Document ID: FDA-2008-N-0561-0001
Agency: fda
Document Type: Proposed Rule
Title: Maximum Civil Money Penalty Amounts and Compliance with the Federal Civil Penalties Inflation Adjustment Act
Posted Date: 2008-11-12T05:00Z

[Federal Register: November 12, 2008 (Volume 73, Number 219)]
[Proposed Rules]               
[Page 66811-66815]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12no08-26]                         

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 17

[Docket No. FDA-2008-N-0561]

 
Maximum Civil Money Penalty Amounts and Compliance With the 
Federal Civil Penalties Inflation Adjustment Act

AGENCY: Food and Drug Administration, HHS.

ACTION: Proposed rule.

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SUMMARY: The Food and Drug Administration (FDA) is publishing this 
companion proposed rule to the direct final rule, published elsewhere 
in this issue of the Federal Register, which is intended to amend our 
regulations to adjust for inflation the maximum civil money penalty 
amounts for the various civil money penalty authorities within our 
jurisdiction. We are taking this action to comply with the Federal 
Civil Penalties Inflation Adjustment Act of 1990 (FCPIAA), as amended. 
The last adjustment was published in the Federal Register of July 20, 
2004 (69 FR 43299), and the FCPIAA requires Federal agencies to adjust 
their civil money penalties at least once every 4 years. This proposed 
rule does not adjust the civil money provisions

[[Page 66812]]

enacted by the Food and Drug Administration Amendments Act of 2007 
(FDAAA).

DATES: Submit written or electronic comments on the proposed rule by 
December 26, 2008. If FDA receives any timely significant adverse 
comments, the agency will publish a document withdrawing the direct 
final rule within 30 days after the comment period ends. FDA will then 
proceed to respond to comments under this proposed rule using the usual 
notice-and-comment procedures.

ADDRESSES: You may submit comments, identified by Docket No. FDA-2008-
N-0561, by any of the following methods:
Electronic Submissions
    Submit electronic comments in the following way:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
Written Submissions
    Submit written submissions in the following ways:
     FAX: 301-827-6870.
     Mail/Hand delivery/Courier [For paper, disk, or CD-ROM 
submissions]: Division of Dockets Management (HFA-305), Food and Drug 
Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852.
    To ensure more timely processing of comments, FDA is no longer 
accepting comments submitted to the agency by e-mail. FDA encourages 
you to continue to submit electronic comments by using the Federal 
eRulemaking Portal or the agency Web site, as described previously, in 
the ADDRESSES portion of this document under Electronic Submissions.
    Instructions: All submissions received must include the agency name 
and Docket No. FDA-2008-N-0561 for this rulemaking. All comments 
received may be posted without change to  http://www.regulations.gov, 
including any personal information provided. For additional information 
on submitting comments, see the ``Comments'' heading of the 
SUPPLEMENTARY INFORMATION section of this document.
    Docket: For access to the docket to read background documents or 
comments received, go to  http://www.regulations.gov and insert the 
docket number, found in brackets in the heading of this document, into 
the ``Search'' box and follow the prompts and/or go to the Division of 
Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852. 
Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES) written or electronic comments regarding this document. 
Submit a single copy of electronic comments or two paper copies of any 
mailed comments, except that individuals may submit one paper copy. 
Comments are to be identified with the docket number found in brackets 
in the heading of this document. Received comments may be seen in the 
Division of Dockets Management between 9 a.m. and 4 p.m., Monday 
through Friday.

FOR FURTHER INFORMATION CONTACT: Erik Mettler, Office of Policy (HF-
11), Food and Drug Administration, 5600 Fishers Lane, Rockville, MD 
20857, 301-827-3360.

SUPPLEMENTARY INFORMATION:

I. Background

    In general, the FCPIAA (28 U.S.C. 2461 note, as amended by the Debt 
Collection Improvement Act of 1996 (31 U.S.C. 3701)) requires Federal 
agencies to issue regulations to adjust for inflation each civil 
monetary penalty provided by law within their jurisdiction. The FCPIAA 
directs agencies to adjust the civil monetary penalties by October 23, 
1996, and to make additional adjustments at least once every 4 years 
thereafter. The adjustments are based on changes in the cost of living, 
and the FCPIAA defines the cost of living adjustment as: `` * * * the 
percentage (if any) for each civil monetary penalty by which--(1) the 
Consumer Price Index for the month of June of the calendar year 
preceding the adjustment, exceeds (2) the Consumer Price Index for the 
month of June of the calendar year in which the amount of such civil 
monetary penalty was last set or adjusted pursuant to law'' (28 U.S.C. 
2461 note, section 5(b)).
    The FCPIAA also prescribes a rounding method based on the size of 
the penalty after the calculated increase, but states that the first 
adjustment of a civil monetary penalty may not exceed 10 percent of the 
penalty.
    The FCPIAA defines a civil monetary penalty as: ``any penalty, 
fine, or other sanction that--(A)(i) is for a specific monetary amount 
as provided by Federal law; or (ii) has a maximum amount provided for 
by Federal law; and (B) is assessed or enforced by an agency pursuant 
to Federal law; and (C) is assessed or enforced pursuant to an 
administrative proceeding or a civil action in the Federal Courts'' (28 
U.S.C. 2461 note, section 3(2)).
    Congress enacted the FCPIAA, in part, because it found that the 
impact of civil monetary penalties had been reduced by inflation and 
that reducing the impact of civil monetary penalties had weakened their 
deterrent effect.
    In the Federal Register of July 20, 2004 (69 FR 43299), we 
published a final rule that identified 14 civil monetary penalties that 
fall within our jurisdiction and are subject to adjustments under the 
FCPIAA. The final rule amended our regulations governing civil money 
penalties hearings found at part 17 (21 CFR part 17) to establish a new 
Sec.  17.2 entitled ``Maximum penalty amounts'' to show the maximum 
civil monetary penalty amounts that were adjusted under the FCPIAA. The 
final rule also revised Sec.  17.1, which lists statutory provisions 
authorizing civil money penalties governed by the civil money penalty 
regulations as of August 28, 1995, updating the statutory citations.

II. What Changes Did We Make?

    We revised the list of statutory monetary penalties in Sec.  17.1 
to include the new penalties prescribed by the Federal Food, Drug, and 
Cosmetic Act, as amended by FDAAA in 2007. These new penalties have 
been added as proposed new paragraphs (c) and (d). The table in Sec.  
17.2 has also been amended to include the new penalties, and the 
adjusted maximum penalty amounts for the pre-FDAAA penalties have been 
updated to account for the inflation between June 2004 (the year of the 
last adjustment) and June 2007 as prescribed by FCPIAA. The per 
violation amount for 21 U.S.C. 333(f)(1)(A), the per violation per 
person amount for 21 U.S.C. 360pp(b)(1), and the per violation amount 
for 42 U.S.C. 263b(h)(3) have not been adjusted because the rounding 
rules of FCPIAA prevent an inflation adjustment in these cases. The new 
FDAAA penalties have also not been adjusted because Congress only 
recently passed FDAAA on September 27, 2007. Finally, the ``Description 
of the Violation'' column in the table in Sec.  17.2 is proposed to be 
removed, as it is unnecessary for purposes of merely showing the 
adjustment in penalty amounts.

III. What is Proposed?

    In brief, the proposed rule would:
     Revise Sec.  17.1 to update the statutory citations 
regarding the new civil monetary penalties prescribed by FDAAA, and
     Revise the table in Sec.  17.2 to include the new FDAAA 
penalties, and adjusts the pre-FDAAA maximum civil penalty amounts for 
inflation as prescribed by FCPIAA.

IV. Additional Information

    This proposed rule incorporates requirements specifically set forth 
in the FCPIAA requiring FDA to issue a

[[Page 66813]]

regulation implementing inflation adjustments for all its civil penalty 
provisions. These technical changes, required by law, do not 
substantively alter the existing regulatory framework, nor do they in 
any way affect the terms under which civil penalties are assessed by 
FDA. The formula for the amount of the penalty adjustment is prescribed 
by Congress in the FCPIAA, and these changes are not subject to the 
exercise of discretion by FDA. In addition, FDA has made conforming 
changes to the regulations, which have no substantive effect, to 
reflect the new penalties prescribed by Congress in FDAAA.
    This proposed rule is a companion to the direct final rule 
published elsewhere in this issue of the Federal Register. This 
companion proposed rule and the direct final rule are identical in 
substance. This companion proposed rule will provide the procedural 
framework to proceed with standard notice-and-comment rulemaking in the 
event the direct final rule receives significant adverse comment and is 
withdrawn. The comment period for the companion proposed rule runs 
concurrently with the comment period of the direct final rule. Any 
comments received under the companion proposed rule will be treated as 
comments regarding the direct final rule and vice versa.
    A significant adverse comment is one that explains why the rule 
would be inappropriate, including challenges to the rule's underlying 
premise or approach, or would be ineffective or unacceptable without 
change. A comment recommending a rule change in addition to this rule 
will not be considered a significant adverse comment unless the comment 
states why this rule would be ineffective without the additional 
change.
    If no significant adverse comment is received in response to the 
direct final rule, no further action will be taken related to the 
companion proposed rule. Instead, we will publish a confirmation 
document within 30 days after the comment period ends. We intend the 
direct final rule to become effective 30 days after publication of the 
confirmation document.
    If we receive significant adverse comments, we will withdraw the 
direct final rule. We will proceed to respond to all the comments 
received regarding the direct final rule, treating those comments as 
comments to this proposed rule. The agency will address the comments in 
the subsequent final rule. We will not provide additional opportunity 
for comment. If we receive a significant adverse comment which applies 
to part of the rule and that part may be severed from the remainder of 
the rule, we may adopt as final those parts of the rule that are not 
the subject of significant adverse comment.
    For additional background information, see the corresponding direct 
final rule published elsewhere in this issue of the Federal Register.

V. Environmental Impact

    We have determined under 21 CFR 25.30(a) and (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.

VI. Paperwork Reduction Act 1995

    We conclude that the civil monetary penalties adjustments in this 
proposed rule are not subject to review by the Office of Management and 
Budget because they do not constitute a ``collection of information'' 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The 
adjustments do not require disclosure of any information to FDA, third 
parties, or the public.

VII. Federalism

    FDA has analyzed this proposed 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, the agency has concluded 
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.

VIII. Analysis of Impacts

    FDA has examined the impacts of the proposed rule under Executive 
Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612), and 
the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). 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). The agency believes that 
this proposed rule is not a significant regulatory action under the 
Executive order.
    The Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would minimize any significant impact of a rule 
on small entities. Because the proposed rule simply proposes to adjust 
the maximum amount of civil monetary penalties administered by FDA, and 
because the adjustment is required by the FCPIAA, the agency certifies 
that the proposed rule will not have a significant economic impact on a 
substantial number of small entities.
    Section 202(a) of the Unfunded Mandates Reform Act of 1995 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 or more (adjusted annually for 
inflation) in any one year.'' The current threshold after adjustment 
for inflation is $130 million, using the most current (2007) Implicit 
Price Deflator for the Gross Domestic Product. FDA does not expect this 
proposed rule to result in any 1-year expenditure that would meet or 
exceed this amount.

IX. Comments

    Interested persons may submit to the Division of Dockets Management 
(see ADDRESSES) written or electronic comments regarding this document. 
This comment period runs concurrently with the comment period for the 
direct final rule; any comments received will be considered as comments 
regarding the direct final rule. Submit a single copy of electronic 
comments or two paper copies of any mailed comments, except that 
individuals may submit one paper copy. Comments are to be identified 
with the docket number found in brackets in the heading of this 
document. Received comments may be seen in the Division of Dockets 
Management between 9 a.m. and 4 p.m., Monday through Friday.
    Please note that on January 15, 2008, the FDA Division of Dockets 
Management Web site transitioned to the Federal Dockets Management 
System (FDMS). FDMS is a Government-wide, electronic docket management 
system. Electronic comments or submissions will be accepted by FDA only 
through FDMS at http://www.regulations.gov.

List of Subjects in 21 CFR Part 17

    Administrative practice and procedure, Penalties.

[[Page 66814]]

    Therefore, under the Federal Food, Drug, and Cosmetic Act and the 
Public Health Service Act, and under authority delegated to the 
Commissioner of Food and Drugs, 21 CFR part 17 is amended as follows:

PART 17--CIVIL MONEY PENALTIES HEARINGS

    1. The authority citation for 21 CFR part 17 continues to read as 
follows:

    Authority: 21 U.S.C. 331, 333, 337, 351, 352, 355, 360, 360c, 
360f, 360i, 360j, 371; 42 U.S.C. 262, 263b, 300aa-28; 5 U.S.C. 554, 
555, 556, 557.
    2. Section 17.1 is amended by redesignating paragraphs (c) through 
(g) as paragraphs (e) through (i) and by adding new paragraphs (c) and 
(d) to read as follows:

Sec.  17.1  Scope.

* * * * *
    (c) Section 303(f)(3) of the act authorizing civil money penalties 
for certain violations relating to the submission of certifications 
and/or clinical trial information to the clinical trial data bank and 
section 303(f)(4) of the act authorizing civil money penalties for 
certain violations of the act relating to postmarket studies, clinical 
trial requirements, and risk evaluation and mitigation strategies for 
drugs.
    (d) Section 303(g)(1) of the act authorizing civil money penalties 
for certain violations of the act that relate to dissemination of 
direct-to-consumer advertisements for approved drugs or biological 
products.
* * * * *
    3. Section 17.2 is revised to read as follows:

Sec.  17.2  Maximum penalty amounts.

    The following table shows maximum civil monetary penalties 
associated with the statutory provisions authorizing civil monetary 
penalties under the act or the Public Health Service Act.

  Civil Monetary Penalties Authorities Administered by FDA and Adjusted
                         Maximum Penalty Amounts
------------------------------------------------------------------------
               Former                                          Adjusted
              Maximum                        Date of Last      Maximum
  U.S.C.      Penalty       Assessment      Penalty Figure     Penalty
  Section    Amount (in       Method         or Adjustment    Amount (in
              dollars)                                         dollars)
------------------------------------------------------------------------
21 U.S.C.
------------------------------------------------------------------------
  333(b)(2  55,000       For each of the               2008       60,000
   )(A)                   first two
                          violations in
                          any 10-year
                          period
------------------------------------------------------------------------
  333(b)(2  1,100,000    For each                      2008    1,200,000
   )(B)                   violation after
                          the second
                          conviction in
                          any 10-year
                          period
------------------------------------------------------------------------
  333(b)(3  110,000      Per violation                 2008      120,000
   )
------------------------------------------------------------------------
  333(f)(1  16,500       Per violation                 2008  16,500 (not
   )(A)                                                        adjusted)
------------------------------------------------------------------------
  333(f)(1  1,100,000    For the                       2008    1,200,000
   )(A)                   aggregate of
                          violations
------------------------------------------------------------------------
  333(f)(2  55,000       Per individual                2008       60,000
   )(A)
------------------------------------------------------------------------
  333(f)(2  275,000      Per ``any other               2008      300,000
   )(A)                   person''
------------------------------------------------------------------------
  333(f)(2  550,000      For all                       2008      600,000
   )(A)                   violations
                          adjudicated in
                          a single
                          proceeding
------------------------------------------------------------------------
  333(f)(3  10,000       For all                       2007  10,000 (not
   )(A)                   violations                           adjusted)
                          adjudicated in
                          a single
                          proceeding
------------------------------------------------------------------------
  333(f)(3  10,000       For each day the              2007  10,000 (not
   )(B)                   violation is                         adjusted)
                          not corrected
                          after a 30-day
                          period
                          following
                          notification
                          until the
                          violation is
                          corrected
------------------------------------------------------------------------
  333(f)(4  250,000      Per violation                 2007      250,000
   )(A)(i)                                                          (not
                                                               adjusted)
------------------------------------------------------------------------
  333(f)(4  1,000,000    For all                       2007    1,000,000
   )(A)(i)                violations                                (not
                          adjudicated in                       adjusted)
                          a single
                          proceeding
------------------------------------------------------------------------
  333(f)(4  250,000      For the first 30-             2007      250,000
   )(A)(ii                day period (or                            (not
   )                      any portion                          adjusted)
                          thereof) of
                          continued
                          violation
                          following
                          notification
------------------------------------------------------------------------
  333(f)(4  1,000,000    For any 30-day                2007    1,000,000
   )(A)(ii                period, where                             (not
   )                      the amount                           adjusted)
                          doubles for
                          every 30-day
                          period of
                          continued
                          violation after
                          the first 30-
                          day period
------------------------------------------------------------------------
  333(f)(4  10,000,000   For all                       2007   10,000,000
   )(A)(ii                violations                                (not
   )                      adjudicated in                       adjusted)
                          a single
                          proceeding
------------------------------------------------------------------------

[[Page 66815]]

  333(g)(1  250,000      For the first                 2007      250,000
   )                      violation in                              (not
                          any 3-year                           adjusted)
                          period
------------------------------------------------------------------------
  333(g)(1  500,000      For each                      2007      500,000
   )                      subsequent                                (not
                          violation in                         adjusted)
                          any 3-year
                          period
------------------------------------------------------------------------
  335b(a)   275,000      Per violation                 2008      300,000
                          for an
                          individual
------------------------------------------------------------------------
  335b(a)   1,100,000    Per violation                 2008    1,200,000
                          for ``any other
                          person''
------------------------------------------------------------------------
  360pp(b)  1,100        Per violation                 2008   1,100 (not
   (1)                    per person                           adjusted)
------------------------------------------------------------------------
  360pp(b)  330,000      For any related               2008      355,000
   (1)                    series of
                          violations
------------------------------------------------------------------------
42 U.S.C.
------------------------------------------------------------------------
  263b(h)(  11,000       Per violation                 2008  11,000 (not
   3)                                                          adjusted)
------------------------------------------------------------------------
  300aa-28  110,000      Per occurrence                2008      120,000
   (b)(1)
------------------------------------------------------------------------

    Dated: October 30, 2008.
Jeffrey Shuren,
Associate Commissioner for Policy and Planning.
[FR Doc. E8-26864 Filed 11-10-08; 8:45 am]

BILLING CODE 4160-01-S