71562 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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.

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 § 1.326)

D. Comments on Who is Excluded 

From All or Part of the Regulations 

in this Subpart? (Proposed § 1.327)

E. Comments on What Definitions 

Apply to this Subpart? (Proposed 

§ 1.328)

F. Comments on Do Other Statutory 

Provisions and Regulations Apply? 

(Proposed § 1.329)

G. Comments on Can Existing Records 

Satisfy the Requirements of this 

Subpart? (Proposed § 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 §§ 1.337 and 1.345)

I. Comments on Who is Required to 

Establish and Maintain Records for 

Tracing the Transportation of All 

Food? (Proposed § 1.351)

J. Comments on What Information is 

Required in the Transportation 

Records? (Proposed § 1.352)

K. Comments on What Are the Record 

Retention Requirements? (Proposed 

§ 1.360)

L. Comments on What Are the Record 

Availability Requirements? 

(Proposed § 1.361)

M. Comments on What Records Are 

Excluded From this Subpart? 

(Proposed § 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 § 1.363)

O. Comments on What Are the 

Compliance Dates for This Subpart? 

(Proposed § 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 

§§ 1.337 and 1.345 of subpart J of this 

final rule, but are subject to the record 

availability requirements in §§ 1.361 

and 1.363 for existing records: (1) 

Fishing vessels not engaged in 

processing as defined in § 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 §§ 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 

§§ 1.361 and 1.363.

• Persons who distribute food 

directly to consumers are excluded from 

the requirement in § 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 § 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 

71564 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 § 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 § 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 fulltime 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 §§ 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 

§§ 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 §§ 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 § 1.352(a); 

(2) keeping the records listed in 

§ 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 § 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 § 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 § 1.352(c). 

Intrastate transporters must also 

establish and maintain records under 

this final rule and can meet this 

obligation by complying with either 

§ 1.352(a), (b), (c), (d), or (e).

• Foreign persons who transport food 

in the United States, whether or not 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71565

they have possession, custody, or 

control of the food for the sole purpose 

of transporting, must comply with 

§ 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 § 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 

71566 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 § 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 traceback 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 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 countryof-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 

71568 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 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 § 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 § 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 § 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 § 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 

71570 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 § 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, forhire 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, forhire 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 §§ 1.337 and 1.345 of 

this final rule apply to persons who 

‘‘hold’’ food for purposes other than 

transportation. As defined in § 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 

§§ 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 (§ 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 § 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 § 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 

§ 1.327(f) of the final rule, is subject to 

the requirements in § 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 § 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 

71572 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 § 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 

§ 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 Mexicodomiciled. The comment points out 

that, therefore, the majority of crossborder 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 § 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 

71574 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 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 §§ 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 § 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 § 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, 

§ 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 § 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 

71576 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

§§ 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 § 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 § 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 §§ 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 

§§ 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 § 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 § 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 §§ 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 § 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 § 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 §§ 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) 

(§§ 1.337(a)(4) and 1.345(a)(4) of the 

final rule).

(Comment 43) One comment argues 

that the proposed retail exemption 

(§ 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 § 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 

71578 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

§§ 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 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 § 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 § 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 § 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 § 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 

§§ 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. 

71580 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

§ 1.327(b) of this final rule, there is also 

an exclusion for retail food 

establishments that may apply. Under 

§ 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 mixedtype 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 § 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 § 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 §§ 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 

(§ 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 §§ 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 

§ 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 § 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 §§ 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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

Sector % of establishments That Are Very Small % of Food Industry Revenue From Very 

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 §§ 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 bioterrorismrelated threats.

(Response) The exclusion in 

§ 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-thecounter 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 foodproducing 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 § 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 § 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 

§§ 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 

71582 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 § 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 

§§ 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 §§ 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 

§ 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 § 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 § 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 § 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 § 1.327(h) of 

this final rule. In addition, the final rule 

deletes the proposed exclusion for nonBSE 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 foodproducing 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 crosscontamination 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 foodproducing 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 

71584 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

1FDA’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.

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 

§§ 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

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 FDAregulated 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, 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 §§ 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 §§ 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 

71586 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 §§ 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 §§ 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 the outer packaging of 

food that bears the label and does not contact the food. Packaging does not include 

food contact substances (§ 1.328).

Manufacture, process, pack, transport, distribute, receive, hold, or importExcluded from all provisions of the rule unless person also engages in covered activity with respect to food, in which case subject to §§ 1.361 and1.363 (record access) 

(See § 1.327(i))

Food contact substance, other than the finished container that directly contacts foodManufacture, process, pack, transport, distribute, receive, hold, or importExcluded from all provisions of the rule, except §§ 1.361 and 1.363 (record access) 

(See § 1.327(j))

Finished container that contacts food Place food directly in contact with its finished 

container

No exclusions, subject to record establishment, maintenance, and access (See 

§ 1.327(k))

Finished container that contacts food All other activities with respect to finished 

container

Excluded from all provisions of the rule, except §§ 1.361 and 1.363 (record access) 

(See § 1.329(k))

E. Comments on What Definitions Apply 

to This Subpart? (Proposed § 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71587

facilities subject to registration 

requirements under § 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 § 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, controlledatmosphere 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 § 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 

§ 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 

71588 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

§§ 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 §§ 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.

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 heattreated, 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 § 1.360(b) of this 

final rule using similar criteria as the 

NIST definitions for perishable, semiperishable 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 § 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, 

71590 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 § 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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) 

§ 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 

71592 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

§ 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 § 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 § 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 

§ 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 

§§ 1.361 and 1.363. (See response to 

comment 38 of the document for a 

further discussion of FDA’s rationale 

underlying this exclusion.)

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 1.329)

There were no comments on this 

issue.

G. Comments on Can Existing Records 

Satisfy the Requirements of This 

Subpart? (Proposed § 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 § 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 § 1.352(a) of this final rule. 

Second, transporters can meet the 

requirements of this final rule by 

keeping the records listed in § 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 § 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 § 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 

71594 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

contain the elements specified in 

§ 1.352(e) of this final rule. Failure by 

the immediate previous source or 

immediate subsequent recipient who 

enters into an agreement under 

§ 1.352(c) of this final rule to keep such 

records is a prohibited act under § 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 § 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 FDAregulated 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.

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 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 

§ 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, § 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 

§ 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 

§ 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 §§ 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 

71596 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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, § 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, 

§ 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 § 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 § 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 (§ 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 longstanding 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 

§ 1.337(a) of this final rule and instead 

inserted it in § 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 

§ 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 

71598 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

§ 1.345(b) of this final rule and has been 

deleted from § 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 §§ 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 §§ 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 

§ 1.328 of this final rule. A manufacturer 

of alcoholic beverages is required under 

§ 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 § 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 §§ 1.232(d) and (e) 

and 1.233(d) or § 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 §§ 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 §§ 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 

71600 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 § 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 

§§ 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 

§§ 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 §§ 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 § 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 § 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 § 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 §§ 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 

71602 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 §§ 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 

§ 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 

§ 1.360)

(Comment 129) Many comments state 

that because an infrastructure for longterm 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 

§ 1.360(b) of this final rule now require 

record retention of: (1) 6 months for 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 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 § 1.360(b) of this 

final rule using similar criteria as the 

NIST definitions for perishable, semiVerDate jul<14>2003 16:48 Dec 08, 2004 Jkt 205001 PO 00000 Frm 00043 Fmt 4701 Sfmt 4700 E:\FR\FM\09DER3.SGM 09DER3
71604 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

perishable and long shelf-life food. 

Therefore, FDA has changed the record 

retention requirements in § 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 § 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 

§ 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, 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 

§§ 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 § 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 

§ 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 

71606 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 (§ 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 

§ 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 

§ 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 § 1.328 for the definition of recipe), 

71608 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 (§ 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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) (§ 20.84), 

its contractors (§ 20.90), other Federal 

government agencies (§ 20.85), or 

foreign government agencies (§ 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 § 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 § 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 

§ 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 § 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. 

71610 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 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 

71612 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 COSTS1

21 CFR Section Costs (in dollars) 

1.337, 1.345, and 1.352 (learning) $85,082,000

1.337, 1.345, and 1.352 (records redesign) $205,239,000

1.337, 1.345, and 1.352 (additional records maintenance) $114,701,000

1.337, 1.345, and 1.352 (learning for new firms) $8,508,200

Discounted present value of total costs2 $1,406,356,000

1The 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. 2The 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

Low2 Medium3 High4

VSL1 = $5 million $7,388,685 $15,905,182 $24,421,229

VSL = $6.5 million $8,199,494 $16,715,991 $25,232,038

1Value of a statistical life used to value the averted deaths.

2A value of $100,000 was used to value a year in good health.

3A value of $300,000 was used to value a year in good health.

4A 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 

71614 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 onetime 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 widelyconsumed food, the hoax might lead to 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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.

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 


ER09DE04.004</GPH>
71616 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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.

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71617


ER09DE04.005</GPH>
71618 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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.


ER09DE04.006</GPH>
Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71619

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

Agent Number of Outbreaks Attributed to the Agent 

Number of Known Illnesses Attributed to Outbreak Agents Number of Illnesses That 

Were Known to Be 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


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71620 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

TABLE 3.—THE DISTRIBUTION OF ILLNESSES BY AGENT FROM OUTBREAKS MONITORED BY FDA FROM 2000 TO 2003—

Continued

Agent Number of Outbreaks Attributed to the Agent 

Number of Known Illnesses Attributed to Outbreak Agents Number of Illnesses That 

Were Known to Be Hospitalized 

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 onehalf 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.

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71621

TABLE 4.—ESTIMATED RATIO OF THE TOTAL NUMBER OF ILLNESSES TO REPORTED NUMBER OF ILLNESSES

Mean Low (greater than 5% of the 

range) 

High (greater than 95% of the 

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 488

E. coli 0157 3 8 18

Listeria 4 30 37

Salmonella 4 12 16

Shigella 3 11 18

Vibrio P. 223

Chemical

Ammonia 357

Methomyl 357

Sodium nitrite 357

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 226

Viral or Vitrio 226

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 

71622 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 Illness Symptom Mobility Physical Social Quality 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.

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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

Year Number of Outbreaks Investigated 

Number of Investigative 

Visits per outbreak 

Rate of records quality related 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 INVESTIGATION1

Most Likely Low High 

Eggs and fresh produce 6 to 8 weeks 2 to 5 weeks 12 weeks

71624 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

TABLE 9.—DURATION OF THE TRACEBACK COMPONENT OF AN OUTBREAK INVESTIGATION1—Continued

Most Likely Low High 

Packaged products 3 days 1 day 14 days

1Estimates 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 records 4 to 48 hours Uniformly distributed 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).

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 mixedtype 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 

71626 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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

Sector % of Establishments That 

Are Very Small 

% of Food Sector Revenue From Very Small 

Establishments 

Manufacturers 77 15

Wholesalers 81 14

Transporters 90 16

Grocery outlets 88 18

Convenience outlets 73 18

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71627

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—Continued

Sector % of Establishments That 

Are Very Small 

% of Food Sector Revenue From Very Small 

Establishments 

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 FDAregulated 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 FDAregulated products (ref. 18). Past 

traceback investigations provide 

examples of the need to regulate 

intrastate transport. For example, in 

2003, there were two produceassociated outbreaks that occurred in 

CA from intrastate shipments. There 

were also two Salmonella enteritidis

outbreaks in WI associated with 

71628 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 sproutassociated 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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 FDAregulated 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.

71630 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 air transportation584 2,413

481212 Nonscheduled chartered freight 

air transportation

217

483111 Deep sea freight transportation 485 4,754

483113 Coastal and Great Lakes freight 

transportation

546

483211 Inland water freight transportation 402

4841 General freight trucking 27,937 164,242

48422 Specialized freight (exclusively 

used) trucking, local

6,499 4,946

48423 Specialized freight (exclusively 

used) trucking, long distance

2,580 8,189

488320 Marine cargo handling 607 2,415

488510 Freight transportation arrangement3,035 3,814

488991 Packing and crating 1,315

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.

71632 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

(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 mixedtype 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

Commodity Total No. of Farms Percent Mixed-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 mixing) 110,580 1.0% 1,106

Dairy 86,022 1.1% 903

Grain, rice, and beans 462,877 1.0% 4,629

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71633

TABLE 13.—MIXED-TYPE FACILITIES ENGAGE IN FARMING—Continued

Commodity Total No. of Farms Percent Mixed-Type No. of Mixed-Type Farms 

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

NAICS SIC Corresponding Index 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 

71634 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 

71636 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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-bycase 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 

71638 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 lowvalue 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 nontransporter immediate subsequent 

recipient located in the United States; 

any contractual arrangements would 

redistribute the burden of establishing 

and maintaining transportation records 

between transporters and nontransporters but would not change the 

total recordkeeping costs since the same 

number of records would be established 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 

71640 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 §§ 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 COSTS1

21 CFR Section Costs (in dollars) 

1.337, 1.345, and 1.352 (learning) $85,082,000

1.337, 1.345, and 1.352 (records redesign) $205,239,000

1.337, 1.345, and 1.352 (additional records maintenance) $114,701,000

1.337, 1.345, and 1.352 (learning for new firms) $8,508,000

Discounted present value of total costs2 $1,406,356,000

1The 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. 2The 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.

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 

71642 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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

Policy Option (in Terms 

of the Baseline) Cost (7% Discount) Cost (3% Discount) 

Reduction in 

Benefits Relative to the 

Baseline 

Baseline1: Proposed rule except requirement for all records to contain lot 

codes is relaxed.

$4.0 billion $5.27 billion

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71643

TABLE 16.—COSTS AND REDUCTIONS IN FOOD SAFETY BENEFITS FOR CHANGES BASED ON COMMENTS—Continued

Policy Option (in Terms 

of the Baseline) Cost (7% Discount) Cost (3% Discount) 

Reduction in 

Benefits Relative to the 

Baseline 

(1) Baseline except existing interstate 

transporter requirements are sufficient.

$3.78 billion $4.97 billion No reduction2 1

(2) Baseline except retention of 6, 12, 

and 24 months per NIST standards

$4.0 billion $5.27 billion Negligible reduction 2

(3) Baseline except food contact entities 

are excluded.3

$3.92 billion $5.16 billion Exclude 37,000 facilities 

near the top of supply 

chain. Low risk of contamination and low risk 

of loss of the paper 

trail.

3

(4) Baseline except compliance dates 

are extended by 6 months.

$3.73 billion $5.10 billion An estimated one-time, 

two-fold increase in 

the number of victims 

compared with the 

baseline in the first 

year only.

4

(5) Baseline except foreign facilities are 

excluded.

$3.23 billion $4.26 billion Exclude 225,000 facilities 

near the beginning of 

the supply chain. Very 

high cost of enforcement and access.

5

(6) Baseline except relax records access 

from 4 and 8 hours, to 24 hours.

$3.74 billion $4.95 billion Adds a maximum of 

about 5 days to the 

time for preventive action during an outbreak.

6

(7) Adjusted comprehensive coverage $2.59 billion $3.57 billion Incorporates all 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. 2Because this chart only reflects food safety, it does not include classified food security scenarios which envision intrastate shipments being 

targeted for tampering. 3This 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 Outlets Importers and 

Wholesalers Manufacturers Mixed-Type Facilities Warehouses Transporters 

Option

Adjusted ComprehensiveAll All All All All All

71644 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

TABLE 17.—COVERAGE OF DIFFERENT POLICY OPTIONS—Continued

Grocery Outlets Importers and 

Wholesalers Manufacturers Mixed-Type Facilities Warehouses Transporters 

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 

small

All All All All All

H Exclude very 

small

Exclude very 

small

Exclude very 

small

Exclude very 

small

Exclude very 

small

Exclude very 

small

I Exclude very 

small

All All All All Only interstate

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 costeffectiveness 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 

Annualized Costs Incremental Cost Illnesses averted Incremental Benefit 

Incremental Cost 

per Averted Illness 

Average Cost 

per Averted 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

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71645

TABLE 18.—COSTS, FOOD SAFETY BENEFITS, AND COST EFFECTIVENESS OF ALTERNATIVE COVERAGE OPTIONS—

Continued

Costs Benefits Cost Effectiveness 

Annualized Costs Incremental Cost Illnesses averted Incremental Benefit 

Incremental Cost 

per Averted Illness 

Average Cost 

per Averted Illness 

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 Comprehensive$244,134,086 $111,383,994 1,282 78 $1,428,000 $190,432

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

71646 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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

Low2 Medium3 High4

VSL1 = $5 million $7,388,685 $15,905,182 $24,421,229

VSL = $6.5 million $8,199,494 $16,715,991 $25,232,038

1Value of a statistical life used to value the averted deaths.

2A value of $100,000 was used to value a year in good health.

3A value of $300,000 was used to value a year in good health.

4A 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 redesign) $411.00

1.337, 1.345, and 1.352 (additional records maintenance) $219.00

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 

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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-theboard 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 

71648 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 inflationadjusted 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 Statesbased 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.

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 

§§ 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 onetime 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 

71650 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

firms are reported in table 26 of this 

document.

TABLE 25.—ESTIMATED ANNUAL RECORDKEEPING BURDEN—FIRST AND SECOND YEARS1

21 CFR Section 

No. of 

Record keepers 

Annual Frequency per 

Record 

Total Annual 

Records 

Hours per 

Record Capital Costs Total Hours 

1.337, 1.345, and 1.352 (learning) 707,672 1 707,672 4.790 3,390,000

1.337, 1.345, and 1.352 (redesign) 150,358 1 150,358 29.084 $70,409,000 4,373,000

Total 7,763,000

1There are no operating and maintenance costs associated with this collection of information.

TABLE 26.—ESTIMATED ANNUAL RECORDKEEPING BURDEN—SUBSEQUENT YEARS1

21 CFR Section No. of Record 

Keepers 

Annual Frequency per 

Record 

Total Annual 

Records 

Hours per 

Record Total Hours 

1.337, 1.345, and 1.352 (additional 

records maintenance) 379,493 1 379,493 13.228 5,020,000

1.337, 1.345, and 1.352 (learning for 

new firms) 70,767 1 70,767 4.790 339,000

Total 5,359,000

1There 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 InsecticideRelated Illness Associated with MosquitoControl 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 WellBeing 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/

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71651

part3.html#income, 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.

■ 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

■ 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.

■ 2. New subpart J (§§ 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

§ 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 § 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 § 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.

§ 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 §§ 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 § 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.

71652 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

(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 

§ 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 

§§ 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 §§ 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 

§§ 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 

§§ 1.361 and 1.363.

(l) Nonprofit food establishments are 

excluded from all of the requirements in 

this subpart, except §§ 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.

§ 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.

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 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 § 1.326.

§ 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 § 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.

§ 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

§ 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

§ 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

§ 1.352 What information must 

transporters establish and maintain?

If you are a transporter, you must 

establish and maintain the following 

71654 Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 

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 § 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 § 1.360, 

if the agreement provides for 

maintenance of records;

(5) Provision for the records to be 

available to FDA as required by § 1.361, 

if the agreement provides for 

maintenance of records;

(6) Acknowledgement that the 

nontransporter assumes legal 

responsibility under § 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.

§ 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.

§ 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.

§ 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 § 1.328; financial data, 

pricing data, personnel data, research 

data, or sales data (other than shipment 

data regarding sales).

Federal Register / Vol. 69, No. 236 / Thursday, December 9, 2004 / Rules and Regulations 71655

§ 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 § 1.352(c) to establish, maintain, 

or establish and maintain, records 

required under § 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

§ 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 fulltime 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 fulltime equivalent employees.

PART 11—ELECTRONIC RECORDS; 

ELECTRONIC SIGNATURES

■ 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.

■ 4. Section 11.1 is amended by adding 

paragraph (f) to read as follows:

§ 11.1 Scope

* * * * *

(f) This part does not apply to records 

required to be established or maintained 

by §§ 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

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1

[Docket No. 2002N–0277]

Final Regulation Implementing the 

Public Health Security and 

Bioterrorism Preparedness and 

Response Act of 2002—Establishment 

and Maintenance of Records for 

Foods; Notice of Public Meeting

AGENCY: Food and Drug Administration, 

HHS.

ACTION: Notice; public meeting on final 

rule.

SUMMARY: The Food and Drug 

Administration (FDA) is announcing a 

series of domestic public meetings to 

discuss the final regulation 

implementing section 306 (Maintenance 

and Inspection of Records) of the Public 

Health Security and Bioterrorism 

Preparedness and Response Act of 2002 

(Bioterrorism Act), which is publishing 

in this issue of Federal Register. The 

purpose of these public meetings is to 

provide information on the rule to the 

public and to provide the public an 

opportunity to ask questions of 

clarification.

DATES: See table 1 of the SUPPLEMENTARY

INFORMATION section of this document.

ADDRESSES: See table 1 of the 

SUPPLEMENTARY INFORMATION section of 

this document.

FOR FURTHER INFORMATION CONTACT:

Marion V. Allen, Center for Food Safety 

and Applied Nutrition (HFS–32), Food 

and Drug Administration, 5100 Paint 

Branch Pkwy., College Park, MD 20740, 

301–436–1584, FAX: 301–436–2605, email: marion.allen@fda.hhs.gov, for 

general questions only about the 

meeting.

SUPPLEMENTARY INFORMATION:

I. Background

The events of September 11, 2001, 

highlighted the need to enhance the 

security of the U.S. food supply. 

Congress responded by passing the 

Bioterrorism Act (Public Law 107–188), 

which was signed into law on June 12, 

2002.

In this issue of the Federal Register, 

FDA is publishing the final rule 

implementing section 306 of the 

Bioterrorism Act and a draft guidance 

on records access under the 

Bioterrorism Act. During the public 

meetings, FDA will explain this rule 

and the draft guidance and answer 

questions of clarification.

Information about the public 

meetings, contact information, and the 

provisions of the Bioterrorism Act under 

FDA’s jurisdiction can be accessed at 

http://www.fda.gov/oc/bioterrorism/

bioact.html.

II. Final Rule and Draft Guidance

Section 306 of the Bioterrorism Act 

directs the Secretary of Health and 

Human Services (the Secretary) to issue 

final regulations that 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 must be 

kept by these regulations are those that 

are 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, in order 

to address credible threats of serious 

adverse health consequences or death to 

humans or animals. This regulation 

implements the recordkeeping authority 

in the Bioterrorism Act.

In addition, the Bioterrorism Act 

provides records inspection authority to 

FDA such that 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, and the 

records are necessary to assist FDA in 

making such a determination, persons 

(excluding farms and restaurants) who 

manufacture, process, pack, transport, 

distribute, receive, hold, or import food 

must provide access to records.

III. Registration for the Public Meetings

Please submit your registration 

information (including name, title, firm 

name, address, telephone number, eVerDate jul<14>2003 16:48 Dec 08, 2004 Jkt 205001 PO 00000 Frm 00095 Fmt 4701 Sfmt 4700 E:\FR\FM\09DER3.SGM 09DER3