Document ID: FDA-2011-N-0146-0241
Agency: fda
Document Type: Rule
Title: Amendments to Accreditation of Third-Party Certification Bodies to Conduct Food Safety Audits and to Issue Certifications to Provide for User Fee Program
Posted Date: 2016-12-14T05:00Z

[Federal Register Volume 81, Number 240 (Wednesday, December 14, 2016)]
[Rules and Regulations]
[Pages 90186-90194]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-30033]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 1

[Docket No. FDA-2011-N-0146]
RIN 0910-AH23

Amendments to Accreditation of Third-Party Certification Bodies 
To Conduct Food Safety Audits and To Issue Certifications To Provide 
for the User Fee Program

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA, the Agency, or we) is 
amending its regulations on accreditation of third-party certification 
bodies to conduct food safety audits and to issue certifications to 
provide for a reimbursement (user fee) program to assess fees for the 
work FDA performs to establish and administer the third-party 
certification program under the FDA Food Safety Modernization Act 
(FSMA).

DATES: This rule is effective January 13, 2017.

FOR FURTHER INFORMATION CONTACT: Sylvia Kim, Office of Foods and 
Veterinary Medicine, Food and Drug Administration, 10903 New Hampshire 
Ave., Bldg. 1, Rm. 3212, Silver Spring, MD 20993-0002, 301-796-7599.

SUPPLEMENTARY INFORMATION: 

Table of Contents

I. Background
    A. FDA Food Safety Modernization Act and Section 808 of the 
Federal Food, Drug, and Cosmetics Act
    B. Third-Party Certification Regulation
    C. Purpose of This Rulemaking
    D. The Proposed Rule
    E. Public Comments
II. Legal Authority
III. Comments on Who Is Subject to a User Fee Under This Subpart 
(Sec.  1.700)
IV. Comments on What User Fees Are Established Under This Subpart 
(Sec.  1.705)
V. Comments on How Will FDA Notify the Public About the Fee Schedule 
(Sec.  1.710)
VI. Comments on When a User Fee Required by This Subpart Must Be 
Submitted (Sec.  1.715)
VII. Comments on Whether User Fees Under This Subpart Are Refundable 
(Sec.  1.720)
VIII. Comments on the Consequences of Not Paying a User Fee Under 
This Subpart on Time (Sec.  1.725)
IX. Comments on Possible Exemptions
X. Economic Analysis of Impacts
XI. Paperwork Reduction Act of 1995
XII. Analysis of Environmental Impact
XIII. Federalism

[[Page 90187]]

XIV. References

I. Background

A. FDA Food Safety Modernization Act and Section 808 of the Federal 
Food, Drug, and Cosmetics Act

    FSMA (Pub. L. 111-353), signed into law by President Obama on 
January 4, 2011, is intended to allow FDA to better protect public 
health by helping to ensure the safety and security of the food supply. 
FSMA enables us to focus more on preventing food safety problems rather 
than relying primarily on reacting to problems after they occur. The 
law also provides new enforcement authorities to help achieve higher 
rates of compliance with risk-based, prevention-oriented safety 
standards and to better respond to and contain problems when they do 
occur. In addition, the law contains important new tools to better 
ensure the safety of imported foods and encourages partnerships with 
State, local, tribal, and territorial authorities and international 
collaborations with foreign regulatory counterparts.
    FSMA added section 808 to the FD&C Act (21 U.S.C. 384d), which 
directs FDA to establish a program for accreditation of third-party 
certification bodies \1\ to conduct food safety audits and to certify 
that eligible foreign entities (including registered foreign food 
facilities) and food produced by such entities meet applicable FDA food 
safety requirements. FSMA specifies two uses for the food and facility 
certifications issued by accredited third-party certification bodies 
under this program. First, facility certifications will be used by 
importers that want to establish eligibility for the Voluntary 
Qualified Importer Program (VQIP) under section 806 of the FD&C Act (21 
U.S.C. 384b). VQIP offers participating importers expedited review and 
entry of food that is part of VQIP. Second, section 801(q) of the FD&C 
Act (21 U.S.C. 381(q)) gives FDA the authority to make a risk-based 
determination to require, as a condition of admissibility, that a food 
imported or offered for import into the United States be accompanied by 
a certification or other assurance that the food meets the applicable 
requirements of the FD&C Act. The authority to mandate import 
certification for food, based on risk, is one of the tools we can use 
to help prevent potentially harmful food from reaching U.S. consumers.
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    \1\ For the reasons explained in the third-party certification 
final rule (80 FR 74570 at 74578-74579, November 27, 2015), and for 
consistency with the implementing regulations for the third-party 
certification program in 21 CFR parts 1, 11, and 16, this final rule 
uses the term ``third-party certification body'' rather than the 
term ``third-party auditor/certification body'' that was used in the 
proposed rule.
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B. Third-Party Certification Regulation

    On November 27, 2015, FDA published in the Federal Register a final 
rule, ``Accreditation of Third-Party Certification Bodies to Conduct 
Food Safety Audits and to Issue Certifications'' (third-party 
certification regulation), to implement section 808 of the FD&C Act on 
accreditation of third-party certification bodies to conduct food 
safety audits of eligible foreign entities (including registered 
foreign food facilities) and to issue certifications of foreign food 
facilities and foods for humans and animals for purposes of sections 
801(q) and 806 of the FD&C Act (80 FR 74570). The third-party 
certification regulation establishes the framework, procedures, and 
requirements for accreditation bodies and third-party certification 
bodies for purposes of the program under section 808 of the FD&C Act. 
It sets requirements for the legal authority, competency, capacity, 
conflict of interest safeguards, quality assurance, and records 
procedures that accreditation bodies must demonstrate that they have to 
qualify for recognition. Accreditation bodies also must demonstrate 
capability to meet the applicable program requirements of the third-
party certification regulation that would apply upon recognition. 
Additionally, the regulation establishes requirements for the legal 
authority, competency, capacity, conflict of interest safeguards, 
quality assurance, and records procedures that third-party 
certification bodies must demonstrate that they have to qualify for 
accreditation. Third-party certification bodies also must demonstrate 
capability to meet the applicable program requirements of the third-
party certification regulation that would apply upon accreditation.
    Under FSMA section 307 (21 U.S.C. 384d), accredited third-party 
certification bodies must perform unannounced facility audits conducted 
under the third-party certification program, notify FDA upon 
discovering a condition that could cause or contribute to a serious 
risk to the public health, and submit to FDA reports of regulatory 
audits conducted for certification purposes. The regulation includes 
stringent requirements to prevent conflicts of interest from 
influencing the decisions of recognized accreditation bodies and 
accredited third-party certification bodies.

C. Purpose of This Rulemaking

    This rulemaking implements section 808(c)(8) of the FD&C Act to 
establish a reimbursement (user fee) program to assess fees and require 
reimbursement for the work we perform to establish and administer the 
third-party certification program. In this document, we amend the 
third-party certification regulation (21 CFR part 1, subpart M) to 
provide for the assessment of user fees on accreditation bodies that 
include application fees for accreditation bodies seeking FDA 
recognition and annual monitoring fees, once recognized. We also 
provide for the assessment of user fees that include application fees 
for only those third-party certification bodies that seek FDA direct 
accreditation and annual monitoring fees for any third-party 
certification body participating in FDA's program, whether accredited 
directly by FDA or by an FDA-recognized accreditation body.

D. The Proposed Rule

    FDA published a proposed rule titled ``User Fee Program to Provide 
for Accreditation of Third-Party Auditors/Certification Bodies to 
Conduct Food Safety Audits and To Issue Certifications'' on July 24, 
2015 (80 FR 43987). The proposed rule on the third-party certification 
program user fees includes the following: (1) Who would be subject to a 
user fee; (2) how user fees would be computed; (3) how FDA would notify 
the public about annual fee rates; (4) how the user fee would be 
collected; and (5) what the consequences would be for not paying a user 
fee. The comment period closed on October 7, 2015.

E. Public Comments

    FDA received comments from accreditation bodies, certification 
bodies, foreign governments, industry associations, consumer groups, 
and members of industry. In the remainder of this document, we describe 
the comments that are within the scope of this rulemaking, respond to 
them, and explain any revisions we made from the proposed rule.

II. Legal Authority

    Section 307 of FSMA, Accreditation of Third-Party Auditors, amends 
the FD&C Act to create a new provision, section 808, under the same 
name. Section 808 of the FD&C Act directs us to establish a new program 
for accreditation of third-party certification bodies conducting food 
safety audits and issuing food and facility certifications to eligible 
foreign entities (including registered foreign food

[[Page 90188]]

facilities) that meet the applicable food safety requirements. Under 
this provision, we will recognize accreditation bodies to accredit 
third-party certification bodies, except for limited circumstances in 
which we may directly accredit third-party certification bodies to 
participate in the third-party certification program.
    Our authority for this rule is derived in part from section 
808(c)(8) of the FD&C Act, which requires us to establish by regulation 
a reimbursement (user fee) program by which we assess fees and require 
accredited third-party certification bodies and audit agents to 
reimburse us for the work performed to establish and administer the 
third-party certification program under section 808. Accordingly, 
section 808(c)(8) of the FD&C Act authorizes us to assess fees and 
require reimbursement from accreditation bodies applying for 
recognition under section 808, third-party certification bodies 
applying for direct accreditation under section 808, and recognized 
accreditation bodies and accredited third-party certification bodies 
participating in the third-party certification program under section 
808.
    Further, section 701(a) of the FD&C Act (21 U.S.C. 371(a)) 
authorizes us to issue regulations for the efficient enforcement of the 
FD&C Act, including this rule establishing a user fee program for the 
third-party certification program under section 808 of the FD&C Act. 
Thus, FDA has the authority to issue this rule under sections 808 and 
701(a) of the FD&C Act.

III. Comments on Who Is Subject to a User Fee Under This Subpart (Sec.  
1.700)

    We proposed in Sec.  1.700 that four main groups would be subject 
to a user fee under the regulation: (a) Accreditation bodies submitting 
applications, including renewal applications, for recognition in the 
third-party certification program; (b) recognized accreditation bodies 
participating in the third-party certification program; (c) third-party 
certification bodies submitting applications, including renewal 
applications, for direct accreditation; and (d) accredited third-party 
certification bodies participating in the third-party certification 
program. On our own initiative, and consistent with the third-party 
certification regulation, in this final rule we are using the term 
``third-party certification body'' rather than the term ``third-party 
auditor/certification body'' that was used in the proposed rule.
    Additionally, in the proposed rule we noted that the proposed user 
fee program would not recover all costs associated with the 
establishment and administration of the third-party certification 
program, such as the costs of any work by FDA in reviewing requests for 
reconsideration and waivers, revoking recognition of accreditation 
bodies, or withdrawing accreditation of third-party certification 
bodies, where necessary (80 FR 43987 at 43989). We also identified some 
of FDA's initial startup costs that would not be fully recouped, such 
as for some previously incurred costs for training employees and 
developing the third-party certification program IT portal that will 
accept applications for recognition and for direct accreditation and 
submissions from recognized accreditation bodies and accredited third-
party certification bodies. We solicited comment on whether the costs 
for activities other than application processing and monitoring (i.e., 
unaccounted for costs) should be paid for through user fees and if so, 
to whom should the fees be charged and how should the fees be 
calculated.
    FDA received no adverse comments specific to our proposal to assess 
user fees on accreditation bodies submitting applications to FDA for 
recognition, third-party certification bodies submitting applications 
to FDA for direct accreditation, and recognized accreditation bodies 
and accredited third-party certification bodies participating in the 
program.
    (Comment 1) In response to our request for comments on unaccounted 
for costs, some comments suggest that these costs should be recouped 
through fees paid by recognized accreditation bodies and accredited 
third-party certification bodies. Some comments opine that 
accreditation bodies should be responsible for paying any additional 
user fees related to maintenance of a database for recognized 
accreditation bodies and accredited certification bodies for the third-
party certification bodies they accredit under the FDA program, as some 
accreditation bodies already invoice the certification bodies for these 
services. The comments do not address the feasibility of calculating or 
collecting such fees.
    (Response 1) We decline the suggestion to assess additional fees on 
recognized accreditation bodies and accredited third-party 
certification bodies. Section 808(c)(8) of the FD&C Act requires us to 
establish a user fee program that assesses fees to reimburse FDA for 
the work in establishing and administering the third-party 
certification program. The statute further provides that FDA must not 
generate surplus revenue from the user fee program.
    In implementing this provision, FDA is estimating the average costs 
of work it will perform to establish the program by recognizing 
accreditation bodies under section 808(b)(1) of the FD&C Act to 
accredit third-party certification bodies to participate in the third-
party certification program (and, in limited circumstances under 
section 808(b)(1)(A)(ii), to directly accredit third-party 
certification bodies). Additionally, FDA is estimating the average 
costs of work it will perform in administering the program through 
monitoring, under section 808(f) of the FD&C Act, of recognized 
accreditation bodies and accredited third-party certification bodies, 
including through onsite audits of eligible entities issued 
certifications. The user fee program gives us flexibility to adjust 
estimates of the number of hours various activities will require and 
the hourly rates for performing the work, which will allow us to ensure 
that we are not generating a surplus.
    We do not think it would be feasible at this time to accurately 
calculate and collect fees for all additional unaccounted for costs. 
For example, we do not have information on the number of, if any, 
waiver requests, revocations, and withdrawals we may get. It would be 
difficult to project a fee based on this limited information and assess 
it on accreditation bodies and certification bodies.
    Additionally, it would be difficult to fairly distribute a fee for 
startup costs to future participants. We also do not want to 
disincentivize early participants from applying by imposing higher fees 
early on to cover initial program start-up costs related to setting up 
an IT portal or training employees.
    (Comment 2) Some comments agree that both accreditation bodies and 
certification bodies are the appropriate parties to be assessed fees.
    (Response 2) We agree and are finalizing Sec.  1.700 as proposed, 
with conforming editorial changes as discussed previously.

IV. Comments on What User Fees Are Established Under This Subpart 
(Sec.  1.705)

    Under the proposed user fee program we would assess user fees for 
two types of activities: (1) Application review; and (2) performance 
monitoring.
    We proposed in Sec.  1.705(a) that application fees would be 
assessed on accreditation bodies seeking FDA recognition or renewal of 
recognition and on third-party certification bodies seeking direct 
accreditation (and renewal of direct accreditation) by FDA. The 
application fees would be based on

[[Page 90189]]

the estimated average cost of the work FDA performs in reviewing and 
evaluating each type of application. To calculate the estimated average 
cost of reviewing applications for recognition and for direct 
accreditation, we estimated the average number of hours it would take 
for FDA to conduct the relevant activities and multiplied that by the 
appropriate fully supported full time equivalent (FTE) hourly rate to 
derive flat rates for reviews of each of the following types of 
applications: (1) Initial applications for recognition of accreditation 
bodies; (2) applications for renewal of recognition; (3) initial 
applications for direct accreditation of third-party certification 
bodies; and (4) applications for renewal of direct accreditation.
    We requested comment on an alternative approach for calculating 
application fees by tracking the actual number of hours it takes FDA 
staff to conduct relevant activities for each applicant, multiply that 
number by the fully supported FTE hourly rate calculated by the Agency 
for the applicable fiscal year, and then bill each applicant separately 
for the actual application costs attributable to it.
    We requested comment on whether the proposed or alternative 
approach would create more favorable incentives for quality of the 
application. For the alternative approach, we specifically requested 
comment on possible consequences we should impose for not paying the 
application fee on time, since with this approach we would likely not 
be able to bill the applicant until after it learns whether it is 
accepted into the program. We also requested comment on whether we 
should adopt the alternative approach for a portion of the application 
review process (e.g., the onsite audit portion), while maintaining a 
flat fee for other portions (e.g., the paper application review).
    Under proposed Sec.  1.705(b), recognized accreditation bodies 
would be subject to an annual fee for the estimated average cost of the 
work FDA performs to monitor performance of recognized accreditation 
bodies under Sec.  1.633. Under Sec.  1.633(a), FDA will periodically 
evaluate the performance of each recognized accreditation body at least 
4 years after the date of recognition for a 5-year term of recognition, 
or by no later than the mid-term point for a term of recognition of 
less than 5 years. We would estimate the average number of hours it 
would take for FDA to conduct relevant activities and multiply that by 
the appropriate fully supported FTE hourly rate for the applicable 
fiscal year. To calculate the annual fee for each recognized 
accreditation body, FDA would take the estimated average cost of work 
FDA performs to monitor performance of a single recognized 
accreditation body and annualize that over the average term of 
recognition (e.g., 5 years).
    The proposed user fee program also would assess fees for the 
estimated average cost for the work FDA will perform in monitoring the 
performance of third-party certification bodies accredited by FDA-
recognized accreditation bodies, and third-party certification bodies 
directly accredited by FDA. We estimated the average number of hours it 
would take for FDA to conduct relevant monitoring activities for each, 
including a representative sample of onsite audits, and multiplied that 
by the appropriate fully supported FTE hourly rate. We further proposed 
that these monitoring fees would be annualized over the length of the 
term of accreditation (e.g., 4 years).
    In developing the proposed rule, we also considered annualizing the 
cost of application review over the length of the term of recognition 
(e.g., 5 years) or direct accreditation (e.g., 4 years), adjusting for 
inflation, and adding this to the annual fee funding FDA's monitoring 
activities. We tentatively concluded in the proposed rule that this 
alternative fee structure could potentially reimburse FDA less for work 
performed and could also lead to more lower-quality applications. We 
requested comment on the proposed annual fee structure, the alternative 
annual fee structure described in the proposed rule, and any other 
alternative fee structures that may be simpler or more consistent with 
industry practice.
    (Comment 3) Some comments propose a different approach whereby FDA 
would establish one application fee for accreditation bodies which 
encompasses all of the anticipated costs (and specify what those costs 
are for each part of the assessment process) and then provide for 
reimbursements upon completion of the process for costs that were not 
incurred. The comment suggests that this would create incentives for an 
accreditation body to have a well-documented and implemented 
accreditation process and to cooperate fully to facilitate the 
assessment by FDA. Some comments request that we simplify the user fee 
program, but do not provide suggestions as to what changes would 
simplify the program.
    (Response 3) We decline to accept the alternative approach, for a 
couple of reasons: First, we expect that the costs for reviewing 
applications for recognition will not vary significantly among the 
accreditation bodies, because we expect most, if not all, of the 
accreditation bodies that seek recognition under the third-party 
certification program will use documentation of their conformance with 
International Organization for Standardization (ISO) and the 
International Electrotechnical Commission (IEC) 17011:2004, Conformity 
assessment--General requirements for accreditation bodies accrediting 
conformity assessment bodies (ISO/IEC 17011:2004) (Ref. 1) to support 
their applications. This will allow FDA to use a common approach in 
reviewing accreditation body applications and, as a result, will help 
keep the costs of application review fairly steady and predictable 
across applications, making the alternative approach unnecessary.
    Second, in authorizing FDA to assess fees and recover the costs 
associated with establishing and administering the third-party 
certification program, section 808(c)(8) of the FD&C Act helps to 
ensure that FDA has a stable funding base for the program. The 
alternative approach would limit our ability to develop and execute 
program plans or to sustain program services and operations at 
predictable levels. Third, the alternative approach would be 
administratively burdensome and would generate new administrative costs 
associated with providing a series of reimbursements at various steps 
in the processing of a single application. The net result would be to 
drive up program costs, which would increase user fee rates.
    With respect to the comments requesting that we simplify the user 
fee program, we decline to adopt a different approach absent any 
feasible suggestions as to what changes would simplify the program. 
Further, the approach we have established in this final rule limits the 
types of fees that are assessed to just application fees and annual 
fees. Our approach is designed to be simple. It is similar to the fee 
structure used by several accreditation bodies, who charge third-party 
certification bodies initial fees and annual fees (Ref. 2).
    (Comment 4) Some comments recommend that the recognized 
accreditation bodies and accredited third-party certification bodies 
pay for monitoring as it is conducted. The comments note that for a 
recognized accreditation body this would assume that the level of 
monitoring would be related to its performance, the number of third-
party certification bodies it accredited, and their performance. The 
comments further assert that the level of

[[Page 90190]]

monitoring FDA performs for an accredited third-party certification 
body would be based on its performance, the number of clients that the 
accredited third-party certification body has certified, and their 
performance.
    (Response 4) We disagree. As explained in Response 3, the user fee 
program is designed to provide FDA a stable funding base for operating 
the program. The proposed approach of paying for monitoring as it is 
conducted would not offer stability and predictability for FDA or for 
recognized accreditation bodies and accredited certification bodies. In 
addition, we note that the number of certification bodies the 
accreditation body has accredited under the program is only one of 
several factors we may consider in developing our plans for monitoring 
a recognized accreditation body. Under Sec.  1.633(b) we may elect to 
observe a representative sample of certification bodies the recognized 
accreditation body accredited when conducting an assessment of its 
accreditation body. The size of the representative sample may depend on 
a number of factors including the scope of accreditation of the 
certification bodies accredited by the accreditation body, how many 
years the accreditation body has been in the program, how many prior 
assessments of the accreditation body we have performed, and the length 
of time since any prior assessments, in addition to the number of 
third-party certification bodies it has accredited. Similarly, when 
monitoring an accredited third-party certification body under Sec.  
1.662 we may elect to observe regulatory audits the accredited third-
party certification body performs, and we will base our decision 
regarding how many onsite observations to conduct based on a number of 
factors such as how many years the certification body has been in the 
program, how many prior assessments we have performed and the length of 
time since the last assessment, in addition to the number of eligible 
entities the certification body certifies. Further, we do not 
anticipate that the cost of monitoring will vary greatly among 
accreditation bodies or among certification bodies. We note that the 
third-party certification regulations allow recognized accreditation 
bodies and accredited third-party certification bodies to use 
documentation of their conformance with applicable ISO/IEC standards, 
which we expect will allow FDA greater consistency and efficiency in 
conducting monitoring activities.
    (Comment 5) Some comments recommend that FDA establish application 
and monitoring fees that relate to costs for the services by FDA and 
that these be paid in the years the services are provided, rather than 
annualized fees.
    (Response 5) We decline the recommendation to change the fee 
structure from an estimated average cost to a pay-as-you go system. As 
explained in Response 3, the estimated average cost approach to the fee 
assessments provides prospective applicants, participants, and FDA 
predictability that allows for proper planning and budgeting. The 
monitoring fee is structured to annualize the payments for the total 
cost of monitoring recognized accreditation bodies and accredited 
third-party certification bodies, which provides predictability that 
helps accreditation bodies, third-party certification bodies, and FDA 
in planning and budgeting. Additionally, the recommended approach would 
be administratively burdensome and would generate new administrative 
costs associated with billing for various monitoring activities across 
the duration of each accreditation body's recognition and each third-
party certification body's accreditation. The net result would be to 
drive up program costs, which would increase user fee rates. Further, 
we do not think that system suggested in the comment would be 
particularly beneficial to participants, since we do not anticipate 
that there will be much variability in the cost of monitoring services. 
We note that the user fee program is flexible. The fee rates are 
adjusted annually, as appropriate, so estimates regarding the cost of 
monitoring will be refined regularly.

V. Comments on How Will FDA Notify the Public About the Fee Schedule 
(Sec.  1.710)

    We proposed to notify the public of the fee schedule annually prior 
to the beginning of the fiscal year for which the fees apply. We 
further proposed that each new fee schedule would be calculated based 
on the parameters in the proposed rulemaking and adjusted for 
improvements in the cost to FDA of performing relevant work for the 
upcoming year and inflation. At our own initiative, we revised proposed 
Sec.  1.710 to create an exception to the requirement to provide notice 
prior to the start of the fiscal year for which the fees apply, in 
order to provide notice of the FSMA Third-Party Certification Program 
User Fee Rate for FY 2017, which is published elsewhere in this issue 
of the Federal Register. The notice for fiscal year (FY) 2017 sets the 
application fee rate for accreditation bodies applying for recognition. 
The rate will be effective on January 13, 2017, and will allow 
accreditation bodies to apply to participate in the third-party 
certification program prior to the start of FY 2018.
    (Comment 6) Several comments address user fee costs. Some raise 
general concerns that user fees may serve as a disincentive to program 
participation by accreditation bodies and third-party certification 
bodies, especially during the initial phase of the program. One such 
comment characterized the estimated user fee amounts as ``somewhat 
high.'' Other comments noted the proposed fees were reasonably aligned 
with the third-party certification body fees assessed under the Global 
Food Safety Initiative (GFSI). (By way of background, a group of 
international retailers established GFSI in 2000 with the goal of 
reducing the need for duplicative third-party audits by benchmarking 
private food safety schemes against a harmonized set of criteria for 
food safety and management systems.)
    (Response 6) With respect to the comments suggesting that user fees 
may serve as a disincentive to program participation by accreditation 
bodies and third-party certification bodies, we note that the FD&C Act 
requires us to establish by regulation a user fee program by which we 
assess fees and require accredited third-party auditors and audit 
agents to reimburse us for the work performed to establish and 
administer the third-party accreditation program under section 808 of 
the FD&C Act. With respect to comments suggesting that the estimated 
user fee rates in the proposed rule may be too high, we disagree. We 
have designed the proposed user fee program to be flexible--that is, we 
expect that the estimates of the number of FTE hours used to calculate 
the actual user fees for accreditation bodies and third-party 
certification bodies will be informed by FDA's experience with the 
program each year (80 FR 43987 at 43990). Once the program begins we 
will update the estimates used to calculate the annual user fees as 
appropriate on a yearly basis. For example, if we determine it takes 
less time, on average, for us to prepare written reports documenting 
our onsite assessments of recognized accreditation bodies, we will use 
that information to decrease the fee for the following year.
    (Comment 7) Some comments contend that the third-party 
certification program user fees and the indirect costs of complying 
with the third-party certification regulation will be passed down to 
food firms, negatively impacting the number of foreign food facilities 
that will become certified under the program and resulting in

[[Page 90191]]

further proliferation of the multitude of audit schemes.
    (Response 7) The comments did not provide any data to support 
assertions regarding the indirect impacts of the proposed rule on 
dynamics of markets for third-party audits of foreign food facilities 
and private audit standards. Absent data or other information to 
support changes to the proposal, we are not modifying Sec.  1.710 in 
anticipation of possible market forces on third-party audits and 
private audit schemes.
    (Comment 8) Some comments discourage FDA from annually reviewing 
its fees for at least one 5-year cycle because fluctuations in the fees 
could significantly disadvantage accreditation bodies or third-party 
certification bodies that enter the program early.
    (Response 8) We disagree with the suggestion to review fees less 
frequently than annually. Section 808(c)(8) of the FD&C Act provides 
that FDA shall not generate a surplus from the user fee program. By 
annually reviewing (and, if appropriate, adjusting) the fee rates, we 
can help ensure that we do not generate a surplus.

VI. Comments on When a User Fee Required by This Subpart Must Be 
Submitted (Sec.  1.715)

    We proposed to require accreditation bodies applying for 
recognition and third-party certification bodies applying for direct 
accreditation to submit their application fees concurrently with 
submitting an application, including a renewal application. We also 
proposed that recognized accreditation bodies and accredited third-
party certification bodies subject to an annual fee must submit payment 
within 30 days of receiving billing for the fee.
    (Comment 9) Some comments support having initial and renewal 
application fees paid upon application. The comments also assert that 
FDA should not review any applications until payment has been received.
    (Response 9) We agree and are maintaining these requirements in the 
final rule.

VII. Comments on Whether User Fees Under This Subpart Are Refundable 
(Sec.  1.720)

    Under proposed Sec.  1.720, user fees would not be refundable. We 
requested comment on whether we should consider refund requests under 
this program, and if so, under what circumstances.
    At our own initiative, we are revising Sec.  1.720 to clarify that 
we will not refund any fees accompanying completed applications or 
annual user fees. However, user fees submitted with applications will 
not be considered to have been accepted until the application is 
complete and ready for FDA review. Applications for recognition and 
direct accreditation will not be substantively reviewed by FDA until a 
completed submission with all of the required elements is received in 
accordance with Sec. Sec.  1.631(a) and 1.671(a).
    (Comment 10) Some comments recommend that FDA charge a flat fee for 
the application fees, but provide for refunds of portions of the 
initial application and renewal application fees if we do not incur all 
the anticipated costs during review of the application. This would 
ensure that FDA has adequate funding to cover costs up front without 
overburdening accreditation bodies or third-party certification bodies 
financially if we don't end up using all the costs.
    (Response 10) We disagree with providing a refund as described by 
the comment. As noted in Response 3, we anticipate that costs for 
reviewing applications for recognition will not vary significantly 
among the accreditation bodies. In addition, it would be 
administratively burdensome to track and process refunds at various 
stages of the application process for each applicant and would 
potentially drive up the costs of the program.

VIII. Comments on the Consequences of Not Paying a User Fee Under This 
Subpart on Time (Sec.  1.725)

    In proposed Sec.  1.725(a), we proposed that applications would not 
be considered complete until FDA receives the application fee. In 
proposed Sec.  1.725(b), we proposed that a recognized accreditation 
body that fails to submit its annual user fee within 30 days of the due 
date would have its recognition suspended. We proposed that FDA would 
notify the accreditation body electronically that its recognition is 
suspended and would notify the public of the suspension on the Web site 
that lists the recognized accreditation bodies. We requested comment on 
our tentative conclusion that there is no reason for the process of 
notifying the accreditation body and the public of suspension to differ 
from the process of notifying the accreditation body and the public of 
revocation in these respects. We also requested comment on whether FDA 
should notify a certification body if the recognition of its 
accreditation body has been suspended.
    We further proposed that while an accreditation body's recognition 
is suspended, it will not be able to accredit additional third-party 
certification bodies. However, we proposed that any certification 
bodies accredited by such accreditation body prior to the suspension 
would be unaffected by the suspension, as would any food or facility 
certification issued by such certification body. We also proposed that 
if payment is not received within 90 days of the payment due date, FDA 
would revoke the accreditation body's recognition and provide notice of 
such revocation in accordance with the procedures in Sec.  1.634. 
Accordingly, we proposed to amend Sec.  1.634(a)(4) by adding proposed 
Sec.  1.634(a)(4)(iii), which would explicitly include failure to pay 
the annual user fee within 90 days of the payment due date as a basis 
for revoking an accreditation body's recognition.
    In proposed Sec.  1.725(c), we proposed that an accredited third-
party certification body that fails to submit its annual user fee 
within 30 days of the due date would have its accreditation suspended. 
We proposed that FDA would electronically notify the certification body 
that its accreditation is suspended and would notify the public of the 
suspension on the Web site that lists the recognized accreditation 
bodies and accredited third-party certification bodies. While a 
certification body's accreditation is suspended, it would not be 
allowed to issue food or facility certifications as part of FDA's 
third-party certification program. However, we proposed that food or 
facility certifications issued by a certification body prior to the 
suspension of its accreditation would remain in effect. We proposed 
that if payment is not received within 90 days of the payment due date, 
FDA would withdraw the third-party certification body's accreditation 
under Sec.  1.664(a), and provide notice of such withdrawal in 
accordance with the procedures in Sec.  1.664. Accordingly, we proposed 
to amend Sec.  1.664(a) by adding proposed Sec.  1.664(a)(4), which 
would explicitly include failure to pay the annual user fee within 90 
days of the payment due date as a basis for withdrawal of 
accreditation. We requested comment on whether the consequences of a 
third-party certification body failing to pay a user fee by the due 
date are appropriate.
    (Comment 11) Some comments agree with FDA's proposal to suspend an 
accreditation body's recognition or a third-party certification body's 
accreditation if it fails to submit its annual user fee within 30 days 
of the payment due date and to revoke the accreditation body's 
recognition or withdraw a certification body's accreditation if it 
fails to submit its annual user fee within 90 days of the payment due 
date.

[[Page 90192]]

    (Response 11) We agree and are retaining these provisions in the 
final rule.
    (Comment 12) One comment recommends that notice of the suspension 
or revocation on FDA's Web site differentiate between suspension and 
revocation for financial reasons and suspension or revocation for 
failure to conform to requirements.
    (Response 12) We agree with respect to notice of revocation or 
withdrawal. In accordance with Sec. Sec.  1.634(f) and 1.664(h), FDA 
will provide the basis for revocation of recognition and for withdrawal 
of accreditation on its Web site, as applicable. With respect to 
suspension of recognition or accreditation by FDA, failure to pay the 
user fee would be the only reason for FDA suspension.
    (Comment 13) One comment recommends that FDA should notify a third-
party certification body if its accreditation body's recognition has 
been suspended and that FDA should notify an accreditation body if a 
third-party certification body accredited by that accreditation body is 
suspended.
    (Response 13) At this time FDA has determined that, unlike notice 
of withdrawal of accreditation and notice of revocation of recognition, 
notice of suspension is not essential to the operation of an accredited 
certification body or a recognized accreditation body. For example, 
accredited certification bodies would remain accredited even if their 
accreditation body had their recognition suspended. Further, we note 
that FDA's electronic portal for the third-party certification program 
currently does not have the capability to provide notice of suspension. 
We will consider the feasibility of adding this capability as resources 
allow.

IX. Comments on Possible Exemptions

    We did not propose a small business exemption or reduction in the 
proposed rule because no statutory requirement to establish or consider 
an exemption or reduction in user fees exists in section 808 of the 
FD&C Act. However, we requested comment on whether we should account 
for small businesses in other ways, including whether an exemption or 
fee reduction would be appropriate. We requested that comments in favor 
of an exemption or fee reduction for small businesses state who should 
be eligible for an exemption or fee reduction; if recommending a fee 
reduction, how much of a reduction should be granted; and why.
    (Comment 14) Some comments recommend that there be no exemption or 
reduced fee for small businesses or entities because the costs to FDA 
for performing the work activities are not lower for small businesses 
or entities. Other comments recommend that the user fees for public-
sector and private-sector accreditation bodies or third-party 
certification bodies be the same because the costs to FDA are not lower 
for one group compared to the other. Some comments recommend that the 
program offer reduced fees or exemptions for small businesses to be 
consistent with the principles embedded in FSMA. Other comments request 
a reduction in fees or an exemption for public-sector accreditation 
bodies or third-party certification bodies.
    (Response 14) We agree that there be no exemptions or reduced fees 
for small businesses or entities or for public-sector entities. Section 
808(c)(8) of the FD&C Act makes no distinction between public and 
private bodies for purposes of the user fee program, and, as noted 
previously, contains no requirement to establish or consider an 
exemption or reduction in user fees. As explained in Responses 3 and 4, 
we agree that the cost to FDA for performing the application review and 
monitoring will not vary greatly across entities participating in the 
third-party certification program, regardless of the entity's size or 
public versus private status. Moreover, creating exemptions or fee 
reductions would hinder FDA's ability to create a stable funding base 
for the third-party certification program.

X. Economic Analysis of Impacts

    We have examined the impacts of the final rule under Executive 
Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 
U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 
104-4). Executive Orders 12866 and 13563 direct us 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). We 
believe that this final rule is not a significant regulatory action as 
defined by Executive Order 12866.
    The Regulatory Flexibility Act requires us to analyze regulatory 
options that would minimize any significant impact of a rule on small 
entities. This rule demonstrates how user fees will be calculated and 
assessed for different activities FDA conducts under FDA's third-party 
accreditation program. This rule does not require action by entities 
affected by the Third-Party Certification regulation; it merely 
provides additional information so that affected entities can make an 
informed decision on whether to participate in FDA's third-party 
certification program. FDA analyzed the costs and benefits of FDA's 
third-party certification program including imposition of user fees 
resulting from participating in the third-party certification program 
in the regulatory impact analysis of the Third-Party Certification 
final rule. Therefore because this rule does not require actions by 
affected entities, we certify that the final rule will not have a 
significant economic impact on a substantial number of small entities.
    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires 
us to prepare a written statement, which includes an assessment of 
anticipated costs and benefits, before issuing ``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 or more (adjusted annually for inflation) in any one 
year.'' The current threshold after adjustment for inflation is $146 
million, using the most current (2015) Implicit Price Deflator for the 
Gross Domestic Product. This final rule would not result in an 
expenditure in any year that meets or exceeds this amount.
    The full analysis of the economic impacts of the Third-Party 
Certification regulation is available at https://www.regulations.gov 
under the docket number (FDA-2011-N-0146) for this final rule (Ref. 3) 
and at http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm.

XI. Paperwork Reduction Act of 1995

    This rule contains no collection of information. Therefore, 
clearance by OMB under the Paperwork Reduction Act of 1995 is not 
required.

XII. Analysis of Environmental Impact

    We previously considered the environmental effects of this rule, as 
stated in the proposed rule ``User Fee Program to Provide for 
Accreditation of Third-Party Auditors/Certification Bodies to Conduct 
Food Safety Audits and To Issue Certifications'' published on July 24, 
2015 (80 FR 43987). We stated that we had 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'' such 
that neither an environmental assessment nor an environmental impact 
statement is required. We have not received any new information or 
comments that

[[Page 90193]]

would affect our previous determination.

XIII. Federalism

    We have analyzed this final rule in accordance with the principles 
set forth in Executive Order 13132. FDA has determined that the 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, we conclude that the 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.

XIV. References

    The following references are on display in the Division of Dockets 
Management (HFA-305), Food and Drug Administration, 5630 Fisher Lane, 
Rm. 1061, Rockville, MD 20852 and are available for viewing by 
interested persons between 9 a.m. and 4 p.m., Monday through Friday; 
they are also available electronically at https://www.regulations.gov. 
FDA has verified the Web site addresses, as of the date this document 
publishes in the Federal Register, but Web sites are subject to change 
over time.

    1. International Organization for Standardization/International 
Electrotechnical Commission, ISO/IEC ``17011:2004 Conformity 
Assessment--General Requirements for Accreditation Bodies 
Accrediting Conformity Assessment Bodies,'' Copies are available 
from the International Organization for Standardization, 1, rue de 
Varembe, Case postale 56, CH-1211 Geneve 20, Switzerland, or on the 
Internet at http://www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?csnumber=29332 or may be examined at the 
Division of Dockets Management (see ADDRESSES) (Reference Docket No. 
FDA-2011-N-0146 and/or RIN 0910-AG66).
    2. FDA, ``Preliminary Regulatory Impact Analysis for the 
proposed rules on Foreign Supplier Verification Programs (Docket No. 
FDA-2011-N-0143) and Accreditation of Third-Party Auditors/
Certification Bodies to Conduct Food Safety Audits and to Issue 
Certifications (Docket No. FDA-2011-N-0146) under Executive Order 
13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), the 
Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4), and the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520),'' http://www.fda.gov/downloads/aboutfda/reportsmanualsforms/reports/economicanalyses/ucm363286.pdf, November 2013.
    3. FDA, ``Final Regulatory Impact Analysis: Accreditation of 
Third-Party Certification Bodies to Conduct Food Safety Audits and 
to Issue Certifications,'' http://www.fda.gov/downloads/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/UCM471886.pdf, November 
2015.

List of Subjects in 21 CFR Part 1

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

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, 21 CFR part 
1 is amended as follows:

PART 1--GENERAL ENFORCEMENT REGULATIONS

0
1. The authority citation for part 1 is revised to read as follows:

    Authority: 15 U.S.C. 1333, 1453, 1454, 1455, 4402; 19 U.S.C. 
1490, 1491; 21 U.S.C. 321, 331, 332, 333, 334, 335a, 342, 343, 350c, 
350d, 350e, 350j, 350k, 352, 355, 360b, 360ccc, 360ccc-1, 360ccc-2, 
362, 371, 373, 374, 379j-31, 381, 382, 384a, 384b, 384d, 387, 387a, 
387c, 393; 42 U.S.C. 216, 241, 243, 262, 264, 271; Pub. L. 107-188, 
116 Stat. 594, 668-69; Pub. L. 111-353, 124 Stat. 3885, 3889.

0
2. In Sec.  1.634, add paragraph (a)(4)(iii) to read as follows:

Sec.  1.634   When will FDA revoke recognition?

    (a) * * *
    (4) * * *
    (iii) Failure to pay the annual user fee within 90 days of the 
payment due date, as specified in Sec.  1.725(b)(3).
* * * * *

0
3. In Sec.  1.664, add paragraph (a)(4) to read as follows:

Sec.  1.664   When would FDA withdraw accreditation?

    (a) * * *
    (4) If payment of the third-party certification body's annual fee 
is not received within 90 days of the payment due date, as specified in 
Sec.  1.725(c)(3).
* * * * *

0
4. In Subpart M, add an undesignated center heading and Sec. Sec.  
1.700 through 1.725 to read as follows:

Requirements for User Fees Under This Subpart

Sec.
1.700 Who is subject to a user fee under this subpart?
1.705 What user fees are established under this subpart?
1.710 How will FDA notify the public about the fee schedule?
1.715 When must a user fee required by this subpart be submitted?
1.720 Are user fees under this subpart refundable?
1.725 What are the consequences of not paying a user fee under this 
subpart on time?

Sec.  1.700   Who is subject to a user fee under this subpart?

    (a) Accreditation bodies submitting applications or renewal 
applications for recognition in the third-party certification program;
    (b) Recognized accreditation bodies participating in the third-
party certification program;
    (c) Third-party certification bodies submitting applications or 
renewal applications for direct accreditation; and
    (d) Accredited third-party certification bodies (whether accredited 
by recognized accreditation bodies or by FDA through direct 
accreditation) participating in the third-party certification program.

Sec.  1.705   What user fees are established under this subpart?

    (a) The following application fees:
    (1) Accreditation bodies applying for recognition are subject to an 
application fee for the estimated average cost of the work FDA performs 
in reviewing and evaluating applications for recognition of 
accreditation bodies.
    (2) Recognized accreditation bodies submitting renewal applications 
are subject to a renewal application fee for the estimated average cost 
of the work FDA performs in reviewing and evaluating renewal 
applications for recognition of accreditation bodies.
    (3) Third-party certification bodies applying for direct 
accreditation are subject to an application fee for the estimated 
average cost of the work FDA performs in reviewing and evaluating 
applications for direct accreditation.
    (4) Accredited third-party certification bodies applying for 
renewal of direct accreditation are subject to an application fee for 
the estimated average cost of the work FDA performs in reviewing and 
evaluating renewal applications for direct accreditation.
    (b) The following annual fees:
    (1) Recognized accreditation bodies are subject to an annual fee 
for the estimated average cost of the work FDA performs to monitor 
performance of recognized accreditation bodies under Sec.  1.633.
    (2) Third-party certification bodies directly accredited by FDA are 
subject to an annual fee for the estimated average cost of the work FDA 
performs to monitor directly accredited third-party certification 
bodies under Sec.  1.662.
    (3) Third-party certification bodies accredited by recognized 
accreditation bodies are subject to an annual fee for the estimated 
average cost of the work

[[Page 90194]]

FDA performs to monitor third-party certification bodies that are 
accredited by a recognized accreditation body under Sec.  1.662.

Sec.  1.710   How will FDA notify the public about the fee schedule?

    FDA will notify the public of the fee schedule annually. The fee 
notice will be made publicly available prior to the beginning of the 
fiscal year for which the fees apply, except for the first fiscal year 
in which this regulation is effective. Each new fee schedule will be 
adjusted for inflation and improvements in the estimates of the cost to 
FDA of performing relevant work for the upcoming year.

Sec.  1.715   When must a user fee required by this subpart be 
submitted?

    (a) Accreditation bodies applying for recognition and third-party 
certification bodies applying for direct accreditation must submit a 
fee concurrently with submitting an application or a renewal 
application.
    (b) Accreditation bodies and third-party certification bodies 
subject to an annual fee must submit payment within 30 days of 
receiving billing for the fee.

Sec.  1.720   Are user fees under this subpart refundable?

    User fees accompanying completed applications and annual fees under 
this subpart are not refundable.

Sec.  1.725   What are the consequences of not paying a user fee under 
this subpart on time?

    (a) An application for recognition or renewal of recognition will 
not be considered complete for the purposes of Sec.  1.631(a) until the 
date that FDA receives the application fee. An application for direct 
accreditation or for renewal of direct accreditation will not be 
considered complete for the purposes of Sec.  1.671(a) until FDA 
receives the application fee.
    (b) A recognized accreditation body that fails to submit its annual 
user fee within 30 days of the due date will have its recognition 
suspended.
    (1) FDA will notify the accreditation body electronically that its 
recognition is suspended. FDA will notify the public of the suspension 
on the Web site described in Sec.  1.690.
    (2) While an accreditation body's recognition is suspended, the 
accreditation body will not be able to accredit additional third-party 
certification bodies. The accreditation of third-party certification 
bodies that occurred prior to an accreditation body's suspension, as 
well as food or facility certifications issued by such third-party 
certification bodies, would remain in effect.
    (3) If payment is not received within 90 days of the payment due 
date, FDA will revoke the accreditation body's recognition under Sec.  
1.634(a)(4)(iii), and provide notice of such revocation in accordance 
with Sec.  1.634.
    (c) An accredited third-party certification body that fails to 
submit its annual fee within 30 days of the due date will have its 
accreditation suspended.
    (1) FDA will notify the third-party certification body that its 
accreditation is suspended, electronically and in English. FDA will 
notify a recognized accreditation body, electronically and in English, 
if the accreditation of one if its third-party certification bodies is 
suspended. FDA will notify the public of the suspension on the Web site 
described in Sec.  1.690.
    (2) While a third-party certification body's accreditation is 
suspended, the third-party certification body will not be able to issue 
food or facility certifications. A food or facility certification 
issued by a third-party certification body prior to the suspension of 
the auditor/certification body accreditation will remain in effect.
    (3) If payment is not received within 90 days of the payment due 
date, FDA will withdraw the third-party certification body's 
accreditation under Sec.  1.664(a)(4), and provide notice of such 
withdrawal in accordance with Sec.  1.664.

    Dated: December 9, 2016.
Leslie Kux,
Associate Commissioner for Policy.
[FR Doc. 2016-30033 Filed 12-13-16; 8:45 am]
BILLING CODE 4164-01-P