Document ID: FDA-2019-N-3406-0001
Agency: fda
Document Type: Notice
Title: Food Safety Modernization Act Voluntary Qualified Importer Program User Fee Rate for Fiscal Year 2020
Posted Date: 2019-07-24T04:00Z

[Federal Register Volume 84, Number 142 (Wednesday, July 24, 2019)]
[Notices]
[Pages 35680-35683]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-15742]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2019-N-3406]

Food Safety Modernization Act Voluntary Qualified Importer 
Program User Fee Rate for Fiscal Year 2020

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) 2020 annual fee rate for importers approved to 
participate in the Voluntary Qualified Importer Program (VQIP) that is 
authorized by the Federal Food, Drug, and Cosmetic Act (FD&C Act), as 
amended by the FDA Food Safety Modernization Act (FSMA). This fee is 
effective August 1, 2019, and will remain in effect through December 
31, 2019.

FOR FURTHER INFORMATION CONTACT: Donald Prater, Office of Food Policy 
and Response, Food and Drug Administration, 10903 New Hampshire Ave., 
Bldg. 1, Rm. 3202, Silver Spring, MD 20993, 301-348-3007.

SUPPLEMENTARY INFORMATION:

I. Background

    Section 302 of FSMA, Voluntary Qualified Importer Program, amended 
the FD&C Act to create a new provision, section 806, under the same 
name. Section 806 of the FD&C Act (21 U.S.C. 384b) directs FDA to 
establish a program to provide for the expedited review and importation 
of food offered for importation by importers who have voluntarily 
agreed to participate in such program, and a process, consistent with 
section 808 of the FD&C Act (21 U.S.C. 384d), for the issuance of a 
facility certification to accompany a food offered for importation by 
importers participating in the VQIP.
    Section 743 of the FD&C Act (21 U.S.C. 379j-31) authorizes FDA to 
assess and collect fees from each importer participating in VQIP to 
cover FDA's costs of administering the program. Each fiscal year, fees 
are to be established based on an estimate of 100 percent of the costs 
for the year. The fee rates must be published in a Federal Register 
notice not later than 60 days before the start of each fiscal year 
(section 743(b)(1) of the FD&C Act). After FDA approves a VQIP 
application, the user fee must be paid before October 1, the start of 
the VQIP fiscal year, to begin receiving benefits for that VQIP fiscal 
year.
    The FSMA FY 2020 VQIP user fee rate announced in this notice is 
effective on August 1, 2019, and will remain in effect through December 
31, 2019. The FY 2020 VQIP user fee will support benefits from October 
1, 2019, through September 30, 2020.

II. Estimating the Average Cost of a Supported Direct FDA Work Hour for 
FY 2020

    Each fiscal year, fees are to be established based on an estimate 
of 100 percent of the costs for the year. 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 (operating funds) 
available to FDA are used to support FDA employees for paying rent, 
travel, utility, information technology, and other operating costs.

[[Page 35681]]

A. Estimating the Full Cost per Direct Work Hour in FY 2020

    Full-time Equivalent (FTE) reflects the total number of regular 
straight-time hours--not including overtime or holiday hours--worked by 
employees, divided by the number of compensable hours applicable to 
each fiscal year. Annual leave, sick leave, compensatory time off, and 
other approved leave categories are considered ``hours worked'' for 
purposes of defining FTE employment.
    In general, the starting point for estimating the full cost per 
direct work hour is to estimate the cost of an FTE or paid staff year. 
Calculating an Agency-wide total cost per FTE requires three primary 
cost elements: Payroll, non-payroll, and rent.
    We have used an average of past year cost elements to predict the 
FY 2020 cost. The FY 2020 FDA-wide average cost for payroll (salaries 
and benefits) is $160,885; non-payroll--including equipment, supplies, 
information technology, general and administrative overhead--is 
$92,828; and rent, including cost allocation analysis and adjustments 
for other rent and rent-related costs, is $24,888 per paid staff year, 
excluding travel costs.
    Summing the average cost of an FTE for payroll, non-payroll, and 
rent, brings the FY 2020 average fully supported cost to $278,602 per 
FTE, excluding travel costs. FDA will use this base unit fee in 
determining the hourly fee rate for VQIP user fees for FY 2020 prior to 
including travel costs as applicable for the activity.
    To calculate an hourly rate, FDA must divide the FY 2020 average 
fully supported cost of $278,602 per FTE by the average number of 
supported direct FDA work hours in FY 2018--the last FY for which data 
are available. See table 1.

Table 1--Supported Direct FDA Work Hours in a Paid Staff Year in FY 2018
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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
  12.5 days of training.........................................    -100
  26.5 days of general administration...........................    -184
  26.5 days of travel...........................................    -212
  2 hours of meetings per week..................................    -104
                                                                 -------
    Net Supported Direct FDA Work Hours Available for              1,160
     Assignments................................................
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    Dividing the average fully supported FTE cost in FY 2020 ($278,602) 
by the total number of supported direct work hours available for 
assignment in FY 2018 (1,160) results in an average fully supported 
cost of $240 (rounded to the nearest dollar), excluding travel costs, 
per supported direct work hour in FY 2020.

B. Adjusting FY 2018 Travel Costs for Inflation To Estimate FY 2020 
Travel Costs

    To adjust the hourly rate for FY 2020, FDA must estimate the cost 
of inflation in each year for FY 2019 and FY 2020. FDA uses the method 
prescribed for estimating inflationary costs under the Prescription 
Drug User Fee Act (PDUFA) provisions of the FD&C Act (section 736(c)(1) 
(21 U.S.C. 379h(c)(1)), the statutory method for inflation adjustment 
in the FD&C Act that FDA has used consistently. FDA previously 
determined the FY 2019 inflation rate to be 1.7708 percent; this rate 
was published in the FY 2019 PDUFA user fee rates notice in the Federal 
Register (83 FR 37504, August 1, 2018). Utilizing the method set forth 
in section 736(c)(1) of the FD&C Act, FDA has calculated an inflation 
rate of 1.7708 percent for FY 2019 and 2.3964 percent for FY 2020, and 
FDA intends to use this inflation rate to make inflation adjustments 
for FY 2020 for several of its user fee programs; the derivation of 
this rate is published in the Federal Register in the FY 2020 notice 
for the PDUFA user fee rates. The compounded inflation rate for FYs 
2019 and 2020, therefore, is 1.042096 (or 4.2096 percent) (1 plus 
1.7708 percent times 1 plus 2.3964 percent).
    The average fully supported cost per supported direct FDA work 
hour, excluding travel costs, of $240 already takes into account 
inflation as the calculation above is based on FY 2020 predicted costs. 
FDA will use this base unit fee in determining the hourly fee rate for 
VQIP fees for FY 2020 prior to including domestic or foreign travel 
costs as applicable for the activity. For the purpose of estimating the 
fee, we are using the travel cost rate for both domestic and foreign 
travel because we anticipate that a portion of onsite assessments made 
by FDA under this program will require foreign travel in addition to 
domestic travel.
    In FY 2018 FDA's Office of Regulatory Affairs (ORA) spent a total 
of $6,027,291 for domestic regulatory inspection travel costs and 
General Services Administration Vehicle cost related to FDA's Center 
for Food Safety and Applied Nutrition (CFSAN) and Center for Veterinary 
Medicine (CVM) field activities programs. The total ORA domestic travel 
costs spent is then divided by the 9,976 CFSAN and CVM domestic 
inspections, which averages a total of $604 per inspection by 35.44 
hours per inspection results in a total and an additional cost of $17 
(rounded to the nearest dollar) per hour spent for domestic inspection 
travel cost in FY 2018. To adjust for the $17 per hour inflationary 
increases in FY 2019 and FY 2020, FDA must multiply it by the same 
inflation factor mentioned previously in this document (1.042096 or 
4.2096 percent), which results in an estimated cost of $18 (rounded to 
the nearest dollar) per paid hour in addition to $240 for a total of 
$258 per paid hour ($240 plus $18) for each direct hour of work 
requiring domestic inspection travel. FDA will use these rates in 
charging fees in FY 2020 when domestic travel is required.
    In FY 2018, the ORA spent a total of $3,229,335 on 455 foreign 
inspection trips related to FDA's CFSAN and CVM field activities 
programs, which averaged a total of $7,097 per foreign inspection trip. 
These trips averaged 3 weeks (or 120 paid hours) per trip. Dividing 
$7,097 per trip by 120 hours per trip results in a total and an 
additional cost of $59 (rounded to the nearest dollar) per paid hour 
spent for foreign inspection travel costs in FY 2018. To adjust $59 for 
inflationary increases in FY 2019 and FY 2020, FDA must multiply it by 
the same compounded inflation factor mentioned previously in this 
document (1.042096 or 4.2096 percent), which results in an estimated 
cost of $61 (rounded to the nearest dollar) per paid hour in addition 
to $240 for a total of $301 per paid hour ($240 plus $61) for each 
direct hour of work requiring foreign inspection travel. FDA will use 
these rates in charging fees in FY 2020 when foreign travel is required 
for the VQIP.

                 Table 2--FSMA Fee Schedule for FY 2020
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                                                           Fee rates for
                      Fee category                            FY 2020
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Hourly rate without travel..............................            $240
Hourly rate if domestic travel is required..............             258
Hourly rate if foreign travel is required...............             301
------------------------------------------------------------------------

III. Fees for Importers Approved To Participate in the Voluntary 
Qualified Importer Program Under Section 743 of the FD&C Act

    FDA assesses fees for VQIP annually. Table 3 provides an overview 
of the fees for FY 2020.

[[Page 35682]]

            Table 3--FSMA VQIP User Fee Schedule for FY 2020
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                                                          Fee rates for
                      Fee category                           FY 2020
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VQIP User Fee..........................................         $16,681
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    Section 743 of the FD&C Act requires that each importer 
participating in VQIP pay a fee to cover FDA's costs of administering 
the program. This fee represents the estimated average cost of the work 
FDA performs in reviewing and evaluating a VQIP importer. At this time, 
FDA is not offering an adjusted fee for small businesses. As required 
by section 743(b)(2)(B)(iii) of the FD&C Act, FDA previously published 
a set of guidelines in consideration of the burden of the VQIP fee on 
small businesses and provided for a period of public comment on the 
guidelines (80 FR 32136, June 5, 2015). While we did receive some 
comments in response, they did not address the questions posed, i.e., 
how a small business fee reduction should be structured, what 
percentage of fee reduction would be appropriate, or what alternative 
structures FDA might consider in order to indirectly reduce fees for 
small businesses by charging different fee amounts to different VQIP 
participants. We plan on monitoring costs and collecting data to 
determine if, in future fiscal years, we will provide for a small 
business fee reduction. Consistent with section 743(b)(2)(B)(iii), we 
will adjust the fee schedule for small businesses only through notice 
and comment rulemaking.
    The fee is based on the fully supported FTE hourly rates and 
estimates of the number of hours it would take FDA to perform relevant 
activities. These estimates represent FDA's current thinking, and as 
the program evolves, FDA will reconsider the estimated hours. We 
estimate that it would take, on average, 39 person-hours to review a 
VQIP application (including communication provided through the VQIP 
Importer's Help Desk), 16 person-hours for an onsite performance 
evaluation of a domestic VQIP importer (including travel and other 
steps necessary for a fully supported FTE to complete and document an 
onsite assessment), and 34 person-hours for an onsite performance 
evaluation of a foreign VQIP importer (including travel and other steps 
necessary for a fully supported FTE to complete and document an onsite 
assessment). Additional costs include maintenance costs of information 
technology of administering benefits of the program. These costs are 
estimated to be $2,209 per VQIP importer.
    FDA employees are likely to review applications from their 
worksites, so we use the fully supported FTE hourly rate excluding 
travel, $240/hour, to calculate the portion of the user fee 
attributable to those activities: $240/hour x (39 hours) = $9,360.
    FDA employees will conduct a VQIP inspection to verify the 
eligibility criteria and full implementation of the food safety and 
food defense systems established in the Quality Assurance Program. A 
VQIP importer may be located inside or outside of the United States. We 
have used an estimate that up to 20 percent of VQIP importers may be 
located outside of the United States.
    FDA employees are likely to prepare for and report on the 
performance evaluation of a domestic VQIP importer at an FTE's 
worksite, so we use the fully supported FTE hourly rate excluding 
travel, $240/hour, to calculate the portion of the user fee 
attributable to those activities: $240/hour x (8 hours) = $1,920. For 
the portion of the fee covering onsite evaluation of a domestic VQIP 
importer, we use the fully supported FTE hourly rate for work requiring 
domestic travel, $258/hour, to calculate the portion of the user fee 
attributable to those activities: $258/hour x 8 hours (i.e., one fully 
supported FTE x (1 day onsite x 8 hours)) = $2,064. Therefore, the 
total cost of conducting the domestic performance evaluation of a VQIP 
importer is determined to be $2,064 + $1,920 = $3,984.
    Coordination of the onsite performance evaluation of a foreign VQIP 
importer is estimated to take place at an FTE's worksite, so we use the 
fully supported FTE hourly rate excluding travel, $240/hour, to 
calculate the portion of the user fee attributable to those activities: 
$240/hour x (10 hours) = $2,400. For the portion of the fee covering 
onsite evaluation of a foreign VQIP importer, we use the fully 
supported FTE hourly rate for work requiring foreign travel, $301/hour, 
to calculate the portion of the user fee attributable to those 
activities: $301/hour x 24 hours (i.e., one fully supported FTE x ((2 
travel days x 8 hours) + (1 day onsite x 8 hours))) = $7,224. 
Therefore, the total cost of conducting the foreign performance 
evaluation of a VQIP importer is determined to be $2,400 + $7,224 = 
$9,624.
    Therefore, the estimated average cost of the work FDA performs in 
total for approving an application for a VQIP importer based on these 
figures would be $2,209 + $9,360 + ($3,984 x 0.8) + ($9,624 x 0.2) = 
$16,681.

IV. How must the fee be paid?

    An invoice will be sent to VQIP importers approved to participate 
in the program. Payment must be made prior to October 1, 2019, in order 
to be eligible for VQIP participation for the benefit year beginning 
October 1, 2019. FDA will not refund the VQIP user fee for any reason.
    The payment must be made in U.S. currency from a U.S. bank by one 
of the following methods: Wire transfer, electronically, check, bank 
draft, or U.S. postal money order made payable to the Food and Drug 
Administration. The preferred payment method is online using an 
electronic check (Automated Clearing House (ACH), also known as eCheck) 
or credit card (Discover, VISA, MasterCard, American Express). Secure 
electronic payments can be submitted using the User Fees Payment Portal 
at https://userfees.fda.gov/pay or the Pay.gov payment option, which is 
available to you after you submit a cover sheet. (Note: Only full 
payments are accepted. No partial payments can be made online.) Once 
you have found your invoice, select ``Pay Now'' to be redirected to 
Pay.gov. Electronic payment options are based on the balance due. 
Payment by credit card is available only for balances less than 
$25,000. If the balance exceeds this amount, only the ACH option is 
available. Payments must be made using U.S. bank accounts as well as 
U.S. credit cards.
    When paying by check, bank draft, or U.S. postal money order, 
please include the invoice number. Also write the FDA post office box 
number (P.O. Box 979108) on the enclosed check, bank draft, or money 
order. Mail the payment and a copy of the invoice to: Food and Drug 
Administration, P.O. Box 979108, St. Louis, MO 63197-9000.
    When paying by wire transfer, it is required that the invoice 
number is included; without the invoice number the payment may not be 
applied. The originating financial institution may charge a wire 
transfer fee. If the financial institution charges a wire transfer fee, 
it is required to add that amount to the payment to ensure that the 
invoice is paid in full. For international wire transfers, please 
inquire with the financial institutions prior to submitting the 
payment. Use the following account information when sending a wire 
transfer: U.S. Department of the Treasury, TREAS NYC, 33 Liberty St., 
New York, NY 10045, Account Name: Food and Drug Administration, Account 
No.: 75060099, Routing No.: 021030004, Swift No.: FRNYUS33.

[[Page 35683]]

    To send a check by a courier such as Federal Express, the courier 
must deliver the check and printed copy of the cover sheet to: U.S. 
Bank, Attn: Government Lockbox 979108, 1005 Convention Plaza, St. 
Louis, MO 63101. (Note: This address is for courier delivery only. If 
you have any questions concerning courier delivery, contact U.S. Bank 
at 314-418-4013. This phone number is only for questions about courier 
delivery.)
    The tax identification number of FDA is 53-0196965. (Note: In no 
case should the payment for the fee be submitted to FDA with the 
invoice.)

V. What are the consequences of not paying this fee?

    The consequences of not paying these fees are outlined in Section J 
of ``FDA's Voluntary Qualified Importer Program; Guidance for 
Industry'' document (available at https://www.fda.gov/media/92196/download). If the user fee is not paid before October 1, a VQIP 
importer will not be eligible to participate in VQIP. For the first 
year a VQIP application is approved, if the user fee is not paid before 
October 1, 2019, you are not eligible to participate in VQIP. If you 
subsequently pay the user fee, FDA will begin your benefits after we 
receive the full payment. The user fee may not be paid after December 
31, 2019. For a subsequent year, if you do not pay the user fee before 
October 1, FDA will send a Notice of Intent to Revoke your 
participation in VQIP. If you do not pay the user fee within 30 days of 
the date of the Notice of Intent to Revoke, we will revoke your 
participation in VQIP.

    Dated: July 19, 2019.
Lowell J. Schiller,
Principal Associate Commissioner for Policy.
[FR Doc. 2019-15742 Filed 7-23-19; 8:45 am]
 BILLING CODE 4164-01-P