[Federal Register Volume 70, Number 190 (Monday, October 3, 2005)]
[Rules and Regulations]
[Pages 57505-57509]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-19730]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 1 and 20

[Docket No. 2002N-0276] (formerly Docket No. 02N-0276)
RIN 0910-AC40


Registration of Food Facilities Under the Public Health Security 
and Bioterrorism Preparedness and Response Act of 2002

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is issuing a final 
regulation that confirms the interim final rule entitled ``Registration 
of Food Facilities Under the Public Health Security and Bioterrorism 
Preparedness and Response Act of 2002'' (68 FR 58894, October 10, 2003 
(interim final rule) as corrected by a technical amendment (69 FR 
29428, May 24, 2004), and responds to comments submitted in response to 
the request for

[[Page 57506]]

comments in the interim final rule. This final rule affirms the interim 
final rule's requirement that domestic and foreign facilities that 
manufacture/process, pack, or hold food for human or animal consumption 
in the United States be registered with FDA by December 12, 2003. The 
interim final rule implemented the Public Health Security and 
Bioterrorism Preparedness and Response Act of 2002 (the Bioterrorism 
Act), which requires domestic and foreign facilities to be registered 
with FDA by December 12, 2003. This final rule does not make any 
changes to the regulatory requirements established by the interim final 
rule.

DATES: The interim final rule published at 68 FR 58894 was effective on 
December 12, 2003. The technical amendment to the interim final rule 
published at 69 FR 29428 was effective May 24, 2004. This final rule, 
which adopts as final the interim rule as amended, is effective October 
3, 2005.

FOR FURTHER INFORMATION CONTACT: Catherine L. Copp, Center for Food 
Safety and Applied Nutrition (HFS-004), Food and Drug Administration, 
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-1589.

SUPPLEMENTARY INFORMATION:

I. Background and Legal Authority

    Section 305 of the Bioterrorism Act, which was enacted on June 12, 
2002, amended the Federal Food, Drug, and Cosmetic Act (the act) to 
require the Secretary to establish regulations requiring domestic and 
foreign facilities that manufacture, process, pack, or hold food for 
human or animal consumption in the United States to be registered with 
the Secretary (section 415 of the act (21 U.S.C. 350d)). Facilities 
were required to be registered by December 12, 2003. Failure to 
register a facility in accordance with section 415 of the act is a 
prohibited act (section 301(dd) of the act (21 U.S.C. 331(dd))). 
Section 305 of the Bioterrorism Act amended the act to prohibit the 
importation of food from a foreign facility that is required to 
register, but has not done so (section 801(l) of the act (21 U.S.C. 
381(l))).
    The Department of Health and Human Services (DHHS) and the 
Department of Treasury (Treasury) jointly published the proposed 
registration regulation in the Federal Register on February 3, 2003 (68 
FR 5378), for comment (proposed rule). On October 10, 2003, DHHS and 
the Department of Homeland Security (DHS) jointly issued the interim 
final rule\1\. The interim final rule implemented section 305 of the 
Bioterrorism Act, and required domestic and foreign facilities to be 
registered with FDA by December 12, 2003. The interim final rule 
responded to comments from the public on the proposed rule, and 
established a 75-day comment period on a limited set of issues 
identified in the interim final rule and also set out below. In order 
to ensure that those commenting on the interim final rule had the 
benefit of FDA's outreach and educational efforts and had experience 
with the systems, timeframes, and data elements of the registration 
system, FDA reopened the comment period on the same limited set of 
issues for 30 days on April 14, 2004 (69 FR 19766). FDA requested 
comment only on the following issues:
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    \1\The authorities of Treasury under section 701(b) of the act 
to prescribe regulations for the efficient enforcement of section 
801 of the act were transferred to DHS when it was created by an act 
of Congress in 2002.
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    1. The cost to foreign facilities of hiring and retaining a U.S. 
agent. Specifically, FDA invited comment, and the submission of data or 
other information, on the following:
    <bullet> The costs to a foreign facility of hiring a U.S. agent;
    <bullet> The number of foreign facilities that have hired a U.S. 
agent or negotiated additional duties from someone with whom they have 
an existing relationship in response to the interim final rule, instead 
of relying on an existing relationship with a person who qualifies as a 
U.S. agent;
    <bullet> The number of foreign facilities that have ceased 
exporting to the United States because they have decided not to hire/
retain a U.S. agent for registration purposes.
    <bullet> The distribution of costs between submitting registrations 
and other services offered by the U.S. agent.
    <bullet> The assumptions underlying FDA's estimates of the costs of 
hiring and retaining a U.S. agent.
    2. The effects on domestic small businesses, if any, if some 
foreign facilities cease exporting to the United States due to the U.S. 
agent requirement for registration. Specifically, FDA invited comment, 
and the submission of data or other information, on the following:
    <bullet> The number of domestic small businesses that have been 
adversely affected by trading partners that have ceased exporting to 
the United States due to the U.S. agent requirement for foreign 
facility registration; and
    <bullet> The costs incurred by these domestic small businesses due 
to the loss of these trading partners.
    In addition to the provisions of the act amended by section 305 of 
the Bioterrorism Act, FDA is relying on section 701(a) and (b) of the 
act (21 U.S.C. 371(a) and (b)) in issuing this final rule. Section 
701(a) authorizes the agency to issue regulations for the efficient 
enforcement of the act, while section 701(b) of the act authorizes FDA 
and Treasury jointly to prescribe regulations for the efficient 
enforcement of section 801 of the act.
    To the extent that 5 U.S.C. 553 applies to this action, the 
agency's implementation of this action with an immediate effective date 
comes within the good cause exception in 5 U.S.C. 553(d)(3) (21 CFR 
10.40(c)(4)(ii)). As this final rule imposes no new regulatory 
requirements, a delayed effective date is unnecessary.

II. Comments on the Interim Final Rule

    FDA received approximately 200 timely submissions in response to 
the interim final rule. Approximately three-quarters of the comments 
FDA received addressed issues outside the scope of the interim final 
rule's request for comments. FDA did not consider nonresponsive 
comments in developing this final rule, and this final rule does not 
address comments that are beyond the scope of the issues on which FDA 
requested comment. Relevant comments did not cause FDA to significantly 
revise its economic analysis of the requirement that each foreign 
facility designate a U.S. agent. Because FDA's responses to the 
comments below do not result in any changes to the regulatory 
requirements published in the interim final rule, the governing 
regulation continues to be set out in Sec. Sec.  1.225 through 1.243 
and 20.100.
    All of the issues on which FDA requested comment were related to 
the assumptions in the economic analysis section of the interim final 
rule. Accordingly, FDA is responding to all comments in section III of 
this document.

III. Analysis of Economic Impacts Benefit-Cost Analysis

    We have examined the economic implications of this final rule as 
required by Executive Order 12866. Executive Order 12866 directs 
agencies to assess all costs and benefits of available regulatory 
alternatives and, when regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
environmental, public health and safety, and other advantages; 
distributive impacts; and equity). Executive Order 12866 classifies a 
rule as significant if it meets any one of a number of specified 
conditions, including having an annual effect on the

[[Page 57507]]

economy of $100 million, adversely affecting a sector of the economy in 
a material way, adversely affecting competition, or adversely affecting 
jobs. Executive Order 12866 also considers a rule as a significant 
regulatory action if it raises novel legal or policy issues. In the 
interim final rule, FDA determined that the rule was a significant 
regulatory action as defined by Executive Order 12866. We have 
determined that this final rule is not a significant regulatory action 
as defined by Executive Order 12866, because it is not imposing any new 
requirement on any entity beyond the requirements of the interim final 
rule.
    The scope of the analysis of economic impacts for this final rule 
is limited to the costs associated with the U.S. agent requirement. For 
a full discussion of all costs and benefits associated with the 
registration requirement, see the proposed and interim final rules.

Summary of U.S. Agent Costs

    Section 415(a)(1)(B) of the act, as established by the Bioterrorism 
Act, requires that the owner, operator, or agent in charge of a foreign 
facility submit in the facility's registration the name of the U.S. 
agent for the facility. Section 1.232(d) requires that all foreign 
facility registrations include information about the facility's U.S. 
agent and implements the statutory requirement. Section 1.227(b)(13) 
requires that the U.S. agent be a person residing or maintaining a 
place of business in the United States, who is designated by the owner, 
operator, or agent in charge of a foreign facility as the facility's 
agent. FDA recognizes only one U.S. agent per foreign facility for 
purposes of registration. (See 68 FR 58894 at 58915.) The U.S. agent 
acts as a communications link between FDA and the facility, and FDA 
considers providing information to the U.S. agent the same as providing 
information directly to the foreign facility (Sec.  1.227(b)(13)(ii)). 
A U.S. agent may submit a facility's registration to FDA if the owner, 
operator, or agent in charge of the foreign facility authorizes the 
U.S. agent (if an individual) to register on behalf of the owner, 
operator, or agent in charge of the facility (Sec.  1.225(c)).
    In the economic analyses of the proposed and interim final rules, 
FDA estimated that more than 90 percent of foreign facilities did not 
currently have a U.S. agent and that foreign facilities currently 
without a U.S. agent would require 5 to 15 hours to find an agent and 
would pay an annual fee of $1,000 (68 FR 5378 at 5396 and 68 FR 58894 
at 58943). The $1,000 fee estimated in the proposed rule was an 
estimate of an average fee for a U.S. agent under FDA regulations for 
drugs, biologics, and devices (21 CFR parts 207, 607, and 807, 
respectively), based on fees quoted over the phone and in Internet 
advertisements. During the period from the publication of the proposed 
rule to publication of the interim final rule, a number of companies 
began advertising their services as a U.S. agent for foreign food 
facilities on the Internet. These companies specified a range of costs, 
some with discounts for multiple facilities under the same ownership, 
fees that are a function of the number of shipments each year, or 
additional fees for registration updates. Based on the requirements in 
the proposed rule, the lowest fee quoted was $399 for representation by 
a U.S. agent for 1 year; other U.S. agents charged initial fees between 
$599 and $1,400. Many of the U.S. agents charged fees for additional 
registration-related services, such as registration updates or 
cancellations. Based on these estimates of fees, FDA concluded that 
$1,000 represented a reasonable estimate of a U.S. agent fee, including 
registering the foreign facility (68 FR 58894 at 58945). The total 
first year cost for foreign facilities was estimated to be $306 
million, and annual costs were estimated to be $229 million with a U.S. 
agent fee of $1,000. However, because there was a wide range of fees 
charged by U.S. agents, FDA also presented in the interim final rule an 
estimate of the cost of the rule with a U.S. agent fee of $700. 
Assuming this $700 fee, FDA estimated that the total first year cost 
for foreign facilities would be $247.6 million and annual costs would 
be $164.5 million (68 FR 58894 at 58945).
    To improve the analysis involving the costs of hiring and retaining 
a U.S. agent, FDA requested comments on a number of specific components 
of the cost calculations, as summarized below.

A. The Costs to a Foreign Facility of Hiring and Retaining a U.S. Agent

    (Comment 1) FDA received a number of comments about the costs of 
hiring and retaining a U.S. agent. FDA received estimates of U.S. agent 
fees ranging from $95 to $1400. Many comments mentioned a very wide 
range of fees, with differences as large as $800 between the lowest and 
highest fees cited in a single comment. None of the comments stated 
whether there were differences in services between the low and high fee 
agents, other than lower fees for ``farm'' registrations. (The comments 
did not elaborate on the meaning of ``farm'' registrations.) The 
majority of the comments that estimated U.S. agent fees mentioned $700 
or $750 or included $700 in the range of fees. Some comments also noted 
that U.S. agents charged an hourly fee for any additional, but 
unspecified, services provided to the foreign facility. Some comments 
did not provide a dollar estimate of the U.S. agent fee, but asserted 
that FDA had underestimated the cost of a U.S. agent, while others 
claimed that FDA had overestimated the cost of hiring and retaining a 
U.S. agent.
    (Response) In the interim final rule, FDA estimated total costs 
using average U.S. agent fees of $700 and $1,000. Given the wide range 
of fees reported in the comments, we now conclude that the average fee 
for a U.S. agent is probably closer to $700, giving a total first year 
cost for foreign facilities of $247.6 million and annual costs of 
$164.5 million. Table 1 presents the revised present value and 
annualized total costs of the interim final rule for a U.S. agent fee 
of $700.

                          Table 1.--Present value and annualized costs over 20 years for a U.S. agent fee of $700 (in millions)
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                 Discount Rate                                     Present Value                                          Annualized
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7%                                                                                         $2,144.1                                               $107.2
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3%                                                                                         $2,861.5                                               $143.1
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[[Page 57508]]

B. The Number of Foreign Facilities That Have Hired a U.S. Agent or 
Negotiated Additional Duties From Someone With Whom They Have an 
Existing Relationship in Response to the Interim Final Rule, Instead of 
Relying on an Existing Relationship With a Person Who Qualifies as a 
U.S. Agent

    (Comment 2) FDA did not receive any comments estimating the number 
of facilities that have hired a U.S. agent or have negotiated 
additional duties from someone with whom they have an existing 
relationship. However, we did receive individual comments from 
facilities and industry representatives reporting that some facilities 
have hired a new U.S. agent. FDA also received comments reporting that 
some facilities have used U.S. business partners, U.S. customers, or 
U.S. brokers as U.S. agents.
    (Response) From the comments we received it is clear that foreign 
facilities are complying with the U.S. agent requirement both by hiring 
new U.S. agents and by negotiating new duties with someone with whom 
they have an existing relationship. However, it was not possible to 
extrapolate from the comments how many facilities were hiring new U.S. 
agents or utilizing existing relationships. Therefore, FDA has not 
altered its analysis on this point. (See 68 FR 58894 at 58945.)

C. The Number of Foreign Facilities That Have Ceased Exporting to the 
United States Because They Have Decided Not to Hire or Retain a U.S. 
Agent for Registration Purposes

    (Comment 3) FDA did not receive any estimates of the number of 
foreign facilities that have ceased exporting to the United States due 
to the U.S. agent requirement. FDA did receive comments from 
governmental agencies and industry groups reporting that some exporters 
of small value shipments may stop exporting or have stopped exporting 
to the United States as a result of the cost of hiring a U.S. agent. 
Other comments stated that they were unaware of any facilities that had 
stopped exporting to the United States in response to the cost of 
hiring a U.S. agent.
    (Response) Although some comments confirmed the assumption of the 
interim final rule economic analysis that some facilities would stop 
exporting to the United States due to costs associated with hiring a 
U.S. agent, the comments did not provide any information to estimate 
how many facilities would stop exporting. Therefore, FDA has not 
altered this portion of its analysis. (See 68 FR 58894 at 58943.)

D. The Distribution of Costs Between Submitting Registrations and Other 
Services Offered by the U.S. Agent

    (Comment 4) FDA received some comments separating the fee paid to a 
U.S. agent for registration services from fees paid for ongoing 
services. One comment assumed that the U.S. agent fees would be in 
addition to any existing fee for services the agent may be providing 
for the facility. Another comment stated that the fee to register a 
facility was $350 with an additional charge of $199 per year for acting 
as a facility's U.S. agent, for a total fee of $549. Most comments that 
provided a U.S. agent fee did not specify what services were provided 
for the fee.
    (Response) FDA was unable to estimate based on the information in 
the comments the distribution of costs between submitting registrations 
and other services offered by the U.S. agent. Therefore, FDA has not 
altered this portion of its analysis. (See 68 FR 58894 at 58945.)

E. The Assumptions Underlying FDA's Estimates of the Costs of Hiring 
and Retaining a U.S. Agent

    (Comment 5) FDA received comments questioning whether FDA had 
included all costs associated with hiring a U.S. agent. One comment 
stated that a firm had spent $1,800 per facility to register its 
foreign affiliates.
    (Response) The comment that provided specific costs of registration 
included many activities that FDA considered in other parts of its 
analysis, such as reading and understanding the rule and understanding 
the implications of the requirements for their business. If only 
activities related to the U.S. agent were considered, the comment's 
cost estimates were consistent with FDA's cost estimates for a U.S. 
agent. (See 68 FR 58894 at 58945.)
    (Comment 6) Other comments that mentioned costs stated that FDA had 
failed to include costs associated with entering into a legal agreement 
with the U.S. agent.
    (Response) FDA did include an estimate of costs to find and hire a 
U.S. agent in the interim final rule, which would include the costs of 
establishing an agreement between the U.S. agent and the facility. 
Accordingly, FDA has not altered its assumptions about costs associated 
with entering into an agreement with the U.S. agent. (See 68 FR 58894 
at 58945.)

F. The Effects on Domestic Small Businesses, if Any, if Some Foreign 
Facilities Cease Exporting to the United States Due to the U.S. Agent 
Requirement for Registration

    Specifically, FDA invited comment, and the submission of data or 
other information, on the following: The number of domestic small 
businesses that have been adversely affected by trading partners that 
have ceased exporting to the United States due to the U.S. agent 
requirement for foreign facility registration.
    FDA received no comments on the number of U.S. small businesses 
adversely affected by the loss of their trading partners, and thus, has 
not altered this portion of its analysis. (See 68 FR 58894 at 58954 to 
58955.)

G. The Effects on Domestic Small Businesses, if Any, if Some Foreign 
Facilities Cease Exporting to the United States Due to the U.S. Agent 
Requirement for Registration

    Specifically, FDA invited comment, and the submission of data or 
other information, on the following: The costs incurred by these 
domestic small businesses due to the loss of these trading partners.
    (Comment 7) Some comments agreed that there was a potential for 
some foreign facilities to stop exporting to the United States as a 
result of the U.S. agent requirement. One comment listed the following 
several possible consequences for U.S. small businesses if foreign 
facilities stopped exporting: (1) Need to find new suppliers; (2) 
inability to supply existing customer base; (3) increase in cost of 
goods; and (4) increase in cost of goods that may be passed on to U.S. 
consumers. However, no comments provided any estimate of the costs of 
these effects.
    (Response) In the economic analysis of the interim final rule, FDA 
considered the impacts on small businesses. Because no comment provided 
an estimate of the costs to domestic small businesses if some foreign 
facilities cease exporting to the United States due to the U.S. agent 
requirement, FDA has not altered its estimate of the number of 
facilities that will stop exporting to the United States or its 
expectations of possible consequences for U.S. facilities. (See 68 FR 
58894 at 58954 to 58955.)

IV. Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (5 U.S.C. 601-612) requires agencies 
to analyze regulatory options that would lessen the economic effect of 
the rule on small entities. Because this final rule

[[Page 57509]]

does not make any changes to existing requirements, and thus, does not 
impose any new costs on facilities, the agency certifies that this 
final rule will not have a significant impact on a substantial number 
of small entities. Full analysis of the effect of the registration 
requirement on small entities is provided in the analysis of economic 
impacts set out in the preceding analysis of economic impacts and in 
the preamble to the interim final rule at 68 FR 58894 at 58954.

V. Unfunded Mandates

    Section 202 of the Unfunded Mandates Reform Act of 1995 (Public Law 
104-4) requires that agencies prepare a written statement, which 
includes an assessment of anticipated costs and benefits, before 
proposing ``any rule that includes any 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 one year.'' The current threshold after 
adjustment for inflation is $115 million, using the most current (2003) 
Implicit Price Deflator for the Gross Domestic Product. FDA does not 
expect this final rule to result in any one-year expenditure that would 
meet or exceed this amount.

VI. Federalism Analysis

    FDA has analyzed this final rule in accordance with the principles 
set forth in Executive Order 13132. FDA has determined that the final 
rule does not contain policies that have substantial direct effects on 
the States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Accordingly, the agency concludes that 
the final rule does not contain policies that have federalism 
implications as defined in the Executive order and, consequently, a 
federalism summary impact statement is not required.

VII. The Paperwork Reduction Act of 1995

    This final rule contains information collection provisions that are 
subject to review by the Office of Management and Budget (OMB) under 
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The title, 
description, and respondent description of the information collection 
provisions and an estimate of the annual reporting burden were provided 
in the interim final rule issued October 10, 2003 (68 FR 58894). 
Included in the estimate was the time for reviewing instructions, 
searching existing data sources, gathering and maintaining the data 
needed, and completing and reviewing each collection of information. 
The final rule requires no new information collection. Individuals and 
organizations may submit comments on the burden estimates or on any 
other aspect of these information collection provisions, including 
suggestions for reducing the burden, and should direct them to the 
contact person identified in the FOR FURTHER INFORMATION CONTACT 
section of this document. The information collection provisions in this 
final rule have been approved under OMB control number 0910-0502. This 
approval expires October 31, 2006. An agency may not conduct or 
sponsor, and a person is not required to respond to, a collection of 
information unless it displays a currently valid OMB control number.

VIII. Analysis of Environmental Impact

    The agency has determined under 21 CFR 25.30(h) that this action is 
of a type that does not individually or cumulatively have a significant 
effect on the human environment. Therefore, neither an environmental 
assessment nor an environmental impact statement is required.

List of Subjects

21 CFR Part 1

    Cosmetics, Drugs, Exports, Food labeling, Imports, Labeling, 
Reporting and recordkeeping requirements.

21 CFR Part 20

    Confidential business information, Courts, Freedom of information, 
Government employees.

PART 1--GENERAL ENFORCEMENT REGULATIONS

PART 20--PUBLIC INFORMATION

0
Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, the interim 
rule amending 21 CFR parts 1 and 20, which was published at 68 FR 58894 
(October 10, 2003) and amended at 69 FR 29428 (May 24, 2004), is 
adopted as a final rule without change.

    Dated: August 28, 2005.
Michael Chertoff,
Secretary of Homeland Security.

    Dated: September 20, 2005.
Michael O. Leavitt,
Secretary of Health and Human Services.
[FR Doc. 05-19730 Filed 9-28-05; 1:53 pm]
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