed recordkeeping
requirements of the regulation might be construed to apply to them. The
comment strongly suggests that were the requirements to apply to their
businesses, many individuals would be discouraged from entering into
direct sales. Individuals who are attracted to direct selling because
of the ease of entry into the business would surely not welcome the
additional paperwork and bureaucratic requirements necessitated by the
proposal. Although perhaps appropriate for larger businesses, these
requirements would provide a severe disincentive to their way of doing
business. Additionally, given the sheer numbers of salespeople
potentially involved, and the generally small size of the sales
transactions consummated by direct sellers, the massive paperwork
generated by direct sellers under the recordkeeping requirements could
actually be counterproductive to efforts to enhance bioterrorism
preparedness. The comment states that, given the unique, micro-
entrepreneurial nature of operations of individual direct sellers and
the questionable (at best) benefit to national security that might be
achieved by applying this regulation to them, direct sellers should be
exempt from the extensive recordkeeping requirements with respect to
both immediate previous sources and immediate subsequent recipients.
The comment also notes that other retailing operations are exempt (at
least in part) from the proposed regulation, and believes that an
exemption for direct sellers is consistent with the retailing exemption
and the Bioterrorism Act.
(Response) ``Direct sellers'' are not required to establish and
maintain records to identify the nontransporter and transporter
immediate subsequent recipients for sales directly to consumers. Direct
sellers that qualify as a retail food establishment under Sec.
1.327(e) are required to establish and maintain records for sales to
other direct sellers, when such information is reasonably available.
FDA explains the rationale for distinguishing between sales to
consumers and businesses in response to comment 40. Direct sellers,
like other covered persons, are required to establish and maintain
records to identify the nontransporter and transporter immediate
previous sources of food, as required by Sec. 1.337 of this final
rule. However, retail food establishments that employ 10 or fewer full-
time equivalent employees are excluded from all of the requirements of
subpart J in this final rule, except the record access provisions for
existing records under Sec. Sec. 1.361 and 1.363. (See response to
comment 38 of this document for a further discussion of FDA's rationale
underlying this exclusion.) Thus, if a direct seller qualifies as a
retail food establishment and employs 10 or fewer full-time equivalent
employees, it is exempt from all recordkeeping requirements under this
rule, except for the record access provisions for existing records.
(Comment 51) One comment states the Secretary has the full
discretion to determine who shall be required to maintain records and
what records shall be kept. Congress has clearly communicated its
intention to protect small businesses by stating: ``The Secretary shall
take into account the size of the business in promulgating regulations
under this section.'' The comment states that individual direct sellers
who distribute nutritional or related products should be exempt from
the requirement to maintain records under the proposed rule.
(Response) As stated in the proposed rule, FDA carefully considered
the size of a business when developing these regulations. FDA found
that most products and ingredients pass through
[[Page 71581]]
at least one very small business when moving through the distribution
process. If FDA were to exempt all very small businesses with 10 or
fewer employees, not just those in the retail sector, this would create
a ``Swiss Cheese'' approach to trace back, as there would be a
potential failure of entities to keep records throughout the
distribution chain. The number of very small entities account for a
large fraction of the total number of food establishments. We used U.S.
Census data to estimate the percentage of the total number of food
establishments that are very small, as well as their revenues, by
sector and report them in table A of this document. The fraction of the
total number of facilities that are very small ranges from an estimated
73 percent of convenience outlets to 90 percent of transporters.
Table A.--Estimated Total Number of Very Small Food Establishments
----------------------------------------------------------------------------------------------------------------
% of Food Industry Revenue From Very
Sector % of establishments That Are Very Small Small Establishments
----------------------------------------------------------------------------------------------------------------
Manufacturers 77 15
----------------------------------------------------------------------------------------------------------------
Wholesalers 81 14
----------------------------------------------------------------------------------------------------------------
Transporters 90 16
----------------------------------------------------------------------------------------------------------------
Grocery outlets 88 18
----------------------------------------------------------------------------------------------------------------
Convenience outlets 73 18
----------------------------------------------------------------------------------------------------------------
Importers 82 14
----------------------------------------------------------------------------------------------------------------
Mixed-type facilities 82 15
----------------------------------------------------------------------------------------------------------------
Moreover, many of our failures in a typical trace back
investigation (i.e., unclassified scenarios) have been at the
wholesaler (distributor) level. As noted in the table A of this
document, 81 percent of the wholesalers are considered very small. We
also would have significant concerns if 90 percent of the transporters
(as very small entities) were excluded from the requirements to
establish and maintain records.
In light of the previous information, FDA does not believe we would
have an effective recordkeeping system if we were to exempt all very
small entities from the rule. Unlike the very small retailers who are
at the end of the distribution chain only, a full exemption by size
would create holes throughout the distribution chain and would not
provide FDA adequate assurances that, in the event of a threat of
serious adverse health consequences or death, FDA would be able to
conduct an efficient and effective tracing investigation.
However, ``individual direct sellers'' as described in the comment
who qualify as retail food establishments that employ 10 or fewer full-
time equivalent employees are excluded from all of the requirements of
subpart J in this final rule, except the record access provisions for
existing records under Sec. Sec. 1.361 and 1.363. (See response to
comment 38 of this document for a further discussion of FDA's rationale
underlying this exclusion.)
In addition, FDA has considered the size of a business in
establishing compliance dates for this final rule. Further, the final
rule exempts direct sellers who are otherwise subject to the
recordkeeping requirements of this rule and who sell food products
directly to consumers from keeping records of the immediate subsequent
recipients of that food.
(Comment 52) Several comments state FDA should interpret the
exemption from maintaining records for immediate subsequent recipients
of food to expressly include retail farm supply and feed stores that
sell finished product directly to consumers and final purchasers. For
instance, the comments note that many small rural feed manufacturers
also have a retail outlet in their facilities that sell bagged feed,
pet food, and feed ingredients/additives over-the-counter directly to
consumers and to final purchasers for their own animals. These products
are not resold by the purchaser-customer. Maintaining records of these
sales is not common practice today, would represent a costly burden to
such enterprises, many of which are small businesses, and would not
demonstrably enhance human or animal protection from bioterrorism-
related threats.
(Response) The exclusion in Sec. 1.327(d) of this final rule from
establishing and maintaining records of immediate subsequent recipients
for food distributed directly to consumers applies to sales of bagged
feed, pet food, and feed ingredients/additives over-the-counter
directly to consumers and final purchasers for their own animals,
unless the feed is to be used in animals that will be sold as food. If
the feed is to be fed to food-producing animals, then the purchasers
are not considered consumers since they are purchasing the food for a
business (i.e., for the food-producing operation). The feed will remain
in the food distribution system, and FDA needs records to help address
credible threats of serious adverse health consequences or death to
humans or animals. Therefore, under Sec. 1.327(e), persons who operate
retail food establishments that distribute food to persons who are not
consumers are subject to all of the requirements in subpart J of this
final rule. However, for retail food establishments, the requirements
in Sec. 1.345 of this final rule to establish and maintain records to
identify the nontransporter and transporter immediate subsequent
recipients that are not consumers applies as to those transactions only
to the extent the information is reasonably available.
In addition, retail food establishments that employ 10 or fewer
full-time equivalent employees are excluded from all of the
requirements of subpart J in this final rule, except the record access
provisions for existing records under Sec. Sec. 1.361 and 1.363. (See
response to comment 38 of this document for a further discussion of
FDA's rationale underlying this exclusion.)
6. Retail Facility/Roadside Stands
(Comment 53) One comment is concerned that the retail exemption
only applies to facilities, such as roadside stands that employ 10 or
fewer
[[Page 71582]]
full-time employees, and that are located in the same general physical
location as farms that sell unprocessed food grown or raised on those
farms. The comments note that the exclusion does not apply to processed
foods, even if they are sold directly to the consumers from the retail
facility in the same general location as the farm, unless all the
ingredients in that processed food were grown or raised on that farm.
Consequently, persons handling processed foods, such as baked goods,
jams, jellies, maple syrup, and ``processed'' items such as hams and
sausages from animals grown and processed into meat products on the
farm would fall under the provisions of the final rule. Also, any
persons handling products that were ``imported'' from off the farm
would be subject to the final rule. The processed food provision is a
burden for those involved in roadside stands that operate outside of
the normal seasonal harvest period or sell processed foods. They could
not purchase goods from neighbors or bring in goods from other areas
under the exemption or include ingredients from a nonfarm source. The
comment asks that this limitation affecting farm markets be removed
from the final rule.
(Response) FDA has changed the exclusion in proposed Sec.
1.327(d)(2) and has now provided an exclusion for all retail food
establishments that employ 10 or fewer full-time equivalent employees
from all of the regulations in this final rule, except the record
access provisions for existing records under Sec. Sec. 1.361 and
1.363, regardless of whether the food being sold is processed or
unprocessed. (See response to comment 38 of this document for a further
discussion of FDA's rationale underlying this exclusion.)
7. Persons Under the Exclusive Jurisdiction of USDA
(Comment 54) One comment states that proposed Sec. Sec. 1.327 and
1.328 distinguish between those foods that will be subject to the
requirements of the final rule, and those foods that will be exempt. In
doing so, the proposed rule refers to other federal statutes (e.g., the
Federal Meat Inspection Act, the Poultry Products Inspection Act, and
the Egg Products Inspection Act), as a means to provide the regulated
community with the relevant details as to whether and when their
conduct will come within the scope of the regulations being proposed.
Although statutory references such as these may suffice to inform
farms, food manufacturers, restaurants, and other food-related
facilities that deal with these statutes on a daily basis whether and
when they will be subject to FDA's final rule, that is clearly not the
case with motor carriers. Therefore, the comment states that FDA should
explain what food is subject to the final rule in layman's language to
avoid any confusion. The comment further recommends that FDA attach a
list of the applicable or the exempted foods as an appendix to the
final rule.
In addition, a foreign comment states that meat, poultry, and eggs
are exempt under the proposed rule because the United States deems
current risk management systems associated with these products to be
sufficiently stringent. The comment states that, in Australia, these
products are subject to strict regulatory and certification
requirements as ``prescribed goods'' under Australian legislation (the
Export Control Act 1982), which the USDA audits. A range of other
Australian products, such as milk and fish, are also prescribed goods
and are subject to the same certification process. The comment,
therefore, argues that all prescribed goods should qualify for an
exemption on these grounds.
(Response) The rule does not impose any requirements with regard to
food to the extent it is within USDA's exclusive jurisdiction under
FMIA, PPIA, or EPIA. Under the FMIA, USDA regulates cattle, sheep,
swine, equines, goats, and ``meat food products.'' Under the PPIA, USDA
regulates poultry and ``poultry products.'' Under the Egg Products
Inspection Act, USDA regulates some eggs and ``egg products.''
Any person that manufactures, processes, packs, transports,
distributes, receives, holds, or imports some foods subject to
exclusive USDA jurisdiction is exempt from these regulations with
respect to that food while it is under USDA's exclusive jurisdiction.
FDA has decided not to attach an appendix to the final rules
highlighting which foods are within the scope of this final rule. If
questions remain, FDA will determine whether it needs to issue
additional guidance on this subject.
With respect to the comment regarding Australian meat, poultry,
eggs, milk, and fish, FDA notes that all foreign persons, except for
foreign persons who transport food in the United States, are excluded
from all of the requirements of the final rule under Sec. 1.327(h).
However, domestic persons who import these foreign products are
required to comply with these recordkeeping regulations to the extent
that they are FDA-regulated food products.
(Comment 55) One foreign comment requests that FDA identify the
list of persons that are excluded from all or part of the regulation in
accordance with Sec. 1.327.
(Response) Foreign persons, except for foreign persons who
transport food in the United States, are excluded from all of the
requirements of this final rule under Sec. 1.327(h). The term
``person'' includes an individual, partnership, corporation, and
association (section 201 of the FD&C Act (21 U.S.C. 321(e))).
8. Foreign Facilities if Food Undergoes Further Manufacturing/
Processing
There were no comments received on this issue. However, FDA has
decided to exempt foreign persons, except foreign persons who transport
food in the United States, from this rulemaking. This is discussed in
detail under section III.C of this document entitled ``Comments on Who
is Subject to This Subpart?'' (Proposed Sec. 1.326).
9. Pet Food
(Comment 56) Two comments requested clarification on whether the
exemption from the recordkeeping requirements for non-BSE regulated pet
food manufacturers applies to foreign manufacturing facilities.
(Response) All foreign persons, except foreign persons who
transport food in the United States, are excluded from all of these
regulations under Sec. 1.327(h) of this final rule. In addition, the
final rule deletes the proposed exclusion for non-BSE regulated pet
food. Accordingly, all persons who manufacture, process, pack,
transport, distribute, receive, hold, or import animal feed in the
United States, including pet food, are subject to the requirements of
this final rule, unless otherwise exempted.
(Comment 57) FDA received three comments from four national animal
feed trade associations. One disagrees with the proposal to exempt pet
food entities that are not subject to the BSE rule. It comments that it
was an error to attempt to combine provisions of the BSE rule with a
Bioterrorism rule. Because the BSE rule was solely designed to prevent
the introduction and amplification of BSE, the comment is concerned
that the recordkeeping requirements of the BSE rule do not fully
address the recordkeeping provisions of the Bioterrorism Act. In
addition, it comments that the health and safety of pets should not be
compromised and, therefore, all animal food should be treated equally
under the final rule and pet food companies should be required to
maintain the same level of records as other animal feed companies. The
comment also notes that creating an exempt category of food products
(i.e., certain pet foods) could result in a gap in the recordkeeping
[[Page 71583]]
system established by the Bioterrorism Act.
Two additional animal feed associations submitted a combined
comment that for simplicity FDA should adopt the same recordkeeping
requirements for all animal food, pet food, and food intended for food-
producing animals. One comments that entities already complying with
the BSE rule should comply but all other animal feed and pet foods
should be exempt from the recordkeeping requirement because of the low
risk of serious adverse health consequence. Two comments state that
they agree with FDA's risk assessments that animal feed and pet food
have a lower risk and therefore needs fewer requirements than human
food.
One other comment supports the proposed provision stipulating that
BSE-regulated pet food entities should comply with the recordkeeping
regulations. A foreign comment questions the need for the inclusion of
any animal feed or pet food in the rule. Several comments, foreign and
domestic, request clarification on which foreign establishments are
subject to the recordkeeping requirements under the proposed non-BSE
rule exclusion.
(Response) In the final rule, FDA has deleted the non-BSE pet food
exclusions, and the final rule now requires all animal feed and pet
food entities to establish and maintain records for 1 year. Therefore,
the definition of pet food in the proposed rule is no longer needed and
has been deleted. FDA was persuaded by the comments from three national
trade organizations that: (1) Using the scope of the BSE rule as the
criterion for exempting certain pet foods is inappropriate and would
result in insufficient recordkeeping coverage to protect the public
from bioterrorism; (2) creating an exclusion for certain pet foods
could create a gap in the recordkeeping system; and (3) for simplicity,
FDA should adopt the same recordkeeping requirements for all animal
food, including pet food. FDA believes that contaminated animal food
can be a link to human foodborne illness. People could be at risk
through direct contact with animal food or through unintentional cross-
contamination of cooking surfaces or utensils. Animals may also become
infected and serve as a reservoir for exposing other animals and humans
to disease. In 2002, dog chew treats were contaminated with Salmonella
enteritidis (Salmonella) and became a vehicle to transmit Salmonella
into homes. As a consequence, many pet owners became ill, and one
person died (Ref. 15). Although FDA continues to believe that the
consequences of a potential terrorist attack or food-related emergency
are greater for food for food-producing animals than for pet food,
compelling arguments have been raised against the proposal to create
exclusions for certain pet food entities. Therefore, FDA believes that
applying the recordkeeping requirements uniformly to all animal foods
is most consistent with the intent of the Bioterrorism Act.
The final rule requires records for all animal food, including pet
food, to be retained for 1 year after the dates you receive and release
the food. FDA believes that a 1-year period of records retention is
appropriate because food for food producing animals tends to have a
faster turnover rate than many kinds of human food. In addition, since
pet foods are typically the sole source of food for pets, such foods
tend not to be stored as long as many human foods.
(Comment 58) One comment states that the recordkeeping requirements
for animal food foreign establishments should be limited to the final
establishment handling the product prior to export to the United
States.
(Response) Section 1.327(h) of this final rule excludes all foreign
persons, except foreign person who transport food in the United States,
from all requirements in this final rule.
(Comment 59) One comment asks FDA to officially recognize its
country's BSE regulations as equivalent to the U.S. BSE regulations.
(Response) FDA declines to respond to this request because it is
outside the scope of this rulemaking.
(Comment 60) One comment asks that suppliers and transporters of
animal food not be required to retain any additional information other
than what is contained in their current records.
(Response) FDA agrees in part with this comment. This rule only
requires additional records to be established and maintained to the
extent the information does not already exist.
10. Food Contact Materials
(Comment 61) Several comments state that, although they agree with
FDA's decision not to apply the proposed regulations to outer
packaging, the same logic that supports that exclusion applies equally
to food contact materials. One comment states that applying the
recordkeeping requirements to food contact substances would create an
unreasonable and unjustified burden on the industry and its suppliers.
One comment states that, under FDA's proposed approach, there is no
limit to the suppliers of components and precursor substances who would
be required to establish and maintain records. Removing food contact
facilities from the ambit of the recordkeeping regulations is
consistent with the clear intent of the Bioterrorism Act and FDA's
mandate to ensure the safety of the U.S. food supply in the least
burdensome means possible.
Several comments state it is unrealistic to believe that a
terrorist attack on the food supply will be carried out through food
contact substances. As a technical matter, it would be virtually
impossible to insert a poison in contact materials with a sustained
release mechanism to contaminate food, without the full cooperation of
the materials manufacturer. Even putting aside the technical and
logistical complexities that would be involved, such an indirect
approach would have virtually no impact before discovery. Food contact
manufacturers and food processors have routine procedures in place to
ensure that their contact materials are suitable for use with food. Any
possible threat to the food supply from packaging would be uncovered at
this stage. Accordingly, there is no reason to believe that applying
the recordkeeping requirements to food contact substances would further
the purpose of the Bioterrorism Act or FDA's stated goal of the
proposed regulations.
Another comment states that excluding outer food packaging from the
requirements has little practical meaning because nearly all packaging
companies handle both outer packaging and food contact substances. The
comment further states that FDA's assumption that half of the
manufacturers and distributors of packaging handle only outer packaging
materials (68 FR 25188 at 25212) may be true for suppliers in other
packaging segments, but is simply incorrect when it comes to the
cartonboard segment of the industry. The comment states that packaging
companies in that segment will find it more expedient to keep records
on all materials--both outer packaging and contact substances--rather
than to document only the food contact materials, because many of the
same materials can be used for both purposes, and it would be
prohibitively expensive to segregate these uses. The comment notes that
this would result in a recordkeeping requirement for nearly all
facilities that manufacture packaging and packaging components, and all
of their suppliers, if FDA retains the proposed approach.
One comment states the inclusion of ``immediate food packaging''
and ``food contact substances'' in the definition of ``food'' creates a
difficult and
[[Page 71584]]
unnecessary compliance effort throughout the supply chain. The comment
suggests that FDA remove the requirement to establish and maintain
records on ``immediate food packaging'' and ``food contact substances''
after such materials are either accompanying or affixed to the food,
thus eliminating duplicative tracking and burdensome paperwork. If
records are kept on the food, the comment states that those same
records could be used to trace the packaging and labeling materials to
the farm and point of initial contact with the food. From there, the
material's original manufacturing/processing facility can be
identified, where detailed records on the immediate subsequent
transporter and recipient (likely the farm) will be maintained
according to the regulations.
(Response) FDA agrees with these comments in part. FDA is
finalizing the definition of ``food'' as proposed and is not excluding
food contact substances from the definition. As discussed in the
following paragraphs and provided in Sec. Sec. 1.327(i) and (j) of
this final rule, however, FDA is using our discretion to exclude
specified persons and activities from recordkeeping requirements for
packaging and food contact substances.
These comments raise the question of what Congress intended
``food'' to mean for purposes of recordkeeping and access. In
construing the recordkeeping and access provisions of the Bioterrorism
Act, FDA is confronted with two questions. First, has Congress directly
spoken to the precise question presented (Chevron step one)? Chevron,
U.S.A., Inc. v. NRDC, Inc., 467 U.S. 837, 842 (1984). To find no
ambiguity, Congress must have focused directly on the question
presented and have articulated clearly its intention. Young v.
Community Nutrition Institute, 476 U.S. 974, 980 (1986). If Congress
has spoken directly and plainly, the agency must implement Congress's
unambiguously expressed intent. Chevron, 467 U.S. at 842-843. If,
however, the Bioterrorism Act is silent or ambiguous as to the meaning
of ``food,'' FDA may define ``food'' in a reasonable fashion (Chevron
step two). Chevron, 467 U.S. at 842-843; FDA v. Brown & Williamson
Tobacco Corp., 529 U.S. 120, 132 (2000).
The agency has determined that, in enacting section 306 of the
Bioterrorism Act, Congress did not speak directly and precisely to the
meaning of ``food.'' The FD&C Act has a definition of ``food'' in
section 201(f). It is a reasonable assumption that, when the term
``food'' is used in the Bioterrorism Act, section 201(f) applies.
However, although there may be ``a natural presumption that identical
words used in different parts of the same Act are intended to have the
same meaning [citation omitted], * * * the presumption is not rigid* *
*.''Atlantic Cleaners & Dyers, Inc. v. U.S., 286 U.S. 427, 433 (1932).
Accord: U.S. v. Cleveland Indians Baseball Co., 532 U.S. 200, 213
(2000). Thus, the same word may be given different meanings, even in
the same statute, if different interpretations are what Congress
intended. Atlantic Cleaners & Dryers, Inc., supra.
Even before the Bioterrorism Act amendments, the term ``food'' was
not given an identical meaning throughout the FD&C Act. For example, in
construing the parenthetical ``(other than food)'' in section
201(g)(1)(C) of the FD&C Act, the Seventh Circuit noted that Congress
meant to exclude only ``articles used by people in the ordinary way
that most people use food--primarily for taste, aroma, or nutritive
value'' and not all substances defined as food by section 201(f) of the
FD&C Act. Nutrilab, Inc. v. Schweiker, 713 F.2d 335, 338 (7th Cir.
1983). Similarly, section 409(h)(6) of the FD&C Act defines a food
contact substance as ``any substance intended for use as a component of
materials used in manufacturing, packing, packaging, transporting, or
holding food if such use is not intended to have any technical effect
in such food (emphasis added).'' This definition makes sense only if
``food'' is interpreted to exclude materials that contact food because
components of food contact materials are plainly intended to have a
technical effect in such materials.\1\
---------------------------------------------------------------------------
\1\ FDA's long-standing interpretation of the FD&C Act's
definition of color additive, section 201(t), is an additional
example of where ``food'' is used more narrowly than as defined in
section 201(f) of the FD&C Act. A color additive is defined in
section 201(t) as a substance that ``when applied to a food is
capable of imparting color thereto * * *.'' The agency's food
additive regulations distinguish between color additives and
``colorants,'' the latter being used to impart color to a food
contact material (21 CFR 178.3297(a)). See also 21 CFR 70.3(f).
Thus, ``food'' as it appears in the statutory definition of color
additive, necessarily excludes food contact materials.
---------------------------------------------------------------------------
Thus, it is in this larger statutory context, that FDA has
evaluated section 306 of the Bioterrorism Act to determine whether the
meaning of the word ``food'' is ambiguous. In conducting this Chevron
step one analysis, all of the traditional tools of statutory
interpretation are available to determine whether Congress's intent is
ambiguous. Pharmaceutical Research & Manufacturers of America v.
Thompson, 251 F. 3d 219, 224 (D.C. Cir. 2001). Section 306 of the
Bioterrorism Act amends the FD&C Act by adding section 414 to the FD&C
Act. In section 414, ``food'' is used in conjunction with other words
to describe which FDA-regulated articles are subject to recordkeeping
and access requirements. In describing the conditions for record access
by FDA, section 414(a) of the FD&C Act requires a reasonable belief as
to an ``article of food.'' In describing the purpose for which
recordkeeping may be required, section 414(b) of the FD&C Act refers to
``food, including its packaging.'' Elsewhere in the recordkeeping
provisions, section 414 of the FD&C Act refers to ``food,'' ``food
safety,'' ``a food to the extent it is within the exclusive
jurisdiction of [USDA],'' and ``recipes for food.''
The Bioterrorism Act is silent as to the meaning of ``food.''
Congress did not specify whether it intended the definition in section
201(f) of the FD&C Act to apply, one of the other possibilities noted
in the previous paragraph, or another meaning. Where, as here, the
statutory language on its face does not clearly establish Congressional
intent, it is appropriate to consider not only the particular statutory
language at issue, but also the language and design of the statute as a
whole. Martini v. Federal Nat'l Mortgage Association, 178 F. 3d 1336,
1345 (D.C. Cir. 1999), citing K Mart Corp. v. Cartier, Inc., 486 U.S.
281 (1988). Indeed, the analysis should not be confined to the specific
provision in isolation because the meaning or ambiguity of a term may
be evident only when considered in a larger context. FDA v. Brown &
Williamson Tobacco Corp., supra at 132 (2000).
FDA has considered other sections of the Bioterrorism Act and has
concluded that the meaning of ``food'' in the Bioterrorism Act is
ambiguous. FDA previously considered the meaning of ``food'' in section
305 of the Bioterrorism Act, governing registration of food facilities,
and concluded that it is ambiguous (68 FR 58894). Section 305 of the
Bioterrorism Act amends the FD&C Act by adding section 415 to the FD&C
Act (21 U.S.C. 350d). In section 415(a)(1) of the FD&C Act, the word
``food'' is modified by the phrase ``for consumption in the United
States.'' It is not clear whether this modifying phrase limits the
definition of ``food'' to food that is ingested, a narrower definition
of ``food'' than that in section 201(f) of the FD&C Act. In addition,
the definition of ``facility'' in section 415(b)(1) of the FD&C Act
exempts ``farms; restaurants; other retail establishments.'' It is not
clear whether the phrase ``other retail establishments'' includes
retailers of food contact materials; the legislative history indicates
that it does not,
[[Page 71585]]
thereby giving rise to additional ambiguity about which definition of
``food'' applies to section 415.
FDA also considered the meaning of ``food'' in section 307 of the
Bioterrorism Act, governing prior notice of imported food shipments,
and concluded that it is ambiguous (68 FR 58974). Section 307 of the
Bioterrorism Act amends the FD&C Act by adding section 801(m) to the
FD&C Act. Section 801(m) of the FD&C Act refers to an ``article of
food.'' However, the legislative history of section 307 of the
Bioterrorism Act indicates that packaging materials are not subject to
section 307, and can be read to imply that Congress was not relying on
the definition of food in section 201(f) of the FD&C Act, thereby
giving rise to ambiguity about which definition of ``food'' applies to
section 307 of the Bioterrorism Act.
FDA also considered the meaning of ``food'' in section 303 of the
Bioterrorism Act, governing administrative detention, and concluded
that it is ambiguous. FDA determined that use of the definition of
``food'' in section 201(f) of the FD&C Act is consistent with the
language of section 303 of the Bioterrorism Act. Section 303 repeatedly
uses the term ``food'' without adjectives, except for a reference to
``perishable foods,'' which is not used to limit the reach of the
section. FDA also determined that use of the definition of ``food'' in
section 201(f) of the FD&C Act is consistent with the use of the term
in judicial enforcement actions (e.g., seizures and injunctions) that
may be instituted under administrative detention.
The ambiguity surrounding Congress's use of ``food'' in sections
303, 305, 306, and 307 of the Bioterrorism Act, coupled with the lack
of a definition of the term in the Bioterrorism Act, support a
conclusion that the meaning of ``food'' in the Bioterrorism Act is
ambiguous. Having concluded that the meaning of ``food'' in the
Bioterrorism Act and in section 306 of the Bioterrorism Act in
particular is ambiguous, FDA has considered how to define the term to
achieve a ``permissible construction'' of the records establishment and
maintenance provisions. Chevron, USA, Inc. v. NRDC, Inc., supra at 843.
In conducting this Chevron step two analysis, the agency has considered
the same information it evaluated at step one of the analysis. Bell
Atlantic Telephone Co. v. FCC, 131 F. 3d 1044, 1049 (D.C. Cir. 1997);
Chevron U.S.A., Inc. v. FERC, 193 F. Supp. 2d 54, 68 (D.D.C. 2002). FDA
has determined that it is permissible, for purposes of the records
establishment and maintenance provisions, to use the definition of
``food'' in section 201(f) of the FD&C Act.
Use of the definition of ``food'' in section 201(f) of the FD&C Act
is consistent with the language of section 306 of the Bioterrorism Act.
Section 306 does not contain language qualifying the meaning of food.
Furthermore, section 414(b) of the FD&C Act authorizes the Secretary to
require certain records to identify the immediate previous sources and
recipients of ``food, including its packaging.'' In addition, section
306(b) of the Bioterrorism Act amended section 704(a) of the FD&C Act,
governing factory inspections, to provide that in the case of persons
engaging in covered activities with regard to ``foods, the inspection
shall extend to all records and other information described in section
414* * *.'' The inspection referenced in section 306(b) of the
Bioterrorism Act is one of ``any factory, warehouse or establishment in
which [food] is manufactured, processed, packed or held* * *.'' FDA's
longstanding interpretation is that ``food'' in section 704 of the FD&C
Act has the same meaning as in section 201(f) of the FD&C Act.
Use of the definition of ``food'' in section 201(f) of the FD&C Act
is also consistent with other sections of the Bioterrorism Act. Section
414(a) of the FD&C Act refers to an article of food that is
``adulterated.'' ``Adulterated'' is defined in section 402 of the FD&C
Act (21 U.S.C. 342), and ``food'' in that section has the meaning
provided in section 201(f) of the FD&C Act. See, e.g., Natick
Paperboard Corp. v. Weinberger, 525 F.2d 1103 (1st Cir. 1975).
Furthermore, using the definition of ``food'' in section 201(f) of the
FD&C Act for section 306 is consistent with the interpretation of
``food'' in section 303 of the Bioterrorism Act, providing for
administrative detention. When the Secretary has a reasonable belief
that an article of food is adulterated and presents a threat of serious
adverse health consequences or death to humans or animals, FDA may need
to administratively detain the food under section 303 of the
Bioterrorism Act and access relevant records under section 306 of the
Bioterrorism Act. FDA is therefore retaining its interpretation of
``food'' in section 306 of the Bioterrorism Act to mean ``food'' as
defined in section 201(f) of the FD&C Act. Food subject to section 306
of the Bioterrorism Act thus includes, but is 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.
Although ``food'' for purposes of section 306 of the Bioterrorism
Act means the same as in section 201(f) of the FD&C Act, FDA is using
its discretion to exclude some food from the record establishment and
maintenance provisions. Persons who manufacture, process, pack,
transport, distribute, receive, hold, or import food contact substances
other than the finished container that directly contacts the food are
excluded from all the requirements of subpart J of this final rule,
except Sec. Sec. 1.361 and 1.363. Persons who place food directly in
contact with its finished container are subject to all of the
requirements of subpart J as to the finished container that directly
contacts that food. All other persons who manufacture, process, pack,
transport, distribute, receive, hold, or import the finished container
that directly contacts the food are excluded from the requirements of
subpart J as to the finished container, except the record access
provisions for existing records under Sec. Sec. 1.361 and 1.363. FDA
determined that requiring such persons to establish and maintain
records is not necessary in order to address credible threats of
serious adverse health consequences or death to humans and animals.
(Comment 62) One comment states that food packaging other than
immediate food-contact packaging defined as ``food'' in the FD&C Act
should not be included within the scope of this final rule. This
appears to be consistent with FDA's intent in that the term
``packaging'' is neither defined nor used in the proposed rules.
One comment states that the inner packaging that is in direct
contact with the food provides a barrier to contamination from outer
packaging components. Therefore, the comment agrees with FDA's
conclusion that shipping containers and outer packaging not in direct
contact with food poses only a small risk from contamination and should
be omitted from recordkeeping requirements.
One comment believes strongly that ``packaging'' is not ``food''
for purposes of the Bioterrorism Act. Even if FDA disagrees, the agency
is urged to exclude from the recordkeeping obligation all
[[Page 71586]]
materials that are separated from edible food by a ``functional
barrier.'' In other words, at a minimum, any materials that are
separated from edible food by a functional barrier should be regarded
as a type of ``outer packaging'' for which recordkeeping is not
required. The comment states that FDA has long recognized the use of a
functional barrier in determining what types of materials can be used
in a packaging product. If a functional barrier (such as aluminum foil)
is present in a packaging laminate, there is no expectation of
migration of any material through the functional barrier. Therefore,
the comment strongly requests that any materials on the exterior side
of a functional barrier be excluded from the recordkeeping regulation.
Because there is no expectation of migration of any material through a
functional barrier, the likelihood that such materials could be used to
adulterate food is extremely remote.
One comment states the reference to packaging does not mandate
recordkeeping by packaging suppliers or transporters. Indeed, the
reference to ``packaging,'' in addition to ``food,'' indicates a
distinction between the two terms in the view of the drafters. The law
and Congressional intent would be satisfied by a food processor
maintaining records identifying the source of the finished packaging
for the food product. In the unlikely event that food packaging is the
target of terrorists, records in the hands of food processors regarding
their packaging suppliers will allow FDA to follow the history of the
packaging and its components. The regulation as proposed by FDA extends
far beyond what was intended by Congress. To follow Congressional
intent, the comment states FDA needs to revise the proposed regulation
to provide only that food processors have records identifying the
suppliers of their packaging.
(Response) FDA agrees with the comments in part. Persons who
manufacture, process, pack, transport, distribute, receive, hold, or
import food are subject to Sec. Sec. 1.361 and 1.363 of this final
rule (records access for existing records) with respect to its
packaging (the outer packaging of food that bears the label and does
not contact the food). All other persons who manufacture, process,
pack, transport, distribute, receive, hold, or import packaging are
excluded from all of the requirements of subpart J of this final rule.
In addition, persons who place food directly in contact with its
finished container are subject to all of the requirements of subpart J
as to the finished container that directly contacts that food. All
other persons who manufacture, process, pack, transport, distribute,
receive, hold, or import the finished container that directly contacts
the food are excluded from the requirements of subpart J as to the
finished container, except Sec. Sec. 1.361 and 1.363 of this final
rule. For example, a manufacturer and transporter of candy bar wrappers
are not required to establish and maintain records as to the wrappers
because they do not place food (candy bars) directly in contact with
its finished container (wrappers). A manufacturer of candy bars, who
places the candy bars in the wrappers, is required to keep records as
to the sources of the wrappers and the recipients of the candy bars as
a whole (not the candy bar and wrapper separately). Once the candy bar
is placed in the wrapper, all persons who manufacture, process, pack,
transport, distribute, receive, hold, or import the wrapped candy bar
are required to keep records of the wrapped candy bar, but not to keep
separate records with respect to the wrapper. FDA notes that the
``food'' in contact with the finished container refers to articles used
by people in the ordinary way that most people use food primarily for
taste, aroma, or nutritive value and not all substances defined as food
by section 201(f) of the FD&C Act. The requirements for packaging and
food contact substances are reflected in the following table.
Table B.--Packaging and Food Contact Substances
------------------------------------------------------------------------
SUBSTANCE ACTIVITY COVERAGE
------------------------------------------------------------------------
Packaging (Defined as Manufacture, process, Excluded from all
the outer packaging of pack, transport, provisions of the
food that bears the distribute, receive, rule unless person
label and does not hold, or import also engages in
contact the food. covered activity with
Packaging does not respect to food, in
include food contact which case subject to
substances (Sec. Sec. Sec. 1.361
1.328). and1.363 (record
access) (See Sec.
1.327(i))
------------------------------------------------------------------------
Food contact substance, Manufacture, process, Excluded from all
other than the pack, transport, provisions of the
finished container distribute, receive, rule, except Sec.
that directly contacts hold, or import Sec. 1.361 and
food 1.363 (record access)
(See Sec. 1.327(j))
------------------------------------------------------------------------
Finished container that Place food directly in No exclusions, subject
contacts food contact with its to record
finished container establishment,
maintenance, and
access (See Sec.
1.327(k))
------------------------------------------------------------------------
Finished container that All other activities Excluded from all
contacts food with respect to provisions of the
finished container rule, except Sec.
Sec. 1.361 and
1.363 (record access)
(See Sec. 1.329(k))
------------------------------------------------------------------------
E. Comments on What Definitions Apply to This Subpart? (Proposed Sec.
1.328)
1. General Comments
(Comment 63) One comment states that FDA should clarify the meaning
of ``responsible individual.'' The meaning of the term ``responsible
individual'' is the same as other terms mentioned in other sections,
such as ``emergency contact.'' Moreover, it is not clear what
responsibilities are included in this term.
(Response) FDA agrees with the comment that there is little utility
for the record of each commercial transaction involving the
distribution of food to contain the name of a responsible individual
given that individuals change jobs within and among companies very
often, making it unlikely that the person in the record will have
responsibility for the food at issue when FDA seeks to effect a
traceback. Therefore, FDA deleted the requirement that a name of a
``responsible individual'' be included in each record. To the extent
this information is available, FDA will use the registration contact
information for
[[Page 71587]]
facilities subject to registration requirements under Sec. 1.232. FDA
believes that, for facilities not subject to the registration interim
final rule, an independent requirement to provide this emergency
contact information with the records being kept will not be useful. The
stated purpose of having such a contact name is to obtain help in
accessing the records. However, to find that information, FDA would
have already obtained the records without this emergency contact
information.
(Comment 64) One comment states that FDA should clarify the meaning
of ``Adequate description.'' FDA must establish and publish the minimum
parameters of the products description.
(Response) An adequate description of the food would include the
brand name and specific variety (e.g., brand x cheddar cheese, not just
cheese; or romaine lettuce, not just lettuce). This type of description
saves time and resources during a tracing investigation because it
allows FDA to narrow its focus to the appropriate product during the
investigation.
(Comment 65) One comment requests that FDA clarify the meaning of
``Holding.''
(Response) FDA has defined ``holding'' in Sec. 1.328 of this final
rule to mean ``storage of food. Holding facilities include warehouses,
cold storage facilities, storage silos, grain elevators, and liquid
storage tanks.''
(Comment 66) One comment states that FDA uses the word ``Importer''
but does not define it.
(Response) The word ``importer'' does not appear in the final
regulation. FDA will not define it for purposes of this regulation.
2. The FD&C Act
There were no comments on this issue.
3. Domestic Person
There were no comments on this issue; however, FDA has deleted the
word ``domestic'' and instead defines the word ``person'' consistent
with its definition in section 201(e) of the FD&C Act. FDA believes
that the term ``domestic person'' is no longer needed because it is
exempting foreign persons, except for foreign persons who transport
food in the United States, from the requirements of subpart J of this
final rule.
4. Farm
(Comment 67) Several comments assert that FDA's proposed definition
of farm is too narrow and would require recordkeeping by farms that
minimally process their produce for further marketing. The comments
claim that many fresh produce farms incorporate packing and holding
activities, and that minor manufacturing/processing activities should
be considered incidental to the packing and storage activities.
Accordingly, to give effect to the legislative intent to exclude farms,
the comments argue that the definition of ``farm'' should include
typical fresh produce post-harvest farming operations such as packing/
packaging, washing, grading, waxing, sizing, cooling, application of
inventory control items (e.g., price lookup stickers (PLUs) or
universal product codes (UPCs)), conventional storage, controlled-
atmosphere storage, transportation from the fields, transportation to
storage or processing facilities, and transportation from the farm.
According to the comments, these activities should be included in the
definition of ``farm'' whether they are conducted in the field or in a
packinghouse.
Some comments believe that the proposed definition of ``farm''
should be modified to include certain of the activities defined as
manufacturing/processing, regardless of whether the foods that are the
focus of these activities are consumed on that farm or one with common
ownership or are offered for sale elsewhere, at least insofar as these
activities relate to raw agricultural commodities. The comments state
that the specific manufacturing/processing activities that should be
included within the definition of ``farm'' are at least the following
activities: Cutting, at least when this activity is applied to harvest
of a farm crop; trimming; washing; labeling, at least when this
activity is applied to containers that are not intended for direct
consumer purchase; and packaging, at least when this activity is
applied to containers that are not intended for direct consumer
purchase. The comments also suggest that FDA should consider allowing
farms to engage in milling and grinding without voiding the statutory
exemption to section 306 of the Bioterrorism Act granted to farms,
insofar as these activities are common farm activities.
(Response) In response to these comments and to ensure that FDA is
fulfilling Congress's intent to exempt ``farms,'' FDA has revised the
definition of farm in the final rule to state that a ``farm'' means ``a
facility in one general physical location devoted to the growing and
harvesting of crops, the raising of animals (including seafood), or
both'', and that ``[w]ashing, trimming of outer leaves, and cooling
produce are considered part of harvesting.''
FDA considers several of the activities identified in the comments
to be ``packing or holding,'' including sorting, grading, wrapping, and
boxing harvested food for the sole purpose of transporting this food
off the farm. FDA also considers placing stickers on produce grown or
consumed on a farm to be part of ``packing.'' FDA notes that the
definition of ``farm'' includes facilities that pack or hold food,
provided all food used in such activities is grown, raised, or consumed
on that farm or another farm under the same ownership. Thus, a farm
that performs these packing and holding activities will not necessarily
cease to be a farm and therefore cease to be exempt from these
regulations. Similarly, FDA considers several of the activities
identified in the comment (waxing, milling, and grinding) to be
manufacturing/processing. A farm that performs these activities will
not necessarily cease to be a farm because the definition of ``farm''
includes facilities that manufacture/process food, provided that all
food used in these activities is consumed on that farm or another farm
under the same ownership.
FDA is aware that a number of other activities may affect an
establishment's status as a ``farm'' under this final rule. Thus, the
agency is providing the following additional clarification. First, FDA
considers application of a pesticide to a crop to be an integral part
of growing and harvesting crops and therefore considers the activity to
be covered by the ``farm'' definition. Therefore, an establishment
devoted to the growing and harvesting of crops that applies a pesticide
to its crops is a ``farm'' as defined in this final rule.
In addition, FDA recognizes that an activity such as placing a raw
agricultural commodity directly into consumer-ready packages is likely
to provide better protection to fragile produce, such as berries, than
placing the produce into a larger bin or box for transport off the
farm, with consumer packaging of the produce further down the
distribution chain. ``Manufacturing/processing'' as defined in Sec.
1.328 means ``making food from one or more ingredients, or
synthesizing, preparing, treating, modifying or manipulating food,
including food crops or ingredients.'' Thus, simply placing produce
into containers (such as clamshells, baskets, mesh bags, or plastic
bags) is more akin to packing, even if the containers are ultimately
received by the consumer. Under Sec. 1.328 of this final rule, a farm
may engage in this packing activity so long as all of the involved
produce is grown or consumed on the farm or a farm
[[Page 71588]]
under the same ownership. Accordingly, a farm that simply places a raw
agricultural commodity into containers, such as placing berries in
clamshells, is not ``manufacturing/processing.''
Finally, a farm that transports its products from the field does
not cease to be a ``farm'' because such transportation is considered
incidental to traditional farming activities.
(Comment 68) One comment states that FDA's definition of ``farm''
should be size-neutral, and apply equally to integrated livestock and
poultry facilities, as long as the activities engaged in at such
locations are limited to ``growing or raising'' farm animals for human
food, but do not extend to further processing of food-producing animals
into meat, milk, or eggs (such as occurs at food processing and packing
plants and rendering facilities) for subsequent commercial sale for
humans or animals.
(Response) The proposed rule's definition of ``farm'' had no size
limitation, and neither does the final rule's definition. FDA agrees
that integrated livestock and poultry facilities are ``farms,'' to the
extent that these operations are devoted to raising animals for food,
the growing of crops, or both, and otherwise engage in only those
activities included in the farm definition. FDA considers milking cows
and collecting eggs from chickens to be ``harvesting'' when applied to
animals, because these activities are akin to harvesting crops.
5. Food
FDA received a number of comments regarding using the definition of
``food'' in section 201(f) of the FD&C Act, which includes food contact
substances within its scope. These comments are addressed in section
III.D.10, entitled ``Food Contact Materials.'' For the reasons stated
therein, FDA has decided to retain the definition of food as proposed;
however, the final rule exempts persons who manufacture, pack,
transport, distribute, receive, hold, or import food contact
substances, other than the finished container that directly contacts
the food, from all requirements of subpart J of this final rule, except
Sec. Sec. 1.361 and 1.363. Further, persons who place food directly in
contact with its finished container are subject to all of the
requirements of subpart J as to the finished container that directly
contacts that food. All other persons who manufacture, process, pack,
transport, distribute, receive, hold, or import the finished container
that directly contacts the food are excluded from the requirements of
subpart J as to the finished container, except Sec. Sec. 1.361 and
1.363 (regarding access to existing records).
6. Foreign Facility
(Comment 69) One comment asks whether ``foreign facility'' includes
warehouses in ports belonging to shipping companies, land transport or
air lines, sealed container deposits, public organization facilities of
the foreign government and of other federal agency representatives
(such as FDA or USDA) in the country of origin and/or shipment. Another
comment states that FDA's definition of foreign facility is too
inclusive. The comments suggest that only foreign manufacturers and
exporters should be required to keep records of their partners, such as
packing facilities and holding facilities.
(Response) FDA has deleted the definition of foreign facility in
the final rule. FDA notes that foreign persons, except foreign persons
who transport food in the United States, are excluded from all of these
regulations in subpart J of this final rule.
7. Manufacturing/Processing
There were no comments on this issue.
8. Nontransporter
(Comment 70) Two comments state that many nontransporters own
trucks or other vehicles and transport food as an incidental part of
their operations. For example, many food distributors deliver food by
truck to their customers and also may transport food returns. These
entities should not be classified as transporters for their
distribution practices that are incidental to the nontransporters'
holding, processing, packing, importing, or receiving of food. The
comments ask that the final rule clarify that an entity is either a
transporter or a nontransporter, and that FDA will not consider the
same entity a transporter for some purposes and a nontransporter for
other purposes. The final rule should confirm that a food distributor
is a nontransporter. A food distributor should not automatically be
considered a transporter simply because it delivers food using its own
truck fleet. If FDA were to consider the same company a transporter for
some purposes and a nontransporter for other purposes, this would
create tremendous confusion regarding what records are required to be
retained.
(Response) Both the proposed and final rule define a transporter as
a person who has possession, custody, or control of an article of food
for the sole purpose of transporting the food. A person who owns food,
or who holds, processes, packs, imports, receives, or distributes food
for purposes other than transportation is not a transporter, even if
the person also transports food. In the example presented in the
comment, a manufacturer that owned its own trucks to deliver food would
not be considered a transporter. However, because FDA has exempted all
foreign persons except those who transport food in the United States
from this rule, foreign persons who transport food in the United States
are subject to the requirements applicable to transporters regardless
of whether that person has possession, custody, or control of the food
for the sole purpose of transporting that food.
(Comment 71) One comment states that the proposed definition of
``nontransporter'' reads as follows: ``Nontransporter means a person
who owns food or who holds, processes, packs * * *'' The same reference
to a ``person'' is included in the definitions of ``nontransporter
immediate previous source'' and ``nontransporter immediate subsequent
recipient.'' The comment asks whether the proposed rules apply to firms
and other legal entities and/or physical persons. Any other solution
would, in the comment's view, neither be appropriate nor practicable.
(Response) The maintenance and inspection of records provisions in
section 306 of the Bioterrorism Act apply to ``persons (excluding farms
and restaurants) who manufacture, process, pack, transport, distribute,
receive, hold, or import food.'' The term ``person'' has the same
meaning as in section 201(e) of the FD&C Act and includes individuals,
partnerships, corporations, and associations.
In addition, as explained further in response to comment 13, intra-
company transfers of food are not subject to additional recordkeeping
requirements. Once a covered person (including individuals,
partnerships, corporations, and associations) receives food and keeps
information on its immediate previous sources, that person or company
does not need to keep additional records until it releases the food to
another person or company. Unless otherwise exempt, at the time that
person or company releases the food, it is required to identify the
immediate subsequent recipients of that food.
9. Nontransporter Immediate Previous Source
There were no comments on this issue.
[[Page 71589]]
10. Nontransporter Immediate Subsequent Recipient
There were no comments on this issue.
11. Perishable Food
(Comment 72) Several comments propose that FDA use existing
National Institute of Standards and Technology (NIST) Handbook 130
Regulations for Uniform Open Dating Definition for Perishable; Semi-
Perishable and Long Term Shelf Life to define ``perishable food.'' One
comment states that the definition of ``perishable food'' proposed by
FDA is inconsistent with prevailing regulatory definitions of that
term. The NIST Handbook defines ``perishable food'' as ``any food for
which a significant risk of spoilage, loss of value, or loss of
palatability occurs within 60 days of the date of packaging.'' ``Semi-
Perishable food'' means ``any food for which a significant risk for
spoilage, loss of value, or loss of palatability occurs only after a
minimum of 60 days, but within 6 months, after the date of packaging.''
``Long Shelf-Life food'' is defined as ``any food for which a
significant risk of spoilage, loss of value, or loss of palatability
does not occur sooner than six months after the date of packaging,
including foods preserved by freezing, dehydrating, or being placed in
a hermetically sealed container.'' These definitions have a history of
use and acceptance by industry and government, and were developed 30
years ago by the National Conference of Weights and Measures, working
in conjunction with state agencies responsible for the regulation of
foods. The comments note that the National Conference undertook this
task to assist in the establishment of a uniform method for presenting
open code date labeling for foods. The definitions have since been
adopted by numerous states and local jurisdictions with open date code
regulations.
Several comments also question why records should be maintained for
an additional 22 months after a product has been consumed. The comments
state that 6 months is sufficient time to maintain records necessary
for any traceback investigation related to food safety or security
risks in the produce industry. One comment estimates that few, if any
foods, would qualify as perishable as defined by FDA. The comment has
identified only a few foods sold at retail that are ``not heat-treated,
not frozen and not otherwise preserved in a manner so as to prevent the
quality of the food from being adversely affected if held longer than 7
days under normal shipping and storage conditions,'' namely bread,
fish, and store prepared food.
One comment supports the following revised definition of the term
``perishable food.'' Perishable food means food that may have been
thermally processed or otherwise preserved in a manner so as to prevent
the quality of the foods from being adversely affected if held for 90
days or less under normal shipping and storage conditions. The comment
agrees with FDA's decision to divide the food products subject to the
record maintenance requirement into perishable and nonperishable
groupings, but disagrees with the 7-day aspect of the proposed rule's
definition of perishable. In addition, the comment does not believe
that whether a food has been subjected to heat treatment or thermal
processing should be a factor in differentiating between perishable and
nonperishable food. The comment's members consider as ``perishable''
those juice products that have a shelflife of 90 days or less. If 90
days was substituted for 7 days in the definition of ``perishable,''
this would result in retention of records for perishable products for
at least 4 times their shelflife.
One comment states that FDA should harmonize the Bioterrorism
regulations with the other current regulatory provisions such as the
Perishable Agricultural Commodities Act, where available. The
definition for ``perishable food'' should include all fresh fruits and
vegetables where the original kind or character has not been changed.
The comment states that the effects of the following operations should
not be considered as changing a commodity into a food of a different
kind or character: Water, steam, or oil blanching; chopping; color
adding; curing; cutting; dicing; drying for the removal of surface
moisture; fumigating; gassing; heating for insect control; ripening and
coloring; removal of seed, pits, stems, calyx, husk, pods, rind, skin,
peel, etc.; polishing; precooling; refrigerating; shredding; slicing;
trimming; washing with or without chemicals; waxing; adding sugar or
other sweetening agents; adding ascorbic acid or other agents used to
retard oxidation; mixing several kinds of sliced, chopped, or diced
fruits or vegetables for packaging in any type of containers; or
comparable methods of preparation. (For example, fresh iceberg lettuce,
romaine and carrots would be included, as well as fresh-cut and
packaged salads; fresh green beans would be included; frozen or canned
green beans would not; fresh oranges would be included; frozen
concentrated orange juice would not.)
One comment states that the proposed definition of ``perishable
food'' excludes many products (including milk, which sometimes has a
shelflife of up to 15 days) that are handled and treated as perishable
in the food distribution system. The comment states that FDA should
amend the definition so that perishable foods are those that are
refrigerated or those that will be adversely affected if held longer
than 20 days. The comment asserts that such a change would make the
regulation more consistent with industry practice.
One comment states that the ``perishable food'' definition is
confusing because the definition begins by stating that perishable
foods are foods that are ``not heat-treated, not frozen and not
otherwise preserved * * * '' Confusion arises because pasteurized milk
is heat treated, and FDA's qualification of the three criteria is
somewhat awkward and combined with an extensive use of negatives.
(Response) FDA agrees in part with the comments, but has decided
not to define ``perishable food'' in this final rule. FDA defined
perishable food in the proposal for the purpose of establishing a
shorter record retention time for those foods as opposed to
nonperishable foods. FDA has concluded that this objective can be
achieved by inserting language directly in Sec. 1.360(b) of this final
rule using similar criteria as the NIST definitions for perishable,
semi-perishable and long shelf-life food. FDA agrees that the proposed
definition is too restrictive for purposes of these final regulations.
Therefore, FDA has changed the record retention requirements in Sec.
1.360(b) of this final rule to require record retention for: (1) 6
months for food for which a significant risk of spoilage, loss of
value, or loss of palatability occurs within 60 days after the date you
receive or release the food; (2) 1 year for food for which a
significant risk of spoilage, loss of value, or loss of palatability
occurs only after a minimum of 60 days, but within 6 months, after the
date you receive or release the food; and (3) 2 years for food for
which a significant risk of spoilage, loss of value, or loss of
palatability does not occur sooner than 6 months after the date you
receive or release the food, including foods preserved by freezing,
dehydrating, or being placed in a hermetically sealed container.
However, transporters, or nontransporters retaining records on behalf
of transporters, are required to retain for 6 months records for any
food having a significant risk of spoilage, loss of value,
[[Page 71590]]
or loss of palatability within 60 days after the date the food is
received or released and 1 year for any food having a significant risk
of spoilage, loss of value, or loss of palatability only after a
minimum of 60 days after the date the food is received or released.
FDA chose this approach because: (1) The food industry already is
familiar with classification of foods into these three categories due
to existing regulations and practices and (2) it will mitigate the
problem raised by some comments of inadequate infrastructure for long
term storage of records for the shorter shelf life foods. FDA believes
that a tracing investigation involving ``perishable'' food will not be
compromised by providing for the reduced record retention of 6 months
because most of these tracebacks are initiated within 6 months of the
outbreak.
(Comment 73) FDA requested comments on whether persons subject to
the proposed rule always or usually know at the time a perishable food
is released whether or not it is intended to be processed into
nonperishable food. Two comments state that distributors have no way of
knowing whether a perishable food will be processed into a
nonperishable food by other parties. Buyers do not always disclose how
the product will be used and may utilize it in more than one way.
Therefore, producers of perishable food will have to retain records for
the longer period, if they are held accountable for the further
distribution and use of their products as nonperishable food.
(Response) FDA agrees with the comments that covered persons may
not know at the time they release food if it is intended to be
processed into a food that meets the 2-year record retention
requirement. FDA clarifies that the retention period depends upon the
status of the food at the time you release a food to your immediate
subsequent recipient, regardless of whether it is intended or not to be
processed into nonperishable food in the future.
12. Pet Food
There were no comments on the definition of pet food, however, FDA
has decided to include all animal feeds, including pet food, under
these regulations. Therefore, there is no longer a need to define the
term ``pet food'' and FDA has deleted this definition from the final
rule.
13. Recipe
(Comment 74) Three comments state that the proposed definition of
recipe is internally inconsistent and ambiguous, and request
clarification of its precise meaning. One comment characterizes the
proposed definition as confusing and nearly nonsensical. The comment
suggests that this definition be removed and that instead Sec. 1.362
of this final rule be modified to add, for example, ``Notwithstanding
the exclusion of recipes for food from this subpart, all of the
ingredients in a food are subject to this subpart.''
Four comments state that the provisions in the proposed rule are
inconsistent with the protection of recipes required by the
Bioterrorism Act. The Bioterrorism Act and accompanying legislative
history make it clear that the records authority does not apply to
recipes. The comments urge FDA to further clarify that information on
both the quantitative and qualitative ingredients in a proprietary
formula are not covered by the proposed recordkeeping requirements or
by the records access authority. According to the comments, in its
ordinary meaning, a ``recipe'' includes three elements: The
ingredients, the quantities, and the procedure. However, the
fundamental element, and the one which in most cases is the most
commercially sensitive, is the ingredient list. The comments state that
it is not reasonable to define ``recipe'' to exclude the list of
ingredients to obtain access to the list. The comments state that FDA
is exceeding its statutory authority under the Bioterrorism Act.
Other comments are concerned about trade secret, sensitive, and/or
proprietary information regarding recipe ingredients. One comment notes
that food manufacturers are explicitly exempted from disclosing the
specific contents of their flavor mixtures by section 403(i)(2) of the
FD&C Act (21 U.S.C. 343(i)(2)) and 21 CFR 101.4(b)(1) and 101.22(h)(1).
The comment states that the purpose of this exemption is to protect a
food manufacturer's trade secrets and excluding the identity of the
individual ingredients of the food from the definition of ``recipe''
negates trade secret protection. The comment states that the complete
lists of ingredients used in flavor formulas and seasoning blends are
considered closely held trade secrets and should be considered part of
the meaning of recipe. Flavors and spices are highly proprietary and,
in many products, distinguish one manufacturer's product from
another's. Disclosure on the label, or disclosure through the exercise
of FDA's record access authority would be highly damaging to the food
manufacturer whose ``secret formula'' entered the public domain. The
comment states that it is unlikely that a product specific formulation
would be relevant to an investigation. Therefore, the comment believes
persons subject to the final rule should only have to establish and
maintain records on nutrition facts.
Another comment similarly states that many products will be
affected by the proposed definition, and ingredients and quantities
must be protected. Many products are unique and were expensive to
develop. Reverse engineering as well as trial and error can lead to
duplication of products that can have very serious consequences for
companies. FDA must find a solution to this challenge so as to not
impede its investigations and at the same time protect the recipes of
the involved companies.
(Response) FDA is changing the definition of ``recipe'' to clarify
that a recipe consists of all three elements necessary to make a food:
(1) A list of ingredients, (2) ingredient quantity information, and (3)
instructions for combining the ingredients. Therefore, FDA is defining
recipe to mean ``the formula, including ingredients, quantities, and
instructions, necessary to manufacture a food product. Because a recipe
must have all three elements, a list of the ingredients used to
manufacture a product without quantity information and manufacturing
instructions is not a recipe.''
To address credible threats of serious adverse health consequences
or death to humans or animals and to conduct tracing investigations, it
is critical that FDA have access to the ingredients and the sources of
the ingredients of food.
Some comments express concern about the disclosure of ingredients
to the public. FDA understands the comments' concerns about protecting
the confidentiality of nonpublic information. Several statutes and the
agency's information disclosure regulations at parts 20 and 21 (21 CFR
parts 20 and 21) govern the agency's ability to disclose information to
the public. For example, section 301 of the FD&C Act prohibits any
person from using to his own advantage or revealing, other than to the
Secretary or other officers or employees of the Department, or to the
courts, any information acquired under authority of section 414 and 704
concerning any method or process which as a trade secret is entitled to
protection. Furthermore, the records provisions in the Bioterrorism Act
recognize that FDA may obtain trade secret or confidential information
and direct the Secretary to ``take appropriate measures to ensure that
there are in effect effective procedures to prevent the unauthorized
disclosure of [such information]'' (21 U.S.C. 414(c)). FDA is planning
to reemphasize
[[Page 71591]]
in instructions to FDA personnel the importance of current protections
and legal requirements against the unauthorized disclosure of any trade
secret or confidential information that is obtained. Therefore, FDA
disagrees that a manufacturer would be harmed by disclosing ingredient
information to FDA.
Moreover, the FD&C Act currently requires manufacturers to disclose
the ingredients they use to the public on food labels. One comment
notes that section 403(i)(2) of the FD&C Act excludes spices,
flavorings, and some colors from the label requirement. The exemption
in section 403(i)(2) of the FD&C Act from disclosing specific spices,
flavorings, and colors to the public on the label does not prohibit FDA
from obtaining this information under the Bioterrorism Act. As
previously discussed, if this information is legally protected from
public disclosure, FDA will not release it to the public.
(Comment 75) A comment states that FDA's procedures for the
exercise of its records access authority should embody recognition of
the special status of confidential ingredients, as follows: First, FDA
should provide that it will not routinely seek access to records that
would require the disclosure of confidential ingredient information;
second, if FDA concludes that it needs access to information about
ingredients, it should present a written explanation to the custodian
of the records that sets forth the basis for the agency's conclusion;
and third, FDA should seek records access in an orderly manner,
beginning with ingredients other than flavors and spices. The comment
states that it will not be possible for FDA to assess simultaneously
each ingredient in a product as the potential source of the problem
that is being investigated. Given that flavor and spice information is
highly confidential and that the low levels of use of those ingredients
make it unlikely that one of them will be the source of the problem
investigated, it is reasonable to provide that requesting information
on flavors and spices will occur only as a ``last resort.'' Finally,
FDA should provide for special procedures to ensure that, when flavor
and spice information is obtained, it is properly protected from
disclosure, whether advertently or otherwise. The comment urges FDA to
implement a system to adequately safeguard against the inadvertent
release of proprietary and confidential information. Among other
things, such information should be shared within FDA only to the
limited extent necessary to conduct the particular investigation that
resulted in the disclosure. The comment asserts that highly proprietary
information about product formulas should not be widely distributed
within the agency, and all persons who are made privy to the
information should be reminded explicitly of the confidential nature of
the information. Moreover, the comment states that FDA should amend its
public information regulations to provide expressly that information
obtained under the records access authority is exempt from disclosure
under one or more of the exemptions under the Freedom of Information
Act (FOIA) (5 U.S.C. 552).
(Response) FDA's procedure for accessing records is outside the
scope of this final rule. FDA will consider these comments when it
develops guidance for its investigations outlining how FDA intends to
implement its access authority in section 414(a) of the FD&C Act. Such
guidance will be subject to public comment under FDA's good guidance
practice regulations (CGPs) Sec. 10.115 (21 CFR 10.115).
14. Restaurant
(Comment 76) Many comments suggest that caterers supplying
interstate conveyances are preparing meals for direct consumption by
the consumer and should be excluded as restaurants. Some comments state
that the manufacturer/processor of a sandwich should be treated the
same, whether the sandwich is served in a restaurant, offered for sale
in a vending machine, delivered as carryout, served on a hospital
patient's tray, or served on a train or airplane. The comments note
that, in the past, FDA has referred to ``level playing fields.'' In
this case, exempting of conveyance caterers is the only way to regulate
even-handedly. If restaurants and retailers are to be exempt, these
comments believe that caterers should also be exempt.
The comments further state that just because FDA has historically
inspected the facilities providing food to interstate conveyances under
the Public Health Service Act does not mean that these facilities
should be considered processors under this security regulation. The
comments view the proposed distinction between a snack bar on the train
selling sandwiches to consumers for immediate consumption (considered
an exempted restaurant) and a facility that provides the sandwiches to
an airplane or train for later consumption (considered a covered
processing establishment) as an arbitrary and illogical distinction,
because they view the risk associated with that sandwich as the same
between the two facilities.
The comments view their industry as similar to a large restaurant
or hotel kitchen, which produces a wide variety of meals within a
matter of hours. The comments state that inflight catering is not
regulated under the same rules as a food processing plant because the
same rules would not fit the inflight catering industry. Food in a
processing plant may be prepared weeks to a year before consumption.
The comments state that the only difference between the catering and
the restaurant service is that the catering meals are generally
consumed 1 to 4 hours after departing from the kitchen rather than
immediately consumed, as in the restaurant industry.
(Response) FDA continues to believe that facilities that provide
food to interstate conveyances should not be covered by the restaurant
exclusion because they do not provide food directly to the consumer for
immediate consumption. In fact, the food is prepared and provided to
several possible intermediaries before reaching the consumer, such as
the packer, transporter, and/or distributor, before reaching the
interstate conveyance (e.g., airplanes, passenger trains, and cruise
ships) that actually provides the food directly to the consumer for
immediate consumption. FDA believes the risk is substantially higher
when the food is not prepared and served directly to consumers for
immediate consumption, but rather goes through a number of
intermediaries before it reaches the consumer. In a traceback
investigation, it is critical for FDA to be able to identify each
entity that handled the suspect food. FDA would lose this ability if
interstate conveyance caterers were exempted. In addition, this
requirement is consistent with the registration interim final rule,
which requires interstate conveyance caterers to register as
manufacturers/processors.
(Comment 77) Several comments urge FDA to reconsider the proposed
regulations for airline caterers. The comments state that these
proposed requirements are onerous, unnecessary, and are being unfairly
applied to that industry and would bury the industry in volumes of
information. The comments note that the same rationale FDA used for
partially exempting retail facilities should apply to airline caterers
as well.
The comments further state that the airline catering industry
currently must be in compliance with many Government regulatory
agencies (FDA, Federal Aviation Administration (FAA), USDA,
Environmental Protection Agency, Transportation Security Administration
(TSA)), and that they have strict specifications for products and
vendors, whereas most food service
[[Page 71592]]
operations do not. The comments also note that they currently employ
security companies to monitor their staff, the food processes in which
they prepare meals, the equipment the food items are loaded into, and
the process of how it gets on board the aircraft. They also state that
their customers have always expected traceability of all products used
on their flights as part of their food safety and hygiene audits to
resolve flight passenger complaints, food poisoning reports, and for
other purposes, but not to the extent that is required by the proposed
rule.
One comment states that it is a member of the International Flight
Catering Association and International Inflight Food Service
Association and adheres to practices of the ``World Food Safety
Guideline'' as set forth by the two associations of inflight food
services. Another comment states that all employees have been certified
by the FAA through fingerprinting and 10-year background checks, and
inhouse security personnel are responsible for checking what is placed
on aircraft. Another comment maintains control of all inputs and
outputs of production and states that documentation is in place for all
items received and for all items produced.
(Response) For the reasons stated in response to comment 76 of this
document, FDA continues to believe that facilities that provide food to
interstate conveyances should not be covered by the restaurant
exclusion because they do not provide food directly to consumers for
immediate consumption. However, these final regulations state that
duplication of existing records is not required if those records
contain all of the information required by subpart J of this final
rule. Therefore, if a covered person keeps records of all of the
information as required by subpart J in order to comply with other
Federal, State, or local regulations, or for any other reason, then
those records may be used to meet these requirements. As the comment
notes, the airline catering industry currently has the capability to
trace all food products on their flights. These regulations do not
dictate the format or system in which the required records are
maintained. The airline catering industry can use existing tracing
mechanisms to comply with these regulations to the extent those
mechanisms contain the required information.
(Comment 78) Some comments state that these proposed regulations
would require a substantial and costly change in the way meals are
delivered and processed. The comments urge FDA to consider whether the
air and rail industries can bear the additional expense of these
proposed regulations, as numerous ingredients are included in each meal
that is prepared and boarded. The comments state that compliance with
the traceability regulations depicted in the rule would require so many
revamped processes and additional personnel that their organizations
would likely not recover from the fiscal implications. The comments
further state that they would have to completely change the way they
produce and package meals for their customers, going to unprecedented
lengths to ensure strict batch preparation. As an example, the comments
note that with their current processes, they can determine shipment
origin and location of the entire meal; however, it would be impossible
to trace each individual ingredient going into the package. For
example, meat from one lot number of ham could be put into sandwiches
along with other ingredients from different sources and fruit or chips,
and then loaded onto numerous flights. This level of batch control
would make the production of these sandwiches and meals cost
prohibitive.
The comments further state that the impact on the airline industry
from September 11, 2001, has been tremendous. The airline industry is
facing unprecedented challenges, and the way business is conducted has
been altered forever. The comments note that reductions and bankruptcy
filings by the various airlines have been extreme and have resulted in
immense reductions in the airline catering business. The airlines'
decisions to significantly cut back, eliminate food service, and reduce
the load capacity on airplanes and number of flights continue to impact
the interstate conveyance catering business. The comments urge FDA to
consider these conditions because it will be difficult for the airline
catering business to absorb the costs of proposed regulations into its
current pricing structure. The comments conclude that they would be
forced to pass these costs onto the already struggling airline
industry.
(Response) For the reasons stated in the previous paragraphs, FDA
continues to believe that facilities that provide food to interstate
conveyances should not be covered by the restaurant exclusion because
they do not prepare and sell food directly to the consumer for
immediate consumption. However, the comment's concern about having to
``go to unprecedented lengths to ensure strict batch preparation''
misconstrues the proposed requirement. In the final rule, FDA deleted
the requirement in Sec. 1.337(a) for a nontransporter to provide
information reasonably available to identify the specific source of
each ingredient used to make every lot of finished product, and instead
put that requirement in Sec. 1.345(b) of this final rule because it is
unlikely that a person would have that information reasonably available
at the time records are created to identify the immediate previous
sources of the food.
FDA acknowledges that certain business practices are not amenable
to linking incoming ingredients with outgoing product and that it may
not always be possible to identify the specific source of an ingredient
that was used to make a lot of finished product. It is not FDA's intent
to mandate reengineering of long-standing existing processes.
Accordingly, the final rule requires linking incoming with outgoing
product only when this information is reasonably available.
Although the definition of restaurant has not changed from the
proposed definition, FDA exercised its discretion and added language to
the restaurant exclusion in Sec. 1.327(b) of this final rule to
account for incidental sales of food that a restaurant/retail facility
does not prepare itself (e.g., food it purchases from a manufacturer
for sale to consumers). See the discussion earlier in section III.E.14
of this document.
15. Retail Facility
As explained in response to comment 40 of this document, for
purposes of Sec. 1.327(e) of this final rule, ``retail food
establishment'' is defined to mean an establishment that sells food
products directly to consumers as its primary function. The term
``consumers'' does not include businesses. A retail food establishment
may manufacture/process, pack, or hold food if the establishment's
primary function is to sell from that establishment food, including
food that it manufactures/processes, packs, or holds, directly to
consumers. A retail food establishment's primary function is to sell
food directly to consumers if the annual monetary value of sales of
food products directly to consumers exceeds the annual monetary value
of sales of food products to all other buyers. A ``retail food
establishment'' includes grocery stores, convenience stores, and
vending machine locations. In addition, retail food establishments that
employ 10 or fewer full-time equivalent employees are excluded from the
requirements in subpart J of this final rule, except Sec. Sec. 1.361
and 1.363. (See response to comment 38 of the document for a further
discussion of FDA's rationale underlying this exclusion.)
[[Page 71593]]
16. Transporter
There were no comments on this definition. However, FDA is changing
the definition to make clear that foreign persons that transport food
in the United States are subject to these requirements regardless of
whether they have possession, custody, or control of that food for the
sole purpose of transporting that food.
17. Transporter's Immediate Previous Source
There were no comments on this definition.
18. Transporter's Immediate Subsequent Recipient
There were no comments on this definition.
19. You
There were no comments on this definition.
F. Comments on Do Other Statutory Provisions and Regulations Apply?
(Proposed Sec. 1.329)
There were no comments on this issue.
G. Comments on Can Existing Records Satisfy the Requirements of This
Subpart? (Proposed Sec. 1.330)
(Comment 79) Several comments state that the final rule requires
additional or more detailed data than what is already maintained and
recommend that the FDA and CBP work together with industry to avoid any
unnecessary burdens. A few comments requested that we also work closely
with TSA and FAA as those agencies consider modifications of their own
rules. The comments urge close coordination between the FDA and those
other agencies to avoid inconsistent or redundant regulations.
Several comments state that the proposed regulations do not strike
a proper balance in that some of the data elements requested are
unnecessary (redundant) and too burdensome on an industry already
highly regulated by several agencies requiring the same or similar
information. For example, the air cargo industry currently establishes
and maintains industry air waybills, bills of lading and commercial
invoices, which are required by CBP to be maintained for a period of 5
years. Moreover, CBP will be proposing a new set of mandatory advanced
notice information, including other data elements, that could satisfy
FDA in its effort to establish a complete tracing of activities.
(Response) FDA based the requirements of the final rule on what
records are needed by the Secretary for inspection to help the
Secretary identify the immediate previous sources and the immediate
subsequent recipients of food, including its packaging, to address
credible threats of serious adverse health consequences or death to
humans or animals. Section 1.330 of subpart J of this final rule states
that duplication of existing records is not required if those records
contain all of the information required by subpart J. If a person keeps
records of all of the information as required by subpart J to comply
with other Federal, State, or local regulations (including those of TSA
or FAA), or for any other reason, then those records may be used to
meet these requirements. In addition, where a person currently has
existing records that contain some, but not all, of the required
information, only records for the nonexisting information needs to be
created.
(Comment 80) One comment notes that CBP's current requirements
would apply to a trucking company transporting imported food into the
United States and manifest data would be maintained. The comment states
that FDA could easily coordinate with CBP to get the data from them in
the event a threat to the nation's food supply is discovered, rather
than develop its own distinct recordkeeping regulations.
(Response) The Bioterrorism Act authorizes the Secretary (and, by
delegation, FDA) to require the establishment and maintenance of
records to address credible threats of serious adverse health
consequences or death to humans or animals. As discussed in response to
comment 79, subpart J of this final rule does not require duplication
of existing records if those records contain all of the information
required by subpart J. Therefore, to the extent information you keep
for purposes of complying with CBP satisfies the provisions of subpart
J, you do not need to keep duplicate records.
(Comment 81) One comment states that past situations have
demonstrated that FDA already has a policy and good track record for
finding and refusing adulterated products and products that could pose
a problem to the American public. The comment questions how the final
rule is going to improve upon existing recordkeeping.
(Response) As explained in the proposed rule (68 FR 25188), FDA has
been involved in traceback investigations where not all necessary
records were established and maintained to enable FDA to conduct a
complete tracing investigation. By issuing these regulations, FDA
believes that the likelihood of such a situation recurring will be
reduced. As discussed in response to comment 93 of this document, for
those covered persons already establishing and maintaining records that
contain all of the required information in subpart J of this final
rule, duplication of those existing records is not necessary. (See
response to comment 2 of this document for further discussion on FDA's
past experiences with traceback failures.)
(Comment 82) Several comments recommend that, for accuracy and
regulatory consistency, the final rule should recognize that compliance
with the bill of lading regulations of DOT's FMCSA will constitute
compliance with the transporter's obligations under proposed Sec.
1.352. The comments note that bills of lading and freight/expense bills
for motor carriers are legal documents and contain sufficient
information for the agency to be able to fulfill its Bioterrorism Act
responsibilities. The information to be included on the bill of lading
and freight/expense bills is prescribed by the United States Department
of Treasury at 49 CFR 373.101 and 373.103.
(Response) FDA agrees in part with the comments. The final rule has
been revised from the proposal. The final rule provides five
alternatives for transporters to meet their obligation to establish and
maintain records. First, transporters can meet the requirements of this
final rule by keeping the records listed in Sec. 1.352(a) of this
final rule. Second, transporters can meet the requirements of this
final rule by keeping the records listed in Sec. 1.352(b) of this
final rule, which are included within the current requirements for
roadway interstate transporters under FMCSA regulations as of the date
of publication of this final rule (49 CFR 373.101 and 373.103). Third,
transporters can meet the requirements of this final rule by keeping
the records listed in Sec. 1.352(c) of this final rule, which are
included within the current requirements for rail and water interstate
transporters under STB regulations as of the date of publication of
this final rule (49 CFR 1035.1 and 1035.2). Fourth, transporters can
meet the requirements of this final rule by keeping the records listed
in Sec. 1.352(d) of this final rule, which are included with the
current requirements for international air transporters under the
Warsaw Convention. Fifth, transporters can meet the requirements of
this final rule by entering into an agreement with a nontransporter
immediate previous source in the United States or a nontransporter
immediate subsequent recipient in the United States to keep records for
them. Such agreements must
[[Page 71594]]
contain the elements specified in Sec. 1.352(e) of this final rule.
Failure by the immediate previous source or immediate subsequent
recipient who enters into an agreement under Sec. 1.352(c) of this
final rule to keep such records is a prohibited act under Sec. 1.363
of this final rule.
FDA notes that the FMCSA and STB regulations only apply to
interstate transporters, and this final rule applies to both interstate
and intrastate transporters. Intrastate transporters will be subject to
the requirements of this final rule because FDA has determined that
imposing such requirements on intrastate transporters comports with the
Constitution, and these requirements are necessary to allow FDA to
identify the immediate previous sources and immediate subsequent
recipients of food in order to address credible threats of serious
adverse health consequences or death. Intrastate transporters can meet
this obligation by complying with either Sec. 1.352(a), (b), (c), (d),
or (e) of this final rule.
As a practical matter, because the final rule's requirements for
interstate shipments can be satisfied by existing records relating to
interstate shipments, the final rule only establishes new requirements
for (1) intrastate transporters; and (2) intrastate shipments conveyed
by interstate transporters. FDA estimates that there are approximately
115,000 intrastate carriers, and based on DOT data, almost one million
commercial drivers report intrastate travel. In reviewing the truck
tonnage by commodity, approximately 12 percent of the intrastate
shipments are of FDA-regulated food products. The average distance
these products are shipped is 231 miles, which means many shipments are
intrastate, especially in the larger western states.
For some foods, distribution may be limited primarily to intrastate
transportation, depending on the time of year and state. Many
businesses have their own delivery trucks that are used intrastate,
several use employee vehicles for deliveries, and many rent vehicles to
deliver product. These vehicles are used to deliver all types of food
products--refrigerated, cooked, as well as fresh food and produce, and
grocery items. Some local firms pick up their own merchandise from
``warehouse'' facilities to stock their own locations. Many of these
``warehouses'' (commonly referred to as ``bin warehouses'') may receive
product via interstate transporter and subsequently deliver to a
variety of intrastate retail customers via many different intrastate
means.
Data on the volume of foods that move in intrastate commerce are
maintained by individual state Departments of Agriculture and by DOT.
For example, from CA, LA, TX alone, DOT reports over 12 percent of
intrastate truck tonnage is FDA-regulated products. Past traceback
investigations provide examples of the need to regulate intrastate
transport. For example, in 2003, there were two produce-associated
outbreaks that occurred in CA from intrastate shipments. There were
also two Salmonella enteritidis outbreaks in WI associated with
intrastate shipments of eggs. Other foods, such as pasteurized milk,
nearly all raw products, seafood, and sprouts, may be shipped either
intrastate or interstate depending on the production or processing
site.
Most seafood consumed in FL is transported only intrastate, but in
OK, most seafood is transported interstate. In 2002, there was an
outbreak in NJ and FL linked to seafood. Intrastate records assisted us
in pinpointing the portion of the Indian River, FL that was causing the
problem. In reviewing egg tracebacks from 1996 to 2003, 35 percent of
the tracebacks that resulted in farm investigations were intrastate.
This past summer, the state of Oregon (OR) was able to stop a sprout-
associated outbreak from becoming a serious one by tracing back to a WA
sprouter just over the border from OR after some initial cases but
before the Salmonella serotype had been identified. The sprouts were
recalled. If the sprouter had been located in OR so that the sprouts
were not transported interstate, it would have been problematic to a
traceback investigation for FDA to be limited to records only from
interstate transporters.
The NC green onion traceback investigation in 2003, which was part
of the largest Hepatitis A outbreak that has ever occurred in the
United States, is another example of the importance of intrastate
records. There, the amount of time spent on the traceback within that
State was twice as long as the other three tracebacks done in other
states because the distributor in NC did not have records. Traceback
from the TN outbreak took over a month, the GA traceback took a month,
and Pennsylvania (PA) traceback took a week. Because we had no
intrastate records in the NC outbreak, the traceback was determined to
be inconclusive after two months, which meant that we would not have
been able to identify the farms involved if it had not been for the
other outbreaks.
This year, there was an Escherichia coli (E. coli) O157:H7 outbreak
associated with bagged lettuce product in CA that was only in
intrastate commerce. That traceback might have been lost had records
not have been available. Exempting intrastate transporters could
significantly impede FDA's ability rapidly and effectively to respond
to a public health emergency involving a food transported within a
state, particularly if the adulteration occurred during transport and
the food was delivered to multiple sources within the State. In
scenarios where time is of the essence to prevent serious injuries or
death on a large scale, having records available becomes even more
critical. In addition, not only must FDA be able to rapidly obtain
records, it is imperative that FDA be assured that those records
contain certain essential information to allow FDA to prevent further
harm in an efficient and effective manner.
Additional examples of circumstances involving food products that
have significant intrastate manufacturing/processing or distribution
are provided in the following paragraphs:
An intrastate sandwich/snack food company that sells to
retail outlets for consumption had an outbreak of Listeriosis or
Salmonellosis that was traced back to the sandwiches. The product was
completely distributed using the company trucks within the state. FDA
was unable to determine which sandwiches caused the outbreak. The
sandwiches were delivered to retail customers, and it was impossible to
track which sandwiches went to which retailer. The transporter did not
track which product was delivered to which location. In this case, the
firm had to recall all of its products.
Retail stores regularly purchase food, especially locally
grown produce, from ``truck farmers.'' These farm trucks travel from
store to store within a state, sometimes selling an entire truckload to
a store, other times a portion. There is no manifest or record other
than a bill of sale--e.g., 200 cantaloupes from Farmer Brown. If the
contamination occurred on the truck, FDA would not have a record from
the truck of all other delivery sites.
Several days into the investigation of a Hepatitis A
outbreak from chicken salad in one city, FDA learned that the chicken
was ``cubed'' at another facility in another city within the state, and
transported to the ``manufacturing facility.'' The source of the
outbreak was the site where the chicken was ``cubed'' by an ill
employee; however, there were no records to indicate when the cubed
product was shipped or received by the salad manufacturing facility.
[[Page 71595]]
(Comment 83) One comment suggests that the final regulation should
clarify that ``transportation record'' includes the various documents
that may be developed by a company that contain the information
specified in the regulation. They do not believe that it would be
necessary to include all of this information in one shipping document.
The comment notes that industry currently collects much of the data
that would be requested by FDA but these data are not found in one
document, and in some instances, may be found at various locations
within the manufacturing facility. Significant time and expense could
be involved in making the modifications to the company's computer and
recordkeeping systems to have a system that develops a transportation
record that contains all of this information on one form. Such a
requirement would be unreasonably onerous, particularly if the
company's system is designed to make certain that the company can
provide all of this information to the agency within the specified
time. The respondent asks the agency to clarify in the final rule that
it is not necessary to develop one transportation record that contains
all of the information in a single form.
(Response) FDA confirms that it is not necessary to develop one
record that contains all of the information. FDA's intent is to have as
little impact as possible on current recordkeeping practices if those
records can meet the requirements of these regulations. The final
regulation has been clarified to explicitly provide in Sec. 1.360 that
you must create the required records when you receive and release food,
except to the extent that the information is contained in existing
records. FDA is requiring that specific information be kept by a
covered person, but is not specifying the form or type of system in
which those records must be maintained. The required information may be
contained entirely in one record or spread among many different
records. The person subject to these regulations is responsible for
ensuring that it keeps all applicable records and that those records
are available to FDA under the record availability requirements in
Sec. 1.361 of this final rule.
(Comment 84) A few comments note that the recordkeeping
requirements under existing FDA regulations, such as Substances
Prohibited From Use in Animal Food or Feed (21 CFR part 589), Current
Good Manufacturing Practice for Medicated Feeds (21 CFR part 225), and
Fish and Fishery Products (seafood Hazard Analysis Critical Control
Point (HACCP)) (21 CFR part 123) should be sufficient and deemed
adequate to meet the requirements under the Bioterrorism Act and that
FDA should not introduce additional, stand alone, recordkeeping
systems.
(Response) As discussed in response to comment 79, Sec. 1.330 of
the final regulation states that duplication of existing records is not
required if those records contain all of the information required by
subpart J of this final rule. That includes records kept under the
regulations identified in the comment.
(Comment 85) One comment states that it would be beneficial if FDA
announced the suitability of records kept under existing requirements
well ahead of the implementation deadline under the Bioterrorism Act.
(Response) FDA is not able to determine what records currently
exist throughout the entire food industry that satisfy these
regulations due to the diversity and complexity of the food industry
and the various existing Federal, State, and local regulations that
require recordkeeping, as well as varying business practices. The
person subject to these regulations is responsible for ensuring that it
keeps all applicable records and that those records are available to
FDA under the record availability requirements in Sec. 1.361 of this
final rule. FDA points out that the earliest compliance date of this
final rule is December 9, 2005, and that many persons are not required
to comply with this final rule for up to 2 years after publication.
Therefore, FDA believes that it has provided sufficient time for
persons to determine what, if any, additional information must be kept
to comply with these provisions well ahead of the compliance date of
this final rule.
(Comment 86) A few comments note that most food companies currently
maintain the chain of distribution information that FDA proposed, but
the diversity and complexity of the food industry means that the
information is maintained in many different ways and formats, ranging
from computerized records systems to file folders of paper records. The
comments state that it should be of no concern to FDA and, therefore,
not the subject of the regulations to prescribe any specific manner or
form of maintaining the information.
(Response) As discussed in response to comments 1 and 83 of this
document and in the proposed rule, FDA's intent is to have as little
impact as possible on current recordkeeping practices if those records
can meet the requirements of these regulations. FDA is requiring
specific information be kept by a covered person, but not specifying
the form or type of system in which those records must be maintained.
The person subject to these regulations is responsible for ensuring
that it keeps all applicable records and that those records be made
available to FDA under the record availability requirements in Sec.
1.361 of this final rule. To satisfy the requirements in this final
rule, paper or electronic records or a combination of the two may be
used.
H. Comments on What Information is Required in the Records You Must
Establish and Maintain to Identify the Nontransporter and Transporter
Immediate Previous Sources and Immediate Subsequent Recipients?
(Proposed Sec. Sec. 1.337 and 1.345)
1. General Comments
(Comment 87) Several comments state that the information required
by the recordkeeping regulations exceeds the information required by
the Bioterrorism Act, thereby exceeding FDA's statutory authority. Some
of these comments state that according to the Bioterrorism Act, the
regulations need to provide that those persons subject to the
recordkeeping requirement maintain the ``one-up and one-back''
information in a records maintenance system in which the information is
reasonably accessible to FDA upon request. The comments ask that FDA
consider the diversity and complexity of the food industry and allow
for more flexibility. They contend that the name and address of the
person from whom an article of food was received or to whom it was
shipped and a description of the article of food should be sufficient.
The comments further suggest that not all companies require or need the
same type of identification as other members in the food chain, e.g.,
lot numbers and identity preserved ingredients. They request that,
because of this diversity in the supply chain, the agency not define
rigid identification requirements. The comments contend that this
flexibility is in keeping with the intent of the Bioterrorism Act and
will avoid dramatic changes to what are currently efficient and
effective business practices.
(Response) FDA disagrees that the information required by the rule
exceeds FDA's authority under the Bioterrorism Act. The Bioterrorism
Act authorizes FDA to require records needed to ``allow the Secretary
to identify the immediate previous sources and immediate subsequent
recipients of food, including its packaging, in order to address
credible threats of serious adverse health consequences or death in
humans or animals.'' FDA believes the information it is requiring to be
[[Page 71596]]
established and maintained meets this standard.
Information such as the specific name of the food will allow FDA to
limit its investigation to the implicated food. For example, if FDA has
a reasonable belief that a shipment of cheddar cheese is contaminated,
traceback or trace forward would be better facilitated if the records
contained the identifier ``cheddar.'' This would help FDA narrow its
investigation and increase the speed of the trace. The information
would also help the involved firm limit the scope of any recall, should
it be necessary. However, FDA does recognize the diversity of the food
chain and has allowed for flexibility in the final rule. For example,
the requirement to record lot/code number or other identifier applies
only to persons who manufacture, process, or pack food and only to the
extent that information exists. Also, the final rule allows covered
persons to use existing abbreviations or codes currently used to
identify the food. However, if these abbreviations and/or codes are
used, they must be readily deciphered for FDA upon request so that an
``adequate description'' of the food is recorded.
(Comment 88) One comment questions the need for the extensive
recordkeeping requirements in the regulations and suggests that much of
the facility information required in the recordkeeping rule is already
required in the registration interim final rule. The comment gives as
an example the duplicate requirements that the nontransporter must
maintain a record of the responsible individual, fax number, and e-mail
address for: (1) The facility that shipped product to your facility,
(2) the transportation company that delivered the product, (3) the
transportation company that picked up product from your facility, and
(4) the facility where your product is being shipped.
(Response) FDA does not agree that much of the information required
under this recordkeeping rule is already required under the
registration interim final rule. Information required under the
registration interim final rule pertains to the facility itself,
including information about the general food product categories that
the facility manufactures/processes, packs, or holds. Information that
this final rule mandates be established and maintained in records is
information pertaining to food that will assist FDA in identifying the
immediate previous sources and the immediate subsequent recipients of
all food that is received and released by a person. In addition, to
complete the tracing investigation, the identity of the transporters
who transported the food to and from the sources and recipients is
required, which is not covered by the facility registration. Moreover,
the scope of section 305 of the Bioterrorism Act (registration) is not
as broad as section 306 of the Bioterrorism Act (establishment and
maintenance of records). Specifically, registration applies only to
facilities that manufacture, process, pack, or hold food for
consumption for humans or animals in the United States. Recordkeeping
applies to these facilities, as well as those who transport,
distribute, receive, or import food. Recordkeeping also applies to all
food regardless of whether it will be consumed in the United States or
exported.
However, FDA has deleted the requirement that persons subject to
subpart J of this final rule identify a responsible individual in the
records. Instead, for those facilities required to register under part
1, subpart H, FDA will use the emergency contact telephone number
provided by those facilities. For other facilities, FDA does not
believe requiring such facilities to provide an emergency contact
telephone number is needed to assist the Secretary to identify the
immediate previous sources and immediate subsequent recipients of food,
since that telephone number would be contained in the very records FDA
would be seeking assistance in locating.
(Comment 89) One comment states that it is unreasonable to require
nontransporters to have a record of the intermediate transporters,
i.e., transporters who do not have direct contact with the
nontransporters.
(Response) Neither the proposed rule nor the final rule requires
nontransporters to establish and maintain records identifying
intermediate transporters. With respect to transportation records,
Sec. 1.337(a)(6) of this final rule only requires nontransporters to
establish and maintain records of the transporter that brought the food
to them. Similarly, Sec. 1.345(a)(6) of this final rule only requires
nontransporters to establish and maintain records of the transporter
that took the food from them. The transporters are required to keep
records that identify intermediate transporters.
(Comment 90) One comment states that some firms use carriers such
as United Parcel Service, Federal Express, and the United States Postal
Service to deliver their products and conduct all their transactions
with these carriers via the Internet. The address and fax numbers of
these carriers are not relevant. The comment requests that FDA revise
the section on identifying information of the transporter to require
only ``sufficient identifying information.''
(Response) FDA disagrees with this comment. In the event that FDA
has a reasonable belief that an article of food is adulterated and
presents a threat of serious adverse health consequences or death to
humans or animals, FDA would need to determine from the source and
recipient records who transported the subject food to complete the
tracing investigation. Although the transportation may be arranged over
the Internet, companies such as those mentioned in the comment have
fixed addresses, such as a corporate headquarters, that would need to
be included in the record so that if FDA had to access their existing
records under section Sec. 1.361 of this final rule, FDA would know
where to go.
(Comment 91) One comment states that wines produced in France are
sold by someone other than the producer and that the producer never
knows the destination of the wine. The comment states that the
recordkeeping requirement is an unnecessary burden on the producer
because much of the producer's wine may be sent to destinations other
than the United States.
(Response) There is no requirement for a person that manufactures
or processes food to know the ultimate destination of its product. A
person subject to subpart J of this final rule is only required to
establish and maintain records to identify the transporter and
nontransporter immediate previous sources and transporter and
nontransporter immediate subsequent recipients of food. Further, FDA
notes that it has excluded all foreign persons, except foreign persons
who transport food in the United States, from all of the regulations in
subpart J.
(Comment 92) One comment requests clarification on the records
requirements for products produced before the regulations take effect.
(Response) Covered persons are required to establish and maintain
records to identify the immediate previous sources and the immediate
subsequent recipients of all food as of the compliance date of this
final rule, keeping in mind the staggered compliance dates provided in
Sec. 1.368 of this final rule. If a food was received before the
compliance date of this final rule, then there is no obligation to keep
records of the immediate previous sources of that food. If a food is
released on or after the compliance date of this final rule, you must
establish and maintain records of the immediate
[[Page 71597]]
subsequent recipients of the food, regardless of when that food was
produced or received.
2. Information Reasonably Available to Identify the Specific Source
of Each Ingredient
(Comment 93) A few comments state that the requirement to keep
records that identify the specific source of each ingredient to a lot
of finished product exceeds the intent of the Bioterrorism Act. One
comment adds that the language in the Bioterrorism Act clearly
authorizes a regulation to require the maintenance of records that show
the person from whom a product is received and the person to whom a
product is sent. The comment states that there is nothing in the
language of the Bioterrorism Act or in its legislative history that
would support including a requirement that products received be
directly associated with products that are shipped.
(Response) FDA does not agree with these comments. Section 306(b)
of the Bioterrorism Act expressly states that the Secretary
* * * may by regulation establish requirements regarding the
establishment and maintenance, for not longer than two years, of
records by persons (excluding farms and restaurants) who
manufacture, process, pack, transport, distribute, receive, hold, or
import food, which records are needed by the Secretary for
inspection to allow the Secretary to identify the immediate previous
sources and the immediate subsequent recipients of food, including
its packaging, in order to address credible threats of serious
adverse health consequences or death to humans or animals''
(emphasis added).* * *
Thus, the Bioterrorism Act clearly gives FDA the authority to determine
what records are needed to achieve this objective.
The final rule contains those requirements that FDA has determined
are necessary to help FDA identify the immediate previous sources and
immediate subsequent recipients of food to address credible threats of
serious adverse health consequences or death to humans or animals. If
FDA cannot immediately narrow its tracing to a specific source, tracing
becomes much more difficult and time-consuming, there is an increased
risk to consumers, and some food sources may be unfairly implicated.
FDA notes, however, that the final rule (Sec. 1.345(b)) only requires
nontransporters to identify the specific source of each ingredient that
was used to make every lot of finished product to the extent such
information is reasonably available.
(Comment 94) A few comments state that they are not able to provide
information that ties the specific source of each ingredient to a lot
of the finished product. Several comments agreed with FDA's decision to
require identification of the specific source of an ingredient in a
finished product only when the information is ``reasonably available.''
Some comments request that the agency make clear in the final rule
that, in many instances, it will be impossible to identify the specific
source of a material that is held in bulk and that multiple sourcing
information in recordkeeping is to be anticipated for raw materials
that are held in bulk form.
Several other comments state that, because their ingredients are
commingled, they are unable to provide FDA with information that ties
the specific source of each ingredient to a lot of the finished
product. Certain bulk products such as flour, shortening, vegetable
oil, fructose syrup, and milk cannot be identified as ingredient lots.
Other comments state that the ability to identify specific sources of
ingredients will vary based on many factors. One comment states that
produce is often commingled to meet marketplace needs. A few comments
state that some processors commingle ingredients in their processing
operations, which makes it impossible to trace the specific source of
ingredients to a lot of finished product. One comment states that most
companies would only be able to produce possible sources of ingredients
in batches of final products. The comment asserts that companies should
only be required to do so in a crisis.
(Response) FDA acknowledges that certain business practices are not
amenable to linking incoming ingredients with outgoing product and that
it may not always be possible to identify the specific source of an
ingredient that was used to make a lot of finished product. It is not
FDA's intent to mandate reengineering of long-standing existing
processes. For this reason, the final rule requires the identification
of the specific source of each ingredient that was used to make every
lot of finished product only when the food is released and only if this
information is reasonably available. With respect to the comment that
companies should only be required to produce records during a crisis,
the agency notes that FDA will request access to the records under
section 306 of the Bioterrorism Act only when it has reasonable belief
that an article of food is adulterated and presents a threat of serious
adverse health consequences or death to humans or animals.
(Comment 95) One comment requests that the agency accept testing of
each delivery of incoming product as a substitute for the requirement
to tie the specific source of each ingredient to a lot of the finished
product. The comment asserts that this testing provides the needed
safeguards and would ensure that the ingredient is not contaminated
chemically, physically, or biologically.
(Response) The agency does not agree with this comment. The comment
fails to specify the nature of the chemical, physical, or biological
tests being proposed, or what sampling scheme would be conducted to
ascertain that the incoming ingredient is not contaminated. Moreover,
only nontransporters are required to identify the specific source of
each ingredient that was used to make every lot of finished product,
and they are required to do so only if this information is reasonably
available. FDA also notes that it has deleted this provision from Sec.
1.337(a) of this final rule and instead inserted it in Sec. 1.345(b)
of this final rule. The agency believes records are more likely to be
reasonably available to persons when they release food made from the
ingredients than when the persons receive the ingredients under Sec.
1.337 of this final rule.
(Comment 96) A few comments request that the agency treat
processing aids and incidental additives as it does commingled
ingredients. The comments state that they are able to identify the
source(s) in use in a facility when specific food products were
produced, but are not able to identify the source of the processing aid
or incidental additive used to produce a specific lot of food.
(Response) The recordkeeping requirements in these regulations
apply to all food unless specifically exempted. Processing aids may be
food additives or a generally recognized as safe ingredient. In either
case, they fall within the definition of food and are subject to these
regulations. If the manufacturing process is such that a processing aid
was used to make a specific lot of a finished food product, then the
specific source of each processing aid should be identified in the
records to the extent that information is reasonably available.
(Comment 97) Several comments ask that the agency clarify the term
``reasonably available'' and provide guidance on what the agency
considers is ``reasonably available.'' One comment suggests that the
agency use hypothetical case studies as guidance.
(Response) What is ``reasonably available'' is going to depend on
the particular circumstances. To illustrate this point in the proposed
rule, FDA used a hypothetical case of a cookie maker. (See 68 FR 25188
at 25197.) A company that bakes cookies may source
[[Page 71598]]
flour from five different companies rather than depend on a single
company as its supplier. The flour from the five companies may be
stored in one common silo before being used in the manufacture of the
cookies. In this scenario, the manufacturer could identify, depending
on the date the flour was received from each company and placed in the
silo and when the silo was emptied, the various companies that were the
sources of the flour. Under this situation, the information is not
reasonably available to determine a single source of the flour used in
a particular lot of cookies. The information reasonably available to
the manufacturer would be the identity of all of the potential sources
of the flour for each finished lot of cookies. However, if the
manufacturer had dedicated silos for each supplier of flour, then the
information would be reasonably available to the manufacturer to
specify the specific source of the flour for each finished product. If
we determine that additional guidance is needed, FDA will consider
issuing guidance in the future to explain this requirement further.
Again, FDA notes that this requirement now appears in Sec. 1.345(b) of
this final rule and has been deleted from Sec. 1.337(a) of this final
rule.
(Comment 98) One comment states that manufacturers of packaging
face the same issues as processors who deal with commingled
ingredients. The comment explains that, during the manufacture of
multiple-layer packaging products, it is common to use multiple lots of
raw material within a master roll of semifinished or finished product.
An example of this condition would be a paper/foil lamination where one
roll of foil and three to four rolls of paper are used in the same
production run. In this situation, the lot numbers of the raw materials
and the lot numbers of the finished products may be known, but it
cannot be determined with precision which lot of the input materials is
in an individual roll of finished product.
(Response) Manufacturers of packaging (the outer packaging of food
that bears the label and does not contact the food) are excluded from
all requirements of subpart J of this final rule unless such persons
also manufacture, process, pack, transport, distribute, receive, hold
or import food in the United States, in which case they are subject to
Sec. Sec. 1.361 and 1.363 of this final rule as to the food's
packaging. Manufacturers of food contact substances, whether or not the
substances are the finished container that directly contacts the food,
are excluded from all of the requirements of subpart J, except
Sec. Sec. 1.361 and 1.363 of this final rule. Therefore, such
manufacturers are not required to know which lot of the input materials
is in an individual roll of finished product.
(Comment 99) Several comments request that the agency clarify the
term ``ingredient'' with respect to distilled spirits that have
innumerable sources of ingredients dependent upon the category and
particular brand. The comments state that there is a question of
interpretation as to what is meant by ingredients, given that the
distilling process changes substantially the character and chemical
composition of the raw materials and some of them may even be absent
from the final product.
(Response) Alcoholic beverages are within the definition of
``food'' in Sec. 1.328 of this final rule. A manufacturer of alcoholic
beverages is required under Sec. 1.337 of this final rule to identify
the source of each ingredient that was received to make the alcoholic
beverage, regardless of whether it later changes character and chemical
composition.
(Comment 100) One comment suggests that the agency reconsider the
requirement for immediate previous sources of bottled water. The
comment asserts that the detail of records required under the
regulations will not exist in many cases because the bottled water
source will be directly out of the ground and that the bottler will
capture any potential concerns of a serious threat of adverse health
consequences. The comment suggests that water be viewed as other
primary agricultural food ingredients.
(Response) Bottled water is within the definition of food as
defined in Sec. 1.328 of this final rule. If water is obtained from a
public water system, then the public water system is the immediate
previous source. If ground water is used, then the location where the
water was extracted should be provided.
(Comment 101) One comment recommends that, in requiring a record of
the raw material of a product, the agency should limit its requirement
to that of major ingredients of the product.
(Response) FDA does not agree with the comment. The comment neither
explains what distinguishes a major ingredient from a minor one, nor
why the agency should limit its requirement to ``major'' ingredients
only. Even if an ingredient is present only in small quantities, it may
pose a risk and could be the focus of an intentional attack (e.g., the
deliberate addition of a chemical toxin or pathogens), which would
further contaminate food products to which they are added.
3. Requirement to Record Responsible Individual
(Comment 102) Several comments object to the requirement to name a
responsible individual as duplicative of a requirement in the
registration interim final rule. The majority of these comments ask
that FDA use the emergency contact information required in the
registration interim final rule in place of the responsible individual.
The comments suggest that using the emergency contact information would
give the agency rapid access to the information and provide the
industry with flexibility. The comments state that there is no
demonstrated need for the record of each commercial transaction
involving the distribution of food to contain the name of a responsible
individual, and that the requirement for a responsible individual is
too rigid, as there is a high turnover of employees in many companies
and the naming of a specific person as the responsible individual would
require frequent updating.
(Response) FDA agrees with the comments that there is little
utility from requiring that the record of each commercial transaction
involving the distribution of food contain the name of a responsible
individual, due to the fact that individuals change jobs within and
among companies very often, making it unlikely that the person named in
the record will have responsibility for the food at issue when FDA
seeks to effect a traceback. FDA further notes that, for those
facilities required to register under part 1, subpart H, FDA already
has the emergency contact designated in the registration under
Sec. Sec. 1.232(d) and (e) and 1.233(d) or Sec. 1.233(e). As
explained previously, FDA does not believe this information is
necessary for those facilities not required to register under 21 CFR
part 1, subpart H, because including an emergency contact telephone
number in records being kept will not assist the Secretary in locating
the records because FDA would not have the emergency number until it
had already accessed the records.
(Comment 103) Some comments suggest that, rather than requiring a
specific individual, the agency require a department such as a quality
assurance department.
(Response) As explained in response to comment 63 of this document,
FDA has deleted the proposed requirement that a responsible individual
be listed in each record.
4. Adequate Description of Type of Food
(Comment 104) One comment notes that ``specific variety'' is not
appropriate
[[Page 71599]]
for many food ingredients and should be changed to ``common name.''
(Response) FDA is requiring an adequate description of the type of
food received or released to include brand name where applicable and
specific variety where applicable (e.g., brand x cheddar cheese, not
just cheese; or romaine lettuce, not just lettuce). FDA agrees that
``specific variety'' may not apply in all cases, but should be provided
where it applies because it will help narrow the investigation and help
FDA identify the immediate previous sources and immediate subsequent
recipients of food to address credible threats of serious adverse
health consequences or death to humans or animals.
(Comment 105) Some comments recommend that the agency allow the use
of company specific codes or an existing abbreviation system. One
comment states that commercial documents often incorporate code numbers
and abbreviations that identify the food products very specifically.
The comments add that, as long as these codes and abbreviations can be
deciphered readily for FDA in the event of an agency request for
records, the product descriptions should be considered sufficient in
their present form.
(Response) As discussed in response to comment 103 of this
document, in keeping with FDA's intention to ensure these regulations
are not unnecessarily burdensome, FDA agrees that covered persons may
use existing abbreviation or code systems that identify the food very
specifically, provided the abbreviations or codes can be readily
deciphered at the time the records are made available to FDA following
an agency request.
(Comment 106) Some comments who represent warehouses state that
they rely on the customer's description of the product as the food
comes to them in shrink-wrapped pallets and cartons and the warehouse
is not permitted to open the packaging.
(Response) It is not clear from the comment what the ``customer's
description'' entails; however, FDA is requiring an adequate
description of the type of food to be able to narrow the scope of the
implicated food in the event of a public health emergency. For this
reason, each entity within the chain of distribution of the food must
establish and maintain records that adequately describe the type of
food received and released so that FDA can identify the immediate
previous sources and immediate subsequent recipients of food to address
credible threats of serious adverse consequences or death to humans or
animals. It is the responsibility of the covered entity to revise its
recordkeeping system so that it establishes and maintains records
containing all required information. In the previous example, the
warehouse may need to require its customers to provide it with a more
detailed description when food is delivered or released than it
currently receives.
5. Date Food Received or Released
(Comment 107) One comment agrees with the proposed requirement.
Another stated that the term ``released'' is ambiguous in a commercial
environment and asked for clarification.
(Response) Under Sec. Sec. 1.337 and 1.345 of this final rule, if
you are a nontransporter, you must establish and maintain records to
identify the date you received and released food. Food is ``released''
when it moves from one covered activity to another covered activity
(unless both activities are conducted by the same person). For example,
an article of food is released from the manufacturer when it is given
to the transporter. The food is released again when the transporter
delivers the food to a grocery store. Where the manufacturer transports
its own food to the grocery store, however, the food is not released
when the manufacturer loads his trucks, but rather when the
manufacturer delivers the food to the grocery store.
6. Lot or Code Number/Other Identifier
(Comment 108) Several comments state that some products do not have
lot numbers (e.g., bulk produce and restaurant foods). The comments
state that ``character/number string'' on the package may be hard to
identify as a lot code; food product with closed lot codes requires
deciphering; lot codes may be on nonvisible portions of the packaging
or on the invoice; the integrity of the lot code may be compromised or
unreadable if the outer packaging is damaged; and this requirement
potentially forces the manufacturer either to stop using or to shorten
the lot codes, which would be counterproductive to addressing public
health concerns in this initiative. Another comment states that the
requirement to record lot or code number/other identifier would be time
inefficient and time consuming. One comment states the agency should
require lot number tracing when information is ``reasonably
available.''
(Response) FDA recognizes the difficulties in some situations of
recording lot/code number or other identifiers of food. FDA has revised
the final rule to only require that persons who manufacture, process,
and pack food to record lot/code numbers or other identifiers. See
Sec. Sec. 1.337(a)(4) and 1.345(a)(4) of this final rule. Furthermore,
this requirement only applies to the extent the information exists. FDA
has learned through comments that tracking lot/code numbers or other
identifiers throughout the manufacturing/processing and packing of food
is not a problem, because in most cases it is currently being done or
capable of being done. It is during the transporting, distribution, and
holding of food (e.g., from the warehouse distribution centers to the
retail store or restaurant) that such tracking becomes a problem. FDA
also learned that the food industry is moving in the direction of being
able to track the lot or code number or other identifier throughout the
entire food chain, but that the current technology has not made such
tracking cost efficient.
(Comment 109) Several comments state that the requirement to record
lot/code number or other identifier would cost the industry millions of
dollars in operational changes. They state that more warehouse space
would be required to separate food by lot number, expensive computer
system upgrades would be needed to handle lot code information, and the
industry would incur significant administrative and labor costs to
enter lot code information into the system. Comments further state that
bar code tracing/scanning or radio frequency identification (RFID)
systems are costly, and the RFID technology is new. The food
distribution business will be affected every minute of every day
compared to the infrequent costs associated with investigating food
safety issues as the need arises. RFID is being studied and involves
placing tagging chips in packaging. It may not be necessary to invent
an elaborate system of paper recordkeeping if RFID proves to be useful
in the future.
(Response) As discussed in response to comment 108 of this
document, FDA recognizes the difficulties in tracking lot/code numbers
or other identifiers throughout the entire food distribution chain.
This final rule accounts for those difficulties. FDA is aware that
technology is developing that will enable lot/code number tracking in
the future to be cost efficient for all of the food industry.
(Comment 110) One comment states that food is not sorted by lot
code identification. One pallet/bin, slot, or stockkeeping unit may
contain multiple lot numbers.
(Response) The final rule does not require warehouse distribution
facilities
[[Page 71600]]
to track lot/code number or other identifiers in these final
regulations.
(Comment 111) A comment states that lot numbers are not scannable
or machine readable, and manual transcription of these numbers would
introduce errors. The comment states that small businesses would be
buried in a mountain of paperwork and this would make it impossible for
them to track products accurately.
(Response) As explained in response to comment 108, FDA recognizes
the difficulties in tracking lot/code numbers or other identifiers.
This final rule reflects those considerations. FDA has balanced the
need to provide information that would expedite a traceback in a food-
related emergency with the ability to record lot numbers. Because food
almost always passes through at least one small business in the
distribution chain, FDA cannot exempt small businesses entirely from
this important requirement. The final rule, however, does give small
and very small businesses more time to comply with its requirements.
FDA is aware that technology is developing that will enable lot/code
number tracking in the future to be cost efficient for all of the food
industry.
(Comment 112) Some comments state that if foods are distributed to
the store via direct store delivery (DSD) (i.e., baked goods, breads,
soda, snack foods, beer/wine, ice, and milk) the vendor provides the
food directly to the store and sometimes stocks the shelves. DSD has no
system to track the information the FDA will require.
Several comments note that protecting public health does not
necessitate the maintenance of records in every step of the
distribution process. The comments state that the current recall system
is the most efficient and practical way to identify and remove product
from distribution. These comments state that consumers typically return
all products in a recall with no regard to the lot code, and that this
is the most appropriate response in the event of a terrorist attack. In
these comments' opinion, complex lot numbers may slow or substantially
limit the recall of contaminated food. Additionally, requiring
distributors to compromise the integrity of food packaging to determine
lot codes defeats the purpose of the proposal. Some comments state that
this requirement represents a disproportionate burden to packaged food
distributors.
Some comments state that food manufacturers may use independent
delivery persons who pick up product from several manufacturers for
delivery to retailers. There may be as many as 75 to 100 different
products on each truck. The independent delivery person has no
capability to capture the lot numbers of the products of several
different manufacturers.
(Response) (Response) The final rule does not require distributors
to track lot/code numbers or other identifiers. DSD vendors will not be
subject to the lot code requirement in Sec. 1.345(a)(4) for activities
other than manufacturing, processing, and packing food. Thus,
activities such as holding and transportation are not subject to the
requirements.
(Comment 113) Many comments request clarifications for the terms
``other identifiers'' and ``to the extent information this information
exists.''
(Response) FDA acknowledges that most firms use lot or code numbers
to identify specific batches of their products. However, some may use
other technologies such as barcodes. The term ``other identifier'' is
intended to capture any other methods that the food industry may be
using to identify specific lots of product. FDA is mandating that this
information be captured in the records, where required, to the extent
this information exists. It is conceivable that certain sectors of the
industry may not use lot or code numbers, or other identifiers to
identify specific lots of products. In this case, the regulations do
not specify that these sectors start using such identifiers. The
identifiers are required only to the extent that they already exist.
(Comment 114) A number of comments suggest that, in lieu of lot
numbers, purchase orders numbers would serve as acceptable identifiers.
(Response) To the extent that a purchase order contains all
required identifiers of food received or released, the purchase orders
may be used to satisfy the requirement. To the extent that a purchase
order only contains some of the required information, those records
will need to be supplemented to satisfy all the requirements contained
in Sec. Sec. 1.337 and 1.345 of this final rule.
FDA notes that the final rule only requires that persons who
manufacture, process, or pack food maintain lot or code number or other
identifier of the food, and only requires this information to the
extent that the information exists. Furthermore, FDA is not specifying
the form or the format of the information that is required to be
established and maintained.
(Comment 115) One comment states the FDA should standardize lot
codes.
(Response) FDA does not agree. The agency has determined that the
least burdensome way of issuing the recordkeeping requirements mandated
by the Bioterrorism Act is to specify the information that must be
contained in the records, but not the format in which the records are
kept. As indicated by other comments summarized previously, persons
subject to this final rule already have various means to identify food,
including lot numbers. The final rule allows such persons to use lot
numbers or other appropriate identifiers, including abbreviations,
provided such information can readily be decoded to identify particular
foods if FDA makes an appropriate request to access records.
7. Quantity and How the Food is Packaged
(Comment 116) A few comments recommend that FDA allow quantity of
products in bulk containers to be expressed in gross quantity, e.g., 1
to 5,000 gallon (gal) tank load; 5 to 1,000 gal totes.
(Response) FDA agrees with this comment that, when recording
quantity of bulk food, the gross quantity, or weight, (e.g., 5,000 gal)
is acceptable. To satisfy the requirement to record how the food is
packaged, ``tank load'' or ``totes'' is acceptable. FDA has revised
Sec. Sec. 1.337(a)(5) and 1.345(a)(5) of this final rule accordingly.
(Comment 117) One comment representing warehouses recommends that
the final rule require that the information relating to quantity and
how a food is packaged be maintained by the warehouse customer.
(Response) FDA disagrees with this comment. Warehouses ``hold''
food and are, therefore, subject to all of the regulations in subpart J
of this final rule. The comment has not explained why a warehouse would
not know or could not obtain information regarding the quantity of food
received and how it is packaged. FDA believes it is necessary to
maintain this information at each step of the distribution chain to be
able to effectively and efficiently conduct a tracing investigation.
8. Name, Responsible Individual, Address, Telephone Number, Fax Number,
E-Mail Address of Transporters Who Transported the Food To You and From
You
(Comment 118) Several comments state that the identity of the
transporter is known to the shipper but is not typically known to the
receiver. The comments assert that it is unreasonable to expect the
receiver to have, seek, or maintain information on the identity and
related contact information for the transporter that delivered the
product, especially if multiple transporters may have been involved.
The comments state
[[Page 71601]]
that such information would be available from the shipper that arranged
the transport. One comment states that it is not usual business
practice for distributors to keep records about the transporter who
delivers food.
(Response) FDA believes that excluding a source from keeping
records on the immediate previous source if that immediate previous
source is a transporter would hinder a traceback investigation. The
proposed and final rule require nontransporters to identify the name of
the firm, address, telephone number and, if available, the fax number
and e-mail address of the transporter who transported the food to and
from them. See Sec. Sec. 1.337(a)(6) and 1.345(a)(6) of this final
rule. These provisions however, do not require the nontransporter to
record transactions to which they were not a party, e.g., where
multiple transporters are involved.
I. Comments on Who is Required to Establish and Maintain Records for
Tracing the Transportation of All Food? (Proposed Sec. 1.351)
(Comment 119) Several comments stated that foreign transporters are
not included in the definition of ``foreign facilities'' and that the
final rule should be applied to foreign transporters as it is to
domestic transporters.
(Response) FDA has excluded all foreign persons, except foreign
persons who transport food in the United States, from all of the
regulations in subpart J of this final rule. Therefore, foreign
transporters are subject to the same requirements as ``domestic''
transporters when transporting food in the United States.
(Comment 120) A number of comments noted that many
``nontransporters'' own trucks or other vehicles and transport food or
feed as an incidental part of their operations. They express concern
that they would be required to keep two sets of records, one as a
nontransporter, and the other as a transporter. One comment recommends
that the final rule be applicable to both private and ``for-hire''
transporters.
(Response) ``Transporter'' is defined in Sec. 1.328 of this final
rule to mean a person who has possession, custody, or control of an
article of food in the United States for the sole purpose of
transporting the food, whether by road, rail, water, or air.
Transporter also includes a foreign person that transports food in the
United States, regardless of whether that person has possession,
custody, or control of that food for the sole purpose of transporting
that food. If a person is considered a nontransporter under the rule,
then the person is not subject to the transporter provisions when
transporting food, but must comply with the requirements applicable to
nontransporters. The final rule applies to transporters regardless of
their status as private or for-hire. For example, if a U.S.
manufacturer hires a company to deliver its food, the delivery company
is subject to the transporter provisions whether or not it is private
or for-hire.
If a person is considered a nontransporter under the final rule,
then the person is not subject to the transporter provisions when
transporting food. For example, a U.S. manufacturer that delivers its
food to a grocery store must only keep the records required of a
nontransporter. In this situation, the immediate previous sources of
the manufacturer are the sources and transporters of the ingredients,
and the immediate subsequent recipient of the manufacturer is the
grocery store.
(Comment 121) A number of comments note that the specific records
being required of transporters are duplicative of the information being
required of the immediate prior sources and the immediate subsequent
recipients with respect to each other and that such redundancy is
unnecessary because the agency could get the information from either or
both of the immediate prior sources or immediate subsequent recipients.
(Response) The requirements in the final rule ensure that
transporters have records that would assist FDA in a tracing
investigation. For example, if a manufacturer of a food product sends
300 boxes of that product to its buyer (the immediate subsequent
nontransporter recipient), and the recipient only receives 200 boxes,
records created by the transporters (or multiple transporter companies
if more than one is used to transfer food between the nontransporter
immediate previous source and the nontransporter immediate subsequent
recipient) will be the only means of enabling FDA to learn how and when
the remaining 100 boxes were diverted, and to where. In addition, under
a similar scenario where a manufacturer of a food product sends 300
boxes of that product to its buyer and the recipient receives 400
boxes, transportation records will be the only means of enabling FDA to
determine when the additional 100 boxes were introduced into the system
and where they came from. Further support for requiring transporters to
establish and maintain records is provided in response to comment 82 of
this document.
J. Comments on What Information is Required in the Transportation
Records? (Proposed Sec. 1.352)
(Comment 122) Several comments recommend that FDA exempt
transporters from all recordkeeping elements except the immediate
source and immediate subsequent recipient. They note that the cost of
complying is not proportional to the risk.
(Response) FDA disagrees with this comment. FDA, however, has taken
steps to minimize the burden on transporters by including five
alternatives to meet their obligations to establish and maintain
records under this final rule. FDA notes that transporters also are
subject to the records access requirements in Sec. Sec. 1.361 and
1.363 of this final rule. This will ensure that FDA has access to all
applicable records that will enable FDA to perform a tracing
investigation quickly and effectively. Additionally, to ensure there
are no gaps in transporter coverage in a traceback investigation, the
final rule applies to both interstate and intrastate transporters of
food.
(Comment 123) Comments arguing for exemption of transporters state
that it is difficult or impossible for the crew of the transporter to
open each container of food, contaminate it, repackage it, replace
seals, and arrive on time without leaving any trace of their
intervention. Other comments suggest that a known and trustworthy
transport company will not risk their business by doing something of
this nature.
(Response) FDA disagrees that the transportation process is any
less vulnerable to attacks on the food supply than any other part of
the food industry. FDA believes that recordkeeping requirements are
necessary for transporters, but, as discussed previously, it has taken
steps to minimize the burden on transporters.
(Comment 124) A number of comments state that the transporter has
no access to detailed information about the shipment and is dependent
on the information listed on the bill of lading provided by the
shipper. Therefore, the information required of transporters should be
limited to the information on the bill of lading. One comment states
that a bulk shipper, for example, has a 5,000 gal shipment of orange
juice and has access to only this information, and detailed descriptive
information such as brand names, specific variety, and package types
are not applicable to bulk loads. Several comments state that
transporters are frequently provided with preloaded and/or sealed
vehicles for transport, and the transporter does not have knowledge of
the contents
[[Page 71602]]
other than what is on the bill of lading prepared by the shipper. They
argue that they cannot access the sealed cargo to obtain specific
information to confirm or supplement the bill of lading information.
Similarly, other comments advise that they cannot verify bill of lading
information for food contained in shrink-wrapped pallets. These
comments believe that the carriers responsibility should be limited to
the description provided by the shipper.
(Response) As discussed in response to comment 82 of this document,
transporters are not required to establish and maintain the detailed
information about a particular shipment of food that nontransporters
are required to establish and maintain under Sec. Sec. 1.337 and 1.345
of this final rule. The final rule provides five alternatives for
interstate and intrastate transporters to meet their obligation to
establish and maintain required records.
(Comment 125) One comment notes that air transporters may have a
record of the consignee (immediate subsequent recipient), but may not
have a record of the truck transporter the consignee sent to pick up
the freight. The comment believes that the consignee who arranged for
the pickup should be responsible for the record, not the air
transporter who released the shipment to the agent of the consignee.
(Response) The final rule provides five alternatives for
transporters to meet their obligation to establish and maintain
records. Failure by the immediate previous source or immediate
subsequent recipient who enters into an agreement under Sec. 1.352(e)
of this final rule to keep such records is a prohibited act. The
requirements for transporters in the final rule ensure that FDA has
records identifying how a food traveled between a nontransporter
supplier and nontransporter recipient when multiple transportation
companies or multiple modes of transportation are used. FDA does not
believe that the nontransporter will always have this information. For
example, if a trucking company that picks up the food from a
manufacturer in State A for delivery to a grocery store in State B
subcontracts with an airline and subsequent trucking company to deliver
the food to the grocery store, the manufacturer may have no knowledge
that the food was transported on the airline and subsequent trucking
company. Similarly, the grocery store is aware that the second trucking
company delivered the food, but may not be aware that before that, the
food was transported on an airline and a different trucking company.
In the event that FDA has a reasonable belief that food is
adulterated and presents a threat of serious adverse health
consequences or death to humans or animals, such records could be
critical to determining whether such adulteration occurred during
transportation, and if so, during which leg.
(Comment 126) One comment observes that the Bioterrorism Act does
not mention ``transporters'' in providing the Secretary with record
access. The comment concludes that Congress chose not to give the
Secretary access to the records of transporters and asks why there is a
recordkeeping requirement for those transporters.
(Response) FDA disagrees with this comment's assertion that the
statute does not provide FDA with access to transporters' records.
Section 306 of the Bioterrorism Act amends section 704(a) of the FD&C
Act, Factory Inspection, to read:
* * * In the case of any person (excluding farms and
restaurants) who manufactures, processes, packs, transports,
distributes, holds, or imports foods, the inspection shall extend to
all records or other information described in section 414 when the
Secretary has a reasonable belief that an article of food is
adulterated and presents a threat of serious adverse health
consequences or death to humans or animals * * *. (Emphasis added.)
FDA is imposing a record establishment and maintenance requirement on
transporters to ensure that transporters have records that would assist
FDA in a tracing investigation in a food-related emergency.
(Comment 127) Numerous comments state that a requirement for
specificity as to brand names, specific variety names (e.g., ``romaine
lettuce'' rather than ``lettuce''), lot numbers, and the way the food
is packaged would require information neither readily available to
transporters, nor routinely recorded by transporters. They further
state that, if needed, such information could be obtained from both the
shipper and receiver. They contend that these requirements are not
necessary to effectuate the purposes of the statute. Other comments
state that air carriers typically rely on information from those
tendering the freight and, in some instances, shipments may not even be
identified as containing food, particularly since chewing gum and pet
foods are included in the definition of food.
(Response) The final rule does not require transporters to
establish and maintain records with brand name or lot numbers. However,
FDA believes it is necessary to obtain some information about the
shipment of food from transporters to conduct tracing investigations.
Transporters are responsible for knowing that they are transporting
food.
(Comment 128) Some comments state that requiring brand name
descriptions raises cargo security concerns because having more
detailed descriptions on paperwork will increase the risk of theft and
make it easier for bioterrorists to target certain shipments.
(Response) FDA does not agree with this comment. Interstate
transporters are already required to keep similar records under the DOT
regulations, and FDA is not aware of these records presenting a
security risk; thus, there should not be any increased security risks
as a result of this rulemaking. Furthermore, FDA notes that the final
rule does not require transporters to establish and maintain records of
brand name, specific variety names, or lot numbers.
K. Comments on What are the Record Retention Requirements? (Proposed
Sec. 1.360)
(Comment 129) Many comments state that because an infrastructure
for long-term record retention does not exist to the extent FDA
envisions, more reasonable time requirements for retention of records
should be established. Another comment states that, although the
proposed record retention periods seem simple and straightforward, in
practice, they are difficult and confusing for some companies to apply
because of the other record retention requirements of varying lengths
with which they also must comply. The comment urges FDA to review the
recordkeeping retention periods now in effect for specific food
categories (e.g., acidified foods, low acid canned foods, bottled
water, juices, seafood, and milk) and work to harmonize the proposed
record retention requirements with those periods. A few comments
question the value of a 2-year record retention period for a product
with a shelflife of 60 days, particularly in light of the additional
costs associated with the extended retention requirements for
perishables. Another comment states that the proposed timeframes for
maintaining records for all food products, based solely on whether a
food has a shelflife of 7 days, does not appear to utilize sound risk
management principles.
(Response) FDA agrees in part with these comments and has revised
the record retention requirements in the final rule. FDA used similar
criteria as the NIST definitions for perishable, semiperishable and
long shelf-life food. The record retention requirements in Sec.
1.360(b) of this final rule now require record retention of: (1) 6
months for
[[Page 71603]]
food for which a significant risk of spoilage, loss of value, or loss
of palatability occurs within 60 days after the date you receive or
release the food; (2) 1 year for food for which a significant risk of
spoilage, loss of value, or loss of palatability occurs only after a
minimum of 60 days, but within 6 months, after the date you receive or
release the food; and (3) 2 years for food for which a significant risk
of spoilage, loss of value, or loss of palatability does not occur
sooner than 6 months after the date you receive or release the food,
including foods preserved by freezing, dehydration, or being placed in
a hermetically sealed container.
Transporters, or nontransporters retaining records on behalf of a
transporter, are required to retain records for 6 months for any food
having a significant risk of spoilage, loss of value, or loss of
palatability within 60 days after the date the food is received or
released and 1 year for any food having a significant risk of spoilage,
loss of value, or loss of palatability only after a minimum of 60 days
after the date the food is received or released.
FDA chose this approach because: (1) The food industry already is
familiar with classification of foods into these three categories due
to existing regulations and practices and (2) it will mitigate the
problem raised by some comments of inadequate infrastructure for long
term storage of records for the shorter shelf life foods. FDA believes
that a tracing investigation involving food for which a significant
risk of spoilage, loss of value, or loss of palatability occurs within
60 days after the date you receive or release the food will not be
compromised by providing for the reduced record retention of 6 months
because most of these tracebacks are initiated within 6 months of the
outbreak.
(Comment 130) Comments from the transportation industry indicate
that FDA should revise the record retention requirements for
transporters to be the same for both nonperishable and perishable food
shipments, rather than the 1 and 2-year periods FDA proposed, and that
the final rule should adopt the FMCSA 1-year retention period required
for bills of lading.
(Response) FDA agrees with this comment and has revised the final
rule accordingly. Section 1.360(f) of the final rule requires
transporters, or nontransporters retaining records on behalf of a
transporter, to retain records for 6 months for any food having a
significant risk of spoilage, loss of value, or loss of palatability
within 60 days after the date the food is received or released and 1
year for any food having a significant risk of spoilage, loss of value,
or loss of palatability only after a minimum of 60 days after the date
the food is received or released.
(Comment 131) One comment suggests that records retention
timeframes should be based on a simple partitioning of shelf perishable
and shelf stable products, e.g., retain records for products with a
shelflife up to 90 days for 1 year and retain records for products with
a shelf life greater than 90 days for 2 years from the time of
manufacture.
(Response) As stated previously in response to comment 129 of this
document, FDA has considered various options and has chosen to require
record retention based on criteria similar to the NIST definitions for
perishable, semi-perishable and long shelf-life food. FDA is convinced
such an approach is the most efficient and effective because the food
industry already is familiar with classification of foods into these
three categories due to existing regulations and practices; and it will
mitigate the problem raised by some comments of inadequate
infrastructure for long term storage of records for the shorter shelf
life foods. FDA believes that a tracing investigation involving food
for which a significant risk of spoilage or significant loss of value
occurs within 60 days will not be compromised by providing for the
reduced record retention of 6 months because most of these tracebacks
are initiated within 6 months of the outbreak.
With regard to the comment's statement that records be retained
from the time of manufacture, FDA does not agree. The record retention
periods begin at the time the food is received and released. Under
Sec. 1.360(a) of this final rule, you must create the required records
at the times you receive and release food, except to the extent that
the information is contained in existing records.
(Comment 132) One comment suggests that retaining records for 6
months after the product expiration date should be more than adequate
for investigations for potential threats associated with the food. The
comment indicates that expanding system capacity to accommodate much
longer record retention is a major cost associated with implementing
the proposed regulation and that FDA should either justify the value
for longer record retention periods against the increased burden being
placed on the industry or substantially decrease the number of records
that must be retained for longer duration.
(Response) As previously noted in response to comment number 129,
FDA has considered various options and has chosen to require record
retention based on criteria similar to the NIST definitions for
perishable, semiperishable and long shelf-life food. FDA is convinced
such an approach is the most efficient and effective because the food
industry already is familiar with classification of foods into these
three categories due to existing regulations and practices; and it will
mitigate the problem raised by some comments of inadequate
infrastructure for long term storage of records for the shorter shelf
life foods.
FDA notes that a traceback may not begin until well past the time
the food has been consumed, as explained in the response to the
following comments.
(Comment 133) A few comments contend that a shorter record
retention time, such as 3 to 6 months, should be sufficient time for
retention of records because any harmful effect directly related to a
perishable food would be detected well within the life expectancy of
the food.
(Response) FDA does not agree that harmful effects directly
relating to perishable foods always can be detected within the
shelflife of the food. FDA has experienced some situations in which the
health hazard was not immediately apparent, but only emerged several
months after the food was consumed. Also, FDA recognizes the potential
for serious adverse health consequences caused by novel contaminants or
novel food sources for known contaminants. In such situations, it may
take months to identify the source of contamination, or the contaminant
itself.
(Comment 134) Several comments suggest that record retention be
based on three categories of food, i.e., perishable, semiperishable,
and long shelflife, as defined by NIST. NIST defines perishable food as
any food for which a significant risk of spoilage, loss of value, or
loss of palatability occurs within 60 days of the date of packaging.
The corresponding time frames for semiperishable and long shelflife
food are 60 days to 6 months, and greater than 6 months, respectively.
Several comments suggest the record retention time should be 6 months
for perishable food; 12 months for semiperishable food and 18 months
(or product shelflife plus 12 months or 24 months, whichever is
greater) for long shelflife food.
(Response) FDA agrees with this comment. FDA has concluded that
this objective can be achieved by inserting language directly in Sec.
1.360(b) of this final rule using similar criteria as the NIST
definitions for perishable, semi-
[[Page 71604]]
perishable and long shelf-life food. Therefore, FDA has changed the
record retention requirements in Sec. 1.360(b) of this final rule to
require record retention by nontransporters for: (1) 6 months for food
for which a significant risk of spoilage, loss of value, or loss of
palatability occurs within 60 days after the date you receive or
release the food; (2) 1 year for food for which a significant risk of
spoilage, loss of value, or loss of palatability occurs only after a
minimum of 60 days, but within 6 months, after the date you receive or
release the food; and (3) 2 years for food for which a significant risk
of spoilage, loss of value, or loss of palatability does not occur
sooner than 6 months after the date you receive or release the food,
including foods preserved by freezing, dehydrating, or being placed in
a hermetically sealed container.
Transporters, or nontransporters retaining records on behalf of
transporters, are required to retain for 6 months records for food
having a significant risk of spoilage, loss of value, or loss of
palatability within 60 days after the date the food is received or
released and for 1-year records for all food having a significant risk
of spoilage, loss of value, or loss of palatability after a minimum of
60 days after the date the food is received or released.
FDA chose this approach because: (1) The food industry already is
familiar with classification of foods into these three categories due
to existing regulations and practices and (2) it will mitigate the
problem raised by some comments of inadequate infrastructure for long
term storage of records for the shorter shelf life foods. FDA believes
that a tracing investigation involving food for which a significant
risk of spoilage, loss of value, or loss of palatability occurs within
60 days will not be compromised by providing for the reduced record
retention of 6 months because most of these tracebacks are initiated
within 6 months of the outbreak.
(Comment 135) One comment states that records should be retained
for 2 years from the date they are created, and not for 2 years from
the date of shipment of the product. The comment points out that wine
may be shipped several years after it has been manufactured, and that
establishing the timeframe from the date of shipment of the product
would be an unwarranted burden. One comment suggests that the minimum
record retention periods should be stated as time from the date of
production, e.g., a minimum of 2 years after the date of production of
the food, except perishables, and a minimum of 1 year after the date of
production for perishables.
(Response) FDA does not agree with the comment's suggestion, as
this will not ensure that FDA has access to the requisite records at
the time of a traceback investigation. Often, a traceback begins after
consumers become sickened or die. In the comment's example, if the wine
was adulterated and presented a threat of serious adverse health
consequences or death to humans, FDA may not know this until the wine
has been consumed, i.e., after the product was released by the
manufacturer into commerce and consumers became seriously ill. If the
record retention period began at the time of production, but the wine
was aged at the manufacturer's facility 2 years before distribution
into commerce, the record retention period would have expired before
the wine entered commerce. In the final rule, FDA retains the
requirement that records required under subpart J must be established
at the time food is received or released and maintained from that time
until the end of the time period specified in Sec. 1.360 of this final
rule.
(Comment 136) One comment notes that mechanisms for keeping records
updated have not been established. The comment asked what should be
done if a record's 2-year deadline expires, e.g., is there a
requirement to open a new record?
(Response) The final rule does not mandate specific mechanisms,
systems, or processes for establishing and maintaining the required
records, only the information that must be kept. The record retention
period is from the time the food is received or released. Persons are
not required to update, modify, or transfer information in a record to
a new record after the end of the required retention period.
(Comment 137) One comment expressed concern that, under the
proposed regulation, persons who do not know if perishable food is
intended for processing into nonperishable food would have to assume it
is and maintain records for 2 years. A few comments state that persons,
such as distributors, carriers, farms or orchards, roadside stands, and
small collection centers generally have no way of knowing whether a
perishable food will be processed into a nonperishable food by other
parties. A few comments ask FDA to clarify that companies selling
perishables can rely on the applicability of the 1-year records
retention period unless they have actual knowledge at the time of sale
that the perishables will be used for processing into nonperishable
foods.
(Response) Section 1.360 of the final rule specifies retention
periods based on the type of food being received or released, not on
the end use of the food being delivered.
(Comment 138) One comment states that the proposed requirements are
more burdensome than is necessary to enable food producers to respond
quickly and appropriately to a food safety emergency. The comment
further states that the proposal does not take into account the sheer
volume that retail grocery stores deal with on a daily basis. According
to the comment, the average retail grocery store currently is capable
of retaining such records for only approximately 1 week. The comment
concludes that the requirement to maintain records for 2 years is
completely unworkable and will not serve in the interest of public
health in times of crisis.
(Response) FDA has revised the record retention periods for
nontransporters to 6, 12, and 24 months as discussed in response to
comment number 129. FDA believes that these timeframes are within the
period Congress believed appropriate because the Bioterrorism Act gives
FDA authority to require records to be retained for up to 2 years.
Moreover, Congress did not exempt retailers (e.g., retail grocery
stores) from the recordkeeping requirements, as they did in section 305
of the Bioterrorism Act (registration of food facilities). FDA believes
that the benefit to FDA and consumers in conducting an efficient and
rapid traceback in a public health emergency justifies the burden to
industry.
For the final rule, FDA has changed the record retention
requirements in Sec. 1.360(b) to require record retention by
nontransporters for: (1) 6 months for food for which a significant risk
of spoilage, loss of value, or loss of palatability occurs within 60
days after the date you receive or release the food; (2) 1 year for
food for which a significant risk of spoilage, loss of value, or loss
of palatability occurs only after a minimum of 60 days, but within 6
months, after the date you receive or release the food; and (3) 2 years
for food for which a significant risk of spoilage, loss of value, or
loss of palatability does not occur sooner than 6 months after the date
you receive or release the food, including foods preserved by freezing,
dehydrating, or being placed in a hermetically sealed container.
Transporters or nontransporters retaining records on behalf of a
transporter are required to retain 6 months records for food having a
significant risk of spoilage, loss of value,
[[Page 71605]]
or loss of palatability within 60 days after the date the food is
received or released and 1 year all food having a significant risk of
spoilage, loss of value, or loss of palatability after a minimum of 60
days after the date the food is received or released.
FDA chose this approach because: (1) The food industry already is
familiar with classification of foods into these three categories due
to existing regulations and practices and (2) it will mitigate the
problem raised by some comments of inadequate infrastructure for long
term storage of records for the shorter shelf life foods. FDA believes
that a tracing investigation involving food for which a significant
risk of spoilage or significant loss of value occurs within 60 days
under normal shipping and storage conditions will not be compromised by
providing for the reduced record retention of 6 months because most of
these tracebacks are initiated within 6 months of the outbreak.
In addition, FDA has excluded the distribution of food directly to
consumers from the requirement to keep records of immediate subsequent
recipients of food because FDA can obtain information from consumers
and notify them when necessary. Often, consumer illness is the first
common indicator that food may be adulterated and present a threat of
serious adverse health consequences or death. Requiring retailers to
retain records for only weeks or months would greatly impede FDA's
ability to conduct a rapid and effective traceback. FDA has selected
those timeframes for record retention based on the amount of time
perishable and nonperishable food may remain in commerce, and thus, may
be the subject of a traceback investigation. FDA further notes its
understanding that many retailers currently maintain records for 2
years.
Also, retail food establishments that employ 10 or fewer full-time
equivalent employees are now excluded from all of the requirements in
this subpart, except Sec. Sec. 1.361 and 1.363. (See response to
comment 38 of this document for a further discussion of FDA's rationale
underlying this exclusion.)
(Comment 139) A few comments state that the requirement to maintain
records for 2 years is very burdensome for those who obtain a variety
of fresh produce from a large number of small farmers and commingle
lots of produce for distribution.
(Response) FDA notes that these foods for the most part would fall
into the category of foods for which a significant risk of spoilage or
significant loss of value occurs if held longer than 60 days under
normal shipping and storage conditions for the food. As stated
previously, the record retention period for this category of foods in
this final rule is 6 months.
(Comment 140) A few comments state that, for alcoholic beverages
and distilled spirits, retention of records for a period of only 2
years would be inadequate to trace a matured product back to the
source. They suggest that FDA should rely on alcoholic beverage
importers' and producers' own existing record systems to facilitate
tracebacks.
(Response) Although retaining records for 2 years may not be enough
for products with long shelflives, the agency notes that the
Bioterrorism Act sets the maximum time the agency can mandate record
retention at 2 years. FDA further notes, however, that when FDA has a
reasonable belief that an article of food is adulterated and presents a
threat of serious adverse health consequences or death to humans or
animals, any records and other information accessible to FDA under
section 414 or 704(a) of the FD&C Act must be readily available for
inspection and photocopying or other means of reproduction. Therefore,
as a practical matter, FDA may be able to access additional information
about food products after the 2-year retention period required by
subpart J of this final rule has elapsed.
(Comment 141) Several comments offer suggestions on where the
required records should be maintained. One comment recommends that, for
intracorporate transfers, companies should be permitted to make all
required records accessible at one location. The comment states that
this would not delay, and could even enhance, efficiencies in an FDA
traceback investigation. Several comments state that companies should
have flexibility for determining where to maintain the required
records. The comments note that it should be sufficient that the
records are maintained and are accessible at some location, including
the headquarters office for specific locations within a company. One
comment requests clarification on whether records may be stored in
separate locations, as long as the combined records adequately provide
the required information. The comment notes that confidentiality
requirements may cause records that contain part of the required
information to be maintained in different locations.
One comment states that, in the context of air transportation of
food, the location where the activity occurred may be difficult to
determine, and may not be a feasible place to store records or to make
them available to FDA at a future date. According to the comment, the
option to store records offsite, combined with the flexibility to
maintain records in an electronic format, is critical to ensuring
prompt access to the records.
(Response) FDA requires in the final rule that the required records
must be retained at the establishment where the covered activities
described in the records occurred (onsite) or at a reasonably
accessible location. The agency clarifies that the intent of this
provision of the regulation is to provide flexibility for a company to
determine the most efficient and readily accessible means of storage,
consistent with the company's business practices. Access to the records
may be provided to FDA electronically, by facsimile, or by other
appropriate means consistent with the availability requirements in
Sec. 1.361 of this final rule, once FDA makes a written request under
section 414(a) or 704(a) of the FD&C Act. Each individual company may
determine the appropriate location for maintaining the required records
and for ensuring that the record availability requirements can be met.
L. Comments on What Are the Record Availability Requirements? (Proposed
Sec. 1.361)
(Comment 142) Some comments state that the proposed time is
reasonable for record production if the requested records are onsite
and of recent transactions (i.e., within the last 3 months). One
comment urges the agency to clarify that, although companies must make
the records available within 4 hours, the agency does not expect
companies to link the sources of each ingredient with every finished
lot of product within that timeframe. Another comment states that,
within the 4-hour proposed time, a firm will not be able to make
records available that are stored offsite and currently are subject to
contracts that allow the vendors to deliver records on the next
business day. The comment recommends that FDA consider the possibility
of allowing records stored offsite to be produced at locations more
convenient than the manufacturing facility, such as FDA offices,
headquarters, or other locations mutually agreed upon to expedite
record examination.
Some comments also state that the cost of renegotiating record
storage contracts would cost thousands of dollars, more than the $151
per firm cost that FDA estimated. They recommend that FDA allow
companies to provide records ``within a reasonable period of time'' or
that the final rule
[[Page 71606]]
give companies 24 hours to make records available to FDA from the time
of receipt of FDA's official request. Several comments state that the
proposed time does not reasonably reflect the following: The scope of
requested records; the accessibility, degree of compatibility and
number of recordkeeping systems involved; the limitations on record
maintenance of some systems; the limited physical access to
nonelectronic records; and the presence or absence of a quality
assurance system. Comments further state that, with millions of foods
transported annually, many firms utilize various data systems and have
implemented records maintenance procedures to meet their specific
company needs. Compliance with this new rule requires establishing new
protocols and developing new database systems, which would require a
substantial capital investment.
Comments also note that the proposed rule does not consider the
time required to verify the completeness and accuracy of records,
transmission of data to appropriate authorities and the availability of
knowledgeable personnel to access specific records. They suggest that
FDA should focus on the information contained in the records, rather
than on the records themselves. Comments suggest FDA change the
proposed language to include: As soon as possible within 24 hours from
the time the request is made. Other comments state that the proposed
time is not enough, particularly if the request for record is made late
during the day, or on Friday, or on a day (Sunday) when the location
where records are maintained is closed and insufficient staff is
available to retrieve the requested records. Comments urge FDA to allow
companies to provide records as quickly as is practicable, given the
nature of the recordkeeper's operations.
(Response) FDA agrees with these comments in part and has amended
the proposed records availability requirements in this final rule.
Section 1.361(a) of this final rule states: ``* * * Such records and
other information must be made available as soon as possible, not to
exceed 24 hours from the time of receipt of an official request * *
*.'' FDA notes that, although the rule sets an outer limit of 24 hours
to provide records, it requires that records be provided ``as soon as
possible.'' (Comment 143) Other comments suggest that records be
available within 12 hours regardless of what time of day the FDA
request is made or the next business day, in the event the next day
falls on a weekend or a holiday. Some suggest a timeframe within 24
hours if the request is made during a working week and within 72 hours
if a request is made during a weekend.
Several comments state that the majority of businesses, especially
small businesses, store records that are older than 3 weeks ``offsite''
where many storage facilities are not open on weekends and holiday.
Comments also state that more than 24 hours is needed to retrieve such
records and to impose criminal liability for noncompliance is
unworkable and unfair. Comments urge FDA to allow companies to provide
records within a reasonable period of time or that the final rule gives
companies 24 hours to make records available to FDA from the time of
receipt of an official request.
(Response) FDA agrees with these comments in part. In this final
rule, FDA is requiring that records be made available as soon as
possible, but not more than 24 hours from the time of receipt of an
official request. FDA does not agree with the comments' suggestion that
more time be made available if a request for records is made outside of
the working week. FDA notes that it would only access the records if
FDA has a reasonable belief that an article of food is adulterated and
presents a threat of serious adverse health consequences or death to
humans or animals. Under these circumstances, it is critical for FDA to
move as quickly as possible to trace backwards to identify the source
of any such adulteration and trace forward from that source to remove
all similarly adulterated food from commerce to protect the public
health. FDA notes that although the rule sets an outer limit of 24
hours to provide records, it requires that records be provided ``as
soon as possible.''
(Comment 144) Several comments urge FDA to reconsider its proposed
definition of work hours (8 a.m. to 6 p.m.). The comments state that in
most ports of entry, the hours of operation of the trade community are
established to mirror the hours of the commercial operations of CBP. If
FDA requests records outside of those hours of operation, FDA could
encounter difficulty in contacting the appropriate parties from whom to
request records. Comments suggest that FDA use the phrase ``during
times in which a firm is operating'' or ``during a firm's normal
business hours.''
(Response) FDA is no longer defining work hours, and has modified
its proposed records availability requirement to ``as soon as possible,
not to exceed 24 hours from the time of receipt of the official
request.''
(Comment 145) Some comments state that the agency has not
considered difficulties of compliance in the real world where there are
different time zones within the United States and foreign countries.
According to these comments, mandating an unattainable compliance time
may cause great confusion globally and may actually impede the
information gathering process. Comments urge FDA to allow for records
to be provided to FDA within a timeframe not to exceed 24 hours or
other timeframe appropriate to the scope of records being sought.
Others suggest 24 hours for domestic and 36 hours for foreign
facilities.
(Response) FDA agrees in part with these comments. FDA has deleted
the 4-hour and 8-hour requirements. The final rule requires all records
to be made available as soon as possible, not to exceed 24 hours from
the time of receipt of the official request. With respect to the
comments suggestion that foreign facilities be given 36 hours, FDA
notes that foreign persons (except for foreign persons who transport
food in the United States) are not subject to these final recordkeeping
regulations.
(Comment 146) Many foreign governments express concern that FDA
does not have authority regarding recordkeeping and record access when
a firm is located in a foreign country. One foreign government urges
FDA to recognize the role of another competent authority with respect
to records access as provided for under the World Trade Organization
Agreement on Sanitary and Phytosanitary Measures. Foreign governments
request that FDA operate under agreements with these governments so
that FDA will convey its request to the competent authority in that
country. The competent authority can then carry out investigations on
behalf of FDA and provide FDA with any resulting relevant information.
(Response) Foreign persons, except those who transport food in the
United States, are not subject to these final recordkeeping
regulations. If FDA needs to access food records that are established
and maintained by foreign persons, FDA will work with the relevant
competent authorities in those countries to do so.
(Comment 147) One comment notes that the proposed rule does not
take into account the time required to translate into English records
in other languages that are obtained from firms located in foreign
countries.
(Response) Foreign persons, except those who transport food in the
United States, are not subject to these final recordkeeping
regulations. In the event FDA needs to access records kept by foreign
persons, FDA intends to work
[[Page 71607]]
with the relevant competent authorities in those countries to do so.
(Comment 148) One comment states that, for rurally-located
industry, it is difficult for primary agricultural dealers from any
location to meet the proposed requirements, because, in some of these
small businesses, one person assumes many responsibilities.
(Response) FDA has considered this and other comments and has
changed the record availability requirement from the proposed rule.
Under this final regulation, records shall be made available as soon as
possible, but not to exceed 24 hours after FDA has made the request. In
the circumstances in which FDA would access the records, it is critical
for FDA to move as quickly as possible to trace backwards to identify
the source of any such adulteration and trace forward from that source
to remove all similarly adulterated food from commerce to protect the
public health. FDA notes that, although the rule sets an outer limit of
24 hours to provide records, it requires that records be provided ``as
soon as possible.''
(Comment 149) One comment states that the proposed time for records
access is problematic for small-scale exporters that do not have any
representation in the United States; hence, they need special
treatment.
(Response) Foreign persons are not subject to these final
recordkeeping regulations, except to the extent they transport food in
the United States.
(Comment 150) Several comments state that the Bioterrorism Act only
provides authority to access and copy records for the purpose of
determining whether a food believed to be adulterated is actually so
and for conducting a tracing investigation in regard to such an
adulterated food. Comments express concern over possible unlawful
conduct and abuse of discretion by FDA field inspectors and other
officials. They urge FDA to clearly define legal violations concerning
recordkeeping and record access requirements so corporate officers can
make responsible decisions. They also urge FDA to integrate the
constitutionally required safeguards into the regulations.
Comments recommend that FDA establish procedural safeguards to
protect manufacturers and their customers by providing the affected
company with a reasonable written notice that explains how the
``reasonable belief'' standard is being met and identifies the type of
records being requested. According to comments, this would inform the
affected company which records are being sought and the legal basis for
the request. Several comments also request that FDA develop procedures
requiring that the written notice be examined and approved by the
District Director in whose district the implicated food is located, or
by any FDA official senior to such District Director. They urge FDA to
develop guidelines to define ``reasonable belief'' and base a decision
to access records on laboratory analyses confirming adulteration and/or
on an affidavit sworn under penalty of perjury.
Other comments state that FDA should issue interim final
regulations with an opportunity for comment on the procedural
protections that will be utilized to implement the record maintenance
and inspection provisions of the Bioterrorism Act. Specifically, the
comments state that the regulations should at least delineate agency
procedures for authorizing the review, those officials who are
permitted to review the documents, the standard for when such review
may occur, an appellate procedure for those who disagree with the
agency's determination, and the reasonable times, limits and
circumstances to which the Bioterrorism Act limits FDA's review, as
well as the procedures FDA must implement to prevent the unauthorized
disclosure of any trade secret or confidential information that is
obtained by FDA under the Bioterrorism Act. Others urge FDA to
incorporate these procedures into regulations and ask that the public
be granted an additional 60 days to comment.
(Response) FDA's record access authority under sections 414(a) and
704(a) of the FD&C Act became effective upon enactment of the
Bioterrorism Act on June 12, 2002. The record access provisions of the
Bioterrorism Act do not require FDA to issue implementing regulations.
FDA intends to issue guidance to FDA personnel regarding FDA's exercise
of this provision in accordance with FDA's GGPs regulations (Sec.
10.115). The previously stated comments will be considered as FDA
develops the agency's guidance. FDA does not agree that these
procedures need to be codified.
(Comment 151) One comment observes that, depending on the length of
the distribution chain involved in a contamination event, FDA may need
to examine records of numerous food handling facilities. As a result,
it could still take FDA several days to obtain needed records. The
comment suggests that source labeling could help FDA determine the
ultimate source faster.
(Response) The comment's suggestion is outside the scope of the
proposed rule. The authority granted in section 306 of the Bioterrorism
Act relates to establishing requirements for records to identify
immediate previous sources and recipients of food, not establishing
labeling requirements.
(Comment 152) One comment requests specific guidelines and an
opportunity to object to providing the records for a period before
access of the records.
(Response) FDA disagrees. FDA does not currently provide a period
of time in which a person subject to an inspection may object prior to
that inspection. As discussed in response to comment 171 of this
document, FDA plans to issue a guidance document regarding the record
access provisions.
M. Comments on What Records Are Excluded From This Subpart? (Proposed
Sec. 1.362)
(Comment 153) Several comments express concern that information
that FDA would view, copy, or otherwise access could contain
confidential information, such as confidential commercial or trade
secret information. Two comments ask FDA to permit a person subject to
the requirements of section 414 of the FD&C Act to redact what they
consider to be nonpublic information from records properly sought by
FDA. One comment asks FDA to permit a person to create a separate
document containing only that information FDA is entitled to inspect.
Examples of confidential information that comments have described
include formulas, recipes, information about their businesses, where
the product was purchased or sold, product development information, and
location and business operations of farms.
One comment requests that FDA allow the affected person to either
redact confidential information from the source records (purchase
orders, bills of lading, etc.), or create separate records containing
the information required by section 414 of the FD&C Act, but not
including the information excluded by Sec. 1.362 of this final rule or
any other confidential information.
(Response) FDA understands the comments' concerns about protecting
the confidentiality of nonpublic information. If a person wishes to
create separate records that do not contain certain confidential
information, the person may do so, as long as the records are created
at the time the food is received or released and the records contain
the information required by the regulations. In addition, section 306
of the Bioterrorism Act excludes many types of confidential data from
the record requirements: Recipes for food (see Sec. 1.328 for the
definition of recipe),
[[Page 71608]]
financial data, pricing data, personnel data, research data, and sales
data (other than shipment data regarding sales). Section 306 of the
Bioterrorism Act, however, does not allow other types of confidential
data to be withheld from FDA even if they are confidential. The laws
governing FDA's activities, however, require it to protect certain
trade secret and confidential information. See responses to comments 74
and 154 of this document.
Further, because timely information is critical to a tracing
investigation, records and other information must be made available to
FDA as soon as possible, not to exceed 24 hours from the time of a
request (Sec. 1.361 of this final rule). If the provision of
information and records to FDA is delayed so that information can be
redacted, the information and records may not have been provided ``as
soon as possible.''
(Comment 154) Comments ask that FDA take steps to maintain the
confidentiality of the information it receives. One comment asks that
FDA develop and inform the public of procedural safeguards it will
follow to obtain the information needed without jeopardizing the
confidentiality of business information. Two comments ask that FDA
provide guidance about its information disclosure procedures. Other
comments ask how FDA will ensure the confidentiality of sensitive
business information.
Comments ask that FDA provide for special procedures to safeguard
the confidentiality of the identities of flavors and spices and other
secret ingredients in a recipe. Two comments request that FDA issue a
regulation and another comment suggests that FDA issue an interim final
regulation concerning the statutory requirement under section 414(c) of
the FD&C Act to prevent unauthorized disclosure of any trade secret or
confidential information.
A comment asks that FDA provide a paragraph in a regulation
requiring that FDA maintain the confidentiality of nonpublic
information. That comment expresses concern about information FDA might
receive from an ``unaffected source,'' ``incorrectly implicated
sources'' in the distribution chain, or the identity of a food company
that was the victim of ``food contamination in premeditated form.'' A
comment asks that FDA amend its public information regulations to
provide that information obtained under the records access authority is
exempt from disclosure under FOIA.
(Response) As discussed in response to comment 74, several statutes
and the agency's information disclosure regulations at parts 20 and 21
govern the agency's ability to disclose information to the public,
including information obtained under section 306 of the Bioterrorism
Act. For example, section 301 of the FD&C Act prohibits any person from
using
* * * to his own advantage, or revealing, other than to the
Secretary or officers or employees of the Department, or to the
courts * * *, any information acquired under authority of [section
414 or 704] concerning any method or process which as a trade secret
is entitled to protection * * *.
FDA already has procedures in place to ensure that FDA staff follow
these laws. See, e.g., FDA Staff Manual Guide sections 2280.10,
3250.15, and 3291.5. Furthermore, the record provisions in the
Bioterrorism Act recognize that FDA may obtain trade secret or
confidential information, and direct the Secretary to ``* * * take
appropriate measures to ensure that there are in effect effective
procedures to prevent the unauthorized disclosure of [such information]
* * *'' (21 U.S.C. 414(c)). FDA is planning to reemphasize in
instructions to FDA personnel the importance of current protections and
legal requirements against the unauthorized disclosure of any trade
secret or confidential information that is obtained.
FDA has previously issued information disclosure regulations
applicable to information FDA obtains, and these regulations are
applicable to information FDA obtains under the Bioterrorism Act (parts
20 and 21). FDA notes that these regulations are applicable regardless
of whether the person supplying the information is ultimately
determined to be an ``unaffected source,'' ``incorrectly implicated
source,'' or the victim of ``food contaminated in premeditated form.''
Therefore, it is not necessary for FDA to issue additional information
disclosure regulations.
Moreover, FDA routinely reviews, evaluates, investigates and
maintains confidential, trade secret information that encompasses
sophisticated, cutting edge technologies, as well as confidential
records that contain formulations and other trade secret information.
Based upon FDA's track record of consistently ensuring the
confidentiality of this type of information, we have attained the trust
of the pharmaceutical, medical device and biologics industries.
Moreover, the utilization of such information by an FDA employee for
his or her own advantage, or the revelation of such information to
outside parties beyond the scope allowed by the FD&C Act, is a
prohibited act (21 U.S.C. 331(j)) subject to criminal prosecution.
(Comment 155) One comment asks that FDA not disclose personal
details (name of responsible person) about secondary suppliers. The
comment notes that disclosure of personal details of secondary supplies
might be contrary to international and European privacy regulations.
One comment notes that disclosure to the public of the names of the
firm and the responsible individual might conflict with foreign
confidentiality rules of law. Other comments express concern about
protecting personal privacy information. Another comment states that
farmers are concerned about the effect of possible information
disclosure on the personal and physical security of their farms where
they reside with their families.
(Response) Foreign persons, except for those who transport food in
the United States, are exempt from all of the requirements in subpart J
of this final rule. Farms are also exempt. FDA follows Federal statutes
(e.g., FOIA, the Privacy Act) and its regulations (e.g., parts 20 and
21) in determining the proper treatment of information it receives,
including personal information. FOIA, for example, contains exemptions
that allow FDA to withhold personal information from the public in
certain circumstances (5 U.S.C. 552(b)(6) and (b)(7)).
(Comment 156) A few comments ask what assurances FDA can give to a
person subject to the Bioterrorism Act that the information will not be
subject to unauthorized disclosure. Other comments ask that CBP and FDA
guarantee nondisclosure of the information. A comment asks how FDA can
guarantee the confidentiality of confidential and secret information
such as formulas.
(Response) FDA complies with Federal law (e.g., the FD&C Act, FOIA,
Trade Secrets Act) and regulations (e.g., parts 20 and 21) regarding
the dissemination of the information it receives. FDA employees are
subject to criminal penalties for disclosing information in violation
of section 301(j) of the FD&C Act or the Trade Secrets Act. FDA plans
to reemphasize to its field personnel the importance of current
protections and legal requirements against unauthorized disclosure of
any protected information FDA obtains.
(Comment 157) A comment concerned about adverse publicity asks with
whom might FDA share information.
(Response) FDA is authorized to share certain nonpublic information
with others. For example, FDA may share confidential commercial
information with a sister agency within the
[[Page 71609]]
Department of Health and Human Services, a State government agency
official whom FDA has commissioned to act on its behalf under section
702 of the FD&C Act (21 U.S.C. 372) (Sec. 20.84), its contractors
(Sec. 20.90), other Federal government agencies (Sec. 20.85), or
foreign government agencies (Sec. 20.89). Procedural and other
safeguards must be followed for FDA to share nonpublic information with
other persons. For FDA to share confidential commercial information
with CBP under Sec. 20.85, CBP must sign a written agreement that it
will not further disclose the information except with FDA's written
permission.
(Comment 158) Several comments express concern about the risk of
disclosure of information about a formula or recipe. One of these
comments noted that, even if the complete formula may not be disclosed,
listing the source of each ingredient in a product would reveal the
recipe for that product. Other comments ask how FDA would handle
commercially sensitive information that might be derived if FDA
provides information about a ``one-up'' source nontransporter for each
of the ingredients in a recipe.
(Response) As discussed in response to comment 74 of this document,
several statutes and the agency's information disclosure regulations at
parts 20 and 21 govern the agency's ability to disclose information to
the public, including information obtained under section 306 of the
Bioterrorism Act. For example, section 301 of the FD&C Act prohibits
any person from using
* * * to his own advantage, or revealing, other than to the
Secretary or officers or employees of the Department, or to the
courts * * *, any information acquired under authority of [section
414 or 704] concerning any method or process which as a trade secret
is entitled to protection * * *.
FDA follows these laws in determining the proper treatment of the
information it receives.
N. Comments on What Are the Consequences of Failing to Establish and
Maintain Records or Make Them Available to FDA as Required by This
Subpart?'' (Proposed Sec. 1.363)
(Comment 159) Three comments state that imposition of criminal
liability would be inappropriate and excessive if they performed to the
best of their abilities. The comments state that taking time beyond 4
hours to locate, compile, and provide records on a detained article's
manufacture should not be viewed as a prohibited act.
(Response) As noted previously, FDA has changed the proposed times
in Sec. 1.361 of this final rule for responding to a request for
access to records to a requirement that all records be made available
as soon as possible, not to exceed 24 hours from the time of receipt of
the official request. Failure to establish or maintain records or
refusal to permit access to or verification or copying of any record is
a prohibited act under section 301 of the FD&C Act.
(Comment 160) One comment states that the rules on recordkeeping
are not enforceable outside the United States. The comment states that
any legal proceedings based on failure to comply with the final rule
that could result in confiscation of assets held in the United States
or action against foreign executives visiting U.S. territory would be
considered by a foreign country to be a very grave step. This would be
unworkable in practice and problematic in terms of bilateral relations.
The comment requests that FDA clarify that no enforcement action will
be taken against foreign persons outside the United States.
(Response) Foreign persons, except those who transport food in the
United States, are not subject to subpart J of this final rule and
thus, for the most part, the concerns raised by the comment are moot.
If FDA needs to access records kept by foreign persons, FDA intends to
work in cooperation with the relevant competent authorities to do so.
(Comment 161) One comment encourages FDA not to use incidental
infractions of its final recordkeeping regulations as a pretext for
bringing additional enforcement actions for alleged violations of other
agency regulations that are outside the scope of the Bioterrorism Act.
(Response) Nothing in the proposed or final rule suggests that FDA
would take such actions.
O. Comments on What Are the Compliance Dates for This Subpart?
(Proposed Sec. 1.368)
(Comment 162) Many comments strongly urge FDA to revise the
compliance dates in the proposed rule. The comments state that given
the scope of the proposed requirements it is not possible for industry
to be in compliance within the 6, 12, or 18 months proposed by FDA. The
comments state that each of the new requirements imposes programming,
training, and business practice adjustments that FDA must take this
into account in setting an appropriate effective date for the
regulation. The recommendations that FDA received from comments are as
follows: 9 to 12 months for larger businesses; 1 year regardless of the
size of the business; 18 months regardless of the size of the business;
18 months for large firms and 24 to 30 months for smaller firms,
depending on their numbers of employees; an additional 1 year for each
entity group; and 2 to 7 additional years.
(Response) FDA has carefully considered these comments and agrees
that businesses should be given additional time to comply in view of
the programming, training, and business practice adjustments that will
be needed. Section 1.368 of the final rule requires large businesses
(500 or more full-time equivalent employees) to be in compliance within
December 9, 2005. Small businesses (those with fewer than 500, but more
than 10 full-time equivalent employees) must be in compliance within
June 9, 2005, and very small businesses that employ 10 or fewer full-
time equivalent employees must be in compliance within December 11,
2006. The extended compliance times for small and very small businesses
are based on the total number of full-time equivalent employees within
the entire business, not just at each individual establishment. FDA
does not believe that extending more time is appropriate given the need
for the regulations to help improve FDA's ability to address credible
threats of serious adverse health consequences or death to humans or
animals from accidental or deliberate contamination of food. In the
event of an outbreak of foodborne illness, such information will help
FDA and other authorities determine the source and cause of the event.
In addition, the information will enable FDA to notify more quickly the
consumers and/or facilities that might be affected by the outbreak.
Further, the Bioterrorism Act directs FDA to take into account the
size of a business in promulgating regulations. Consistent with this
provision, FDA has: (1) Provided a full exemption for very small
retailers based on the rationale stated previously; (2) provided a
partial exemption for small (11 to 500 employees) and large (more than
500 employees) retailers from having to establish and maintain records
as to immediate subsequent recipients; and (3) provided extended
compliance times for very small businesses and small businesses in all
sectors.
(Comment 163) Some comments state that the transportation chain
information requirements, by themselves, are so complex they simply
cannot be developed in such a short timeframe even if industry were not
dealing with several other major security-related regulatory efforts
under the Trade Act of 2002 and the Maritime Transportation Security
Act of 2002.
[[Page 71610]]
The comments ask FDA to require more reasonable timetables that would
be less costly and have a more realistic chance of successful
compliance.
(Response) As stated in the response to the comment 162, FDA has
modified the compliance timeframes proposed. The final rule gives
covered persons 12, 18, or 24 months after the date of publication to
come into compliance, depending on the size of the business. The
extended compliance times for small and very small businesses are based
on the total number of full-time equivalent employees within the entire
business, not just at each individual establishment.
(Comment 164) Several comments state that the food distribution
chain is comprised of multiple links or components, some of which will
qualify as small or very small businesses, such as independent truck
operators or some DSD operations. For example, some large national
baked goods companies deliver products directly to stores through
individuals who function as independent businesses (e.g., they own
their own trucks, purchase the food from the vendor and sell it to the
store, and hold licenses to the particular delivery routes). The
comments state that, if these businesses are covered by the small
business exemption, they will not be required to provide the
information that larger businesses will be required to retain. The
comments recommend that FDA either extend the exemption through all
subsequent links in the distribution chain, or else recognize the
interconnectedness of the systems and impose a single, more realistic
compliance date with which all in the food distribution chain will be
able to comply, e.g., establish a universal compliance date for the
regulations of June 9, 2005.
(Response) FDA does not agree that all businesses should be subject
to a universal compliance date. FDA has considered the
interconnectedness of the food distribution system and contractual
relationships that exist between very small, small, and large
businesses. FDA has determined that large, small, and very small
businesses will have 12, 18, and 24 months, respectively, from the date
of publication of this final rule, with which to comply. These
timeframes represent an extra 6 months over the timeframes in the
proposed rule for all business sizes to come into compliance. FDA
believes that many large businesses and possibly many small businesses
already establish and maintain records that contain most or all of the
information required by these regulations, and thus should not require
longer than 12 and 18 months, respectively, to come into compliance.
Very small firms would have 24 months to comply.
FDA anticipates that the very small and small businesses will be
able to lower their compliance costs by learning from the experience of
the large businesses. The extended compliance times for small and very
small businesses are based on the total number of full-time equivalent
employees within the entire business, not just at each individual
establishment.
(Comment 165) One comment notes that small businesses doing
business with large businesses would have to comply with the large
business timeframe and asks FDA to reconsider this exception, and allow
small businesses to comply on the 12 and 18 month schedule.
(Response) FDA has considered the interconnectedness of the food
distribution system and contractual relationships that exist between
very small, small, and large businesses. FDA has determined that small
and very small businesses will have 18 and 24 months, respectively (not
the 12 and 18 months that were proposed that the comment alludes to) to
comply with the regulations, regardless of whether they are engaged in
doing business with large firms.
(Comment 166) Several comments express support for the different
implementation dates based on the size of a business. The comments
state that the extra time will ensure that small businesses have
adequate time to understand the new rules, reorganize their
administrative recordkeeping, and spread the costs of the new rules
over a greater volume of their (limited) production. In addition,
within the first year of implementation, the comments note that the
larger companies and FDA will resolve many of the problems that will
arise with the new rules. The comments maintain that large companies
are better able to adjust to any problems than are small businesses.
(Response) FDA agrees with this comment, and for the reasons stated
in the preceding paragraphs, has modified the compliance dates and
extended each of the proposed compliance dates by an additional 6
months.
(Comment 167) Several comments request that FDA clarify the method
used to determine business size for deciding the timeframe for
compliance. The comments ask whether a company's size is determined
based on all employees of the parent company, the entire corporation as
a whole, or upon each individual enterprise or location or
manufacturing facility. The comments also question how full- and part-
time employees are counted.
(Response) The size of the business is determined using the total
number of full-time equivalent employees in the entire business, not
each individual location or establishment. A full-time employee counts
as one full-time equivalent employee. Two part-time employees, each
working half time, count as one full-time equivalent employee.
(Comment 198) Some comments state that the criterion used to
determine small and very small businesses is the number of employees,
whereas in other countries, especially the developing ones, other
criteria are used to better reflect the nature of the businesses. The
comments ask FDA whether the value of investment and value of assets
can be considered as other criteria in determining if a business meets
the definition of a small or very small business in order to be allowed
extended time to comply with the regulations. The comments also ask FDA
to consider factors such as production capacity and production value
for labor-dense firms such as in China, where the production rate per
person is lower than that in the United States.
(Response) FDA continues to believe it is appropriate to use the
number of full-time-equivalent employees as a criterion to
differentiate between very small, small, and large businesses. This is
consistent with other regulations the agency has issued where staggered
compliance dates were utilized, e.g., the juice HACCP regulation (21
CFR 120.1(a)).
(Comment 169) Two comments ask FDA to phase in enforcement of these
provisions once the regulations are in effect, especially as to the
critical elements of the regulation. One of the comments requests that
FDA allow a grace period of 1 year before enforcing any of the rule's
requirements against any organization that is taking good faith steps
to achieve compliance.
(Response) Rather than phase in enforcement, FDA has extended the
compliance dates for all covered persons subject to this final rule.
The earliest that covered persons would have to be in compliance is 1
year for large firms, and the latest is as much as 2 years for very
small firms.
(Comment 170) Two comments ask whether the staggered timeframes
apply to foreign businesses of varying sizes.
(Response) Foreign persons, except for those who transport food in
the United States, are not subject to the recordkeeping regulations in
this final
[[Page 71611]]
rule. For foreign persons who transport food in the United States, the
staggered compliance dates based on size of business applies.
(Comment 171) Two comments ask how the proposed rule affects long
shelflife products prepared before the introduction of the new rule
still in storage when full compliance is required. Is the rule
retroactive or does it apply to food manufacturers from the date of
full compliance?
(Response) Once applicable compliance dates occur, covered persons
must establish and maintain records. As explained previously, records
must be created at the times you receive and release the food. Persons
do not need to keep records of the immediate previous sources of food
if that food is received before the compliance date of the rule.
Likewise, persons do not need to keep records of the immediate
subsequent recipients if that food is released before the compliance
date of subpart J of this final rule.
(Comment 172) One comment states that implementation may prove to
be a major barrier to foreign shipments due to the additional strains
and demands upon communication systems, port and airport facilities,
and on the inspection infrastructure. The comment also states that it
may overlap with the beginning of the fresh fruit export season.
(Response) Foreign persons, except those who transport food in the
United States, are not subject to this final rule; however, persons
that import food from foreign countries are subject to the rule. FDA
believes that the compliance timeframes specified in Sec. 1.368 of
this final rule give all persons subject to this final rule, including
importers, sufficient time to determine what steps are needed to be
able to comply with the final rule, and to be in compliance on their
respective compliance dates, while allowing FDA to meet its statutory
objective of ensuring that persons that manufacture, process, pack,
hold, transport, distribute, receive, or import food in the United
States establish and maintain records that will significantly improve
FDA's ability to address credible threats of serious adverse health
consequences or death to humans or animals.
(Comment 173) One comment states that the proposed delay in the
compliance date for small businesses does not adequately address small
business needs. One comment states that FDA should provide businesses
with additional assistance with compliance.
(Response) FDA has increased the compliance period for small
businesses from 12 months to 18 months, and for very small businesses
from 18 months to 24 months. With respect to additional assistance, in
accordance with the Small Business Regulatory Enforcement Fairness Act
of 1996 (SBREFA), FDA plans to publish a small entities compliance
guide to assist small and very small businesses with complying with the
recordkeeping requirements. As described previously, FDA also plans to
conduct outreach activities to explain the requirements of this final
rule to affected entities.
(Comment 174) One comment states that the phase-in for small and
very small businesses is not a good idea because if the consequences
are as grave as FDA claims, everyone must be required to comply at the
earliest possible time, allowing for systems and procedural development
and employee training. The comment states that a phase-in of the
regulations would pose a threat to public health and safety, should not
be part of this regulation, and would be against the public interest.
(Response) The Bioterrorism Act specifically states that, in
issuing these regulations, the Secretary shall take the size of a
business into account. FDA considered reduced requirements for, or even
exempting, small businesses. However, most food products and
ingredients pass through at least one small business during commerce.
In addition, more than 80 percent of the covered entities are
considered very small businesses. If FDA were to exempt small
businesses from these regulations, permit shorter record retention
periods, or subject them to reduced records requirements, FDA's tracing
investigations would be severely compromised. Given the foregoing, FDA
believes it is appropriate to give small and very small businesses
additional time to come into compliance with the regulations.
(Comment 175) A few comments point out that the burden for
maintaining records is proportionately similar for large transporter
companies and small independent transporters. Therefore, according to
the comments, the relative regulatory burden for small, independent
transporters is no greater than for large companies. The comments
contend that all carriers, regardless of the size of the company,
should be required to comply with the same requirements on the same
timetable.
(Response) As stated previously, the Bioterrorism Act specifically
states that, in issuing these regulations, the Secretary shall take the
size of a business into account. FDA believes it is appropriate to give
small and very small businesses additional time to come into compliance
with the regulations.
IV. Analysis of Economic Impacts--Final Regulatory Impact Analysis
FDA has examined the economic implications of this final rule as
required by Executive Order 12866. Executive Order 12866 directs
agencies to assess all costs and benefits of available regulatory
alternatives and, when regulation is necessary, to select regulatory
approaches that maximize net benefits (including potential economic,
environmental, public health and safety, and other advantages;
distributive impacts; and equity). Executive Order 12866 classifies a
rule as significant if it meets any one of a number of specified
conditions, including: Having an annual effect on the 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 final
rule is an economically significant regulatory action as defined by
Executive Order 12866.
This final regulatory impact analysis reflects changes made in the
regulation from the proposed rule to the final rule, as well as changes
in estimates in response to comments. It also includes responses to
comments on the preliminary regulatory impact analysis (PRIA) (see 68
FR 25188). Where there were no changes in the estimates provided in the
PRIA, the estimates are summarized here. Interested persons are
directed to the text of the PRIA for a fuller explanation of the
estimates over which there were no significant comments or changes. As
noted in the previous section of this preamble, FDA received 212
submissions in response to the proposed rule, which raised over 200
issues. We continue with the discussion of the comments and FDA's
responses to those comments using the same presentation as in section
III of this document, focusing here on the comments FDA received on the
PRIA. Accordingly, the word ``Comment'' again will appear in
parenthesis before the description of the comment, and the word
``Response'' will appear in parenthesis before FDA's response.
A. Summary of the Costs and Benefits of the Final Rule
We revised the estimated costs of the final rule in response to
comments on the proposed rule and to account for the changes between
the proposed and final rules. The final rule will cover more
[[Page 71612]]
than 1 million entities at a cost of approximately $1.41 billion in
present value with a 7-percent discount rate. With a discount rate of 3
percent, the estimated present value of the costs is approximately
$1.94 billion. Costs for learning, records redesign, and planning for
records access requests are one-time costs incurred in the first 2
years following publication of the final rule. Additional records
maintenance costs and records retention costs are incurred each year
following publication of the rule beginning in the second year for
large and small firms, and in the third year for very small firms.
Learning costs and records access planning costs for new entrants are
also incurred each year following publication of the final rule
beginning after the second year. The total cost estimate can be
computed by summing the costs estimated for learning, records redesign,
additional records maintenance, records retention, and planning for a
records access request. The annual and total costs of the final rule
are reported in table 1 of this document. The recurring annual costs of
the final rule (the sum of additional records maintenance and learning
for new firms) are about $123 million. The annualized costs of this
final rule are $108,000 using a 3-percent discount rate and $110,000
using a 7-percent discount rate.
Table 1.--Estimated Annual and Total Recordkeeping Costs\1\
------------------------------------------------------------------------
21 CFR Section Costs (in dollars)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 $85,082,000
(learning)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 $205,239,000
(records redesign)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 $114,701,000
(additional records
maintenance)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 $8,508,200
(learning for new firms)
------------------------------------------------------------------------
Discounted present value $1,406,356,000
of total costs\2\
------------------------------------------------------------------------
\1\ The annual costs are reported in undiscounted terms. Records access
planning costs and records retention costs are estimated to be zero
and are not reported here.
\2\ The reported discounted present value of total costs assumes a 7-
percent discount rate and a 20-year time horizon over which annual
costs are summed.
The final rule will help reduce the numbers of people who become
ill during foodborne outbreaks by reducing the time required for
preventive action. Furthermore, the final rule will eliminate the
recurrence of outbreaks that may have been prevented had poor records
quality not resulted in prematurely terminating the initial traceback
investigation. The number of illnesses prevented (excluded those
associated with food security will be approximately 1,204. The food
safety benefits reported in the table are the values of averted
illnesses from increased food safety. Averted illnesses are valued by
low, middle, and high cost of illness estimates for both $5 million and
$6.5 million values of a statistical life. The estimated annual
benefits from enhanced food safety range from $7 million to $25
million. These estimates should be interpreted as the minimum benefits
from this final rule because they do not include the benefits from
enhanced food security.
Table 2.--Value of Averted Illnesses for the Final Rule
------------------------------------------------------------------------
Low\2\ Medium\3\ High\4\
------------------------------------------------------------------------
VSL\1\ = $5 $7,388,685 $15,905,182 $24,421,229
million
------------------------------------------------------------------------
VSL = $6.5 $8,199,494 $16,715,991 $25,232,038
million
------------------------------------------------------------------------
\1\ Value of a statistical life used to value the averted deaths.
\2\ A value of $100,000 was used to value a year in good health.
\3\ A value of $300,000 was used to value a year in good health.
\4\ A value of $500,000 was used to value a year in good health.
B. Description of Proposed Rule
The proposed rule required the establishment and maintenance of
records by certain domestic persons who manufacture, process, pack,
transport, distribute, receive, hold, or import food intended for human
and animal consumption in the United States and also by certain foreign
facilities that manufacture, process, pack, or hold food for human or
animal consumption in the United States. The proposed regulations would
implement section 306 of the Bioterrorism Act. FDA expected that the
requirements the agency proposed would result in a significant
improvement in FDA's ability to respond to and help contain threats of
serious adverse health consequences or death to humans or animals from
accidental or deliberate contamination of food.
C. General Comments
(Comment 176) FDA received a number of comments that asserted that
the costs of the proposed rule were incorrectly estimated.
(Response) If the comment asserted costs or benefits were
incorrectly estimated without specifying which costs or benefits, there
was not sufficient information for FDA to respond. Comments that
specified which costs or benefits the comments believed were
incorrectly estimated are addressed in later sections of this analysis.
(Comment 177) There were several general comments that the costs
that result from the rule are too high and would result in the failure
of enterprises and small businesses.
(Response) In the PRIA, FDA estimated the impacts of the costs of
compliance on small businesses using FDA's small business model using a
cash flow metric (Ref. 1). In this
[[Page 71613]]
analysis, we use the small business model to calculate the effects on
small businesses using the difference between revenue and variable cost
as the metric. A finding that firms incur costs greater than revenues
as a result of this rule can be interpreted to mean that they may be
driven out of business. We incorporated both the annualized value of
one-time costs and the recurring costs for computing the effects of
this final rule on small firms.
We computed the effects for firms manufacturing dietary
supplements, candy, and ready-to-eat foods, including breakfast
cereals, beverages, canned foods, baked items and breads, and dressings
and sauces. While these firms do not represent every category of food
establishment covered by this final rule, they do reflect a large
number of firms in the food industry, including manufacturers, input
suppliers, and distributors. FDA assumes that the cost and revenue
structures of firms not explicitly included in the computation of the
model do not differ substantially from those that are included.
Consistent with FDA's assumption that the rule will require only
small changes in current recordkeeping practices, the findings from the
small business model indicate that virtually no small businesses will
incur negative cash flows (defined as revenues less than variable
costs) as a result of this rule. The percentages of firms predicted to
incur negative cash flows range from 0.2 percent to a high of 1.9
percent for the ready-to-eat food manufacturing industry. These
findings strongly suggest that very few firms, if any, will be driven
from business as a result of this rule.
D. The Tradeoff Between Costs and Risk Reduction
(Comment 178) Many comments argue that the benefits from the rule
do not justify the costs to the food industry. Another comment states
that it remains doubtful that the benefits from the regulation justify
the costs, while another comment expressed the need for a proper model
to compare the costs of the recordkeeping provisions with a measure of
the risks averted from the provisions.
(Response) FDA agrees that the measure of the net benefits used to
justify the regulation remains uncertain. A large portion of the
uncertainty arises from FDA's inability to quantify the benefits from
the regulation. In the PRIA, we used epidemiological evidence from four
outbreaks to suggest qualitative results.
In the final rule, we develop a more comprehensive and detailed
model to estimate the food safety benefits using information generated
from FDA outbreak investigations (Ref. 2). We use this information to
estimate the number of illnesses averted as improved recordkeeping
practices lead to faster traceback investigations and higher rates of
successful traceback completions. These estimates understate the true
expected benefits from the rule, because they are derived solely from
food safety data and do not take into account the expected benefits of
this rule to food security. The estimate of strictly food security
benefits is based on classified data and is not used in this analysis.
A qualitative description of the security benefits is provided below
under section IV.E.1 of this document, entitled ``Bioterrorism
Considerations''.
Although benefit-cost analysis is primarily a quantitative
exercise, the existence of non-quantified benefits and costs, as well
as uncertainty around the quantified measures, means that assessing
whether costs justify benefits entails a qualitative element. Decision
aids such as uncertainty analyses are used to help decision makers in
these instances.
(Comment 179) There were several comments stating that the costs of
compliance for specific sectors, including foreign facilities, food
contact suppliers, and transportation facilities, did not justify the
benefits of reducing the risks of contamination posed by those sectors.
(Response) In the final analysis that follows, we refine the
analysis of the benefits of selected policy options including those
expected from foreign firms, food contact substance suppliers, and
transportation facilities.
(Comment 180) One comment states the need to measure benefits from
the regulation against the existing traceback and recall capability of
the industry. This comment questions whether the provisions in the
recordkeeping rule would improve response times for removing product
from the market, and potentially reduce the number of illnesses from a
foodborne outbreak. The comment suggests that FDA should consider what
the savings would be in anticipated response times and records recovery
times, as well as how this would translate into a reduction in
illnesses and enhanced product recovery. Finally, the comment states
that the burdensome exercise to produce records could actually slow and
hinder the objectives of recalling a suspected product.
(Response) FDA agrees with the comment that a model is needed to
determine the savings in investigation traceback times, and the numbers
of illnesses that would be avoided from this regulation. FDA has
developed a model of the benefits, which is described later in this
section. However, FDA does not agree that the benefits should be
compared to the current system for recalling products since few
investigations result in recalls. Instead, FDA believes that benefits
from this final rule will primarily be from faster investigations
leading up to preventive actions, including recalls. A recall or other
preventive action is made only after a product has been implicated. The
benefits from the recordkeeping rule are to improve the accuracy and
speed with which a product is implicated. If recalls or other
preventive actions are made too quickly and cover too wide a range of
products, there is the very real danger of a recurrence of the outbreak
if the source is not investigated. For that reason, the benefits from
the regulation include not only faster traceback investigation times,
but also higher rates of completed traceback investigations, and the
commensurate reduction in outbreak recurrences.
(Comment 181) One comment states that the analysis failed to meet
Office of Management and Budget (OMB) guidelines for regulatory impact
analysis by failing to do the following: (1) Adequately consider the
need and consequences of the regulation and (2) show that the benefits
outweigh the costs of the regulation. In addition, the comment states
that the purpose of the regulation is to expand the agency's
jurisdiction, rather than to maximize the net benefits to society, and
that alternatives with the highest net benefits (including the
alternative not to regulate) were not chosen. Finally, the comment
states that the analysis failed to consider the condition of the
affected food industries, potential future regulatory actions, and the
weak state of the national economy as required.
(Response) In the PRIA, we stated that the need for these
regulations is to enable FDA to respond to, and help contain, food for
which the agency has a reasonable belief that it is adulterated and
presents a threat of serious adverse health consequences or death to
humans or animals. In the final rule we bolster the explanation of the
need for the regulation by analyzing vulnerabilities due to shortfalls
in current recordkeeping practices. These shortfalls are shown to
inhibit current outbreak investigation efforts and, by extension,
efforts to mitigate serious adverse health consequences or death to
humans or animals. The perceived vulnerability of the U.S. food supply
to an attack, as articulated by Congressional passage of the
[[Page 71614]]
Bioterrorism Act, elevates the importance of addressing these
shortfalls.
The analysis of the benefits of the final rule uses characteristics
of conventional outbreaks and investigations to more clearly identify
and quantify shortfalls in existing recordkeeping practices and how
each is addressed by the recordkeeping regulation. We measure the
effects in terms of the number of illnesses averted due to reductions
in the duration of outbreak investigations and reductions in the number
of investigations that are prematurely terminated because of poor
records quality. When an investigation is prematurely terminated, there
is both a loss of data that might prevent recurrences of the outbreak
and a decrease in the effectiveness of any preventive action. The need
for this regulation is underscored when the potentially large sizes of
outbreaks from intentional attacks on the food supply are considered.
Although the probability of such an intentional attack is unknown, the
size of the benefits from this regulation are larger, the larger the
size of such an outbreak.
We estimate benefits using data from FDA outbreak investigations.
We then compared estimated benefits for a number of regulatory options.
In this way, the benefits of each regulatory option can be compared to
its costs. While the costs and benefits of the policy alternative ``not
to regulate'' are not considered in the final rule, they were analyzed
in the proposed rule. We did not estimate the effects of potential
future regulatory actions because we do not anticipate any such actions
that would affect the estimated costs or benefits of this final rule.
In response to the comment that we have not shown that benefits
exceed costs, the Executive Order requires that costs must be justified
by benefits. We believe we have done so in this analysis. Finally, in
the PRIA, FDA addressed the state of the national economy by examining
the impact of the final rule on the most vulnerable firms in the
industry, through simulations using our small business model (Ref 1.),
and also in the Unfunded Mandates section by examining the impact of
the rule on all consumers as well as producers in the food economy in
general.
In this analysis we use the small business model to calculate the
effects of the costs of this final rule on the survival of small
businesses. We incorporated both the annualized one-time costs and the
recurring costs for computing the effects on cash flows. We computed
the effects for firms manufacturing dietary supplements, candy, and
ready-to-eat foods, including breakfast cereals, beverages, canned
foods, baked items and breads, and dressings and sauces. While these
firms do not represent every category of food establishment covered by
this final rule, they do reflect a large number of firms in the food
industry, including manufacturers, input suppliers, and distributors.
FDA assumes that the cost and revenue structures of firms not
explicitly included in the computation of the model do not differ
substantially from those that are included.
Consistent with FDA's assumption that the rule will require only
small changes to current recordkeeping practices, the findings from the
small business model indicate that virtually no small businesses will
shut down as a result of this rule. In the Unfunded Mandates section of
the PRIA, we also consider the impacts of the proposal on food prices
and conclude that any effect would be negligible.
E. Estimating the Benefits
The benefits from the recordkeeping rule will be from illnesses
averted due to faster traceback components of outbreak investigations,
and an increased ability to complete investigations that previously
would have been prematurely terminated due to poor records quality.
Because of this new recordkeeping rule, a greater number of traceback
investigations will be completed, and traceback investigations will
take less time because of shorter records access times and better
records quality.
The benefits estimated in this analysis are realized only in the
event of a foodborne outbreak (intentional or unintentional) because
the probability of a terrorist attack is unknown. However, the
estimated costs are incurred at all times regardless of whether there
is an outbreak investigation underway, as well as by all facilities,
regardless of whether they are implicated in the outbreak.
1. Bioterrorism Considerations
Interviews with FDA traceback personnel indicate that traceback and
source investigations involving fresh produce find that the
contamination often occurs at the farm level (Ref. 2). The interviews
suggest that bioterrorism scenarios envision possible intentional
contaminations on the farm, in distribution, at processing, and at
retail. Moreover, fresh products may be more likely targeted for
intentional contamination when they are at intermediate levels of
processing than when they are at the farm level.
The benefits from the recordkeeping rule are from enhanced food
safety and enhanced food security. We can estimate the food safety
benefits, but we cannot estimate the food security benefits, as the
probability of the occurrence of a deliberate outbreak is unknown. The
tangible benefits from the recordkeeping rule occur after an outbreak
of food-related illness. With the records required by this rule, the
agency can investigate outbreaks more quickly and will not be forced to
terminate an investigation because of poor or nonexistent records. The
speeding up of investigations generates benefits in some cases because
the information from the records will enable the agency to take actions
to reduce the size of the outbreak. Both the increased completion rate
and faster investigations may reveal more sources of outbreaks and help
to prevent recurrences.
The food security benefits of recordkeeping come from mitigating a
terrorist attack on the food supply, and preventing unnecessary expense
in the event of a hoax or a small terrorist event. While we are unable
to estimate the benefits from such scenarios, we can point to
investigative speed as a principal mechanism for mitigating their
costs. The first benefit--mitigating the effects of an attack--is
similar to the food safety benefit. Investigations will be quicker
because of better records. Investigation speed may be crucial in the
early period after a terrorist attack to more quickly determine the
likely scope and scale of the contamination. With quicker
investigations, the government can act sooner to reduce the public
health and other effects of a terrorist attack on the food supply.
These benefits should be qualitatively the same as in the case of an
accidental outbreak of food-related illness, but we expect them to be
potentially larger for a terrorist attack on the food supply.
The second counterterrorism benefit from recordkeeping is also
difficult to quantify but may be important: the ability to identify
quickly a potential food security hoax. The hoax could be completely
false, or it could be a small event masquerading as a large event. For
example, a terrorist could contaminate a single container of some food
and send out an Internet message stating that the entire national stock
of that food was contaminated. If the goal is to spread terror rather
than to cause mass illness, then a small attack or even an Internet
announcement with no contaminated products could persuade consumers
that the risk is real.
With a sufficiently plausible background story implicating a
widely-consumed food, the hoax might lead to
[[Page 71615]]
extensive protective efforts by businesses and consumers. Consumers
might take costly preventive actions, such as throwing away food,
stopping their consumption of the suspect food item, or visiting
physicians or emergency rooms to determine if they have been exposed to
some hazard. Producers and distributors might destroy inventories of
the suspect food as a preventive measure. If there is widespread
uncertainty about the extent of contamination, this protective behavior
could easily generate high costs. If the terrorist attack on a food is
a small-scale event masquerading as a national event, a full system of
records will allow the agency to trace the suspect foods through the
food chain to determine the extent of contamination. The government
could quickly narrow down the range of suspect foods and, if the risk
is absent, reassure the public that the suspect foods are indeed free
of contamination by terrorists. The ability to move quickly and
authoritatively will possibly generate real benefits by preventing
costly defensive actions by businesses and consumers.
2. Benefits: Model Framework
The primary food safety benefits from this rule are from the number
of illnesses averted due to improved recordkeeping practices. Improved
recordkeeping practices result in faster traceback investigations and
higher traceback completion rates, which will reduce the expected
number of illnesses from intentional and unintentional outbreaks.
The following diagram visually depicts the benefits from faster
traceback times from the recordkeeping rule. The number of onsets of
new illnesses and outbreak investigation duration curves overlap to
estimate the number of days that an investigation is likely to reduce
the duration of an outbreak. With faster traceback times, the
distribution of the durations of outbreak investigations shifts to the
left from ``existing'' to ``improved,'' reducing even further the
number of days of an outbreak. This diagram assumes the outbreak is
still going on at the time the traceback investigation begins. The
reduced number of days of an outbreak can then be translated into a
reduced number of illnesses from an outbreak.
[GRAPHIC] [TIFF OMITTED] TR09DE04.004
There are two ways that the recordkeeping rule speeds up traceback
investigations: (1) Higher records quality means that traceback
investigators spend less time trying to find and analyze information
that might have been missing or incomplete had there been no rule and
(2) the rule makes failure to provide records within the required time
period a violation, thus increasing cooperation with investigators who
need rapid access to records. Greater traceback speeds result in more
recalls (if the product is still in the marketplace), administrative
detentions (under section 303 of the Bioterrorism Act), import actions,
closures, and other preventive actions that reduce the number of
illnesses during an outbreak. The following is a description of the
model used to measure the benefits from the recordkeeping rule.
i. Given the speed of the initial recognition and epidemiological
investigation of an outbreak, the benefits from the recordkeeping rule
[[Page 71616]]
depend on the following factors: (1) the average duration of a
traceback investigation, (2) the average number of traceback
investigations prematurely terminated for reasons of poor records
quality, and (3) the distributions of outbreak durations and sizes.
ii. The average duration of a traceback investigation depends on
the number of point-of-service and distributor investigative visits per
traceback investigation, and the average duration of an investigative
visit. The quantity of records that needs to be reviewed is an
important determinant of the duration of a traceback investigation.
However, we assume that the change in the quantity of records requested
is much smaller than the change in the quality of the records requested
as a result of this final rule. We therefore omit the quantity of
records reviewed during a traceback investigation as a modeling
consideration when measuring the impact of the final rule.
iii. Because traceability information, such as lot codes, may be
readily identified on the label of packaged products but is largely
absent for fresh produce, the average number of investigative visits
per outbreak may depend on the food category (e.g., fresh and packaged)
of the contamination source.
iv. The average duration of an investigative visit depends on the
following factors: Average records access times, which depend in part
on how records are stored and maintained; average travel times and
overnight stays required to complete an investigative visit; and
average records analysis times. The time required to analyze records
depends on the quality of the records.
v. The rate that traceback investigations are prematurely
terminated due to poor records quality will decline as the average
quality of records improves. This improvement will reduce the number of
outbreaks that result from recurring contaminations that may otherwise
have been prevented.
vi. The size, contaminating agent, and duration of an outbreak
determines the number of illnesses averted from faster preventive
action and higher success rates of traceback completion. The value of
the averted illnesses is the averted medical expenses, and the averted
loss in welfare, including pain, suffering, and productivity that would
otherwise result from the illness.
Thus, the model may be summarized as the following:
i. Benefits are determined by: (1) The sizes of outbreaks, and the
nature of contaminating agents, which determine the baseline number and
severity of illnesses potentially averted; (2) the reduced time needed
to complete a traceback investigation, which reduces the number of
illnesses by allowing faster preventive action; and (3) the increased
rates of successful traceback completion, which reduce the number of
illnesses that result from outbreak recurrences.
ii. Time to complete a traceback investigation is determined by the
time needed to complete an investigative visit, and the number of
investigative visits.
iii. Time to complete an investigative visit is determined by the
record access times, and the record analysis times.
iv. Record analysis times are determined by records quality (we
ignore the quantity of records requested on the assumption that the
changes in the quantity resulting from this final rule will be
negligible compared with changes in the quality).
v. The rate of successfully completed traceback investigations is
determined by the quality of the records.
vi. The value of the averted illnesses is computed by adding
together the estimated value of averted healthy life days lost, and the
averted medical expenses due to the illness.
3. Data on Outbreak Sizes, Durations, and Contaminating Agents
Data used to estimate the numbers of illnesses, contaminating
agents, and outbreak durations are taken from FDA information
documenting investigations monitored by the agency from 2000-2003 (Ref.
2). The investigation information is drawn from multiple, non-
standardized sources that irregularly document different aspects of
investigations. The number of investigations reported in the table is
not exhaustive; more investigations may be documented elsewhere.
Moreover, it is possible that the information does not perfectly
reflect the universe of FDA outbreak investigations because the methods
for its collection and distribution are non-standardized. Nevertheless,
we believe the information is sufficiently accurate, and that the list
of outbreaks is sufficiently exhaustive for purposes of estimating the
benefits from the recordkeeping final rule.
The outbreak duration is calculated as the time between the first
and last illness, and the sizes of the outbreaks are calculated as the
numbers of known illnesses attributed to an outbreak. The charts that
follow depict the sizes and durations of the outbreaks from 2000 to
2003 as estimated from FDA outbreak investigation data.
[[Page 71617]]
[GRAPHIC] [TIFF OMITTED] TR09DE04.005
[[Page 71618]]
[GRAPHIC] [TIFF OMITTED] TR09DE04.006
The next diagram combines information from the two preceding
diagrams and depicts the cumulative distribution by outbreak duration
of the percent of all onsets of illnesses. The horizontal axis in the
following diagram gives the number of days that outbreaks lasted, and
the vertical axis gives the fraction of all illnesses that occurred
during outbreaks of a given duration. The diagram shows that
approximately 80 percent of illnesses were from outbreaks that lasted
for 33 or fewer days, and 20 percent of all illnesses were from
outbreaks that lasted more than 33 days.
[[Page 71619]]
[GRAPHIC] [TIFF OMITTED] TR09DE04.007
Estimates of the durations and magnitudes of outbreaks based on FDA
outbreak investigation information may overestimate the true average
outbreak magnitudes and durations. The outbreaks monitored by FDA may
be the most difficult to investigate because they involve interstate
commerce (so illnesses are geographically dispersed), and may sicken a
greater number of people. Consequently, the duration and magnitudes of
the outbreaks may be longer and more severe than the average duration
and magnitude of all investigations, which includes investigations at
the local level in addition to the national level. However, as
indicated earlier, the estimates presented here are based on food
safety considerations and may understate the benefits of this final
rule when the possibility of bioterrorism (food security) is
considered.
4. The Total Number of Illnesses
The following table 3 of this document reports agents, illnesses,
and deaths taken from the FDA outbreak investigation information. The
129 outbreaks from approximately 21 agents resulted in reports of 8,325
illnesses, 444 hospitalizations, and 21 deaths. The data reported in
the table are drawn from multiple, non-standardized, sources that
irregularly document different aspects of investigations.
Table 3.--The distribution of illnesses by agent from outbreaks monitored by FDA from 2000 to 2003
----------------------------------------------------------------------------------------------------------------
Number of Known Number of Illnesses That
Agent Number of Outbreaks Illnesses Attributed to Were Known to Be
Attributed to the Agent Outbreak Agents Hospitalized
----------------------------------------------------------------------------------------------------------------
Bacteria
----------------------------------------------------------------------------------------------------------------
Campylobacter 1 20 0
E. coli 0157:H7 13 287 45
Listeria 2 51 10
Salmonella 59 4,411 253
Shigella 3 672 30
Vibrio P. 4 124 0
----------------------------------------------------------------------------------------------------------------
[[Page 71620]]
Chemical
----------------------------------------------------------------------------------------------------------------
Ammonia 1 141 42
Methomyl 1 26 0
Sodium nitrite 1 5 0
----------------------------------------------------------------------------------------------------------------
Parasitic
----------------------------------------------------------------------------------------------------------------
Cryptosporidium 1 19 0
Cyclospora 4 78 3
----------------------------------------------------------------------------------------------------------------
Toxin
----------------------------------------------------------------------------------------------------------------
Ciguatera or Ciguatoxin 3 26 3
Histamine 3 26 7
Saxotoxin 1 17 0
Scromboid 2 14 4
Star Anise 1 20 0
Toxin 1 78 0
----------------------------------------------------------------------------------------------------------------
Viral
----------------------------------------------------------------------------------------------------------------
Hepatitis A 4 945 18
Norovirus 18 1,246 11
Viral or Vitri 1 35 4
----------------------------------------------------------------------------------------------------------------
Unknown 5 84 14
----------------------------------------------------------------------------------------------------------------
Total 129 8,325 444
----------------------------------------------------------------------------------------------------------------
The number of illnesses reported in table 5 of this document
represents only the known cases, cases that have been recorded
elsewhere in the public health system. For each reported illness, there
are many illnesses that are unreported, so the actual number of
illnesses from outbreaks is much larger than the reported number. For
example, CDC states that the ratio of total (unreported plus reported)
illnesses to reported sporadic illnesses from Salmonella is 38 (Ref.
3).
To estimate the number of unreported illnesses from outbreaks that
FDA monitors, we assume the same pathogen-specific hospitalization
rates as those used in the CDC estimates for the burden of foodborne
illness (Ref. 3). For example, CDC assumes a 0.295 hospitalization rate
for all illnesses caused by the pathogen E. coli 0157:H7. Moreover, CDC
assumes that about one-half of hospitalizations related to foodborne
illnesses are reported or diagnosed (Ref. 3). Consequently, we estimate
that there were 90 hospitalizations due the E. coli pathogen from
outbreaks monitored by FDA 2000 to 2003 (i.e., twice the number of
hospitalizations from E. coli 0157:H7 reported in table 3 of this
document). Based on the CDC hospitalization rate for E. coli, we
estimate that the total number of illnesses (reported and unreported)
from outbreaks caused by E. coli contamination is approximately 305
(i.e., 90 divided by 0.295, the hospitalization rate for illnesses
caused by E. coli 0157:H7).
In order to characterize uncertainty in the estimates, we assumed
that the total number of unreported illnesses from outbreaks for almost
all pathogens would be distributed as a negative binomial with the
parameters defined by the case hospitalization rates, and twice the
reported number of hospitalizations. The estimated total number of
illness for each agent is extrapolated from the estimated number of
hospitalizations, with two exceptions: Estimates obtained of the total
number of illnesses from Listeria monocytogenes and Vibrio
parahaemolyticus were less than the reported total from those
pathogens, so we used the reported total instead of the estimated
total.
Case hospitalization rates for chemical poisoning and for other
toxins are not reported in the CDC report, and (because such cases are
unusual and characterized by severe acute distress) we assumed that
half of such cases would be hospitalized. Finally, we assumed that the
total number of illnesses from unknown agents is the same fraction of
the estimated total summed over all pathogens, as the reported total
summed over all pathogens. The estimated ratio of the total number of
illnesses to reported illnesses was computed by dividing the estimated
total by the reported total summed of all pathogens.
The average estimate of the ratio of total illnesses to reported
illnesses from all pathogens, as well as the high and low estimates
representing the 95 percent and 5 percent levels are reported in the
following table. We estimate a total of 71,928 reported and unreported
illnesses from outbreaks monitored by FDA from 2000 to 2003. This total
reflects 8,325 illnesses that were reported, and approximately 63,603
that were estimated to be unreported.
[[Page 71621]]
Table 4.--Estimated ratio of the total number of illnesses to reported number of illnesses
----------------------------------------------------------------------------------------------------------------
Low (greater than 5% of the High (greater than 95% of the
Mean range) range)
----------------------------------------------------------------------------------------------------------------
8.64 7.89 9.51
----------------------------------------------------------------------------------------------------------------
5. The Costs of Each Illness
We estimate the direct medical costs as well as the indirect costs
of illnesses from outbreaks monitored by FDA. The direct medical costs
include the costs of any doctor visits and hospitalizations that are
required. Indirect costs are from the loss in productivity and quality
of life as a result of the symptoms and severity of the illness. We
estimate the indirect and direct costs of each illness for mild,
moderate, and severe cases.
Mild cases are assumed to remain untreated with no direct medical
costs. We assume that persons with moderate cases visit a physician and
that those with severe cases require hospitalization. The average costs
of $64 for a physician visit was obtained from the online source,
Medical Economics (Ref. 4), and hospitalization costs were obtained
from the Health Cost and Utility Project's (HCUP) Nationwide Inpatient
Sample (Ref. 5) by type of illness.
The numbers of days that symptoms persist for each illness and
severity were estimated from the FDA-Center for Food Safety and Applied
Nutrition (CFSAN) Bad Bug Book (Ref. 6), CDC's National Center for
Infectious Diseases, Infectious Disease Information fact sheets (Ref.
7), and from a CFSAN report entitled ``Estimating the Value of
Consumers' Loss from Foods Violating the FD&C Act'' (Ref. 8). These
estimates were assumed to be uniformly distributed with the means
reported in table 5 of this document.
Table 5.--Duration of the illness for mild, moderate, and severe cases
------------------------------------------------------------------------
Mild Moderate Severe
---------------------------------------------------------
Bacteria
------------------------------------------------------------------------
Campylobacter 4 8 8
E. coli 0157 3 8 18
Listeria 4 30 37
Salmonella 4 12 16
Shigella 3 11 18
Vibrio P. 2 2 3
------------------------------------------------------------------------
Chemical
------------------------------------------------------------------------
Ammonia 3 5 7
Methomyl 3 5 7
Sodium nitrite 3 5 7
------------------------------------------------------------------------
Parasitic
------------------------------------------------------------------------
Cryptosporidium 17 22 60
Cyclospora 17 22 60
------------------------------------------------------------------------
Toxin
------------------------------------------------------------------------
Ciguatera or Ciguatoxin 2 5 19
Histamine 2 5 19
Saxotoxin 2 5 19
Scromboid 2 5 19
Star Anise 2 5 19
Toxin 2 5 19
------------------------------------------------------------------------
Viral
------------------------------------------------------------------------
Hepatitis A 22 22 28
Norovirus 2 2 6
Viral or Vitrio 2 2 6
------------------------------------------------------------------------
The distributions over mild, moderate, and severe cases for most of
the illnesses were estimated from the CDC (Ref. 3), and a CFSAN report
entitled ``Modeling the Effects of Food Handling Practices on the
Incidence of Foodborne Illness'' (Ref. 9). The case distributions over
mild, moderate, and severe cases were estimated for chemical and marine
toxin poisoning from a study by Brevard et al. (Ref. 10), and a study
reported by CDC (Ref. 11).
The indirect costs of an illness are the loss in welfare measured
as a loss in life quality or, in the extreme case, death from the
illness. This loss in quality of life also includes lost worker
productivity while ill. Estimates of the indirect costs will vary
depending on the symptoms of the illness and their severity. We use a
quality of well-being scale for a typical gastrointestinal illness to
adjust the well-being of a person with mild, moderate, or severe
symptoms (Ref. 12). The well-being scale assumes a value of 1 for a
person in good health, and is reduced according to the
[[Page 71622]]
symptoms and impaired mobility, reduced physical activity, and reduced
social activity that result from the illness.
We compute an index of lost quality adjusted life days (QALD) by
subtracting the individual's health status when ill from one and then
multiplying that fraction by the number of days the illness lasts. The
result represents the number of health days lost from an illness; we
estimate the loss for varying severities for each illness. The QALD
losses for an average foodborne illness are reported in the following
table 6 of this document.
Table 6.--Lost QALDs Due to an Average Case of Foodborne Illness
----------------------------------------------------------------------------------------------------------------
Severity of Quality
Illness Symptom Mobility Physical Social Adjustment QALDs Lost
----------------------------------------------------------------------------------------------------------------
Mild -0.29 -0.062 -0.077 -0.061 0.51 0.49
----------------------------------------------------------------------------------------------------------------
Moderate -0.29 -0.062 -0.077 -0.061 0.51 0.49
----------------------------------------------------------------------------------------------------------------
Severe -0.29 -0.090 -0.077 -0.061 0.48 0.52
----------------------------------------------------------------------------------------------------------------
To reflect uncertainty in the literature, FDA uses a range to
estimate the values of the health days lost. We use a low estimate of
$100,000 for the value of a life year. This is consistent with that
proposed by Garber and Phelps, who suggest a value of approximately
twice the annual income (Ref. 13). U.S. Census data reports that the
median family income in 2001 was approximately $51,000 (Ref. 14).
Middle and high estimates of the value of a health day are derived
from estimates reported in the literature of the value of a statistical
life. A value of a statistical life of $6.5 million is consistent with
the findings of a literature survey of the premium for risk observed in
labor markets, reported by Aldy and Viscusi (Ref. 15). We derive middle
and high estimates of the value of a health day by annualizing the
value of a statistical life of $6.5 million over 35 years at discount
rates of 3 percent and 7 percent. These computations yield middle and
high estimates for the value of an additional year of life of about
$300,000 and $500,000. We estimated the range in values of a health day
by dividing each of the estimates of the value of an additional year of
health by 365, which yields estimates of $274, $822, and $1,370.
To calculate the indirect costs of mild, moderate, and severe cases
of the illnesses, we multiplied the low, middle, and high estimates of
the value of a health day by the QALD estimated for each illness and
severity. Consistent with OMB's guidance on the use of multiple values
for a statistical life, we used values of $5.0 million and $6.5 million
to compute the value of a death from an illness.
The estimated range of the average cost of an illness resulting
from outbreaks monitored by FDA from 2000 to 2003 is reported in the
following table. The averages reported in table 7 of this document are
weighted by the total number of reported and unreported illnesses from
each agent, as well as the assumed distributions of mild, moderate, and
severe cases, including deaths, from those illnesses. As explained
earlier, we valued statistical deaths at $5 million and $6.5 million,
and the low, medium, and high estimates assume values of a healthy year
of $100,000, $300,000, and $500,000.
Table 7.--Average Cost of an Illness Across Outbreaks
----------------------------------------------------------------------------------------------------------------
Low Medium High
----------------------------------------------------------------------------------------------------------------
VSL = $5 million $6,136 $13,209 $20,282
----------------------------------------------------------------------------------------------------------------
VSL = $6.5 million $6,810 $13,883 $20,955
----------------------------------------------------------------------------------------------------------------
6. The Stages of an Outbreak Investigation
There are four stages in an outbreak investigation. The first stage
is the preliminary investigation of laboratory results and
epidemiological evidence used to determine the parameters of the
outbreak, including the following: number ill, food vehicle
contaminated, microbial or other agent responsible, potential
commercial sources of contamination, as well as the degree of
confidence in the information on each of these parameters. The second
stage of the outbreak investigation is the decision making part, when
FDA determines what resources will be committed to proceed further in
the investigation. The third stage is the traceback investigation,
which is conducted to do the following: (1) Identify the source and
distribution of the implicated food and remove the contaminated food
from the marketplace; (2) distinguish between two or more implicated
food products; and (3) determine potential routes and sources of
contamination in order to prevent future illnesses, or to treat persons
sooner for the identified contaminants. The traceback investigation
involves investigative visits by FDA inspectors to points of service,
which are the facilities where consumers had purchased the contaminated
food, and also distribution facilities.
A fourth stage is the source investigation of the specific
practices at the farm, transportation, or other facility that may have
led to the outbreak. For many outbreaks, the source investigation
occurs well after any preventive action can be taken to limit the
number of illnesses. This would be true for outbreaks from contaminated
foods with short shelf lives that no longer are in circulation at the
time of the source investigation, or from contaminations occurring at
banquets, parties, or other one-time events where the source
investigation cannot limit the size of the outbreak. For these
outbreaks, the improved recordkeeping practices specified in the final
rule would not improve FDA's current ability to limit the size of the
outbreak, or prevent additional illnesses.
[[Page 71623]]
However, for certain products such as eggs, sprouts, and other
fresh products, additional illnesses due to conditions at the source
may continue if shipments from contaminated facilities continue. The
same may also be true for perishable foods imported on a frequent basis
from contaminated facilities. For these kinds of outbreaks, the ability
to more rapidly implicate a contaminated farm or manufacturing source
will improve FDA's ability to limit the size of the outbreak, or
prevent its recurrence.
7. The Duration of Traceback Investigations, and Numbers of Premature
Terminations
FDA outbreak investigation personnel estimate that a full outbreak
investigation lasts at least 3 to 5 weeks, with a most likely duration
of 2 to 6 months, and a maximum duration of 10 months (Ref. 2). The
numbers of outbreak investigations and investigative visits come from
internal interviews with investigation personnel and from other data
maintained by FDA (Ref. 2).
The annual numbers of outbreaks investigated, investigative visits,
and investigations that are prematurely terminated for reasons of poor
records quality are reported in table 8 of this document. A traceback
is defined to be prematurely terminated for records quality reasons if
investigators noted in summarizing information that data quality
impeded the investigation which ended before investigators were able to
determine the specific cause of the outbreak. We used the simple
averages over the 4 years reported in the table to estimate the annual
numbers of outbreaks investigated, the annual numbers of investigative
visits per outbreak investigated, and the annual rates of
investigations prematurely terminated for reasons of poor records
quality. We characterized the uncertainty of these estimates as normal
distributions with means and standard deviations taken from the data on
annual numbers of outbreaks and investigative visits per outbreak. For
the annual rate of prematurely terminated investigations, we
characterized the uncertainty with a beta pert distribution using the
average, low and high values reported in the table 8 of this document.
Table 8.--Outbreak Investigation Data
----------------------------------------------------------------------------------------------------------------
Number of Rate of records
Year Number of Outbreaks Investigative Visits quality related
Investigated per outbreak premature terminations
----------------------------------------------------------------------------------------------------------------
2000 9 12 0.11
----------------------------------------------------------------------------------------------------------------
2001 9 11 0.33
----------------------------------------------------------------------------------------------------------------
2002 18 7 0.06
----------------------------------------------------------------------------------------------------------------
2003 17 6 0.00
----------------------------------------------------------------------------------------------------------------
The recordkeeping requirements of this final rule will improve the
quality of records established and maintained by persons that
manufacture, process, pack, transport, distribute, receive, hold, or
import food. For options that provide comprehensive coverage of all
food facilities, we estimate that the number of investigations
prematurely terminated because of poor records would fall to zero. For
options that provide less than comprehensive coverage, the reduction in
premature terminations is reduced in proportion to the coverage.
Because outbreaks whose investigations are prematurely terminated
may recur, the benefits from reducing that number may be high (if many
people continue to become ill as a result of the recurrence). Based on
FDA outbreak investigation information, the average number of reported
illnesses in outbreaks that occurred between the years 2000 and 2003
was approximately 65. However, many illnesses from outbreaks go
unreported, so the average total number of illnesses from an outbreak
is much larger than the reported number. Using the estimated average
ratio of total illnesses to reported illnesses reported earlier, we
estimate that by avoiding just one outbreak recurrence, approximately
559 persons would avoid becoming ill.
Traceback durations may be different for processed food sold in
packages with labels with identifying barcodes than for fresh food
items sold in packages with no labels. Eggs and fresh produce account
for 90 percent of all outbreaks investigated by FDA, while labeled
packaged foods account for only 10 percent (Ref. 2). To determine the
likely length of time it takes to investigate a packaged food product,
we use a range that includes the low end, where investigators are able
to obtain the exact package that contains the identifying barcodes, and
the high end that assumes the package, with the identifying barcodes,
is not available. In the latter case, any subsequent recalls would
likely include more foods than the implicated lot.
The final rule relaxes the proposed requirement for lot codes to be
established and maintained on all records. If FDA were to require all
persons, including distributors, transporters, and retailers, to
include lot numbers in the records they establish and maintain under
this final rule, the traceback durations for many products would be
reduced and would be comparable to those currently reported for
tracebacks of packaged products that contain barcode information. If
all retailers and distributors were required to establish and maintain
lot codes for all processed products, then the duration of the
traceback component of an outbreak investigation for many products
could be reduced to 1 to 14 days. Examples of reported traceback times
for fresh products and for packaged products that contain lot code
information in bar code format are reported in table 9 of this
document.
Table 9.--Duration of the Traceback Component of an Outbreak
Investigation\1\
------------------------------------------------------------------------
Most Likely Low High
------------------------------------------------------------------------
Eggs and fresh 6 to 8 weeks 2 to 5 weeks 12 weeks
produce
------------------------------------------------------------------------
[[Page 71624]]
Packaged products 3 days 1 day 14 days
------------------------------------------------------------------------
\1\ Estimates reported in Ref. 2 of this document.
8. The Duration of Investigative Visits
The main delays in traceback investigations are long travel times
and overnight stays, slow and poor cooperation from recordkeepers, and
inconsistent and incomplete records. Many recordkeepers may not be
inclined to devote sufficient labor to providing records to inspectors
during business hours because that is a costly time of day to
reallocate resources. Furthermore, sometimes companies follow time-
consuming procedures before approving FDA's request for records access.
The legally binding provision in this rule will expedite cooperation
from recordkeepers and reduce access times. When we take into account
the requirement in the rule that access be provided on weekends, we
estimate a substantial amount of time saved due to the records access
provision--especially when there are multiple point of service or
distributor visits.
The inconsistency and incompleteness with which some records are
maintained are also important causes for delay in an investigative
visit. Records from approximately 50 percent of access requests require
additional information from the recordkeeper. Examples of information
that may be incomplete include supplier contact information, a
description of a product received or shipped, or date of receipt or
shipment. This information is used by analysts located at headquarters,
along with inventory rotation and control information, to determine
precisely what was shipped, by whom, and when it was received. Often,
many similar products from different suppliers are received during the
course of the day by any given receiver.
Frequently, records document transactions from regular suppliers or
customers where the identity of the shipper and description of the
product can be determined readily based on the regularity and
composition of the shipments. Sometimes, an entity will receive an
unusual shipment (especially during holiday seasons), or it may receive
multiple shipments of similar products from different suppliers, making
it difficult to precisely link an incoming product with an outgoing
shipment. Other times, descriptions of products received differ from
how they are referenced on the shipping documents, making it difficult
for the analyst to link the incoming product with an outgoing shipment.
Each category of incidents may result in confusion on the part of
the analyst located at central headquarters and require an additional
visit by the field inspector to the recordkeeper for further
clarification. Because travel times account for a significant amount of
time in a traceback investigation, and an estimated 20 percent of all
point of service or distributor visits require an overnight stay, we
estimated that the final rule would result in substantially reduced
traceback durations.
Including travel time, 1 full day is usually required to obtain
records after a request. A second full day is required when the records
are not available on the first day. Furthermore, although records
analysis times are typically only 7 to 10 hours, approximately 50
percent of all investigative visits require a return trip to clarify
inconsistencies in the records, or to obtain additional information to
compensate for incomplete records. In addition to slow compliance with
records access requests, the unavailability of personnel and flight
schedules may necessitate an overnight stay and an extra day of travel
by an FDA investigator. Approximately 20 percent of all investigative
visits require an overnight stay.
The duration of each component of an investigative visit, both
inclusive and exclusive of travel times, is reported in the following
table. We assume a uniform distribution of between 1 and 3 days
including travel times for obtaining requested records. We assume that
the times for records analysis are uniformly distributed between 0.8
and 1.6 days, including travel times. The lower bound reflects the time
for records analysis when documents are able to be quickly transferred
to headquarters. The upper bound reflects 1 full day of travel with 50
percent requiring an additional follow-up and 20 percent requiring an
overnight stay.
Table 10.--Duration of the Components of an Investigative Visit
------------------------------------------------------------------------
Including Travel Time
and Overnight Stays
------------------------------------------------------------------------
Obtaining requested 4 to 48 hours Uniformly distributed
records between 1 and 3 days
------------------------------------------------------------------------
Records analysis 7 to 10 hours Uniformly distributed
between 0.8 to 1.6
days
------------------------------------------------------------------------
We estimate the time for a traceback investigation by multiplying
the duration of an average investigative visit by the number of
investigative visits per traceback investigation. We estimate the
duration of an investigative visit by adding the time to comply with a
records access request to the time required to analyze those records.
If obtaining requested records takes 1 to 3 days (i.e., 1 to 2 days to
comply with the access request and 1 day of travel) and records
analysis, inclusive of travel, takes between 0.8 and 1.6 days (i.e., 50
percent require return trips and 20 percent of trips require an
overnight stay), the duration of an investigative visit is assumed to
be uniformly distributed between 1.8 and 4.6 days (i.e., 1 to 3 days
plus 0.8 to 1.6 days), with a simple average of 3.2 days.
From annual data we assume that the number of investigative visits
per outbreak for the years 2000 to 2003 is normally distributed with a
mean of approximately 9 visits and standard deviation of approximately
3 visits per traceback investigation. Using just the mean numbers of
visits in a traceback investigation and visit durations, we estimate
that the traceback component of an outbreak investigation takes
approximately 29 days (the duration of an investigative visit
multiplied by the number of investigative visits per outbreak).
[[Page 71625]]
9. Adjustments to Account for Records Requests Made on the Weekends
If there are 4 sets of weekends during the 29 day traceback time
period in which records are inaccessible, then the estimated calendar
duration (including weekends) of a current traceback investigation
becomes much longer. To allow more accurate comparison of the time
savings between current traceback times with those projected under
alternative policy options requiring 4 and 8 hours, and up to 24 hours
records access, we adjust the estimate of current traceback times to
account for requests that would be made on weekends following issuance
of this final rule. Most current records requests are made during the
week, because establishments may not be open or key personnel may be
absent on weekends. However, this final rule requires records access
when requests are made on either weekdays or weekends. Consequently, we
assume that there is a 1 in 7 chance of requesting records on a
Saturday, and a 1 in 7 chance of requesting records on a Sunday if FDA
were conducting a traceback investigation of a food for which it had a
reasonable belief the food was adulterated and presented a serious
threat of serious adverse health consequences or death to humans or
animals.
A 24-hour records access requirement would improve current
traceback times by allowing weekend records access requests. We assume
that a records access request that would be made on a Saturday or
Sunday following issuance of this final rule, would currently not be
made until the following Monday. Taking this assumption into account,
we estimate that the current time to satisfy a records request made on
a Saturday to be 3 to 5 days (i.e., 2 days, plus 1 to 3 days), or an
average of 4 days for 1/7 of all access requests (i.e., records
requested on a Saturday), and 2 to 4 days (i.e., 1 day, plus 1 to 3
days), or an average of 3 days for 1/7 of all access requests (i.e.,
records requested on a Sunday).
With the average of 1.2 days for records analysis times, the
adjusted estimate of the total time for satisfying a records access
request and records analysis is an average of 5.2 days (1.2 days, plus
an average of 4 days) for requests made on a Saturday, and 4.2 days
(1.2 days, plus an average of 3 days) for requests made on a Sunday.
The adjusted estimate of current traceback times is computed as an
expectation of traceback times taking into account the probabilities of
records requests made on weekdays and weekends. Assuming nine
investigative visits per traceback investigation, the adjusted estimate
of the current traceback time is approximately 33 days (((3.3 days x 5/
7) + (4.2 days x 1/7) + (5.2 days x 1/7)) x 9 visits). The adjusted
estimate of the current traceback duration is reasonably consistent
with the current traceback durations reported by traceback personnel of
between 6 and 8 weeks for eggs and fresh produce, and 3 days for
packaged products that contain lot code information on the labeling.
10. Estimate of the Time Required Before Preventive Action
We estimated the time required before taking preventive action
using FDA outbreak investigation information. We estimated the time
required for a preventive action as the time that elapsed between the
onset of the first reported illness and the first action taken by FDA
or a commercial or state entity. In 11 of 26 traceback investigations
considered from 2000 to 2003, an average of 78 days had elapsed between
the time of the onset of the first illness in the outbreak and any
initial preventive measure.
The estimate of the time required for a preventive action may be
overstated because for those investigations that had entries reporting
an initial action, but did not report a specific date of the action, we
used the information entry date to approximate the date of the initial
action. The information entry date is the date on which the initial
action is recorded by FDA. Consequently, this procedure likely
overestimates the time to preventive action because the information
entry date is later than the date of the initial action it
approximates, and in some cases may be significantly later than that
date.
Moreover, many investigations do not involve any preventive action
that would limit the magnitude of the outbreak, because either the
investigation lasts longer than the shelf life of the implicated food
product (so that there is no longer any implicated food in
circulation), or the implicated source of the outbreak is determined to
be an isolated event with no possible preventive action that would
limit the size of the outbreak. Because information from such
observations is not used in the analysis, the resulting estimate of the
investigation duration is likely to be shorter than what would
otherwise be obtained.
Based on the outbreak data used to create figure 2 of this document
entitled ``Cumulative Distribution of the Fraction of Total Reported
Illnesses by Outbreak Duration,'' we estimate that between 15 and 18
percent of all illnesses were from outbreaks that lasted more than 78
days. This implies that, with an average of 2,081 reported illnesses
per year, the faster tracebacks could potentially prevent up to a
maximum of 312 to 374 (reported) illnesses per year. The average
duration of outbreaks that last longer than 78 days is approximately
121 days, for an average net excess of 43 days (121 days minus 78
days). By dividing the maximum number of known illnesses per year, by
the average duration of outbreaks that persist beyond 78 days, we
estimate a maximum daily average of 8 to 9 illnesses that occur each
day after the 78 day threshold.
We characterize the uncertainty in the estimate of the time for
preventive action as a Beta-Pert distribution with the most likely
value of 78 and the minimum and maximum values (taken from the data) of
6 days and 150 days. The Beta-Pert distribution is a Beta distribution
that has been re-scaled to run between values other than 0 and 1. The
Beta-Pert uses a minimum, maximum, and most likely value to generate a
distribution running from the minimum to the maximum, with a mean equal
to (minimum + (4 times the most likely) + maximum) divided by 6. We use
the Beta-Pert distribution since it is less sensitive to extreme values
and generates more outcomes close to the mean than a Triangular
distribution. We assume that the average duration of outbreaks that
persist beyond the time for preventive action is distributed normally
with a mean of 121 minus the time for preventive action, and a standard
deviation (computed from the data) of 17. We assume a uniform
distribution with a range between 0.15 and 0.18 in the estimate in the
portion of annual illnesses that potentially could be averted by faster
preventive action.
11. Estimating the Impact on Traceback Performance for Options With
Different Coverage
Our framework for estimating the impact on baseline traceback
speeds and completion rates for policy options with alternative levels
of coverage uses the number of facilities in each sector to weight the
sectoral contribution to baseline traceback performance. We adjusted
the weights of the transportation, warehouse, and mixed-type facilities
sectors to account for special considerations related to their
contributions to traceback speeds and completion rates. For options
that distinguish between very small and large facility coverage, we
also adjusted
[[Page 71626]]
the contributions to traceback performance by facility size.
We estimated that options with the most comprehensive coverage will
lead to the greatest decrease in times for preventive action, and
eliminate the largest number of investigations that are prematurely
terminated for reasons of poor records quality or nonexistent records.
Options with more limited coverage will have a more limited impact on
traceback speeds and completion rates. The factors used to scale
baseline traceback speeds and rates of premature terminations are
described by the following expression:
Total baseline performance = contribution by grocery outlets, given
that contamination occurred further up the supply chain + contribution
by wholesalers and importers, given that contamination occurred further
up the supply chain + contribution by warehouses, given that
contamination occurred further up the supply chain + contribution by
manufacturers, given that contamination occurred further up the supply
chain + contribution by transporters, given that contamination occurred
further up the supply chain + contribution by mixed-type facilities.
The contribution to baseline traceback speeds by each sector is
adjusted to reflect the probability that the food was contaminated
further up the supply chain. Based on conversations with traceback
personnel, we estimated that 10 percent of outbreaks requiring
traceback records are from contamination at manufacturing facilities,
and 90 percent are from contamination at the farm facilities (which may
include mixed-type facilities subject to the recordkeeping requirements
of this final rule).
a. Adjustments to traceback performance for the grocery sector. The
baseline contribution from the retail sector to traceback performance
is composed of contributions from both the restaurant and grocery
sectors. The contribution to traceback performance from grocery outlets
represents only a fraction of the total contribution of the retail
sector. We adjust the probability of requiring traceback records from
grocery outlets downward to account for the possibility that initial
traceback from retail could begin at a restaurant as well as at a
grocery outlet. For the adjustment we use the estimated number of
restaurant locations of approximately 900,000 reported in a recent
survey conducted for the National Restaurant Association (Ref. 16).
b. Adjustments to traceback performance for transportation and
warehouse facilities. We adjusted estimates of the contributions to
traceback performance by warehouse and transportation facilities to
reflect the ``checks and balances'' nature of traceback records from
these facilities for many investigations. Manufacturers and third party
warehouses are both important links in the supply chain and are
required to keep records under the provisions of this regulation. This
requirement allows FDA to determine whether what was sent at each stage
is what was received, and if not, to be able to locate the unaccounted-
for food. It is critical that FDA be able to locate and remove from
commerce any adulterated food that presents a credible threat of
serious adverse health consequences or death to humans or animals.
We assume that there is a uniform likelihood between zero and one
that there are more than two transportation or warehouse facilities
used in the provision of a transportation or storage service. For these
cases there is no adjustment to the value of records from such
facilities during a traceback investigation. When two or fewer
facilities provide transportation and warehouse services (estimated to
be approximately half of the total number of such services) we adjust
downward the value of records to acknowledge their role of verifying,
rather than identifying, the buyer or seller of the food. For these
cases we adjust the value of records to traceback performance by a
factor of 0.5.
c. Adjustments to traceback performance for large and very small
facilities. We adjusted the contributions by large and very small
facilities to traceback performance to reflect the substantially
different quantities of food each facility size is responsible for.
While the number of very small facilities accounts for a large fraction
of the total number of facilities, the quantity of food for which these
facilities are responsible is relatively small. Consequently, estimates
of the contributions to traceback performance should reflect the lower
likelihoods of investigative visits at very small businesses.
For options that differentiate between coverage by facility size,
we used estimates of the quantities of food passing through very small
establishments and the quantities of food passing through all other
sized establishments to scale each sector's contribution to traceback
performance. In this way we were able to estimate the contribution by
very small size establishments and other size establishments to
traceback performance for each sector. We used U.S. Census data (Ref.
17) to estimate the percentage of the total number of food
establishments that are very small, as well as their revenues, by
sector and report them in the chart below. The fraction of the total
number of facilities that are very small ranges from an estimated 73
percent of convenience outlets to 90 percent of transporters. In
contrast, the percentage of total convenience store revenues from very
small facilities is an estimated 18 percent, while very small
transporters are responsible for an estimated 16 percent of total
revenues from that sector.
Table 11.--The percentage of very small food establishments that make up
each sector and the percentage of the total sector's food for which they
are responsible
------------------------------------------------------------------------
% of Food Sector
Sector % of Establishments Revenue From Very
That Are Very Small Small Establishments
------------------------------------------------------------------------
Manufacturers 77 15
------------------------------------------------------------------------
Wholesalers 81 14
------------------------------------------------------------------------
Transporters 90 16
------------------------------------------------------------------------
Grocery outlets 88 18
------------------------------------------------------------------------
Convenience outlets 73 18
------------------------------------------------------------------------
[[Page 71627]]
Importers 82 14
------------------------------------------------------------------------
Mixed-type facilities 82 15
------------------------------------------------------------------------
Source: U.S. Census, 1997 Economic Census.
In addition to a lower probability of an investigative visit at
very small compared with other size facilities, records quality or
records access times might also be different for very small and other
size facilities. However, conversations with FDA investigative
personnel revealed that there are no differences in records quality or
records access times across business sizes. Consequently, we estimate
the duration of an investigative visit to be the same for very small
and other size businesses.
12. Estimating the Benefits When Selected Sectors Are Excluded
In this section we describe the estimated reduction in benefits
that would be incurred from excluding certain sectors. We will provide
additional quantitative information on this later in the analysis. We
selected specific sectors for analysis in this section based on
comments received on the proposal. The reduction in benefits from
excluding foreign persons, transport persons, and food contact
substance persons (including the finished container that contacts the
food) from establishing and maintaining records are estimated as
affecting traceback performance and the number of outbreak victims. The
final rule excludes food contact substance and foreign facilities from
recordkeeping maintenance requirements. As stated earlier, these
estimates all account for food safety benefits based on traceback
investigations currently performed and do not consider food security
benefits, which are based on classified information.
a. Excluding foreign facilities. One policy option excludes
approximately 225,000 foreign persons from all recordkeeping
requirements. Although it is impossible to estimate the likelihood of
intentional contamination at foreign facilities compared with domestic
facilities, in this analysis we assume that there is no difference
between the probabilities of foodborne outbreaks originating at foreign
and domestic facilities. Consequently, the estimated reduction in
benefits from excluding foreign persons is based solely on the number
of facilities that are excluded, and the likely importance of their
records for traceback performance. Because foreign facilities are close
to the beginning of the supply chain for U.S. domestic consumption, the
importance of their records during a traceback investigation is
moderate while the costs to obtain those records during a traceback
investigation are high.
b. Excluding persons that manufacture, process, pack, hold,
transport, distribute, receive, or import food contact substances.
Another policy option excludes food contact substance suppliers,
estimated to be 37,000 manufacturers and distributors of the finished
container that contacts the food, from the requirement to establish and
maintain records. Because of the small number of manufacturers and
distributors of the finished container that contacts the food compared
with the total number of foreign suppliers, their exclusion from
recordkeeping requirements would have a relatively small impact on
traceback performance (if we ignore the possibility that excluding
packaging suppliers increases their profile as potential targets for
terrorist activities). Moreover, because manufacturers and distributors
of the finished container that contacts the food occupy up-stream
positions along the supply chain relative to foreign entities, we
estimate the reduction in benefits from excluding them to be less than
that from excluding foreign entities. Finally, if the requirements of
section 306(a) of the Bioterrorism Act were satisfied, FDA would have
access to existing records at these facilities.
c. Excluding transporters. One policy option would exclude all
transporters from the requirement to establish and maintain records.
FDA determined, however, that the qualitative and quantitative impact
on benefits in the classified and unclassified scenarios would greatly
eliminate the effectiveness of the rule and FDA's ability to timely and
efficiently respond to a threat of serious adverse health consequences
or death to humans or animals. As a practical matter, because the final
rule's requirements for interstate shipments can be satisfied by
compliance with existing requirements for interstate shipments, the
final rule only establishes new requirements for the following: (1)
Intrastate transporters; and (2) intrastate shipments conveyed by
interstate transporters. FDA estimates that there are approximately
115,000 intrastate carriers, and based on DOT data, almost one million
commercial drivers report intrastate travel. In reviewing the truck
tonnage by commodity, approximately 12 percent of the intrastate
shipments are of FDA-regulated food products. The average distance
these products are shipped is 231 miles, which means many shipments are
intrastate, especially in the larger western states.
For some foods, distribution may be limited primarily to intrastate
transportation, depending on the time of year and state. Many
businesses have their own delivery trucks that are used intrastate,
several use employee vehicles for deliveries, and many rent vehicles to
deliver products. These vehicles are used to deliver all types of food
products--refrigerated, cooked, as well as fresh food and produce, and
grocery items. Some local firms pick up their own merchandise from
``warehouse'' facilities to stock their own locations. Many of these
``warehouses'' (commonly referred to as ``Bin warehouses'') may receive
product via interstate transporter and subsequently deliver to a
variety of intrastate retail customers via many different intrastate
means. Data on the volume of foods that move in intrastate commerce are
maintained by individual state Department of Agriculture and by DOT.
For example, from CA, LA, and TX alone, DOT reports over 12 percent of
intrastate truck tonnage is from FDA-regulated products (ref. 18). Past
traceback investigations provide examples of the need to regulate
intrastate transport. For example, in 2003, there were two produce-
associated outbreaks that occurred in CA from intrastate shipments.
There were also two Salmonella enteritidis outbreaks in WI associated
with
[[Page 71628]]
intrastate shipments of eggs. Other foods, such as pasteurized milk,
nearly all raw products, seafood, and sprouts, may be shipped either
intrastate or interstate depending on the production or processing
site.
Most of the seafood consumed in Florida is transported only
intrastate, but in Oklahoma most seafood is transported interstate. In
2002, there was an outbreak in New Jersey and Florida linked to fish.
Intrastate records assisted us in pinpointing the portion of the Indian
River, Florida that was causing the problem. Information on egg
tracebacks from 1996-2003 indicates that 35 percent of the tracebacks
that resulted in farm investigations were intrastate. This past summer,
the State of Oregon was able to stop a sprout-associated outbreak from
becoming a serious one by tracing back to a Washington sprouter that
was just over the border from Oregon after some initial cases before
the Salmonella serotype had been identified. The sprouts were recalled.
If the sprouter had been located in Oregon so that the sprouts were not
transported interstate, it would have been problematic to a traceback
investigation limited solely to interstate transporters.
The North Carolina green onion traceback investigation, which was
part of the largest Hepatitis A outbreak that has ever occurred in the
U.S., is another example of the importance of intrastate records.
There, the amount of time spent on the traceback within that State was
twice as long as the other three tracebacks done in other states
because the distributor in North Carolina did not have records.
Traceback from the Tennessee outbreak took over a month, the Georgia
traceback took a month, and Pennsylvania traceback took a week. Because
we had no intrastate records in the North Carolina outbreak, the
traceback was determined to be inconclusive after two months, which
meant that we would not have been able to identify the farms involved
if it had not been for the other outbreaks.
This year, there was an E. coli O157:H7 outbreak associated with
bagged lettuce product in CA that was only in intrastate commerce. That
traceback might have been lost had records not have been available.
Exempting transporters could significantly impede FDA's ability to
rapidly and effectively respond to a public health emergency involving
a food transported within a state, particularly if the adulteration
occurred during transport and the food was delivered to multiple
sources within the State. In scenarios where time is of the essence to
prevent serious injuries or death, having records available becomes
even more critical. In addition, not only must FDA be able to rapidly
obtain records, it is imperative that FDA be assured that those records
contain certain essential information to allow FDA to prevent further
harm in an efficient and effective manner.
Additional examples of circumstances involving food products that
have significant intrastate manufacturing, processing or distribution
are provided in the following paragraphs:
An intrastate sandwich and snack food company that sells
to retail outlets for consumption had an outbreak of Listeriosis or
Salmonellosis that was traced back to the sandwiches. The product was
completely distributed using the company trucks within the state. FDA
was unable to determine which sandwiches caused the outbreak. The
sandwiches were delivered to retail customers, and it was impossible to
track which sandwiches went to which retailer. The transporter did not
track which product was delivered to which location. In this case, the
firm had to recall all of its products.
Retail stores regularly purchase food, especially locally
grown produce, from ``truck farmers.'' These farm trucks travel from
store to store within a state, sometimes selling an entire truckload to
a store, other times a portion. There is no manifest or record other
than a bill of sale--e.g., 200 cantaloupes from Farmer Brown. If the
contamination occurred on the truck, FDA would not have a record from
the truck of all other delivery sites.
Several days into the investigation of a Hepatitis A
outbreak from chicken salad in one city, FDA learned that the chicken
was ``cubed'' at another facility in another city within the state, and
transported to the ``manufacturing facility.'' The source of the
outbreak was the site where the chicken was ``cubed'' by an ill
employee; however, there were no records to indicate when the cubed
product was shipped or received by the salad manufacturing facility.
Having transporter documents would be critical if there was an
intentional or unintentional contamination of the product while en
route. Because of our limited experience, we cannot anticipate how much
additional time it would add to our investigation, should records not
be available.
The probability that a traceback investigation will require records
that document the movements and packaging of food items between
transportation facilities is uncertain. At least one outbreak involving
the contamination of dairy products while inside a truck that had
previously carried non-pasteurized eggs is estimated to have infected
about 224,000 persons (Ref. 19). This example illustrates only one
potential way that food may be contaminated while in the possession of
transporters, and suggests that these risks of contamination can be
considerable.
13. Options With Different Access and Retention Requirements and With
Different Compliance Dates
a. 24 hour and 4- and 8-hour records access requirements. For
options with comprehensive coverage (and using simple average numbers),
when compared with current traceback times, we would save an estimated
10 days for the proposed option requiring 4 and 8 hour records access,
and 5 days for the option requiring 24 hour records access. When travel
times are included, the provisions of the recordkeeping rule will
significantly reduce the records access as well as the records analysis
times. When travel times are included, the 4 and 8 hour records access
times in the proposed rule would reduce the range of records access
times to 1 to 2 days. The final rule requires records access within 24
hours of a request, which would reduce records access times by a
smaller amount than with the proposed 4 and 8 hour requirement. Because
current records access times are between 1 and 3 days including travel
times, we assume that relaxing the requirement to 24 hours would only
speed up compliance for records requested on the weekends. The proposed
records access times of 4 and 8 hours would result in estimated records
access times of between 1 and 2 days, and a records analysis time of 1
day (because the improved records quality would preclude the need for
return investigative visits).
We assume that a 10-day reduction in the duration of the traceback
component of an outbreak investigation would reduce the time required
to take an initial preventive action by 10 days as well. A savings of
10 days would reduce the average amount of time required to take a
preventive action to 68 days (based on the estimated current time of 78
days), and a savings of 5 days would reduce the time required to take a
preventive action to 73 days. From data used to generate the cumulative
distribution displayed earlier in this document in figure 2 entitled
``Cumulative Distribution of the Fraction of Total Illnesses by
Outbreak Duration (2000-2003),'' we find that between 15 and 18 percent
of all outbreak victims became ill from outbreaks that lasted more than
65 days. Consequently, the benefits from
[[Page 71629]]
reducing traceback times by either 10 days for the 4-and 8-hour records
access requirement, or 5 days for the 24-hour records access
requirement can be considerable. We assume that with comprehensive
coverage, the number of traceback investigations that are prematurely
terminated because of poor records quality will fall to zero under
either the 24-hour records access requirement, or under the proposed 4-
and 8-hour records access requirement.
The reduced durations of traceback investigations computed in the
previous paragraphs are based on the assumed comprehensive coverage of
the proposed recordkeeping rule. Excluding certain persons from all or
part of the requirements of the regulation results in a reduction in
the benefits as measured by reduced times for traceback investigations.
The extent of the reduction in benefits from reduced traceback
durations depends on the number of persons (and facilities for which
the persons are responsible) that may be excluded from the regulation
and the position along the supply chain of the excluded facilities. The
position along the supply chain influences the probability of
contamination, as well as the probability of losing the paper trail. We
assess the relative benefits of excluding certain sectors as policy
options later in this document.
Finally, if there is a deliberate attack on the food supply, with
catastrophic consequences, then the duration of the preliminary and
decision making parts of the outbreak investigation will likely be
substantially compressed, and the importance of the traceback
investigation in preventing additional illnesses from an outbreak will
be elevated. If firms fully understand the seriousness of an outbreak,
their reaction times may be compressed as well, which would tend to
reduce the computed benefits from this rule. However, we expect FDA to
be more likely than all firms to fully understand the seriousness of an
outbreak.
As an example computing how compressed preliminary investigation
and decision making times affect the benefits from faster tracebacks,
we estimate the duration of the preliminary and decision making parts
of the outbreak investigation to currently be approximately 55 days
(i.e., the difference between 78 days for an initial preventive action
and 33 days for the traceback investigation). If we assume a 50 percent
reduction in the times for the preliminary and decision making
components of an outbreak investigation, then a 10-day reduction in
traceback times would result in preventive measures taken after
approximately 56 days (28 days, rounding up, for the preliminary and
decision making investigations plus 28 days for a traceback
investigation) compared with the current 78 day duration. For a 75
percent reduction in the duration of the initial parts of an outbreak
investigation, a 10-day reduction in traceback times would result in
preventive measures being taken after approximately 42 days (14 days
for preliminary and decision making investigations plus 28 days for a
traceback investigation) compared with the current 78 days.
b. Records retention requirements of 6 months, 12 months, and 24
months based on three NIST definitions. Many comments suggested that
product shelf lives as defined by the NIST should determine which
product records would be subject to retention requirements of 6 months,
12 months, and 24 months. We estimate a negligible reduction in costs
(which we estimate to be zero) and benefits associated with reducing
retention times in the final rule.
The provision specifying the shorter retention requirements of 6
months, 12 months, and 24 months may result in the destruction of
records earlier than would be the case for the longer retention
requirements. While we estimate the reduction in benefits from the
reduced retention times to be negligible, we explain the logic behind
the perverse incentive for the early destruction of records, and its
potential impact on traceback performance. The benefits from the
records access requirements cannot be realized without the records
retention requirements. If records no longer exist, there is nothing
for FDA to access.
Given the records access requirement, the records retention
requirement in both the proposed and final rules may create a perverse
incentive for entities to destroy records, even though we estimate that
this incentive will lead to the actual destruction of very few records,
and very small reductions in investigative speed. Private firms are
quite reluctant to share their private records with outsiders such as
federal regulatory agencies. Facilities may choose to destroy records
once legal retention requirements have been met rather than risk the
possibility of sharing them with FDA. Consequently, there is a nonzero
probability that facilities will destroy records subject to the
retention requirements shortly after the legal retention requirement
has been met, and that those records would not exist in the event of an
FDA records access request.
The incentive to destroy records due to the access requirement will
likely result in the destruction of a very small fraction of records
because of the private utility from retaining records, and also the
costs of destroying them. Because of the perverse nature of this
incentive, it is informative to estimate its impact on the benefits
from final rule--especially since the costs of the 1 and 2 years
records retention provisions were estimated to be zero because the
retention time periods are the same as or shorter than current business
practices.
We used outbreak investigation data to estimate the reduction in
benefits when retention requirements are redefined to be 6, 12, and 24
months based on NIST definitions of shelf lives. Investigations that
remained open 6 months after initial exposure were considered possible
candidates for continued investigative visits. From FDA investigation
information, we estimated that about 20 percent of all FDA
investigations from 2000 to 2003 remained open 6 months after initial
exposure to the pathogen. However, it is likely that most of these
investigations did not require access to a firm's records after 6
months.
We assume that a maximum of 20 percent of all traceback
investigations are candidates for a records access request 6 months
after initial exposure to the pathogen. We assume that half of the
investigative visits in one of these candidate investigations requires
access to records after 6 months, and that 1/3 of these access requests
are for records subject to the 6 month retention period (i.e., a 1/3
probability for 6 months, a 1/3 probability for 12 months and a 1/3
probability for 24 months). Consequently, 3.3 percent of records
requests for records subject to the 6 month retention time are
estimated to be made after 6 months (20 percent x 1/2 x 1/3).
We assume that the potential records destroyed (after retention
requirements have been met) as a result of the access requirement would
be from the set of establishments with the poorest food safety
practices. To determine the percent of firms with the poorest food
safety practices, we obtained information from FDA personnel indicating
that inspections of approximately 3 to 4 percent of all FDA-regulated
food and cosmetic facilities from 2001 to 2003 were classified as
official action indicated (Ref. 20). Based on this information, we
assume that the incentive for records destruction will result in
approximately 3 to 4 percent of firms destroying their records after 24
months, with destruction taking place shortly after retention
commitments have been met.
[[Page 71630]]
We assume that the private utility of records decreases over time,
and that the rate at which records subject to 6 months retention are
destroyed shortly after meeting the retention requirement is half that
for records subject to 12 months retention, which is half that for
records subject to 24 months retention. Consequently, an estimated 0.5
percent of records subject to the 6 month retention time are assumed to
be destroyed shortly after the 6 months have been met (i.e., the
solution for ``X'' when solving the algebraic problem, 3.5 percent = X
+ 2X + 4X, where 3.5 percent is the midpoint between 3 and 4 percent
and the rate at which all records are destroyed, X is the rate that
records subject to the 6 month retention requirements are destroyed, 2X
is the rate that records subject to 12 month retention requirements are
destroyed, and 4X is the rate that records subject to the 24 month
retention requirements are destroyed.). The destruction of records is
estimated to affect about 0.02 percent of access requests (i.e., 0.5
percent records destruction rate x 3.3 percent of records requests made
after 6 months). Finally, we assume that records destruction will slow
down and terminate traceback investigations at the same rates at which
the destruction takes place. Consequently, we estimate that both
traceback speeds and rates of successful traceback completions will
decline by 0.02 percent because of access requests when the requested
records had been destroyed because of retention requirements.
c. Extending the compliance dates. Another policy option considers
extending each of the proposed compliance dates by 6 months: Large,
small, and very small firms would be required to be in compliance with
the regulation 12, 18, and 24 months, respectively, after publication
of the final rule instead of the proposed 6, 12, and 18 months after
publication. The longer compliance dates reduce the time savings for a
preventive action for 50 percent of the annual number of traceback
investigations, and lead to a 50 percent increase in the annual number
of outbreak investigations prematurely terminated for records quality
reasons. Unlike the reduction in the benefits from the other policy
options considered, these are one-time decreases in the benefits,
because the option only extends the initial baseline compliance times
by 6 months.
d. Exemption of all very small entities. FDA also considered
whether it should exempt all entities with ten or fewer employees, not
just those in the retail sector as is provided in the final rule;
however, this would create a ``Swiss Cheese'' approach to trace back,
as there would be a potential failure of entities to keep records
throughout the distribution chain. The number of very small entities
account for a large fraction of the total number of food
establishments.
Moreover, many of our failures in a typical trace back
investigation (i.e., unclassified scenarios) have been at the
wholesaler (distributor) level. As discussed above, we would have
significant concerns if 90 percent of the transporters (as very small
entities) would be excluded from the requirements to establish and
maintain records, particularly if these are predominantly intrastate
transporters that are not currently subject to DOT's requirements. (FDA
notes that intrastate shipments carried by interstate transporters also
are not subject to DOT's requirements.)
In light of the above, FDA does not believe we would have an
effective recordkeeping system if we were to exempt all very small
entities from the rule. Unlike the very small retailers who are at the
end of the distribution chain only, a full exemption by size would
create holes throughout the distribution chain and would not provide
FDA adequate assurances that, in the event of a threat of serious
adverse health consequences or death to humans or animals, FDA would be
able to conduct an efficient and effective traceback investigation.
F. Costs
1. Estimates of the Number of Facilities Affected By the Final Rule
In the PRIA, FDA estimated the number of transporters and packers
from data in the 2000 County Business Pattern statistics (Ref. 21) and
the 1999 Nonemployer statistics (NES) (Ref. 22). We assumed that local
and long distance specialized freight carriers devoted exclusively to
transporting food were about 20 percent of the total of the specialized
freight category. In the PRIA, FDA requested comments on the assumption
that 20 percent was appropriate for this estimate.
(Comment 182) Several comments suggest that the number of trucking
entities covered by the rule was substantially underestimated. One
comment suggests that while 20 percent of the specialized carriers
transport food products at any specific time, most specialized carriers
transport food at one time or another. Another comment suggests that
FDA's estimate of the number of covered trucking entities was low; the
comment cites information obtained from the U.S. DOT that indicated
close to 600,000 operating authorities on file, which includes Mexican,
Canadian, and domestic carriers. Moreover, the comment suggests that if
half of the general carrier population (600,000 carriers) transports
food on an occasional basis, then over 300,000 companies would be
affected. These numbers suggest an estimate of covered trucking
facilities much larger than FDA's estimate. To support the assertion of
an underestimate, the comment suggests that FDA-regulated Mexican
carriers alone likely account for 12,000 facilities. Another comment
states that individual transporters, not only transportation firms,
will hold food while it is in transit and that transportation vehicles
do not appear to be exempt from the recordkeeping requirements.
(Response) FDA agrees with the concerns underlying many of these
comments and revises its estimates of the number of transportation
entities in a way that is consistent with the data and framework used
in the PRIA. Although FDA does not dispute the comment that most
specialized carriers transport food items at one time or another, the
ease with which transporters enter and leave the food industry is
considered in the PRIA. That analysis already accounts for the
additional learning, records access, and planning costs incurred by new
entrants. In the PRIA, FDA estimated that there would be approximately
a 10 percent rate of entry and exit of new and existing firms for all
sectors. FDA calculated the startup costs for these new entrants and
added them to the compliance costs incurred by existing facilities.
The County Business Pattern and NES used by FDA in the analysis
include all potentially covered transporters (except foreign-based
carriers that transport food in the United States), including
individual carriers. However, in the PRIA, FDA neglected to include the
number of establishments under North American Industry Classification
System (NAICS) code 4841 for general freight trucking as well as for
NAICS code 488510 for freight transportation arrangement. In the
analysis of the final rule, we include entities that fall under both of
these categories.
The combined data from the County Business Pattern and NES contain
384,358 establishments under code 4841 for general freight trucking. In
addition, the County Business Pattern data contain 15,177
establishments for code number 488510 for freight transportation
arrangement. To estimate the number of facilities under code 488510 in
the NES data, we calculated
[[Page 71631]]
the ratio of the number for code 488510 to the total number for code
488 in the County Business Pattern data, and then applied that ratio to
the number of establishments under code 488 in the NES data. We assumed
a uniform distribution of food and nonfood carriers under the general
freight trucking category and estimated the number of establishments
that transport food products under code 4841 to be half of the total
for that category. We assumed the number of establishments under code
488510 that arrange freight transportation for food products to be 20
percent of the total for that category. We assumed that the same
percentage applies to the total assumed for specialized freight
carriers dedicated to the food industry. As a result of these changes,
the total number of domestic transportation and packing facilities is
revised upward from 16,773 facilities used in the PRIA to 234,980. The
numbers of establishments by code are reported in table 12 of this
document.
Table 12.--Number of Transportation Establishments by NAICS Code
------------------------------------------------------------------------
NAICS Code Description CBP 2000 NES 99
------------------------------------------------------------------------
481112 Scheduled freight 584 2,413
air
transportation
------------------------------------------------------------------------
481212 Nonscheduled 217 ................
chartered
freight air
transportation
------------------------------------------------------------------------
483111 Deep sea freight 485 4,754
transportation
------------------------------------------------------------------------
483113 Coastal and Great 546 ................
Lakes freight
transportation
------------------------------------------------------------------------
483211 Inland water 402 ................
freight
transportation
------------------------------------------------------------------------
4841 General freight 27,937 164,242
trucking
------------------------------------------------------------------------
48422 Specialized 6,499 4,946
freight
(exclusively
used) trucking,
local
------------------------------------------------------------------------
48423 Specialized 2,580 8,189
freight
(exclusively
used) trucking,
long distance
------------------------------------------------------------------------
488320 Marine cargo 607 2,415
handling
------------------------------------------------------------------------
488510 Freight 3,035 3,814
transportation
arrangement
------------------------------------------------------------------------
488991 Packing and 1,315 ................
crating
------------------------------------------------------------------------
Foreign transportation carriers that cross the northern and
southern U.S. borders are not counted in the County Business Pattern
and NES data, because they are foreign based. All of these carriers are
subject to DOT regulations, and the costs of compliance for these
facilities are assumed to be zero because the final rule allows a
transporter to meet its obligations by keeping the records currently
required by DOT. However, foreign transportation carriers that cross
the northern and southern U.S. borders are assumed to incur learning
costs associated with this final rule.
FDA estimates the number of Mexican carriers that are subject to
DOT regulations from a study conducted for DOT by Economic Data
Resources under the auspices of the International Association of Chiefs
of Police (Ref. 23). Using 1999 U.S. Customs and Border Protection data
on the use of annual decals and per-trip payments by commercial
vehicles at Southwest border crossings, that study estimated the total
number of vehicles that cross the Southwest border to be approximately
76,177. Furthermore, using 1998 data on Mexican interstate commercial
vehicle registrations, the DOT study estimated the number of commercial
carriers of Mexican origin that use the Southwest border crossings to
be approximately 63,000, or approximately 83 percent of the total. If
one half of the total number of these trucks carry food items, then
approximately 31,500 carriers of Mexican origin are subject to this
final rule and would not be counted in the CBP or NES data.
In order to estimate the number of commercial carriers of Canadian
origin that would be covered by this final rule, from the DOT study we
obtain an estimate of approximately 79,643 carriers that purchase
annual decals at the Northern border. We assume the same ratio of the
total number of trucks that purchase annual decals for Southwest border
crossings as that for northern border crossings (42 percent) and
estimate the total number of trucks that cross the northern border to
be approximately 191,167. Furthermore, we assume the percentage of
these carriers that are of Canadian origin is the same as that used to
estimate Southwest border crossings by Mexican carriers (83 percent).
This assumption yields a total of 158,099 carriers of Canadian origin
that are subject to DOT regulations. If one half of the total number of
these trucks carry food items, then approximately 79,050 carriers of
Canadian origin are subject to this final rule and would not be counted
in the CBP or NES data. The number of transport facilities is revised
upward by 110,550 (i.e., 79,050 plus 31,500) to account for the number
of foreign based transporters that are subject to the final rule and
not counted in the NES or CBP data.
(Comment 183) One comment states that direct selling businesses are
clearly not accounted for because there are millions of such entities
involved on either a full or part-time basis, while the combined
estimate of domestic retailers and wholesalers used in the analysis is
only slightly more than 300,000. Furthermore, the comment states that
the burden on these retailers would be higher than for other retailers.
[[Page 71632]]
(Response) FDA does not agree that there are millions of direct
marketers of food in the United States. Nor does FDA agree that the
burden on direct marketing retailers would be greater than for other
retail establishments. However, FDA does agree that the data sources
used in the PRIA may not account for many small direct marketers that
may not have filed as a sole proprietorship business with the Internal
Revenue Service (IRS). While these direct marketers may have been
omitted in the PRIA, they are considered exempt in the final rule and
are not included in the cost estimates in this analysis. Nevertheless,
in order to respond to comments and to estimate the cost of policy
options that include very small retailers, FDA does revise its estimate
of the number of retail establishments to account for direct marketers
that may not have been included in the PRIA.
FDA found estimates of 10 million (Ref. 24) and 12 million (Ref.
25) direct marketers in the United States, but these estimates included
all the direct marketers of both nonfood and food products in the
United States. FDA does not have a complete census of the number of
marketers of food versus nonfood products. To approximate the
percentage of direct marketers selling food, FDA divided the number of
direct marketing companies selling food by the number selling all types
of products, using data from the directory of companies on the Web site
of a large direct selling trade organization (Ref. 25). Of the 141
companies in the directory, approximately 5 market food or beverages,
or approximately 3.5 percent of the total.
The number of direct marketing establishments should be captured by
the NES, which are generated chiefly from administrative records of the
IRS. These data are primarily composed of sole proprietorship
businesses filing IRS Form 1040, Schedule C (Ref. 22). Many of the
nonemployer businesses are very small, and many are not the primary
source of income for their owners. Furthermore, nonemployers account
for 75 percent of all businesses.
There is the possibility that direct marketers are included in the
estimate of the number of direct marketers cited earlier and excluded
in the NES if they are casual market participants, and have temporarily
left the industry, or if they do not file as a sole proprietorship
business with the IRS. Casual market participants might be included in
the estimate of the total number of direct market facilities even if
they are not active members. This would tend to inflate the total
number of direct marketers to include both active and inactive members.
Because of the ease of entry and exit by these firms, casual direct
marketers that have temporarily left the industry are assumed to be
approximately half of the number of direct marketers of food, or 1.75
percent of all direct marketers. This assumption leaves an estimated
1.75 percent (175,000) of direct marketers that are not counted in the
NES statistics because they did not file as a sole proprietorship
business with the IRS. We use this estimate of the number of direct
food marketers that did not file as a sole proprietorship business with
the IRS to revise our estimate of the total number of retail
facilities.
Direct marketers that did not file as a sole proprietorship
business with the IRS are assumed to be part-time suppliers and to sell
mostly at the retail level. Furthermore, because these are very small
businesses that only sell food products on a part-time basis, the
additional records maintenance costs for these facilities will be
considerably less than that for larger, full-time businesses. We
estimate the additional records maintenance costs for these part-time
facilities to be one half that for other retailers. The learning costs,
records redesign costs, and records access planning costs for these
facilities are assumed to be the same as for other facilities.
FDA does not agree that the burden of the rule would be higher for
direct marketers than for other retailers. In the PRIA, FDA estimated
that about 88 percent of retailers classified as very small firms have
fewer than 10 employees. FDA believes it is reasonable to assume that
compliance costs for direct marketers would be about the same as for
other very small firms.
(Comment 184) One comment suggests that FDA underestimated the
number of mixed-type facilities that engage in nut farming. The comment
states that, in the almond industry, there are about 360 hullers and
processors who are also growers, while FDA estimated that there were
only 290 mixed-type facilities that engage in all categories of nut
farming. Furthermore, because there are about 6,000 almond growers, the
comment states that this implies that 6 percent of all almond growers
would be classified as mixed-type facilities, compared to FDA's
estimate of 2 percent of all nut farms.
(Response) FDA acknowledges considerable uncertainty in the
estimates of the numbers of mixed-type facilities that engage in
farming and is receptive to comments from industry that can improve
them. There is likely to be more uncertainty in the estimates of the
number of mixed-type facilities that engage in any individual category
of nut farming than that for the estimate of the number of mixed-type
facilities that engage in nut farming over all categories of nuts. FDA
will use the estimate provided by the comment to revise its estimate of
mixed-type facilities that engage in nut farming from 2 percent to 6
percent. The total number of mixed type facilities that engage in
farming is revised upward to 31,077 from 30,497 used in the PRIA.
Table 13 of this document is a revised table of mixed-type
facilities that engage in farming.
Table 13.--Mixed-Type Facilities Engage in Farming
----------------------------------------------------------------------------------------------------------------
Percent Mixed-
Commodity Total No. of Farms Type No. of Mixed-Type Farms
----------------------------------------------------------------------------------------------------------------
Pig farms (feed mixing) 46,353 1.5% 695
----------------------------------------------------------------------------------------------------------------
Cattle (feed mixing) 785,672 1.0% 7,857
----------------------------------------------------------------------------------------------------------------
Poultry (feed mixing) 36,944 1.0% 369
----------------------------------------------------------------------------------------------------------------
Other animal production (feed 110,580 1.0% 1,106
mixing)
----------------------------------------------------------------------------------------------------------------
Dairy 86,022 1.1% 903
----------------------------------------------------------------------------------------------------------------
Grain, rice, and beans 462,877 1.0% 4,629
----------------------------------------------------------------------------------------------------------------
[[Page 71633]]
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 6.0% 870
----------------------------------------------------------------------------------------------------------------
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 50.0% 3,103
----------------------------------------------------------------------------------------------------------------
Honey 7,688 50.0% 3,844
----------------------------------------------------------------------------------------------------------------
Syrup 4,850 100.0% 4,850
----------------------------------------------------------------------------------------------------------------
Herbs 1,776 10.0% 178
----------------------------------------------------------------------------------------------------------------
Total 31,077
----------------------------------------------------------------------------------------------------------------
(Comment 185) One comment states that FDA mistakenly omitted the
number of food grade warehouses that are subject to the regulation
included in NAICS code 49311. Consequently, FDA's estimate that a total
of 76,952 wholesaler and public warehouse companies are affected by the
regulation is too low, and these additional warehouses should be
included in the cost calculation of the final rule.
(Response) FDA agrees that public warehouses included in NAICS code
number 49311 were omitted from the count of total warehouse facilities.
Table 14 of this document describes the primary activities performed by
the warehouses included in this classification.
Table 14.--Description of Primary Activities Performed by Warehouses by
NAICS Code
------------------------------------------------------------------------
Corresponding Index
NAICS SIC Entries
------------------------------------------------------------------------
493110 4225 Bonded warehousing,
general merchandise
------------------------------------------------------------------------
493110 4225 General warehousing and
storage
------------------------------------------------------------------------
493110 AUX Private warehousing and
storage, general
merchandise
------------------------------------------------------------------------
493110 4225 Public warehousing and
storage (except self
storage), general
merchandise
------------------------------------------------------------------------
493110 4226 Warehousing (including
foreign trade zones),
general merchandise
------------------------------------------------------------------------
493110 4225 Warehousing and storage,
general merchandise
------------------------------------------------------------------------
There are a total of 4,415 of such facilities listed in the County
Business Pattern data. In the NES statistics, there are 4,700 reported
for the aggregate NAICS code of 4931. To estimate the number of
warehousing facilities that would be included in NAICS code 49311 in
the NES statistics, we scaled the aggregate number in the NES
statistics by the ratio of the numbers reported for code 49311 to the
total of those reported under code 3931 in the County Business Pattern.
When the imputed NES numbers for code 49311 are added to the reported
County Business Pattern numbers for code 49311, the total number of
facilities in the NAICS code is 7,328 facilities. We adjust the total
number of warehouses by one half of the total number of facilities
reported for code 49311 by assuming that half of the total number of
facilities included in that code handle food items. The number of
warehouse facilities is revised upward to 6,089 from the 2,425 in the
PRIA. The facilities-to-firm adjustment factor used for the facilities
listed in NAICS code 49311 is the average of that used for the
[[Page 71634]]
other two warehouse codes in the analysis.
(Comment 186) One comment requests clarification as to whether all
members of the International Bottled Water Association were included in
the number of facilities covered by the regulation.
(Response) The NAICS code 3121 used in the PRIA includes all
beverage manufacturers and specifically includes bottled water
manufacturers. All other bottled water suppliers are included in the
various NAICS codes used to count wholesalers and retailers, and other
food suppliers.
Finally, the changes to the costs and benefits of the final rule
due to the expanded coverage to include persons that export food for
consumption outside of the United States are estimated to be small. We
assume that the export of food and feed occurs at the manufacturing and
wholesaling levels, with retailers unlikely to engage in export. The
U.S. Census Bureau's 1997 Economic Census (Ref.17) indicates that
approximately 4 percent of wholesale trade in all grocery and related
products (NAICS code 4224) was from export sales. We assume that the
same percent also applies to exports in the manufacturing sector and
also to the numbers of facilities in those sectors. An estimate of 4
percent likely overstates the true incremental cost of covering
exported food and feed since most, if not all of the establishments
engaged in export are also likely to be engaged in domestic commerce
and consequently would not incur additional learning and records
redesign costs. Moreover, firms that export and also engage in domestic
commerce are unlikely to incur additional maintenance costs because it
is unlikely that they would follow two sets of recordkeeping practices.
Consequently, only firms that are exclusively exporters will incur
incremental recordkeeping costs as a result of expanded coverage. We
assume that half of all wholesale and manufacturing establishments
estimated to engage in export, or 2,736 facilities, are exclusively
exporters and will incur recordkeeping costs as a result of expanded
coverage to include export of food and feed.
The incremental benefits from expanding the coverage to include
exported food and feed are from the possibility that some of these
shipments may be diverted for domestic consumption, and their coverage
may enhance traceback investigations should they be necessary. The food
safety (but not food security) benefits from expanded coverage are
likely to be negligible since the likelihood of diversion is small, and
the likelihood that a diverted shipment is accidentally contaminated is
also small. However, the food security benefits, while not
quantifiable, include classified scenarios that could include diversion
of food and feed. Further, FDA is concerned that exempting foods
intended for export from the recordkeeping regulations could lead to
such foods being targeted for tampering by terrorists and
reintroduction into domestic commerce as they would prove more
intractable to tracing investigations. Including the revisions
described previously, we estimate that a total of 707,672 facilities
will be covered by this final rule. This represents a reduction of
96,642 facilities compared with the number estimated in the analysis of
the proposed rule.
2. High Cost of Tracking by Lot Code
(Comment 187) Many comments state that lot codes are not currently
used in tracking products at the distributor and retailer levels, and
that requiring lot codes to be recorded by these entities would
represent a large change in business practice. One comment states that
only 10 percent of food distributors currently use lot numbers to track
their food products. One comment states that its facility tested the
proposed requirement to establish records of lot numbers in its daily
operations and concluded that there would be an 80 percent loss in
productivity as a result of the requirement. Another comment states
that labor costs for unloading a truck at a distributor would increase
by a factor of 15 under an exhaustive check of shipper and lot code
information. The comment further states that a conservative estimate of
the unloading costs would be a threefold increase in current costs if a
less exhaustive spot check of the lot codes is required.
Other comments illustrate the dramatic change in current business
practices that would result from requiring lot codes to be included in
records. However, several comments indicate that although the
technology to maintain lot codes in bar code format does not currently
exist, the industry is moving in that direction and such a requirement
might be feasible in 5 to 7 years.
(Response) In estimating the costs of the rule, FDA assumed that
all required information provided for in the regulation represented
only small deviations from current business practice. The comments
received strongly suggest that the cost estimates for maintaining
records on lot codes for distributors and retailers were substantially
understated. The results reported by one comment of an experiment that
tested the requirement in their daily operations indicated an 80
percent loss in productivity. Other estimates of the increase in labor
costs that would result from this requirement ranged from three-fold to
fifteen-fold. FDA revises the estimates of the costs to maintain
records on lot codes by assuming an 80 percent loss in productivity for
retailers and distributors from compliance with this provision. For
other policy options included in this analysis as well as in the final
rule, the requirement to establish and maintain records containing lot
codes is relaxed to be consistent with current feasibility.
3. Records Retention Costs
(Comment 188) Several comments address the costs of records
retention. Several comments suggest that records are often stored off
site or at corporate headquarters, with a nonzero cost for retrieval.
Another comment recommends that we review our estimate of records
retention costs of zero. The comment states that firms that handle
products not covered by the juice HACCP regulation (part 120) may not
have a records retention strategy and may have to implement a new
strategy for records retention and recovery. Several comments express
uncertainty with regard to the appropriate records retention time of
either 1 year or 2 years for the products that they handle. These
comments suggest definitions of ``perishable'' that would be more
consistent with the terminology used in the trade, which is different
from the definition in the proposed rule. Recommended records retention
times ranged from a low of 6 months for perishable foods, up to 2 years
for other foods.
(Response) In the PRIA, we used information from preliminary
outreach to tentatively conclude that requirements for records
retention of 1 year for perishable products, and 2 years for all other
foods were consistent with current industry norms. The respondents to
the outreach were not necessarily subject to the recordkeeping
requirement of the juice HACCP rule, and we assume that the
understanding of the term ``perishables'' by the respondents to that
outreach was based on the conventional use of the term, rather than the
definition of the term used in the PRIA.
In response to comments, the record retention requirements for
nontransporters in the final rule now provide: (1) 6 months for food
for which a significant risk or spoilage or significant loss of value
occurs within
[[Page 71635]]
60 days under normal shipping and storage conditions for that food; (2)
1 year for food for which a significant risk of spoilage or significant
loss of value occurs within 61 days to 6 months under normal shipping
and storage conditions for that food; and (3) 2 years for food for
which a significant risk of spoilage or significant loss of value
occurs greater than 6 months under normal shipping and storage
conditions for that food.
(Comment 189) One comment suggests that the estimates of zero
storage costs from records retention are too low. The comment estimates
that offsite storage and recovery costs range between $2.50 and $3.50
per cubic foot per year.
(Response) The costs for records storage and retrieval are not
zero, but the additional storage costs likely to be incurred by covered
entities as a result of this regulation are assumed to be zero. We
assume that the private benefits from retaining records for the 1 and 2
years time frames required by this rule exceed the private costs of
doing so. The range of comments to the proposal suggests that this
assumption is reasonable. The private benefits of retaining records
include enhancing a firm's ability to do the following: (1) file claims
for shortages in quantities or qualities of products received, (2)
respond to claims for shortages in quantities or qualities of products
shipped, (3) sue suppliers for damages resulting from products
received, and (4) respond to suits filed by downstream users for
damages resulting from products shipped. FDA also believes that most
firms retain these records for at least two years for income tax
purposes. Therefore, FDA is not persuaded by the comment that most
firms do not currently retain these records.
Evidence gathered from interviews with FDA traceback investigation
personnel indicate that current records retention practices in the food
industry have not been a major obstacle to successful traceback
investigations. In addition, comments suggest that records retention
requirements should be linked to the shelf life of the product (which
is presumably the current practice), and suggest retention times of 6
months to 2 years, depending on the shelf lives of the products. FDA
interprets this evidence to indicate that even in the absence of
records retention requirements, the private incentives to retain
records would result in records retention times in excess of those
required in the regulation.
(Comment 190) One comment draws comparisons of the proposed records
retention burden on small and large trucking firms. The comment
contains a calculation of the number of records that would be required
to be retained by a typical owner and operator of a single truck. The
comment states that a 2 year retention requirement would obligate an
owner and operator of a single truck to have on hand approximately 598
sets of load documents at any given time. If the average set of
documents contained 20 pages, then this person would be required to
retain approximately 11,960 pages at any given time. The comment
suggests that this amount of documentation could be easily kept inside
the truck in a side box and later transferred to an office corner or
file cabinet at the owner's convenience. By assuming the number of
documents to be retained by a firm is commensurate with the number of
trucks owned by the firm, the comment argues that the proposed
retention requirement would require large firms to retain an
unreasonable amount of paperwork requiring substantially more storage
space.
(Response) FDA notes that we computed the retention costs of the
proposed rule on a per-facility basis and that we assumed that costs
did not differ significantly from those of current business practices.
The example documented in the comment illustrates the small amount of
storage space that is required per facility. In the PRIA, FDA assumed
that all firms keep most of the proposed records so that larger firms
with a larger quantity of records may find it necessary to retain off-
site records storage. In the final rule, FDA has revised the
recordkeeping retention and other requirements for transporters to be
consistent with current requirements for interstate transportation.
Consequently, the retention requirements from this final rule should
impose no extra burden on these facilities.
(Comment 191) One comment from an association of wholesalers states
that its members typically retain invoices and shipping records for
approximately 6 months and will find it difficult to find the storage
space to retain records under the proposed requirements. The comment
states that a 2-year retention requirement would constitute a dramatic
change in distributors' operations and lead to a substantial increase
in data storage costs.
(Response) FDA does not agree that the retention requirements from
this final rule will impose a large burden on food businesses. Only a
small fraction of information is required to be added to existing
records. Furthermore, based on preliminary research, a survey of
dietary supplement manufacturers, and our interpretation of most of the
comments to the proposed rule, the retention requirements in this final
rule do not differ substantially from the industry norm. We believe
that any change in practice from wholesalers that generates costs is
mostly included in the estimated redesign and other set-up costs.
4. Records Access Costs
(Comment 192) One comment states that a 4 and 8 hour records access
cost is an additional cost, because it requires retrieval on the
weekends, which may require companies to renegotiate storage contracts
to allow for weekend access.
(Response) FDA researched typical records storage contracts and
found that at least one company's standard records retention contract
explicitly provides that ``unscheduled or emergency delivery of
records'' was to be charged on a ``per event'' basis (Ref. 26). FDA
assumes this to be the norm in the industry. For both the proposed and
final rules, FDA does not estimate the probability of a records access
request, and weekend access is assumed to be charged on a per-event
basis, which is considered a cost of performing a records access
request. Because the records access costs are estimated to be the
private costs of planning for a records access request, rather than for
performing a records access request, the estimates for planning for a
records access request in the analysis of the final rule do not change.
(Comment 193) Many comments assert that the cost estimates for
requiring 4 and 8 hour records access were too low or inappropriate.
Comments support this assertion by citing factors ranging from the
additional staffing requirements necessary to respond to a records
request at such short notice, to the burden of a records access request
being dependent on the number of records, and to the length of time
covered by the records requested. Some comments state that a 48-hour
records access requirement would be reasonable, and some comments state
that 24 hours would be reasonable.
(Response) FDA acknowledges the difficulties faced by firms
complying with the 4 and 8-hour records access requirements. This final
rule requires providing access to records as soon as possible, but no
later than 24 hours after an FDA request. The costs for 4 and 8 hours
and 24 hours are analyzed as policy options later in this document. In
the PRIA, we estimated the records access costs as the costs for
planning for a records access request. FDA assumed
[[Page 71636]]
that the 4-and 8-hour response time required would compel business
practices to change as firms developed preemptive emergency plans,
while a 24-hour response requirement would not compel firms to modify
their current business practices. Interviews with FDA traceback
personnel suggest that firms are able to comply with a 24-hour records
access request. Many comments support the notion that a 24-hour
response time is not an unreasonable requirement given current business
practices. Consequently, FDA maintains the assumption that a 24-hour
records access requirement is reasonable under current business
practices and that a 4 and 8 hour records access requirement would
require additional planning for a records request.
Relaxing the records access requirement from 4 and 8 hours to 24
hours leads to an estimated cost savings relative to the PRIA. The
access planning cost estimate assumed that 6 hours of administrative
labor per firm (lowered to 3 hours per convenience store firm) would be
a one-time requirement for each firm. FDA estimated that new businesses
would also have to incur records access costs. As a result of relaxing
the records access request time to 24 hours, these costs will no longer
be incurred.
5. Additional Records Maintenance and Redesign Costs
The cost estimates assume that the information a covered entity
must keep is specified, but that the form or type of system in which
those records are maintained is not specified; we expect that firms
will collect the additional information not currently included in their
existing records. Furthermore, FDA assumes that firms will choose to
comply with any new requirements in the manner most economically
feasible for them, including modifying shipping or purchase records,
such as bills of lading, invoices, or purchase orders.
(Comment 194) Several comments question the format for presenting
the additional required information and whether existing records could
satisfy the requirements. These comments cite specific types of
transactions to illustrate the difficulties in maintaining the required
information on one form. In addition, several comments state that the
required information is typically available. One comment states that it
is already standard business practice to maintain all required
information on bills of lading in the trucking industry. Several
comments state that FDA should maintain flexibility in the information
required, as well as the type of forms maintained.
(Response) Neither the proposed nor final rule specifies the form
or format in which records are to be established and maintained. There
are no restrictions on the kinds of forms maintained. Commercial
invoices, bills of lading, packing lists, and other forms commonly used
when executing business transactions can all be used to record the
information required by the regulation. We assume that most of the
required information is already maintained on forms ordinarily used in
conducting business. Persons subject to this final rule can choose to
record the required information in one record or to use existing and
newly created supplemental records to capture the required information.
(Comment 195) One comment requests clarification that
``transportation record'' includes the various documents that may be
developed by a company and that it is not necessary to include all of
this information in one shipping document. Furthermore, the comment
asks us to clarify that existing records can be used to satisfy the
requirements, even if they are not in the same location within the
manufacturing facility (i.e., all required information is there, but
not in the same location).
Others comment that the proposed regulation is not practical or
reasonable, and fails to consider the business practices currently in
place for food protection.
(Response) FDA believes that most of the information required by
this regulation is currently collected as a matter of normal business
practices and that any changes to current business practices as a
result of this final rule are small. The revised language in the final
rule removing the requirement to record lot codes for distributor and
retail facilities increases the agency's belief that changes to
existing recordkeeping practices will be small.
(Comment 196) One comment states that the need for both
manufacturers and third party warehouse or wholesalers to keep the
records is redundant.
(Response) Manufacturers and third party warehouses are both
important links in the supply chain and are required to keep records
under the provisions of this regulation. It allows FDA to determine
whether what was sent at each stage is what was received, and if not,
to be able to locate the unaccounted-for food. In a traceback
investigation, it is critical that FDA be able to locate and remove
from commerce any adulterated food that presents a threat of serious
adverse health consequences or death to humans or animals.
(Comment 197) Several comments suggest that the information
required by the proposed regulation is excessive and that it would
require significant changes in business practices to collect and
maintain the required information. One comment suggests that requiring
records of names, addresses, and telephone numbers of each supplier for
each transaction is excessive. A comment suggests that its firm has no
way to capture all of the proposed data elements through current
sources of transaction documentation.
(Response) FDA assumes, and comments agree, that most of the
information required by this regulation is already collected and
maintained through currently used transaction documents. The final rule
requires lot codes or other identifiers only of persons who
manufacture, process, or pack food, and only to the extent this
information exists. The final rule also does not require that a
responsible individual be identified for the immediate previous source
and immediate subsequent recipient for each transaction, as was
required by the proposed rule. Accordingly, FDA does not modify its
assumptions underlying the estimate of the costs of establishing and
maintaining records.
6. Estimates of Additional Records Maintenance Costs Too Low
In the PRIA, FDA assumed that the burden of maintaining and
collecting additional information would be shared among more than one
facility.
(Comment 198) Comments state that FDA's estimates of recordkeeping
burden obtained from the juice HACCP rule are inappropriate. The
comments state that using the juice HACCP model substantially
underestimates time requirements because most other types of firms
would require more resources to achieve the proficiency required under
the HACCP rule.
(Response) The juice HACCP cost estimates that we used to estimate
costs in the PRIA were published before the juice HACCP rule took
effect. The cost estimates for that rule were for firms that were not
yet in compliance. FDA continues to believe that those cost estimates
are an appropriate reference for this final rule, because they
represent a precedent for cost estimates of activities similar to those
required in this regulation.
(Comment 199) According to numerous discussions with those who are
subject to HACCP regulations, the time and money estimates of the costs
FDA provided in the seafood HACCP
[[Page 71637]]
rule were about 1/10 the actual values. This represents a big
underestimate of the true costs of the regulation.
(Response) The costs estimated in the PRIA use cost estimates of
the juice HACCP rule as a reference, not those of the seafood HACCP
regulation. FDA has also received information that costs for compliance
with the seafood HACCP rule were underestimated. FDA developed the
estimates for the juice HACCP rule much later than those for the
seafood HACCP rule. In addition, the burden for the additional records
maintenance required in this final rule is considerably less than that
required by the juice HACCP rule, particularly because FDA has relaxed
the requirement for maintaining lot code information in the final rule
and removed the requirement to record and maintain contact information
for each transaction.
(Comment 200) Some comments state that FDA failed to account for
the effect of higher transaction costs (as a result of the regulation)
on reducing arbitrage opportunities. Food arbitrage is a line item in
most food distributors' and retailers' financial statements. The
comments assert that this final rule will result in fewer arbitrage
opportunities, because the cost of a transaction will rise, which will
cause a substantial reduction in profits, encourage layoffs, and raise
consumer prices.
(Response) FDA agrees that the recordkeeping provisions in this
regulation may increase the costs of transactions, thereby decreasing
the total number of transactions. FDA believes, however, that
transactions will be only slightly costlier and the effect on consumer
prices and arbitrage opportunities will be small.
(Comment 201) One comment urges FDA to clarify and confirm that it
would not consider records identifying producers of coffee cherry for
traceback purposes as information that would be considered to be
``information reasonably available.'' The comment states that it would
be prohibitively costly to link the identities of individual coffee
cherry growers to any processed food item, because the cherries from
many growers are typically mixed upon delivery to a processing
facility.
(Response) Both the proposed and final rules require incoming
ingredients to be linked specifically to outgoing food products only if
that information is reasonably available (as discussed previously).
What is reasonably available is determined on a case-by-case basis and
depends on the operating practices of a specific facility. FDA does not
intend the rule to require covered entities to reconfigure their
operations. If cherries from many growers are typically mixed (i.e.,
commingled), then full information linking ingredient source to final
product may not be reasonably available. If, however, the cherries are
in separate bins based on supplier or easily can be separated and
identified, then full information linking source to final product may
be reasonably available. In the PRIA, FDA acknowledged the prohibitive
cost of a policy option requiring producers to be able to link specific
ingredients to specific food products (option 13 in the proposal). That
option was ultimately rejected, in part, because of the high cost of
identifying the producers of traditionally commingled raw commodities.
Instead, both the proposed and final rules required linkage only when
the linkage is reasonably available.
7. Labor Cost Estimates
(Comment 202) Several comments suggest that the wage rate used by
FDA in the PRIA of $25.10 is too low. One comment suggests that an
hourly wage of $33 would be more appropriate for the analysis, because
it would reflect the need for higher-level personnel involvement due to
complexities in the proposed rule. Another comment suggests that the
$25.10 wage is reasonable, but that the hour estimates are too low.
(Response) FDA disagrees with the suggestion to increase the wage
rate used in the analysis because the implied annual wage and overhead
cost of more than $52,000 seems more than reasonable, as suggested in
another comment.
(Comment 203) One comment argues that there is no evidence that the
wage of $25.10 used in the analysis has been doubled to account for
overhead in any of the calculations.
(Response) The hourly wage of an administrative worker reported by
the Bureau of Labor Statistics of about $12.55 was doubled in the
computations to account for overhead costs. FDA acknowledges that this
was not clearly stated in the PRIA.
8. Learning Costs
(Comment 204) Some comments state that FDA's estimate of 3 hours
for learning costs is low. The comments state that access to the
Internet and lack of fluency in English are not the only costs. The
comments maintain that learning cost estimates did not include the time
for an FDA explanatory video and did not include adequate time for
evaluating the information in the rule.
(Response) Although the comment states that 3 hours is too low an
estimate, the comment did not indicate how the learning cost estimates
as a whole, or any of the component cost estimates, can be improved.
FDA explicitly incorporates the costs of searching, learning, and
comprehending the rule in the PRIA. Learning cost estimates are
composed of costs for searching for a copy of the requirements, and
reading and understanding them. Because of the approximate nature of
the calculation, FDA rounds up to the nearest half hour to 3 1/2 hours
for the time required for reading and comprehending the requirements of
this final rule for all English reading users. Although the cost of
viewing the explanatory video was not explicitly included in the PRIA,
such a viewing was assumed to reduce the burden from other searching
and learning activities. Consequently, in the analysis of the final
rule, FDA maintains the learning costs estimates used in the PRIA.
9. Specific Sector Cost Estimates
a. Transportation and warehouse sector. (Comment 205) At least one
comment states that trucking companies already maintain the required
records to comply with another Federal regulation and therefore
additional Federal requirements would be duplicative.
(Response) FDA has included several options in this final rule for
transporters to comply with their obligations to establish and maintain
records under this final rule. One option is for transporters to keep
some of the records currently required by the FMCSA regulations as of
the date of publication of this final rule. The FMCSA regulations
already require interstate transporters to establish and maintain
transportation records, and we assume that interstate transporters who
already comply with the FMCSA recordkeeping requirements will choose to
comply with this final rule by maintaining such records. However, the
FMCSA regulations cover only interstate common carriers, while this
regulation covers all persons who transport food, including intrastate
carriers. Moreover, domestic air carriers, and interstate transporters
of low-value packages may not be required to comply with FMCSA
regulations. Consequently, as a result of this final rule, intrastate
carriers, intrastate shipments by interstate carriers, domestic air
cargo carriers, and transporters of low-value packages may incur
recordkeeping costs, in addition to learning costs, as a result of this
final rule.
To estimate the costs incurred by intrastate carriers, domestic air
cargo carriers, and transporters of low value
[[Page 71638]]
packages, we first estimate the number of facilities that engage in
only intrastate food transportation. Then, we adjust this number to
account for domestic air cargo carriers of food shipments and carriers
of low-value food packages. Additional records maintenance costs
incurred by interstate carriers of intrastate shipments are estimated
to be zero since it is unlikely that a transportation establishment
would use two sets of recordkeeping practices.
To determine the number of intrastate carriers subject to this
final rule but not subject to FMCSA requirements, we take a weighted
average of the ratios of local to total general freight trucking in the
CBP data under NAICS code 4841, and the local to total specialized
freight trucking in the County Business Pattern data under NAICS code
4842. Weights are applied to reflect the importance of local
specialized and local general freight in all local trucking to estimate
the overall number of intrastate carriers. This computation estimates
that 50 percent of all freight carrying trucks are intrastate carriers.
Consequently, we assume that 50 percent of all transportation
facilities are not already subject to recordkeeping requirements under
FMCSA, and will incur the full records redesign and additional records
maintenance costs of this regulation.
The total number of domestic air cargo carriers of food packages is
estimated from NAICS code 481112 in the CBP and NES data which was used
for estimating the total number of transporters in the PRIA. Since not
all of the carriers reported under NAICS code 481112 transport food
items, we used a factor of 50 percent to scale data from the CBP and
the NES to estimate the number of air cargo carriers that have a
significant portion of their business transporting food items. The
resulting estimate of the number of air cargo carrier facilities that
transport food items is approximately 1,825 or 0.078 percent of the
total number of transporters. These facilities will incur records
redesign costs and additional records maintenance costs, in addition to
learning costs as a result of this final rule.
The number of carriers of low-value food items is estimated using
the number of couriers under NAICS code number 49211, which was not
included in the PRIA. According to the U.S. Census Bureau, this NAICS
includes establishments primarily engaged in providing air, surface, or
combined courier delivery services. From the CBP and NES statistics
there are approximately 141,931 establishments engaged in courier
services. Since this includes courier services that use both air and
surface transportation, we reduce this number by 50 percent, under the
assumption that only establishments engaged in surface courier services
are likely to carry food items, resulting in an estimate of 70,965
surface courier facilities.
Most surface courier services may carry food items as an incidental
part of their business and will incur learning costs as a result of
this rule. However, only a small fraction will carry food items as a
significant part of their business and will incur additional records
maintenance and records redesign costs. We estimate that 10 percent of
surface couriers services will ve more than an incidental portion of
their business transporting food items and will incur records redesign
and additional maintenance costs in addition to learning costs. This is
consistent with the fraction of restaurants that report retail sales as
a secondary activity of their establishment (Ref. 29). The resulting
estimated number of surface transporters of low-value packages of food
items that would incur additional records maintenance and records
redesign costs is 7,097 facilities.
(Comment 206) Several comments suggest that transportation carriers
have only a limited knowledge of the contents of the packages that they
carry and should not be held liable for much of the information. These
comments suggest that transporters have detailed information on sources
and recipients of the products that they carry but do not have the
capacity to track other details of the contents of the packages, such
as lot codes and other details. For example, one comment states that
air carriers typically rely on the shippers for information, and
shipments may not be identified as containing food. Others comment that
because carriers lack knowledge of the contents of packages, the
default records retention times for all shipments will be the longer
required time of 2 years, even if the contents are perishable products.
The comments state that this 2-year default retention time will only
add to the records retention burden already faced by many trucking
firms.
(Response) FDA acknowledges that, currently, the transporter may
have limited knowledge of the contents of the packages that it carries
and that an undue records retention burden would result if the default
would be the longer retention period. FDA notes, however, that under
this final rule transporters must know that they are transporting food
and be able to record a description of that food. Nonetheless, FDA has
relaxed the records retention requirement for transporters from the
proposed rule to this final rule. Transporters, or nontransporters
retaining records on behalf of a transporter, are required to retain
records for 6 months for any food having a significant risk of
spoilage, loss of value, or loss of palatability within 60 days after
the date the food is received or released and 1 year for any food
having a significant risk of spoilage, loss of value, or loss of
palatability only after a minimum of 60 days after the date the food is
received or released. FDA also has codified in this final rule an
option for transporters to comply with recordkeeping requirements of
this final rule by keeping records already required by the existing
bill of lading requirements applicable to interstate transporters.
(Comment 207) One comment expresses concern that differing
knowledge of the contents of food packages between transporters and
nontransporters would require standards of information exchange to be
created to coordinate the contents of records maintained by the two
types of entities. The comment suggests that without such standards,
the coordination costs may be high, because certain records maintained
by nontransporters would need to be exchanged with transporters for
them to have the full knowledge of the contents and extent of the
packaging. Failure to create these standards would result in elevated
costs for transporters.
(Response) FDA acknowledges the limited knowledge that transporters
currently may have about the contents of the packages that they carry.
FDA has included less detailed information requirements in the final
rule to respond to these comments; however, FDA believes the
information it is requiring is necessary to allow the FDA to conduct a
tracing investigation efficiently and effectively. In addition, FDA
included an option whereby transporters can fulfill their recordkeeping
requirements by keeping records already required for interstate
transporters. Furthermore, the final rule provides an option allowing
transporters to enter into a contractual arrangement with the non-
transporter immediate previous source located in the United States or
with the non-transporter immediate subsequent recipient located in the
United States; any contractual arrangements would redistribute the
burden of establishing and maintaining transportation records between
transporters and non-transporters but would not change the total
recordkeeping costs since the same number of records would be
established
[[Page 71639]]
and maintained under all negotiated arrangements. FDA assumes that
current business practices are the low-cost arrangement for the
establishment and maintenance of records and does not revise its
estimate of recordkeeping costs to account for higher coordination
costs between transporters and nontransporters.
(Comment 208) Some comments state that FDA's estimated cost per
facility in the public warehousing sector is likely to be incorrect
because of the apparent assumption that costs incurred would be similar
for both a public warehouse and a wholesaler. The comments argue that,
because wholesalers own a product, they are more knowledgeable about
its contents and packaging than are warehouse facilities. The comment
notes that a warehouse is a third party provider of warehousing,
storage, and other value added services; does not have direct knowledge
of where a product originates; and may not have full knowledge of the
contents and packaging of a product, or of the product's next
destination. Another comment states that the information asked for in
the proposal is reasonable, but that this information will be
difficult, costly, or impossible to obtain for public warehouse
facilities.
(Response) FDA acknowledges that warehouse facilities and
wholesalers perform different functions. FDA has accounted for the
differences in its cost estimates. The NAICS definition of the
wholesale trade includes, ``* * * selling merchandise, generally
without transformation* * * to other business* * *.'' The definition
also characterizes wholesalers as normally operating from a warehouse
or office (Ref. 27). In contrast, the NAICS defines the warehousing and
storage sector as providing facilities to store goods but not sell the
goods that they store. In addition, warehouse facilities may also
provide logistical services for the goods that they store (Ref. 27).
Although the warehouse and wholesaler functions are clearly
different, FDA assumes that both kinds of facilities would have records
giving an immediate previous source and an immediate subsequent
recipient of the product. Because warehouse facilities do not take
ownership of the products that they handle, they may not have specific
information about the products and their packaging.
In the course of their day-to-day business dealings, warehouses may
not be privy to a description of the type of food or details of its
packaging sufficient to satisfy this regulation. To acquire this
knowledge and maintain the required records, warehouses may incur costs
in addition to those that would be incurred by the owners of the
product. FDA assumes that as part of their normal business practices,
warehouse facilities may be required to maintain a limited amount of
information on the immediate previous source and immediate subsequent
recipient of a comparable magnitude to that of the owners of the
products. However, the detailed information on the product and its
packaging required by the regulation may be more costly to obtain for
warehouse personnel than for the owners of the product. For some
products, warehouse facilities are assumed to have the same required
knowledge of the required information on the stored product and its
packaging as that of the owner of the product. For other products, the
warehouse personnel's knowledge of the required information on the
stored product and its packaging is less than that of the owner. We
estimate that, for half of all food products stored, warehouse
personnel have the same amount of the required knowledge of the food
and its packaging as the owner of the product, and that the additional
records maintenance costs would be comparable to those incurred by the
product owners. For products for which warehouses currently lack the
required knowledge, we assume that the additional records maintenance
costs for warehouse facilities would be approximately 50 percent higher
than those for owners of the products. Much of the extra cost may
involve contracting with product owners to provide the required
information.
b. Interstate conveyances and catering services sector. (Comment
209) Several comments suggest that the costs to the interstate
conveyance catering industry were greatly underestimated and that this
sector should be excluded from the regulation. One comment states that
for airline caterers, each flight typically includes hundreds of
individual foods from scores of different sources and suppliers. The
comment further states that this industry is further complicated by the
large number of special meal requests by individual passengers on each
flight.
(Response) In the PRIA, we assumed that persons subject to this
final rule may be required to add a limited amount of new information
to existing transactions records, such as bills of lading, commercial
invoices, and other shipping documents. We did not model the costs of
compliance for each sector in the food economy, and assumed that the
private incentives to maintain most, if not all, of the required
information were sufficient. Examples of private incentives to maintain
the required records are provided in our response to comment 189.
Moreover, we do not require that the information be in any particular
form or format, which further reduces the potential costs of
compliance.
c. Pet foods sector. (Comment 210) Some comments suggest that FDA
eliminate requirements for pet food because the risk of exposure
through that sector is small. Other comments acknowledge potential
targets and impacts from terrorist attacks through the pet food sector
and encourage FDA to require all in the pet food sector to be subject
to the final rule.
(Response) In the proposed rule, pet food not subject to the BSE
rule was excluded from the requirement to establish and maintain
records. In this final rule, all animal feed entities, including all
pet food entities, are subject to all requirements of the rule, but
have a records retention requirement of 1 year. There are approximately
19,600 facilities that were excluded in the proposed rule and that have
been included in this final rule. In the PRIA, rather then estimate the
cost savings from excluding these facilities from complying with the
regulation, we noted that the costs were overestimated because pet food
facilities were included in the estimates. In the final rule, pet food
entities are subject to the regulation and are included in the cost
estimates.
d. Food contact substances and the packaging sector. (Comment 211)
FDA received many comments that FDA underestimated the number of
facilities covered by the definition of substances and components of
substances that contact food. One comment states that FDA does not
include the ``upstream'' manufacturers that make ingredients and
components that go into food packaging who would be required to comply
with the recordkeeping provisions of this regulation. The comment
further states that there is no logical conclusion to this chain. Some
other comments assert that FDA did not account for warehouses that hold
articles that can migrate to food from food packaging, or other
articles that contact food.
Another comment states that FDA's count of the number of domestic
facilities is overly inclusive if FDA's intention is to include only
finished packaging and that the Operational and Administrative System
for Import Support (OASIS) database used for the count of foreign
facilities does not include suppliers of food contact articles. Other
comments indicate that FDA understated the number of
[[Page 71640]]
facilities covered by the regulation by not identifying transporters of
food contact materials, and that the 20 NAICS codes do not cover all
food packaging manufacturers and distributors. Several comments state
that all packaging firms handle both outer packaging and food contact
substances, and for all practical purposes, will have to track all
products they produce, because they may not know if a shipment is
destined for food or nonfood use. One comment states that FDA's count
of foreign facilities from OASIS did not include all imported food
contact substances.
(Response) The final rule does not require persons who manufacture,
process, pack, transport, distribute, import, receive, or hold
packaging (the outer packaging of food that bears the label and does
not contact the food) to establish or maintain records. However, these
persons are subject to the records access requirements with respect to
any existing records if they also engage in another regulated activity
with respect to the food in, or to be placed in, such packaging.
Persons who place food directly in contact with its finished container
are subject to all of the requirements of subpart J as to the finished
container that directly contacts that food. Moreover, all other persons
who manufacture, process, pack, transport, distribute, receive, hold,
or import the finished container that directly contacts the food are
excluded from the establishment and maintenance requirements with
regard to the finished container, and are only subject to the records
access provisions for existing records under Sec. Sec. 1.361 and
1.363.
In the final rule, records access costs are estimated to be zero
and we assume that the only costs incurred by persons who manufacture,
process, pack, transport, distribute, receive, hold, or import the
finished container that directly contacts the food are learning costs.
Because the economic burden on these facilities in the final rule has
been substantially reduced from that estimated in the PRIA, we assume
that the impact on costs of any possible underestimation of their
numbers will be very small.
e. Foreign facilities and related impacts. (Comment 212) There were
many comments that state that the expansion of requirements to foreign
facilities would have a large impact on international trade by making
imports more expensive. Some comments state that costs for compliance
by developing countries were underestimated in the PRIA because their
labor and technology are so different from those that prevail in
developed countries.
(Response) In the final rule, all foreign persons are excluded from
all requirements in this rule, except for foreign persons who transport
food in the United States. Because all foreign persons who transport
food in the United States are currently subject to FMCSA regulations as
interstate transporters, and can meet the requirements of transporters
in subpart J of this final rule by keeping records already required by
FMCSA, the costs of compliance for these facilities, including the
costs for the records access requirement, are assumed to be zero.
(Comment 213) One comment questions the implied assumption in the
PRIA that foreign transporters share the cost burden with other foreign
facilities when foreign transporters are not covered by the rule.
(Response) Foreign persons who transport food in the United States
are covered by this final rule. The revised costs of compliance by
these facilities to establish and maintain records are assumed to be
zero because they will be in compliance with this final rule if they
keep the records currently required by FMCSA for interstate
transporters.
10. Compliance Dates
Several comments suggest changes in the compliance dates. In the
design of the regulation, the compliance dates are used primarily to
address regulatory flexibility considerations. Consequently, these
comments are treated in the regulatory flexibility section of the final
analysis.
G. Summary of the Costs and Benefits of the Final Rule and Policy
Options Considered
The revisions to the cost estimates based on comments to the
proposed rule and on changes in records requirements between the
proposed and final rule result in estimated costs of approximately
$1.41 billion expressed in present value terms, using a 7-percent
discount rate. Using a discount rate of 3 percent, the estimated costs
of the final rule expressed in present value terms are approximately
$1.94 billion. Costs for learning, records redesign, and planning for
records access requests are one-time costs incurred in the first 2
years following publication of the final rule. Additional records
maintenance costs and records retention costs are incurred each year
following publication of the final rule, beginning in the second year
for large and small firms and in the third year for very small firms.
Learning costs and records access planning costs for new entrants are
also incurred each year following publication of the final rule
beginning after the second year. The details of the assumptions used to
estimate the costs are provided in the PRIA. The estimated total cost
is computed by summing the costs estimated for learning, records
redesign, additional records maintenance, records retention, and
planning for a records access request. The annual and total costs of
the final rule are reported in table 15 of this document.
Table 15.--Estimated Annual and Total Recordkeeping Costs\1\
------------------------------------------------------------------------
21 CFR Section Costs (in dollars)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 $85,082,000
(learning)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 $205,239,000
(records redesign)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 $114,701,000
(additional records
maintenance)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 $8,508,000
(learning for new firms)
------------------------------------------------------------------------
Discounted present value of $1,406,356,000
total costs\2\
------------------------------------------------------------------------
\1\ The annual costs are reported in undiscounted terms. Records access
planning costs and records retention costs are estimated to be zero
and are not reported here.
\2\ The reported discounted present value of total costs assumes a 7-
percent discount rate and a 20-year time horizon over which annual
costs are summed.
[[Page 71641]]
The final rule will help reduce the numbers of people who become
ill during a foodborne outbreak by reducing the time required for
preventive action. Furthermore, the final rule will reduce the
recurrence of outbreaks that may have been prevented had nonexistent or
poor records quality not resulted in prematurely terminating the
initial traceback investigation. In addition to relaxing elements of
the requirement for records to contain lot code information, the
reduction in benefits from the final rule compared to the proposal
results from excluding foreign facilities except those that transport
food in the United States, relaxing recordkeeping requirements for food
contact substance facilities, relaxing recordkeeping requirements for
very small retail facilities, adopting retention requirements based on
the NIST food shelf life definitions, and relaxing the records access
requirement from 4 and 8 hours to as soon as possible, not to exceed 24
hours.
The estimated costs and benefits of many policy options considered
in this section summarize the details of the analyses based on the
comments FDA received and are reported in the following tables. The
costs for the options are reported in present value terms for both 7
percent-and 3-percent discount rates. We summed the discounted annual
costs over a 20 year horizon to obtain the estimate of the total costs.
A 20-year horizon for measuring the costs from the regulation is
reasonable, given uncertainty in the regulatory environment and
technological change. The reduction in benefits relative to the
proposal from each modification is based on the impact that each option
would likely have on traceback times and the rates of traceback
completions. Again, the benefits are based solely on food safety
concerns (i.e., typical traceback scenarios with which FDA has been
involved) and do not take into account food security concerns.
In table 16 of this document we compare the costs of the options
considered to the baseline option of the proposed rule, with the caveat
that the provision requiring all records to contain lot code
information, which was included in the proposed rule, is no longer in
the baseline. All other provisions included in the proposed rule are in
the baseline for this analysis.
All options consider relaxing one provision, or excluding one
sector from the recordkeeping requirements. In that way, a comparison
of the cost of a policy option with the cost of the baseline yields the
marginal cost savings from either relaxing a provision in the baseline,
or reducing the coverage by one sector relative to the baseline. The
columns containing the absolute amount and percentage cost savings show
the savings relative to the baseline. In the final rule reported in
table 18 of this document, the provisions requiring lot code
information, 4- and 8-hour records access, and short compliance dates
are all relaxed to yield cost savings relative to the baseline.
Additional cost savings result from excluding the following: (1)
Foreign persons, except for foreign persons who transport food in the
United States; (2) persons who manufacture, process, pack, transport,
distribute, receive, hold, or import food contact substances except the
finished container that directly contacts the food; and (3) persons who
manufacture, process, pack, transport, distribute, receive, hold, or
import the finished containers that directly contacts food except for
those who place food directly in contact with its finished container.
The option to relax the requirements for all records to contain lot
code information when feasible saves more costs relative to the
baseline than any other option. The cost savings from relaxing the lot
code information requirement is approximately $13 billion in present
value terms with a 7 percent discount rate, and $18 billion with a 3
percent discount rate. Based on detailed information in the comments,
requiring lot code information to be contained in all records by
retailers and distributors would result in approximately an 80 percent
loss in productivity for distributors and retailers.
Excluding many foreign persons and relaxing the 4- and 8-hour
records access requirement also result in significant cost savings. By
excluding all foreign persons except those who transport food in the
United States, approximately 225,000 facilities would not have to
establish and maintain records relative to the baseline. This exclusion
results in a cost savings of approximately $770 million, or 19 percent,
relative to the baseline in present value terms when a 7-percent
discount rate is used, and a savings of $1 billion when a 3 percent
discount rate is used. A 24-hour records access requirement results in
a cost savings of approximately $260 million relative to the baseline
with a 7-percent discount rate, and $318 million with a 3-percent
discount rate.
Extending the compliance dates and broadening the scope of foods
subject to the limited 1-year records retention period relative to the
baseline are all provisions in the final rule. Cost savings from
extending the compliance dates by 6 months relative to the baseline
result from reductions in inventory losses and discounts in the costs
realized when incurred 6 additional months into the future. These cost
savings are approximately $271 million relative to the baseline with a
7-percent discount rate, and $163 million with a 3 percent discount
rate. Adopting retention requirements based on NIST definitions based
on shelf life is not assumed to increase costs, but will reduce the
benefits by a negligible amount.
Throughout the analysis, we have estimated costs based on the
number of facilities, and assume that this number, whenever used,
approximately reflects the number of persons covered by the regulation.
The revised number of facilities covered by the final rule is estimated
to be 707,672 (including persons who manufacture, process, pack,
transport, distribute, receive, hold, or import food, and foreign based
transporters that transport food in the United States). Learning costs
are assumed to be incurred by all facilities and persons 2 years
following enactment of this final rule and are computed by multiplying
the number of facilities by the cost of learning per facility. Based on
details outlined in the proposed rule, learning costs are computed
using a $25.10 wage rate and 4.5 hours spent learning for Internet
users (approximately 71 percent, and 5.5 hours spent learning for non-
Internet users). The total learning costs are computed to be
$85,082,000.
Records redesign costs are assumed to be incurred by approximately
101,153 large and small firms 2 years following issuance of this final
rule and by 222,316 very small firms after 3 years following issuance
of this final rule. Persons who manufacture, process, pack, transport,
distribute, receive, hold, or import the finished container that
contacts food, and foreign based transporters that transport food in
the United States are assumed not to incur records redesign costs. In
this analysis, FDA assumed that all sizes of firms will bear the $1,365
per-firm records redesign cost estimate that was used in the proposal
as the most likely records redesign cost for small and very small
firms. The redesign costs are $53,508,000 after the second year and
$151,731,000 after the third year following issuance of this
regulation.
FDA assumes the additional records maintenance costs to be incurred
by 110,081 large and small facilities 2 years following issuance of
this final rule and by 379,493 facilities after 3 years and for all
subsequent years following issuance of the final rule. Persons who
[[Page 71642]]
manufacture, process, pack, transport, distribute, receive, hold, or
import the finished container that contacts food and foreign based
transporters that transport food in the United States are assumed to
not incur additional records maintenance costs. FDA assumes the 34,634
convenience store facilities will spend 2.5 hours per year and that
persons who directly market food are excluded from the rule. All other
facilities (344,859) will spend 13 hours per year on additional records
maintenance at an hourly cost of $25.10. The undiscounted total
additional records maintenance costs 2 years following enactment of the
rule are $70,745,000. After 3 years, and for each subsequent year, the
undiscounted additional records maintenance costs are $114,701,000. The
annual costs for records access planning and for records retention for
all persons are assumed to be zero in the final rule.
The following table includes the estimated reduction in benefits
relative to the proposal from policy options that would exclude select
sectors from recordkeeping requirements, or that would relax certain
provisions, which are considered in detail earlier in this analysis.
The benefits from each policy option are ranked by size, so that policy
options that would result in large reductions in benefits relative to
the proposal are ranked highest, where a ranking of one represents the
largest reduction in benefits relative to the proposal.
The reduction in benefits from relaxing the requirement for all
persons to establish and maintain records containing lot numbers is
very high. With lot codes contained on all records, the duration of a
traceback investigation for many products would likely be between 1 and
14 days (estimated current times for many packaged products that
contain all lot code information on the package). Relaxing the lot code
requirement may increase the traceback times of these products to
between 6 to 8 weeks (estimated current times for many fresh products
not accompanied by lot code information). Relaxing the requirement for
all records to contain lot code information leads to the largest
reduction in benefits relative to the baseline.
The reduction in benefits from excluding all foreign persons except
those who transport food in the United States is considerable because
the large number of excluded entities increases the likelihood of
hampering traceback investigations. Moreover, the risk of contamination
(unintentional) is generally higher for many products earlier in the
supply chain. In addition, enforcement costs for foreign persons would
likely be prohibitively high--decreasing the likelihood of obtaining
records required for a traceback even if these persons were covered.
When compared to the eight other individual options considered for the
final rule, the large number of excluded foreign persons ranks third
highest of the reductions in benefits relative to the baseline
considered. This reduction in benefits, however, is mitigated in one
respect: The risk of not being able to complete traceback
investigations due to this exclusion is considered low because most of
these foreign entities occupy positions early in the supply chain.
The reduction in benefits from relaxing the recordkeeping
requirements for persons who manufacture, process, pack, transport,
distribute, import, receive, or hold food contact substances other than
the finished container that directly contacts the food, and who
manufacture or process the finished container that directly contacts
the food, as estimated by the number of applicable facilities, is
small. Although relaxing requirements for these persons may expose a
``soft target'' for intentional contamination, the probability of
foodborne illness from unintentionally contaminated food contact
substance and finished container material is low. Furthermore, the
likelihood of needing records from food contact substance and finished
container facilities during traceback investigations is also low. When
compared to the other issues considered for the final rule, relaxing
the requirements for these persons ranks only seventh in the reductions
in benefits relative to the baseline.
The reduction in benefits from relaxing the requirement to access
records within 24 hours from 4- and 8-hour requirement would be
substantial. We estimate that relaxing the records access requirement
would increase the amount of time for any preventive action to be taken
during a traceback investigation by about 5 days relative to the
baseline, if all persons subject to an access request took the full 24
hours to respond. The loss of time relative to the baseline would limit
the preventive benefits for 15 percent to 18 percent of outbreaks.
Relaxing the record access requirement from 4 and 8 hours, to within 24
hours ranks second in reductions in benefits relative to the baseline.
The reduced benefits from extending the compliance period by 6
months for each person subject to the final rule are a twofold increase
in the number of outbreak victims relative to the baseline in the first
year only. Baseline benefits reduce the impact of 15 percent to 18
percent of outbreaks and eliminate the problem of prematurely
terminated investigations because of poor records quality (i.e., about
10 percent of the total number of traceback investigations estimated
from FDA outbreak investigation information). Extending the compliance
dates by 6 months ranks sixth in the reductions in benefits relative to
the baseline.
We estimate that allowing transporters to comply with this final
rule by complying with existing requirements (e.g., records already
required by FMCSA) will have a negligible impact on the benefits
relative to that from the more comprehensive requirements of the
proposal. Option 7 in table 16 of this document incorporates a 24-hour
access provision, 6, 12, and 24 month retention requirements, extension
of the compliance dates, and adjusted recordkeeping requirements for
transporters based on existing requirements. In table 18 of this
document, the costs and benefits of the final rule are compared with
those from the adjusted comprehensive coverage of option 7 in table 16
of this document.
Table 16.--Costs and Reductions in Food Safety Benefits for Changes Based on Comments
----------------------------------------------------------------------------------------------------------------
Reduction in
Policy Option (in Benefits Size of
Terms of the Cost (7% Discount) Cost (3% Discount) Relative to reduction
Baseline) the Baseline (6=Largest)
----------------------------------------------------------------------------------------------------- -------------
Baseline\1\: Proposed $4.0 billion $5.27 billion .................. ..............
rule except
requirement for all
records to contain lot
codes is relaxed.
-------------------------------------------------------------------------------------------------------
[[Page 71643]]
(1) Baseline except $3.78 billion $4.97 billion No reduction\2\ 1
existing interstate
transporter
requirements are
sufficient.
-------------------------------------------------------------------------------------------------------
(2) Baseline except $4.0 billion $5.27 billion Negligible 2
retention of 6, 12, reduction
and 24 months per NIST
standards
-------------------------------------------------------------------------------------------------------
(3) Baseline except $3.92 billion $5.16 billion Exclude 37,000 3
food contact entities facilities near
are excluded.\3\ the top of supply
chain. Low risk
of contamination
and low risk of
loss of the paper
trail.
-------------------------------------------------------------------------------------------------------
(4) Baseline except $3.73 billion $5.10 billion An estimated one- 4
compliance dates are time, two-fold
extended by 6 months. increase in the
number of victims
compared with the
baseline in the
first year only.
-------------------------------------------------------------------------------------------------------
(5) Baseline except $3.23 billion $4.26 billion Exclude 225,000 5
foreign facilities are facilities near
excluded. the beginning of
the supply chain.
Very high cost of
enforcement and
access.
-------------------------------------------------------------------------------------------------------
(6) Baseline except $3.74 billion $4.95 billion Adds a maximum of 6
relax records access about 5 days to
from 4 and 8 hours, to the time for
24 hours. preventive action
during an
outbreak.
-------------------------------------------------------------------------------------------------------
(7) Adjusted $2.59 billion $3.57 billion Incorporates all ..............
comprehensive coverage policy options
and adjusted
numbers of
facilities
----------------------------------------------------------------------------------------------------------------
\1\ Note that option 1 is used as the baseline in the descriptions of all other options. The variation of the
proposed rule with the relaxed lot code requirements is used as the baseline in this table because the high
cost of requiring lot codes on all records ($16.58 billion) is overwhelming. While the reduction in benefits
from relaxing the lot code requirements is also large, we thought that the inclusion of that option in this
table would confuse the presentation and add little practical value to the policy analysis.
\2\ Because this chart only reflects food safety, it does not include classified food security scenarios which
envision intrastate shipments being targeted for tampering.
\3\ This option overstates the cost reduction from provisions in the final rule that exclude food contact
substance entities since it assumes that they will not have to incur learning, records redesign, and
additional records maintenance costs. In the final rule these entities will incur learning costs since they
will still be subject to access requirements for records that they keep during the course of normal business
activity.
We constructed the policy options reported in the following tables
to provide a range of net benefit and cost effectiveness measures for
alternative coverage options. The records access, retention, and
compliance date provisions, as well as the requirements for
transporters for all options reported in the following tables, are the
same as those reported for option 7 in the previous table. In addition,
coverage for the option entitled ``all entities'' is the same as that
for option 7 in the previous table. Persons handling the finished
container that contacts food are excluded from all of the following
coverage options for the policy reasons stated previously. However,
while persons handling the finished container that contacts food other
than those who place food directly in contact with the finished
container, are not required to establish and maintain records in the
final rule, they are required to provide access to FDA to existing
records if the conditions for access are satisfied. This requirement is
implicit in all of the options with different coverage reported in the
following tables.
Table 17.--Coverage of Different Policy Options
----------------------------------------------------------------------------------------------------------------
Grocery Importers and Mixed-Type
Outlets Wholesalers Manufacturers Facilities Warehouses Transporters
----------------------------------------------------------------------------------------------------------------
Option
----------------------------------------------------------------------------------------------------------------
Adjusted All All All All All All
Comprehensive
----------------------------------------------------------------------------------------------------------------
[[Page 71644]]
A .............. All ................ ............. ............. ...............
----------------------------------------------------------------------------------------------------------------
B All .............. ................ ............. ............. ...............
----------------------------------------------------------------------------------------------------------------
C .............. All All ............. ............. ...............
----------------------------------------------------------------------------------------------------------------
D .............. All All All ............. ...............
----------------------------------------------------------------------------------------------------------------
E .............. All All All All ...............
----------------------------------------------------------------------------------------------------------------
F .............. All All All All All
----------------------------------------------------------------------------------------------------------------
G (final rule) Exclude very All All All All All
small
----------------------------------------------------------------------------------------------------------------
H Exclude very Exclude very Exclude very Exclude very Exclude very Exclude very
small small small small small small
----------------------------------------------------------------------------------------------------------------
I Exclude very All All All All Only interstate
small
----------------------------------------------------------------------------------------------------------------
Note: Very small firms are defined as those with fewer than 10 full-time equivalent employees.
In the following table, costs, food safety benefits, and cost
effectiveness measures are reported for each of the coverage options
described in the above table, and the final rule. Costs are reported in
terms of annualized costs and incremental costs using a 7-percent
discount rate over a 20-year horizon. Benefits are reported in terms of
the annual number of food safety illnesses averted (reported and
unreported), and the incremental number of illnesses averted. The
estimates of the numbers of averted illnesses should be interpreted as
minimum values because they relate to only the food safety benefits;
bioterrorism considerations are not incorporated into the estimates.
Cost effectiveness measures are in terms of the incremental costs per
averted illness, and the average cost per averted illness.
The incremental cost per averted illness is used to measure the
relative cost effectiveness of an option when compared with
successively more stringent requirements. It is computed by dividing
the incremental costs from the option by the incremental benefits.
Since option H averts a larger number of illnesses at lower cost then
options A through F, option H dominates the other options and they can
be eliminated from further consideration in an incremental cost
effectiveness analysis. Thus, the cells for computing the incremental
costs per averted illness for those options are left blank in table 18
of this document. Similarly, through the principle of weak (or
extended) dominance, option I can be eliminated from the incremental
cost effectiveness analysis. (For a full discussion of extended
dominance in cost-effectiveness analysis, see Gold, M.L., J.E. Siegel,
L.B. Russell, and M.C. Weinstein, `` Cost Effectiveness in Health and
Medicine: The Report of the Panel on Cost-Effectiveness in Health and
Medicine, Oxford University Press,'' New York, p. 286, 1996).
Consequently, only options H, the final rule, and the adjusted
comprehensive coverage are used to measure the incremental cost
effectiveness. We assume that bioterrorism considerations would not
alter the relative order of the number of illnesses averted across all
options.
The average costs per averted illness reported in table 18 of this
document are calculated by dividing the annualized costs by the total
number of illnesses averted for each option. The average costs per
averted illness is the cost-effectiveness of each option relative to
the baseline. For the final rule, the average cost-effectiveness
expressed in costs per illness prevented is $110,000 discounted at 7
percent and $108,000 discounted at 3 percent.
Table 18.--Costs, Food Safety Benefits, and Cost Effectiveness of Alternative Coverage Options
----------------------------------------------------------------------------------------------------------------
Costs Benefits Cost Effectiveness
------------------------------------------------------------------------------------------------
Incremental
Annualized Incremental Illnesses Incremental Cost per Average Cost
Costs Cost averted Benefit Averted per Averted
Illness Illness
----------------------------------------------------------------------------------------------------------------
Option A $40,975,852 ............... 245 ............... .............. $167,248
----------------------------------------------------------------------------------------------------------------
Option C $56,753,102 ............... 316 ............... .............. $179,598
----------------------------------------------------------------------------------------------------------------
Option D $67,712,296 ............... 355 ............... .............. $190,739
----------------------------------------------------------------------------------------------------------------
Option E $69,902,094 ............... 359 ............... .............. $194,713
----------------------------------------------------------------------------------------------------------------
Option B $135,636,340 ............... 572 ............... .............. $237,126
----------------------------------------------------------------------------------------------------------------
Option F $119,792,995 ............... 621 ............... .............. $192,903
----------------------------------------------------------------------------------------------------------------
[[Page 71645]]
Option H $30,610,378 $30,610,378 1,067 1,067 $28,688 $28,688
----------------------------------------------------------------------------------------------------------------
Option I $106,138,020 ............... 1,072 ............... .............. $99,009
----------------------------------------------------------------------------------------------------------------
Final Rule $132,750,092 $102,139,714 1,204 137 $745,545 $110,258
----------------------------------------------------------------------------------------------------------------
Adjusted $244,134,086 $111,383,994 1,282 78 $1,428,000 $190,432
Comprehensive
----------------------------------------------------------------------------------------------------------------
The distribution of the number of illnesses averted due to faster
traceback investigations and more successfully completed traceback
investigations for each policy option are also reported in the
following tables. Of the 800 annual food safety illnesses averted due
to improved recordkeeping practices, about 600 can be attributed to
more successfully completed tracebacks, and about 200 from faster
tracebacks. The sum of averted illnesses from faster tracebacks, plus
that from more successfully completed tracebacks may differ from that
reported in the table of totals because of rounding in the
computations.
Table 19.--All Averted (Reported and Unreported) Food Safety Illnesses per Year
----------------------------------------------------------------------------------------------------------------
Mean Low High
----------------------------------------------------------------------------------------------------------------
Adjusted Comprehensive 1,282 0 6,400
----------------------------------------------------------------------------------------------------------------
Option A 245 0 1,079
----------------------------------------------------------------------------------------------------------------
Option B 572 0 2,660
----------------------------------------------------------------------------------------------------------------
Option C 316 0 1,452
----------------------------------------------------------------------------------------------------------------
Option D 355 0 1,612
----------------------------------------------------------------------------------------------------------------
Option E 359 0 1,750
----------------------------------------------------------------------------------------------------------------
Option F 621 0 2,846
----------------------------------------------------------------------------------------------------------------
Final Rule 1,204 0 6,061
----------------------------------------------------------------------------------------------------------------
Option H 1,067 0 5,372
----------------------------------------------------------------------------------------------------------------
Option I 1,072 0 5,504
----------------------------------------------------------------------------------------------------------------
Table 20.--Averted Annual Food Safety Illnesses From Faster Traceback Investigations
----------------------------------------------------------------------------------------------------------------
Mean Low High
----------------------------------------------------------------------------------------------------------------
Adjusted Comprehensive 451 0 2,692
----------------------------------------------------------------------------------------------------------------
Option A 83 0 513
----------------------------------------------------------------------------------------------------------------
Option B 206 0 1,278
----------------------------------------------------------------------------------------------------------------
Option C 111 0 691
----------------------------------------------------------------------------------------------------------------
Option D 122 0 755
----------------------------------------------------------------------------------------------------------------
Option E 124 0 763
----------------------------------------------------------------------------------------------------------------
Option F 184 0 1,078
----------------------------------------------------------------------------------------------------------------
Final Rule 425 0 2,532
----------------------------------------------------------------------------------------------------------------
Option H 387 0 2,307
----------------------------------------------------------------------------------------------------------------
Option I 396 0 2,414
----------------------------------------------------------------------------------------------------------------
[[Page 71646]]
Table 21.--Averted Annual Food Safety Illnesses From More Successfully Completed Tracebacks
----------------------------------------------------------------------------------------------------------------
Mean Low High
----------------------------------------------------------------------------------------------------------------
Adjusted Comprehensive 826 0 3,024
----------------------------------------------------------------------------------------------------------------
Option A 161 0 605
----------------------------------------------------------------------------------------------------------------
Option B 364 0 1,296
----------------------------------------------------------------------------------------------------------------
Option C 203 0 778
----------------------------------------------------------------------------------------------------------------
Option D 232 0 864
----------------------------------------------------------------------------------------------------------------
Option E 234 0 864
----------------------------------------------------------------------------------------------------------------
Option F 434 0 1,728
----------------------------------------------------------------------------------------------------------------
Final Rule 775 0 2,592
----------------------------------------------------------------------------------------------------------------
Option H 676 0 2,592
----------------------------------------------------------------------------------------------------------------
Option I 673 0 2,592
----------------------------------------------------------------------------------------------------------------
The next table shows the food safety benefits as the number of
averted illnesses valued by the low, middle, and high cost of illness
estimates, and for the $5 million and $6.5 million estimates of the
value of a statistical life. These are estimated annual food safety
benefits and should be interpreted as minimum benefits from this final
rule because food security benefits are not included.
Table 22.--Value of Averted Food Safety Illnesses for the Final Rule
----------------------------------------------------------------------------------------------------------------
Low\2\ Medium\3\ High\4\
----------------------------------------------------------------------------------------------------------------
VSL\1\ = $5 million $7,388,685 $15,905,182 $24,421,229
----------------------------------------------------------------------------------------------------------------
VSL = $6.5 million $8,199,494 $16,715,991 $25,232,038
----------------------------------------------------------------------------------------------------------------
\1\ Value of a statistical life used to value the averted deaths.
\2\ A value of $100,000 was used to value a year in good health.
\3\ A value of $300,000 was used to value a year in good health.
\4\ A value of $500,000 was used to value a year in good health.
V. Final Regulatory Flexibility Analysis
FDA has examined the economic implications of this final 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 final
rule on small entities. FDA finds that this final rule may have a
significant economic impact on a substantial number of small entities.
We estimate that more than 75 percent of all businesses covered by
this final rule are small or very small. The undiscounted per-facility
costs for small and very small businesses are reported in the following
table. Costs for learning and records redesign are one-time costs
incurred in the first 2 years following publication of the final rule.
Additional records maintenance costs are incurred each year following
publication of the final rule beginning in the second year for large
and small firms, and in the third year for very small firms.
Table 23.--Estimated Per Facility Recordkeeping Costs
------------------------------------------------------------------------
21 CFR Section Costs
------------------------------------------------------------------------
1.337, 1.345, and 1.352 (learning) $120.00
------------------------------------------------------------------------
1.337, 1.345, and 1.352 (records $411.00
redesign)
------------------------------------------------------------------------
1.337, 1.345, and 1.352 (additional $219.00
records maintenance)
------------------------------------------------------------------------
Comments Summary
Comments cover topics such as reasons why staggering compliance
dates will not achieve regulatory flexibility objectives, suggestions
of regulatory alternatives that would achieve regulatory flexibility
objectives, appeals to consider the cumulative costs of all four
bioterrorism regulations together when considering the impact on small
businesses, appeals for exclusion of certain categories of small
businesses, as well as other general topics. The different categories
of comments are summarized in the following paragraphs.
(Comment 214) One comment finds the definition of ``small
business'' uncertain and asks whether it is based on either the number
of employees at a
[[Page 71647]]
firm or the number of employees at a facility.
(Response) The U.S. Small Business Administration (SBA) establishes
small business definitions (or size standards) by industry (Ref. 28).
The most common SBA size standard applicable to manufacturers covered
by this final rule is 500 employees. Other pertinent SBA size standards
include 100 employees for wholesale distributors, $21.5 million in
receipts for transporters, and $6 million or $23 million in receipts
for retailers, depending on the type of store. After discussions with
the SBA, we define a small business in the food industry as having more
than 10 and fewer than 500 full-time equivalent employees, and we
define very small firms as having 10 or fewer full-time equivalent
employees.
Firm size, rather than facility size, is used in the cost estimates
for regulatory flexibility purposes whenever the data permit. For
purpose of the compliance dates, the firm size governs. For purpose of
the retail exclusion, the number of employees at the facility applies.
(Comment 215) Several comments suggest that the recordkeeping
requirements are so onerous that compliance periods should be extended
to as many as 7 years.
(Response) In the PRIA, FDA assumed that the recordkeeping
provisions required a limited amount of additional information over
current business practices. Comments suggest that this may not be true
for certain provisions. In the final rule, we have relaxed some of the
more costly provisions, such as the requirement for records to contain
lot code information for all persons subject to the final rule, and we
have relaxed the records access requirement to 24 hours. We have also
revised the requirements applicable to transporters so that they have
multiple options for complying with the final rule. These modifications
should reduce the costs of compliance for small businesses. In
addition, we have extended the compliance dates of the final rule by 6
months to 12, 18, and 24 months for large, small, and very small
businesses. The extension should further reduce the costs of compliance
with the final rule because the costs of the required changes in
records quality and records access fall as compliance time increases.
Moreover, given the purpose of the Bioterrorism Act, FDA believes a 7-
year compliance period is excessive.
(Comment 216) One comment states that large carriers account for
only 0.28 percent of all carriers and that 0.28 percent of all carriers
should not be unfairly burdened to comply with regulations 1 year
before the rest. Another comment states that across-the-board
compliance dates of 18 months better serves the purposes of the
Bioterrorism Act, because it reflects the large volume of food that
moves through big business.
(Response) The Regulatory Flexibility Act requires that special
consideration be given to small businesses when such flexibility does
not compromise the efficacy of the regulation. In the PRIA, FDA
considered several other potential flexibility options and found that
the policy of staggering the compliance dates and exempting very small
retailers were the only ones that did not appreciably compromise the
effectiveness of the regulation.
(Comment 217) Several comments state that large businesses would
likely pass the costs of the regulation on to smaller firms. In
addition, the proposed regulatory flexibility from staggered compliance
dates would largely be ineffective, because large businesses will
require their small suppliers to comply with the regulation to ensure
their own compliance. Another comment suggests extending the compliance
dates to 18 months for large businesses and 36 months to small
businesses but acknowledged that staggering compliance dates would
complicate business practices.
(Response) FDA acknowledges the difficulties in addressing
regulatory flexibility considerations with staggered compliance dates.
Nevertheless, FDA has decided that staggering the compliance dates is a
viable mechanism to address regulatory flexibility considerations
without compromising the effectiveness of the regulation as intended by
Congress when it enacted section 306 of the Bioterrorism Act. However,
to address the concerns expressed by these comments without
compromising the effectiveness of the regulation, in the final rule
compliance dates for all size businesses have been extended by 6 months
to 12 months for large, 18 months for small, and 24 months for very
small businesses. FDA further notes that small and very small
businesses are not required by FDA to comply earlier than these
timeframes even if they are doing business with larger businesses that
have earlier compliance dates.
(Comment 218) At least one comment suggests that requiring the same
compliance date for all firms and excluding small businesses from
complying with the regulation compromises the effectiveness of the
regulation due to breaks in the recordkeeping chain during traceback
investigations. Such a compromise is contrary to the intent of the
Regulatory Flexibility Act.
(Response) In the PRIA, FDA considered three regulatory flexibility
options: (1) Exempting small business from all regulatory requirements,
(2) offering small business exemptions from parts of the regulation,
and (3) specifying longer effective compliance dates for small
businesses. We found that specifying longer compliance dates for small
businesses was one option that would not appreciably compromise the
purpose of the regulation.
(Comment 219) Several comments state that the 4 and 8 hour
provision for records access is more onerous for small businesses and
suggest either flexibility in the extent of the records to be made
available in that time period for small businesses, or extending the
records access time requirements for small businesses. One comment
suggests that the rule requires firms to keep more records than is
necessary and that FDA should consider relaxing the level of detail in
the small business records required to be made available in the 4 and
8-hour records access times. One comment states that the burden on a
small firm from devoting a single employee, who generally performs
multiple tasks, to accessing requested records is greater than that on
a large firm devoting an employee who may generally perform only one
task.
(Response) The proposed rule required large and small firms to
provide access to records up to 4 hours after a request made during
business hours, and up to 8 hours after a request made after business
hours. FDA's current experience is that access to records generally
takes 2 to 3 days and the requirements in the regulation will
considerably increase the speed of traceback investigations. To
acknowledge the concerns addressed by these comments, FDA has relaxed
the records access requirement to as soon as possible, but within 24
hours. This longer requirement should provide regulatory relief to
small businesses; however, FDA reiterates that it expects all
businesses to provide access as soon as possible, given that an access
request would only be made in a food-related emergency.
(Comment 220) Several comments request an exemption for some
specific categories of small business, because they believe the
estimated costs of compliance for small businesses are inadequate.
Furthermore, one comment states that the regulatory flexibility
provisions in the proposed rule did not satisfy SBREFA obligations.
(Response) FDA addresses SBREFA's regulatory flexibility issues by
[[Page 71648]]
exempting very small retailers, and by staggering compliance dates so
that small and very small businesses would have 18 and 24 months to
comply with the regulation. Because food in commerce generally passes
through at least one small business before reaching consumers,
excluding small businesses in every sector from compliance with the
regulation would risk severely compromising the effectiveness of the
regulation due to breaks in the recordkeeping chain during traceback
investigations.
(Comment 221) Some comments argue that FDA should address the
relatively large burden on small businesses due to the cumulative cost
of the four bioterrorism regulations when considered together. The
comments state that the proposed registration rule estimated that
approximately 16 percent of foreign businesses might cease to export to
the United States as a result of that rule. The comments note that this
figure was used in the sensitivity analysis in the proposed
recordkeeping rule to estimate the costs of the rule with 16 percent
fewer foreign facilities. However, the comments stated that FDA did not
consider the costs of all the bioterrorism regulations combined on
small (or other) businesses.
(Response) The cumulative costs of multiple regulations are rarely
considered in regulatory impact analyses. However, costs of the other
three regulations were analyzed in their respective regulatory impact
analyses. To estimate the cumulative costs of the regulation one could
add together the costs determined for all four regulations.
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 will 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 $112,300,000. FDA has determined that this final
rule does constitute a significant rule under the Unfunded Mandates
Reform Act.
Most of the requirements of the Unfunded Mandates have been
fulfilled in the Executive Order 12866 analysis in the PRIA. The
requirements under the Unfunded Mandates Act of 1995 include assessing
the rule's effects on future costs; productivity; particular regions,
communities, or industrial sectors; economic growth; full employment;
job creation; and exports.
Future Costs
The future costs from the recordkeeping rule include the recurring
costs, which reach their long-term value in the third year after
promulgation of the final rule. These costs will be incurred by all
domestic facilities that manufacture, process, pack, transport,
distribute, receive, hold, or import food except very small retail
facilities.
Recurring costs from collecting new information as well as the
learning costs for new entrants will be incurred in each future year.
An hourly burden of 30 minutes a week was estimated for the additional
monitoring and recordkeeping that will be required from this final
rule. This hourly burden estimate was modified for convenience stores
to allow for structural differences assumed in their operations. Refer
to the PRIA for a fuller illustration of the future costs of the final
rule.
Table 24.--Future Costs
----------------------------------------------------------------------------------------------------------------
Mean Low High
----------------------------------------------------------------------------------------------------------------
Year 3 and later years $123,209,200 $121,980,000 $125,788,000
----------------------------------------------------------------------------------------------------------------
Particular Regions, Communities, or Industrial Sectors
The costs of the establishment and maintenance of records will be
shared among all domestic manufacturers, processors, packers,
transporters, receivers, holders, and importers of food, except very
small retail facilities that are exempted from the final rule. The
higher costs incurred by domestic suppliers as a result of these
regulations will mostly be passed on to consumers in the form of higher
food prices. Because consumer demand for food is highly inelastic,
almost all of the higher costs incurred by food suppliers will be
passed on to consumers. Consequently, higher food prices will reduce
real incomes for all consumers. However, we believe that the benefits
from these regulations will justify the reduction in real incomes.
These benefits are measured as an improved ability by the FDA to
respond to and contain threats of serious adverse health consequences
from accidental or deliberate contamination of food.
National Productivity, Economic Growth, Job Creation, and Full
Employment
Although this regulation is costly, we do not expect it to
substantially affect national productivity, growth, jobs, or full
employment. The total costs will be small relative to the economy, and
will be offset by benefits. The improved ability to respond to, and
contain, serious adverse health consequences means less illness and
fewer sick days taken by employees, and lower adjustment costs by firms
that would otherwise need to hire replacement employees.
Exports
This rule requires additional records to be kept throughout the
production and distribution chain for food. The additional
recordkeeping costs will increase the total costs of production and
distribution for all of the regulated products, including products sold
within the United States and across national borders. These increased
costs will be largely passed on to consumers in the form of higher
prices, which will tend to reduce the quantity demanded of the
regulated products. The increased prices of United States exports could
reduce the quantity of United States exports demanded, particularly in
comparison with exports from countries that do not implement similar
recordkeeping regulations. We expect this effect to be insignificant,
because under the final rule, the increases in the price of United
States exports (and resulting decreases in quantity demanded) will be
quite small.
VII. SBREFA
SBREFA (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
or more; 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 SBREFA, OMB has determined that this
final rule is a major rule for the purpose of congressional review.
[[Page 71649]]
VIII. Paperwork Reduction Act of 1995
This final rule contains information collection requirements that
are subject to review by OMB under the Paperwork Reduction Act of 1995
(PRA) (44 U.S.C. 3501-3520). The title, description, and respondent
description of the information collection requirement are shown below
with an estimate of the annual recordkeeping 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.
Title: Establishment and Maintenance of Records
Description: The Bioterrorism Act contains a provision authorizing
the Secretary to establish requirements regarding the establishment and
maintenance of records by persons who manufacture, process, pack,
transport, distribute, receive, hold, or import food which are needed
to allow the Secretary to identify the immediate previous sources and
immediate subsequent recipients of food, including its packaging, in
order to address credible threats of serious adverse health consequence
or death to humans or animals.
Description of Respondents: Persons that manufacture, process,
pack, hold, receive, distribute, transport, or import food in the
United States are required to establish and maintain records, including
persons that engage in both interstate and intrastate commerce. FDA
received several comments about the hourly burden imposed by the rule
on respondents.
(Comment 222) One comment states that the cumulative effect of the
regulation is a staggering amount of required paperwork that needs to
be organized and made available.
(Response) This comment is not directly responding to any specific
request for comments but is a general comment. The duplication of
records is unnecessary as long as existing records contain all of the
required information. In this analysis we use the FDA small business
model to calculate the effects on small businesses using the difference
between revenues and variable costs as the metric. We incorporated both
the one-time costs and the recurring costs to compute the effects on
small businesses. The effects were computed for firms in the dietary
supplements industry, candy manufacturing, and the ready-to-eat food
manufacturing industry, including firms that manufacture breakfast
cereals, beverages, canned foods, baked items and breads, and dressings
and sauces. While these firms do not represent every category of food
establishment covered by this final rule, they do reflect a large
number of firms in the food industry, including manufacturers, input
suppliers, and distributors. FDA assumes that the cost and revenue
structures of firms not explicitly included in the computation of the
model do not differ substantially from those that are included.
Consistent with FDA's assumption that the rule will require only
small changes to current recordkeeping practices, the findings from the
small business model indicate that virtually no small businesses will
incur negative cash flows as a result of this rule. The percentages of
firms predicted to incur negative cash flows are range from 0.2 percent
to a high of 1.9 percent for the ready-to-eat food manufacturing
industry. These findings strongly suggest that very few firms, if any,
will be driven from business as a result of this rule. In the Unfunded
Mandates section of the PRIA, we also consider the impacts of the
proposal on food prices and conclude that any effect would be
negligible.
(Comment 223) One comment states that the PRA was adopted to
prevent the burden of collecting unnecessary information that has
little practical utility or benefit. The comment further states that
FDA needs to realign the benefits with the costs of the regulation.
(Response) This is a response to the request for comments on
whether the information required in the proposal would have any
practical utility. Compared with the description of the costs in the
proposal, the benefits were not as well defined. In the final rule, the
benefits of each provision are more clearly identified, which
facilitates greater realignment of costs with the benefits of the
regulation. As stated previously, however, the benefits are
underestimated because they only consider food safety concerns and do
not address food security concerns, which are based on classified
information.
(Comment 224) One comment suggests that FDA should reduce the
paperwork burden by integrating the paperwork requirements from this
regulation with current U.S. CBP process so that only one form needs to
be completed.
(Response) The final recordkeeping regulation excludes all foreign
persons, except for foreign persons who transport food in the United
States so that many foreign persons do not have to establish or
maintain records. Moreover, neither the proposed nor final rules
specify the form or format of required records. Accordingly, existing
records used for U.S. CBP purposes may be used if they contain all of
the information required by this final rule and are retained for the
required time period.
Burden: FDA estimates that the paperwork burden of this final rule
will be incurred by approximately 707,672 facilities owned by 581,943
firms. This number includes domestic facilities that manufacture,
process, transport, distribute, pack, receive, hold, or import food as
well as foreign persons who transport food in the United States. Some
of the recordkeeping burden will be incurred at the firm level and some
of the burden will be incurred at the facility level.
The recordkeeping burden for Sec. Sec. 1.337, 1.345, and 1.352 of
this final rule includes learning about the regulation requirements,
the redesign of records, and records maintenance including information
collection for these records. The burden for learning the regulatory
requirements of this proposed recordkeeping rule may be shared by firms
that also need to learn the regulatory requirements of the registration
interim final rule (68 FR 58894). The learning burden presented in
table 25 of this document includes the total number of hours needed to
learn and understand the records required for compliance. This is a
one-time burden that covered firms will incur in the first year
following issuance of the final rule.
The records redesign burden presented in table 25 of this document
reflects the burden that some firms will incur by adding a limited
amount of new information to their records. Some firms will not already
be keeping the required information in a readily accessible form. The
records redesign burden includes labor and capital costs associated
with modifying existing forms so that they are better suited to meet
the recordkeeping requirements. This is assumed to be a one-time burden
incurred by each covered firm in the first and second years following
implementation of the final rule.
FDA expects that personnel at most facilities will incur a records
maintenance burden due to collecting, recording, and checking for
accuracy the limited amount of additional information required by the
proposed rule. The burden from this activity is reported in table 25 of
this document and is assumed to be incurred by all facilities in each
subsequent year following enactment of the final rule. Finally, new
firms are assumed to incur burdens from learning in each subsequent
year following enactment of the final rule. These burdens for new
[[Page 71650]]
firms are reported in table 26 of this document.
Table 25.--Estimated Annual Recordkeeping Burden--First and Second Years\1\
----------------------------------------------------------------------------------------------------------------
No. of Annual
21 CFR Section Record Frequency per Total Annual Hours per Capital Costs Total Hours
keepers Record Records Record
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, 707,672 1 707,672 4.790 ................. 3,390,000
and 1.352
(learning)
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, 150,358 1 150,358 29.084 $70,409,000 4,373,000
and 1.352
(redesign)
----------------------------------------------------------------------------------------------------------------
Total 7,763,000
----------------------------------------------------------------------------------------------------------------
\1\ There are no operating and maintenance costs associated with this collection of information.
Table 26.--Estimated Annual Recordkeeping Burden--Subsequent Years\1\
----------------------------------------------------------------------------------------------------------------
Annual
21 CFR Section No. of Record Frequency per Total Annual Hours per Total Hours
Keepers Record Records Record
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352 379,493 1 379,493 13.228 5,020,000
(additional records
maintenance)
----------------------------------------------------------------------------------------------------------------
1.337, 1.345, and 1.352 70,767 1 70,767 4.790 339,000
(learning for new
firms)
----------------------------------------------------------------------------------------------------------------
Total 5,359,000
----------------------------------------------------------------------------------------------------------------
\1\ There are no capital costs or operating and maintenance costs associated with this collection of
information.
The information collection provisions of this final rule have been
submitted to OMB for review.
Before the effective date of this final rule, FDA will publish a
notice in the Federal Register announcing OMB's decision to approve,
modify, or disapprove the information collection provisions in this
final rule. An agency may not conduct or sponsor, and a person is not
required to respond to, a collection of information unless it displays
a currently valid OMB control number.
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 final 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 concludes that the final rule does not contain policies that
have federalism implications as defined in the Executive order and,
consequently, a federalism summary impact statement is not required.
XI. References
The following references have been placed on display in the
Division of Dockets Management (see ADDRESSES) and may be seen by
interested persons between 9 a.m. and 4 p.m., Monday through Friday.
(FDA has verified the Web site addresses, but we are not responsible
for subsequent changes to the nonFDA Web sites after this document
publishes in the Federal Register.)
1. Eastern Research Group, Small Business Model, 2003.
2. Estrin, A., Memo to Docket Summarizing Conversations Held
Between May 15, 2003, and August 7, 2003, With Experts Jack Guzewich
and Sarah Pichette; Also a Description of Data Obtained From FDA's
Outbreak Investigations, February 6, 2004.
3. Mead, P.S., L. Slutaker, V. Dietz, et al., ``Food-Related
Illness and Death in the United States,'' Emerging Infectious
Diseases, Center for Disease Control and Prevention (CDC), vol. 5,
no. 5, September-October 1999.
4. Finger, Anne L., Senior Editor, ``Primary Care: Where Do You
Stand on the Pay Scale?'' Medical Economics, (http://www.memag.com/
), March 19, 2001.
5. Healthcare Cost and Utilization Project, Nation Inpatient
Sample (NIS)--2001, Washington, DC, Agency for Healthcare Research
and Quality, 2003.
6. FDA/CFSAN Bad Bug Book, accessed at http://www.cfsan.fda.gov/
mow/intro.html on May 3. 2004.
7. National Center for Infectious Diseases, Infectious Disease
Information, CDC, accessed at http://www.cdc.gov/ncidod/diseases/index.htm on May 3, 2004.
8. ``Estimating the Value of Consumers' Loss from Foods
Violating the FD&C Act,'' Research Triangle Institute (RTI), vol.
II, Final Report, September 1988.
9. ``Modeling the Effects of Food Handling Practices on the
Incidence of Foodborne Illness,'' Final Report Contract No. 223-01-
2466, Task Order 1, With FDA Performed by RTI International, April
2003.
10. Brevard, Theresa A., et al, ``Acute Occupational
Disinfectant-Related Illness Among Youth, 1993-1998,'' Environmental
Health Perspectives, vol. 111, no. 13, 2003.
11. ``Surveillance for Acute Insecticide-Related Illness
Associated with Mosquito-Control Efforts--Nine States, 1999-2002,''
Morbidity and Mortality Weekly Report, vol. 52, no. 27, pp. 629-634,
July 11, 2003.
12. Kaplan, et al., ``The Quality of Well-Being Scale: Rationale
for a Single Quality of Life Index,'' Quality of Life Assessment:
Key Issues in the 1990s, ed. Stuart R. Walker and Rachel M. Rosser,
1993.
13. Garber, A.M. and C.E. Phelps, Economic Foundations of Cost-
Effectiveness Analysis,'' Journal of Health Economics, vol. 16, pp.
1-31, 1997.
14. U.S. Census Bureau, USA Statistics in Brief, http://
www.census.gov/statab/www/
[[Page 71651]]
part3.htmlincome, accessed on November 29, 2004.
15. Viscusi, W., Joseph E. Kip and Aldy, ``The Value of a
Statistical Life: A Critical Review of Market Estimates Throughout
the World,'' February 2003, NBER Working Paper No. W9487, accessed
at http://ssrn.com/abstract=379270 on May 3, 2004.
16. National Restaurant Association, 2004 Restaurant Industry
Forecast, 2004.
17. U.S. Census, American FactFinder, 1997 Economic Census,
accessed at (http://factfinder.census.gov/servlet/DatasetMainPageServlet?
--program=ECN&--lang=en&--t=) on March 31, 2004.
18. U.S. Department of Transportation, available at http://www.transtats.bts.gov, accessed on April 6, 2004.
19. Hennessy, T.W., C.W. Hedberg, L. Slutsker, et al., ``A
National Outbreak of Salmonella Enteriditis Infections from Ice
Cream,'' New England Journal of Medicine, vol. 334, pp. 1281-1286,
1996.
20. Lee, Judy O., E-Mail Correspondence, October 27, 2004 at
1:33 p.m.
21. United States Census Bureau, 2000 County Business Patterns,
available at http://www.census.gov/epcd/cbp/view/cbpview.html,
accessed on March 30, 2004.
22. United States Census Bureau, 1999 Nonemployer Statistics,
available at http://www.census.gov/epcd/nonemployer/index.html,
accessed on March 30, 2004.
23. Economic Data Resources, Estimates of Commercial Motor
Vehicles Using the Southwest Border Crossings, Under the Auspices of
the International Association of Chiefs of Police for U.S.
Department of Transportation, September 20, 2000.
24. Direct Sales World, Facts and Figures and Comment of the
World of Direct Sales, accessed at http://www.nmworld.com/pages/Countries/USA/index.html on July 10, 2003.
25. Direct Selling Association, Direct Selling By the Numbers,
accessed at http://www.dsa.org/research/numbers.htm#DISTTYPE on July
10, 2003.
26. University of Pennsylvania Center Rate Schedule, Internet
address: http://www.archives.upenn.edu/urc/rates04.html accessed on
September 15, 2003.
27. United States Census Bureau, 2002 NAICS Definitions accessed
at http://www.census.gov/epcd/naics02/def/ND488510.HTM on September
15, 2003.
28. United States Small Business Administration, Small Business
Size Regulations, 13 CFR 121.201, available at http://www.sba.gov/size/indextableofsize.html, accessed on February 27, 2004.
29. Memorandum on the Number of Restaurants Selling Retail Food,
dated December 15, 2003.
List of Subjects
21 CFR Part 1
Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling,
Reporting and recordkeeping requirements.
21 CFR Part 11
Administrative practice and procedure, Computer technology,
Reporting and recordkeeping requirements.
0
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR parts
1 and 11 are amended as follows:
PART 1--GENERAL ENFORCEMENT REGULATIONS
0
1. The authority citation for 21 CFR part 1 continues to read as
follows:
Authority: 15 U.S.C. 1453, 1454, 1455; 19 U.S.C. 1490, 1491; 21
U.S.C. 321, 331, 332, 333, 334, 335a, 343, 350c, 350d, 352, 355,
360b, 362, 371, 374, 381, 382, 393; 42 U.S.C. 216, 241, 243, 262,
264.
0
2. New subpart J (Sec. Sec. 1.326 through 1.368) is added to part 1 to
read as follows:
Subpart J--Establishment, Maintenance, and Availability of Records
General Provisions
Sec.
1.326 Who is subject to this subpart?
1.327 Who is excluded from all or part of the regulations in this
subpart?
1.328 What definitions apply to this subpart?
1.329 Do other statutory provisions and regulations apply?
1.330 Can existing records satisfy the requirements of this subpart?
Requirements for Nontransporters to Establish and Maintain Records to
Identify the Nontransporter and Transporter Immediate Previous Sources
of Food
1.337 What information must nontransporters establish and maintain
to identify the nontransporter and transporter immediate previous
sources of food?
Requirements for Nontransporters to Establish and Maintain Records to
Identify the Nontransporter and Transporter Immediate Subsequent
Recipients of Food
1.345 What information must nontransporters establish and maintain
to identify the nontransporter and transporter immediate subsequent
recipients of food?
Requirements for Transporters to Establish and Maintain Records
1.352 What information must transporters establish and maintain?
General Requirements
1.360 What are the record retention requirements?
1.361 What are the record availability requirements?
1.362 What records are excluded from this subpart?
1.363 What are the consequences of failing to establish or maintain
records or make them available to FDA as required by this subpart?
Compliance Dates
1.368 What are the compliance dates for this subpart?
Subpart J--Establishment, Maintenance, and Availability of Records
General Provisions
Sec. 1.326 Who is subject to this subpart?
(a) Persons who manufacture, process, pack, transport, distribute,
receive, hold, or import food in the United States are subject to the
regulations in this subpart, unless you qualify for one of the
exclusions in Sec. 1.327. If you conduct more than one type of
activity at a location, you are required to keep records with respect
to those activities covered by this subpart, but are not required by
this subpart to keep records with respect to activities that fall
within one of the exclusions in Sec. 1.327.
(b) Persons subject to the regulations in this subpart must keep
records whether or not the food is being offered for or enters
interstate commerce.
Sec. 1.327 Who is excluded from all or part of the regulations in
this subpart?
(a) Farms are excluded from all of the requirements in this
subpart.
(b) Restaurants are excluded from all of the requirements in this
subpart. A restaurant/retail facility is excluded from all of the
requirements in this subpart if its sales of food it prepares and sells
to consumers for immediate consumption are more than 90 percent of its
total food sales.
(c) Fishing vessels, including 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, are excluded from all of the requirements in
this subpart, except Sec. Sec. 1.361 and 1.363. However, those fishing
vessels otherwise engaged in processing fish are subject to all of the
requirements in this subpart. For the purposes of this section,
``processing'' means handling, storing, preparing, shucking, changing
into different market forms, manufacturing, preserving, packing,
labeling, dockside unloading, holding or heading, eviscerating, or
freezing other than solely to prepare fish for holding on board a
harvest vessel.
(d) Persons who distribute food directly to consumers are excluded
from the requirements in Sec. 1.345 to establish and maintain records
to identify the nontransporter and transporter immediate subsequent
recipients as to those transactions. The term ``consumers'' does not
include businesses.
[[Page 71652]]
(e) Persons who operate retail food establishments that distribute
food to persons who are not consumers are subject to all of the
requirements in this subpart. However, the requirements in Sec. 1.345
to establish and maintain records to identify the nontransporter and
transporter immediate subsequent recipients that are not consumers
applies as to those transactions only to the extent the information is
reasonably available.
(1) For purposes of this section, retail food establishment is
defined to mean an establishment that sells food products directly to
consumers as its primary function. The term ``consumers'' does not
include businesses.
(2) A retail food establishment may manufacture/process, pack, or
hold food if the establishment's primary function is to sell from that
establishment food, including food that it manufactures/processes,
packs, or holds, directly to consumers.
(3) A retail food establishment's primary function is to sell food
directly to consumers if the annual monetary value of sales of food
products directly to consumers exceeds the annual monetary value of
sales of food products to all other buyers.
(4) A ``retail food establishment'' includes grocery stores,
convenience stores, and vending machine locations.
(f) Retail food establishments that employ 10 or fewer full-time
equivalent employees are excluded from all of the requirements in this
subpart, except Sec. Sec. 1.361 and 1.363. The exclusion is based on
the number of full-time equivalent employees at each retail food
establishment and not the entire business, which may own numerous
retail stores.
(g) Persons who manufacture, process, pack, transport, distribute,
receive, hold, or import food in the United States that is within the
exclusive jurisdiction of 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.) are excluded from all
of the requirements in this subpart with respect to that food while it
is under the exclusive jurisdiction of USDA.
(h) Foreign persons, except for foreign persons who transport food
in the United States, are excluded from all of the requirements of this
subpart.
(i) Persons who manufacture, process, pack, transport, distribute,
receive, hold, or import food are subject to Sec. Sec. 1.361 and 1.363
with respect to its packaging (the outer packaging of food that bears
the label and does not contact the food). All other persons who
manufacture, process, pack, transport, distribute, receive, hold, or
import packaging are excluded from all of the requirements of this
subpart.
(j) Persons who manufacture, process, pack, transport, distribute,
receive, hold, or import food contact substances other than the
finished container that directly contacts food are excluded from all of
the requirements of this subpart, except Sec. Sec. 1.361 and 1.363.
(k) Persons who place food directly in contact with its finished
container are subject to all of the requirements of this subpart as to
the finished container that directly contacts that food. All other
persons who manufacture, process, pack, transport, distribute, receive,
hold, or import the finished container that directly contacts the food
are excluded from the requirements of this subpart as to the finished
container, except Sec. Sec. 1.361 and 1.363.
(l) Nonprofit food establishments are excluded from all of the
requirements in this subpart, except Sec. Sec. 1.361 and 1.363.
(m) Persons who manufacture, process, pack, transport, distribute,
receive, hold, or import food for personal consumption are excluded
from all of the requirements of this subpart.
(n) Persons who receive or hold food on behalf of specific
individual consumers and who are not also parties to the transaction
and who are not in the business of distributing food are excluded from
all of the requirements of this subpart.
Sec. 1.328 What definitions apply to this subpart?
The definitions of terms in section 201 of the Federal Food, Drug,
and Cosmetic Act (the act) (21 U.S.C. 321) apply to such terms when
used in this subpart. In addition, for the purposes of this subpart:
Act means the Federal Food, Drug, and Cosmetic Act.
Farm means a facility in one general physical location devoted to
the growing and harvesting of crops, the raising of animals (including
seafood), or both. Washing, trimming of outer leaves, and cooling
produce are considered part of harvesting. The term ``farm'' includes:
(1) Facilities that pack or hold food, provided that all food used
in such activities is grown, raised, or consumed on that farm or
another farm under the same ownership; and
(2) 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.
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 as
components of food; animal feed, including pet food; food and feed
ingredients and additives, including substances that migrate into food
from the finished container 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.
Full-time equivalent employee means all individuals employed by the
person claiming the exemption. The number of full-time equivalent
employees is determined by dividing the total number of hours of salary
or wages paid directly to employees of the person and of all of its
affiliates by the number of hours of work in 1 year, 2,080 hours (i.e.,
40 hours x 52 weeks).
Holding means storage of food. Holding facilities include
warehouses, cold storage facilities, storage silos, grain elevators,
and liquid storage tanks.
Manufacturing/processing means making food from one or more
ingredients, or synthesizing, preparing, treating, modifying, or
manipulating food, including food crops or ingredients. Examples of
manufacturing/processing activities are cutting, peeling, trimming,
washing, waxing, eviscerating, rendering, cooking, baking, freezing,
cooling, pasteurizing, homogenizing, mixing, formulating, bottling,
milling, grinding, extracting juice, distilling, labeling, or
packaging.
Nonprofit food establishment means a charitable entity that
prepares or serves food directly to the consumer or otherwise provides
food or meals for consumption by humans or animals in the United
States. The term includes central food banks, soup kitchens, and
nonprofit food delivery services. To be considered a nonprofit food
establishment, the establishment must meet the terms of section
501(c)(3) of the U.S. Internal Revenue Code (26 U.S.C. 501(c)(3)).
Nontransporter means a person who owns food or who holds,
manufactures, processes, packs, imports, receives, or distributes food
for purposes other than transportation.
Nontransporter immediate previous source means a person that last
had food before transferring it to another nontransporter.
[[Page 71653]]
Nontransporter immediate subsequent recipient means a
nontransporter that acquires food from another nontransporter.
Packaging means the outer packaging of food that bears the label
and does not contact the food. Packaging does not include food contact
substances as they are defined in section 409(h)(6) of the act (21
U.S.C. 348(h)(6)).
Person includes individual, partnership, corporation, and
association.
Recipe means the formula, including ingredients, quantities, and
instructions, necessary to manufacture a food product. Because a recipe
must have all three elements, a list of the ingredients used to
manufacture a product without quantity information and manufacturing
instructions is not a recipe.
Restaurant means a facility that prepares and sells food directly
to consumers for immediate consumption. ``Restaurant'' does not include
facilities that provide food to interstate conveyances, central
kitchens, and other similar facilities that do not prepare and serve
food directly to consumers.
(1) Facilities in which food is directly provided to humans, such
as cafeterias, lunchrooms, cafes, bistros, fast food establishments,
food stands, saloons, taverns, bars, lounges, catering facilities,
hospital kitchens, day care kitchens, and nursing home kitchens, are
restaurants.
(2) Pet shelters, kennels, and veterinary facilities in which food
is directly provided to animals are restaurants.
Transporter means a person who has possession, custody, or control
of an article of food in the United States for the sole purpose of
transporting the food, whether by road, rail, water, or air.
Transporter also includes a foreign person that transports food in the
United States, regardless of whether that foreign person has
possession, custody, or control of that food for the sole purpose of
transporting that food.
Transporter's immediate previous source means a person from whom a
transporter received food. This source can be either another
transporter or a nontransporter.
Transporter's immediate subsequent recipient means a person to whom
a transporter delivered food. This recipient can be either another
transporter or a nontransporter.
You means a person subject to this subpart under Sec. 1.326.
Sec. 1.329 Do other statutory provisions and regulations apply?
(a) In addition to the regulations in this subpart, you must comply
with all other applicable statutory provisions and regulations related
to the establishment and maintenance of records for foods except as
described in paragraph (b) of this section. For example, the
regulations in this subpart are in addition to existing recordkeeping
regulations for low acid canned foods, juice, seafood, infant formula,
color additives, bottled water, animal feed, and medicated animal feed.
(b) Records established or maintained to satisfy the requirements
of this subpart that meet the definition of electronic records in Sec.
11.3(b)(6) (21 CFR 11.3 (b)(6)) of this chapter are exempt from the
requirements of part 11 of this chapter. Records that satisfy the
requirements of this subpart but that are also required under other
applicable statutory provisions or regulations remain subject to part
11 of this chapter.
Sec. 1.330 Can existing records satisfy the requirements of this
subpart?
The regulations in this subpart do not require duplication of
existing records if those records contain all of the information
required by this subpart. If a covered person keeps records of all of
the information as required by this subpart to comply with other
Federal, State, or local regulations, or for any other reason, then
those records may be used to meet these requirements. Moreover, persons
do not have to keep all of the information required by this rule in one
set of records. If they have records containing some of the required
information, they may keep those existing records and keep, either
separately or in a combined form, any new information required by this
rule. There is no obligation to create an entirely new record or
compilation of records containing both existing and new information,
even if the records containing some of the required information were
not created at the time the food was received or released.
Requirements for Nontransporters to Establish and Maintain Records
to Identify the Nontransporter and Transporter Immediate Previous
Sources of Food
Sec. 1.337 What information must nontransporters establish and
maintain to identify the nontransporter and transporter immediate
previous sources of food?
(a) If you are a nontransporter, you must establish and maintain
the following records for all food you receive:
(1) The name of the firm, address, telephone number and, if
available, the fax number and e-mail address of the nontransporter
immediate previous source, whether domestic or foreign;
(2) An adequate description of the type of food received, to
include brand name and specific variety (e.g., brand x cheddar cheese,
not just cheese; or romaine lettuce, not just lettuce);
(3) The date you received the food;
(4) For persons who manufacture, process, or pack food, the lot or
code number or other identifier of the food (to the extent this
information exists);
(5) The quantity and how the food is packaged (e.g., 6 count
bunches, 25 pound (lb) carton, 12 ounce (oz) bottle, 100 gallon (gal)
tank); and
(6) The name of the firm, address, telephone number, and, if
available, the fax number and e-mail address of the transporter
immediate previous source (the transporter who transported the food to
you).
Requirements for Nontransporters to Establish and Maintain Records
to Identify the Nontransporter and Transporter Immediate Subsequent
Recipients of Food
Sec. 1.345 What information must nontransporters establish and
maintain to identify the nontransporter and transporter immediate
subsequent recipients of food?
(a) If you are a nontransporter, you must establish and maintain
the following records for food you release:
(1) The name of the firm, address, telephone number, and, if
available, the fax number and e-mail address of the nontransporter
immediate subsequent recipient, whether domestic or foreign;
(2) An adequate description of the type of food released, to
include brand name and specific variety (e.g., brand x cheddar cheese,
not just cheese; or romaine lettuce, not just lettuce);
(3) The date you released the food;
(4) For persons who manufacture, process, or pack food, the lot or
code number or other identifier of the food (to the extent this
information exists);
(5) The quantity and how the food is packaged (e.g., 6 count
bunches, 25 lb carton, 12 oz bottle, 100 gal tank);
(6) The name of the firm, address, telephone number, and, if
available, the fax number and e-mail address of the transporter
immediate subsequent recipient (the transporter who transported the
food from you); and
(b) Your records must include information reasonably available to
you to identify the specific source of each ingredient used to make
every lot of finished product.
Requirements for Transporters to Establish and Maintain Records
Sec. 1.352 What information must transporters establish and maintain?
If you are a transporter, you must establish and maintain the
following
[[Page 71654]]
records for each food you transport in the United States. You may
fulfill this requirement by either:
(a) Establishing and maintaining the following records:
(1) Names of the transporter's immediate previous source and
transporter's immediate subsequent recipient;
(2) Origin and destination points;
(3) Date shipment received and date released;
(4) Number of packages;
(5) Description of freight;
(6) Route of movement during the time you transported the food; and
(7) Transfer point(s) through which shipment moved; or
(b) Establishing and maintaining records containing the following
information currently required by the Department of Transportation's
Federal Motor Carrier Safety Administration (of roadway interstate
transporters (49 CFR 373.101 and 373.103) as of December 9, 2004:
(1) Names of consignor and consignee;
(2) Origin and destination points;
(3) Date of shipment;
(4) Number of packages;
(5) Description of freight;
(6) Route of movement and name of each carrier participating in the
transportation; and
(7) Transfer points through which shipment moved; or
(c) Establishing and maintaining records containing the following
information currently required by the Department of Transportation's
Surface Transportation Board of rail and water interstate transporters
(49 CFR 1035.1 and 1035.2) as of December 9, 2004:
(1) Date received;
(2) Received from;
(3) Consigned to;
(4) Destination;
(5) State of;
(6) County of;
(7) Route;
(8) Delivering carrier;
(9) Car initial;
(10) Car no;
(11) Trailer initials/number;
(12) Container initials/number;
(13) No. packages; and
(14) Description of articles; or
(d) Establishing and maintaining records containing the following
information currently required by the Warsaw Convention of
international air transporters on air waybills:
(1) Shipper's name and address;
(2) Consignee's name and address;
(3) Customs reference/status;
(4) Airport of departure and destination;
(5) First carrier; and
(6) Description of goods; or
(e) Entering into an agreement with the nontransporter immediate
previous source located in the United States and/or the nontransporter
immediate subsequent recipient located in the United States to
establish, maintain, or establish and maintain, the information in
Sec. 1.352(a), (b), (c), or (d). The agreement must contain the
following elements:
(1) Effective date;
(2) Printed names and signatures of authorized officials;
(3) Description of the records to be established and/or maintained;
(4) Provision for the records to be maintained in compliance with
Sec. 1.360, if the agreement provides for maintenance of records;
(5) Provision for the records to be available to FDA as required by
Sec. 1.361, if the agreement provides for maintenance of records;
(6) Acknowledgement that the nontransporter assumes legal
responsibility under Sec. 1.363 for establishing and/or maintaining
the records as required by this subpart; and
(7) Provision that if the agreement is terminated in writing by
either party, responsibility for compliance with the applicable
establishment, maintenance, and access provisions of this subpart
reverts to the transporter as of the date of termination.
Sec. 1.360 What are the record retention requirements?
(a) You must create the required records when you receive and
release food, except to the extent that the information is contained in
existing records.
(b) If you are a nontransporter, you must retain for 6 months after
the dates you receive and release the food all required records for any
food having a significant risk of spoilage, loss of value, or loss of
palatability within 60 days after the date you receive or release the
food.
(c) If you are a nontransporter, you must retain for 1 year after
the dates you receive and release the food all required records for any
food for which a significant risk of spoilage, loss of value, or loss
of palatability occurs only after a minimum of 60 days, but within 6
months, after the date you receive or release the food.
(d) If you are a nontransporter, you must retain for 2 years after
the dates you receive and release the food all required records for any
food for which a significant risk of spoilage, loss of value, or loss
of palatability does not occur sooner than 6 months after the date you
receive or release the food, including foods preserved by freezing,
dehydrating, or being placed in a hermetically sealed container.
(e) If you are a nontransporter, you must retain for 1 year after
the dates you receive and release the food all required records for
animal food, including pet food.
(f) If you are a transporter or nontransporter retaining records on
behalf of a transporter, you must retain for 6 months after the dates
you receive and release the food all required records for any food
having a significant risk of spoilage, loss of value, or loss of
palatability within 60 days after the date the transporter receives or
releases the food. If you are a transporter, or nontransporter
retaining records on behalf of a transporter, you must retain for 1
year after the dates you receive and release the food, all required
records for any food for which a significant risk of spoilage, loss of
value, or loss of palatability occurs only after a minimum of 60 days
after the date the transporter receives or releases the food.
(g) You must retain all records at the establishment where the
covered activities described in the records occurred (onsite) or at a
reasonably accessible location.
(h) The maintenance of electronic records is acceptable. Electronic
records are considered to be onsite if they are accessible from an
onsite location.
Sec. 1.361 What are the record availability requirements?
When FDA has a reasonable belief that an article of food is
adulterated and presents a threat of serious adverse health
consequences or death to humans or animals, any records and other
information accessible to FDA under section 414 or 704(a) of the act
(21 U.S.C. 350c and 374(a)) must be made readily available for
inspection and photocopying or other means of reproduction. Such
records and other information must be made available as soon as
possible, not to exceed 24 hours from the time of receipt of the
official request, from an officer or employee duly designated by the
Secretary of Health and Human Services who presents appropriate
credentials and a written notice.
Sec. 1.362 What records are excluded from this subpart?
The establishment and maintenance of records as required by this
subpart does not extend to recipes for food as defined in Sec. 1.328;
financial data, pricing data, personnel data, research data, or sales
data (other than shipment data regarding sales).
[[Page 71655]]
Sec. 1.363 What are the consequences of failing to establish or
maintain records or make them available to FDA as required by this
subpart?
(a) The failure to establish or maintain records as required by
section 414(b) of the act and this regulation or the refusal to permit
access to or verification or copying of any such required record is a
prohibited act under section 301 of the act.
(b) The failure of a nontransporter immediate previous source or a
nontransporter immediate subsequent recipient who enters an agreement
under Sec. 1.352(c) to establish, maintain, or establish and maintain,
records required under Sec. 1.352(a) or (b), or the refusal to permit
access to or verification or copying of any such required record, is a
prohibited act under section 301 of the act.
(c) The failure of any person to make records or other information
available to FDA as required by section 414 or 704(a) of the act and
this regulation is a prohibited act under section 301 of the act.
Compliance Dates
Sec. 1.368 What are the compliance dates for this subpart?
The compliance date for the requirements in this subpart is
December 9, 2005. However, the compliance dates for small and very
small businesses are contained in paragraphs (a) and (b) of this
section. The size of the business is determined using the total number
of full-time equivalent employees in the entire business, not each
individual location or establishment. A full-time employee counts as
one full-time equivalent employee. Two part-time employees, each
working half time, count as one full-time equivalent employee.
(a) The compliance date for the requirements in this subpart is
June 9, 2004, for small businesses employing fewer than 500, but more
than 10 full-time equivalent employees.
(b) The compliance date for the requirements in this subpart is
December 11, 2006, for very small businesses that employ 10 or fewer
full-time equivalent employees.
PART 11--ELECTRONIC RECORDS; ELECTRONIC SIGNATURES
0
3. The authority citation for 21 CFR part 11 continues to read as
follows:
Authority: 21 U.S.C. 321-393; 42 U.S.C. 262.
0
4. Section 11.1 is amended by adding paragraph (f) to read as follows:
Sec. 11.1 Scope
* * * * *
(f) This part does not apply to records required to be established
or maintained by Sec. Sec. 1.326 through 1.368 of this chapter.
Records that satisfy the requirements of part 1, subpart J of this
chapter, but that also are required under other applicable statutory
provisions or regulations, remain subject to this part.
Dated: November 30, 2004.
Lester M. Crawford,
Acting Commissioner of Food and Drugs.
Dated: December 2, 2004.
Tommy G. Thompson,
Secretary of Health and Human Services.
[FR Doc. 04-26929 Filed 12-6-04; 8:45 am]
BILLING CODE 4160-01-S