Document ID: FDA-2012-N-0799-0001
Agency: fda
Document Type: Notice
Title: Food Safety Modernization Act Domestic and Foreign Facility Reinspection, Recall, and Importer Reinspection Fee Rates for Fiscal Year 2013
Posted Date: 2012-08-01T04:00Z

[Federal Register Volume 77, Number 148 (Wednesday, August 1, 2012)]
[Notices]
[Pages 45636-45638]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-18678]

[[Page 45636]]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2012-N-0799]

Food Safety Modernization Act Domestic and Foreign Facility 
Reinspection, Recall, and Importer Reinspection Fee Rates for Fiscal 
Year 2013

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing the 
fiscal year (FY) 2013 fee rates for certain domestic and foreign 
facility reinspections, failures to comply with a recall order, and 
importer reinspections that are authorized by the Federal Food, Drug, 
and Cosmetic Act (the FD&C Act), as amended by the FDA Food Safety 
Modernization Act (FSMA). These fees are effective on October 1, 2012, 
and will remain in effect through September 30, 2013.

DATES: Submit either electronic or written comments by October 31, 
2012.

ADDRESSES: Submit electronic comments to http://www.regulations.gov. 
Submit written comments to the Division of Dockets Management (HFA-
305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, 
Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT:  Erin Caines, Office of Resource 
Management, Office of Regulatory Affairs, 12420 Parklawn Dr., rm. 2010, 
Rockville, MD 20857, 301-796-2900, email: Erin.Caines@fda.hhs.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 107 of FSMA (Pub. L. 111-353) added section 743 to the FD&C 
Act (21 U.S.C. 379j-31) to provide FDA with the authority to assess and 
collect fees from, in part: (1) The responsible party for each domestic 
facility and the U.S. agent for each foreign facility subject to a 
reinspection, to cover reinspection-related costs; (2) the responsible 
party for a domestic facility and an importer who does not comply with 
a recall order, to cover food recall activities associated with such 
order; and (3) each importer subject to a reinspection to cover 
reinspection-related costs (sections 743(a)(1)(A), (B), and (D) of the 
FD&C Act). Section 743 of the FD&C Act directs FDA to establish fees 
for each of these activities based on an estimate of 100 percent of the 
costs of each activity for each year (sections 743(b)(2)(A), (B), and 
(D)), and these fees must be made available solely to pay for the costs 
of each activity for which the fee was incurred (section 743(b)(3)).
    These fees are effective on October 1, 2012, and will remain in 
effect through September 30, 2013. FDA is accepting comments to this 
document and intends to consider such comments in its continued 
implementation of these fees. Submit either electronic or written 
comments by October 31, 2012.
    Section 743(b)(2)(B)(iii) of the FD&C Act directs FDA to develop a 
proposed set of guidelines in consideration of the burden of fee 
amounts on small businesses. As a first step in developing these 
guidelines, FDA invited public comment on the potential impact of the 
fees authorized by section 743 of the FD&C Act on small businesses (76 
FR 45818, Aug. 1, 2011). The comment period for this request ended 
November 30, 2011. As stated in FDA's September 2011 ``Guidance for 
Industry: Implementation of the Fee Provisions of Section 107 of the 
FDA Food Safety Modernization Act,''(http://www.fda.gov/Food/GuidanceComplianceRegulatoryInformation/GuidanceDocuments/FoodSafety/ucm274176.htm), because FDA recognizes that for small businesses the 
full cost recovery of FDA reinspection or recall oversight could impose 
severe economic hardship, FDA intends to consider reducing certain fees 
for those firms. FDA is currently developing a guidance document to 
outline the process through which firms may request such a reduction of 
fees. FDA does not intend to issue invoices for reinspection or recall 
order fees until this guidance document has been published.
    In addition, as stated in the September 2011 Guidance, FDA is in 
the process of considering various issues associated with the 
assessment and collection of importer reinspection fees. Recognizing 
the particular complexities involved in these issues, FDA is not in a 
position to assess importer reinspection fees until the Agency has 
resolved these issues and will not assess importer reinspection fees 
until the Agency notifies the public. However, the fee rates set forth 
in this notice will be used to determine any importer reinspection fees 
assessed in FY 2013.

II. Estimating the Average Cost of a Supported Direct FDA Work Hour for 
FY 2013

    FDA is required to estimate 100 percent of its costs for each 
activity in order to establish fee rates for FY 2013. In each year, the 
costs of salary (or personnel compensation) and benefits for FDA 
employees account for between 50 and 60 percent of the funds available 
to, and used by, FDA. Almost all of the remaining funds (or the 
operating funds) available to FDA are used to support FDA employees for 
paying rent, travel, utility, information technology, and other 
operating costs.

A. Estimating the Full Cost per Direct Work Hour in FY 2011

    In general, the starting point for estimating the full cost per 
direct work hour is to estimate the cost of a full-time-equivalent 
(FTE) or paid staff year for the relevant activity. This is most 
reasonably done by dividing the total funds allocated to the elements 
of FDA primarily responsible for carrying out the activities for which 
fees are being collected by the total FTEs allocated to those 
activities, using information from the most recent FY for which data 
are available. For the purposes of the reinspection and recall order 
fees authorized by section 743 of the FD&C Act (the fees that are the 
subject of this notice), primary responsibility for the activities for 
which fees will be collected rests with FDA's Office of Regulatory 
Affairs (ORA), which carries out inspections and other field-based 
activities on behalf of FDA's product centers, including the Center for 
Food Safety and Applied Nutrition (CFSAN) and the Center for Veterinary 
Medicine (CVM). Thus, as the starting point for estimating the full 
cost per direct work hour, FDA will use the total funds allocated to 
ORA for CFSAN and CVM related field activities. The most recent FY with 
available data is FY 2011. In that year, FDA obligated a total of 
$669,939,746 for ORA in carrying out the CFSAN and CVM related field 
activities work, excluding the cost of inspection travel. In that same 
year, the number of ORA staff primarily conducting the CFSAN and CVM 
related field activities was 3,022 FTEs or paid staff years. Dividing 
$669,939,746 by 3,022 FTEs, results in an average cost of $221,688 per 
paid staff year, excluding travel costs.
    Not all of the FTEs required to support the activities for which 
fees will be collected are conducting direct work such as inspecting or 
reinspecting facilities, examining imports, or monitoring recalls. Data 
collected over a number of years and used consistently in other FDA 
user fee programs (e.g., under the Prescription Drug User Fee Act 
(PDUFA) and the Medical Device User Fee and Modernization Act show that 
every seven FTEs who perform direct FDA work require three indirect and 
supporting FTEs. These indirect

[[Page 45637]]

and supporting FTEs function in budget, facility, human resource, 
information technology, planning, security, administrative support, 
legislative liaison, legal counsel, program management, and other 
essential program areas. On average, two of these indirect and 
supporting FTEs are located in ORA or the FDA center where the direct 
work is being conducted, and one of them is located in the Office of 
the Commissioner. To get the fully supported cost of an FTE, FDA needs 
to multiply the average cost of an FTE by 1.43, to take into account 
the indirect and supporting functions. The 1.43 factor is derived by 
dividing the 10 fully supported FTEs by 7 direct FTEs. In FY 2011, the 
average cost of an FTE was $221,688. Multiplying this amount by 1.43 
results in an average fully supported cost of $317,013 per FTE, 
excluding the cost of inspection travel.
    To calculate an hourly rate, FDA must divide the average fully 
supported cost of $317,013 per FTE by the average number of supported 
direct FDA work hours. See Table 1.

      Table 1--Supported Direct FDA Work Hours in a Paid Staff Year
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Total number of hours in a paid staff year..............           2,080
Less:
    10 paid holidays....................................              80
    20 days of annual leave.............................             160
    10 days of sick leave...............................              80
    10 days of training.................................              80
    2 hours of meetings per week........................              80
Net Supported Direct FDA Work Hours Available for                  1,600
 Assignments............................................
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    Dividing the average fully supported cost of an FTE in FY 2011 
($317,013) by the total number of supported direct work hours available 
for assignment (1,600) results in an average fully supported cost of 
$198 (rounded to the nearest dollar), excluding inspection travel 
costs, per supported direct work hour in FY 2011--the last FY for which 
data are available.

B. Adjusting FY 2011 Costs for Inflation To Estimate FY 2013 Costs

    To adjust the hourly rate for FY 2013, FDA must estimate the cost 
of inflation in each year for FY 2012 and FY 2013. FDA uses the method 
prescribed for estimating inflationary costs under the PDUFA provisions 
of the FD&C Act (section 736(c)(1) (21 U.S.C. 379h(c)(1)), the only 
statutory method for inflation adjustment in the FD&C Act. FDA 
previously determined the FY 2012 inflation rate to be 3.72 percent; 
this rate was published in the FY 2012 PDUFA user fee rates notice in 
the Federal Register of August 1, 2011 (see 76 FR 45831). Utilizing the 
method set forth in section 736(c)(1) of the FD&C Act, FDA has 
calculated an inflation rate of 2.01 percent for FY 2013 and FDA 
intends to use this inflation rate to make inflation adjustments for FY 
2013 for several of its user fee programs; the derivation of this rate 
is published elsewhere in this issue of the Federal Register in the FY 
2013 notice for the PDUFA user fee rates. The compounded inflation rate 
for FYs 2012 and 2013, therefore, is 5.80 percent (one plus 3.72 
percent times one plus 2.01 percent).
    Increasing the FY 2011 average fully supported cost per supported 
direct FDA work hour of $198 (excluding inspection travel costs) by 
5.80 percent yields an inflationary adjusted estimated cost of $209 per 
a supported direct work hour in FY 2013, excluding inspection travel 
costs. This is the base unit fee that FDA will use in determining the 
hourly fee rate for reinspection and recall order fees for FY 2013, 
prior to including domestic or foreign travel costs as applicable for 
the activity.
    In FY 2011, ORA spent a total of $4,504,788 for domestic regulatory 
inspection travel costs and General Services Administration (GSA) 
Vehicle costs related to FDA's CFSAN and CVM field activities programs. 
The total ORA domestic travel costs spent is then divided by the total 
of 12,729 CFSAN and CVM domestic inspections, which averages a total of 
$354 per inspection. These inspections average 32.77 hours per 
inspection. Dividing $354 per inspection by 32.77 hours per inspection 
results in a total and an additional cost of $11 per hour spent for 
domestic inspection travel costs in FY 2011. To adjust $11 for 
inflationary increases in FY 2012 and FY 2013, FDA must multiply it by 
the same inflation factor mentioned previously in this document 
(1.0580) which results in an estimated cost of $12 dollars per paid 
hour in addition to $209 for a total of $221 per paid hour ($209 plus 
$12) for each direct hour of work requiring domestic inspection travel. 
These are the rates that FDA will use in charging fees in FY 2013 when 
domestic travel is required.
    In FY 2011, ORA spent a total of $2,095,738 on a total of 229 
foreign inspection trips related to FDA's CFSAN and CVM field 
activities programs, which averaged a total of $9,152 per foreign 
inspection trip. These trips averaged 3 weeks (or 120 paid hours) per 
trip. Dividing $9,152 per trip by 120 hours per trip results in a total 
and an additional cost of $76 per paid hour spent for foreign 
inspection travel costs in FY 2011. To adjust $76 for inflationary 
increases in FY 2012 and FY 2013, FDA must multiply it by the same 
inflation factor mentioned previously in this document (1.0580) which 
results in an estimated cost of $80 dollars per paid hour in addition 
to $209 for a total of $289 per paid hour ($209 plus $80) for each 
direct hour of work requiring foreign inspection travel. These are the 
rates that FDA will use in charging fees in FY 2013 when foreign travel 
is required.

                 Table 2--FSMA Fee Schedule for FY 2013
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                                                           Fee rates for
                      Fee category                            FY 2013
------------------------------------------------------------------------
Hourly rate if domestic travel is required..............            $221
Hourly rate if foreign travel is required...............             289
------------------------------------------------------------------------

III. Fees for Reinspections of Domestic or Foreign Facilities Under 
Section 743(a)(1)(A)

A. What will cause this fee to be assessed?

    The fee will be assessed for a reinspection conducted under section 
704 of the FD&C Act to determine whether corrective actions have been 
implemented and are effective and compliance has been achieved to the 
Secretary of Health and Human Services' (the Secretary) (and, by 
delegation, FDA's) satisfaction at a facility that manufactures, 
processes, packs or holds food \1\ for consumption necessitated as a 
result of a previous inspection (also conducted under section 704) of 
this facility which had a final classification of Official Action 
Indicated (OAI) conducted by or on behalf of FDA, when FDA determined 
the non-compliance was materially related to food safety requirements 
of the FD&C Act. FDA considers such non-compliance to include non-
compliance with a statutory or regulatory requirement under section 402 
of the FD&C Act (21 U.S.C. 342) and section 403(w) of the FD&C Act (21 
U.S.C. 343(w)). However, FDA does not consider non-compliance that is 
materially related to a food safety requirement to include 
circumstances where the non-compliance is of a technical nature and not 
food safety related (e.g., failure to comply with a food standard or 
incorrect font size on a food label). Determining when non-

[[Page 45638]]

compliance, other than under section 402 and 403(w) of the FD&C Act, is 
materially related to a food safety requirement may depend on the facts 
of a particular situation. FDA intends to issue guidance to provide 
additional information about the circumstances under which FDA would 
consider non-compliance to be materially related to a food safety 
requirement of the FD&C Act.
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    \1\ The term ``food'' for purposes of this document has the same 
meaning as such term in section 201(f) of the FD&C Act (21 U.S.C. 
321(f)).
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    Under section 743(a)(1)(A) of the FD&C Act, FDA is directed to 
assess and collect fees from ``the responsible party for each domestic 
facility (as defined in section 415(b) (21 U.S.C. 350d)) and the United 
States agent for each foreign facility subject to a reinspection'' to 
cover reinspection-related costs.
    Section 743(a)(2)(A)(i) of the FD&C Act defines the term 
``reinspection'' with respect to domestic facilities as ``1 or more 
inspections conducted under section 704 subsequent to an inspection 
conducted under such provision which identified non-compliance 
materially related to a food safety requirement of th[e] Act, 
specifically to determine whether compliance has been achieved to the 
Secretary's satisfaction.''
    The FD&C Act does not contain a definition of ``reinspection'' 
specific to foreign facilities. In order to give meaning to the 
language in section 743(a)(1)(A) of the FD&C Act to collect fees from 
the United States agent of a foreign facility subject to a 
reinspection, the Agency is using the following definition of 
``reinspection'' for purposes of assessing and collecting fees under 
section 743(a)(1)(A), with respect to a foreign facility: ``1 or more 
inspections conducted by officers or employees duly designated by the 
Secretary subsequent to such an inspection which identified non-
compliance materially related to a food safety requirement of the FD&C 
Act, specifically to determine whether compliance has been achieved to 
the Secretary's (and, by delegation, FDA's) satisfaction.''
    This definition allows FDA to fulfill the mandate to assess and 
collect fees from the United States agent of a foreign facility in the 
event that an inspection reveals non-compliance materially related to a 
food safety requirement causing one or more subsequent inspections to 
determine whether compliance has been achieved to the Secretary's (and, 
by delegation, FDA's) satisfaction. By requiring the initial inspection 
to be conducted by officers or employees duly designated by the 
Secretary, the definition ensures that a foreign facility would be 
subject to fees only in the event that FDA, or an entity designated to 
act on its behalf, has made the requisite identification at an initial 
inspection of non-compliance materially related to a food safety 
requirement of the FD&C Act. The definition of ``reinspection-related 
costs'' in section 743(a)(2)(B) of the FD&C Act relates to both a 
domestic facility reinspection and a foreign facility reinspection, as 
described in section 743(a)(1)(A).

B. Who will be responsible for paying this fee?

    The FD&C Act states that this fee is to be paid by the responsible 
party for each domestic facility (as defined in section 415(b) of the 
FD&C Act) and by the United States agent for each foreign facility 
(section 743(a)(1)(A) of the FD&C Act). This is the party to whom FDA 
will send the invoice for any fees that are assessed under this 
section.

C. How much will this fee be?

    The fee is based on the number of direct hours spent on such 
reinspections, including time spent conducting the physical 
surveillance and/or compliance reinspection at the facility, or 
whatever components of such an inspection are deemed necessary, making 
preparations and arrangements for the reinspection, traveling to and 
from the facility, preparing any reports, analyzing any samples or 
examining any labels if required, and performing other activities as 
part of the OAI reinspection until the facility is again determined to 
be in compliance. The direct hours spent on each such reinspection will 
be billed at the appropriate hourly rate shown in table 2 of this 
document.

IV. Fees for Non-Compliance With a Recall Order Under Section 
743(a)(1)(B)

A. What will cause this fee to be assessed?

    The fee will be assessed for not complying with a recall order 
under section 423(d) or 412(f) of the FD&C Act to cover food recall 
activities associated with such order performed by the Secretary (and 
by delegation, FDA) (section 743(a)(1)(B) of the FD&C Act). Non-
compliance may include the following: (1) Not initiating a recall as 
ordered by FDA; (2) not conducting the recall in the manner specified 
by FDA in the recall order; or (3) not providing FDA with requested 
information regarding the recall, as ordered by FDA.

B. Who will be responsible for paying this fee?

    Section 743(a)(1)(B) of the FD&C Act states that the fee is to be 
paid by the responsible party for a domestic facility (as defined in 
section 415(b) of the FD&C Act) and an importer who does not comply 
with a recall order under section 423 or under section 412(f) of the 
FD&C Act. In other words, the party paying the fee would be the party 
that received the recall order.

C. How much will this fee be?

    The fee is based on the number of direct hours spent on taking 
action in response to the firm's failure to comply with a recall order. 
Types of activities could include conducting recall audit checks, 
reviewing periodic status reports, analyzing the status reports and the 
results of the audit checks, conducting inspections, traveling to and 
from locations, and monitoring product disposition. The direct hours 
spent on each such recall will be billed at the appropriate hourly rate 
shown in table 2 of this document.

V. How must the fees be paid?

    An invoice will be sent to the responsible party for paying the fee 
after FDA completes the work on which the invoice is based. Payment 
must be made within 90 days of the invoice date in U.S. currency by 
check, bank draft, or U.S. postal money order payable to the order of 
the Food and Drug Administration. Detailed payment information will be 
included with the invoice when it is issued.

VI. What are the consequences of not paying these fees?

    Under section 743(e)(2) of the FD&C Act, any fee that is not paid 
within 30 days after it is due shall be treated as a claim of the 
United States Government subject to provisions of subchapter II of 
chapter 37 of title 31, United States Code.

    Dated: July 26, 2012.
Leslie Kux,
Assistant Commissioner for Policy.
[FR Doc. 2012-18678 Filed 7-31-12; 8:45 am]
BILLING CODE 4160-01-P