[Federal Register Volume 60, Number 144 (Thursday, July 27, 1995)]
[Rules and Regulations]
[Pages 38612-38633]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-18325]



      

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Part III





Department of Health and Human Services





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Food and Drug Administration



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21 CFR Part 5 et al.



Civil Money Penalties: Biologics, Drugs, and Medical Devices; Rule



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Statement of Organization, Functions, and Delegations of Authority; 
Notice

  Federal Register / Vol. 60, No. 144 / Thursday, July 27, 1995 / Rules 
and Regulations   

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 5, 10, 17, and 20

[Docket No. 91N-0447]
RIN 0905-AD59


Civil Money Penalties: Biologics, Drugs, and Medical Devices

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is issuing final 
regulations to establish hearing procedures for use when FDA proposes 
the imposition of administrative civil money penalties. This rule 
implements the civil money penalty provisions of several statutes: the 
National Childhood Vaccine Injury Act of 1986 (NCVIA), the Prescription 
Drug Marketing Act of 1988 (PDMA), the Safe Medical Devices Act of 1990 
(SMDA), the Generic Drug Enforcement Act of 1992 (GDEA), and the 
Mammography Quality Standards Act of 1992 (MQSA).

EFFECTIVE DATE: August 28, 1995.

FOR FURTHER INFORMATION CONTACT: Joseph M. Sheehan, Center for Devices 
and Radiological Health (HFZ-84), Food and Drug Administration, 2098 
Gaither Rd., Rockville MD 20850, 301-594-4765.

SUPPLEMENTARY INFORMATION:

I. Background

    In the Federal Register of May 26, 1993 (58 FR 30680), FDA issued a 
notice of proposed rulemaking (NPRM) to establish procedures for 
hearings concerning the administrative imposition of civil money 
penalties by the agency. The NPRM noted that Congress had in recent 
years given FDA authority to impose civil money penalties in the NCVIA, 
the PDMA, the SMDA, and the GDEA. FDA requested that comments be filed 
by July 26, 1993.
    Subsequently, a trade association requested an extension of time to 
file comments, and, in the Federal Register of July 27, 1993 (58 FR 
40103), the agency extended the deadline for comments to August 25, 
1993. In the July 27, 1993, Federal Register, FDA corrected an 
inadvertent error in the proposed rule and added a reference to civil 
money penalties authority provided for in the MQSA. The MQSA was added 
to the list of statutes covered by proposed part 17 insofar as the MQSA 
provided for the administrative imposition of civil money penalties.
    Also, as an interim measure pending adoption of proposed part 17, 
FDA issued a regulation in the Federal Register of September 22, 1993 
(58 FR 49190), under which it could temporarily conduct civil money 
penalties hearings pursuant to part 12 (21 CFR part 12). FDA is now 
revoking procedural regulations that it issued as a temporary measure 
pending adoption of part 17. This revocation will be effective when 
these part 17 regulations become effective. Specifically, Sec. 5.99 (21 
CFR 5.99) (as published at 58 FR 34212, June 24, 1993) and 
Sec. 10.50(c)(21) (21 CFR 10.50(c)(21)) (as published at 58 FR 49190) 
were issued to allow FDA to use part 12 for civil money penalties 
proceedings on an interim basis. Because this delegation is no longer 
needed and because retention of these provisions in the Code of Federal 
Regulations would be confusing, FDA is revoking Secs. 5.99 and 
10.50(c)(21) when the new part 17 becomes effective.
    As to any pending civil money penalty administrative actions that 
were subject to Notices of Opportunity for Hearing under part 12, when 
these part 17 regulations become effective, FDA will send letters to 
the respondents explaining that the agency intends to reinitiate the 
actions by the complaint and answer process of part 17. None of the 
pending actions has yet reached the point in the process of publication 
of a Notice of Hearing under 21 CFR 12.35. Since part 17 was 
specifically drafted to govern administrative hearings on civil money 
penalty assessments, its use for pending actions will not prejudice the 
respondents and will assure consistency in the adjudication of these 
matters. If, for any reason, there is a stay of the effectiveness of 
these part 17 regulations, the agency will proceed with the pending 
civil money penalty administrative actions under current 21 CFR 5.99, 
10.50(c)(21), and part 12.

II. Summary of and Response to Comments

    In response to FDA's NPRM, the agency received 12 public comments. 
Most came from device manufacturers or their representatives and device 
manufacturer trade associations. In addition, one consumer group and 
the Administrative Conference of the United States commented. What 
follows is a summary of and response to each comment. Most of those 
commenting made more than one comment. Except for those comments that 
are not germane to a particular proposed section of part 17, the 
comments are considered in connection with the proposed sections to 
which they are related. In addition to the changes discussed below, a 
number of editorial changes to the text of the final rule have been 
made to improve the clarity of the regulation.

A. General Comments on the Preamble

    In responding to comments and formulating a final rule, FDA has 
balanced competing concerns: Namely, the interests of potential 
defendants in securing as many procedural safeguards as practicable, 
and the interests of the public in an efficient process that 
effectively implements the statutes. FDA is very conscious of the need 
to provide due process for companies and individuals from whom the 
Government is seeking civil money penalties, and the comments were 
carefully evaluated against this standard. At the same time, for the 
civil money penalty remedy to become an effective enforcement tool 
under the statute, the administrative process must be able to proceed 
with predictability and efficiency. The industry, as a whole, benefits 
from an efficient administrative civil penalties process in that such a 
system will help to maintain consistency in enforcement and thereby 
protect the majority of companies who stay in compliance against unfair 
competition from the small minority of firms that do not.
    Accordingly, in developing this final rule, FDA has sought to 
establish an efficient, predictable system that processes cases in a 
fair and responsible manner, while affording defendants adequate 
procedural safeguards. As benchmarks, the agency has examined other 
existing civil money penalty processes, particularly as administered by 
the Environmental Protection Agency (EPA) and by the Inspector General 
of the Department of Health and Human Services (HHS). (See HHS 
regulation on Medicare Exclusions and Civil Money Penalties, 42 CFR 
part 1005; EPA Civil Penalties and Permit Revocation Regulation, 40 CFR 
part 22; Program Fraud Civil Remedies Regulation for HHS, 45 CFR part 
79; and Program Fraud Civil Remedies Regulation for EPA, 40 CFR part 
27).
    These regulations provide a variety of procedural rights. FDA has 
selected from among these various provisions to create a fair hearing 
process. In response to comments, FDA has made over 25 changes in the 
final rule (see concluding section of this preamble), in addition to 
numerous clarifications throughout the preamble. For example, 
procedural safeguards under part 17 include motions for summary 
decisions, interlocutory appeal from rulings of the presiding officer, 
settlement conferences, allowing the parties to determine an 
appropriate settlement, and providing additional time before the 

[[Page 38613]]
hearing for the exchange of exhibits, witness lists, and written 
testimony. All of the EPA and HHS regulations provide for appeal of a 
presiding officer's initial decision to an appeals board. EPA has an 
Environmental Appeals Board, while HHS has the Departmental Appeals 
Board (DAB). FDA has determined (see paragraph 101 below) that it would 
be an appropriate use of agency resources, as well as an efficient and 
effective means for handling appeals, to have the DAB serve as the 
reviewing authority for appeals of decisions by presiding officers on 
civil penalty actions.
    The DAB is generally recognized as a fair and effective 
adjudicative forum. The DAB is an independent body within HHS with 
expertise in adjudication of civil money penalties. Accordingly, FDA 
will use that board, at least initially, for the adjudication of all 
appeals, including review of default judgments, interlocutory appeals, 
and appeals from initial decisions under this part. Elsewhere in this 
issue of the Federal Register, FDA is publishing a final rule in which 
the Commissioner of Food and Drugs delegates to the DAB the authority 
for the adjudication of appeals.
    While a number of comments to the proposed rule sought procedures 
virtually identical to procedural rights available in civil litigation 
in Federal district courts, another comment urged that FDA use a more 
efficient complaint and answer procedure to streamline the process. 
These part 17 regulations provide a level of procedural safeguards 
consistent with that provided in other existing civil money penalties 
regulations. FDA believes that these procedures afford a respondent an 
impartial forum for the adjudication of any contested civil money 
penalty assessments.
    1. Two comments questioned the use of administrative civil money 
penalties in connection with the PDMA and the NCVIA. Those commenting 
argued that, without specific congressional authority, FDA may not 
administratively impose civil money penalties, but must seek them 
through court proceedings. Additionally, another comment argued that 
FDA may not bind any future statutory grant of civil money penalties 
authority to part 17 hearing procedures.
    FDA disagrees with the position that civil money penalties in 
connection with the PDMA and the NCVIA may not be imposed 
administratively, for the reasons stated in the preamble to the NPRM 
(58 FR 30680 through 30681). FDA acknowledges that the issue has not 
been directly addressed by the courts, but it agrees with the comment 
of the Administrative Conference of the United States that ``any 
challenge to FDA's authority to impose penalties administratively under 
such statutes (as the NCVIA) should be unsuccessful, cf., United States 
v. International Harvester, 387 F. Supp. 1338 (D.D.C. 1974).''
    As to implementation of any future civil money penalty statutory 
provision, FDA has reconsidered the desirability of determining in 
advance the use of part 17 procedures. Although the use of part 17 
procedures to implement future civil money penalty legislation may be 
entirely appropriate, the agency prefers to preserve the flexibility to 
determine the procedures that will apply to specific statutory language 
once enacted. Section 17.1 has been modified to reflect this change.
    2. One comment raised the concern that FDA has thus far not been 
delegated authority to impose civil money penalties by the Secretary of 
Health and Human Services (the Secretary). The comment's premise is 
incorrect. The Secretary has delegated to the Commissioner of Food and 
Drugs (the Commissioner) all authority given the Secretary under the 
Federal Food, Drug, and Cosmetic Act (the act). (See Sec. 5.10(a)(1).) 
(See also section 903 of the act (21 U.S.C. 393).) In addition, the 
Secretary has delegated to the Commissioner authority to perform all 
functions vested in the Secretary by Congress under section 351 of the 
Public Health Service Act (the PHS Act) (42 U.S.C. 262) concerning 
biologic recall orders. (See 5 CFR 5.10(a)(5).) The Secretary has 
granted the Commissioner authority to impose civil money penalties 
under the NCVIA. (See Sec. 5.10(a)(35).) Also the Secretary delegated 
to the Commissioner authority granted the Secretary under the MQSA, 
which includes authority to impose civil money penalties. (See 21 CFR 
5.10(a)(36).)
    3. One comment requested FDA to correct its misquoting in the NPRM 
regarding the language of section 17(f) of the SMDA (21 U.S.C. 333(g)) 
by using ``and'' when the statute provided ``or''.
    The preamble to the NPRM stated (58 FR 30680 at 30681) that ``civil 
money penalties are not authorized against persons who violate section 
519(a) of the act (21 U.S.C. 360i(a)) * * * or section 520(f) of the 
act (21 U.S.C. 360j(f)) * * * unless the violation constitutes a 
significant and knowing departure from such requirements or a risk to 
the public health.'' [emphasis added.] In the July 27, 1993, Federal 
Register (58 FR 40103 through 40104), FDA corrected its inadvertent 
misquote. Section 17(f) of the SMDA (21 U.S.C. 333(g)(1)(B)) states 
that civil money penalties shall not apply to any person who violates 
the requirements of section 519(a) or 520(f) ``* * * unless such 
violation constitutes (I) a significant or knowing departure from such 
requirements, or (II) a risk to public health * * *.'' [emphasis added]
    Conversely, another comment argued that FDA had been inadvertently 
correct and that the legislative history shows that Congress had 
actually intended that the violations in question constitute 
significant and knowing departures in order to be punishable by civil 
money penalties. FDA rejects this argument because Congress' intent is 
clear from the language of the statute. The legislative history 
contained in the Conference Report on the SMDA also supports FDA's 
interpretation (H. Conf. Rept. 959, 101st Cong., 2d Sess. 29 (1990)).
    4. Another comment stated that FDA should make clear that civil 
money penalties are in addition to other remedies available under law, 
not in lieu of them. FDA agrees that the agency has the authority to 
use civil money penalties in addition to other judicial and 
administrative remedies, if appropriate.
    5. One comment asserted that violations of medical device 
reporting, current good manufacturing practice (CGMP), and tracking 
regulations should be enforced through civil money penalties. FDA 
agrees that these violations, as well as others, are suitable 
candidates for civil money penalty actions where authorized by the 
SMDA. FDA does not intend to rule out the use of civil money penalties 
in any situation provided for by law. Nor does FDA believe that civil 
money penalties need be the only remedy it may use to enforce these 
violations.
    6. A comment urged the use of civil money penalties in lieu of 
warning letters for serious violations of law. FDA advises that its 
normal practice is to give prior notice by a warning letter or other 
means before taking more significant enforcement action. However, in 
the case of very serious violations or other special circumstances, the 
agency can and will continue to initiate judicial enforcement actions, 
as may be appropriate with or without the customary prior notice. Civil 
money penalties were not intended to take the place of warning letters; 
rather, civil money penalties were intended to assist the agency in 
safeguarding the regulatory system.
    On April 21, 1995, President Clinton directed agencies to use 
discretion to modify penalties for small businesses. FDA's traditional 
approach, by which the agency usually provides written 

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warning to encourage voluntary correction of violations before 
undertaking the imposition of regulatory sanctions, is in keeping with 
the President's directive. Also, as discussed in paragraph 25, in 
addition to establishing the respondent's liability, FDA must prove the 
appropriateness of the penalty under the applicable statute in 
administrative civil money penalty actions.
    7. One comment requested that the agency set forth specific 
examples of what will constitute substantial compliance with device 
tracking regulations such as assigning a percentage of trackable 
devices that would constitute ``substantial compliance.'' Until FDA has 
gathered more information on how and to what extent industry has 
complied with the device tracking regulations, it would be premature 
for the agency to present such specific, defining examples. FDA 
declines to do this at this time.
    8. Yet another comment proposed that all civil money penalty 
proposals be cleared through the Department of Health and Human 
Services prior to implementation. Because the Commissioner of Food and 
Drugs has been delegated authority to impose civil money penalties as 
noted in comment 2 of section II.A. of this document, the agency 
declines to adopt the comment's suggestion. However, as previously 
noted in the preamble and in paragraph 101 below, FDA has selected the 
DAB, at least initially, as the reviewing authority for appeals of 
civil penalty matters. Thus, the DAB's decision will constitute final 
agency action on contested FDA civil money penalties matters.
    9. Several comments noted the absence of any prohibition against ex 
parte communications with the presiding officer. FDA agrees that 
restrictions on communications with the presiding officer concerning 
matters involved in part 17 hearings would be appropriate. Therefore, 
the agency has added Sec. 17.20 to provide restrictions on ex parte 
communications.
    10. Another comment requested that FDA specifically state that its 
part 17 regulation does not provide for a private right of action. FDA 
advises that only Congress can create a private right of action. FDA's 
regulations are not intended to create such a right.
    11. One comment requested that FDA make explicit the authority of 
the parties and of the presiding officer to use alternative dispute 
resolution (ADR) in resolving a dispute under part 17. FDA agrees that 
settlement discussions should be encouraged. Therefore, the presiding 
officer has been given authority to require the parties to attend 
settlement conferences, which could include a conference held before an 
impartial third party, including the presiding officer, another 
administrative law judge, or a professional mediator. This change is 
reflected in revised Sec. 17.19, and the agency believes it is a 
sufficient authorization for the use of ADR procedures.
    12. The same comment suggested that FDA clarify whether an appeal 
to the Commissioner after an initial decision is required before a 
respondent may seek judicial review. The comment noted that in Darby v. 
Cisneros, 113 S.Ct. 2539 (1993), the Supreme Court determined that 
agency regulations that permit, but do not require, an aggrieved party 
to seek administrative review of a presiding officer's decision, allow 
parties to forego the option of administrative review and proceed 
directly to court. The comment stated a preference for requiring that a 
party seek administrative review of a presiding officer's decision 
before going to court, asserting that to be a sensible allocation of 
responsibilities between courts and agencies. FDA agrees and accepts 
the suggestion that FDA recast the regulation to ensure that a 
respondent must request administrative review, which is now made to the 
DAB, before seeking judicial review. Section 17.51(c) has been revised 
accordingly.
    13. One comment criticized the proposal on grounds that the new 
part 17 will limit respondents' ability to reasonably contest the 
agency's allegations, but did not provide specifics to support the 
assertion. Absent any specific concerns raised by the comment, FDA can 
only reiterate that the agency believes these procedures reasonably 
accord due process and offer respondents a fair opportunity to contest 
the Center's allegations before an impartial presiding officer.
    14. One comment took issue with that portion of the preamble of the 
NPRM which establishes FDA headquarters in Rockville, MD, as the 
``venue of choice for hearing procedures.'' The author of the comment 
urged that hearings take place in the FDA district office in whose 
jurisdiction the violations are alleged to have occurred. The author 
further argued that the burden of proof for change of venue from the 
districts where the alleged violations occurred should rest with the 
Center rather than the respondent. FDA believes this comment would be 
more persuasive if the presiding officer were an FDA official from the 
pertinent district office. However, since the administrative law 
judge's principal office is in Rockville, MD, and other types of 
administrative hearings are held there (e.g., hearings under part 12 of 
FDA's procedural regulations), Rockville, MD, is the most logical and 
appropriate venue in most cases. FDA notes that the presiding officer 
has ample discretion to change the venue of the hearing when the 
Rockville location would present a significant hardship to the 
respondent.
    15. Another comment recommended that FDA establish an internal 
procedure such as an intra-agency council of senior compliance 
officials and representatives from the Office of the Chief Counsel to 
assure the fair exercise of prosecutorial discretion in choosing which 
civil penalty cases to bring and how large a penalty to seek.
    FDA agrees that it is important to exercise enforcement discretion 
in a fair and reasonable manner. Due to the newness of the civil 
penalties authority and the lack of FDA precedents in this area, the 
Office of Regulatory Affairs, Office of Enforcement, will establish 
coordinating procedures to help assure consistent policies in 
exercising civil money penalties authority agencywide. This will 
augment FDA's existing multilevel process that reviews all compliance 
actions proposed by the field and Centers, including civil money 
penalties, and which includes review by the Office of the Chief 
Counsel. If FDA determines that additional review procedures are 
appropriate after further experience assessing civil money penalties, 
it can establish those as a matter of internal agency procedure and not 
regulation.

B. Comments on Specific Sections

Section 17.3--Definitions
    16. One comment noted that proposed Sec. 17.3 defined several terms 
including ``defective,'' ``knowing departure,'' ``significant 
departure,'' and ``minor violations,'' used in the SMDA, but that the 
defined terms were not used elsewhere in the proposed rule and, 
therefore, were unnecessary. The comment urged that it should be made 
clear that the purpose of the definitions section is to define certain 
terms used in the SMDA, not terms used in 21 CFR part 17.
    FDA agrees that the final rule should clarify that these defined 
terms apply to specific acts giving rise to civil money penalties, and 
has revised Sec. 17.3 to reflect these changes. The agency has also 
modified the definition of ``person'' or ``respondent'' in Sec. 17.3(b) 
to provide additional examples of potential respondents. Finally, FDA 
has included by reference in Sec. 17.3 definitions from the act, Title 
21, Code of Federal 

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Regulations, and the PHS Act as they may be used in part 17 
proceedings.
    17. Another comment took issue with FDA's interpretation of the 
phrase ``significant departure'' as that term is used at 21 U.S.C. 
333(g)(1)(B)(i), which applies to certain recordkeeping and reporting 
requirements for devices (21 U.S.C. 360i(a)) and to CGMP requirements 
for devices (21 U.S.C. 360j(f)). Proposed Sec. 17.3(c), which is now 
Sec. 17.3(a)(1), defined significant departure as a ``departure from 
requirements which is neither isolated nor inconsequential.'' The 
comment contended that this definition is likely to be met more often 
than not in the case of CGMP violations. The comment further argued 
that this result was contrary to the intent of Congress.
    FDA notes that the comment cited no statutory language or 
legislative history regarding the definition of ``significant 
departure,'' although a review of the conference report (H.R. Conf. 
Rep. No. 959, 101st Cong., 2d Sess. 29 (1990)) indicates that Congress 
did not limit a ``significant departure'' as the comment advocated. FDA 
believes, however, that the proposed definition could be improved to 
state that a significant departure includes a single major incident or 
a series of incidents that collectively are consequential. Section 17.3 
has been amended to reflect this interpretation and to clarify that 
``significant departure'' is being defined for the purposes of 
interpreting 21 U.S.C. 333(g)(1)(B)(i).
    The agency emphasizes that it will not seek assessments of civil 
money penalties for trivial violations. FDA cannot list all violations 
that it regards as ``inconsequential,'' and believes that it can and 
will make reasonable judgments about the importance of violations.
    18. One comment requested that the definition of ``knowing 
departure'' be revised. The author would have ``knowing'' limited to 
actual knowledge. FDA's proposed definition stated that ``knowing 
departure means actual knowledge of departure from requirements, or 
acting in deliberate ignorance of such departure, or acting in reckless 
disregard of such departure.'' FDA disagrees with the comment. Part 17 
defines ``knowing'' consistently with the definitions of ``knowingly'' 
or ``knew'' in the act as amended by the GDEA in 1992 (now 21 U.S.C. 
321(bb)). Nothing in the SMDA or its legislative history suggests that 
the definition of ``knowing'' in 21 U.S.C. 333(g)(1)(B)(i) was intended 
to be more restrictive than the definitions of ``knowingly'' or 
``knew'' that were added to the act by the GDEA in 1992. FDA has 
revised the definition of ``knowing'' to clarify that it is being 
defined for the purposes of interpreting 21 U.S.C. 333(g)(1)(B)(i).
    19. Another comment maintained that the specific acts giving rise 
to civil money penalties are defined much too broadly. For example the 
author of the comment maintained that ``minor violations'' is too 
broadly defined. In proposed Sec. 17.3, the term ``minor violations'' 
was defined as ``violations which are isolated and inconsequential.''
    The term ``minor violations,'' as used in 21 U.S.C. 
333(g)(1)(B)(ii), prohibits the assessment of civil money penalties for 
minor violations against a person who demonstrates substantial 
compliance with the requirements of 21 U.S.C. 360i(e) and (f), which 
relate to device tracking and correction reports. FDA believes that the 
term ``minor violations'' was used by Congress to prohibit the 
assessment of civil penalties when a departure from requirements does 
not rise to a level of single major incident or a series of incidents 
that are collectively consequential. FDA has revised the final rule 
(Sec. 17.3(a)(3)) accordingly and has clarified that ``minor 
violations'' is being defined for the purposes of interpreting 21 
U.S.C. 333(g)(1)(B)(ii). FDA notes that this definition of ``minor 
violation'' is the converse of that adopted for significant departure 
as used in 21 U.S.C. 333(g)(1)(B).
    20. FDA received several comments on the definition of 
``defective.'' As proposed, Sec. 17.3(a)(4) defined defective to 
include ``any defect in performance, manufacture, construction, 
components, materials, specifications, design, installation, 
maintenance, service, or any defect in mechanical, physical and 
chemical properties in a device.'' The comments expressed concern about 
possible broad implications of the proposed definition. In the final 
rule, FDA has generally retained the proposed definition but clarified 
that it is included in the defined terms solely for the purpose of 
interpreting 21 U.S.C. 333(g)(1)(B)(iii), which pertains to the very 
narrow area of devices that may be prepared, packed or held under 
insanitary conditions.
    One comment argued that the inclusion of ``performance'' in the 
definition of ``defective'' is overly broad because it includes 
potential user error in the operation of the device. The comment 
suggested ``performance'' should be eliminated from the definition.
    The intent of 21 U.S.C. 333(g)(1)(B)(iii) was to exempt, from 
potential assessment of civil penalties, those violations that may 
result from preparing, packing, or holding devices under insanitary 
conditions but that do not involve ``defective'' devices.
    FDA agrees that performance failures based solely on user error 
unrelated to the conditions stated in 21 U.S.C. 351(a)(2)(A) or 
unrelated to problems with the device itself would not be considered a 
``defect in performance'' of the device. The agency has revised the 
definition to make it clearer that ``defect in performance'' refers to 
``defect in performance of a device,'' not to defect in performance of 
a user.
    21. The same comment also recommended that the definition of 
``defective'' in Sec. 17.3 be amended to add the following statement: 
``Defective service and maintenance are included within the scope of 
this definition only to the extent that such defects are the result of 
negligence.''
    FDA does not believe that a different standard should be applied to 
service and maintenance than to other activities covered by the 
definition, such as manufacture and construction. Therefore, the agency 
is not adopting the suggested amendment to the definition. FDA notes 
that it does not envision minor deviations from established maintenance 
or service schedules as being the basis for a civil money penalty 
action. FDA has clarified the definition of ``defective'' to substitute 
``or'' for ``and'' in the phrase ``any defect in the mechanical, 
physical, or chemical properties of a device,'' since a defect in any 
one of these properties would cause the device to be ``defective.''
    22. Another comment requested that the definition of ``defective'' 
for purposes of civil money penalty actions incorporate the concept 
that a device is defective only if the device could reasonably be 
expected to pose a risk of some harm or not to function as intended 
because of the defect.
    FDA disagrees. FDA will not seek civil money penalties because of 
trivial defects. However, defects are deviations that can affect the 
quality or performance characteristics of a device. To require a 
showing that the deviation is expected to cause harm or malfunction 
would shift the standard to allow more deviations and to provide less 
public health protection. The civil money penalty remedy is intended to 
promote the public health and the adopted definition of ``defective'' 
for purposes of 21 U.S.C. 333(g)(1)(B)(iii) supports this goal.
Section 17.5--Complaint
    23. A comment remarked that Sec. 17.5 does not contain any 
safeguards to ensure that FDA will only bring actions 

[[Page 38616]]
in those instances where it believes in good faith after properly 
conducting an investigation that violations have occurred sufficient to 
warrant civil money penalties. The comment did not identify what those 
safeguards should be. Although FDA declines to change Sec. 17.5, as the 
answer to comment 15 makes clear, FDA's review process for assessing 
civil money penalties should ensure that the agency will bring such 
actions only under the circumstances stated in the comment.
    24. One comment argued that a complaint should specify ``all 
facts'' on which FDA is relying. FDA believes that the requirement 
regarding the contents of the complaint filed under part 17, as 
proposed, is consistent with other civil processes. For example, a 
complaint filed under Rule 8(a) of the ``Federal Rules of Civil 
Procedure,'' requires only ``* * * (2) a short and plain statement of 
the claim showing that the pleader is entitled to relief * * *.'' The 
requirements for a complaint are also consistent with the previously 
cited EPA and HHS Program Fraud Civil Remedies regulations.
    FDA intends to file complaints that provide a reasonable 
description in sufficient detail for a respondent to have a fair 
understanding of the bases for the action. Moreover, the regulations 
requiring production of documents (Sec. 17.23) and exchanges of witness 
statements and exhibits (Sec. 17.25) provide for detailed presentations 
of factual information.
    25. The same comment argued that the complaint should justify the 
amount of civil penalties being sought in accordance with factors 
identified in Sec. 17.34. Again, FDA believes that a complaint filed 
under part 17 satisfies the requirements of notice pleading.
    FDA recognizes that under the Administrative Procedure Act (APA) (5 
U.S.C. 556(d)), as interpreted by the Supreme Court in Director, OWCP 
v. Greenwich Collieries, 114 S. Ct. 2251, 2257 (1994), the agency has 
the burden of proof on the respondent's liability and on the 
appropriateness of the penalty in light of the factors specified in the 
statute to be taken into account in determining the penalty. However, 
the proof that is required by the APA and specified in Sec. 17.33(b) is 
to be presented by the Center at the time of the hearing, not, as the 
comment suggests, in the complaint. In order to clarify that the burden 
of proof referenced in the APA requires the Center to prove the 
respondent's liability and the appropriateness of the penalty under the 
applicable statute, Sec. 17.33(b) has been revised to state that ``in 
order to prevail, the Center must prove respondent's liability and the 
appropriateness of the penalty under the applicable statute by a 
preponderance of the evidence.''
    26. This same comment called for ``the intervention of [an] 
impartial, non-investigating party regarding whether an administrative 
complaint is sustainable.'' FDA believes that part 17 already provides 
for such an ``impartial non-investigating party'' in the form of a 
presiding officer, who is an administrative law judge qualified under 5 
U.S.C. 3105.
    27. Another comment objected that the regulation does not provide 
for a separation of investigatory and adjudicatory functions and stated 
that civil money penalty proceedings should be among those hearings to 
which separation of functions applies. FDA has added Sec. 17.20 to 
provide restrictions on ex parte communications with the presiding 
officer. Since the DAB will be adjudicating appeals in civil money 
penalties proceedings, there is no need to adopt separation-of-
functions rules in these proceedings.
    28. Yet another comment complained that Sec. 17.5(a) fails to 
identify anyone in FDA management who must approve the decision to 
impose a civil money penalty. Further, the author of the comment stated 
a belief that an initial determination of whether or not civil money 
penalties should be imposed should be made prior to the service of a 
complaint.
    FDA advises that such an initial determination is in fact made. As 
described in paragraph 15, FDA has an established review procedure for 
enforcement cases, and that process will have added coordination for 
civil money penalties cases due to the newness of the authority and the 
lack of FDA precedents. However, since this is an institutional 
decision, it is not appropriate to designate a single individual as the 
agency's decisionmaker.
    29. Yet another comment argued that notice pleading such as that 
provided for in Sec. 17.5(b)(1) is inappropriate in light of the 
limited discovery provided for under these regulations. The comment 
called for either a more detailed notice in the complaint or greater 
discovery.
    As discussed in paragraphs 24 and 61, FDA believes expanded 
discovery and pleading are not necessary. FDA intends to file 
complaints that provide a reasonable description in sufficient detail 
for respondents to have a fair understanding of the bases for the 
action.
    30. One comment requested that FDA first put a respondent on notice 
via a warning letter before it files a claim for civil money penalties. 
FDA advises that as with FDA's judicial enforcement remedies, it will 
normally give prior notice by a warning letter or other means, although 
there may be exceptional circumstances where no prior warning would be 
given.
Section 17.7--Service of Complaint
    31. One comment stated that an affidavit as proof of service should 
suffice only when service is made by personal delivery. FDA agrees that 
an affidavit is most appropriate when service is made by personal 
delivery, and has amended Sec. 17.7(b)(1) to refer to ``personal 
delivery.''
    32. A comment expressed concerns about the costs to be incurred by 
both the Center and the respondent as a result of these administrative 
procedures. FDA was mindful of the costs of litigation when it proposed 
part 17, and has sought to draft these procedures to minimize costs to 
all concerned. For example, providing for written direct testimony 
rather than oral direct testimony will significantly reduce the time 
and costs associated with hearings before the presiding officer.
Section 17.9--Answer
    33. One comment argued that Sec. 17.9 should provide for amendments 
to an answer after submission. FDA advises that it intends that 
complaints and answers may be amended on motion of the parties 
throughout the proceeding to conform to proof as justice may require. 
The ``Federal Rules of Civil Procedure'' follow this method for 
amendment of pleadings, allowing the motions to be ruled on by the 
district judge. Similarly, the presiding officer has been given this 
authority, which is so provided in the final rule (Sec. 17.9(d)).
    34. A comment argued that 30 days is not sufficient to file an 
answer and that 60 days should be allowed for this purpose. FDA advises 
that if 30 days is not sufficient, a respondent may apply for more time 
upon a showing of good cause. (See Sec. 17.9(c).)
    35. One comment observed that Sec. 17.9(c) provides for a request 
for an extension of time within which to file an answer, which request 
is to be ruled on by the presiding officer, who at that stage will not 
have been appointed. Under proposed Sec. 17.12, the presiding officer 
is appointed only after the respondent has answered. The comment 
requested that the final rule change the procedure.
    FDA agrees and is changing the rules to eliminate Sec. 17.12, which 
is unnecessarily repetitious, to include the 

[[Page 38617]]
definition of ``presiding officer'' in Sec. 17.3, and to add a 
provision to Sec. 17.5(d) for the assignment of the presiding officer 
upon the filing of the complaint.
    36. Another comment objected that the proposed rules allow for the 
default of a respondent who fails to answer a complaint because 
extraordinary circumstances prevented it from responding within a 
particular timeframe.
    FDA believes the regulation, as proposed, adequately addresses this 
point. Section 17.9(c) provides for an extension of time within which 
to file an answer when the respondent can show good cause. 
Additionally, a respondent may file a motion to reopen a default 
judgment on the grounds that extraordinary circumstances prevented the 
respondent from filing an answer. This should provide the relief that 
the comment requested.
Section 17.11--Default Upon Failure to File An Answer
    37. A comment argued that Sec. 17.11 should apply an ``excusable 
neglect'' standard, not an ``extraordinary circumstances'' test, for 
determining when relief from default for failure to answer should be 
granted. FDA prefers the ``extraordinary circumstances'' test, which, 
although somewhat harder to meet, is justified by the need to encourage 
respondents to respond in a timely fashion. Additionally, both EPA's 
and HHS's Program Fraud Civil Remedies regulations use an 
``extraordinary circumstances'' test for determining whether to set 
aside a default judgment.
    38. Another comment recommended that the language set forth in 
Sec. 17.11(a) be modified to contain a requirement for the Commissioner 
to stay the initial decision of default upon a showing of extraordinary 
circumstances. FDA has changed Sec. 17.11 regarding the issuance of a 
decision based upon default to allow the presiding officer to issue the 
initial decision rather than the Commissioner. The determination of 
whether to set aside a default judgment is an administrative matter 
that is better suited for initial review by the presiding officer, and 
which would be subject to appeal to the DAB.
    39. The same comment stated that it is imperative that the term 
``extraordinary circumstances'' be fully defined. FDA disagrees. To 
attempt to define and thus limit the circumstances which will be deemed 
``extraordinary'' would be futile. FDA could not possibly anticipate 
all ``extraordinary circumstances.'' Indeed, such an attempt would 
probably not be in the interest of respondents as a group, since it 
would necessarily limit the kinds of circumstances that could be 
considered ``extraordinary'' and, therefore, in which a default 
decision could be set aside.
    40. Yet another comment requested that no time limit be imposed on 
the remedy set forth in proposed Sec. 17.11(c) concerning late filing 
of an answer. FDA disagrees. It is difficult to conceive of 
``extraordinary circumstances'' that would justify extending the period 
for filing an answer or motion before the initial decision becomes 
final and binding. The regulation sets forth a reasonable procedure for 
the presiding officer to set aside a default judgment upon the showing 
of extraordinary circumstances by the respondent.
    41. A comment requested that, in order for a default judgment to be 
entered for failure to answer a complaint, the Center should be 
required to prove that the complaint was received by the respondent. 
FDA agrees and has amended Sec. 17.11 accordingly.
    42. A comment advocated a provision authorizing a party to move to 
disqualify a presiding officer in order to assure a fair and impartial 
hearing. The agency advises that such a motion, carefully documented 
and based upon good cause, may be filed without a provision in these 
rules specifically authorizing it. The APA (5 U.S.C. 556(b)) authorizes 
disqualification of a presiding officer based on the filing in good 
faith of a timely and sufficient affidavit.
Section 17.13--Notice of Hearing
    43. One comment argued that Sec. 17.13 should contain clear 
standards, with reasonable timeframes, for setting the date, time, and 
place of the hearing or prehearing conference. Further, the comment 
suggested that the rules should clarify that the presiding officer sets 
all hearing dates.
    FDA believes that it is currently clear that the presiding officer 
sets all hearing dates. However, FDA disagrees that the rules should 
set timeframes for a hearing or prehearing conference. Scheduling 
depends on many variables, including the schedule of the presiding 
officer, the length of the hearing, the number of witnesses, etc. The 
presiding officer needs flexibility to schedule prehearing conferences, 
testimony, and briefing within the limits set forth in the regulation. 
Accordingly, additional specific time limitations are not being added 
to the regulations.
    44. One comment requested that Sec. 17.13 explicitly provide that 
either the notice of hearing or the complaint state specifically and in 
detail each violation alleged and the factual basis for it. The 
complaint is required to state the allegations of liability against the 
respondent, including the statutory basis for liability, to identify 
the violations that are the basis for the alleged liability, and to 
state the reasons that the respondent is responsible for the 
violations. In addition, the notice of hearing requires a statement as 
to the nature of the hearing and the legal authority and jurisdiction 
under which the hearing is to be held, as well as a description of the 
procedures for the conduct of the hearing.
    FDA declines to make the requested change. The agency believes that 
the regulations, including Sec. 17.5(b), require that a complaint 
provide a respondent with a reasonable description in sufficient detail 
for a respondent to have a fair understanding of the bases for the 
action and the issues for the hearing. FDA has clarified in Sec. 17.13 
that the notice of hearing is to be served on the respondent after the 
answer has been filed.
    45. Another comment expressed the view that proposed Sec. 17.13(f), 
which is now Sec. 17.13(e), allows ex parte communications between the 
Center and the presiding officer without participation or comment by 
the respondent. The comment requested that ex parte communications not 
be permitted.
    As noted in comment 9 above, Sec. 17.20 has been added to restrict 
ex parte communications under part 17. However, FDA believes that ex 
parte contacts are necessary with respect to scheduling of the hearing 
or prehearing conference, and are contemplated for such administrative 
purposes. Ex parte scheduling contacts are common at agencies 
throughout the Federal Government and are not improper under 
Sec. 17.20. All scheduling decisions made before the notice of hearing 
is served are subject to change on motion of the respondent, in any 
event.
Section 17.15--Parties to the Hearing
    46. One comment argued that Sec. 17.15 should specify that parties 
may settle issues prior to the hearing without admitting liability. FDA 
advises that there is no need to specifically state that the parties 
can stipulate that a settlement does not carry with it an admission of 
liability.
    The regulation provides that the parties may agree to a settlement 
of all or a part of the matter. It would be inappropriate to limit by 
regulation the issues that may or may not be covered in a settlement 
agreement. The final rule allows for wide latitude in settlement 
agreements. 

[[Page 38618]]

    47. Another comment requested that FDA specifically state that 
respondent's counsel may be present and participate at the hearing. FDA 
agrees, and has amended the regulation to add Sec. 17.15(c) 
accordingly.
    48. A comment recommended that the final rule state whether a 
settlement pursuant to Sec. 17.15(b) is to be incorporated in the 
initial decision or is instead to be an independent agreement between 
the parties. The comment went on to state that, if the settlement is to 
be incorporated in an independent agreement, the complaint should be 
dismissed.
    FDA advises that a settlement agreement is to be an independent 
agreement. However, FDA believes that it is not necessary to require 
the dismissal of the complaint upon the filing of a settlement 
agreement, as the case will be considered resolved and closed by the 
filing of the settlement agreement, and the agreement will so provide.
Section 17.17--Summary Decisions
    49. A comment objected to the inclusion of a summary decision 
procedure in proposed part 17. FDA affirms the desirability of summary 
decision procedures in this context. In many situations, the facts will 
be undisputed and the only question to be decided is one of law. In 
such cases, time and money can be saved through a summary decision 
procedure.
    50. The author of the same comment urged that, if summary decision 
procedures are retained, time to respond to a motion for summary 
decision should be 30 days, not 10. FDA agrees that 10 days is a short 
time in which to respond. Therefore, FDA is extending from 10 to 30 
days the period in which to respond to a motion for summary decision.
    51. Another comment argued that summary judgment for the Center 
should never be granted without the filing of an affidavit prior to the 
motion being filed. The comment asserts that failure to require an 
initial affidavit prior to a motion for summary decision denies the 
respondent the opportunity to verify the facts set forth in the 
complainant's pleadings.
    The language in Sec. 17.17 setting forth the use of affidavits in 
filing for a motion for summary decision is virtually identical to the 
language in Rule 56 of the ``Federal Rules of Civil Procedure.'' 
Respondent may oppose the motion for summary decision with specific 
facts or opposing affidavits. The presiding officer may only grant the 
motion if the pleadings, affidavits, and other material in the record 
show that there is no genuine issue as to any material fact. 
Additionally, the presiding officer may direct further evidentiary 
proceedings on facts still at issue. Accordingly, FDA believes the rule 
provides adequate safeguards for the due process rights of the 
respondent.
    52. Another comment asked the following: (1) Whether or not a 
proceeding will be stayed pending an interlocutory appeal granting 
partial summary decision, and (2) whether judicial review of such a 
decision is a prerequisite to interlocutory relief.
    The decision to stay a proceeding pending appeal is within the 
discretion of the presiding officer, who will make such a decision 
based on the facts before him or her at the time. Similarly, FDA 
believes that in some circumstances it would not be necessary or 
appropriate to have an interlocutory appeal of a presiding officer's 
partial summary judgment decision on civil money penalties. A decision 
by a district court granting partial summary judgment is usually not 
reviewable by the court of appeals on an interlocutory basis. (See, 
e.g., King v. California Co., 224 F.2d 193 (5th Cir.), cert. denied, 
352 U.S. 1007 (1955); Marino v. Nevitt, 311 F.2d 406 (3rd Cir. 1963); 
Acha v. Blame, 570 F.2d 57 (2nd Cir. 1978).)
    53. Another comment suggested that respondents should be given an 
opportunity to conduct discovery before FDA may bring a motion for 
summary decision. FDA advises that the presiding officer has the 
discretion to deny the motion, grant the motion, or order a continuance 
to permit affidavits or additional evidence to be obtained under 
Sec. 17.23(a).
    54. Another comment argued that a party should have the option of 
taking an interlocutory appeal on a partial summary decision order or 
appealing the issue after a final disposition of the entire matter. FDA 
believes that a party should be permitted to request interlocutory 
appeal and has amended Sec. 17.17 and added Sec. 17.18 accordingly.
    Economy of effort dictates that partial summary decisions not be 
appealed routinely to the entity designated by the Commissioner to 
decide appeals (currently the DAB) on an interlocutory basis, but FDA 
has agreed to provide the option to permit interlocutory appeal within 
the discretion of the presiding officer and the entity hearing the 
appeal. In general, appeal of all issues after a final disposition of 
the entire matter would reduce unnecessary review time for resolution 
of civil money penalty cases.
    55. One comment expressed a concern about language in the preamble 
of the proposed rule to the effect that the SMDA permits FDA to bypass 
the administrative hearing procedure and pursue the imposition of civil 
money penalties in Federal court. FDA has reconsidered the language 
stated in the NPRM.
    The statute authorizes assessment of civil money penalties in an 
administrative procedure under the SMDA (21 U.S.C. 333(g)(2)), and this 
is the most efficient manner of imposing civil money penalties. 
Judicial review would only occur in the United States Court of Appeals 
as initiated by the respondent (21 U.S.C. 333(g)(3)).
Section 17.19--Authority of the Presiding Officer
    56. A comment objected that Sec. 17.19 does not set forth criteria 
upon which the presiding officer is to base the assignment of a hearing 
date. This hearing date, according to the comment, should be within at 
least 30 days of the giving of written notice in all hearings.
    FDA does not believe it is necessary to set forth such criteria. 
The presiding officer will set dates based upon factors such as his or 
her own schedule, the length of the hearing, and the number of 
witnesses. FDA hopes that hearings will be completed expeditiously, but 
a 30-day period from notice until actual hearing may not be enough time 
in complex hearings.
    57. A comment complained that proposed Sec. 17.19(b)(14), which is 
now paragraph (b)(15), does not define ``related or similar 
proceedings.'' FDA chose not to define this phrase because of the 
difficulty of anticipating all proceedings that might be ``related or 
similar.'' The comment provides no help in defining the phrase, and the 
agency does not believe that a definition is necessary.
    58. A comment argued that FDA should not have the power to subpoena 
documents because this would impermissibly broaden FDA's enforcement 
powers. FDA disagrees. Congress has specifically provided that FDA may 
subpoena documents under certain circumstances in civil money penalty 
proceedings. (See 21 U.S.C. 333(g)(2)(A) and 21 U.S.C. 335(b)(1)(A)). 
This statutory authority is similar to that granted to, and exercised 
by, other Federal entities, such as the EPA and the HHS Inspector 
General, and the agency expects to use this authority to the extent 
provided by law. (See paragraph 60 below.)
    59. Yet another comment complained that proposed Sec. 17.19(b)(16), 
which is now paragraph (b)(17), which permits the presiding officer to 
``waive, suspend, or modify any rule,'' gives too much discretion to 
the presiding officer. The 

[[Page 38619]]
comment urged that this language be deleted. FDA disagrees. Under 21 
CFR 12.70(m), the presiding officer in formal FDA evidentiary hearings 
has had this authority for many years, and there have been few, if any, 
allegations that this authority has been abused.
    60. One comment opposed the authorization in Sec. 17.19(b)(5) for 
issuance of subpoenas by the presiding officer in proceedings under 
section 303(g)(2)(A) of the act (21 U.S.C. 333(g)(2)(A)). The author of 
the comment stated that this section of the SMDA authorizes only an 
investigative subpoena, not a hearing subpoena.
    FDA disagrees with the comment's interpretation of the SMDA, which, 
in pertinent part, reads as follows: ``In the course of any 
investigation, the Secretary may issue subpoenas requiring the 
attendance and testimony of witnesses and the production of evidence 
that relates to matters under investigation.'' FDA interprets this to 
allow the agency to issue subpoenas related to a civil money penalty 
proceeding at any time, including during the adjudication of the 
penalty. The legislative history indicates that the agency was given 
authority to subpoena records and witnesses relevant to the civil 
penalty proceeding. In addition, the statutory phrase ``attendance and 
testimony of witnesses and the production of evidence'' reflects an 
intention that the testimony and documents be useable at the hearing 
itself.
Section 17.23--Discovery
    61. A comment stated that FDA should authorize depositions, written 
interrogatories, and requests for admissions. The comment argued that, 
while brevity and economy are worthwhile goals, respondents need fuller 
discovery. The comment asserts that discovery depositions are necessary 
tools in the formation of a response to a civil money penalties 
complaint. Specifically, the comment objects to the presentation of 
hearing testimony orally without the opportunity to depose witnesses 
before the hearing.
    FDA disagrees, and does not believe that additional forms of 
discovery are necessary for due process to be accorded to respondents. 
EPA and HHS adjudicative procedures provide these discovery mechanisms 
under their regulations enacted pursuant to the Program Fraud Civil 
Remedies Act (31 U.S.C. 3801, et. seq.). However, 31 U.S.C. 
3803(g)(3)(B)(ii) requires that discovery be authorized to the extent 
allowed by the presiding officer. The program statutes that these part 
17 provisions implement do not require that discovery be provided and 
FDA is not required to provide for discovery under the APA, which 
governs these procedures. (See Pacific Gas and Electric Co. v. 
F.E.R.C., 746 F.2d 1383, 1387 (9th Cir. 1984); McClelland v. Andrus, 
606 F.2d 1278, 1285 (D.C. Cir. 1979).)
    FDA has discretion to determine the extent of discovery to which a 
party is entitled in an administrative hearing. In order to allow the 
parties to present a witness' testimony in the event that a witness 
would be unavailable for the hearing, FDA has added Sec. 17.23(e) to 
provide for depositions in limited circumstances. Specifically, the 
presiding officer may order depositions upon a showing that the 
information sought is not available by alternative methods and there is 
a substantial reason to believe that relevant and probative evidence 
may not otherwise be preserved for presentation by a witness at the 
hearing.
    In order to provide advance notice of each witness' testimony prior 
to cross-examination at the hearing, FDA has changed Sec. 17.37(b) to 
require that direct testimony of witnesses be submitted in written 
form. Section 17.25(a) requires that parties exchange written testimony 
at least 30 days before the hearing. This should eliminate any concern 
that a party may be unfairly surprised by a witness' testimony 
presented at a hearing. Section 17.19(b)(10) has also been changed to 
authorize the presiding officer to recall a witness for additional 
testimony upon a showing of good cause. The failure of a party to 
provide written direct testimony of a witness before a hearing will 
result in exclusion of the witness' testimony.
    The prehearing production of documents and exchange of exhibits by 
both parties, coupled with the right to cross-examine witnesses at the 
hearing and recall witnesses upon a showing of good cause, obviates the 
need for routine depositions, written interrogatories, and requests for 
admission. Recent changes to the ``Federal Rules of Civil Procedure'' 
have significantly reduced the number of depositions available to 
parties in Federal court litigation because of their expensive and time 
consuming nature (Fed. R. Civ. Proc. 30(a)(2)). FDA believes that its 
provision for written direct testimony is more cost effective for all 
concerned. Additionally, to ensure timely exchange of documents between 
the parties, Sec. 17.23(a) has been changed to require that requests 
for production of documents be answered 30 days after the request, and 
that the request be made no later than 60 days before the hearing, 
unless otherwise ordered by the presiding officer.
    62. Another comment argued that Sec. 17.23 should specifically 
authorize the presiding officer to grant protective orders for trade 
secrets and confidential commercial information.
    FDA agrees and has added a new paragraph to Sec. 17.19(b)(18) to 
the final rule authorizing the presiding officer to issue protective 
orders for the protection of trade secrets and confidential commercial 
information. In order to reflect this change and to eliminate any 
confusion that resulted from the proposed rule, FDA has revised 
Secs. 17.28, 17.33, and 17.41 to more clearly state the disclosure 
rules related to part 17 hearings. Additionally, in Sec. 17.23(d)(3) 
FDA has added that the burden of showing that a protective order is 
necessary is on the party seeking the order.
    63. A comment argued that Sec. 17.23 should specifically exempt 
``privileged'' information from access by FDA, even under a protective 
order. The comment expressed concern that the subsection authorizing 
the presiding officer to grant a protective order does not address 
trade secrets and confidential commercial information.
    The agency believes that it would not be appropriate for FDA to be 
denied access to such information. FDA typically has broad access to 
confidential documents through its regulatory activities and carefully 
safeguards the confidentiality of those documents. As discussed in 
comment 62, the presiding officer is authorized to issue a protective 
order that will prevent public disclosure of such information.
Section 17.25--Exchange of Witness Lists, Witness Statements, and 
Exhibits
    64. A comment took issue with the harshness of the ``extraordinary 
circumstances'' test for relief for failure to exchange witness lists, 
statements, and exhibits. The author argued that this relief should be 
granted only when a party did not substantially comply or noncompliance 
was in bad faith.
    FDA disagrees with the comment's interpretation of proposed 
Sec. 17.25(b)(2). However, the agency has clarified that Sec. 17.25 
(b)(2) and (b)(3) refer to the timely exchange of witness lists under 
Sec. 17.25(a). The exclusion of other evidence not exchanged in 
accordance with Sec. 17.25(a) is within the discretion of the presiding 
officer as noted in Sec. 17.25(b)(1). The agency believes that it is 
fair and appropriate to grant relief from sanctions for failure to 
follow the requirements for the timely exchange of witness lists only 
if there are ``extraordinary circumstances.'' 

[[Page 38620]]

    To provide additional time for the parties to prepare for the 
hearing, FDA has changed the deadline for the exchange of witness 
lists, exhibits, and prior written statements of witnesses from 15 days 
to 30 days before the hearing. Section 17.25(c) has also been changed 
to add that objections to authenticity of documents, exchanged pursuant 
to Sec. 17.25(a), must be made no later than 5 days before the hearing, 
or the documents will be deemed authentic.
Section 17.27--Hearing Subpoenas
    65. A comment argued that the authority of the presiding officer 
under Sec. 17.27 to subpoena witnesses broadens FDA's power and is not 
authorized under the PDMA and the NCVIA. FDA agrees that because 
neither the PDMA nor the NCVIA grants FDA subpoena powers, Sec. 17.27 
should not be made applicable to hearings under these statutes.
    FDA is altering Sec. 17.27 to clarify that subpoenas may only be 
issued by the presiding officer to the extent authorized by law. In 
order to ensure that a party can prove that a witness has been served 
with a subpoena, FDA has deleted the provision on service of subpoenas 
by first-class mail. Revised Sec. 17.27(e) provides that subpoenas 
shall be served in the manner prescribed for service of a complaint in 
Sec. 17.7.
Section 17.30--Computation of Time
    66. Another comment contended that the ``less than 7 days'' time 
period stated in proposed Sec. 17.30(b) should be changed to be ``less 
than 11 days'' if the summary decision response time in Sec. 17.17 
remains at 10 days. The comment explained that Rule 6(a) of the 
``Federal Rules of Civil Procedure'' uses the ``less than 11 days'' 
rule specifically to avoid routine requests for extension of the 10-day 
time for responding to most motions, a period that may include only 5 
business days. FDA is changing the summary decision response time to 30 
days (see paragraph 50), which should obviate the need for routine 
requests for extension of the time for responding to motions for 
summary decision.
Section 17.33--The Hearing and Burden of Proof
    67. A comment urged that the presiding officer be required to 
exclude from the public portion of a hearing all evidence involving 
what he or she has determined to be trade secrets or confidential 
commercial information. FDA believes that this is unnecessary.
    The agency has revised Sec. 17.33(d) to clarify the scope of 
information that may be presented in a closed hearing. Under Sec. 17.33 
the presiding officer will apply existing laws and regulations to 
protect trade secrets and confidential commercial information from 
public disclosure.
    68. Yet another comment urged that the Center be required to prove 
its case by ``clear and convincing evidence'' in light of what the 
comment refers to as the extremely broad definitions of punishable acts 
in Sec. 17.3, rather than by a ``preponderance of evidence'' as 
provided for in the proposal.
    FDA believes that the definitions in Sec. 17.3 as revised provide 
adequate explanation of the defined terms. The acts for which civil 
money penalties may be assessed, however, are delineated in the various 
statutory schemes for civil penalties to which part 17 applies. The 
``preponderance of evidence'' test is common in many civil proceedings, 
and is the appropriate standard of proof to be applied by the presiding 
officer under 5 U.S.C. 556(d). (See Sea Island Broadcasting of S.C. v. 
Federal Communications Commission, 627 F.2d 240 (D.C.Cir.), reh. den., 
cert. denied, 449 U.S. 834 (1980).) FDA rejects the comment.
Section 17.34--Determining the Amount of Penalties and Assessments
    69. Two comments urged that FDA include ``degree of culpability'' 
as a factor in determining the amount of a civil money penalty under 
Sec. 17.34. The degree of culpability is listed as a factor to be 
considered in 21 U.S.C. 333(g)(2)(B). Because the statutory civil money 
penalty provisions implemented by this regulation differ, FDA has 
referenced the statutory scheme under which the penalty is assessed for 
purposes of determining the amount of penalty, rather than listing 
factors in Sec. 17.34. Accordingly, FDA rejects the comment.
    70. Another comment argued that FDA should factor in the degree to 
which a respondent has cooperated with FDA. FDA believes that the 
presiding officer could properly consider the extent of cooperation 
under the authority provided in Sec. 17.34(c).
Section 17.35--Sanctions
    71. Another comment argued that the sanctions section (Sec. 17.35) 
is unclear, unnecessarily harsh, and goes beyond the authority 
delegated to FDA. The comment urged FDA to describe the types of 
misconduct to which the section applies and to limit sanctions. Such 
sanction provisions are not novel. For example, they are included in 
regulations used by EPA and HHS to implement statutory civil money 
penalty provisions and are designed to enable the presiding officer to 
manage proceedings effectively. FDA cannot anticipate all types of 
misbehavior and misconduct that could give rise to sanctions. Further, 
FDA cannot anticipate what sanctions may be appropriate for particular 
conduct in a particular situation. The presiding officer must have 
discretion in this area, and Sec. 17.35 is consistent with the 
discretion that may be delegated to the presiding officer under the APA 
(5 U.S.C. 556(c)). FDA therefore declines to accept the comment.
    72. A comment argued that FDA needs to provide a means of appeal of 
an order of the presiding officer imposing sanctions. FDA agrees. 
Sanctions should be subject to requests for interlocutory appeal. 
Section 17.18 has been added to allow for interlocutory appeal of 
matters certified by the presiding officer to need immediate review. 
However, the rule does not contain a provision for the automatic stay 
of proceedings before the presiding officer pending appeal.
    73. A comment argued that the sanctions listed in Sec. 17.35 are 
too harsh and that financial penalties might be more appropriate than 
the loss of the right to defend against or prosecute a civil money 
penalty claim.
    FDA disagrees. The sanctions imposed in Sec. 17.35 are similar to 
sanctions available under Rule 37 of the ``Federal Rules of Civil 
Procedure,'' as well as under the Program Fraud Civil Remedies 
regulations of EPA and HHS, and are a justifiable means of compelling 
the parties to adhere to the orders and rulings of the presiding 
officer. As in a proceeding before a judge in Federal court, a party's 
recalcitrance in disobeying a presiding officer's order in an 
administrative hearing should not be tolerated. The wide range of 
sanctions listed in Sec. 17.35 provide flexibility for the presiding 
officer who might be presented with a party's failure to comply with an 
order through refusal or neglect.
    74. In connection with appellate rights, one comment urged that the 
parties be afforded the right of judicial review of sanctions imposed 
during a part 17 hearing.
    FDA advises that it has no authority to provide for an appeal to 
the courts before the agency's final decision is issued. Under 
Sec. 17.51, the final decision constitutes final agency action which is 
subject to judicial review. The entire record that forms the basis of 
the final decision would be available to the reviewing Court of 
Appeals.
    75. Another comment disagreed with proposed Sec. 17.35(g), which 
provides 

[[Page 38621]]
that the presiding officer may order a party to pay expenses. This 
remedy, the author argued, is unenforceable and outside the authority 
of the Government to provide.
    FDA does not agree that it lacks the authority or that such an 
order of the presiding officer is unenforceable. However, because of 
the wide range of other sanctions available to the presiding officer 
for regulating the conduct of the hearing, FDA has made the change 
requested by the comment and eliminated Sec. 17.35(g) as proposed.
Section 17.37--Witnesses
    76. One comment took issue with what was viewed as a requirement 
that a cross-examining party pay a witness' travel expenses in a 
situation where direct testimony was submitted in writing. This was not 
FDA's intention in drafting Sec. 17.37. FDA advises that it intends 
that a party submitting a witness' testimony in writing is responsible 
for paying the travel and other expenses of that witness on cross-
examination at the hearing. FDA has added Sec. 17.37(g) to clarify its 
intention.
    77. A comment objected to Sec. 17.37 because it could be 
interpreted to permit rebuttal witnesses and evidence to be submitted 
without any provision for discovery or identification, as provided for 
in connection with a party's presentation of its case in chief. FDA 
advises that, because rebuttal testimony and other rebuttal evidence 
are limited in scope and in quantity, requirements for notice and 
discovery are not necessary. Thus, FDA is not specifically providing 
for discovery or notice of a rebuttal witness' appearance. However, 
Sec. 17.39(g) allows the presiding officer to permit the parties to 
introduce rebuttal witnesses and evidence. Implicit in this authority 
is the authority to set the terms of rebuttal testimony, as justice may 
require.
    78. Yet another comment argued that Sec. 17.37(e) is unduly broad 
in permitting cross-examination of witnesses on matters other than 
those within the scope of his or her direct examination. The comment 
recommended that the rules for cross-examination be predicated upon the 
``Federal Rules of Evidence.''
    FDA disagrees. In the interest of truth seeking in general and in 
the interest of procedural economy, FDA prefers Sec. 17.37(e) as 
proposed. This provision is similar to what EPA and HHS provide in 
their Program Fraud Civil Remedies of regulations, which give the 
presiding officer discretion to allow cross-examination of witnesses 
beyond the scope of their direct examination, rather than limiting 
cross-examination to only those matters within the scope of direct 
examination. Otherwise, the opposing party would have to request that a 
subpoena be issued to a witness by the presiding officer, making the 
witness its own in a manner that unnecessarily wastes time.
Section 17.39--Evidence
    79. One comment objected to Sec. 17.39 to the extent that it 
renders privileged information nondiscoverable. Section 17.39 is 
similar to Rule 45 of the ``Federal Rules of Civil Procedure,'' which 
allows privileged information to be withheld by a person responding to 
a subpoena. FDA rejects the comment.
    80. Another comment objected to language in Sec. 17.39(b), which 
allows the presiding officer discretion to apply the ``Federal Rules of 
Evidence.'' According to the comment, the presiding officer is given 
authority to invoke the ``Federal Rules of Evidence'' in an arbitrary 
and capricious fashion, which, the comment alleges, abridges the due 
process rights of both parties. The comment does not, however, provide 
any details to support its assertion.
    FDA disagrees with the comment. To the contrary, under 
Sec. 17.39(b) the presiding officer is allowed to apply the ``Federal 
Rules of Evidence'' when appropriate which is similar to what EPA and 
HHS provide in their Program Fraud Civil Remedies regulations. Section 
17.39(f) has been changed to substitute the relevant language of Rule 
408 of the ``Federal Rules of Evidence'' in place of the reference to 
Rule 408 in the proposed rule.
Section 17.41--The Administrative Record
    81. A comment suggested that Sec. 17.41 should include an explicit 
exemption to the ``open record'' provision, not subject to the 
discretion of the presiding officer, if the officer has determined that 
a portion of the record contains trade secrets or confidential 
commercial information.
    FDA believes this to be a good suggestion, and has so provided. 
Trade secrets, confidential commercial information, information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, or other information that would be withheld from 
public disclosure under 21 CFR part 20 are to be protected from 
disclosure by order of the presiding officer. Additionally, FDA is 
amending 21 CFR 20.86, concerning disclosure of information in 
administrative proceedings, to include part 17.
    82. Another comment was concerned that the proposal does not 
contain a provision authorizing the correction of the hearing 
transcript and recommended that a provision similar to that contained 
in 21 CFR 12.98(d) be included in Sec. 17.41. FDA has made the 
requested change in Sec. 17.41(a).
Section 17.43--Posthearing Briefs
    83. A comment objected to the requirement that briefs be filed 
simultaneously and be limited to 30 pages. According to the comment, 
these restrictions may prejudice respondents, however, the comment does 
not state how respondents may be prejudiced.
    Under Sec. 17.43, a party may file a longer brief if the presiding 
officer has found that the issues in the proceeding are so complex or 
the administrative record is so voluminous as to justify longer briefs. 
In the absence of a showing that simultaneous briefs will prejudice a 
party unfairly, FDA sees no reason to change this requirement. 
Additionally, parties may file proposed findings of fact and 
conclusions of law. FDA has added to Sec. 17.43 that proposed findings 
of fact and conclusions of law are also limited to 30 pages unless the 
presiding officer orders otherwise.
    84. Another comment requested that Sec. 17.43 be clarified to state 
whether the 30-page limitation includes exhibits and attachments. FDA 
advises that the 30-page limitation does not include exhibits and 
attachments unless some material is made part of an exhibit or 
attachment to avoid the 30-page limitation when the material should 
reasonably have been included in the main portion of the brief itself.
Section 17.45--Initial Decision
    85. One comment complained that requiring the presiding officer to 
decide the case within 90 days will inherently increase the risk of an 
incorrect result, thereby allegedly denying due process. FDA disagrees. 
Ninety days should be an ample amount of time for a presiding officer 
to decide most part 17 hearings. If the presiding officer needs more 
time, he or she may request that the entity deciding the appeal set a 
new deadline under Sec. 17.45(c). As stated in the preamble, the DAB 
will be deciding, at least initially, appeals to the Commissioner for 
presiding officer decisions under this part, including a presiding 
officer's request for extending deadlines.
    86. Another comment urged FDA to include timeframes for extensions 
of deadlines for rendering an initial decision. This would assure a 
speedier process, according to the comment. FDA disagrees. It is 
difficult if not impossible to set forth in a regulation the criteria 
for extending timeframes in issuing 

[[Page 38622]]
hearing decisions. FDA believes that attempting to do so would be 
unworkable.
    87. Yet another comment urged that the initial decision be required 
to include a discussion of the reasons for the findings and conclusions 
upon which the decision is based. However, Sec. 17.45 already requires 
that the initial decision shall contain findings of fact, conclusions 
of law, and the amount of any penalties imposed. Section 17.45(b) 
further elaborates on this requirement. In FDA's view, the regulation 
as proposed does not permit a ``conclusory'' initial decision as the 
comment seems to presuppose. FDA declines to make the requested change.
    88. One comment requested that Sec. 17.45 provide that the initial 
decision be automatically stayed pending disposition of an appeal or 
motion for reconsideration. FDA disagrees. The agency does not believe 
that such a provision is necessary since no civil money penalty can be 
imposed until there has been final agency action. The initial decision 
would not become final agency action until any appeal has been acted 
on, the appeal time has expired, or the respondent has stated an 
intention not to seek an appeal.
    89. Another comment recommended that the word ``may'' (in 
Sec. 17.45(c)), as it applies to the Commissioner's authority to set a 
new timeframe for issuing the initial decision, be changed to 
``shall.'' This, the comment alleges, would preclude indefinite delay 
in the issuance of an initial decision. FDA declines to adopt this 
comment. As indicated under comment 86, FDA believes it would be 
unworkable to specify all the criteria for determining when timeframes 
for issuing initial decisions may be extended. FDA reaffirms its 
intention that all such decisions be made promptly.
Section 17.47--Appeals
    90. A comment suggested that Sec. 17.47 should be modified to 
explicitly provide for an automatic stay of a decision pending an 
appeal or motion for reconsideration. As stated in a prior response 
(see paragraph 88 above), such an automatic stay is not necessary.
    91. A comment requested that FDA make clear that the Commissioner's 
decision, which has been delegated to the DAB, not to consider an 
appeal or the affirmation of the presiding officer's decision on appeal 
constitutes final agency action subject to judicial review. FDA agrees 
with the comment and affirms that such events do constitute final 
agency action. However, the agency sees no reason to amend any 
regulation to accomplish this. This statement in the preamble should 
suffice.
    92. A comment urged that oral argument of an appeal to the entity 
designated by the Commissioner to decide appeals (currently the DAB) be 
allowed. FDA disagrees. Oral argument would not provide the DAB with 
any additional information that could not be included in the briefs 
allowed to be filed by the parties under Sec. 17.47. The time required 
to conduct oral argument does not justify any advantage that might be 
gained from it.
    93. A comment urged that FDA allow 60 days for submission of an 
appellate brief, especially considering the complexity of likely 
issues. The comment cites the part 12 practice of allowing 60 days for 
an appellate brief. FDA disagrees with the comment. The agency believes 
that issues raised in part 17 hearings will generally be less complex 
and the volume of testimony smaller than is the case concerning part 12 
hearings. Thus, 30 days should be sufficient. If not, Sec. 17.47 
provides for extensions upon a showing of good cause.
    94. A comment alleged that proposed Sec. 17.47(f), which has been 
redesignated as Sec. 17.47(g), favors appellees (which it alleges will 
usually be the Center) by allowing the appellee to make any argument 
based on the record in support of the initial decision or decision 
granting summary decision. This, the comment alleges, is unfair because 
the appellant does not have as much leeway.
    FDA disagrees. The appellant has the discretion to determine the 
specific exceptions to the initial decision that are to be urged on 
appeal. Section 17.47(c) has been changed to clarify that in the notice 
of appeal the appellant must identify and support specific exceptions 
with citations to the record and explain the basis for the exceptions. 
Since the appellant may urge whatever exceptions it finds appropriate, 
FDA sees no prejudice in allowing the appellee to make arguments on 
matters contained in the record. If the entity deciding the appeal 
(currently the DAB) reverses on issues that the presiding officer 
considered pivotal, it may still affirm on other grounds if the 
appellee has raised such other grounds below. There should be no 
prejudice to either side as both sides have the record before them and 
can brief on appeal all issues raised in it. As explained in paragraph 
95 below, FDA is amending Sec. 17.47(h) to allow the DAB to request 
additional briefing when an issue has not been adequately briefed by 
the appellant.
    95. Similar objection was raised to Sec. 17.47(g), relating to the 
appellee's right to make any argument based on the record. The comment 
stated that if the purpose of this provision is to allow the appellee 
to anticipate sua sponte decisions by the Commissioner favorable to the 
appellant, the regulation would be better if recast as allowing the 
Commissioner to request both parties to address issues not raised by 
the appellant but determined to be important by the Commissioner.
    As previously discussed, the Commissioner has initially designated 
the DAB to conduct appeals of civil money penalty proceedings under 
this part. FDA advises that the purpose of the provision in 
Sec. 17.47(g) is to allow the DAB or other entity deciding the appeal 
to affirm a decision based on issues raised before the presiding 
officer but that did not serve as a basis for the presiding officer's 
decision. This will allow the entity deciding the appeal to overrule 
the presiding officer on an issue considered pivotal by the presiding 
officer, but nevertheless to decide the matter in favor of the appellee 
on other issues based on evidence adduced at the hearing. However, FDA 
agrees with the comment that the entity deciding the appeal may wish to 
decide an issue that is not fully briefed by both parties. Therefore, 
FDA is amending Sec. 17.47(h) to allow that entity discretion to 
request additional briefing if it: (a) Proposes to affirm an initial 
decision based on arguments not fully briefed by appellant, and (b) 
believes that additional briefing is necessary.
    96. One comment took issue with the review standard of 
``substantial evidence on the whole record'' in Sec. 17.47. The comment 
argued that the standard of substantial evidence on the whole record is 
applicable for appellate court review of agency action, but should not 
be applied by an agency head when the agency does not preside at the 
evidentiary hearing under the APA, 5 U.S.C. 557(b). The comment went on 
to state that the burden of proof by a preponderance of the evidence 
rests upon the complainant under 5 U.S.C. 556(d).
    FDA agrees that the appropriate burden of proof before the 
presiding officer is a preponderance of the evidence, as explained in 
paragraph 68 above. However, the agency may limit review of the initial 
decision by the presiding officer if the powers of review have been 
limited by rule. See 5 U.S.C. 557(b).
    FDA has provided that an administrative law judge serve as the fact 
finder in its civil money penalty actions. As the fact finder, the 
presiding officer is required to make his or her 

[[Page 38623]]
findings based on the preponderance of the evidence standard.
    When an appeal is made to the DAB under part 17, the DAB, if it 
decides to review the initial decision, will review disputed issues of 
fact based on the standard of whether the initial decision is supported 
by substantial evidence on the whole record. Additionally, the final 
regulation in Sec. 17.47 has set the standard of review on a disputed 
issue of law to be whether the initial decision is erroneous. These 
standards of review are similar to the HHS regulation on appeals of 
Medicare exclusions, 42 CFR part 1005. The purpose of limiting the 
scope of the DAB's review of appeals from the presiding officer is to 
allow the presiding officer to serve as the fact finder and to limit 
the DAB's reviewing powers to be similar to that of an appellate court. 
The APA permits the standards of review set forth in Sec. 17.47 for the 
DAB's review of initial and summary decisions by the presiding officer.
    97. Another comment suggested that only the respondent should be 
permitted to appeal an adverse initial decision. The comment supports 
its argument by noting that FDA's proposed procedures did not follow 
the EPA model, which precludes appeals by any party other than the 
defendant. However, as the comment points out, the EPA provision tracks 
the statute, 31 U.S.C. 3803(i)(2)(A)(i), with procedures that are 
statutorily imposed on EPA.
    In enacting the civil money penalty provisions in the statutes to 
which this regulation applies, Congress did not choose to prescribe, 
other than in a general manner, the administrative procedures to be 
followed in FDA's assessment of civil money penalties. FDA therefore 
does not believe the Center should be precluded from requesting the DAB 
to review an initial decision with which the Center disagrees.
    The comment questioned the fairness of allowing the Center to 
appeal an initial decision in favor of the respondent. Because FDA has 
revised the appeals provisions in the final rule to designate the DAB, 
at least initially, to make the decision for the Commissioner, the 
independent review by the DAB should eliminate speculation of possible 
bias of the reviewing authority. FDA notes that in civil cases where 
the United States is a party plaintiff, district court decisions that 
are adverse to the plaintiff may be subject to appeal by the plaintiff.
    For example, the act (21 U.S.C. 360pp(a)) provides that Federal 
district courts shall have jurisdiction over civil penalties arising 
from prohibited acts (21 U.S.C. 360oo) pertaining to the regulation of 
electronic products. If the United States disagrees with a district 
court judgment as to the amount or lack of penalty, the Federal Rules 
of Appellate Procedure (Rule 4) authorize an appeal. Under part 17, the 
Center's right to appeal an initial decision to the DAB is consistent 
with appellate review authorized for civil cases in Federal district 
courts.
    In cases that are appealed to the DAB, the DAB will normally issue 
a decision within 60 days. In circumstances where that is not 
practicable, the DAB will notify the parties of the anticipated time 
period for ruling on the appeal. Accordingly, Sec. 17.47(j) has been 
changed to add ``if practicable'' to the 60-day timeframe for the DAB's 
decision.
    98. A comment requested that the time to file an appeal be set at 
60 days and that the time to submit a brief be set by the presiding 
officer. FDA disagrees. The only reason given by the author of the 
comment for this extension of time is that the issues involved are 
likely to be more factually and legally complex than those in the 
typical civil penalty adjudications by other agencies. Further, the 
comment suggested that a change in the deadlines would avoid routine 
requests for extension of time.
    The agency believes that it is far from clear that the issues 
involved in part 17 hearings will be more factually and legally complex 
than those in ``typical civil penalty adjudication.'' However, in order 
to alleviate the concerns expressed by the comment, FDA changed 
Sec. 17.47(b)(2) to provide that the 30-day time limit to file the 
notice of appeal may be extended by the Commissioner or the entity 
designated by the Commissioner to hear appeals (currently the DAB), 
within his or her discretion, upon request of the appealing party for 
good cause shown. In order to ensure that a party has adequate time to 
respond to the brief filed in support of the appeal, Sec. 17.47(d) has 
also been changed to allow the entity deciding appeals, within his or 
her discretion, to extend the time limit for the filing of a brief in 
opposition to the appeal upon request of the party and a showing of 
good cause.
    99. Another comment recommended that Sec. 17.47(d) not prohibit an 
appellant's reply brief. The comment stated that, on a practical level, 
motions for leave to reply will regularly be filed typically 
accompanied by a brief. Further, the comment argues that, based on past 
practice, such briefs will be routinely read and considered in any 
case. FDA agrees and is amending Sec. 17.47 to allow for a short (no 
more than 10 pages) reply brief.
    100. One comment requested that FDA explain more clearly what FDA 
means in proposed Sec. 17.47(i), which is Sec. 17.47(j) in the final 
rule, for the Commissioner to ``decline to review the case.'' Indeed, 
FDA agrees, as the comment presupposes, a decision to decline to review 
the case has the same legal effect as a decision to affirm the initial 
decision summarily without further comment. Such a summary decision may 
be issued without findings of fact or conclusions of law.
    In Sec. 17.47(j), FDA has added that a decision by the DAB to 
decline to review the case shall be the final decision, rendering the 
initial decision final and binding on the parties 30 days after the 
declination. For clarification of the possible actions by the entity 
designated by the Commissioner to decide the appeal, currently the DAB, 
FDA has changed Sec. 17.47(j) in the final rule to authorize the entity 
to reverse the initial decision or decision granting summary decision. 
The proposed Sec. 17.47(i) only provided that the Commissioner could 
reverse the penalty, but did not explicitly state that the initial 
decision could be reversed.
    101. Another comment opposed any form of summary affirmance of a 
decision appealed by the Center. The author of the comment alleged that 
a respondent is entitled to an explanation, however concise, of the 
reasons why the Commissioner agrees with the presiding officer. 
According to the comment, the right to omit such an explanation invites 
cursory review and inappropriately relieves the Commissioner of the 
burden of responsibility that accompanies the authority to penalize a 
manufacturer.
    FDA rejects the comment and, in so doing, notes that summary 
affirmances are routinely used by the courts of appeals. Additionally, 
the EPA and HHS regulations on program fraud that were previously cited 
provide for similar affirmance of an initial decision by the presiding 
officer, as does the HHS regulation on Medicare exclusions and civil 
penalties. FDA continues to believe that a summary disposition is 
appropriate in various circumstances, such as where issues are not 
complex and where the evidence heavily favors the appellee.
    Underlying the comment may be the concern that the Commissioner 
might be biased in favor of the Center, when deciding an appeal and 
using summary affirmances to do so. In order to provide the parties 
with an independent review of civil penalty appeals, eliminate 
speculation of possible bias by the reviewing authority, and to allow 
for 

[[Page 38624]]
more efficient and effective use of the Commissioner's resources, FDA 
has elected to designate the DAB to decide appeals under this part, at 
least initially.
    The DAB serves as the reviewing authority for HHS administrative 
hearings in the previously cited regulations, as does the Environmental 
Appeals Board for EPA. These Boards have the training and resources to 
review appeals of civil penalty actions, whereas the Commissioner would 
be required to set up a separate process for handling civil penalty 
appeals. The DAB is the logical choice, at least initially, to review 
appeals of decisions rendered by the presiding officer in part 17 
matters, while efficiently and effectively using agency resources.
    FDA will use the DAB to decide appeals under part 17 for at least a 
4-year period. After 4 years, FDA will evaluate the DAB's role and the 
Commissioner will determine whether to maintain or alter the delegation 
to the DAB.
Section 17.49--Delegated Functions
    102. A comment suggested that Sec. 17.49 should contain criteria 
for selecting and delegating authority to an individual under that 
section. Because FDA is initially providing that the DAB be designated 
as the entity to decide any appeals under this part, Sec. 17.49 has 
been eliminated.
    103. A comment alleged that Sec. 17.49 allows the Commissioner to 
assign an agency party with an interest in the litigation to make the 
final decision on appeal, as long as the individual was not assigned to 
advise the Center. As noted in paragraph 101, appeals will initially be 
handled by the DAB. Therefore, any concern about an agency party's 
influence on the final decision should be eliminated.
    104. A comment argued that all civil money penalty assessments 
should be finally decided by the Commissioner without delegation to 
another FDA official. As noted in the preceding paragraphs, FDA has 
provided, at least initially, for appeals to the DAB for a variety of 
reasons. Therefore, FDA rejects the comments.
Section 17.51--Judicial Review
    105. A comment urged that FDA should not be allowed to seek 
judicial review of an adverse decision. Only a respondent should be 
allowed to do so, according to the comment. FDA agrees. Section 17.51 
should not be interpreted to provide for the Center to seek judicial 
review. Once a final decision is rendered denying civil money 
penalties, this becomes the decision of the agency from which there is 
no judicial appeal by FDA or any of its Centers. Section 17.51 is being 
amended to clarify this issue.

III. Summary of Changes

    1. In Sec. 17.1, concerning the scope of the regulation, the 
reference to future statutory civil money penalty authority has been 
deleted. (See comment paragraph 1.)
    2. In Sec. 17.3(a), (b), (d), (e), and (f), references to 
definitions in the applicable statutes and regulations have been added. 
In Sec. 17.3(a) the definition of ``significant departure'' has been 
changed to either a single major incident, or a series of incidents 
that are collectively consequential (paragraph 17). In section 17.3(a) 
the definition of ``minor violations'' has been changed to ``departures 
from requirements that do not rise to a level of a single major 
incident or a series of incidents that are collectively consequential'' 
(paragraph 19). Section 17.3(a)(4) has been revised to clarify that ``* 
* * defect in performance * * *'' refers to ``* * * defect in 
performance, * * * or service of a device,'' (paragraph 20). In 
Sec. 17.3(b) scientific or academic establishment or governmental 
agency or organizational unit has been added to the definition of 
``person or respondent'' (paragraph 16). In Sec. 17.3(c) the definition 
of ``presiding officer'' has been added (paragraph 35). In Sec. 17.3(g) 
the definition of Departmental Appeals Board has been added (paragraph 
101).
    3. Section 17.5(c) has been revised to provide for the right of the 
Center to amend its complaint (paragraph 33). Section 17.5(d) has been 
revised to provide that the presiding officer is assigned to the case 
upon filing of the complaint (paragraph 35).
    4. Section 17.9(a) is revised to add that the respondents may 
answer without requesting a hearing. Section 17.9(b) is revised to add 
that allegations not denied are deemed to be admitted, and that all 
defenses must be stated in the answer (paragraph 33). Section 17.9(d) 
was added to provide that respondents may amend their answers 
(paragraph 33).
    5. Section 17.11(a) is revised to add a requirement for proof of 
service and the authority of the presiding officer to enter default 
judgments and hold hearings on motions to reopen default judgments 
(paragraph 38). In Sec. 17.11(a) the reference to the Commissioner has 
been deleted (paragraph 38).
    6. Section 17.12 has been eliminated because the presiding officer 
is now appointed when the complaint is filed (paragraph 35).
    7. Section 17.13 was changed to clarify that the notice of hearing 
is to be served on a respondent after an answer has been filed 
(paragraph 44).
    8. Section 17.15(b) was revised to add a provision that settlement 
agreements are to be filed in the docket and do not require 
ratification by the presiding officer (paragraph 48). Section 17.15(c) 
was added to clarify that parties may be represented by counsel at the 
hearing (paragraph 47).
    9. In Sec. 17.17(a) the response time to motions for summary 
judgment has been extended from 10 days to 30 days (paragraph 50). 
Section 17.17(b) was changed to clarify that summary decision shall be 
granted when there is no genuine issue as to any material fact 
(paragraph 51). Section 17.17(e) now limits the ability of a party to 
obtain interlocutory review of a partial summary decision and refers to 
the DAB as, currently, the reviewing authority (paragraph 52).
    10. New Sec. 17.18 was added to provide for interlocutory appeal 
from a ruling of the presiding officer (paragraph 54).
    11. Section 17.19(b)(3) was changed to authorize the presiding 
officer to require parties to attend conferences for settlement 
(paragraph 11). A new Sec. 17.19(b)(10) was added to authorize the 
presiding officer to allow a witness to be recalled for additional 
testimony (paragraph 61). Proposed Sec. 17.19(b)(10) through (b)(17) 
have been renumbered. For consistency of language, in Sec. 17.19(b)(13) 
(proposed Sec. 17.19(b)(12)) summary ``judgment'' now reads summary 
``decision'' when there is no ``genuine'' issue of material fact. A new 
Sec. 17.19(b)(18) has been added to authorize the presiding officer to 
issue protective orders (paragraph 62).
    12. New Sec. 17.20, has been added to provide restrictions on ex 
parte communications (paragraph 9).
    13. Section 17.21(c)(8) now includes discussion of ``scheduling 
dates for completion of discovery'' as an authorized use of a 
prehearing conference (paragraph 61). Section 17.21(d) has been changed 
to require the presiding officer to issue an order after a prehearing 
conference (paragraph 61).
    14. In Sec. 17.23(a) a requirement has been added that requests for 
``production, inspection, and copying'' of documents be made no later 
than 60 days before the date of the hearing, unless otherwise ordered 
by the presiding officer.
    The party served with the request must respond no later than 30 
days after the request has been made (paragraph 61). In Sec. 17.23(c) a 
reference to new Sec. 17.23(e) has been added. A new Sec. 17.23(d)(3) 
now places the burden of showing that a protective order is necessary 
on the party seeking the order 

[[Page 38625]]
(paragraph 62). Proposed Sec. 17.23(d)(3) has been renumbered (d)(4). 
Section 17.23(e) has been added to provide for oral depositions under 
limited circumstances (paragraph 61).
    15. Section 17.25(a) has been revised to change the deadline for 
the exchange of witness lists, prior written statements, and exhibits 
from 15 days to 30 days before the hearing (paragraph 64). For 
clarification, Sec. 17.25(b)(2) and (b)(3) have been changed to 
specifically clarify that the paragraphs concern the admission of 
testimony by any witness whose name does not appear on the witness 
lists exchanged under Sec. 17.25(a). Section 17.25(c) now imposes a 
deadline of ``5 days'' prior to the hearing for objection to 
authenticity of documents (paragraph 64).
    16. Section 17.27(a) now explicitly limits the issuance of 
subpoenas to when such issuance is ``authorized by law'' (paragraph 
65). For ease of proving service, Sec. 17.27(e) has been changed to 
delete the provision on service of subpoenas by first class mail 
(paragraph 65).
    17. Section 17.28(b) was revised to clarify that a protective order 
may be issued to protect information that would be withheld from public 
disclosure under the agency's public information regulations in 21 CFR 
part 20 (paragraph 63).
    18. For clarification, Sec. 17.31(b) was changed to provide that an 
opposing party must be served with a copy of a document no later than 
when the document is filed in the docket. Section 17.32(a) now requires 
that the presiding officer also be served with a copy of documents 
filed with the Dockets Management Branch.
    19. For clarification, in Sec. 17.33(b) and (c) ``is to'' was 
replaced with ``must''.
    Section 17.33(b) has been clarified to add that the Center has the 
burden of proof to establish that the proposed penalty is appropriate 
under the applicable statute (paragraph 25). Section 17.33(d) was 
revised to include a reference to information that would be withheld 
from public disclosure under 21 CFR part 20.
    20. Section 17.34 has been changed to refer to the statute under 
which the penalty is assessed for purposes of determining the amount of 
the penalty. The DAB has been referenced as the entity currently 
designated by the Commissioner to decide appeals under this part in 
Sec. 17.34(a) and (c) (paragraph 101).
    21. Proposed Sec. 17.35(g), which authorized the presiding officer 
to order the payment of costs as a sanction, has been deleted 
(paragraph 75). New Sec. 17.35(g) now provides for interlocutory appeal 
to the entity designated by the Commissioner to decide appeals 
(currently the DAB) of sanctions imposed by the presiding officer 
(paragraph 72).
    22. Section 17.37(b) now requires, rather than permits, that direct 
testimony of witnesses be submitted by written declaration under 
penalty of perjury. The proposed provision in Sec. 17.37(b) on 
``sufficient time for other parties to subpoena witness'' has been 
deleted in light of the addition of new Sec. 17.37(g) (paragraph 76). 
For clarity, Sec. 17.37(f)(2) was modified to explain more clearly that 
an officer or employee of a party who is ``designated to be the party's 
sole representative for purposes of the hearing'' may not be excluded 
from hearing the testimony of other witnesses. Section 17.37(f)(3) has 
also been revised to make clear that each party may also have an 
individual, such as an expert witness, present at the hearing who would 
not be excluded from hearing other witnesses' testimony. New 
Sec. 17.37(g) was added to clarify that a cross-examining party need 
not subpoena the witness, and to require that a sponsoring party 
produce a witness at its own expense (paragraph 76).
    23. In Sec. 17.39(f), a modified version of the language of Rule 
408 of the ``Federal Rules of Evidence'' has been substituted for the 
proposed reference to Rule 408 (paragraph 80). For clarification, in 
Sec. 17.39(g) a reference to the discretion of the presiding officer 
was added.
    24. In Sec. 17.41(a) a provision has been added to allow for 
corrections for transcription errors (paragraph 82). Section 17.41(b) 
has been changed to reference the DAB as the entity currently 
designated by the Commissioner to decide appeals under this part. 
Section 17.41(c) has been revised to clarify that upon motion of any 
party the presiding officer shall protect from disclosure documents 
that would be withheld from public disclosure under the agency's public 
information regulations at 21 CFR part 20 (paragraph 81).
    25. Section 17.43 has been revised to add a page limit provision 
for filing of proposed findings of fact and conclusions of law 
(paragraph 83).
    26. Section 17.45(c) has been changed to reference ``the 
Commissioner or the entity deciding the appeal.''
    27. Section 17.47 has been changed to authorize appeals to the DAB 
instead of to the Commissioner (paragraph 101). Section 17.47(b)(2) now 
provides that the Commissioner or other entity designated by the 
Commissioner to hear appeals (currently the DAB) has discretion to 
extend the 30-day time limit to file an appeal upon request of a party 
and a showing of good cause.
    Section 17.47(c) has been revised to add a page limitation for 
briefs in support of appeals and a requirement that exceptions listed 
in the notice of appeal be explicitly supported by citations to the 
record (paragraph 94). The prohibition on the filing of an appellant's 
reply brief in proposed Sec. 17.47(d) has been deleted. Section 
17.47(d) has been changed to allow the Commissioner or the entity 
designated by the Commissioner to hear appeals, currently the DAB, to 
extend the 30-day time limit for the filing of a brief opposing the 
appeal upon request of the party and a showing of good cause. New 
Sec. 17.47(e) has been added to provide the right of an appellant to 
file a reply brief within 10 days of being served with the appellee's 
brief (paragraph 99). Section 17.47(h) has been renumbered as 
Sec. 17.47(k) and has been revised to add that the standard of review 
on a disputed issue of law is whether the initial decision is erroneous 
(paragraph 101). Proposed Sec. 17.47(e) through (i) have been 
renumbered. New Sec. 17.47(h) has been added to authorize the entity 
deciding the appeal (currently the DAB) to request additional briefing 
by the parties (paragraph 95). Section 17.47(j) has added ``if 
practicable'' to the 60-day deadline for the decision on appeal. For 
consistency of language, ``summary judgment'' was changed to ``summary 
decision'' in Sec. 17.47(j), which was proposed Sec. 17.47(i). In 
Sec. 17.47(j) explicit language authorizing the entity deciding the 
appeal (currently the DAB) to reverse the initial decision or decision 
granting summary decision has been added (paragraph 100). Section 
17.47(j) now clarifies that a decision by the entity deciding the 
appeal (currently the DAB) to decline to review the case shall be the 
final action of the agency and the initial decision shall be final and 
binding on the parties 30 days after the declination.
    28. Section 17.48 has been changed to reference the DAB as the 
entity currently designated by the Commissioner to decide appeals under 
this part.
    29. Section 17.49 has been deleted.
    30. Section 17.51(a) now states that only a respondent may petition 
for judicial review or file a petition for stay of a decision by the 
Commissioner (paragraph 105). New Sec. 17.51(c) makes explicit that 
exhaustion of an appeal to the entity deciding the appeal (currently 
the DAB) is a jurisdictional prerequisite to judicial review (paragraph 
12).
    31. Section 17.54 has been revised to state amounts assessed under 
part 17 are to be delivered to the Director of FDA's 

[[Page 38626]]
Division of Financial Management and then deposited in the U.S. 
Treasury.
    32. In addition, the following revisions have been made to other 
regulations:
    a. Section 5.99, regarding issuance of notices and orders relating 
to civil money penalties, has been deleted (see the Background section 
of this document).
    b. Section 10.50(c)(21), regarding opportunities for a hearing 
under 21 CFR part 12, has been deleted (paragraph 9).
    c. Section 20.86, regarding disclosure of data and information in 
administrative proceedings, has been revised to include part 17 
(paragraph 81).

IV. Environmental Impact

    The agency has determined under 21 CFR 25.24(a)(8) 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.

V. Analysis of Impacts

    FDA has examined the impacts of the final rule under Executive 
Order 12866 and the Regulatory Flexibility Act (Pub. L. 96-354). 
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 final rule is consistent with the regulatory philosophy and 
principles identified in the Executive Order. In addition, the final 
rule is not a significant regulatory action as defined by the Executive 
Order and so is not subject to review 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. The final rule specifies the procedures to be 
followed by persons who have the right to a hearing on the 
administrative imposition of civil money penalties by the agency. As 
such, the rule does not impose any burden on regulated industry. 
Because the procedures themselves are protections and do not impose 
significant costs beyond what the underlying statute imposes, the 
agency certifies that the final rule will not have a significant 
economic impact on a substantial number of small entities. Therefore, 
under the Regulatory Flexibility Act, no further analysis is required.
List of Subjects

21 CFR Part 5

    Authority delegations (Government agencies), Imports, Organization 
and functions (Government agencies).

21 CFR Part 10

    Administrative practice and procedure, News media.

21 CFR Part 17

    Administrative practice and procedure, Animal drugs, Biologics, 
Civil money penalties hearings, Drugs, Generic drugs, Prescription 
drugs samples, Medical devices.

21 CFR Part 20

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

    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, Title 21, Chapter 1 of the Code of 
Federal Regulations is amended as follows:

PART 5--DELEGATIONS OF AUTHORITY AND ORGANIZATION

    1. The authority citation for 21 CFR part 5 continues to read as 
follows:

    Authority: 5 U.S.C. 504, 552, App. 2; 7 U.S.C. 138a, 2271; 15 
U.S.C. 638, 1261-1282, 3701-3711a; secs. 2-12 of the Fair Packaging 
and Labeling Act (15 U.S.C. 1451-1461); 21 U.S.C. 41-50, 61-63, 141-
149, 467f, 679(b), 801-886, 1031-1309; secs. 201-903 of the Federal 
Food, Drug, and Cosmetic Act (21 U.S.C. 321-394); 35 U.S.C. 156; 
secs. 301, 302, 303, 307, 310, 311, 351, 352, 354, 361, 362, 1701-
1706, 2101, 2125, 2127, 2128 of the Public Health Service Act (42 
U.S.C. 241, 242, 242a, 242l, 242n, 243, 262, 263, 263b, 264, 265, 
300u-300u-5, 300aa-1, 300aa-25, 300aa-27, 300aa-28); 42 U.S.C. 
1395y, 3246b, 4332, 4831(a), 10007-10008; E.O. 11490, 11921, and 
12591; secs. 312, 313, 314 of the National Childhood Vaccine Injury 
Act of 1986, Pub. L. 99-660 (42 U.S.C. 300aa-1 note).


Sec. 5.99  [Removed]

    2. Section 5.99 Issuance of notices and orders relating to the 
administrative imposition of civil money penalties under various 
statutes is removed.

PART 10--ADMINISTRATIVE PRACTICES AND PROCEDURES

    3. The authority citation for 21 CFR part 10 continues to read as 
follows:

    Authority: Secs. 201-903 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 321-394); 21 U.S.C. 41-50, 141-149, 467f, 679, 821, 
1034; secs. 2, 351, 354, 361 of the Public Health Service Act (42 
U.S.C. 201, 262, 263b, 264); secs. 2-12 of the Fair Packaging and 
Labeling Act (15 U.S.C. 1451-1461); 5 U.S.C. 551-558, 701-721; 28 
U.S.C. 2112.


Sec. 10.50  [Amended]

    4. Section 10.50 Promulgation of regulations and orders after an 
opportunity for a formal evidentiary public hearing is amended by 
removing paragraph (c)(21).
    5. New part 17 is added to read as follows:

PART 17--CIVIL MONEY PENALTIES HEARINGS

Sec.
17.1  Scope.
17.3  Definitions.
17.5  Complaint.
17.7  Service of complaint.
17.9  Answer.
17.11  Default upon failure to file an answer.
17.13  Notice of hearing.
17.15  Parties to the hearing.
17.17  Summary decisions.
17.18  Interlocutory appeal from ruling of presiding officer.
17.19  Authority of the presiding officer.
17.20  Ex parte contacts.
17.21  Prehearing conferences.
17.23  Discovery.
17.25  Exchange of witness lists, witness statements, and exhibits.
17.27  Hearing subpoenas.
17.28  Protective order.
17.29  Fees.
17.30  Computation of time.
17.31  Form, filing, and service of papers.
17.32  Motions.
17.33  The hearing and burden of proof.
17.34  Determining the amount of penalties and assessments.
17.35  Sanctions.
17.37  Witnesses.
17.39  Evidence.
17.41  The administrative record.
17.43  Posthearing briefs.
17.45  Initial decision.
17.47  Appeals.
17.48  Harmless error.
17.51  Judicial review.
17.54  Deposit in the Treasury of the United States.

    Authority: Secs. 301, 303, 307, 501, 502, 505, 510, 513, 516, 
519, 520, 701 of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 
331, 333, 337, 351, 352, 355, 360, 360c, 360f, 360i, 360j, 371); 
sec. 351, 354, 2128 of the Public Health Service Act (42 U.S.C. 262, 
263b, 300aa-28); 5 U.S.C. 554, 555, 556, 557.


Sec. 17.1  Scope.

    This part sets forth practices and procedures for hearings 
concerning the administrative imposition of civil money penalties by 
FDA. Listed below are the statutory provisions that as of August 28, 
1995, authorize civil money 

[[Page 38627]]
penalties that are governed by these procedures.
    (a) Section 303 (b)(2) through (b)(4) of the Federal Food, Drug, 
and Cosmetic Act (the act) authorizing civil money penalties for 
certain violations of the act that relate to prescription drug 
marketing practices.
    (b) Section 303(g) of the act authorizing civil money penalties for 
certain violations of the act that relate to medical devices.
    (c) Section 307 of the act authorizing civil money penalties for 
certain actions in connection with an abbreviated new drug application 
or certain actions in connection with a person or individual debarred 
under section 306 of the act.
    (d) Section 351(d)(2)(B) of the Public Health Service Act (the PHS 
Act) authorizing civil money penalties for violations of biologic 
recall orders.
    (e) Section 354(h)(2) of the PHS Act, as amended by the Mammography 
Quality Standards Act of 1992, authorizing civil money penalties for 
failure to obtain a certificate, failure to comply with established 
standards, among other things.
    (f) Section 2128 of the PHS Act authorizing civil money penalties 
for intentionally destroying, altering, falsifying, or concealing any 
record or report required to be prepared, maintained, or submitted by 
vaccine manufacturers pursuant to that section of the PHS Act.


Sec. 17.3  Definitions.

    The following definitions are applicable in this part:
    (a) For specific acts giving rise to civil money penalty actions 
brought under 21 U.S.C. 333(g)(1):
    (1) Significant departure, for the purpose of interpreting 21 
U.S.C. 333(g)(1)(B)(i), means a departure from requirements that is 
either a single major incident or a series of incidents that 
collectively are consequential.
    (2) Knowing departure, for the purposes of interpreting 21 U.S.C. 
333(g)(1)(B)(i), means a departure from a requirement taken: (a) With 
actual knowledge that the action is such a departure, or (b) in 
deliberate ignorance of a requirement, or (c) in reckless disregard of 
a requirement.
    (3) Minor violations, for the purposes of interpreting 21 U.S.C. 
333(g)(1)(B)(ii), means departures from requirements that do not rise 
to a level of a single major incident or a series of incidents that are 
collectively consequential.
    (4) Defective, for the purposes of interpreting 21 U.S.C. 
333(g)(1)(B)(iii), includes any defect in performance, manufacture, 
construction, components, materials, specifications, design, 
installation, maintenance, or service of a device, or any defect in 
mechanical, physical, or chemical properties of a device.
    (b) Person or respondent includes an individual, partnership, 
corporation, association, scientific or academic establishment, 
government agency or organizational unit thereof, or other legal 
entity, or as may be defined in the act or regulation pertinent to the 
civil penalty action being brought.
    (c) Presiding officer means an administrative law judge qualified 
under 5 U.S.C. 3105.
    (d) Any term that is defined in the act has the same definition for 
civil money penalty actions that may be brought under that act.
    (e) Any term that is defined in Title 21 of the Code of Federal 
Regulations has the same definition for civil money penalty actions 
that may arise from the application of the regulation(s).
    (f) Any term that is defined in the PHS Act has the same definition 
for civil money penalty actions that may be brought under that act.
    (g) Departmental Appeals Board (DAB) means the Departmental Appeals 
Board of the Department of Health and Human Services.


Sec. 17.5  Complaint.

    (a) The Center with principal jurisdiction over the matter involved 
shall begin all administrative civil money penalty actions by serving 
on the respondent(s) a complaint signed by the Office of the Chief 
Counsel attorney for the Center and by filing a copy of the complaint 
with the Dockets Management Branch (HFA-305), Food and Drug 
Administration, rm. 1-23, 12420 Parklawn Dr., Rockville, MD 20857.
    (b) The complaint shall state:
    (1) The allegations of liability against the respondent, including 
the statutory basis for liability, the identification of violations 
that are the basis for the alleged liability, and the reasons that the 
respondent is responsible for the violations;
    (2) The amount of penalties and assessments that the Center is 
seeking;
    (3) Instructions for filing an answer to request a hearing, 
including a specific statement of the respondent's right to request a 
hearing by filing an answer and to retain counsel to represent the 
respondent; and
    (4) That failure to file an answer within 30 days of service of the 
complaint will result in the imposition of the proposed amount of 
penalties and assessments, as provided in Sec. 17.11.
    (c) The Center may, on motion, subsequently amend its complaint to 
conform with the evidence adduced during the administrative process, as 
justice may require.
    (d) The presiding officer will be assigned to the case upon the 
filing of the complaint under this part.


Sec. 17.7  Service of complaint.

    (a) Service of a complaint may be made by:
    (1) Certified or registered mail or similar mail delivery service 
with a return receipt record reflecting receipt; or
    (2) Delivery in person to:
    (i) An individual respondent; or
    (ii) An officer or managing or general agent in the case of a 
corporation or unincorporated business.
    (b) Proof of service, stating the name and address of the person on 
whom the complaint was served, and the manner and date of service, may 
be made by:
    (1) Affidavit or declaration under penalty of perjury of the 
individual serving the complaint by personal delivery;
    (2) A United States Postal Service or similar mail delivery service 
return receipt record reflecting receipt; or
    (3) Written acknowledgment of receipt by the respondent or by the 
respondent's counsel or authorized representative or agent.


Sec. 17.9  Answer.

    (a) The respondent may request a hearing by filing an answer with 
the Dockets Management Branch (HFA-305), Food and Drug Administration, 
rm. 1-23, 12420 Parklawn Dr., Rockville, MD 20857, within 30 days of 
service of the complaint. Unless stated otherwise, an answer shall be 
deemed to be a request for hearing.
    (b) In the answer, the respondent:
    (1) Shall admit or deny each of the allegations of liability made 
in the complaint; allegations not specifically denied in an answer are 
deemed admitted;
    (2) Shall state all defenses on which the respondent intends to 
rely;
    (3) Shall state all reasons why the respondent contends that the 
penalties and assessments should be less than the requested amount; and
    (4) Shall state the name, address, and telephone number of the 
respondent's counsel, if any.
    (c) If the respondent is unable to file an answer meeting the 
requirements of paragraph (b) of this section within the time provided, 
the respondent shall, before the expiration of 30 days from service of 
the complaint, file a request for an extension of time within which to 
file an answer that meets the requirements of paragraph (b) of this 

[[Page 38628]]
section. The presiding officer may, for good cause shown, grant the 
respondent up to 30 additional days within which to file an answer that 
meets the requirements of paragraph (b) of this section.
    (d) The respondent may, on motion, amend its answer to conform with 
the evidence as justice may require.


Sec. 17.11  Default upon failure to file an answer.

    (a) If the respondent does not file an answer within the time 
prescribed in Sec. 17.9 and if service has been effected as provided in 
Sec. 17.7, the presiding officer shall assume the facts alleged in the 
complaint to be true, and, if such facts establish liability under the 
relevant statute, the presiding officer shall issue an initial decision 
within 30 days of the time the answer was due, imposing:
    (1) The maximum amount of penalties provided for by law for the 
violations alleged; or
    (2) The amount asked for in the complaint, whichever amount is 
smaller.
    (b) Except as otherwise provided in this section, by failing to 
file a timely answer, the respondent waives any right to a hearing and 
to contest the amount of the penalties and assessments imposed under 
paragraph (a) of this section, and the initial decision shall become 
final and binding upon the parties 30 days after it is issued.
    (c) If, before such a decision becomes final, the respondent files 
a motion seeking to reopen on the grounds that extraordinary 
circumstances prevented the respondent from filing an answer, the 
initial decision shall be stayed pending a decision on the motion.
    (d) If, on such motion, the respondent can demonstrate 
extraordinary circumstances excusing the failure to file an answer in a 
timely manner, the presiding officer may withdraw the decision under 
paragraph (a) of this section, if such a decision has been issued, and 
shall grant the respondent an opportunity to answer the complaint as 
provided in Sec. 17.9(a).
    (e) If the presiding officer decides that the respondent's failure 
to file an answer in a timely manner is not excused, he or she shall 
affirm the decision under paragraph (a) of this section, and the 
decision shall become final and binding upon the parties 30 days after 
the presiding officer issues the decision on the respondent's motion 
filed under paragraph (c) of this section.


Sec. 17.13  Notice of hearing.

    After an answer has been filed, the Center shall serve a notice of 
hearing on the respondent. Such notice shall include:
    (a) The date, time, and place of a prehearing conference, if any, 
or the date, time, and place of the hearing if there is not to be a 
prehearing conference;
    (b) The nature of the hearing and the legal authority and 
jurisdiction under which the hearing is to be held;
    (c) A description of the procedures for the conduct of the hearing;
    (d) The names, addresses, and telephone numbers of the 
representatives of the government and of the respondent, if any; and
    (e) Such other matters as the Center or the presiding officer deems 
appropriate.


Sec. 17.15  Parties to the hearing.

    (a) The parties to the hearing shall be the respondent and the 
Center(s) with jurisdiction over the matter at issue. No other person 
may participate.
    (b) The parties may at any time prior to a final decision by the 
entity deciding any appeal agree to a settlement of all or a part of 
the matter. The settlement agreement shall be filed in the docket and 
shall constitute complete or partial resolution of the administrative 
case as so designated by the settlement agreement. The settlement 
document shall be effective upon filing in the docket and need not be 
ratified by the presiding officer or the Commissioner of Food and 
Drugs.
    (c) The parties may be represented by counsel, who may be present 
at the hearing.


Sec. 17.17  Summary decisions.

    (a) At any time after the filing of a complaint, a party may move, 
with or without supporting affidavits (which, for purposes of this 
part, shall include declarations under penalty of perjury), for a 
summary decision on any issue in the hearing. The other party may, 
within 30 days after service of the motion, which may be extended for 
an additional 10 days for good cause, serve opposing affidavits or 
countermove for summary decision.
    The presiding officer may set the matter for argument and call for 
the submission of briefs.
    (b) The presiding officer shall grant the motion if the pleadings, 
affidavits, and other material filed in the record, or matters 
officially noticed, show that there is no genuine issue as to any 
material fact and that the party is entitled to summary decision as a 
matter of law.
    (c) Affidavits shall set forth only such facts as would be 
admissible in evidence and shall show affirmatively that the affiant is 
competent to testify to the matters stated. When a motion for summary 
decision is made and supported as provided in this regulation, a party 
opposing the motion may not rest on mere allegations or denials or 
general descriptions of positions and contentions; affidavits or other 
responses must set forth specific facts showing that there is a genuine 
issue of material fact for the hearing.
    (d) If, on motion under this section, a summary decision is not 
rendered on all issues or for all the relief asked, and if additional 
facts need to be developed, the presiding officer will issue an order 
specifying the facts that appear without substantial controversy and 
directing further evidentiary proceedings on facts still at issue. The 
facts specified not to be at issue shall be deemed established.
    (e) Except as provided in Sec. 17.18, a party may not obtain 
interlocutory review by the entity deciding the appeal (currently the 
DAB) of a partial summary decision of the presiding officer. A review 
of final summary decisions on all issues may be had through the 
procedure set forth in Sec. 17.47.


Sec. 17.18  Interlocutory appeal from ruling of presiding officer.

    (a) Except as provided in paragraph (b) of this section, rulings of 
the presiding officer may not be appealed before consideration on 
appeal of the entire record of the hearing.
    (b) A ruling of the presiding officer is subject to interlocutory 
appeal to the entity deciding the appeal (currently the DAB) if the 
presiding officer certifies on the record or in writing that immediate 
review is necessary to prevent exceptional delay, expense, or prejudice 
to any participant, or substantial harm to the public interest.
    (c) When an interlocutory appeal is made, a participant may file a 
brief on the appeal only if specifically authorized by the presiding 
officer or the entity deciding the appeal (currently the DAB), and if 
such authorization is granted, only within the period allowed by the 
presiding officer or the entity deciding the appeal. If a participant 
is authorized to file a brief, any other participant may file a brief 
in opposition, within the period allowed by the entity deciding the 
appeal (currently the DAB). The deadline for filing an interlocutory 
appeal is subject to the discretion of the presiding officer.
Sec. 17.19  Authority of the presiding officer.

    (a) The presiding officer shall conduct a fair and impartial 
hearing, avoid delay, maintain order, and assure that a record of the 
proceeding is made.
    (b) The presiding officer has the authority to: 

[[Page 38629]]

    (1) Set and change the date, time, and place of the hearing on 
reasonable notice to the parties;
    (2) Continue or recess the hearing in whole or in part for a 
reasonable time;
    (3) Require parties to attend conferences for settlement, to 
identify or simplify the issues, or to consider other matters that may 
aid in the expeditious disposition of the proceeding;
    (4) Administer oaths and affirmations;
    (5) Issue subpoenas requiring the attendance and testimony of 
witnesses and the production of evidence that relates to the matter 
under investigation;
    (6) Rule on motions and other procedural matters;
    (7) Regulate the scope and timing of discovery consistent with 
Sec. 17.23;
    (8) Regulate the course of the hearing and the conduct of the 
parties;
    (9) Examine witnesses;
    (10) Upon motion of a party for good cause shown, the presiding 
officer may allow a witness to be recalled for additional testimony;
    (11) Receive, rule on, exclude, or limit evidence;
    (12) Upon motion of a party or on the presiding officer's own 
motion, take official notice of facts;
    (13) Upon motion of a party, decide cases, in whole or in part, by 
summary decision when there is no genuine issue of material fact;
    (14) Conduct any conference, argument, or hearing on motions in 
person or by telephone;
    (15) Consolidate related or similar proceedings or sever unrelated 
matters;
    (16) Limit the length of pleadings;
    (17) Waive, suspend, or modify any rule in this part if the 
presiding officer determines that no party will be prejudiced, the ends 
of justice will be served, and the action is in accordance with law;
    (18) Issue protective orders pursuant to Sec. 17.28; and
    (19) Exercise such other authority as is necessary to carry out the 
responsibilities of the presiding officer under this part.
    (c) The presiding officer does not have the authority to find 
Federal statutes or regulations invalid.


Sec. 17.20  Ex parte contacts.

    No party or person (except employees of the presiding officer's 
office) shall communicate in any way with the presiding officer on any 
matter at issue in a case, unless on notice and opportunity for all 
parties to participate. This provision does not prohibit a person or 
party from inquiring about the status of a case or asking routine 
questions concerning administrative functions or procedures.


Sec. 17.21  Prehearing conferences.

    (a) The presiding officer may schedule prehearing conferences as 
appropriate.
    (b) Upon the motion of any party, the presiding officer shall 
schedule at least one prehearing conference at a reasonable time in 
advance of the hearing.
    (c) The presiding officer may use a prehearing conference to 
discuss the following:
    (1) Simplification of the issues;
    (2) The necessity or desirability of amendments to the pleadings, 
including the need for a more definite statement;
    (3) Stipulations and admissions of fact as to the contents and 
authenticity of documents;
    (4) Whether the parties can agree to submission of the case on a 
stipulated record;
    (5) Whether a party chooses to waive appearance at an oral hearing 
and to submit only documentary evidence (subject to the objection of 
the other party) and written argument;
    (6) Limitation of the number of witnesses;
    (7) Scheduling dates for the exchange of witness lists and of 
proposed exhibits;
    (8) Discovery and scheduling dates for completion of discovery;
    (9) The date, time, and place for the hearing; and
    (10) Such other matters as may tend to expedite the fair and just 
disposition of the proceedings.
    (d) The presiding officer shall issue an order containing all 
matters agreed upon by the parties or ordered by the presiding officer 
at a prehearing conference.


Sec. 17.23  Discovery.

    (a) No later than 60 days prior to the hearing, unless otherwise 
ordered by the presiding officer, a party may make a request to another 
party for production, inspection, and copying of documents that are 
relevant to the issues before the presiding officer. Documents must be 
provided no later than 30 days after the request has been made.
    (b) For the purpose of this part, the term ``documents'' includes 
information, reports, answers, records, accounts, papers and other data 
and documentary evidence. Nothing contained in this section may be 
interpreted to require the creation of a document, except that 
requested data stored in an electronic data storage system must be 
produced in a form readily accessible to the requesting party.
    (c) Requests for documents, requests for admissions, written 
interrogatories, depositions, and any forms of discovery, other than 
those permitted under paragraphs (a) and (e) of this section, are not 
authorized.
    (d)(1) Within 10 days of service of a request for production of 
documents, a party may file a motion for a protective order.
    (2) The presiding officer may grant a motion for a protective 
order, in whole or in part, if he or she finds that the discovery 
sought:
    (i) Is unduly costly or burdensome,
    (ii) Will unduly delay the proceeding, or
    (iii) Seeks privileged information.
    (3) The burden of showing that a protective order is necessary 
shall be on the party seeking the order.
    (4) The burden of showing that documents should be produced is on 
the party seeking their production.
    (e) The presiding officer shall order depositions upon oral 
questions only upon a showing that:
    (1) The information sought cannot be obtained by alternative 
methods, and
    (2) There is a substantial reason to believe that relevant and 
probative evidence may otherwise not be preserved for presentation by a 
witness at the hearing.


Sec. 17.25  Exchange of witness lists, witness statements, and 
exhibits.

    (a) At least 30 days before the hearing, or by such other time as 
is specified by the presiding officer, the parties shall exchange 
witness lists, copies of prior written statements of proposed 
witnesses, and copies of proposed hearing exhibits, including written 
testimony.
    (b)(1) If a party objects to the proposed admission of evidence not 
exchanged in accordance with paragraph (a) of this section, the 
presiding officer will exclude such evidence if he or she determines 
that the failure to comply with paragraph (a) of this section should 
result in its exclusion.
    (2) Unless the presiding officer finds that extraordinary 
circumstances justified the failure to make a timely exchange of 
witness lists under paragraph (a) of this section, he or she must 
exclude from the party's hearing evidence the testimony of any witness 
whose name does not appear on the witness list.
    (3) If the presiding officer finds that extraordinary circumstances 
existed, the presiding officer must then determine whether the 
admission of the testimony of any witness whose name does not appear on 
the witness lists exchanged under paragraph (a) of this section would 
cause substantial prejudice to the objecting party. If the presiding 
officer 

[[Page 38630]]
finds that there is not substantial prejudice, the evidence may be 
admitted. If the presiding officer finds that there is substantial 
prejudice, the presiding officer may exclude the evidence, or at his or 
her discretion, may postpone the hearing for such time as is necessary 
for the objecting party to prepare and respond to the evidence.
    (c) Unless a party objects within 5 days prior to the hearing, 
documents exchanged in accordance with paragraph (a) of this section 
will be deemed to be authentic for the purpose of admissibility at the 
hearing.


Sec. 17.27  Hearing subpoenas.

    (a) A party wishing to procure the appearance and testimony of any 
individual at the hearing may, when authorized by law, request that the 
presiding officer issue a subpoena.
    (b) A subpoena requiring the attendance and testimony of an 
individual may also require the individual to produce documents at the 
hearing.
    (c) A party seeking a subpoena shall file a written request 
therefor not less than 20 days before the date fixed for the hearing 
unless otherwise allowed by the presiding officer, upon a showing by 
the party of good cause. Such request shall specify any documents to be 
produced and shall designate the witnesses and describe the address and 
location thereof with sufficient particularity to permit such witnesses 
to be found.
    (d) The subpoena shall specify the time and place at which the 
witness is to appear and any documents the witness is to produce.
    (e) The party seeking the subpoena shall serve it in the manner 
prescribed for service of a complaint in Sec. 17.7.
    (f) If a party or the individual to whom the subpoena is directed 
believes a subpoena to be unreasonable, oppressive, excessive in scope, 
or unduly burdensome, or if it wishes to raise any other objection or 
privilege recognized by law, the party or individual may file a motion 
to quash the subpoena within 10 days after service or on or before the 
time specified in the subpoena for compliance if it is less than 10 
days after service. Such a filing will state the basis for the motion 
to quash. The presiding officer may quash or modify the subpoena or 
order it implemented, as justice may require.


Sec. 17.28  Protective order.

    (a) A party or a prospective witness may file a motion for a 
protective order with respect to discovery sought by a party or with 
respect to the hearing, seeking to limit the availability or disclosure 
of evidence.
    (b) When issuing a protective order, the presiding officer may make 
any order which justice requires to protect a party or person from 
oppression or undue burden or expense, or to protect trade secrets or 
confidential commercial information, as defined in Sec. 20.61 of this 
chapter, information the disclosure of which would constitute a clearly 
unwarranted invasion of personal privacy, or other information that 
would be withheld from public disclosure under 21 CFR part 20. Such 
orders may include, but are not limited to, one or more of the 
following:
    (1) That the discovery not be had;
    (2) That the discovery may be had only on specified terms and 
conditions, including a designation of the time or place;
    (3) That the discovery may be had only through a method of 
discovery provided for by this part other than that requested;
    (4) That certain matters not be inquired into, or that the scope of 
discovery be limited to certain matters;
    (5) That the contents of discovery or evidence be sealed;
    (6) That the information not be disclosed to the public or be 
disclosed only in a designated way; or
    (7) That the parties simultaneously file specified documents or 
information enclosed in sealed envelopes to be opened as directed by 
the presiding officer.


Sec. 17.29  Fees.

    The party requesting a subpoena shall pay the cost of the fees and 
mileage of any witness subpoenaed in the amounts that would be payable 
to a witness in a proceeding in a United States District Court. A check 
for witness fees and mileage shall accompany the subpoena when served.


Sec. 17.30  Computation of time.

    (a) In computing any period of time under this part or in an order 
issued thereunder, the time begins with the day following the act or 
event, and includes the last day of the period, unless either such day 
is a Saturday, Sunday, or Federal holiday, in which event the time 
includes the next business day.
    (b) When the period of time allowed is less than 7 days, 
intermediate Saturdays, Sundays, and Federal holidays shall be excluded 
from the computation.
    (c) When a document has been served or issued by placing it in the 
mail, an additional 5 days will be added to the time permitted for any 
response.


Sec. 17.31  Form, filing, and service of papers.

    (a) Form. (1) Documents filed with the Dockets Management Branch 
(HFA-305), Food and Drug Administration, rm. 1-23, 12420 Parklawn Dr., 
Rockville, MD 20857, shall include an original and two copies.
    (2) The first page of every pleading and paper filed in the 
proceeding shall contain a caption setting forth the title of the 
action, the case number assigned by the Office of the Chief Counsel, 
and designation of the pleading or paper (e.g., ``motion to quash 
subpoena'').
    (3) Every pleading shall be signed by, and shall contain the 
address and telephone number of, the party or the person on whose 
behalf the pleading was filed, or his or her counsel.
    (4) Pleadings or papers are considered filed when they are received 
by the Dockets Management Branch.
    (b) Service. A party filing a document with the Dockets Management 
Branch under this part shall, no later than the time of filing, serve a 
copy of such document on every other party. Service upon any party of 
any document, other than service of a complaint, shall be made by 
delivering a copy personally or by placing a copy of the document in 
the United States mail or express delivery service, postage prepaid and 
addressed, to the party's last known address. When a party is 
represented by counsel, service shall be made on such counsel in lieu 
of the actual party.
    (c) Proof of service. A certificate of the individual serving the 
document by personal delivery or by mail, setting forth the time and 
manner of service, shall be proof of service.


Sec. 17.32  Motions.

    (a) Any application to the presiding officer for an order or ruling 
shall be by motion. Motions shall state the relief sought, the 
authority relied upon, and the facts alleged, and shall be filed with 
the Dockets Management Branch (HFA-305), Food and Drug Administration, 
rm. 1-23, 12420 Parklawn Dr., Rockville, MD 20857, delivered to the 
presiding officer, and served on all other parties.
    (b) Except for motions made during a prehearing conference or at 
the hearing, all motions shall be in writing. The presiding officer may 
require that oral motions be reduced to writing.
    (c) Within 15 days after a written motion is served, or such other 
time as may be fixed by the presiding officer, any party may file a 
response to such motion.
    (d) The presiding officer may not grant a written motion before the 
time for filing responses thereto has expired, except upon consent of 
the parties or 

[[Page 38631]]
following a hearing on the motion, but may overrule or deny such motion 
without awaiting a response.


Sec. 17.33  The hearing and burden of proof.

    (a) The presiding officer shall conduct a hearing on the record to 
determine whether the respondent is liable for a civil money penalty 
and, if so, the appropriate amount of any such civil money penalty 
considering any aggravating or mitigating factors.
    (b) In order to prevail, the Center must prove respondent's 
liability and the appropriateness of the penalty under the applicable 
statute by a preponderance of the evidence.
    (c) The respondent must prove any affirmative defenses and any 
mitigating factors by a preponderance of the evidence.
    (d) The hearing shall be open to the public unless otherwise 
ordered by the presiding officer, who may order closure only to protect 
trade secrets or confidential commercial information, as defined in 
Sec. 20.61 of this chapter, information the disclosure of which would 
constitute a clearly unwarranted invasion of personal privacy, or other 
information that would be withheld from public disclosure under part 20 
of this chapter.


Sec. 17.34  Determining the amount of penalties and assessments.

    (a) When determining an appropriate amount of civil money penalties 
and assessments, the presiding officer and the Commissioner of Food and 
Drugs or entity designated by the Commissioner to decide the appeal 
(currently the DAB) shall evaluate any circumstances that mitigate or 
aggravate the violation and shall articulate in their opinions the 
reasons that support the penalties and assessments imposed.
    (b) The presiding officer and the entity deciding the appeal shall 
refer to the factors identified in the statute under which the penalty 
is assessed for purposes of determining the amount of penalty.
    (c) Nothing in this section shall be construed to limit the 
presiding officer or the entity deciding the appeal from considering 
any other factors that in any given case may mitigate or aggravate the 
offense for which penalties and assessments are imposed.


Sec. 17.35  Sanctions.

    (a) The presiding officer may sanction a person, including any 
party or counsel for:
    (1) Failing to comply with an order, subpoena, rule, or procedure 
governing the proceeding;
    (2) Failing to prosecute or defend an action; or
    (3) Engaging in other misconduct that interferes with the speedy, 
orderly, or fair conduct of the hearing.
    (b) Any such sanction, including, but not limited to, those listed 
in paragraphs (c), (d), and (e) of this section, shall reasonably 
relate to the severity and nature of the failure or misconduct.
    (c) When a party fails to comply with a discovery order, including 
discovery and subpoena provisions of this part, the presiding officer 
may:
    (1) Draw an inference in favor of the requesting party with regard 
to the information sought;
    (2) Prohibit the party failing to comply with such order from 
introducing evidence concerning, or otherwise relying upon, testimony 
relating to the information sought; and
    (3) Strike any part of the pleadings or other submissions of the 
party failing to comply with such request.
    (d) The presiding officer may exclude from participation in the 
hearing any legal counsel, party, or witness who refuses to obey an 
order of the presiding officer. In the case of repeated refusal, the 
presiding officer may grant judgment to the opposing party.
    (e) If a party fails to prosecute or defend an action under this 
part after service of a notice of hearing, the presiding officer may 
dismiss the action or may issue an initial decision imposing penalties 
and assessments.
    (f) The presiding officer may refuse to consider any motion, 
request, response, brief, or other document that is not filed in a 
timely fashion or in compliance with the rules of this part.
    (g) Sanctions imposed under this section may be the subject of an 
interlocutory appeal as allowed in Sec. 17.18(b), provided that no such 
appeal will stay or delay a proceeding.


Sec. 17.37  Witnesses.

    (a) Except as provided in paragraph (b) of this section, testimony 
at the hearing shall be given orally by witnesses under oath or 
affirmation.
    (b) Direct testimony shall be admitted in the form of a written 
declaration submitted under penalty of perjury. Any such written 
declaration must be provided to all other parties along with the last 
known address of the witness. Any prior written statements of witnesses 
proposed to testify at the hearing shall be exchanged as provided in 
Sec. 17.25(a).
    (c) The presiding officer shall exercise reasonable control over 
the manner and order of questioning witnesses and presenting evidence 
so as to:
    (1) Make the examination and presentation effective for the 
ascertainment of the truth;
    (2) Avoid undue consumption of time; and
    (3) Protect witnesses from harassment or undue embarrassment.
    (d) The presiding officer shall permit the parties to conduct such 
cross-examination as may be required for a full disclosure of the 
facts.
    (e) At the discretion of the presiding officer, a witness may be 
cross-examined on relevant matters without regard to the scope of his 
or her direct examination. To the extent permitted by the presiding 
officer, a witness may be cross-examined on relevant matters with 
regard to the scope of his or her direct examination. To the extent 
permitted by the presiding officer, cross-examination on matters 
outside the scope of direct examination shall be conducted in the 
manner of direct examination and may proceed by leading questions only 
if the witness is a hostile witness, an adverse party, or a witness 
identified with an adverse party.
    (f) Upon motion of any party, the presiding officer may order 
witnesses excluded so that they cannot hear the testimony of the other 
witnesses. This rule does not authorize exclusion of:
    (1) A party who is an individual;
    (2) In the case of a party that is not an individual, an officer or 
employee of the party designated to be the party's sole representative 
for purposes of the hearing; or
    (3) An individual whose presence is shown by a party to be 
essential to the presentation of its case, including an individual 
employed by a party engaged in assisting counsel for the party.
    (g) If a witness' testimony is submitted in writing prior to cross-
examination, the cross-examining party need not subpoena the witness or 
pay for his or her travel to the hearing. The sponsoring party is 
responsible for producing the witness at its own expense, and failure 
to do so shall result in the striking of the witness' testimony.


Sec. 17.39  Evidence.

    (a) The presiding officer shall determine the admissibility of 
evidence.
    (b) Except as provided in this part, the presiding officer shall 
not be bound by the ``Federal Rules of Evidence.'' However, the 
presiding officer may apply the ``Federal Rules of Evidence'' when 
appropriate, e.g., to exclude unreliable evidence.
    (c) The presiding officer shall exclude evidence that is not 
relevant or material.
    (d) Relevant evidence may be excluded if its probative value is 
substantially outweighed by the danger of unfair prejudice, confusion 
of the issues, or by considerations of undue 

[[Page 38632]]
delay or needless presentation of cumulative evidence.
    (e) Relevant evidence may be excluded if it is privileged under 
Federal law.
    (f) Evidence of furnishing or offering or promising to furnish, or 
accepting or offering or promising to accept, a valuable consideration 
in settling or attempting to settle a civil money penalty assessment 
which was disputed as to either validity or amount, is not admissible 
to prove liability for or invalidity of the civil money penalty or its 
amount. Evidence of conduct or statements made in settlement 
negotiations is likewise not admissible. This rule does not require the 
exclusion of any evidence otherwise discoverable merely because it is 
presented in the course of settlement negotiations. This rule also does 
not require exclusion when the evidence is offered for another purpose, 
such as proving bias or prejudice of a witness or opposing a contention 
of undue delay.
    (g) The presiding officer may in his or her discretion permit the 
parties to introduce rebuttal witnesses and evidence.
    (h) All documents and other evidence offered or taken for the 
record shall be open to examination by all parties, unless otherwise 
ordered by the presiding officer pursuant to Sec. 17.28.


Sec. 17.41  The administrative record.

    (a) The hearing will be recorded and transcribed. Witnesses, 
participants, and counsel have 30 days from the time the transcript 
becomes available to propose corrections in the transcript of oral 
testimony. Corrections are permitted only for transcription errors. The 
presiding officer shall promptly order justified corrections. 
Transcripts may be obtained following the hearing from the Dockets 
Management Branch at a cost not to exceed the actual cost of 
duplication.
    (b) The transcript of testimony, exhibits, and other evidence 
admitted at the hearing and all papers and requests filed in the 
proceeding constitute the administrative record for the decision by the 
presiding officer and the entity designated by the Commissioner of Food 
and Drugs to decide the appeal, currently the DAB.
    (c) The administrative record may be inspected and copied (upon 
payment of a reasonable fee) by anyone unless otherwise ordered by the 
presiding officer, who shall upon motion of any party order otherwise 
when necessary to protect trade secrets or confidential commercial 
information, as defined in Sec. 20.61 of this chapter, information the 
disclosure of which would constitute a clearly unwarranted invasion of 
personal privacy, or other information that would be withheld from 
public disclosure under part 20.


Sec. 17.43  Posthearing briefs.

    Any party may file a posthearing brief. The presiding officer shall 
fix the time for filing such briefs (which shall be filed 
simultaneously), which shall not exceed 60 days from the date the 
parties received the transcript of the hearing or, if applicable, the 
stipulated record. Such briefs may be accompanied by proposed findings 
of fact and conclusions of law. The presiding officer may permit the 
parties to file responsive briefs. No brief may exceed 30 pages 
(exclusive of proposed findings and conclusions) unless the presiding 
officer has previously found that the issues in the proceeding are so 
complex, or the administrative record is so voluminous, as to justify 
longer briefs, in which case the presiding officer may set a longer 
page limit. Proposed findings of fact and conclusions of law shall not 
exceed 30 pages unless the presiding officer has previously found that 
the issues in the proceeding are so complex, or the administrative 
record is so voluminous, as to justify longer proposed findings and 
conclusions, in which case the presiding officer may set a longer page 
limit.


Sec. 17.45  Initial decision.

    (a) The presiding officer shall issue an initial decision based 
only on the administrative record. The decision shall contain findings 
of fact, conclusions of law, and the amount of any penalties and 
assessments imposed.
    (b) The findings of fact shall include a finding on each of the 
following issues:
    (1) Whether the allegations in the complaint are true, and, if so, 
whether respondent's actions identified in the complaint violated the 
law;
    (2) Whether any affirmative defenses are meritorious; and
    (3) If the respondent is liable for penalties or assessments, the 
appropriate amount of any such penalties or assessments, considering 
any mitigating or aggravating factors that he or she finds in the case.
    (c) The presiding officer shall serve the initial decision or the 
decision granting summary decision on all parties within 90 days after 
the time for submission of posthearing briefs and responsive briefs (if 
permitted) has expired. If the presiding officer believes that he or 
she cannot meet the 90-day deadline, he or she shall notify the 
Commissioner of Food and Drugs or other entity designated by the 
Commissioner to decide the appeal of the reason(s) therefor, and the 
Commissioner or that entity may then set a new deadline.
    (d) Unless the initial decision or the decision granting summary 
decision of the presiding officer is timely appealed, the initial 
decision or the decision granting summary decision shall constitute the 
final decision of FDA and shall be final and binding on the parties 30 
days after it is issued by the presiding officer.
Sec. 17.47  Appeals.

    (a) Either the Center or any respondent may appeal an initial 
decision, including a decision not to withdraw a default judgment, or a 
decision granting summary decision to the Commissioner of Food and 
Drugs or other entity the Commissioner designates to decide the appeal. 
The Commissioner has currently designated the Departmental Appeals 
Board (DAB) to decide appeals under this part. Parties may appeal to 
the DAB by filing a notice of appeal with the DAB, rm. 637-D, Hubert H. 
Humphrey Bldg., 200 Independence Ave. SW., Washington, DC 20201, and 
the Dockets Management Branch (HFA-305), Food and Drug Administration, 
rm. 1-23, 12420 Parklawn Dr., Rockville, MD 20857, in accordance with 
this section.
    (b) (1) A notice of appeal may be filed at any time within 30 days 
after the presiding officer issues an initial decision or decision 
granting summary decision.
    (2) The Commissioner or the entity designated by the Commissioner 
to hear appeals may, within his or her discretion, extend the initial 
30-day period for an additional period of time if the Center or any 
respondent files a request for an extension within the initial 30-day 
period and shows good cause.
    (c) A notice of appeal shall be accompanied by a written brief of 
no greater length than that allowed for the posthearing brief. The 
notice must identify specific exceptions to the initial decision, must 
support each exception with citations to the record, and must explain 
the basis for each exception.
    (d) The opposing party may file a brief of no greater length than 
that allowed for the posthearing brief in opposition to exceptions 
within 30 days of receiving the notice of appeal and accompanying 
brief, unless such time period is extended by the Commissioner or the 
entity designated by the Commissioner to hear appeals on request of the 
opposing party for good cause shown. Any brief in opposition to 
exceptions shall be filed with the Dockets 

[[Page 38633]]
Management Branch and the DAB (addresses above).
    (e) The appellant may file a reply brief not more than 10 pages in 
length within 10 days of being served with appellee's brief.
    (f) There is no right to appear personally before the Commissioner 
of Food and Drugs or other entity deciding the appeal (currently the 
DAB).
    (g) The entity deciding the appeal will consider only those issues 
raised before the presiding officer, except that the appellee may make 
any argument based on the record in support of the initial decision or 
decision granting summary decision.
    (h) If on appeal the entity deciding the appeal considers issues 
not adequately briefed by the parties, the entity may ask for 
additional briefing. However, no such additional briefs will be 
considered unless so requested.
    (i) If any party demonstrates to the satisfaction of the entity 
deciding the appeal (currently the DAB) that additional evidence not 
presented at the hearing is relevant and material and that there were 
reasonable grounds for the failure to adduce such evidence at the 
hearing, the entity deciding the appeal may remand the matter to the 
presiding officer for consideration of the additional evidence.
    (j) The Commissioner of Food and Drugs or other entity deciding the 
appeal (currently the DAB) will issue a decision on the appeal within 
60 days, if practicable, of the due date for submission of the 
appellee's brief. In the decision, the entity deciding the appeal may 
decline to review the case, affirm the initial decision or decision 
granting summary decision (with or without an opinion), or reverse the 
initial decision or decision granting summary decision, or increase, 
reduce, reverse, or remand any civil money penalty determined by the 
presiding officer in the initial decision. If the entity deciding the 
appeal declines to review the case, the initial decision or the 
decision granting summary decision shall constitute the final decision 
of FDA and shall be final and binding on the parties 30 days after the 
declination by the entity deciding the appeal.
    (k) The standard of review on a disputed issue of fact is whether 
the initial decision is supported by substantial evidence on the whole 
record. The standard of review on a disputed issue of law is whether 
the initial decision is erroneous.


Sec. 17.48  Harmless error.

    No error in either the admission or the exclusion of evidence, and 
no error or defect in any ruling or order or in any act done or omitted 
by the presiding officer or by any of the parties is grounds for 
vacating, modifying, or otherwise disturbing an otherwise appropriate 
ruling or order or act, unless refusal to take such action appears to 
the presiding officer or the Commissioner of Food and Drugs or other 
entity deciding the appeal (currently the DAB) to be inconsistent with 
substantial justice. The presiding officer and the entity deciding the 
appeal at every stage of the proceeding will disregard any error or 
defect in the proceeding that does not affect the substantial rights of 
the parties.


Sec. 17.51  Judicial review.

    (a) The final decision of the Commissioner of Food and Drugs or 
other entity deciding the appeal (currently the DAB) constitutes final 
agency action from which a respondent may petition for judicial review 
under the statutes governing the matter involved. Although the filing 
of a petition for judicial review does not stay a decision under this 
part, a respondent may file a petition for stay of such decision under 
Sec. 10.35 of this chapter.
    (b) The Chief Counsel of FDA has been designated by the Secretary 
of Health and Human Services as the officer on whom copies of petitions 
for judicial review are to be served. This officer is responsible for 
filing the record on which the final decision is based. The record of 
the proceeding is certified by the entity deciding the appeal 
(currently the DAB).
    (c) Exhaustion of an appeal to the entity deciding the appeal 
(currently the DAB) is a jurisdictional prerequisite to judicial 
review.


Sec. 17.54  Deposit in the Treasury of the United States.

    All amounts assessed pursuant to this part shall be delivered to 
the Director, Division of Financial Management (HFA-100), Food and Drug 
Administration, rm. 11-61, 5600 Fishers Lane, Rockville, MD 20857, and 
shall be deposited as miscellaneous receipts in the Treasury of the 
United States.

PART 20--PUBLIC INFORMATION

    7. The authority citation for part 20 continues to read as follows:


    Authority: Secs. 201-903 of the Federal Food, Drug, and Cosmetic 
Act (21 U.S.C. 321-393); secs. 301, 302, 303, 307, 310, 311, 351, 
352, 354-360F, 361, 362, 1701-1706, 2101 of the Public Health 
Service Act (42 U.S.C. 241, 242, 242a, 242l, 242n, 243, 262, 263, 
263b-263n, 264, 265, 300u-300u-5, 300aa-1); 5 U.S.C. 552; 18 U.S.C. 
1905.


Sec. 20.86  [Amended]

    8. Section 20.86 is amended by revising the first sentence to read 
as follows:


Sec. 20.86  Disclosure in administrative or court proceedings.

    Data and information otherwise exempt from public disclosure may be 
revealed in Food and Drug Administration administrative proceedings 
pursuant to parts 10, 12, 13, 14, 15, 17, and 19 of this chapter or 
court proceedings, where data or information are relevant. * * *

    Dated: July 12, 1995.
William B. Schultz,
Deputy Commissioner for Policy.
[FR Doc. 95-18325 Filed 7-26-95; 8:45 am]
BILLING CODE 4160-01-P