24254 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

1That is, the total combined effect of all controls

have the effect of reducing the number of colony

forming units (cfu’s) by a factor of 100,000. This

implies that even if the product should contain

1,000 cfu’s per gallon (gal.) prior to processing, the

final product after processing would contain only

.01 cfu’s per gal.

DEPARTMENT OF HEALTH AND

HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 101 and 120

[Docket Nos. 93N–0325 and 97N–0296]

RIN 0910–AA43

Preliminary Regulatory Impact

Analysis and Initial Regulatory

Flexibility Analysis of the Proposed

Rules to Ensure the Safety of Juice

and Juice Products

AGENCY: Food and Drug Administration,

HHS.

ACTION: Preliminary regulatory impact

analysis.

SUMMARY: The Food and Drug

Administration (FDA) is publishing the

preliminary regulatory impact analysis

(PRIA) that it has prepared under

Executive Order 12866 and initial

regulatory flexibility analysis (IRFA)

that it has prepared under the

Regulatory Flexibility Act (RFA), as

amended by the Small Business

Regulatory Enforcement and Fairness

Act (SBREFA), on the costs and benefits

of FDA’s proposed regulations regarding

the Hazard Analysis Critical Control

Points (HACCP) and labeling for juice

and juice products. FDA is issuing those

proposals because of recent outbreaks of

foodborne illness and deaths caused by

consumption of juice products that were

not pasteurized or otherwise processed

to control pathogenic microorganisms.

Those proposals are intended to ensure

that juice and juice products are safe.

DATES: Submit written comments by

May 26, 1998 on aspects of this analysis

related to labeling for juice and juice

products and by July 8, 1998 on aspects

of this analysis related to HACCP for

juice and juice products.

ADDRESSES: Submit written comments

to the Dockets Management Branch

(HFA–305), Food and Drug

Administration, 12420 Parklawn Dr.,

rm. 1–23, Rockville, MD 20857.

Comments should be identified with the

docket numbers found in brackets in the

heading of this document.

FOR FURTHER INFORMATION CONTACT:

David J. Zorn, Center for Food Safety

and Applied Nutrition (HFS–726), Food

and Drug Administration, 200 C St. SW.,

Washington, DC 20204, 202–205–4729.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

II. Introduction

III. Factors Considered in Developing This

Analysis

IV. Regulatory Options

V. Benefits

VI. Costs

VII. Summary of Benefits and Costs

VIII. Initial Regulatory Flexibility Analysis

IX. References

X. Request for Comments

I. Background

This document constitutes FDA’s

PRIA and IRFA of the proposed rules to

amend the food labeling regulations and

to require HACCP for juice and juice

products. Because the industries

affected by both proposed rules

substantially overlap and because both

proposals address the same public

health problem, the safety of juice and

products containing juice, the agency

has chosen to analyze the economic

impact of both proposed rules in a

single PRIA and IRFA. These documents

analyze both the costs and benefits of

the proposed rules as well as the

expected impacts on the affected small

entities. FDA has found that these rules

may constitute significant rules under

Executive Order 12866 because they

could have a significant impact on one

sector of the economy (producers of

minimally processed juice). In addition,

FDA has determined under the RFA that

each proposal would present a

significant impact on a substantial

number of small entities.

II. Introduction

FDA has examined the impacts of

these proposed rules under Executive

Order 12866. Executive Order 12866

directs Federal agencies to assess the

benefits and costs 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

effects; distributive impacts; and

equity). Under the Executive Order, a

regulatory action is ‘‘significant’’ if it

meets any one of a number of specified

conditions, including having an annual

effect on the economy, competition, or

jobs, or if it raises novel legal or policy

issues. FDA finds that each of these

proposed rules may constitute a

significant regulatory action as defined

by Executive Order 12866, as discussed

as follows.

In addition, FDA has determined that

these rules are not significant rules

under the Unfunded Mandates Reform

Act of 1995 (UMRA) requiring benefitcost and other analyses. Under UMRA

significant rule is defined as ‘‘a Federal

mandate that may result in the

expenditure by State, local and tribal

governments in the aggregate, or by the

private sector, of $100,000,000 (adjusted

annually for inflation) in any 1 year’’.

Finally, in accordance with the

SBREFA, the Administrator of the Office

of Information and Regulatory Affairs of

the Office of Management and Budget

(the Administrator) has determined that

these proposed rules are major rules for

the purpose of congressional review. A

major rule for this purpose is defined as

one that the Administrator has

determined has resulted or is likely to

result in an annual effect on the

economy of $100 million or more; a

major increase in costs or prices for

consumers, individual industries,

Federal, State, or local government

agencies, or geographic regions; or

significant adverse effects on

competition, employment, investment,

productivity, innovation, or on the

ability of U.S.-based enterprises to

compete with foreign-based enterprises

in domestic or export markets.

III. Factors Considered in Developing

This Analysis

This analysis estimates costs and

benefits for two proposed regulations,

published in the Federal Register of

April 24, 1998 (63 FR 20450 and 20486),

that would affect the safety of juice

products. The first rule requires warning

statements on minimally processed

packaged juice. That is, juice that has

not been processed in a manner that

will produce, at a minimum, a 5-log

reduction, for a period at least as long

as the shelf life of the product when

stored under normal and moderate

abuse conditions, in the pertinent

microorganism. The ‘‘pertinent

microorganism’’ is the most resistant

microorganism of public health

significance that is likely to occur in the

juice. In the remainder of this analysis,

this will be referred to as the ‘‘5-log

reduction.’’1 The second rule requires

manufacturers of most juice to

implement a HACCP program with the

same 5-log reduction performance

criteria. However, FDA is proposing to

exempt retailers who, for the purposes

of this rule, the agency has tentatively

decided will include very small

businesses that make juice on their

premises and whose total sales of juice

and juice products do not exceed 40,000

gallons per year and who sell directly to

consumers or directly to consumers and

other retailers.

The effective date for the labeling rule

is proposed to be 60 days following

publication of the final rule with
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24255

2The labeling rule does not define ‘‘very small

firms’’ but the HACCP rule does give a separate

definition of ‘‘very small firms’’ as a subset of

‘‘small firms’’ as defined in the labeling and HACCP

rules. Therefore, the term ‘‘very small firms’’ has

been used here in relationship to the labeling rule

to make clear where this subset fits in the context

of both of these rules. The HACCP rule defines

small businesses as those with fewer than 500

employees. It defines very small businesses as those

with total annual sales of less than $500,000 or

those with total annual food sales of less than

$50,000 or those with fewer than 100 employees

and less than 100,000 units of juice sold annually.

3A normal return on profits is the average market

return on capital that a processor could receive, for

example, by investing in the stock market.

warning statements required either on

the labels or, in the case of products

which do not bear the warning

statement on the label, on labeling (e.g.,

on signs or placards at the point of sale)

on juices that have not been processed

in a manner that will produce, at a

minimum, a 5-log reduction. Packaged

juices produced by large firms are

required to bear warning labels

beginning on January 1, 2000, and

packaged juices produced by small and

very small firms2 are required to bear

warning labels beginning on January 1,

2001. The agency expects that the

HACCP rule, because of its complexity,

will not be finalized for at least 1 year

following finalization of the juice

labeling rule. The HACCP rule is

proposed to be effective for large firms,

12 months following publication of the

final HACCP rule; for small firms, 24

months following publication of the

final HACCP rule; and for very small

firms, 36 months following publication

of the final HACCP rule. For purposes

of this rule, the agency is proposing to

define large processors as those who

have more than 500 employees, small

processors as those who have less than

500 employees and very small

processors as those who have either: (1)

Total annual sales of less than $500,000,

or (2) that have total annual sales of

greater than $500,000 but total annual

food sales of less than $50,000, or (3)

that employ fewer than 100 full-time

equivalent employees and annually sell

less than 100,000 units of the juice in

the United States.

To a large extent, benefits and costs

will depend on how processors of juice

who do not currently implement

controls sufficient to achieve a 5-log

reduction respond to the warning label

regulation. That is, firms will choose

whether to display the warning

statement or to comply early with the 5-

log reduction. The agency has no

information to indicate the choices that

specific processors will make.

The actual choice that each processor

will make depends on several factors:

(1) The revenue that processors expect

to lose because of consumers’ responses

to the Government’s announcement of

the rules and the warning label, (2) the

costs of and length of time allowed to

make label changes, (3) the costs of

achieving a 5-log reduction in

pathogens, and (4) the revenue that

processors expect to lose if consumers

respond negatively to the changes in

product characteristics caused by

processing the juice.

Processors will choose to discontinue

juice production if they perceive that

either labeling or a change in processing

practices will lower profits below a

‘‘normal’’ return.3 In other words,

processors will go out of the juice

business rather than comply with these

regulations only if one of the two

following conditions is satisfied: (1) The

combination of the cost of displaying

the warning labeling and the reduction

in revenue caused by the negative

response of consumers to the warning

results in below normal profits; or (2) a

combination of increased costs from

processing and a reduction in revenue

caused by the negative response of

consumers to the changes in product

quality results in below normal profits.

For the purposes of this analysis, the

agency has assumed that, in order to

avoid having their products associated

with the warning to consumers, all

establishments that will eventually be

covered by the HACCP rule will

implement controls sufficient to achieve

a 5-log reduction when the labeling rule

takes effect. The agency has also

assumed for the purposes of this

analysis that those establishments not

covered by the HACCP rule will display

the warning statement for packaged

juice products. However, in order to

avoid displaying the warning statement,

these establishments may choose to

process their juice in a manner

sufficient to achieve a 5-log reduction in

pathogens or under an adequate

voluntary HACCP plan.

IV. Regulatory Options

The preambles in the accompanying

proposed regulations describe the

compelling public need for these

regulations. For example, in recent

years, pathogens have been discovered

in fresh juices after having caused

severe illness in humans. These

products were previously not known to

be vehicles for such hazards, given their

low pH. Because these events have

occurred, the agency tentatively finds

that it is prudent to require the adoption

of preventative controls for hazards now

associated with juice where controls

may not have been previously thought

to be necessary.

There are a number of regulatory

options that FDA has preliminarily

considered to reduce the risks

associated with consuming juice

products. FDA requests comments on

benefits, costs, and any other aspect of

these options.

A. Take No New Regulatory Action

Choosing this option would imply

either reliance on: (1) Existing Federal

regulation, (2) State and local regulatory

activity, (3) business interests, (4)

consumer demands, and (5) product

liability pressures to reduce risks

incurred by consumers of juice products

or acceptance that the risks that juice

currently presents are risks that

consumers are unwilling to pay to

reduce. In the first case, it is unlikely

that the market will adjust to eliminate

the risks present in juice because of the

difficulty of establishing the link

between the various kinds of illnesses,

whether acute or chronic, to

consumption of juice. Generally, this

link may only be established when there

are large, geographically focused

outbreaks of acute illness. However,

research indicates that most cases of

foodborne illness are sporadic and

geographically dispersed and not

associated with any identifiable and

focused outbreaks (Ref. 1). In the second

case, it is presumed that consumers are

willing to pay to reduce these risks

given the sizeable estimated benefits of

the proposed rules. Finally, while

industry and State governments have

undertaken steps in many areas to

reduce risks associated with juice, FDA

believes that the changes have been

made with the expectations of Federal

regulation. It is unlikely that the market

would fully adjust to reduce the risk

without additional Federal action.

B. Regulate Only High-Risk Juice

Products or High-Risk Hazards

FDA could choose to make these rules

applicable only to juice products that

have been associated by epidemiology

or by inspection history with health

hazards. This option is discussed in the

appendix supporting this analysis (Ref.

9). In the appendix, the agency

concluded that unpasteurized or

otherwise nonheat treated juices present

the largest risk to consumers because

pathogens pose the highest risk of the

several categories of hazards. FDA is

proposing that all chemical, physical,

and biological hazards be included

under HACCP, despite the differences in

relative risk posed by different types of

hazards. It is important to note that

processors may, under the umbrella of
24256 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

HACCP, adjust for the probability and

severity of hazards by adjusting critical

limits, the frequency of monitoring,

intensity of corrective action, or any

number of other margins. FDA has not

evaluated the benefits and costs of

structuring HACCP based on this

option, and seeks comments on it,

especially on the option of covering

only some types of juice.

C. Do Either One of the Proposed Rules

but Not Both

One option would be to eliminate the

HACCP requirement for juices, one of

the two proposed actions, and only

require that juices that are not processed

to achieve a 5-log reduction be labeled

with a warning to consumers. The

purpose of this labeling is to alert

consumers who are at increased risk to

avoid these products and to inform all

consumers of the risk of these products

relative to other juices. However, it is

difficult to predict what products

consumers would switch to once they

encounter the warnings. It is possible

that some consumers may reduce their

health status by choosing less nutritious

substitutes in order to avoid the

products with the warning labels.

Although labeling may be effective for

changing both producer behavior

(particularly to avoid displaying the

warning) and consumer behavior, the

agency believes that labeling alone is

unlikely to be sufficient to address all

health hazards associated with

consumption of juice products.

Another option would be to eliminate

the labeling rule and only require that

juice processors implement HACCP.

This option would reduce the

possibility that some consumers might

overreact and avoid all juice. This

option would also allow fresh juice to

be marketed without warnings and

would result in some cost savings for

products that will not need to pay for

labeling costs. However, it would also

result in some reduction in benefits

because the HACCP rule will take longer

to implement than the labeling rule and

because the proposed labeling rule

covers juice made at the point of sale

and the proposed HACCP rule does not

cover retailers.

D. Require New Current Good

Manufacturing Practices

FDA could develop and require

current good manufacturing practices

(CGMP’s) or sanitation standards

specific to juice products to improve the

safety of juices. The use of CGMP’s

would assist processors in ensuring the

safety of their juices by providing

guidance on how to reduce insanitary

manufacturing practices and on how to

protect against food becoming

contaminated. While FDA currently has

general CGMP’s that provide guidance

to all food processing industries, it does

not have specific CGMP’s for the juice

industry.

There are three reasons that this

alternative alone may be undesirable.

First, CGMP’s by themselves are

unlikely to have a sufficient impact on

the safety of juice, particularly relative

to HACCP. That is, CGMP’s do not

provide: (1) A structure for each

processor to align specific hazards

unique to the processor’s operations

with specific control measures; (2)

assurance that the processor will

establish specific performance standards

appropriate to the processor’s unique

operation; (3) records that document

that the performance standards are met;

and (4) records of frequent audits to

verify that controls are being applied, all

of which are associated with HACCP.

Identifying specific hazards, designing

controls that are specific and unique to

each operation, and verifying that these

controls are being applied as specified

are essential elements of a control

program that will provide an improved

level of food safety.

Secondly, under the HACCP approach

being proposed, the industry is required

to use FDA’s general CGMP’s in part 110

(21 CFR part 110) and to develop and

adopt sanitation standard operating

procedures (SOP’s) as part of their

prerequisite programs for their HACCP

plan. Therefore, the HACCP approach

builds on the foundation of CGMP’s at

the same time it avoids the limitations

of this alternative.

HACCP is designed for use in all

segments of the food industry from

growing, harvesting, processing,

manufacturing, distributing, and

merchandising to preparing food for

consumption. Prerequisite programs

such as current good manufacturing

practices (CGMP’s) are an essential

foundation for the development and

implementation of successful HACCP

plans.

The production of safe food products

requires that the HACCP system be built

upon a solid foundation of prerequisite

programs. Each segment of the food

industry must provide the conditions

necessary to protect food while it is

under their control. This has

traditionally been accomplished

through the application of CGMP’s.

These conditions and practices are now

considered to be prerequisite to the

development and implementation of

effective HACCP plans. Prerequisite

programs provide the basic

environmental and operating conditions

that are necessary for the production of

safe, wholesome food.

E. Require Pasteurization

FDA could require that all juice be

pasteurized rather than requiring

HACCP with a specified 5-log reduction.

Although FDA is not currently aware of

other practical methods to achieve this

level of control, solely requiring

pasteurization would inhibit new

technological innovation and it would

only address one type of hazard

(pathogens that are not heat resistant).

In this analysis, the agency has, in fact,

evaluated the costs of pasteurization for

those juices not now pasteurized. It

should be pointed out that, by volume,

the vast majority of juices are now

pasteurized or otherwise equivalently

treated. Thus, the marginal costs and

benefits of requiring pasteurization only

apply to the small fraction of juice that

is not heat treated.

The agency requests comment on the

appropriateness of the 5-log reduction

performance standard and if other

approaches, such as establishing a

minimal acceptable risk standard for

juices, could be used that would ensure

the safety of the juice. The agency

requests comments on what such a

minimal acceptable risk standard

should be and how it would be

implemented. The agency also invites

interested persons to submit scientific

data concerning the acceptability of a 5-

log reduction requirement or whether a

more or less stringent performance

standard (e.g., 3- or 7-log reduction) for

specific juices would be more

appropriate or whether different

approaches consistent with a minimal

acceptable risk standard for juices might

be appropriate for specific juices based

on their unique characteristics.

F. Set Different Performance Standards

for Processing of Different Products

One regulatory option would be to

establish different performance

standards for processing different types

of juice products to decrease the number

of pathogens. In the proposal, the

agency has tentatively proposed that

any combination of processing steps

which cumulatively result in a 5-log (a

100,000-fold) reduction in pathogens

should be applied to the production of

all types of juice. However, different

products may warrant different

processing stringencies because of a

number of factors, including: (1) The

initial microbial counts on raw produce

are likely to vary, (2) different types of

produce are likely to harbor different

kinds of pathogens, and (3) different

products provide different

environments for microbial growth. This
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24257

option could either be exercised as part

of the final rule in response to

comments or the proposed standards

could remain with the option to further

petition the agency for a different

standard. The benefits and costs of the

standard will vary directly with the

stringency of different performance

standards. However, FDA does not have

data to estimate preliminarily the costs

and benefits of this option.

G. Expand HACCP Rule Coverage

FDA has tentatively concluded that

the retail sector should not be included

in the HACCP rule and has asked for

comments on the appropriateness of this

conclusion. The expansion of coverage

of the HACCP rule to include retailers

that process juice at the point of sale

would add an estimated additional

14,300 restaurants and 1,300 grocery

stores and supermarkets for a total of

approximately 16,000 establishments. If

the cost for these establishments to

implement HACCP was equivalent to

that of very small processors who would

be required to initiate pasteurization

($26,000 in the first year and $11,900 in

subsequent years), then the total

additional cost of this option would be

approximately $416 million in the first

year and approximately $190 million in

subsequent years. However, the agency

does not have direct information about

the cost of implementing HACCP in a

retail setting for juice and the actual

costs may vary significantly from these

estimates.

H. Use of One of Various Alternatives

An alternative approach to mandating

HACCP would be to provide a more

flexible array of options tailored to the

microbial risk present in the particular

juice. Manufacturers of apple cider

would be provided a permanent option

choosing between labeling or

implementing a HACCP program with a

5-log pathogen reduction. All juices

other than untreated apple cider would

be provided a permanent option of

choosing between labeling,

implementing a HACCP system, or

achieving a 5-log pathogen reduction.

However, FDA believes that this option

provides only weak incentives for

processors to implement a HACCP

system. Processors could label

hazardous products without taking steps

to improve the safety of juice or choose

to achieve a 5-log reduction for

microbial pathogens without addressing

other hazards. The agency believes that

labeling would not achieve the same

level of product safety. Additionally,

there would be less incentive for

processors to implement a HACCP

system, which includes, among other

things, developing and implementing

sanitation SOP’s and recordkeeping at

critical control points in addition to

achieving a 5-log reduction. Other

hazards that would not be addressed

include chemical contaminants,

hazardous metals, including lead and

tin, mycotoxins, pesticides, and

physical hazards, such as glass.

Another regulatory option would be

to include labeling for unpackaged juice

products for all retail outlets, such as

restaurants. This option would also

require any very small retailer (as

defined for the purposes of this

rulemaking) who is manufacturing less

than 40,000 gallons of juice per year and

selling it directly to consumers and

other retailers to either label or achieve

a 5-log kill until a requirement for

HACCP would become effective 36

months from the date of publication of

the final rule.

If this option is combined with both

proposed rules, FDA has estimated the

benefits to be $383 to $478 million

annually and estimated the costs in the

first year to be $54 million and the costs

in subsequent years to be $28 million.

V. Benefits

This analysis provides estimates of

three additive, independent benefits of

these two proposed rules: (1) Reduced

expenditures related to regulatory

enforcement, (2) reduced adverse health

effects, and (3) other benefits. To some

extent, the benefits of the two rules are

intertwined. Because of the earlier

compliance dates, the impact of the

labeling rule will be to achieve some of

the benefits faster. That is, if firms

choose to achieve a 5-log reduction

through their processing practices to

avoid labeling, then some of the future

benefits that would be otherwise

achieved under HACCP will be

achieved sooner because of the

incentive provided by the labeling rule.

Also, if at-risk consumers avoid

unpasteurized juices as a result of the

labeling, there will be reduced adversehealth effects prior to the introduction

of HACCP. On average, the labeling rule

will achieve some of the benefits 2 years

faster than the HACCP rule.

A. Enforcement Benefits

To the extent that these proposed

rules are effective at reducing

contaminated juice, they should reduce

the number of safety-related

enforcement actions (for both domestic

and imported products) taken by the

agency for juice products. The

enforcement activities chosen as a

baseline for juice products fall between

the period 1992 and 1996 (inclusive)

and involve import detentions and

domestic recalls.

In the final regulatory impact analysis

for FDA’s seafood HACCP rule, FDA

used an assumption that the rule would

prevent 50 percent of the current

number of annual enforcement actions.

The agency did not receive comments

on this assumption in that rule and does

not yet have data from implementation

of the rule to validate it. However, this

may be a conservative assumption. If

HACCP plans are properly conceived,

implemented and validated, it is likely

that the vast majority of problems will

be caught and corrected in the plant,

rather than result in foodborne disease

outbreaks or be caught through Federal

sampling of the final product. Thus, the

agency will continue to make this

assumption but requests comment on it.

1. Import Enforcement

Over the period 1992 through 1996,

there were a number of imported juice

products detained for various violations

of the Federal Food, Drug, and Cosmetic

Act (the act). A detention is a procedure

for preventing violative products from

entering the United States. Following a

determination that a sample of a

product is violative, three steps occur:

(1) FDA sends a detention notice to the

importer providing an opportunity to

introduce testimony as to the condition

of the product; (2) the importer may

contact an attorney, submits a response

application, and introduces evidence

regarding the product; and (3) FDA

makes a determination about what

should be done with the shipment.

There are three actions that FDA can

specify for a detained shipment: (1) The

product is allowed to be ‘‘reshipped’’

out of the country, (2) the product is

reconditioned so as to bring it into

compliance with U.S. law, or (3) the

product is destroyed under Federal

supervision. Assume that the cost per

shipment of the three steps to all parties

involved is $5,000. Then the remaining

cost of detention is the cost per

shipment of the three actions which is

related to the value of the shipment.

Table 1 gives the number of

shipments detained and the total dollar

value of juice products detained for

violations of the act for the entire period

1992 through 1996.

The average value per shipment of

imported juice products refused entry is

approximately $10,000. The average

number of imported juice product

shipments detained annually is 23.
24258 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

4Class 1 recalls are for dangerous or defective

products that predictably could cause serious

health problems or death. Class 2 recalls are for

products that might cause a temporary health

problem, or pose only a slight threat of a serious

nature.

5Most of the information in section V of this

document (Benefits) is taken from Ref. 9. It includes

hazards other than those for which benefits have

been estimated in this analysis. The hazards

considered in section V of this document are those

for which the risk is highest. That is to say they are

the most significant in terms of probability of

occurrence and severity.

TABLE 1.—TOTALS OF JUICE IMPORT DETENTIONS FOR 1992 THROUGH 1996 BY REASON FOR DETENTION

Reason for DetentionFood Additive

Issues

Poisonous or

Deleterious

Substances

Violative

Pesticide

Residues

Chemical

Contamination

New Drug

Residues

Microbial

Hazards Total

Number of

Shipments 44 17 53 1 1 1 117

Value of Shipments $122,000 $112,000 $802,000 $79,000 $20,000 $2,000 $1,137,000

If, on an annual basis, 23 imported

juice product shipments are detained at

an average Federal enforcement and

industry negotiation cost of $5,000 per

shipment (60 FR 65189), and if all 23

shipments (with an average value of

$10,000 per shipment) are destroyed so

that the entire $10,000 value of the

shipment is lost, then the total annual

cost of all juice detentions is

approximately $345,000 (23 shipments

x ($10,000 value of shipment + $5,000

enforcement and negotiation cost)). If 50

percent of these enforcement costs are

prevented, then the benefits related to

import enforcement are approximately

$175,000.

2. Recalls

Recalls tracked by FDA for pathogens

or pesticides in juice products are

infrequent. For the period 1992 through

1996 there was one class 1 recall and

there were seven class 2 recalls4 for

such hazards, or about two recalls per

year. A class 1 recall may cost as much

as $3 to $5 million between

expenditures by the manufacturer,

retailers and State, local, and Federal

authorities. However, the typical juice

recall is smaller and less costly than

this. If the combination of industry and

government costs per recall on average

is $1 million, then the total annual cost

of juice recalls is approximately $2

million (2 recalls per year at $1 million

each). This assumption is based on FDA

conversations with industry for both

large and small recalls. FDA

acknowledges that this may not be the

true average cost of a recall and requests

comment on this assumption. If 50

percent of these enforcement costs are

prevented, then the benefits related to

recalls tracked by FDA are $1 million.

However, FDA may not be aware of all

recalls that take place, particularly for

less hazardous reasons. Assuming that

the recalls that FDA is not aware of are

considerably smaller, perhaps costing

$100,000, and that FDA may only hear

about 10 percent of such recalls, then

the total annual cost of such recalls

could be $1 million. If 50 percent of

these enforcement costs are prevented,

then the benefits related to recalls not

tracked by FDA would be $500,000.

Thus, the total annual benefits of the

HACCP rule related to recalls is

estimated to be $1.5 million.

In addition to those benefits, when

firms have recalls that are made public

they will generally suffer a loss of sales,

at least temporarily, from lost

‘‘goodwill.’’ This alone does not result

in a social cost but rather a social

transfer as other firms will step forward

to capture sales lost from the recalling

firm. However, in addition to the

resources invested in recalling the

product, the recalling firm may invest

real resources in advertising to

recapture lost goodwill, a social cost.

FDA cannot quantify this cost.

B. Health Benefits

This section presents quantitative

estimates of health benefits from this

rule. This is accomplished by the

following steps:

1. The most significant hazards in

juice are described in terms of severity

and duration;

2. The hazards are described in terms

of resulting health effects and symptoms

when they cause illness;

3. The health effects and symptoms

are translated into consumer utility

losses;

4. The utility losses are translated into

values in terms of lost dollars (this gives

the cost per case for every combination

of level of severity and for the specified

duration for each hazard);

5. The average annual number of

reported cases associated with juice are

distributed according to the percentages

associated with each level of severity;

6. The factors used to account for

under reporting of foodborne illness are

estimated;

7. The reported cases are multiplied

by the under reporting factors to get the

estimated average annual number of

cases;

8. The percentages of each type of

hazard expected to be prevented by the

proposal are listed; and

9. The total health benefits of the

proposal are derived by multiplying

numbers 4, 7, and 8.

That is, TB = RC x CF x CR x V, where

TB = total health benefits in dollars,

RC = number of reported cases,

CF = under reporting correction factor,

CR = percent of cases reduced,

V = dollar value per case averted

(medical costs + value of pain and lost

function).

1. Description of Microbial Hazards in

Juice

Most of the significant health risks

associated with juice products are

microbial. In the last 5 years the hazards

associated with commercially

processed, packaged juice produced by

nonretail establishments include

Bacillus cereus, Escherichia coli

O157:H7, and Salmonella non typhi.5

Table 2 lists these hazards with

associated severities and duration of

severities. These hazards have been

directly linked to orange and apple juice

products. However, all juices take farm

produce as an input; all use similar

types of processing steps; and all are

distributed in similar ways. Therefore,

although other types of juices are less

likely to be associated with foodborne

disease outbreaks primarily because

consumption of orange and apple juice

greatly exceeds consumption of all other

types of juice combined, all juices are

similarly vulnerable to microbial

contamination. All juices are sensitive

to potential contamination by

pathogenic microorganisms due to the

way fruits and vegetables are grown and

harvested.

Based on current scientific

understanding, potential vehicles or

mechanisms for pathogenic cross

contamination common to most fruit

and vegetable harvesting and juicing

operations include water; manure

fertilizer; worker, field, and facility

sanitation and transportation, handling

and processing. While most of the

potential for contamination would

appear on the surface of the fruit or

vegetable, the process of juicing this
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24259

fruit or vegetable would potentially

incorporate the pathogenic

microorganisms into the final juice

product. Ref. 10, page 31, lists the pH

of some fruit and vegetable juices.

TABLE 2.—DESCRIPTION OF MICROBIAL HAZARDS IN JUICE

Hazard Severity Percent3 Duration of Illness

(days)

E. coli O157:H7

Mild 50 5

Moderate 32 9

Severe-acute 18 32

Severe-chronic 2 26,6451

Death 1

Salmonella (non typhi)

Mild 65 2

Moderate 30 5

Severe 5 17

Reactive arthritis-short term 2 25

Reactive arthritis-long term 5 18,2502

Death .1

B. cereus

Mild 99 .75

Moderate 1 1

Severe 0 NA

Death 0 NA

1Symptoms lasting 26,645 days, or 73 years, implies that it is generally very young children who experience these severe chronic effects (Ref.

2–3). 2Symptoms lasting 18,250 days, or 50 years. This estimate and other information in section V of this document (Benefits) relating to reactive

arthritis are taken from Ref. 10. 3Percentages are taken from Ref. 10.

Symptoms of illness that results from

exposure to each hazard may be

classified as mild, moderate, or severe.

In general, mild cases are not brought to

the attention of a medical professional.

Moderate cases receive medical

attention but do not require

hospitalization. Severe cases involve

hospitalization and some of these result

in death. The ‘‘Percent’’ column in

Table 2 gives an estimate of the

percentage of the total number of cases

that are classified in these four

categories of severity for each hazard.

Note that the categories are not

necessarily mutually exclusive, for

example, severe-chronic cases of E. coli

O157:H7 follow only after severe-acute

cases of E. coli O157:H7, and deaths

follow only after severe cases. However,

the ‘‘Percent’’ column reports each

category of severity as a percentage of

total cases so that there is no double

counting. Another factor that tends to

distinguish the categories of severity is

the duration of time that symptoms are

experienced. The ‘‘Duration’’ column

gives the general duration of symptoms

(in days) that are associated with the

categories of severity for each hazard.

2. Description of Health Effects and

Symptoms of Microbial Hazards in Juice

In order to quantify the loss

(disutility) that individuals experience

from becoming ill, the pain, suffering,

and mobility loss must be scaled. Tables

3, 4, and 5 represent the outcome of one

type of scaling of these effects.

Individuals who become ill experience

different levels of functional status in

terms of mobility, ability to do other

physical activity, and ability to engage

in social activities. The ‘‘Functional

Status Code’’ column in Table 3

represents the status code which

correlates with the categories of severity

for each hazard. Individuals who

become ill also experience additional

disutility due to the symptoms of the

illness. The ‘‘Symptom/Problem

Complex Code’’ column represents the

symptom/problem complex codes

which correlate with the categories of

severity for each hazard. Descriptions of

the functional status and symptom/

problem complex codes are given in

Tables 4 and 5. FDA requests comment

on this scaling model.

TABLE 3.—DESCRIPTION OF HEALTH EFFECTS AND SYMPTOMS OF MICROBIALLY RELATED ILLNESSES IN JUICE

Hazard Severity Functional Status Code1 Symptom/Problem

Complex Code2

E. coli O157:H7

Mild L20 8, 12, 13, 29

Moderate L19 8, 12, 13, 16, 19, 29, 32

Severe-acute (L1 x .2) + (L6 x .8)3 8, 12, 13, 16, 19, 29, 32

Severe-chronic L31 9

Salmonella (non typhi)

Mild L20 12, 13, 29

Moderate L20 12, 13, 29

Severe L6 12, 13, 16, 29

Reactive arthritis L35, L41, L42, L434 19

B. cereus

Mild L19 12, 13, 29

Moderate L19 12, 13, 29
24260 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

6A QALD is a day of perfect health.

TABLE 3.—DESCRIPTION OF HEALTH EFFECTS AND SYMPTOMS OF MICROBIALLY RELATED ILLNESSES IN JUICE—

Continued

Hazard Severity Functional Status Code1 Symptom/Problem

Complex Code2

Severe NA NA

1Functional Status Codes are described in Table 4.

2Symptom/Problem Complex Codes are described in Table 5.

3The disutilities for two functional status codes were taken for severe cases of E. coli O157:H7 because functional status varies among severe

cases of this hazard. 4Functional Status Code varies, Ref. 10.

In Table 4, the last column, ‘‘Level of

Disutility,’’ represents the degree of

departure from perfect functionality.

Thus, a person would be functioning at

about half capacity if the level was .5

and would be even more diminished at

.75. Code L42 is used whenever the

mobility, physical activity, and social

activity conditions apply and a person

is experiencing a symptom described in

Table 5. Code L43 is used whenever the

mobility, physical activity, and social

activity conditions apply and a person

is experiencing no symptoms. In Table

5, ‘‘Level of Disutility’’ refers to the

amount of pain and suffering such that

.03 would be minor pain and suffering

relative to .3.

TABLE 4.—DESCRIPTION OF FUNCTIONAL STATUS CODES1

Function Status

Levels Mobility Physical Activity Social Activity Level of Disutility

L1 In special care unit In bed or chair Had help with self-care .5626

L6 In hospital In bed or chair Had help with self-care .5301

L19 In house Walked with physical limitationsPerformed self-care but not

work, school, or housework

.4176

L20 In house Walked with physical limitationsLimited in work, school, or

housework

.4448

L23 In house Walked without physical limitationsPerformed self-care, but not

work, school, or housework

.3512

L31 Did not drive, needed help

with transportation

Walked without physical limitationsLimited in work, school, or

housework

.4087

L35 Drove car and used transportation without helpWalked with physical limitationsLimited in work, school, or

housework

.3980

L41 Drove car and used transportation without helpWalked without physical limitationsDid work, school, or housework, but other activities

limited

.3145

L42 Drove car and used transportation without helpWalked without physical limitationsDid work, school, or household, and other activities.2567

L43 Drove car and used transportation without helpWalked without physical limitationsDid work, school, or household, and other activities.0000

1 Ref. 4.

TABLE 5.—DESCRIPTION OF SYMPTOM/PROBLEM COMPLEX CODES1

Symptom/Problem

Complex Description Level of Disutility

8 Itching, bleeding or pain in rectum .0379

9 Pain in chest, stomach, side, back, or hips .0382

12 Sick or upset stomach, vomiting, or diarrhea (watery bowel movements) .0065

13 Fever chills with aching all over and vomiting or diarrhea .0722

16 Headache, dizziness, or ringing in ears .0131

19 Pain, stiffness, numbness, or discomfort of neck, hands, feet, arms, legs ankles, or several

joints together .0344

29 General tiredness, weakness, or weight loss .0027

32 Loss of consciousness such as seizures (fits), fainting, or coma (out cold or knocked out) .1507

1 Ref. 4, p. D–14.

3. Utility Losses From Microbial

Hazards in Juice

The ‘‘Functional Status Code’’

translates into values of disutility given

in the ‘‘Functional Disutility’’ column in

Table 6. The symptom/problem

complex code translates into values of

disutility given in the ‘‘Symptom/

Problem Disutility’’ column in Table 6.

The ‘‘Total Disutility’’ column is the

sum of the ‘‘Functional Disutility’’ and

the ‘‘Symptom/Problem Disutility’’

columns. The ‘‘Utility Losses for

Survivors’’ column is derived by

multiplying the total disutility per day

by the number of days that symptoms of

the illness persists. This gives the utility

loss for survivors in terms of the number

of quality adjusted life days (QALD’s)

for each case of the categories of severity

for each hazard.6 FDA requests

comment on this estimation of utility

loss.
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24261

TABLE 6.—UTILITY LOSSES FROM MICROBIAL HAZARDS IN JUICE

Hazard Severity Functional Disutility (per day)

Symptom/Problem Disutility

(per day)

Total Disutility

(per day)

Utility Losses

for Survivors

(QALD’s)

E. coli O157:H7

Mild .4448 .1193 .5641 2.8

Moderate .4176 .1668 .5844 5.3

Severe-acute .5464 .3175 .8639 27.8

Severe-chronic .4087 .0382 .4469 11,907.7

Salmonella (non typhi)

Mild .4448 .0814 .5262 1.1

Moderate .4448 .0814 .5262 2.6

Severe .5301 .0945 .6246 10.6

Reactive arthritisshort term.3980 .0344 .4324 10.8

Reactive arthritis-long

term

.2582 .0280 .2862 5,223.2

B. cereus

Mild .4176 .0814 .4990 .4

Moderate .4176 .0814 .4990 .5

Severe 0 0 0 0

4. Value of Losses From Microbial

Hazards in Juice

FDA values a QALD at $630. This

value derives from the statistical

estimate of a unit-risk reduction

(commonly referred to as the value of a

statistical life (VSL)) which the

Department of Health and Human

Services assigns the value of $5 million.

Using $5 million for a full lifetime

yields a value for a quality adjusted life

year (QALY) of approximately $230,000,

when discounted at 7 percent. (A QALY

is the estimated value of a year spent in

perfect health. These values are

discounted to reflect time preferences

for investments in health. That is, as

with any other commodity, people have

a stronger preference for good health

now than they have for good health in

the future. Costs or benefits realized in

the future are ‘‘discounted’’ to make

them comparable to today. Essentially,

discounting is the inverse of the interest

rate. Thus, if a benefit of $1.10 were to

be realized 1 year in the future, this

would be equivalent, at approximately a

10 percent discount rate, to a benefit of

$1 realized today. This is the reverse of

saying that $1 invested today at a 10

percent annual interest rate is worth

$1.10 1 year from now.) Dividing this

value by 365 days per year yields a

value for a QALD of approximately

$630. The ‘‘Value of Utility Losses for

Survivors’’ column in Table 7 comes

from multiplying the number of QALD’s

lost due to the illness (see ‘‘Utility

Losses for Survivors’’ in Table 6) by the

value of a QALD, $630. This represents

the value of pain and mobility losses

that individuals experience.

Additionally, there are the societal costs

of medical treatment. These costs are

shared generally between insurance

companies and individuals. They

include all aspects of medical expenses

(e.g., physician visits, laboratory tests,

prescriptions and therapies, hospital

stays). These are estimated in the

‘‘Medical Costs’’ column in Table 7 (Ref.

2–3, pp. 19 and 40 and Ref. 10). The

‘‘Value of Losses per Case’’ column in

Table 7 is the sum of the ‘‘Value of

Utility Losses for Survivors’’ column

and the ‘‘Medical Costs’’ column for the

categories of severity for each hazard.

FDA requests comment on these

valuations.

TABLE 7.—VALUE OF LOSSES FROM MICROBIAL HAZARDS IN JUICE

Hazard Severity

Value of Utility

Losses for Survivors

(QALD=$630)

Medical Costs

Value of Losses per

Case

(VSL=$5,000,000)

(QALD=$630)

E. coli O157:H7

Mild $1,800 $01 $2,000

Moderate $3,300 $2001 $4,000

Severe-acute $17,200 $16,0002 $33,000

Severe-chronic $995,700 $225,0003 $1,221,000

Death NA NA $5,000,000

Salmonella (non typhi)

Mild $700 $2004 $1,000

Moderate $1,600 $8004 $2,000

Severe $6,700 $9,1004 $16,000

Reactive arthritis-short

term

$6,800 $1005 $7,000

Reactive arthritis-long

term

$970,0005 $5,8605 $976,000

Death NA NA $5,000,000

B. cereus

Mild $300 $06 $300

Moderate $300 $1006 $400

Severe $0 $0 $0
24262 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

TABLE 7.—VALUE OF LOSSES FROM MICROBIAL HAZARDS IN JUICE—Continued

Hazard Severity

Value of Utility

Losses for Survivors

(QALD=$630)

Medical Costs

Value of Losses per

Case

(VSL=$5,000,000)

(QALD=$630)

Death NA NA $5,000,000

1 Ref. 2–3, p. 40.

2Explained in Table 8.

3 Recalculated from data in Buzby et al., pp. 41–45 in order to arrive at the present value of the cost per case using a 7 percent discount rate.

4Buzby et al., pp. 18–19. Mild Salmonella medical costs are recalculated from data in Cohen, M. L. et al. so as not to include productivity in

medical costs. 5 Ref. 10.

6The medical cost estimates for B. cereus were made by FDA for this analysis. The extremely brief duration of mild cases suggests that there

would be no medical costs for this level of severity. For moderate cases one visit to a doctor with medical tests are estimated to cost approximately $100.

TABLE 8.—MEDICAL COSTS FOR SEVERE-ACUTE CASES ASSOCIATED WITH E. coli O157:H71

Factors Acute Hemorrhagic

Colitis Acute HUS Average SevereAcute Case

Percent of Severe Cases 80% 20%

Present Value per Case $11,000 $36,000

Weighted Present Value per Case $8,800 $7,200 $16,000

1 Ref. 2–3, p. 40.

5. Distribution of the Reported Cases per

Year for Microbial Hazards in Juice

Table 9 estimates the number of cases

associated with each hazard by severity.

The ‘‘Average Total No. of Cases

Reported per Year’’ column represents

the average number of reported cases for

each hazard from 1992 through 1996.

Cases for each hazard are divided

among the four categories of severity

according to the percentages described

in Table 8. Only those reported cases

associated with commercially-produced

juices sold in interstate commerce as

beverages or used as ingredients in

beverages are included in the averages

presented.

TABLE 9.—DISTRIBUTION OF THE REPORTED CASES PER YEAR FOR MICROBIAL HAZARDS IN JUICE

Hazard Severity Percent

Average No. of

Cases Reported per

Year

Mild 50 8

Moderate 32 5

Severe-acute 18 3

Severe-chronic 2 .3

Death 1 .2

E. coli O157:H7 Total cases 161

Mild 65 8

Moderate 30 4

Severe 5 1

Reactive arthritis-short term 2 .2

Reactive arthritis-long term 5 1

Death .1 .01

Salmonella (non typhi) Total cases 12

Mild 99 17

Moderate 1 .2

Severe 0 0

Death 0 0

B. cereus Total cases 17

1Total cases per pathogen are accurate. The sum of the number of cases for all levels of severity per pathogen may not equal the total number of cases per pathogen due to rounding.

6. Estimates of Factors Needed to Offset

Underreporting of Foodborne Illness

The cases reported in column 4 in

Table 10 are the lower bound of the

likely total number of these cases. The

total number of foodborne illness is

much greater than those numbers

reported to the Centers for Disease

Control and Prevention (CDC) for

several reasons. First, individuals who

become ill do not always go to doctors.

This is particularly true for milder cases

of foodborne disease. Obviously, if

people do not go to health care

professionals, the illnesses will not be

captured in any data base and will not

be picked up by CDC. Second, even

when people go to health care

professionals, they are not necessarily

diagnosed as having foodborne disease

as the symptoms for many types of
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24263

7The CAST Report expands these three categories

of reasons that a case of illness may not be

recognized as foodborne into six reasons (Ref. 6).

foodborne disease are common to

influenza and other diseases. There is

often little incentive to culture stools to

definitively identify a pathogen if the

disease is thought to be of short

duration and not requiring treatment.

Even where a pathogen is identified,

there is even less incentive to identify

the food or other vehicle which carried

it. Third, even when a correct diagnosis

is made, State and local health

professionals do not always report these

cases upwards, particularly going as far

as CDC. Again, milder cases are less

likely to be reported than more severe

cases.7 To complicate matters, the rate

of under reporting is not observable,

and, even if it were known in any 1

year, it may fluctuate dramatically from

year to year. Nevertheless, in order to

compensate for the rate of under

reporting, the number of known cases

associated with a hazard (i.e., reported

to CDC) is multiplied by factors which

are estimated to account for

underreporting.

In Foodborne Pathogens: Risks and

Consequences (the CAST Report) there

are two estimates given of the actual

number of foodborne illnesses: One

estimate made by Bennett et al., and one

made by Todd (Ref. 6, p. 46). Both

Bennett et al. and Todd estimate the

total number of cases and the total

number of deaths for each hazard. By

dividing Bennett’s et al. and Todd’s

estimates of the actual number of cases

and deaths by the number of reported

cases and deaths (Ref. 6, p. 42), the

respective implicit factors needed to

correct for underreporting of these

categories for each hazard are derived.

Based on these correction factors, FDA

has estimated correction factors for each

category of severity. The agency has

taken the correction factor for the

number of cases as the correction factor

for mild cases and the correction factor

for the number of deaths as the

correction factor for severe cases. For

moderate cases, the agency has

interpolated between the factors for

mild and severe cases. E. coli O157:H7

was not a recognized food-safety hazard

at the time that Bennett’s et al. work was

done. For a more complete description

of how these estimates were derived see

the Appendix attached to this document

(Ref. 9).

In Table 10, the third column,

‘‘Estimate of Underreporting Correction

Factor (Bennett),’’ and the fifth column,

‘‘Estimate of Underreporting Correction

Factor (FDA based on Todd),’’ give the

exact implicit correction factors that can

be derived from the work of Bennett and

Todd et al. The fourth column,

‘‘Estimate of Underreporting Correction

Factor (FDA based on Bennett),’’ and the

sixth column, ‘‘Estimate of

Underreporting Correction Factor (FDA

based on Todd),’’ give FDA’s

interpolations of the work of Bennett

and Todd et al. for each of the identified

categories of severity. In general, each

researcher’s estimate of the

underreporting correction factor for total

cases was used as the estimate for mild

cases, and each researcher’s estimate of

the underreporting correction factor for

deaths was used as the estimate for

deaths and severe cases. FDA

interpolated between each researcher’s

estimates of underreporting for total

cases and deaths to derive under

reporting rates for moderate cases. FDA

requests comment on these estimates of

underreporting.

TABLE 10.—ESTIMATES OF FACTORS NEEDED TO OFFSET UNDERREPORTING OF FOODBORNE ILLNESS

Hazard Severity

Estimate of

Underreporting

Correction Factor (Bennett)

Estimate of

Underreporting

Correction Factor (FDA based

on Bennett)

Estimate of

Underreporting

Correction Factor (Todd)

Estimate of

Underreporting

Correction Factor (FDA based

on Todd)

Mild 195

Moderate 20

Severe 7

Death 7 7

E. coli O157:H7 Total cases ND1 195

Mild 307 474

Moderate 307 45

Severe 246 4

Reactive arthritis-short term 307 474

Reactive arthritis-long term 307 474

Death 246 246 4 4

Salmonella (non typhi) Total cases 307 474

Mild 96 1,615

Moderate 96 1,615

Severe NA NA NA NA

Death NA NA NA NA

B. cereus Total cases 96 1,615

7. Estimates of Juice-Associated Cases

per Year

In Table 11, FDA has estimated ranges

of the likely annual number of cases that

occur for each of the four pathogens

studied. The column ‘‘Estimate of

Actual No. of Juice Associated Cases per

Year (FDA based on Bennett)’’ in Table

11 is derived by multiplying the

‘‘Average Total No. of Reported Cases

per Year’’ column in Table 9 by the

‘‘Estimate of Underreporting Correction

Factor (FDA based on Bennett)’’ column

in Table 11. The column ‘‘Estimate of

Actual No. of Juice Associated Cases per

Year (FDA based on Todd)’’ in Table 11

is calculated in a similar manner.
24264 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

TABLE 11.—ESTIMATES OF JUICE-ASSOCIATED CASES PER YEAR

Hazard Severity

Estimate of Underreporting Correction

Factor (FDA based

on Bennett)

Estimate of Underreporting Correction

Factor (FDA based

on Todd)

Estimate of Actual

No. of Juice-Associated Cases per Year

(FDA based on Bennett)

Estimate of Actual

No. of Juice-Associated Cases per Year

(FDA based on

Todd)

Mild ND 195 ND 1,560

Moderate ND 20 ND 100

Severe-acute ND 7 ND 20

Severe-chronic ND 7 ND 2

Death ND 7 ND 1

E. coli O157:H7 Total cases ND 1,700

Mild 307 474 2,460 3,790

Moderate 307 45 1,230 180

Severe 246 4 150 2

Reactive arthritisshort term307 474 60 100

Reactive arthritislong term307 474 180 280

Death 246 4 2 .04

Salmonella (non typhi) Total cases 3,800 4,000

Mild 96 1,615 160 2,750

Moderate 96 1,615 2 30

Severe 0 0 0 0

Death 0 0 0 0

B. cereus Total cases 200 2,800

8. Percent of Cases Preventable by

HACCP Proposal

In general, most pathogens will be

eliminated when juice is heat-treated.

For example, E. coli O157:H7, and

Salmonella should all be completely

eliminated from juice by standard

methods of flash pasteurization (absent

extraordinarily high counts, detrimental

human intervention, or equipment

failure). However, hazards associated

with B. cereus will not necessarily be

eliminated by heat treatment. This

bacterium forms spores which are more

difficult to kill by heat. After heat

treatment, if the spores survive, they

may grow out and produce a toxin

which causes illness. Ideally, the best

way to reduce illness associated with B.

cereus is by killing the bacterium in its

nonspore state before any toxin has been

produced. For most types of heat-treated

juice, there is a small probability that

the heat treatment will take place when

B. cereus is in its nonspore state. To the

extent that processors adopt controls for

these hazards other than flash

pasteurization which are less effective,

the percentage of cases prevented may

be smaller than those estimated here.

FDA requests comment on these

estimates. Based on information from

USAA, FDA estimates that the

exemption from the HACCP rule for

retailers and small retail processors will

affect 14 percent of the volume of

unpasteurized juice. Therefore, the

agency estimates that though pathogen

controls may be 100 percent effective in

controlling some hazards, such controls

will only prevent 86 percent of the cases

of illness from these hazards.

TABLE 12.—PERCENT OF CASES

PREVENTABLE BY HACCP PROPOSAL

Hazard

Percent of Cases

Preventable by

HACCP Proposal

E. coli O157:H7 86

TABLE 12.—PERCENT OF CASES PREVENTABLE BY HACCP PROPOSAL—

Continued

Hazard

Percent of Cases

Preventable by

HACCP Proposal

Salmonella (non

typhi) 86

B. cereus 9

9. Estimates of Annual Benefits for

HACCP Proposal

The total benefits for the categories of

severity for each hazard are derived by

multiplying the percentage of cases

preventable by the HACCP proposal by

the estimates of the number of actual

cases. The sum of those benefits for each

hazard is the total benefits of the

HACCP proposal for pathogen control.

Table 13 gives the estimate of benefits

for each hazard using each source of

information on the appropriate

correction factor for underreporting.

TABLE 13.—ESTIMATES OF ANNUAL BENEFITS FOR HACCP PROPOSAL

Hazard Severity

FDA Estimate of

Annual Benefits Based

on Bennett

FDA Estimate of

Annual Benefits Based

on Todd

Mild $2,680,000

Moderate $360,000

Severe-acute $660,000

Severe-chronic $2,442,000

Death $5,000,000

E. coli O157:H7 Total $11,142,000

Mild $2,120,000 $3,260,000
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24265

TABLE 13.—ESTIMATES OF ANNUAL BENEFITS FOR HACCP PROPOSAL—Continued

Hazard Severity

FDA Estimate of

Annual Benefits Based

on Bennett

FDA Estimate of

Annual Benefits Based

on Todd

Moderate $2,120,000 $300,000

Severe $2,080,000 $32,000

Reactive arthritis-short term $350,000 $630,000

Reactive arthritis-long term $146,400,000 $234,240,000

Death $10,000,000 $200,000

Salmonella (non typhi) Total $163,070,000 $238,662,000

Mild $42,000 $711,000

Moderate $1,000 $12,000

Severe 0 0

Death 0 0

B. cereus Total $43,000 $725,000

Table 14 presents a range of estimates

of annual benefits based on the

estimates in Table 13. The low and high

estimates do not represent lower and

upper bounds of benefits, but only a

range of potentially likely estimates.

TABLE 14.—RANGE ESTIMATES OF ANNUAL MICROBIALLY RELATED BENEFITS FOR HACCP PROPOSAL

Hazard Low Estimate of Annual

Benefits

High Estimate of Annual

Benefits

E. coli O157:H7 $11,142,000 $11,142,000

Salmonella (non typhi)1 $163,070,000 $238,662,000

B. cereus1 $43,000 $725,000

Totals $174,000,000 $251,000,000

1 Ranges for these two pathogens are taken from two different estimates that exist in the public health literature. The estimates for the other

pathogen was made by FDA, alone.

10. Percent of Cases Preventable by

Labeling Proposal

FDA does not have direct estimates of

the effects of a warning label on the

incidence of illness from juice

consumption. FDA indirectly estimates

the effects by estimating how warning

labels will change consumption,

assuming that changes in the number of

illnesses are proportional to changes in

consumption. FDA believes that the

labeling rule will cause a reduction in

the consumption of unpasteurized juice,

but the size of the reduction is

uncertain. As a likely value, FDA

estimates that consumption and

illnesses will decline by 5 percent in

response to the warning label. The 5

percent reduction is the estimated effect

on cooking practices of the USDA meat

safe handling label, as found in a recent

survey (Ref. 11). However, there are

some dissimilarities between the meat

and juice labels, most particularly that

the juice label is targeted at sensitive

consumers. If, for example, parents

redirect children away from nonheattreated juice, then consumption and

illness will decline by 16 percent,

which is the proportion of apple cider

consumed by children under the age of

6 (Ref. 12). This estimate embodies the

assumptions that cider consumption is

a good proxy for unpasteurized juice

consumption, and that parents will not

let their children consume

unpasteurized juices.

11. Estimates of Annual Benefits for

Labeling Proposal

Table 11 shows FDA’s estimate that

there are approximately 5,600 cases of

foodborne illness associated with

commercially processed, package juice

produced by nonretail establishments.

In addition to these cases, an average of

6 cases annually of Cryptosporidium

parvum have been associated with

commercially processed, packaged juice

produced by retail establishments

exempted from the HACCP rule. Table

15 shows the agency’s estimate of the

actual number of cases per year by

severity.
24266 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

TABLE 15.—ESTIMATES OF JUICE-ASSOCIATED C. parvum CASES PER YEAR

Severity Average No. of Cases Reported per Year (1992–1996)

FDA Estimate of

Underreporting Correction Factor1

FDA Estimate of Actual

No. of Juice-Associated Cases per Year

Mild 5 100 500

Moderate 1 10 10

Severe .06 5 .3

Death .001 5 .005

Total 6 500

1Because C. parvum was not a recognized food safety hazard at the time that Bennett et al. and Todd’s work was done, FDA has made its

own estimates of the factors needed to correct for underreporting of this hazard.

Table 16 gives the agency’s estimate

of the value of the loss per case of C.

parvum.
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24267

TABLE 16.—ESTIMATE OF

VALUE OF

LOSSES

ASSOCIATED WITH

CASE OF C. parvum

Severity Percent Duration of Ill- ness (in days) Function Status Code1 Symptom/Prob- lem Complex Code2 Total Disutility (per day) Utility Losses for Survivors (QALD’s) Value of Utility Losses for Sur- vivors (QALD=$630) Medical Costs Value of Losses per Case (VSL=$5,000,000) (QALD=$630)

Mild 90 9 L41 12, 13,

29

.3959 3.6 2,300 $03 $2,000

Moderate 9 17 L41 12, 13,

29

.3959 6.7 $4,200 $4003 $5,000

Severe 1 24 L6 12, 13,

29

.6115 14.7 $9,300 $8,3004 $18,000

Death .02 NA NA $5,000,000

1Functional Status Codes are described in Table 4.2Symptom/Problem Complex Codes are described in Table 5.3Medical Costs for mild and moderate cases of C. parvum were calculated by multiplying the per day medical costs for E. coli 0157:H7 for these levels of severity by the duration of illness

of C. parvum. The symptoms of C. parvum for these levels of severity are similar to those of E. coli 0157:H7. 4Medical Costs for severe cases of C. parvum were calculated by multiplying the per day medical costs for severe cases of acute hemorrhagic colitis by the duration of illness of C.

parvum. The implicit assumption is that the medical costs for acute hemorrhagic colitis (bloody diarrhea) are equivalent to the medical costs for watery diarrhea associated with C. parvum.
24268 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

The labeling rule is expected to

prevent some cases of foodborne illness

as people avoid juice that is labeled.

Because B. cereus is, in general, not

disproportionately associated with

minimally processed juice, cases of B.

cereus are not expected to be prevented

by the labeling. However, to the extent

that the label is effective and to the

extent of the volume of juice that is

labeled, the labeling rule will reduce the

number of cases associated with E. coli

0157:H7, Salmonella and C. parvum.

Combining the estimates of the

number of illnesses in Tables 11 and 15,

the total number of estimated cases

associated with minimally processed

juice for these 3 hazards is 6,100 per

year associated with consumption of the

70 million gallons of minimally

processed juice produced annually.

FDA has estimated that 14 percent of

minimally processed juice (10 million

gallons) will be exempt from the HACCP

rule but will be covered by the labeling

rule. Therefore, the number of illnesses

that may be associated with this volume

of juice (10 million gallons) will be

exempt from the HACCP rule but will be

covered by the labeling rule. Therefore,

the number of illnesses which may be

associated with this volume of juice (10

million gallons) is approximately 900

and 5,200 illnesses are associated with

minimally processed juice covered by

the HACCP rule.

As stated earlier, FDA estimates that

consumption of labeled, minimally

processed juice will decline by 5

percent in response to the warning

label. This leads to the conclusion that

the labeling rule is expected to prevent

approximately 50 illnesses annually

(900 x .05). If juice consumption

decreases by as much as 16 percent in

response to the warning label, then the

labeling rule may prevent as many as

140 illnesses per year.

The value of this reduction in illness

depends on the type of cases prevented.

FDA assumes that these cases will be

distributed according to the share of

illnesses associated with each of these

hazards. Table 17 shows the expected

distribution of cases prevented by

labeling across the hazards and

severities.
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24269

TABLE 17.—DISTRIBUTION OF

CASES

PREVENTED BY

LABELING

PROPOSAL

Hazard Severity

Low Estimate of Actual

No. of Juice-Associated Cases per Year

High Estimate of Actual

No. of Juice-Associated Cases per Year

Low Estimate of No. of

Cases Prevented by a

5% Consumer Response to Labeling

High Estimate of No. of

Cases Prevented by a

5% Consumer Response to Labeling

Low Estimate of No. of

Cases Prevented by a

16% Consumer Response to Labeling

High Estimate of No. of

Cases Prevented by a

16% Consumer Response to Labeling

Mild 1,560 1,560 13 13 36 35Moderate 100 100 1 1 2 2Severe-acute 20 20 .2 .2 .5 .5Severe-chronic 2 2 .02 .02 .05 .05Death 1 1 .008 .008 .02 .02

E. coli

0157:H7

Total 1,700 1,700 14 14 39 38Mild 2,460 3,790 20 31 58 87Moderate 1,230 180 10 1 29 4Severe 150 2 1 .02 4 .05Reactive arthritisshort term 60 100 .5 .8 1 2Reactive arthritislong term 180 280 1 2 4 6Death 2 .04 .02 .0003 .05 .0009

Salmonella

(non

typhi)

Total 3,800 4,000 32 32 90 91Mild 500 500 4 4 11 11Moderate 10 10 .08 .08 .2 .2Severe .3 .3 .002 .002 .006 .006Death .005 .005 .00004 .00004 .0001 .0001

C. parvum Total 500 500 4 4 11 11Total 6,000 6,200 50 50 140 140
24270 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

TABLE 18.—VALUE OF LOSSES PREVENTED BY THE LABELING PROPOSAL

Hazard Severity

Low Estimate of Value

of Losses Prevented

by a 5% Consumer

Response to Labeling

High Estimate of Value

of Losses Prevented

by a 5% Consumer

Response to Labeling

Low Estimate of Value

of Losses Prevented

by a 16% Consumer

Response to Labeling

High Estimate of Value

of Losses Prevented

by a 16% Consumer

Response to Labeling

Mild 26,000 26,000 72,000 70,000

Moderate 4,000 4,000 8,000 8,000

Severe-acute 7,000 7,000 17,000 17,000

Severe-chronic 24,000 24,000 61,000 61,000

Death 40,000 40,000 100,000 100,000

E. coli

0157:H7

Total 101,000 101,000 258,000 258,000

Mild 20,000 31,000 58,000 87,000

Moderate 20,000 2,000 58,000 8,000

Severe 16,000 300 64,000 1,000

Reactive arthritisshort term4,000 6,000 7,000 14,000

Reactive arthritis-long

term

976,000 1,952,000 3,904,000 5,856,000

Death 100,000 2,000 250,000 5,000

Salmonella

(non typhi)

Total 1,136,000 1,993,000 4,341,000 5,971,000

Mild 8,000 8,000 22,000 22,000

Moderate 400 400 1,000 1,000

Severe 0 0 100 100

Death 200 200 500 500

C. parvum Total 9,000 9,000 24,000 24,000

Total 1,000,000 2,000,000 5,000,000 6,000,000

12. Pesticide Residues

Tolerances for pesticides in foods are

established by the Environmental

Protection Agency (EPA) and enforced

by FDA. FDA collects samples for both

surveillance and compliance purposes.

Since the incidence of violative

pesticide residues in fruit and vegetable

juices is relatively low, few compliance

samples are taken.

This discussion pertains to

surveillance samples of fruit and

vegetable juices from 1991 through 1997

(see Table 15). The lab classification

scheme used for pesticide residues is:

1 = in compliance;

2 = not in compliance, but not of

regulatory concern; and

3 = not in compliance, and of regulatory

concern.

The class 2 and 3 violative sample

data are summarized in Table 15. Of the

1,196 surveillance samples of juice

taken and analyzed during this period,

only three (approximately one quarter of

one percent) were class 3 violative. One

was apple cider and the other two were

apple juice, and the violative pesticide

residue was acephate in each case.

There were also five class 2 violations,

in which trace quantities of a pesticide

with no tolerance (i.e., the pesticide was

not approved for use in the commodity)

were found. The products with class 2

violations were grape juice, watermelon

juice concentrate, strawberry/nectarine

juice (2 samples), and apple juice

concentrate; the pesticides were

chlorpyrifos, acephate, and

methamidophos.

Pesticides present some potential

chronic risks to humans at very low

levels of exposure. There is a small

background risk associated even with

nonviolative pesticide residues and, in

the case of products with violative

levels, an added risk from the violative

residues. (Violative residues are

residues above tolerance or residues of

pesticides with no tolerance.)

TABLE 19.—VIOLATIVE PESTICIDE RESIDUES IN FRUIT AND VEGETABLE JUICES, 1991 THROUGH 1997

Commodity Fiscal Year Pesticide Amount Found, ppm Tolerance, ppm Class Violation

Grape juice 1993 Chlorpyrifos Trace None 2

Apple cider 1995 Acephate 0.075 None 3

Apple juice 1995 Acephate 0.052 None 3

Apple juice 1995 Acephate 0.040 None 3

Watermelon juice, concentrate 1995 Acephate Trace None 2

Strawberry/nectarine juice 1996 Methamidophos Trace None 2

Strawberry/nectarine juice 1996 Methamidophos Trace None 2

Apple juice, concentrate 1997 Methamidophos Trace None 2

There are two potential benefits

associated with the regulation of

pesticides: (1) Decreases in cancer and

other illness caused by chronic

consumption of pesticide residues and,

(2) social benefits associated with

reductions in the costs of recapturing

firm goodwill. The U.S. EPA is

responsible for determining the benefits

of reducing exposure to pesticide

residues and, it is assumed, that the

health benefits of the enforcement

actions proposed here are already

accounted for when regulatory

tolerances are established. As to the
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24271

latter benefit, when firms have products

with violative residues either over

tolerance for legal pesticides or any

residue of an illegal pesticide and a

recall of the violative product becomes

publicly known, the sales of those firms

are reduced, at least temporarily.

Because other firms will step in to

supply the product, that loss of sales

alone does not constitute a social cost.

However, it is likely that real resources

will be expended to recapture the lost

‘‘goodwill’’ that would be in addition to

the real expenditures made to actually

recall the product. FDA cannot quantify

the cost savings that will occur because

of more vigilant monitoring of pesticide

residues by firms under a HACCP rule.

C. Other, Nonquantified Benefits

1. Firm Efficiency

The principle benefits from HACCP

reported by the pilot firms are more

effective and efficient operations, a

higher level of confidence in the safety

of the product, and greater customer

satisfaction. The pilot firms attributed

these benefits to HACCP because of the

following results.

(1) Training makes the employees

more aware of safety and needed control

measures, and empowers employees to

prevent problems and respond properly

when deviations occur. Improvement in

employee performance was perhaps the

most significant benefit from HACCP

expressed to FDA by the pilot firms.

One firm reported that ‘‘due to

increased HACCP awareness, employees

have been instrumental in designing

new processes/procedures for

monitoring and control.’’ The firm gave

an example of a processing step that was

changed to reduce the likelihood of

occurrence of a physical hazard. FDA is

unable to estimate the societal cost

savings in terms of reduced product

costs which will, ultimately, affect the

cost of implementing HACCP.

(2) SOP’s and other documented

procedures enable employees to

implement their tasks more consistently

and effectively, and result in smoother

operations.

(3) Prerequisite programs and

incoming ingredient controls prevent

hazards from being introduced into the

process; continuous monitoring reveals

problems quickly and enables prompt

correction and continuation of

production with less waste.

(4) Recordkeeping and review makes

employees more accountable and

conscientious about safety.

(5) Validation and verification

activities provide management with

greater control over their operations and

documentation of the safety of their

product.

Perhaps the most significant benefit in

terms of firm efficiency will be cost

savings from greater awareness by firms

of violative product runs, and the

resulting increase in response to such

violative runs. Although the benefits of

formal recalls have already been

accounted for, many pilot plant

managers suggested that the continuous

monitoring required by HACCP enabled

them to decrease the amount of waste

associated with production-line

problems. For example, one

manufacturer noted that glass breakage

was a constant problem on the line and

that, prior to HACCP, almost an entire

lot would have to be discarded because

the manager could not be sure exactly

when a problem had started. With

continuous HACCP monitoring,

problems were caught more quickly and

the problem corrected more promptly,

thereby minimizing the amount of lost

product.

The cost savings may be substantial

from this source of benefits but FDA is

unable to quantify them. FDA requests

comments on these and other potential

benefits.

2. Increased Shelf Life

Nonheat-treated juices have a limited

shelf life. Heat-treated juices have

longer shelf lives. Depending upon

temperature used, increases of 7 days or

more have been reported. Longer shelf

life allows more flexibility in the

conditions of distribution and sale of

products. The agency requests

comments on how this potential benefit

may be quantified.

D. Summary of Benefits

Table 20 summarizes the benefits of

these two rules.

TABLE 20.—BENEFITS OF JUICE PROPOSALS

Type of Benefit Description Annual Value

Enforcement: Import DetentionsReduced waste and Federal activity from detaining violative juice imports $175,000

Enforcement:Product Recalls Reduced numbers of domestic recalls of violative juice products $1,500,000

Health Benefits: HACCP Reduced illness and death from controlling pathogens in juice $174 to 251 million

Health Benefits: Labeling Reduced illness and death from avoidance of minimally processed juice $1 to $6 million

Health Benefits: Pesticides Reduction of consumption of violative pesticide residues in juice and social

losses from lost goodwill

Not quantified but small

Other Benefits: Firm Efficiency Some offsetting reductions in manufacturing costs due to increased worker

productivity and less product waste

Not quantified but potentially

large

Other Benefits: Increased Shelf

Life

Product Shelf life may be increased for products achieving a 5-log reduction

of pathogens

Not quantified but potentially

large

Total Quantified Benefits $180 to 260 million

VI. Costs

A. General Industry Information Used

Throughout This Analysis

The costs of these rules have been

estimated by analyzing the costs for

each proposed requirement on a perplant basis and multiplying these costs

by the number of plants affected by each

requirement. Cost per plant will vary by

current practice, product, and size. In

order to determine the number of plants

covered, the analysis will first analyze

coverage qualitatively.

1. Types of Plants Covered

The labeling rule and the HACCP rule

do not equally affect an identical subset

of the food industry.

2. HACCP Rule Coverage

For the purpose of this rule, FDA has

tentatively decided that retailers will

include processors who are very small

businesses and who make juice on their

premises and directly sell juice or juice

products to consumers and other

retailers provided that retail sales of

juice and juice products do not exceed

40,000 gallons per year. The HACCP

rule covers all processors of juice except

those who are retailers. Retailers may

include grocery stores, supermarkets,

farms, roadside stands, restaurants and

eating places.
24272 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

3. Labeling Rule Coverage

The labeling rule covers processors

and retailers of packaged minimally

processed juice. The labeling rule is also

applicable to packaged beverages that

have not received further processing to

control microbial hazards and that

contain minimally processed juice.

Such beverages include diluted juice

beverages, ‘‘smoothies,’’ sports drinks,

flavored bottled waters, and carbonated

beverages that contain juice that was not

processed to control pathogens.

Table 21 provides examples of the

types of products and processors

covered and not covered by the two

rules.

TABLE 21.—COVERAGE OF JUICE PROPOSALS

Processor Type

Covered by

Labeling

Rule

Covered by

HACCP Rule3

Processors of packaged beverages sold as juice1 Yes Yes

Processors of packaged purees sold as juice Yes Yes

Processors of juice used as an ingredient in a beverage (e.g., the cranberry juice in cranberry juice cocktail) Yes Yes

Processors of juice which retail the juice at a different location from which it is produced Yes Yes

Processors of beverage concentrates sold as juice Yes Yes

Processors of beverage bases of a fruit origin or other beverage bases including dried or powdered juice

mixes2

Yes Yes

Processors of packaged baby (infant and junior) fruit juices and drinks Yes Yes

Processors of juice that ship to a different location (e.g., the juice processing plant owned by a supermarket

chain that then ships the juice to the chain’s stores or very small processors that sell juice from their own

roadside stand and to other retailers)

Yes Yes

Retailers of packaged juice processed by other establishments (e.g., supermarkets, restaurants and roadside

stands that sell juice produced by another processor) Note: the juice sold by these retailers is covered by

the HACCP rule but the retailer is not covered by the HACCP rule.

Yes No

Processors of packaged juice that do not ship juice to different locations but retail the entire production on

the premises (e.g., supermarkets, and roadside stands that produce juice at the point of sale)

Yes No

Processors of beverages that include juice as an ingredient but which do not produce the juice itself Yes No

Retailers of juice processed for immediate consumption No No

Processors of non-beverage products that include juice as an ingredient No No

Processors of hard cider or other alcoholic beverages No No

Processors of oils No No

Processors of purees not sold as beverages (e.g., tomato puree) No No

Processors of juices not sold as beverages (e.g., vinegar or borscht) No No

Processors of imitation juice flavorings No No

Processors of coffees, teas, or cocoa products No No

1 Juice types are berry; citrus; core fruit; mixed fruit; pit fruit; subtropical and tropical fruit; vine fruit; other fruit; beans, peas and corn; fruits

used as vegetables; leaf and stem vegetables; mixed vegetables; root and tuber vegetables; and other vegetables. 2Beverage bases of fruit origin are berry, citrus, core fruit, mixed fruit, pit fruit, subtropical and tropical fruit, vine fruit, and other fruit.

3A ‘‘yes’’ in this column applies only to processors producing in excess of 40,000 gallons of packaged juice per year. Very small businesses

processing packaged juice, producing 40,000 gallons of juice or less annually are classified as retailers for the purpose of the HACCP rule and

are therefore exempt from it.

4. Number of Establishments Covered

FDA’s own Official Establishment

Inventory (OEI, FDA’s list of food

establishments under its jurisdication)

lists approximately 900 juice

manufacturers. However, recent

information from the U.S. Apple

Association (USAA) indicates that there

are about 1,800 apple juice plants, most

of which are very small processors. A

typical description of these very small

processors is an apple grower who

operates a small apple press and

bottling operation on the same property.

In general these processors market their

products in more than one way. The

channels of distribution include:

Roadside stands owned by the

processors and stands owned by others,

farmers’ markets, grocery stores, and

restaurants. FDA has proposed to

exempt retail establishments from the

HACCP rule. For the purposes of this

rule, the agency has tentatively decided

that retailers will include very small

businesses that make juice on their

premises and whose total sales of juice

and juice products do not exceed 40,000

gallons per year and who sell directly to

consumers or directly to consumers and

other retailers. Based on data supplied

by the USAA, this exemption would

exempt from the HACCP rule 80 percent

of apple juice processors. (Ref. 13). Such

an exemption would leave

approximately 360 apple juice

processors covered by both of these

regulations, and all 1,800 would be

covered by the labeling rule.

The OEI lists about 200 plants in the

United States that produce core fruit

(apple, crab apple, pear, quince, etc.)

juice. If all of the 200 core fruit plants

in the OEI are included in the USAA list

and are not exempt, then there would

still be an excess of 160 apple juice

processing plants in the USAA list not

exempt from the HACCP rule and an

excess of 1,600 (1,800-2000) plants in

the USAA list not exempt from the

labeling rule. (Information from FDA’s

field inspections indicates that very few

of these 160 plants will be exempted

from the HACCP rule under the

exemption for retailers of juice for

immediate consumption. Almost none

of the very small apple juice processing

plants recently inspected by FDA

retailed all of the juice that they

produced at the same location that it

was processed. See Table 21 for a

description of the types of products and

processors not covered.)

The agency is aware that there are

also many very small orange juice

processors who grow oranges and who

also operate a juicing and bottling

operation on the same property.

However, the agency has no direct

information on the number of such

orange juice processors. The OEI lists

about 300 plants in the United States

that produce citrus fruit juice. In this

analysis, the agency has assumed that

there is an equivalent number (300) of

very small processors who are not listed

in the OEI. It is likely that the

proportion of very small orange juice
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24273

processors to OEI citrus juice makers is

lower than the proportion of very small

apple juice processors to OEI apple juice

makers because the growing region for

oranges in the United States is far

smaller than the region for growing

apples.

FDA assumes for the purpose of this

analysis, that 80 percent of these very

small orange juice processors will be

exempt from the HACCP rule based on

their classification as retail

establishments. This would leave 60

very small orange juice processors

covered by both of these

regulations, and all 300 covered by the

labeling rule. FDA has assumed that

there are no vegetable juice processors

which are not in the OEI or which are

not also very small processors of apple

or orange juice as estimated above. FDA

requests comments on these

assumptions.

FDA has assumed that 5 percent

(about 50 plants (900 x .05)) of all juice

plants in the OEI would have

implemented HACCP substantially in

the form required by this regulation by

the time that this proposed HACCP rule

is finalized regardless of this regulatory

action. Therefore, approximately a total

of 1,070 plants (850 plants in the OEI

plus 60 very small orange and 160 apple

juice retailers) will be affected by the

HACCP rule.

The labeling rule will cover retailers

(roadside stands and grocery stores) of

packaged minimally processed juice.

The agency does not have direct

information on the number of

supermarkets and grocery stores that

produce and package at the point of sale

and sell minimally processed juice. The

agency believes that only a portion of

chain supermarkets and grocery stores

do so. Duns Market Identifier (DMI) lists

approximately 9,400 chain

supermarkets (SIC 54110101) and

approximately 3,800 chain grocery

stores (SIC 54119904) making a total of

approximately 13,000 chain

supermarkets and grocery stores. If 10

percent of these stores produce at the

point of sale and sell packaged

minimally processed juice, then

approximately 1,300 chain grocery

stores and supermarkets will be affected

by the labeling rule. (In addition to

these processors, there are other

retailers that do not process juice but

which offer for sale the juice produced

by other processors, which should be

labeled by the manufacturer.)

Due to publicity about the hazards

associated with minimally processed

juice, the agency believes that relatively

few retailers are offering such products

for sale. DMI lists approximately 3,100

independent supermarkets (SIC

54110103) and approximately 31,000

independent grocery stores (SIC

54119905) making a total of

approximately 34,100 chain

supermarkets and grocery stores. If 5

percent of these stores sell minimally

processed packaged juice, then

approximately 1,700 independent

grocery stores and supermarkets will be

affected by the labeling rule. The

labeling rule will also affect roadside

markets and stands that retail packaged

minimally processed juice. For the

purpose of this analysis, the agency

assumes that there are 1,000 such

roadside markets and stands. However,

the assumptions that go into these

calculations may be incorrect, and the

agency specifically requests comments

on them.

Table 22 shows the estimated number

of establishments affected by each rule.

TABLE 22.—NUMBER OF PLANTS AFFECTED BY THE HACCP AND LABELING RULES

Plant Type

No. of

Establishments

Affected by HACCP

Rule

No. of

Establishments

Affected by Labeling

Rule

Juice manufacturers in the OEI 850 201

Very small apple juice makers 160 1,600

Very small orange juice makers 60 300

Roadside retailers 1,000

Grocery stores and supermarkets processing and packaging at the point of sale 1,300

Total 1,070 4,220

1The number of juice manufacturers listed in the OEI affected by the labeling rule is small (20) because most of these manufacturers are already achieving a 5-log reduction. See Table 24.

5. Hourly Price of Labor

Throughout this analysis the hourly

price of labor is taken to be

approximately $13. This is estimated by

taking the 1996 average hourly rural

wage of $9.20 (Ref. 7) and increasing it

by 40 percent (the average amount for

benefit costs paid by employers) (Ref. 8),

or $3.70 to account for such costs in

addition to wages, such as Social

Security, workers’ compensation,

unemployment insurance, paid leave,

retirement and savings, health

insurance, and supplemental pay.

6. Length of Production Period

The agency is aware that many juice

processors operate on a seasonal basis.

Information supplied by USAA

indicates that 94 percent of the apple

cider producers process only seasonally.

The season for apple cider production

runs primarily from September through

December. The other 6 percent operate

year round. Many other processors

covered by the proposed HACCP rule

(e.g., makers of beverage bases) may

process year round. The agency has

assumed that 50 percent of the 850

plants in the OEI plus all of the 220 very

small juice makers affected by the

HACCP rule produce seasonally. Table

23 shows the length of the production

period for plants producing seasonally

and year round.

TABLE 23.—PLANTS’ PRODUCTION PERIOD

Production Weeks of Operation

per Year

Hours of Operation

per Day No. of Plants

Seasonal 16 12 645

Year Round 52 24 425

Total 1,070
24274 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

B. Cost Estimates by Requirement

1. Costs have been estimated for the

following sections of the labeling

regulation:

(1) Signs or Placards (§ 101.17(f)(3)(i)

(part 101 (21 CFR part 101))

(2) Container Labels (§ 101.17(f)(3)(ii))

2. Costs have been estimated for the

following sections of the HACCP

regulation:

(1) CGMP’s (§ 120.5 (part 120 (21 CFR

part 120))

(2) Prerequisite Program SOP’s

(§ 120.6)

(3) Hazard Analysis and HACCP Plan

(§§ 120.7 and 120.8)

(4) Corrective Actions (§ 120.10)

(5) Validation and Verification

(§ 120.11)

(6) Records (§ 120.12)

(7) Training (§ 120.13)

(8) Imports and Foreign Processors

(§ 120.14)

1. Labeling Costs

This cost depends strongly upon

producers’ responses to the labeling

requirements. Some producers may

elect to comply early with the HACCP

rule and avoid the warning labels or

labeling. Others may choose to label

until they are required to implement

HACCP. Finally, some firms may choose

not to produce juice products because

they believe that either the cost of

HACCP implementation or the negative

effect on revenue generated by

consumer response to labels may

depress profits below a normal return

for a substantial time period. Such

producers will be better served by

reinvesting their capital into more

profitable ventures.

a. Signs or placards (§ 101.17(f)(3)(i)).

The costs of signs and placards may be

estimated by multiplying the number of

establishments that must post placards

by the cost per placard. As shown in

Table 22 the agency estimates that the

labeling rule covers approximately

4,220 plants. However, for the purpose

of this analysis, the agency has assumed

that all those processors that will at

some point be required to implement

HACCP will do so at the earliest

possible date to avoid the warning

labeling, or delay operation until they

implement a 5-log pathogen reduction

process.

The following analysis underlies this

assumption. If displaying the warning

can be avoided by beginning

pasteurization (or an equivalent 5-log

pathogen reduction process) sooner,

some firms may marshal the resources

to do so. FDA does not have data,

however, that will allow it to predict

how many firms will respond to this

labeling regulation in this fashion.

However, one way to examine this

choice is examine the additional

discounted costs of pasteurizing sooner.

For example, if a small firm’s cost of

initiating pasteurization is about

$18,000, with recurring costs of about

$8,000, and the firm has an annual juice

revenue of $200,000, then a total sales

decline caused by the warning of 8

percent (a loss of approximately $16,000

discounted at a rate of 7 percent) or

more spread over the course of 2 years

(or approximately 4 percent for 2 years)

would cause the firm to attempt to

borrow the funds needed to initiate

pasteurization 2 years early or to delay

operation until it implements a 5-log

pathogen reduction process. FDA’s

predictions of consumer reactions to the

labeling (for the purposes of benefit

estimations) are an expected loss of

revenue of about 5 percent. Thus, there

is a tentative conclusion that most firms

that are not exempt from the HACCP

rule will choose to implement a 5 log

reduction in pathogens immediately

rather than label and to delay operation

until such processes have been

implemented.

However, there are many

uncertainties contained in this simple

example. Because of the short time

frame for labeling to begin, 60 days from

publication of the final rule, many firms

may not be able to purchase and install

pasteurization equipment or find other

means of validating a 5 log reduction in

the target organism. It is unclear how

manufacturers think that consumers

will react to the warning signs, they may

believe that their customers will not

reduce their purchases of juice. Also,

firms with larger sales or smaller

pathogen reduction costs will need a

smaller percentage sales decline from

labeling in order to be induced to

initiate 5 log pathogen controls early.

Finally, it is unclear how many firms

will have immediate access to the

capital requirements imposed by this

rule.

If, therefore, all processors which will

eventually be covered by the HACCP

rule do not label, then they have no

direct labeling cost. The cost of the

labeling rule to these processors is the

extra expense that results from

implementing HACCP 2 years earlier

than would be required by the HACCP

rule alone. This cost, as stated above, is

$16,000 (discounted for 2 years at 7

percent). Of the 1,070 establishments

covered by the HACCP rule, all of the

20 firms in the OEI which are also

affected by the labeling rule (those

estimated to be producing minimally

processed juice) plus all of the 220 very

small orange and apple juice processors

covered by the HACCP rule are affected

in this way (240 plants in all). The

agency assumes, based on information

from industry sources, that 30 percent of

this set of processors (72 plants) have

already initiated or are in the process of

initiating pasteurization. Therefore, the

total cost of the labeling rule for this set

of processors is $2,688,000 ($16,000 x

168 plants).

The establishments that will need to

display warning labeling are those 3,980

establishments covered by the labeling

rule but not by the HACCP rule. Based

on information learned from FDA’s

nutrition labeling rules, the average cost

per placard (and periodic replacement)

is estimated to be $100. This estimate

will encompass the possibility that

some firms may have to supply multiple

signs to meet the requirement that it

will be available at the point of

purchase. Therefore, the total one-time

cost for this set of processors is

$398,000.

b. Container labels (§ 101.17(f)(3)(ii)).

The cost of labeling is estimated by

multiplying the number of affected

separable labels on packaged products,

normally referred to as stock keeping

units (SKU’s), by the cost of changing

the label to add the warning. Table 24

shows FDA’s estimate of the cost per

SKU of placing a warning label on the

information panel for different lengths

of the compliance period. These costs

decrease over time for several reasons.

The primary reason is that

manufacturers change labels or, at least,

reorder them at regular intervals and a

larger length of compliance period

allows manufacturers to incorporate

regulatory changes into planned

changes.

TABLE 24.—LABEL CHANGE COSTS PER SKU FOR DIFFERENT LENGTHS OF THE COMPLIANCE PERIOD

2 months 6 Months 1 Year 2 Years 3 Years

Administrative costs $6,000 $1,800 $900 $450 $350

Redesign costs $1,500 $450 $450 $50 $50

Inventory loss $800 $250 $0 $0 $0
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24275

8No reports estimated costs of $100 to $999.

TABLE 24.—LABEL CHANGE COSTS PER SKU FOR DIFFERENT LENGTHS OF THE COMPLIANCE PERIOD—Continued

2 months 6 Months 1 Year 2 Years 3 Years

Totals $8,300 $2,500 $1,350 $500 $400

Processors of minimally processed

packaged juice which are not covered by

HACCP will need to add the warning to

their package labels at the end of the 2-

year compliance period. FDA estimates

that 2,980 processors will be subject to

this provision (1,440 very small apple

juice retailers and 240 very small orange

juice retailers exempted from the

HACCP rule plus 1,300 grocery stores

producing packaged juice). The total

cost for this provision is $1,490,000

(2,980 x $500) at the end of the 2-year

compliance period. For simplicity of

reporting and calculation with the other

labeling costs, this cost will be added as

$1,301,000 (the present value of

$1,490,000 discounted 2 years at 7

percent).

c. Summary of likely labeling costs.

The agency estimates that the likely

total cost of the labeling rule is a onetime cost of $4,387,000 ($2,688,000 +

$398,000 + $1,301,000).

2. HACCP Costs

a. CGMP’s (§ 120.5). This section of

the proposal reaffirms the applicability

of the CGMP’s in part 110 in

determining whether facility design,

materials, personnel practices, and

cleaning and sanitation procedures are

safe.

No costs are attributed to this section

for this rulemaking. The overwhelming

majority of juice plants are in

compliance with the CGMP’s. In 1996

only 6 percent of the plants inspected

were cited for official action. Therefore

it is assumed that these rules will not

have any effect on the enforcement of

the CGMP’s for juice products.

b. Prerequisite program SOP’s

(§ 120.6). FDA is proposing to require

that processors control and document

specific SOP’s that provide a foundation

for the HACCP system and to have and

implement SOP’s for prerequisite

programs. In general, there are three

activities that are part of prerequisite

program SOP’s: (1) Developing SOP’s,

(2) implementing sanitation controls

with corrections of deviations from

SOP’s, and (3) monitoring and

documenting for SOP’s.

i. Developing SOP’s. Each processor

must have a sanitation SOP. FDA

estimates that SOP’s for juice plants

could be developed with 20 hours of

labor. At the rural hourly cost of labor

($13), the cost per plant of developing

SOP’s is approximately $260. If one half

of the 900 domestic plants in the OEI

and all of the 220 very small juice

processors do not currently have SOP’s,

then they will have to develop them to

comply with this regulation, if it is

adopted. Under those assumptions, the

total cost for the industry to develop

SOP’s would be approximately $174,200

($260 x 670 plants).

ii. Implementing sanitation controls

with corrections of deviations from

SOP’s. Each processor must implement

a sanitation SOP and correct deviations

from the prerequisite program SOP’s in

a timely fashion.

In 1996, 39 percent of the juice plants

inspected were cited as VAI (voluntary

action indicated). This citation usually

indicates that an investigator noted

deficiencies that were not significant

enough to warrant an administrative or

regulatory action but which should be

corrected on a voluntary basis.

Information from the inspection reports

indicates that approximately 30 percent

of the juice plants inspected had

sanitation and food safety related

deficiencies, 4 percent had deficiencies

which were related to low-acid canned

food regulations, and 4 percent had

deficiencies for misbranding or

mislabeling. Also in 1996, 6 percent of

the juice plants inspected were cited as

OAI (official action indicated). This

citation indicates that an investigator

noted deficiencies significant enough to

recommend regulatory or administrative

sanctions. Information from the

inspection reports indicates that 3

percent of the juice plants had

significant deficiencies that could be

related to food safety or low-acid

canned food regulations, 2 percent had

significant deficiencies for misbranding

or mislabeling.

On a few of the VAI inspection

reports, FDA investigators indicated an

estimate of the cost of correcting

sanitation and food safety related

deficiencies indicated. Two-thirds of the

reports estimated costs of corrections at

$0 to $99, and one-third of the reports

estimated costs of corrections at $1,000

to $4,999.8 Taking the middle of these

ranges gives an average estimated cost of

corrections of approximately $1,000

(($50 x 67 percent) + ($3,000 x 33

percent)) per plant for correcting

sanitation and food safety related

deficiencies.

The HACCP rule will mandate the

implementation of daily monitoring of

sanitation controls. This should make

the correction of sanitation and food

safety related deficiencies happen on

the day that they occur rather than

months later. Regulatory inspections of

juice plants are made approximately

once every 5 years. If food safety and

sanitation related deficiencies occur on

average approximately once every 5

years midway between inspections (to

facilitate calculation), then the HACCP

rule should cause corrections to be

taken an average of 2.5 years earlier than

would be the case without the rule. The

cost of the rule, then, is not the full cost

of taking the corrections. Those

corrections would be taken even

without the HACCP rule after the plant

was inspected and the deficiencies

noted. The cost of the HACCP rule is the

present value of making the

expenditures to correct the deficiencies

at an earlier date than would take place

otherwise. The present value of making

an infinite series of $1,000 expenditures

once every 5 years and 2.5 years earlier

than they would otherwise occur is

$500 when discounted at 7 percent.

Based on information from inspection

reports, FDA assumes that about 30

percent of all 1,070 covered juice plants

(about 320 plants) are not likely to have

sanitation controls that are sufficiently

implemented, but which do not warrant

administrative or regulatory action. If it

costs each of these 320 plants $500 to

implement sanitation controls and to

correct deviations from SOP’s, then the

total cost borne by the industry for this

requirement is $160,000, which,

because it is discounted, will be added

as a one-time expenditure in the total

costs.

iii. Monitoring and documenting of

SOP’s. All procedures in the

prerequisite program SOP’s are required

to be conducted at the frequencies

specified and implementation of these

procedures will have to be monitored

and documented.

FDA estimates that monitoring and

documenting of SOP’s will require onehalf hour of labor per operating week.

The cost per plant of SOP monitoring

and documenting is given in Table 25.
24276 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

TABLE 25.—ANNUAL PER PLANT COST OF SOP MONITORING AND DOCUMENTING

Production Weeks of Operation

per Year

Estimate Hrs. per

Week for SOP

Monitoring and

Documenting

Wage ($/hour)

Estimate Annual

SOP Monitoring and

Documenting Cost

per Plant

Seasonal 16 .5 $13 $100

Year round 52 .5 $13 $340

Table 26 shows the distribution of per

plant and total industry costs based on

the estimate in Table 25 for SOP

monitoring and documenting needed to

comply with this rule, if it is adopted.

These estimates assume that no plants

are currently in compliance with these

particular requirements.

TABLE 26.—TOTAL ANNUAL COST OF SOP MONITORING AND DOCUMENTING

Production

Estimate Annual

SOP Monitoring and

Documenting Cost

per Plant

No. of Plants

Estimate Annual

SOP Monitoring and

Documenting

Seasonal $100 645 $64,500

Year round $340 450 $153,000

Totals 1,095 $218,000

c. Hazard Analysis and HACCP Plan

(§§ 120.7 and 120.8). Under the

proposal, processors are required to

have a written hazard analysis and to

have and implement a written HACCP

plan whenever a hazard analysis reveals

a food hazard that is reasonably likely

to occur. Requirements are set forth for

the minimum contents of the plan and

for the signing and dating of the HACCP

plan by specified personnel. Failure of

a processor to have and implement a

HACCP system in compliance with this

rule, if adopted, will render the food

products of that processor adulterated.

i. Hazard analysis and HACCP plan

development. Under the proposal, each

plant is responsible for developing a

written hazard analysis of hazards that

are reasonably likely to occur in the

product that a processor can control.

The hazards to be considered are any

chemical, physical, and biological

hazards that may cause illness, injury,

or death in humans. Plant management

must determine the likelihood of

occurrence of these hazards, either due

to their introduction through material

inputs or processing or a possible failure

to eliminate them or to reduce them to

acceptable levels in processing. Some

Federal Government sampling and

illness outbreak data are available to

provide firms with a set of possible

hazards that may affect a particular

product and process. In addition,

section V of this document, the

accompanying appendix, and the

preambles to these proposed rules

contain information on most of the

hazards that have caused problems in

juice products in the past. Additional

information may be forthcoming in the

HACCP final rule (after FDA evaluates

the comments). Experience from the

HACCP pilot suggests that the hazard

analysis for products similar to juice

took 16 to 24 hours. FDA’s preliminary

estimate is that it will take

approximately four individuals,

including a plant manager; 5 hours each

to complete the hazard analysis; and

another 15 hours each to formulate the

HACCP plan. The HACCP plan requires

that the plant manager, quality control

official and others establish critical

control points (CCP’s) for every hazard

identified in the hazard analysis and

critical limits at each CCP; establish a

plan to monitor those CCP’s; determine

how deviations from critical limits will

be handled; and establish procedures for

verification and validation that the plan

is being followed and that it is properly

controlling the identified hazards. FDA

assumes that part of this process will be

to determine the most cost-effective

means to comply with this regulation

when developing the plan. Thus, the

total number of person hours per plant

to develop both documents is 80 hours.

At $13 per hour the total cost per plant

is about $1,000 per plant.

FDA has assumed that about 5 percent

(50 plants) of all juice plants in the OEI

will have implemented HACCP

substantially in the form required by

this regulation by the time that this

regulation is finalized regardless of this

regulatory action. This assumption is

based on conversations with pilot plant

firms who have indicated to FDA that

many large firms have begun both to do

HACCP and require HACCP of their

suppliers. It is estimated that

approximately 1,070 plants will need to

do hazard analyses and develop HACCP

plans to comply with this rule, if it is

adopted. Therefore, the total cost of

1,070 plants at $1,000 each to develop

a hazard analysis and a HACCP plan is

approximately $1,070,000 million.

ii. Pesticide HACCP controls.

Pesticides may be a component of

material inputs that must be controlled.

If a processor has direct knowledge of

the amount of pesticide applied, either

because the produce is from the

processor’s own farm or because records

showing the application of pesticides

accompanies the incoming produce,

then the processor may control pesticide

hazards by means of a supplier

certificate. Under such an arrangement

a supplier would only need to provide

the processor with a certification that

any pesticides had been properly

applied to the produce so as not to

exceed applicable tolerances. As each

arrives at the processing plant, a worker

will need to verify that the supplier for

that shipment has supplied the

processor with a proper and up-to-date

certification. FDA assumes that

verification of supplier certification

requires 1 minute per shipment which,

at $13 per hour, represents a cost per

shipment of approximately $0.25.

FDA has estimated the number of

shipments that will be verified in this

manner by working backward from the

amount of juice consumed. Annual juice

consumption in the United States is 2.3

billion gallons (gal). The agency

assumes that 80 percent of this total

(1.84 billion gal) is produced by

approximately 75 large firms (operating

225 plants). FDA believes that all large

firms are currently doing a sufficient
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24277

amount of sampling and monitoring (or

receiving supplier certificates) for

pesticides. Therefore it is assumed that

there are no costs for large firms to

comply with this requirement. That

leaves 20 percent of the total (460

million gal) produced by approximately

2,575 small and very small firms. FDA

assumes that all small and very small

firms use domestic produce only. If 15

pounds (lb) of produce are required to

make 1 gal of juice, then small firms use

6.9 billion lb of domestic produce (460

million gal x 15 lb/gal). If 45,000 lb of

produce (the amount carried by a

typical tractor trailer) constitutes 1

shipment of produce, then small and

very small firms use 153,000 shipments

of produce (6.9 billion lb ÷ 45,000 lb/

shipment).

However, for the purposes of this

proposed regulation FDA is including as

retailers very small businesses that

make juice on their premises, whose

total sales of juice and juice products do

not exceed 40,000 gallons per year and

who sell directly to consumers or

directly to consumers and other

retailers. This exemption decreases the

percentage of juice processed under

pesticide controls by approximately 14

percent thereby reducing the number of

shipments of produce to 132,000

(153,000 x 86 percent).

FDA assumes that 80 percent of small

and very small firms covered by the rule

(676) will process shipments of produce

that will be accompanied by supplier

certifications of pesticide application

after the HACCP rule is in place.

Therefore, the number of shipments to

be handled under prerequisite program

controls is 106,000 (132,000 shipments

x 80 percent) per year. Thus, this

analysis assumes that the average small

and very small plant receives

approximately 160 (106,000 shipments

÷ 676 small plants) shipments per year.

The total per plant cost is about $40 (60

shipments x $0.25/shipment) for the 676

small and very small plants that can

control this issue in this way. Based on

these calculations, the total marginal

cost of this type of control for pesticides

is approximately $27,000 ($40 x 676

plants).

If such records cannot be obtained,

different types of controls need to be

implemented. In this case, the processor

must run pesticide residue tests to

ensure that there are no pesticides either

over tolerance or used on products for

which there is no tolerance. To

determine the frequency of such testing,

processors may avail themselves of

Government test results which indicate

the likely variance of illegal residues

over a particular crop or region.

Current records indicate that, for

domestic crops, only about .25 percent

(one-quarter of 1 percent) are out of

compliance. Furthermore, as HACCP is

adopted by more of the food industry,

it is expected that records, for some

types of produce, will routinely

accompany produce intended for

interstate commerce. However, many

types of produce are currently

commingled at different stages in the

distribution network. This creates a

problem for backtracking when there are

either pesticide or pathogen problems.

There are two potential costs

associated with ensuring that pesticide

residues are legal: (1) Matching and

shipping pesticide spray records with

crops and (2) costs of multiresidue

testing. If records are to accompany

produce, fruits and vegetables may only

be commingled if all of the commingled

produce has records showing it is under

tolerance. Otherwise, produce with

paperwork must be kept separate from

produce without such paperwork. In the

latter case, if it is to be used to produce

juice, multiresidue tests must be

performed costing about $150 per test.

Just as was calculated for supplier

certificates, FDA calculates that there

are 132,000 shipments which use 5,865

million pounds of produce that must be

covered by pesticide controls. As 80

percent has been considered to be

handled by supplier certificates, 20

percent of the remaining shipments

must be covered by a sampling plan.

Thus, of the 845 small plants total, 169

will cover an average of 160 shipments

with a pesticide sampling plan. The

number of shipments that must be

tested is about 26,000 (132,000 x 20

percent) per year.

Because of the likelihood of a very

low violation rate, approximately onequarter of 1 percent, which is coupled

with a maximum upper bound added

risk of about 1 in a million lifetime

cancer cases (see section V of this

document), those processors who are

unable to obtain supplier certificates

should need to only sample lots

periodically to ensure that such lots are

in compliance. If the average number of

shipments per plant per year is 160,

processors could randomly sample 10

shipments per year and, assuming all

were negative, could be assured with 80

percent confidence that there are no

more than 14 percent violative lots in

the entire season’s produce input.

Furthermore, if processors are turning

up violative shipments, they are

expected to take corrective action to

prevent future shipments from being

violative so that the rate of violative

juice that reaches consumers is expected

to stay extremely low. Thus, costs will

be estimated for these processors based

on 10 random samples per year at a cost

of $150 per sample. Based on these

calculations, the total marginal cost of

pesticide testing is approximately

$254,000 (10 tests x $150/test x 169

firms). Costs per plant are estimated to

be an average of $1,500. Therefore, the

total annual cost of pesticide control for

the HACCP rule is $281,000 ($254,000

for pesticide testing + $27,000 for

supplier certificate verification).

iii. Pathogen HACCP controls.

Processors will need to include controls

for microbial hazards in their HACCP

plans and to implement these controls

in their operations. Potential microbial

hazards include both heat sensitive and

heat resistant pathogens (and heat

resistant toxins produced by pathogens),

including viruses. However, FDA is

interested in the safety of products as

they are consumed, and any

combination of controls that

successfully controls pathogens will

satisfy the requirements of this

regulation. This regulation will allow

each processor to choose the

combination of control measures that

cost-effectively controls microbial

hazards. In addition, because of this

‘‘performance’’ nature of HACCP,

manufacturers will be encouraged to

continue to seek out and implement less

costly and more effective methods.

Processors may attempt to control

pathogens through other means, using a

combination of several steps that are

less effective separately, but which

when used together will achieve

adequate log reductions of pathogens.

These methods may include control of

contamination at the growing level,

including use of potable water for

irrigation, use of safe fertilizers,

rejection of fruits dropped from trees

onto the ground, and application of

good sanitation practices during

harvesting. Other controls that can be

applied at the receiving, sorting, and

processing levels include washing,

brushing and sanitizing the product

before extraction, acidifying the

product, and using preservatives. FDA

requests comments on potential costs

and use of these or any other methods.

At present, pasteurization is the

primary effective, commercially

implemented method for controlling

pathogens in juice. However, the agency

is not proposing to require

pasteurization in the proposed HACCP

rule since other methods, either

singularly or combined, may be as

effective in achieving the 5-log

reduction. However, the effectiveness

and commercial feasibility of these

other methods have not been

established over a significant period of
24278 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

time. It is possible that the effectiveness

and feasibility of other methods will be

established prior to the finalization of

the HACCP rule, thus affording

processors a less expensive means of

pathogen control. To the extent that

processors adopt other, less expensive

pathogen controls, the costs for

pasteurization estimated in this analysis

will be an overestimate of the actual

cost of the rule. The agency has

estimated an option for carrying out

pasteurization that it believes minimizes

the cost of pasteurization. That is, the

agency has estimated the costs of

purchasing special, low cost

pasteurizers designed for low-volume

applications that are suited to small

businesses. It is also worth mentioning

that pasteurized juice products can be

made using drops and culled produce,

which significantly lowers the cost of

the material inputs. Processes other than

pasteurization may not be able to reduce

pathogens sufficiently to accept this

type of produce.

Another possibility, for which FDA

has not estimated costs, is that

processors that do not have pasteurizing

equipment on site will ship their juice

to a facility that can provide them with

pasteurization and bottling service and

then ship the bottled juice back for

distribution. Juice and dairy plants are

the facilities most likely to be able to

provide this service. Purchasing the

service of pasteurization may be a more

cost-effective option for some juice

processors.

In fact, some juice companies do

contract out their juice making process.

They blend the different varieties of raw

produce for their product and then ship

it to a processor. There the produce is

washed and culled, pressed,

pasteurized, bottled, and labeled. The

juice is then picked up by the owner

and distributed. Other juice companies

have contracted out the pasteurizationbottling processes. They press the

produce themselves, then ship the juice

to a pasteurization-bottling facility to be

pasteurized and bottled. Still other

companies have contracted out the

pasteurization process only. They press

the produce themselves, then ship the

juice to a pasteurization facility to be

pasteurized, and then ship the

pasteurized juice back in bulk for

bottling and distribution. If some juice

companies decide to take approaches

similar to these in response to this rule,

their operations will change

fundamentally. Juice processors will

choose the option which will result in

the lowest marginal cost to produce

juice. The agency has not included the

estimate of the cost of contracting out

pasteurizing because of: (1) The

increased complexity of the HACCP

plan to control for recontamination, (2)

the problem of estimating processors’

access to pasteurization equipment

owned by other processors, and (3) the

extra expense involved in transporting

the products. All these cast serious

doubt on the feasibility of this option for

many very small processors. However,

this analysis is uncertain and FDA

would expect each manufacturer to

examine the option of contracting their

product to be pasteurized and taking

advantage of this where it is less costly

than purchasing their own equipment.

Another aspect of pathogen control

which some processors may adopt, and

for which FDA has not estimated costs,

is juice refrigeration. Pasteurized juice

which has not been heated to the degree

so as to make it shelf stable must be

refrigerated. This cost has not been

investigated because the agency has

assumed that producers of nonshelf

stable juice are already refrigerating

their products. The agency requests

comment on this assumption and on the

cost of refrigeration, if any, over and

above that which is already being done.

The costs of pasteurization vary

depending on numerous factors, such as

the capacity of the facility, and the

amount of labor. In addition, there is

uncertainty in the estimates of the

number and size of the processors who

will need to install pasteurization

equipment, among other factors. Some

makers of cider processing equipment

are marketing pasteurization units for

small processors. Medium sized

pasteurization/heater/chiller units are

reported to cost about $17,000 plus

about $1,500 for installation. These

units have the capacity necessary to

meet the needs of a small processor

producing about 400,000 gal of juice in

a 4-month season.

Additionally, initial startup of

pasteurization would require alterations

in plant construction, design or layout

to accommodate the additional

processing step and equipment operator

training. Also, there are operating

expenses related to pasteurization

including utilities, cleaning,

maintenance and repair, and

depreciation. Table 27 lists the

parameter values that have been used in

a Monte Carlo analysis to model the

potential costs of installing and using

pasteurization equipment by juice

processors.

TABLE 27.—INPUTS AND RESULTS OF MONTE CARLO ANALYSIS OF INITIATING PASTEURIZATION

Parameter 10th Percentile Mean 90th Percentile

Wage rates $11.30 $13 $14.70

No. of operating months 2 6 9

Plant capacity (in gal) 34,000 74,000 124,000

Installation costs $1,300 $1,500 $1,700

Cleaning hours (monthly) 52 60 68

Costs of the pasteurizer $10,000 $17,000 25,000

Hours to operate (monthly) 26 30 34

Total Pasteurization Cost (per plant) $18,200 $26,200 $34,800

The key variables that affect this

analysis are shown in the ‘‘tornado’’

diagram, Figure 1.
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24279

For the purpose of this benefit-cost

analysis, FDA has preliminarily

concluded that it is unlikely that fresh

orange (and possibly other citrus) juice

processors will have to pasteurize their

products to achieve a 5-log reduction

when a HACCP program is adopted

because of the nature of the fruits and

the methods of juice extraction

commonly used by industry. Therefore,

costs for these processors are limited to

the costs of creating and operating a

HACCP system, not to purchasing

pasteurizing equipment.

Of the 1,070 processors covered by

the HACCP rule only a portion of these

will need to initiate pasteurization.

Table 28 shows FDA’s assumption about

the number of processors in the OEI of

various types of juice that are not

pasteurizing.

TABLE 28.—TYPES OF PLANTS CURRENTLY WITHOUT PASTEURIZATION

Type No. Plants with Type

as Primary Product

Best Estimate of

Plants Minimally

Processing

Berry 77 1

Citrus 211 10

Core 133 3

Mixed Fruit 36 1

Pit 31 1

Sub-tropical/tropical 29 1

Vine 2 0

Other 8 0

Beans/peas/corn 5 0

Fruits used as vegetables 41 1

Leaf/stem 8 0

Mixed vegetable 10 1

Root/tuber 8 1

Fruit beverage bases 37 0

Liquid fruit beverage bases 124 0

Combination true flavored and imitation flavored beverages 19 0

Liquid combination true flavored and imitation flavored beverages 55 0

Other beverage bases 28 0

Baby (infant and junior) fruits, juices and drinks 6 0

Totals 868 20

Of the 20 processors in the OEI

assumed not to be pasteurizing, 10 of

these are citrus juice processors and

may not need to initiate additional

controls beyond those already in place

for controlling pathogens. That leaves

10 processors in the OEI assumed to

need to initiate pasteurization. FDA’s

preliminary determination is that the 60

very small orange juice processors will

not need to implement additional

controls for pathogens than those

already in place. Of the 160 very small

apple juice processors the agency

assumes, based on industry sources, that

30 percent (50) have already initiated or

are in the process of initiating

pasteurization because of both demand

and supply effects.

The assumption that 30 percent of

apple juice processors have already

initiated pasteurization follows from the

adverse publicity concerning

unpasteurized juice. On the demand

side, both consumers and retailers have

become more aware of the hazards

associated with unpasteurized juice

over the last 5 years. From 1992 to 1997,

in two national newspapers, the number

of articles concerning the safety of apple

juice doubled. On the supply side,

producers have certainly become aware

of the problems associated with their
24280 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

unpasteurized juice both due to the

efforts of FDA and from the news media.

For example, in the five states with the

largest number of apple juice processors

(New York, Ohio, Michigan, Illinois,

and Pennsylvania), articles in major

newspapers about the safety of juice

increased 13 percent between 1992 and

1997. This awareness constitutes action

on the supply side as producers

contemplate the potential liability and

loss in sales (from a loss of goodwill)

associated with producing a potentially

unsafe product. That leaves 110 very

small apple juice processors to

implement pasteurization in order to

control pathogens as required in the

HACCP rule. Table 29 shows the first

year total cost of pathogen control

attributable to the HACCP rule.

TABLE 29.—FIRST YEAR COST OF PATHOGEN CONTROL ATTRIBUTABLE TO HACCP PROPOSAL

Processor Type Cost per Plant No. of Plants Total

Very small apple juice processors $18,200 110 $2,002,000

Juice processors in the OEI $34,800 10 $348,000

Total $2,350,000

Pasteurization will require ongoing

costs for operation and maintenance.

FDA estimates these annual costs for

labor, utilities, and materials subsequent

to the first year to be $7,000 per year for

very small processors and $8,000 per

year for processors in the OEI. These

estimates can be derived from Table 27

by subtracting the cost of the pasteurizer

and installation from the total

pasteurization cost for the 10th and 90th

percentile estimates. The total cost of

pathogen control in subsequent years is

given in Table 30.

TABLE 30.—SUBSEQUENT YEAR COST OF PATHOGEN CONTROL ATTRIBUTABLE TO HACCP RULE

Processor Type Cost per Plant No. of Plants Total

Very small apple juice processors $7,000 110 $770,000

Juice processors in the OEI $8,000 10 $80,000

Total $850,000

There are other costs that are related

to processing for pathogen control. The

pasteurization of juice causes changes in

the characteristics of the products,

primarily in terms of texture and taste.

Some current consumers of nonheattreated juice will bear the costs of losing

a particular product as well as costs of

searching for products with the

characteristics that they prefer the most.

Thus, one cost of these regulations is the

loss of ‘‘fresh’’ juice, that is, juice that

is not heat (or otherwise) processed. The

appropriate measure of the loss of a

product is the sum of producer and

consumer surplus. Consumer surplus is

a measure of the value that consumers

obtain from a product. It is measured by

what consumers would be willing to

pay for a product over and above what

they actually must pay. Producer

surplus is a measure of the amount of

rent producers receive, the price minus

the cost of production. Measurement of

consumer surplus depends on several

factors that influence the shape of the

demand curve; the most important one

in this case being the substitutability of

other juice products. If a product has

close substitutes in the minds of

consumers, the amount of both producer

and consumers surplus is smaller. In

addition, if there are attributes that

consumers do not perceive or are not

informed about, such as additional

nutritional benefits associated with the

lost product, there may be additional

costs of losing that product. FDA has no

information on how readily consumers

will accept pasteurized juice in the

place of fresh juice nor any other

information that could be used to

estimate that cost.

iv. Glass and direct food additive

HACCP controls. FDA has not attributed

any costs for control of glass or direct

food additives even though these

potential hazards are among those that

are likely to be relevant for juice. There

have been some recalls in recent years

for each of these two hazards. However,

glass is a food safety hazard that is

readily recognized by consumers who

can hold producers accountable for its

presence in food. Thus, the agency

believes that processors packing juice in

glass are already currently

implementing every feasible control for

this potential hazard in order to limit

their liability and to provide consumer

protection. Additionally, although

approximately 25 percent of the

processing plants pack juice in glass

containers, this number is diminishing

rapidly for economic and safety reasons.

Regarding food additives, many juice

products contain food or color additives

for the purpose of coloring or extending

product shelf life. However, the agency

believes that processors using direct

food additives in juice are already

currently implementing sufficient

controls for these potential hazards as

they are strictly regulated by FDA.

Even though processors may need to

institute some additional monitoring

and recordkeeping for these hazards

after implementing HACCP, the agency

believes that the additional cost will be

negligible. Therefore, there is zero

marginal cost associated with control for

direct food additives, and there is zero

marginal cost (and zero marginal

benefits) associated with HACCP

controls for glass.

v. Natural toxin controls. Processors

of juice using imported apple juice will

need to implement controls for the

natural toxin, patulin. Patulin is a

natural toxin that is found in apple juice

made from moldy apples and is a hazard

that is more likely to occur in imported

apple juice products. Processors of juice

using imported apple juice will need to

implement controls by testing for this

toxin.

FDA has estimated the number of

shipments that will be tested for patulin

by working backward from the amount

of apple juice imported. About 200

million gallons of apple juice are

imported into the United States by 7

large firms (operating 23 plants)

annually. FDA assumes that all small

firms use domestic produce only.

Therefore, there are no costs accruing to

small firms from this requirement.

If 15 lb of produce are required to

make 1 gallon of juice, then large firms

use 3 billion lb of foreign apples

imported in the form of apple juice (200
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24281

million gal x 15 lb/gal). If 45,000 lb of

apples (the amount carried by a typical

tractor trailer) constitute 1 shipment of

apples, then large firms use 66,667

shipments of imported apples (3 billion

lb ÷ 45,000 lb/shipment). Thus, this

analysis assumes that the average

number of imported apple shipments

per year to each large plant (which are

the likely importers) is approximately

2,900 (66,667 shipments ÷ 23 plants).

The agency does not know the current

frequency of shipments of apples

containing patulin at violative levels.

However, the agency assumes that the

23 large plants will randomly sample 30

shipments per year at a cost of $150 per

sample. The total marginal cost of

patulin testing is approximately

$104,000 (30 tests x $150/test x 23

firms). Costs per plant are $4,500. If any

lots are found positive, costs will be

incurred that are estimated in section

VI.B.1.d.i of this document.

d. Corrective actions (§ 120.10).—i.

Corrective action plan. Most processors

will have a corrective action plan that

specifies the appropriate action to be

taken for the violation of each critical

limit. If a processor does not have a

corrective action plan then the

processor must revalidate the HACCP

plan whenever a deviation occurs.

The development of a corrective

action plan for juice products is less

expensive than revalidation after each

deviation from a critical limit. FDA

estimates that a corrective action plan

for juice products can be developed in

4 hours with a cost per plant of

approximately $50 (about 4 hours of

management time).

Approximately 1,070 plants will

develop corrective action plans to

comply with this rule, if adopted.

Therefore, the total cost of 1,070 plants

at $50 each to develop corrective action

plans is approximately $54,000.

ii. Corrective actions. The

implementation of HACCP requires that

corrective actions be taken when critical

limits are violated although deviations

should be infrequent. The agency is

expecting that those juice plants that

pasteurize will establish a minimum of

two CCP’s: One for pathogens and one

for pesticides. Firms may already have

established CCP’s for metal or glass for

which no marginal costs or benefits are

counted in this analysis. In addition,

processors using imported apple juice

may need to establish a CCP for patulin.

Citrus juice producers may establish

three CCP’s, culling, washing and

brushing, and pesticides. This analysis

has assumed that pathogens will be

controlled by pasteurization for

noncitrus juices. Pasteurizers are

designed to sense the temperature at

which the product comes out of the

pasteurizer and automatically

recirculate the product if it has not been

heated sufficiently. Therefore, corrective

actions for pasteurization should be so

rare as to be negligible for this analysis.

FDA believe that virtually all citrus

processors are currently monitoring the

culling, and washing and brushing

steps. Based on data from FDA pesticide

sampling, violations of critical limits for

pesticide should also be rare.

Some plants may choose to have

multiple critical limits for pesticides

because of the nature of the hazard they

present (i.e., chronic). The stringency of

the corrective action could vary directly

with the critical limits. For example, if

the first (lowest) critical limit were

exceeded, the corrective action could be

to investigate the problem. A violation

of a higher limit, possibly one that could

present an acute problem, would cause

the product to be destroyed. As an

upper-bound estimate, this analysis will

assume that: (1) Deviations of pesticide

and natural toxin critical limits occur

once per month in each plant in the first

year and once per quarter in subsequent

years, (2) each corrective action requires

1 hour of labor to resolve, and (3) the

cost of reconditioning is $100 per

corrective action. The cost per plant is

highly dependent upon the number of

months that the plant is in operation.

Assuming that seasonal plants operate

4 months per year and all other plants

operate 12 months per year, Tables 31

and 32 show the estimated first year and

subsequent year costs of corrective

actions per plant as well as the

distribution of costs and total industry

cost for the corrective actions needed to

comply with this rule, if adopted.

TABLE 31.—COST OF FIRST YEAR CORRECTIVE ACTIONS

Production

Months of

Operation

per Year

No. of Deviations per

Month

No. of Labor

Hours per

Deviation

Wage ($/h)

Cost of Reconditioning

per Deviation

Cost per

Plant First

Year

No. of Plants Totals

Seasonal 4 1 1 $13 $100 $150 645 $97,000

Year

Round 12 1 1 $13 $100 $260 425 $111,000

Totals 1,070 $208,000

TABLE 32.—COST OF SUBSEQUENT YEAR CORRECTIVE ACTIONS

Production

Months of

Operation

per Year

No. of Deviations per

Year

No. of Labor

Hours per

Deviation

Wage ($/h)

Cost of Reconditioning

per Deviation

Cost per

Plant Subsequent YearNo. of Plants Totals

Seasonal 4 .25 1 $13 $100 $40 645 $26,000

Year

Round 12 .25 1 $13 $100 $70 425 $30,000

Totals 1,070 $56,000

e. Validation and verification

(§ 120.11).—i. Verification. HACCP

coordinators need to verify at least

weekly by record review that the

HACCP plan is being followed, and

calibrate process-monitoring

instruments weekly.

If record review for verification

requires 1 hour per operating week and

the calibration of instruments used for

monitoring critical limits requires 1

hour per week, then the verification cost

per plant per production cycle is given

in Table 33.
24282 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

TABLE 33.—COST OF VERIFICATION

Production Weeks of Operation per Year

H per Week for

Verification Wage ($/h) VerificationCost per Plant No. of Plants Totals

Seasonal 16 2 $13 $420 645 $271,000

Year round 52 2 $13 $1,350 425 $574,000

Totals 1,070 $845,000

ii. Validation. Processors will need to

validate their HACCP plans during the

first year after implementation and at

least annually, or whenever any changes

occur that could affect or alter the

hazard analysis, or HACCP plan.

Further, if the processor does not have

a HACCP plan because there are no

hazards that are reasonably likely to

occur, the processor must reassess their

hazard analysis when any significant

changes occur. Examples of things that

may change include: (1) Raw material

specifications or sources of raw

materials, (2) product formulation, (3)

processing methods or systems, (4)

packaging, (5) finished product

distribution systems, or (6) intended

consumers or use by consumers. The

purpose of validation is to determine

that the HACCP plan is adequate to

control food-safety hazards.

Validation is intended to answer

several specific questions. These

include: (1) Have all hazards been

identified, (2) have the most appropriate

control measures been identified, (3) are

the critical limits appropriate, (4) does

the monitoring measure what is needed

to determine that the critical limits are

being met, (5) are the right records being

collected to tell whether the system is

working properly, (6) are the right

corrective measures being taken to

ensure that any defective product is

controlled properly, and (7) are the

verification procedures adequate to

provide assurance that the plan is being

followed? If the processor addresses

each of these several questions and the

response to each is positive, then the

processor can say that his plan has been

validated and is working.

Each processor’s operation will be

unique and will require a validation

approach adapted to the specific

operation. Each approach may need to

involve multiple activities since there is

no one measurement or indicator to use

to validate the hazard analysis and the

HACCP plan. There are several factors

that have been considered to determine

the potential costs associated with these

activities.

Validation may only be performed by

an individual who has received training

in an FDA-approved course. However,

no additional costs are assigned to this

requirement because the same training

that is needed to perform the hazard

analysis and prepare the HACCP plan

will meet this need and is estimated in

section VI.B.2.f.g.i of this document.

No one type of validation will work

for all processors of fruit and vegetable

juices for all types of hazards. For

example, validation that a pasteurizer is

attaining the desired ‘‘kill’’ level for a

particular type of product and volume

will be considerably different from

validating that illegal pesticide residues

are not present in the product. Three

potential types of validation activities

are: (1) Reviewing HACCP documents

and scientific literature, (2) challenge

studies, and (3) product testing.

The trained individual may

periodically review all plant HACCP

documents, including the HACCP plan

and the hazard analysis, to determine if

they are consistent with scientific

literature. It is expected that industry

trade publications will serve as a ready

source of this information. Challenge

studies, such as for pasteurizing units,

determine the limits of the processing

equipment and the unique parameters

that need to be set to achieve the desired

results. However, in some cases, simply

relying on manufacturers specifications

will be sufficient. Finally, it is expected

that at least some end-product testing

will take place. If, for example,

processors are unsure of residue levels

because of pooled raw inputs, they will

need to test some finished product. In

addition, some processors may find it

useful to perform periodic microbial

testing of wash water or incoming raw

product. However, because of the

sporadic nature of many of the hazards

that must be considered in these

products, testing alone may not be

sufficient validation.

FDA estimates that validation is likely

to take place twice per year for the 425

plants that operate year round and once

per year for the 645 plants that operate

seasonally. Validation of the SOP’s and

HACCP plan is likely to require hiring

a food science and technology

consultant (presumably, the same

person hired to perform other HACCPrelated services) for the approximately

845 plants that are small businesses.

The costs estimated are assumed to

cover both human and capital costs to

accomplish the mix of likely validation

activities (literature review, challenge

testing, and product or water testing).

FDA estimates that such consultant

services cost approximately $1,000 per

validation in the first year (assuming

that consultant’s services cost $1,000

per day and that the validation process

takes a single day of the consultant’s

time). The agency estimates that in

subsequent years a consultant will be

able to validate the system in one-half

of a day. There are approximately 75

large firms operating 225 plants who are

likely to have the resources available to

perform the validation functions

inhouse. For large firms, FDA estimates

that validating SOP’s and HACCP plans

will require 25 percent of the level of

effort taken for the original SOP and

HACCP plan development ($600).

Because FDA has assumed that about 5

percent (50 plants) of all juice plants in

the OEI would have voluntarily

implemented HACCP substantially in

the form required by this regulation by

the time this regulation is finalized,

only 175 large plants are affected.

Tables 35 and 36 give the estimated cost

for validation in the first and

subsequent years.
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24283

TABLE 34.—COST OF FIRST YEAR VALIDATION

Plant Type Cost of SOP

Development

Cost of

HACCP Plan

Development

Ratio of

Validation to

Development

Level of

Effort

Validation

Cost per

Plant

No. of

Validations

per Year

No. of Plants

Affected Total

Seasonal small

businesses $1,000 1 645 $645,000

Year round small

businesses $1,000 2 250 $500,000

Year round large

businesses $260 $2,100 .25 $600 2 175 $210,000

Total $1,355,000

TABLE 35.—COST OF SUBSEQUENT YEAR VALIDATION

Plant Type Cost of SOP

Development

Cost of

HACCP Plan

Development

Ratio of

Validation to

Development

Level of

Effort

Validation

Cost per

Plant

No. of

Validations

per Year

No. of Plants

Affected Total

Seasonal small

businesses $500 1 645 $323,000

Year round small

businesses $500 2 250 $250,000

Year round large

businesses $260 $2,100 .13 $300 2 175 $105,000

Total $678,000

f. HACCP records (§ 120.12).—i.

Monitoring and recordkeeping.

Processors will need to monitor CCP’s

and keep HACCP system records of

observations at the CCP’s. Even for those

plants that have necessary controls in

place, plants without HACCP are not

likely to be doing the amount of

monitoring and recordkeeping that

HACCP requires. Therefore, all

processors that have not already

implemented HACCP will need to

increase monitoring and recordkeeping

activities.

If the additional monitoring and

recordkeeping that needs to be done

throughout the entire plant is equivalent

to 5 percent of one worker’s time (3

minutes per hour of operation per

plant), then the cost is dependent on the

number of days that the plant is in

operation and the number of hours that

it operates per day.

Assuming seasonal plants operate 12

hours per day for 120 days per year and

year round plants operate 24 hours per

day for 360 days per year, then Table 36

shows the annual cost of additional

monitoring and recordkeeping per plant.

It also shows the distribution of per

plant costs and total industry costs for

the additional monitoring and

recordkeeping needed to comply with

this proposed rule.

TABLE 36.—COST OF MONITORING AND RECORD KEEPING

Production

Hours of

Operation

per Day

Days of

Operation

per Year

Wage ($/h)

Percent

Additional

Time

Cost per

Plant per

Year

No. of Plants Totals

Seasonal 12 120 $13 5% $900 645 $581,000

Year round 24 360 $13 5% $5,600 425 $2,380,000

Totals 1,070 $2,961,000

ii. Record maintenance. The records

produced for this regulation will need to

be maintained for use by both the

processor and regulators.

Assuming record maintenance

requires 1 h per week while the plant is

being operated then the annual cost of

record maintenance per plant is

described in Table 37.

TABLE 37.—COST OF RECORD MAINTENANCE

Production Weeks of Operation per Year

Hours per

Week Maintaining RecordsWage ($/h) Cost per Plant No. of Plants Totals

Seasonal 16 1 $13 $210 645 $135,000

Year round 52 1 $13 $680 425 $289,000

Totals 1,070 $424,000
24284 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

iii. Record storage. Records produced

for this regulation will need to be stored

for use by both the processor and

regulators. A single standard office file

drawer should be sufficient to store the

proposed records for the proposed

duration. If for storage of the additional

records each plant needs to purchase

one standard office file cabinet at

approximately $150 each, then the total

cost of record storage for the 1,070

plants is approximately $161,000.

g. Training (§ 120.13).—i. HACCP

coordinator training. Processors may

need to employ a HACCP coordinator to

carry out the duties specified for such

a person. In order to train one employee

at a 3-day course that has a curriculum

consistent with FDA’s standards, a

processor will need to pay course

tuition, travel and lodging (assuming

that there is not a course in the

immediate area), and replacement of the

labor that the employee would have

provided at the processing plant if the

employee had not attended the course.

Table 38 shows the estimated costs for

each of these items and the estimated

total cost per plant for training a HACCP

coordinator.

TABLE 38.–COST OF HACCP COORDINATOR TRAINING

Tuition Travel and Lodging Foregone Labor Hours Wage ($/h) Total Cost per Plant

$500 $500 24 $13 $1,300

FDA estimates that if each of the

1,070 processing plants that are not

currently estimated to have HACCP

have a single employee trained by a

course that is acceptable to the agency,

then the total industry cost is

$1,391,000 million.

ii. Employee training in HACCP. Each

processor will need to train employees

in their HACCP-related activities and

may need to provide training for some

employees to enable them to read and

write English.

Each processor will need to train

some of their employees as to how to

perform their HACCP-related activities.

From the OEI and the American

Business Listing data, FDA has

information on the distribution of

employment for juice plants in the OEI.

FDA has assumed that all of the 220

very small orange and apple juice

processors employ three people on

average. FDA has also assumed that the

50 plants that have implemented

HACCP are the 50 plants with the

largest number of employees. This

analysis assumes that each plant must

train 5 employees or 10 percent of their

employees in HACCP-related

responsibilities, whichever is greater.

Table 39 describes the cost of training

each employee for 8 hours annually,

total employment in the affected plants

and the total cost of this level of

training.
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24285

TABLE 39.—COST OF

EMPLOYEE

TRAINING

No. of Annual

Hours of Training

per Employee

Wage ($/h) Annual Cost per Employee Average Plant Employment No. of Employees Trained per Plant No. of Plants No. Plants With HACCP Imple- mented Total No. of Employees Trained Total

8 $13 $100 3 3 252 0 756 75,6008 $13 $100 7 5 35 0 175 17,5008 $13 $100 15 5 68 0 340 34,0008 $13 $100 35 5 100 0 500 50,0008 $13 $100 75 8 103 0 824 82,4008 $13 $100 175 18 161 0 2,898 289,8008 $13 $100 375 38 59 0 2,242 224,2008 $13 $100 750 75 25 16 675 67,5008 $13 $100 3,000 300 14 14 0 $08 $13 $100 8,910 $841,000
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h. Imports and foreign processors

(§ 120.14).—i. Importers. Information

from the U.S. Customs Service indicates

that approximately 120 importers

import juice into the United States. The

import provisions of the HACCP

proposal will, in practice, cause

importers to implement written

procedures to ensure that the juice is

produced under HACCP or equivalent

safeguards. The importer may keep file

copies of the foreign processor’s HACCP

plan, written guarantees that the

product was produced in accordance

with the HACCP plan, or certificates of

inspection from foreign Governments.

The importer may also have to inspect

the foreign plant or test the imported

product. Written records of all HACCP

actions must be maintained by the

importer. Some combination of records

from the foreign processor and

safeguards provided by the importer

will become necessary to meet the

requirements of this proposed rule. The

agency estimates that the cost of these

activities will be $10,000 per importer

in early years, decreasing as

memorandum of understandings with

exporting countries are established.

ii. Foreign juice processors. The

agency does not have any direct

information on the number of foreign

juice plants that export to the United

States. However, approximately 75

percent of U.S. juice consumption is

supplied by 900 plants in the OEI.

Approximately 25 percent of U.S. juice

consumption is supplied by foreign

firms. This analysis assumes that the

ratio of the number of domestic plants

in the OEI to domestic production is

equivalent to the ratio of the number of

foreign exporters to foreign juice

imports. The result of this assumption is

an estimate of 300 foreign plants

exporting to the United States that will

need HACCP. FDA requests information

from foreign governments and importers

on the number of exporting juice plants

in their respective countries.

Using this estimate for the number of

juice exporting plants, if the cost per

plant for initiating HACCP is same as for

a large U.S. plant which is already

pasteurizing juice (since all juice

exported to the United States is

pasteurized), then the first year cost per

foreign juice exporter is approximately

$26,000, and the cost in subsequent

years is $22,000. Therefore the total cost

in the first year for 300 foreign

processors is approximately $8 million

and approximately $7 million in

subsequent years.

Table 45 in the Initial Regulatory

Flexibility Analysis, which follows,

shows typical costs for a large plant

which has not already implemented

HACCP. The agency assumes that these

costs are representative of foreign plants

exporting to the United States. The

largest point of uncertainty in this

estimation relates to the cost of

employee training. The average

domestic juice plant which employs 500

or more people has approximately 830

employees. This analysis assumes that

10 percent of these employees will need

to be trained in HACCP-related duties.

If training costs $100 per employee then

the cost of employee training alone in a

large plant is $8,300. Some plants

employ more than 3,000 employees. For

such a plant the cost of employee

training would be $30,000. The agency

request comment on the cost to foreign

processors.

Table 40 lists types of juice exported

to the United States and the various

countries producing the juice. This is

not a complete list of countries

exporting juice to the United States, nor

is it a comprehensive list of juice

products.

TABLE 40.—SOURCES OF IMPORTED JUICE

Apple Juice Grape Juice Citrus Juice Prune Juice Pineapple Juice Vegetable Juice

Argentina Argentina Argentina

Australia Australia

Austria Austria Austria

Belgium-Luxembourg Belgium-Luxembourg Belgium-Luxembourg Belgium-Luxembourg

Belize

Brazil Brazil Brazil

Canada Canada Canada Canada Canada

Chile Chile

Denmark

Dominican Republic

France France France France

Honduras Honduras

Hungary

Israel Israel Israel Israel

Italy Italy Italy

Jamaica

Japan Japan

Leeward/Windward

Islands

Mexico Mexico Mexico

Netherlands

New Zealand

Philippines

Germany Germany Germany Germany

South Korea

Singapore

Spain

Switzerland Switzerland

Taiwan Taiwan

Thailand

Turkey

Yugoslavia
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24287

Table 40 is provided to give

information about the scope of countries

and products covered by these rules.

The agency believes that a high estimate

of the number of firms exporting juice

to the United States is 300. Because the

quality of the juice must be maintained

during transport, all juice exported to

the United States is currently processed

in such a way so as to appropriately

address potential pathogens. However,

the agency has no information to suggest

that any foreign juice processors have

implemented HACCP in their

operations.

C. Summary of Costs for Labeling and

HACCP Rules

The total quantified costs are

approximately $26 million in the first

year and $15 million in all subsequent

years. There will be a substantial impact

on those processors who are producing

minimally processed juice in that some

will stop making the product, some will

implement HACCP, and some will label.

Table 41 summarizes costs of the rules

by provision.

TABLE 41.—TOTAL FIRST YEAR AND RECURRING COST PER ACTIVITY

Activity First Year Costs Recurring Costs

Labeling Costs $4,387,000

Develop SOP’s $174,000

Sanitation SOP’s $160,000

Monitoring and documenting for SOP’s $218,000 $218,000

Hazard analysis and HACCP plan $1,070,000

Pesticide controls $281,000 $281,000

Pathogen controls $2,350,000 $850,000

Natural toxin controls $104,000 104,000

Corrective action plan $54,000

Corrective actions $208,000 $56,000

Verification $845,000 $845,000

Validation $1,355,000 $678,000

HACCP monitoring and recordkeeping $2,961,000 $2,961,000

Record maintenance $424,000 $424,000

Record storage $161,000

HACCP coordinator training $1,391,000

Employee training $841,000 $841,000

Importers 1,200,000 600,000

Foreign processors 8,000,000 7,000,000

Totals $26,184,000 $14,858,000

VII. Summary of Benefits and Costs

FDA has examined the costs and

benefits of the proposed rules as

required under Executive Order 12866.

FDA finds that the costs and benefits of

these rules have different values in

subsequent years such that, to compare

them properly, they must be discounted

to the present year (the point at which

a decision must be made). The

quantified benefits (discounted annually

at 7 percent) are expected to range from

$3 billion to $ 4 billion and the

quantified costs (discounted annually at

7 percent) are expected to be $240

million.

VIII. Initial Regulatory Flexibility

Analysis

FDA has examined the impact of the

two proposed rules as required by the

RFA (5 U.S.C. 601–612). If a rule has a

significant impact on a substantial

number of small entities, the RFA

requires agencies to analyze options that

would minimize the economic impact of

that rule on small entities. The agency

acknowledges that these proposed rules

are likely to have a significant impact on

a substantial number of small entities.

A. Objectives

The RFA requires a succinct

statement of the purpose and objectives

of any rule that will have a significant

impact on a substantial number of small

entities.

The warning label proposal responds

to the need to alert consumers to the

potential risk of foodborne illness from

consumption of juice products not

pasteurized or otherwise processed to

destroy pathogens that may be present.

FDA is proposing to require warning

labels on such juice products to inform

consumers of the potential hazard of

pathogens in such products; such

labeling will not be required for juice

that is processed to achieve a 5-log

reduction. Once HACCP is

implemented, the warning labeling will

no longer be required for those products

covered by the HACCP rule. The

HACCP rule is being proposed to ensure

that juice manufacturers control all

physical, chemical, and microbial

hazards in their products.

B. Definition of Small Business and

Number of Small Businesses Affected

The RFA requires a statement of the

definition of small business used in the

analysis and a description of the

number of small entities affected.

Table 42 shows the definition of small

business for each type of establishment

affected and a description of the number

of small entities affected by each of the

rules. The agency has accepted the

Small Business Administration (SBA)

definitions of small business for this

analysis.

TABLE 42.—APPROXIMATE NUMBER OF SMALL PLANTS COVERED BY THESE RULES

Type of Establishment Standard Industry

Classification Codes

SBA Definition of Small by

Category

Percentage of

Category

Defined as

Small by SBA

No. of Small

Establishments

Covered by

HACCP Rule

No. of Small

Establishments

Covered by Labeling Rule

Juice manufacturers in the

OEI

2033, 2037 Less than 500 employees 75% 675 20
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TABLE 42.—APPROXIMATE NUMBER OF SMALL PLANTS COVERED BY THESE RULES—Continued

Type of Establishment Standard Industry

Classification Codes

SBA Definition of Small by

Category

Percentage of

Category

Defined as

Small by SBA

No. of Small

Establishments

Covered by

HACCP Rule

No. of Small

Establishments

Covered by Labeling Rule

Roadside-type apple juice

makers

2033, 2037 Less than 500 employees 100% 160 1,600

Roadside-type orange juice

makers

2033, 2037 Less than 500 employees 100% 60 300

Grocery stores and supermarkets processing at

the point of sale

5411 Less than $20,000,000 per yr. 85% 1,100

Grocery stores and supermarkets5411 Less than $20,000,000 per yr. 85% 1,450

Totals 895 4,470

C. Description of the Impact on Small

Entities

1. Costs to Small Entities

Because there is a broad distribution

of products covered, firm types, current

processing practices and sizes, it would

be misleading to report average per firm

costs. However, some idea of the costs

can be gained from the following

examples. The impacts that the costs

will have on a firm will vary depending

on the total revenue derived from juice

by a firm and the profit (return on sales)

associated with juice production. Data

on food manufacturing firms indicates

that 75 percent of firms have return on

sales of less than 5 percent.

The first example (Table 43) is of a

small apple cider plant that is now

producing nonheat-treated juice, buying

commingled fruit, and has not

developed or implemented sanitation

SOP’s. This plant will need to buy a

pasteurizer (or find and validate a

different process that achieves a 5-log

reduction) and do some pesticide

testing. The next example (Table 44) is

a small plant that is producing

pasteurized orange juice year round

with fruit from a known source, and that

has already developed and implemented

sanitation SOP’s (except that records

have not been kept on SOP’s). These

two plants can be compared to a very

large apple juice plant (Table 45) that

imports some apples and therefore must

test for patulin, and has not developed

or implemented sanitation SOP’s.

TABLE 43.—COSTS FOR ILLUSTRATIVE SMALL APPLE CIDER PROCESSOR

Type of Cost Cost in First Year Cost in Subsequent

Years

Develop SOP’s $260

Sanitation SOP’s $500

Monitoring and documenting of SOP’s $100 $100

Hazard analysis and HACCP plan $1,000

Pesticide testing controls $1,500 $1,500

Pathogen controls $18,200 $7,900

Corrective action plan $50

Corrective actions $150 $40

Verification $420 $420

Validation $1,000 $500

HACCP monitoring and recordkeeping $900 $900

Record maintenance $210 $210

Record storage $150

Training of coordinator $1,300

Employee training $300 $300

Totals $26,000 $11,900

TABLE 44.—COST FOR ILLUSTRATIVE SMALL ORANGE JUICE PROCESSOR

Type of Cost Cost in First Year Cost in Subsequent

Years

Monitoring and documenting of SOP’s year round $340 $340

Hazard analysis and HACCP plan $1,000

Pesticide controls $60 $60

Corrective action plan $50

Corrective actions $260 $70

Verification $1,350 $1,350

Validation $2,000 $1,000

HACCP monitoring and recordkeeping $5,600 $5,600

Record maintenance $680 $680

Record storage $150

Training of coordinator $1,300

Employee training $300 $300
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TABLE 44.—COST FOR ILLUSTRATIVE SMALL ORANGE JUICE PROCESSOR—Continued

Type of Cost Cost in First Year Cost in Subsequent

Years

Totals $13,100 $9,400

TABLE 45.—COSTS FOR ILLUSTRATIVE VERY LARGE APPLE JUICE PROCESSOR

Type of Cost Cost in First Year Cost in Subsequent

Years

Develop SOP’s $260

Sanitation SOP’s $500

Monitoring and documenting of SOP’s $340 $340

Hazard analysis and HACCP plan $1,000

Natural toxin control $4,500 $4,500

Corrective action plan $50

Corrective actions $260 $70

Verification $1,350 $1,350

Validation $1,200 $1,200

HACCP monitoring and recordkeeping $5,600 $5,600

Record maintenance $680 $680

Record storage $150

Training of coordinator $1,300

Employee training $8,300 $8,300

Totals $26,000 $22,000

2. Professional Skills Required for

Compliance

The RFA requires a description of the

professional skills required for

compliance with this rule. Table 46

describes the professional skills

required for compliance with the

various activities required by this rule.

TABLE 46.—PROFESSIONAL SKILLS REQUIRED FOR COMPLIANCE

Required Activity Section of Proposal Professional Skills Required for Compliance

Developing prerequisite program SOP’s § 120.6 Managers familiar with incoming materials and plant

sanitation

Implementing sanitation controls with corrections of deviations from prerequisite program SOP’s§ 120.6 Production workers who are able to maintain the sanitation controls as described in the sanitation SOP’s and

supervisors or managers who can determine what

corrective actions are necessary for deviations from

SOP’s

Monitoring and documenting of prerequisite program

SOP’s

§ 120.6 Production workers who are appropriately trained to

monitor and keep records on observations and measurements for prerequisite program SOP’s

Developing hazard analysis and HACCP plan §§ 120.7 and 120.8 Supervisors or managers who fulfill the role of HACCP

coordinator as well as microbiologists, chemists, and

attorneys

Implementing pesticide controls §§ 120.7 and 120.8 Production workers who are appropriately trained to

carry out tests, to monitor, and to keep records on observations and measurements at critical control points

Implementing pathogen controls §§ 120.7 and 120.8 Production workers who are appropriately trained to

monitor and keep records on observations and measurements at critical control points

Taking corrective actions § 120.10 Production workers who are trained to take corrective

actions described in corrective action plans and supervisors or managers who can determine what corrective actions are necessary for deviations from critical limits

Verification § 120.11 Supervisors or managers who fulfill the role of HACCP

coordinator

Validation § 120.11 Food scientists or food technologists who can perform a

scientific review of the process

Monitoring and recordkeeping § 120.12 Production workers who are appropriately trained to

monitor and keep records on observations and measurements at critical control points

Record maintenance § 120.12 Clerical or production workers

HACCP coordinator training § 120.13 Supervisors or managers who fulfill the role of HACCP

coordinator

HACCP employee training § 120.13 Clerical and production workers
24290 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

TABLE 46.—PROFESSIONAL SKILLS REQUIRED FOR COMPLIANCE—Continued

Required Activity Section of Proposal Professional Skills Required for Compliance

Imports § 120.14 Clerical workers as well as supervisors or managers

who fulfill the role of HACCP coordinator

3. Recordkeeping requirements

The RFA requires a description of the

recordkeeping requirements of the

proposed rule. Table 47 shows the

provisions for which records need to be

made and kept by small businesses, the

number of small businesses affected, the

annual frequency that the records need

to be made, the amount of time needed

for making each record, and the total

number of hours for each provision in

the first year and then in subsequent

years.

TABLE 47.—SMALL BUSINESS RECORDKEEPING REQUIREMENTS

Provision

No. of Small

Entities Keeping Records

Annual

Frequency

Hours per Record

Small Entity

Total Hours,

First Year

Total Hours,

Subsequent

Years

120.6 Monitoring and recordkeeping of SOP’s 670

225

16

52

.5 5,400

5,900

5,400

5,900

120.7 and 8 Hazard analysis and HACCP plan 895 1 80 71,600 0

120.8 Pesticide controls by supplier certificate 676 227 .02 3,100 3,100

120.11 Verification 670

250

16

52

2 21,400

26,000

21,400

26,000

120.11 Validation 670

250

1

2

8 (first yr)

4 (subsequent yr)

5,400

4,000

2,700

2,000

120.12 HACCP records 670

250

1,440

8,640

.05 48,200

108,000

48,200

108,000

120.12 Record maintenance 670

250

16

52

1 10,700

13,000

10,700

13,000

Totals 323,000 246,000

D. Minimizing the Burden on Small

Entities

The RFA requires an evaluation of

any regulatory overlaps and regulatory

alternatives that would minimize the

costs to small entities.

There are two alternatives that the

agency has considered to provide

regulatory relief for small entities. First,

FDA considered and is proposing the

option of exempting some small entities

from the requirements of these rules.

Second, FDA considered and is

proposing the option of lengthening the

compliance period for small entities.

1. Exempt Small Entities

One alternative for alleviating the

burden for small entities would be to

exempt them from the provisions of

these rules. FDA is proposing to exempt

retailers who, for the purposes of this

rule, the agency has tentatively decided

will include very small businesses that

make juice on their premises and whose

total sales of juice and juice products do

not exceed 40,000 gallons per year and

who sell directly to consumers or

directly to consumers and other

retailers.

Revenue from sales of 40,000 gallons

of nonheat treated juice may be

approximately $160,000 with annual

profits ranging from $1,600 to $16,000

per year (1 percent to 10 percent). This

exemption covers most of the very small

businesses, although less than 15

percent of the volume of unpasteurized

juice. However, packaged products sold

by these types of retailers are covered

under the labeling rule. FDA requests

comments on this exemption.

2. Extend Compliance Period

FDA has also proposed a tiered,

extended compliance period giving the

smallest firms the most time to comply

with the HACCP rule, if such rule is

adopted. The proposed labeling rule,

however, requires either label changes

on the product or labeling 60 days after

publication of the final rule. It is

proposed that small businesses be

allowed to use signs and placards for an

extended period before changing the

labels on their products. Small and very

small firms that produce packaged

juices may continue to use signs and

placards to display the warning instead

of placing the warning on the label of

the product until January 1, 2001. On

that date all firms producing packaged

juice that is not processed with a 5-log

reduction must display the warning on

the product label. A longer compliance

period allows firms to finance large

fixed costs out of retained earnings. For

a regulation of general applicability

across a sector of the economy, it is

difficult for firms obtain loans to finance

regulatory costs, partially because no

increases in profits are expected that

could be used to repay the loan. This

may be particularly troublesome for

small firms that must finance the costs

of HACCP controls. FDA is unable to

quantify the cost savings of the

extended compliance period although

one effect of the cost savings will be to

reduce small firm failure.

E. Summary

FDA has examined the impact of

these proposed rules on small

businesses in accordance with the RFA.

This analysis, together with the rest of

the preamble and the Preliminary

Regulatory Impact Analysis, constitutes

the preliminary RFA. FDA has

determined that these rules are likely to

have a significant impact on a

substantial number of small entities.

IX. References

The following references have been

placed on display in the Dockets

Management Branch (address above)

and may be seen by interested persons

between 9 a.m. and 4 p.m., Monday

through Friday.

1. Bean, Nancy H., and Patricia M. Griffin,

‘‘Foodborne Disease Outbreaks in the United

States, 1973–1987: Pathogens, Vehicles, and

Trends,’’ Journal of Food Protection, vol. 53

(September), p. 805.
Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules 24291

2-3. Buzby, J., et al., Bacterial Foodborne

Disease: Medical Costs and Productivity

Losses (AER–741), U.S. Department of

Agriculture, 1996, p. 42.

4. Estimating the Value of Consumers’ Loss

from Foods Violating the FD&C Act, vol. II,

Final Report, September 1988, FDA Contract

No. 233–86–2097, p. D–12–13.

5. Cohen, M. L., R. E. Fountaine, R. A.

Pollard, S. D. Von Allmen, T. M. Vernon, and

E. J. Gangarosa, ‘‘An Assessment of PatientRelated Economic Costs in an Outbreak of

Salmonellosis,’’ New England Journal of

Medicine, vol. 299, no. 9, 1978, pp. 459–460.

6. Council for Agricultural Science and

Technology, Foodborne Pathogens: Risks and

Consequences, Task Force Report No. 122,

September 1994, p. 51.

7. Personal communication of Gibbs, R.,

ERS/USDA to David Zorn, Rural Wage for

’96, April 22, 1997.

8. Bureau of Labor Statistics, U.S.

Department of Labor, ‘‘Employer Costs for

Employee Compensation—March 1996,’’ U.S.

Department of Labor: 96–424, p. 1.

9. Food and Drug Administration,

Williams, R., et al., ‘‘Appendix: Preliminary

Investigation into the Morbidity and

Mortality Associated with the Consumption

of Fruit and Vegetable Juices,’’ October, 31,

1997.

10. Food and Drug Administration, Zorn,

D., and K. Klontz, ‘‘Appendix: The Value of

Consumer Loss Relating to Foodborne

Reactive Arthritis,’’ February 2, 1998.

11. Food Marketing Institute, Trends in the

United States: Consumer Attitudes & the

Supermarket, 1996. Washington, DC: Food

Marketing Institute.

12. U.S. Department of Agriculture, Food

and Nutrition Intakes by Individuals in the

United States, 3 Days, Continuing Survey of

Food Intakes by Individuals, 1989–1991).

13. Letter from Julia Stewart Daly, U.S.

Apple Association to Dr. John E. Kvenberg,

FDA, August 14, 1997.

X. Requests for Comments

Interested persons may, on or before

May 26, 1998, submit to the Dockets

Management Branch (address above)

written comments regarding this

preliminary regulatory impact analysis

on aspects related to labeling for juice

and juice products and by July 8, 1998,

on aspects of this analysis related to

HACCP for juice and juice products.

Two copies of any comments are to be

submitted, except that individuals may

submit one copy. Comments are to be

identified with the docket numbers

found in brackets in the heading of this

document. Received comments may be

seen in the office above between 9 a.m.

and 4 p.m., Monday through Friday.

Dated: April 24, 1998.

Michael A. Friedman,

Lead Deputy Commissioner for the Food and

Drug Administration.

Donna E. Shalala,

Secretary of Health and Human Services.

The following are the appendices to the

Preliminary Regulatory Impact Analysis

and Initial Regulatory Flexibility

Analysis of the Proposed Rules to

Ensure the Safety of Juice and Juice

Products.

BILLING CODE 4160–01–F
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24344 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24346 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24348 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24350 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24352 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24354 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24356 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24358 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24360 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24362 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24364 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24366 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24368 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24370 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24372 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24374 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24376 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules
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24378 Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed Rules

[FR Doc. 98–11530 Filed 4–27–98; 4:19 pm]

BILLING CODE 4160–01–C