[Federal Register Volume 63, Number 84 (Friday, May 1, 1998)]
[Proposed Rules]
[Pages 24254-24378]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-11530]



[[Page 24253]]

_______________________________________________________________________

Part IV





Department of Health and Human Services





_______________________________________________________________________



Food and Drug Administration



_______________________________________________________________________



21 CFR Parts 101 and 120



Preliminary Regulatory Impact Analysis and Initial Regulatory 
Flexibility Analysis of the Proposed Rules to Ensure the Safety of 
Juice and Juice Products; Proposed Rule

  Federal Register / Vol. 63, No. 84 / Friday, May 1, 1998 / Proposed 
Rules  

[[Page 24254]]



DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 101 and 120

[Docket Nos. 93N-0325 and 97N-0296]
RIN 0910-AA43


Preliminary Regulatory Impact Analysis and Initial Regulatory 
Flexibility Analysis of the Proposed Rules to Ensure the Safety of 
Juice and Juice Products

AGENCY: Food and Drug Administration, HHS.

ACTION: Preliminary regulatory impact analysis.

-----------------------------------------------------------------------

SUMMARY: The Food and Drug Administration (FDA) is publishing the 
preliminary regulatory impact analysis (PRIA) that it has prepared 
under Executive Order 12866 and initial regulatory flexibility analysis 
(IRFA) that it has prepared under the Regulatory Flexibility Act (RFA), 
as amended by the Small Business Regulatory Enforcement and Fairness 
Act (SBREFA), on the costs and benefits of FDA's proposed regulations 
regarding the Hazard Analysis Critical Control Points (HACCP) and 
labeling for juice and juice products. FDA is issuing those proposals 
because of recent outbreaks of foodborne illness and deaths caused by 
consumption of juice products that were not pasteurized or otherwise 
processed to control pathogenic microorganisms. Those proposals are 
intended to ensure that juice and juice products are safe.

DATES: Submit written comments by May 26, 1998 on aspects of this 
analysis related to labeling for juice and juice products and by July 
8, 1998 on aspects of this analysis related to HACCP for juice and 
juice products.

ADDRESSES: Submit written comments to the Dockets Management Branch 
(HFA-305), Food and Drug Administration, 12420 Parklawn Dr., rm. 1-23, 
Rockville, MD 20857. Comments should be identified with the docket 
numbers found in brackets in the heading of this document.

FOR FURTHER INFORMATION CONTACT: David J. Zorn, Center for Food Safety 
and Applied Nutrition (HFS-726), Food and Drug Administration, 200 C 
St. SW., Washington, DC 20204, 202-205-4729.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Introduction
III. Factors Considered in Developing This Analysis
IV. Regulatory Options
V. Benefits
VI. Costs
VII. Summary of Benefits and Costs
VIII. Initial Regulatory Flexibility Analysis
IX. References
X. Request for Comments

I. Background

    This document constitutes FDA's PRIA and IRFA of the proposed rules 
to amend the food labeling regulations and to require HACCP for juice 
and juice products. Because the industries affected by both proposed 
rules substantially overlap and because both proposals address the same 
public health problem, the safety of juice and products containing 
juice, the agency has chosen to analyze the economic impact of both 
proposed rules in a single PRIA and IRFA. These documents analyze both 
the costs and benefits of the proposed rules as well as the expected 
impacts on the affected small entities. FDA has found that these rules 
may constitute significant rules under Executive Order 12866 because 
they could have a significant impact on one sector of the economy 
(producers of minimally processed juice). In addition, FDA has 
determined under the RFA that each proposal would present a significant 
impact on a substantial number of small entities.

II. Introduction

    FDA has examined the impacts of these proposed rules under 
Executive Order 12866. Executive Order 12866 directs Federal agencies 
to assess the benefits and costs 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 effects; distributive impacts; and equity). 
Under the Executive Order, a regulatory action is ``significant'' if it 
meets any one of a number of specified conditions, including having an 
annual effect on the economy, competition, or jobs, or if it raises 
novel legal or policy issues. FDA finds that each of these proposed 
rules may constitute a significant regulatory action as defined by 
Executive Order 12866, as discussed as follows.
    In addition, FDA has determined that these rules are not 
significant rules under the Unfunded Mandates Reform Act of 1995 (UMRA) 
requiring benefit-cost and other analyses. Under UMRA significant rule 
is defined as ``a Federal mandate that may result in the expenditure by 
State, local and tribal governments in the aggregate, or by the private 
sector, of $100,000,000 (adjusted annually for inflation) in any 1 
year''.
    Finally, in accordance with the SBREFA, the Administrator of the 
Office of Information and Regulatory Affairs of the Office of 
Management and Budget (the Administrator) has determined that these 
proposed rules are major rules for the purpose of congressional review. 
A major rule for this purpose is defined as one that the Administrator 
has determined has resulted or is likely to result in an annual effect 
on the economy of $100 million or more; a major increase in costs or 
prices for consumers, individual industries, Federal, State, or local 
government agencies, or geographic regions; or significant adverse 
effects on competition, employment, investment, productivity, 
innovation, or on the ability of U.S.-based enterprises to compete with 
foreign-based enterprises in domestic or export markets.

III. Factors Considered in Developing This Analysis

    This analysis estimates costs and benefits for two proposed 
regulations, published in the Federal Register of April 24, 1998 (63 FR 
20450 and 20486), that would affect the safety of juice products. The 
first rule requires warning statements on minimally processed packaged 
juice. That is, juice that has not been processed in a manner that will 
produce, at a minimum, a 5-log reduction, for a period at least as long 
as the shelf life of the product when stored under normal and moderate 
abuse conditions, in the pertinent microorganism. The ``pertinent 
microorganism'' is the most resistant microorganism of public health 
significance that is likely to occur in the juice. In the remainder of 
this analysis, this will be referred to as the ``5-log reduction.''\1\ 
The second rule requires manufacturers of most juice to implement a 
HACCP program with the same 5-log reduction performance criteria. 
However, FDA is proposing to exempt retailers who, for the purposes of 
this rule, the agency has tentatively decided will include very small 
businesses that make juice on their premises and whose total sales of 
juice and juice products do not exceed 40,000 gallons per year and who 
sell directly to consumers or directly to consumers and other 
retailers.
---------------------------------------------------------------------------

    \1\ That is, the total combined effect of all controls have the 
effect of reducing the number of colony forming units (cfu's) by a 
factor of 100,000. This implies that even if the product should 
contain 1,000 cfu's per gallon (gal.) prior to processing, the final 
product after processing would contain only .01 cfu's per gal.
---------------------------------------------------------------------------

    The effective date for the labeling rule is proposed to be 60 days 
following publication of the final rule with

[[Page 24255]]

warning statements required either on the labels or, in the case of 
products which do not bear the warning statement on the label, on 
labeling (e.g., on signs or placards at the point of sale) on juices 
that have not been processed in a manner that will produce, at a 
minimum, a 5-log reduction. Packaged juices produced by large firms are 
required to bear warning labels beginning on January 1, 2000, and 
packaged juices produced by small and very small firms\2\ are required 
to bear warning labels beginning on January 1, 2001. The agency expects 
that the HACCP rule, because of its complexity, will not be finalized 
for at least 1 year following finalization of the juice labeling rule. 
The HACCP rule is proposed to be effective for large firms, 12 months 
following publication of the final HACCP rule; for small firms, 24 
months following publication of the final HACCP rule; and for very 
small firms, 36 months following publication of the final HACCP rule. 
For purposes of this rule, the agency is proposing to define large 
processors as those who have more than 500 employees, small processors 
as those who have less than 500 employees and very small processors as 
those who have either: (1) Total annual sales of less than $500,000, or 
(2) that have total annual sales of greater than $500,000 but total 
annual food sales of less than $50,000, or (3) that employ fewer than 
100 full-time equivalent employees and annually sell less than 100,000 
units of the juice in the United States.
---------------------------------------------------------------------------

    \2\ The labeling rule does not define ``very small firms'' but 
the HACCP rule does give a separate definition of ``very small 
firms'' as a subset of ``small firms'' as defined in the labeling 
and HACCP rules. Therefore, the term ``very small firms'' has been 
used here in relationship to the labeling rule to make clear where 
this subset fits in the context of both of these rules. The HACCP 
rule defines small businesses as those with fewer than 500 
employees. It defines very small businesses as those with total 
annual sales of less than $500,000 or those with total annual food 
sales of less than $50,000 or those with fewer than 100 employees 
and less than 100,000 units of juice sold annually.
---------------------------------------------------------------------------

    To a large extent, benefits and costs will depend on how processors 
of juice who do not currently implement controls sufficient to achieve 
a 5-log reduction respond to the warning label regulation. That is, 
firms will choose whether to display the warning statement or to comply 
early with the 5-log reduction. The agency has no information to 
indicate the choices that specific processors will make.
    The actual choice that each processor will make depends on several 
factors: (1) The revenue that processors expect to lose because of 
consumers' responses to the Government's announcement of the rules and 
the warning label, (2) the costs of and length of time allowed to make 
label changes, (3) the costs of achieving a 5-log reduction in 
pathogens, and (4) the revenue that processors expect to lose if 
consumers respond negatively to the changes in product characteristics 
caused by processing the juice.
    Processors will choose to discontinue juice production if they 
perceive that either labeling or a change in processing practices will 
lower profits below a ``normal'' return.\3\ In other words, processors 
will go out of the juice business rather than comply with these 
regulations only if one of the two following conditions is satisfied: 
(1) The combination of the cost of displaying the warning labeling and 
the reduction in revenue caused by the negative response of consumers 
to the warning results in below normal profits; or (2) a combination of 
increased costs from processing and a reduction in revenue caused by 
the negative response of consumers to the changes in product quality 
results in below normal profits.
---------------------------------------------------------------------------

    \3\ A normal return on profits is the average market return on 
capital that a processor could receive, for example, by investing in 
the stock market.
---------------------------------------------------------------------------

    For the purposes of this analysis, the agency has assumed that, in 
order to avoid having their products associated with the warning to 
consumers, all establishments that will eventually be covered by the 
HACCP rule will implement controls sufficient to achieve a 5-log 
reduction when the labeling rule takes effect. The agency has also 
assumed for the purposes of this analysis that those establishments not 
covered by the HACCP rule will display the warning statement for 
packaged juice products. However, in order to avoid displaying the 
warning statement, these establishments may choose to process their 
juice in a manner sufficient to achieve a 5-log reduction in pathogens 
or under an adequate voluntary HACCP plan.

IV. Regulatory Options

    The preambles in the accompanying proposed regulations describe the 
compelling public need for these regulations. For example, in recent 
years, pathogens have been discovered in fresh juices after having 
caused severe illness in humans. These products were previously not 
known to be vehicles for such hazards, given their low pH. Because 
these events have occurred, the agency tentatively finds that it is 
prudent to require the adoption of preventative controls for hazards 
now associated with juice where controls may not have been previously 
thought to be necessary.
    There are a number of regulatory options that FDA has preliminarily 
considered to reduce the risks associated with consuming juice 
products. FDA requests comments on benefits, costs, and any other 
aspect of these options.

A. Take No New Regulatory Action

    Choosing this option would imply either reliance on: (1) Existing 
Federal regulation, (2) State and local regulatory activity, (3) 
business interests, (4) consumer demands, and (5) product liability 
pressures to reduce risks incurred by consumers of juice products or 
acceptance that the risks that juice currently presents are risks that 
consumers are unwilling to pay to reduce. In the first case, it is 
unlikely that the market will adjust to eliminate the risks present in 
juice because of the difficulty of establishing the link between the 
various kinds of illnesses, whether acute or chronic, to consumption of 
juice. Generally, this link may only be established when there are 
large, geographically focused outbreaks of acute illness. However, 
research indicates that most cases of foodborne illness are sporadic 
and geographically dispersed and not associated with any identifiable 
and focused outbreaks (Ref. 1). In the second case, it is presumed that 
consumers are willing to pay to reduce these risks given the sizeable 
estimated benefits of the proposed rules. Finally, while industry and 
State governments have undertaken steps in many areas to reduce risks 
associated with juice, FDA believes that the changes have been made 
with the expectations of Federal regulation. It is unlikely that the 
market would fully adjust to reduce the risk without additional Federal 
action.

B. Regulate Only High-Risk Juice Products or High-Risk Hazards

    FDA could choose to make these rules applicable only to juice 
products that have been associated by epidemiology or by inspection 
history with health hazards. This option is discussed in the appendix 
supporting this analysis (Ref. 9). In the appendix, the agency 
concluded that unpasteurized or otherwise nonheat treated juices 
present the largest risk to consumers because pathogens pose the 
highest risk of the several categories of hazards. FDA is proposing 
that all chemical, physical, and biological hazards be included under 
HACCP, despite the differences in relative risk posed by different 
types of hazards. It is important to note that processors may, under 
the umbrella of

[[Page 24256]]

HACCP, adjust for the probability and severity of hazards by adjusting 
critical limits, the frequency of monitoring, intensity of corrective 
action, or any number of other margins. FDA has not evaluated the 
benefits and costs of structuring HACCP based on this option, and seeks 
comments on it, especially on the option of covering only some types of 
juice.

C. Do Either One of the Proposed Rules but Not Both

    One option would be to eliminate the HACCP requirement for juices, 
one of the two proposed actions, and only require that juices that are 
not processed to achieve a 5-log reduction be labeled with a warning to 
consumers. The purpose of this labeling is to alert consumers who are 
at increased risk to avoid these products and to inform all consumers 
of the risk of these products relative to other juices. However, it is 
difficult to predict what products consumers would switch to once they 
encounter the warnings. It is possible that some consumers may reduce 
their health status by choosing less nutritious substitutes in order to 
avoid the products with the warning labels. Although labeling may be 
effective for changing both producer behavior (particularly to avoid 
displaying the warning) and consumer behavior, the agency believes that 
labeling alone is unlikely to be sufficient to address all health 
hazards associated with consumption of juice products.
    Another option would be to eliminate the labeling rule and only 
require that juice processors implement HACCP. This option would reduce 
the possibility that some consumers might overreact and avoid all 
juice. This option would also allow fresh juice to be marketed without 
warnings and would result in some cost savings for products that will 
not need to pay for labeling costs. However, it would also result in 
some reduction in benefits because the HACCP rule will take longer to 
implement than the labeling rule and because the proposed labeling rule 
covers juice made at the point of sale and the proposed HACCP rule does 
not cover retailers.

D. Require New Current Good Manufacturing Practices

    FDA could develop and require current good manufacturing practices 
(CGMP's) or sanitation standards specific to juice products to improve 
the safety of juices. The use of CGMP's would assist processors in 
ensuring the safety of their juices by providing guidance on how to 
reduce insanitary manufacturing practices and on how to protect against 
food becoming contaminated. While FDA currently has general CGMP's that 
provide guidance to all food processing industries, it does not have 
specific CGMP's for the juice industry.
    There are three reasons that this alternative alone may be 
undesirable. First, CGMP's by themselves are unlikely to have a 
sufficient impact on the safety of juice, particularly relative to 
HACCP. That is, CGMP's do not provide: (1) A structure for each 
processor to align specific hazards unique to the processor's 
operations with specific control measures; (2) assurance that the 
processor will establish specific performance standards appropriate to 
the processor's unique operation; (3) records that document that the 
performance standards are met; and (4) records of frequent audits to 
verify that controls are being applied, all of which are associated 
with HACCP. Identifying specific hazards, designing controls that are 
specific and unique to each operation, and verifying that these 
controls are being applied as specified are essential elements of a 
control program that will provide an improved level of food safety.
    Secondly, under the HACCP approach being proposed, the industry is 
required to use FDA's general CGMP's in part 110 (21 CFR part 110) and 
to develop and adopt sanitation standard operating procedures (SOP's) 
as part of their prerequisite programs for their HACCP plan. Therefore, 
the HACCP approach builds on the foundation of CGMP's at the same time 
it avoids the limitations of this alternative.
    HACCP is designed for use in all segments of the food industry from 
growing, harvesting, processing, manufacturing, distributing, and 
merchandising to preparing food for consumption. Prerequisite programs 
such as current good manufacturing practices (CGMP's) are an essential 
foundation for the development and implementation of successful HACCP 
plans.
    The production of safe food products requires that the HACCP system 
be built upon a solid foundation of prerequisite programs. Each segment 
of the food industry must provide the conditions necessary to protect 
food while it is under their control. This has traditionally been 
accomplished through the application of CGMP's. These conditions and 
practices are now considered to be prerequisite to the development and 
implementation of effective HACCP plans. Prerequisite programs provide 
the basic environmental and operating conditions that are necessary for 
the production of safe, wholesome food.

E. Require Pasteurization

    FDA could require that all juice be pasteurized rather than 
requiring HACCP with a specified 5-log reduction. Although FDA is not 
currently aware of other practical methods to achieve this level of 
control, solely requiring pasteurization would inhibit new 
technological innovation and it would only address one type of hazard 
(pathogens that are not heat resistant). In this analysis, the agency 
has, in fact, evaluated the costs of pasteurization for those juices 
not now pasteurized. It should be pointed out that, by volume, the vast 
majority of juices are now pasteurized or otherwise equivalently 
treated. Thus, the marginal costs and benefits of requiring 
pasteurization only apply to the small fraction of juice that is not 
heat treated.
    The agency requests comment on the appropriateness of the 5-log 
reduction performance standard and if other approaches, such as 
establishing a minimal acceptable risk standard for juices, could be 
used that would ensure the safety of the juice. The agency requests 
comments on what such a minimal acceptable risk standard should be and 
how it would be implemented. The agency also invites interested persons 
to submit scientific data concerning the acceptability of a 5-log 
reduction requirement or whether a more or less stringent performance 
standard (e.g., 3- or 7-log reduction) for specific juices would be 
more appropriate or whether different approaches consistent with a 
minimal acceptable risk standard for juices might be appropriate for 
specific juices based on their unique characteristics.

F. Set Different Performance Standards for Processing of Different 
Products

    One regulatory option would be to establish different performance 
standards for processing different types of juice products to decrease 
the number of pathogens. In the proposal, the agency has tentatively 
proposed that any combination of processing steps which cumulatively 
result in a 5-log (a 100,000-fold) reduction in pathogens should be 
applied to the production of all types of juice. However, different 
products may warrant different processing stringencies because of a 
number of factors, including: (1) The initial microbial counts on raw 
produce are likely to vary, (2) different types of produce are likely 
to harbor different kinds of pathogens, and (3) different products 
provide different environments for microbial growth. This

[[Page 24257]]

option could either be exercised as part of the final rule in response 
to comments or the proposed standards could remain with the option to 
further petition the agency for a different standard. The benefits and 
costs of the standard will vary directly with the stringency of 
different performance standards. However, FDA does not have data to 
estimate preliminarily the costs and benefits of this option.

G. Expand HACCP Rule Coverage

    FDA has tentatively concluded that the retail sector should not be 
included in the HACCP rule and has asked for comments on the 
appropriateness of this conclusion. The expansion of coverage of the 
HACCP rule to include retailers that process juice at the point of sale 
would add an estimated additional 14,300 restaurants and 1,300 grocery 
stores and supermarkets for a total of approximately 16,000 
establishments. If the cost for these establishments to implement HACCP 
was equivalent to that of very small processors who would be required 
to initiate pasteurization ($26,000 in the first year and $11,900 in 
subsequent years), then the total additional cost of this option would 
be approximately $416 million in the first year and approximately $190 
million in subsequent years. However, the agency does not have direct 
information about the cost of implementing HACCP in a retail setting 
for juice and the actual costs may vary significantly from these 
estimates.

H. Use of One of Various Alternatives

    An alternative approach to mandating HACCP would be to provide a 
more flexible array of options tailored to the microbial risk present 
in the particular juice. Manufacturers of apple cider would be provided 
a permanent option choosing between labeling or implementing a HACCP 
program with a 5-log pathogen reduction. All juices other than 
untreated apple cider would be provided a permanent option of choosing 
between labeling, implementing a HACCP system, or achieving a 5-log 
pathogen reduction. However, FDA believes that this option provides 
only weak incentives for processors to implement a HACCP system. 
Processors could label hazardous products without taking steps to 
improve the safety of juice or choose to achieve a 5-log reduction for 
microbial pathogens without addressing other hazards. The agency 
believes that labeling would not achieve the same level of product 
safety. Additionally, there would be less incentive for processors to 
implement a HACCP system, which includes, among other things, 
developing and implementing sanitation SOP's and recordkeeping at 
critical control points in addition to achieving a 5-log reduction. 
Other hazards that would not be addressed include chemical 
contaminants, hazardous metals, including lead and tin, mycotoxins, 
pesticides, and physical hazards, such as glass.
    Another regulatory option would be to include labeling for 
unpackaged juice products for all retail outlets, such as restaurants. 
This option would also require any very small retailer (as defined for 
the purposes of this rulemaking) who is manufacturing less than 40,000 
gallons of juice per year and selling it directly to consumers and 
other retailers to either label or achieve a 5-log kill until a 
requirement for HACCP would become effective 36 months from the date of 
publication of the final rule.
    If this option is combined with both proposed rules, FDA has 
estimated the benefits to be $383 to $478 million annually and 
estimated the costs in the first year to be $54 million and the costs 
in subsequent years to be $28 million.

V. Benefits

    This analysis provides estimates of three additive, independent 
benefits of these two proposed rules: (1) Reduced expenditures related 
to regulatory enforcement, (2) reduced adverse health effects, and (3) 
other benefits. To some extent, the benefits of the two rules are 
intertwined. Because of the earlier compliance dates, the impact of the 
labeling rule will be to achieve some of the benefits faster. That is, 
if firms choose to achieve a 5-log reduction through their processing 
practices to avoid labeling, then some of the future benefits that 
would be otherwise achieved under HACCP will be achieved sooner because 
of the incentive provided by the labeling rule. Also, if at-risk 
consumers avoid unpasteurized juices as a result of the labeling, there 
will be reduced adverse-health effects prior to the introduction of 
HACCP. On average, the labeling rule will achieve some of the benefits 
2 years faster than the HACCP rule.

A. Enforcement Benefits

    To the extent that these proposed rules are effective at reducing 
contaminated juice, they should reduce the number of safety-related 
enforcement actions (for both domestic and imported products) taken by 
the agency for juice products. The enforcement activities chosen as a 
baseline for juice products fall between the period 1992 and 1996 
(inclusive) and involve import detentions and domestic recalls.
    In the final regulatory impact analysis for FDA's seafood HACCP 
rule, FDA used an assumption that the rule would prevent 50 percent of 
the current number of annual enforcement actions. The agency did not 
receive comments on this assumption in that rule and does not yet have 
data from implementation of the rule to validate it. However, this may 
be a conservative assumption. If HACCP plans are properly conceived, 
implemented and validated, it is likely that the vast majority of 
problems will be caught and corrected in the plant, rather than result 
in foodborne disease outbreaks or be caught through Federal sampling of 
the final product. Thus, the agency will continue to make this 
assumption but requests comment on it.
1. Import Enforcement
    Over the period 1992 through 1996, there were a number of imported 
juice products detained for various violations of the Federal Food, 
Drug, and Cosmetic Act (the act). A detention is a procedure for 
preventing violative products from entering the United States. 
Following a determination that a sample of a product is violative, 
three steps occur: (1) FDA sends a detention notice to the importer 
providing an opportunity to introduce testimony as to the condition of 
the product; (2) the importer may contact an attorney, submits a 
response application, and introduces evidence regarding the product; 
and (3) FDA makes a determination about what should be done with the 
shipment. There are three actions that FDA can specify for a detained 
shipment: (1) The product is allowed to be ``reshipped'' out of the 
country, (2) the product is reconditioned so as to bring it into 
compliance with U.S. law, or (3) the product is destroyed under Federal 
supervision. Assume that the cost per shipment of the three steps to 
all parties involved is $5,000. Then the remaining cost of detention is 
the cost per shipment of the three actions which is related to the 
value of the shipment.
    Table 1 gives the number of shipments detained and the total dollar 
value of juice products detained for violations of the act for the 
entire period 1992 through 1996.
    The average value per shipment of imported juice products refused 
entry is approximately $10,000. The average number of imported juice 
product shipments detained annually is 23.

[[Page 24258]]



                                Table 1.--Totals of Juice Import Detentions for 1992 through 1996 by Reason for Detention                               
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Poisonous or    Violative                                                                
             Reason for Detention              Food Additive   Deleterious     Pesticide       Chemical       New Drug      Microbial         Total     
                                                   Issues       Substances      Residues    Contamination     Residues       Hazards                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
Number of Shipments                                  44             17             53              1              1              1              117     
Value of Shipments                             $122,000       $112,000       $802,000        $79,000        $20,000         $2,000       $1,137,000     
--------------------------------------------------------------------------------------------------------------------------------------------------------

    If, on an annual basis, 23 imported juice product shipments are 
detained at an average Federal enforcement and industry negotiation 
cost of $5,000 per shipment (60 FR 65189), and if all 23 shipments 
(with an average value of $10,000 per shipment) are destroyed so that 
the entire $10,000 value of the shipment is lost, then the total annual 
cost of all juice detentions is approximately $345,000 (23 shipments x 
($10,000 value of shipment + $5,000 enforcement and negotiation cost)). 
If 50 percent of these enforcement costs are prevented, then the 
benefits related to import enforcement are approximately $175,000.
2. Recalls
    Recalls tracked by FDA for pathogens or pesticides in juice 
products are infrequent. For the period 1992 through 1996 there was one 
class 1 recall and there were seven class 2 recalls\4\ for such 
hazards, or about two recalls per year. A class 1 recall may cost as 
much as $3 to $5 million between expenditures by the manufacturer, 
retailers and State, local, and Federal authorities. However, the 
typical juice recall is smaller and less costly than this. If the 
combination of industry and government costs per recall on average is 
$1 million, then the total annual cost of juice recalls is 
approximately $2 million (2 recalls per year at $1 million each). This 
assumption is based on FDA conversations with industry for both large 
and small recalls. FDA acknowledges that this may not be the true 
average cost of a recall and requests comment on this assumption. If 50 
percent of these enforcement costs are prevented, then the benefits 
related to recalls tracked by FDA are $1 million. However, FDA may not 
be aware of all recalls that take place, particularly for less 
hazardous reasons. Assuming that the recalls that FDA is not aware of 
are considerably smaller, perhaps costing $100,000, and that FDA may 
only hear about 10 percent of such recalls, then the total annual cost 
of such recalls could be $1 million. If 50 percent of these enforcement 
costs are prevented, then the benefits related to recalls not tracked 
by FDA would be $500,000. Thus, the total annual benefits of the HACCP 
rule related to recalls is estimated to be $1.5 million.
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    \4\Class 1 recalls are for dangerous or defective products that 
predictably could cause serious health problems or death. Class 2 
recalls are for products that might cause a temporary health 
problem, or pose only a slight threat of a serious nature.
---------------------------------------------------------------------------

    In addition to those benefits, when firms have recalls that are 
made public they will generally suffer a loss of sales, at least 
temporarily, from lost ``goodwill.'' This alone does not result in a 
social cost but rather a social transfer as other firms will step 
forward to capture sales lost from the recalling firm. However, in 
addition to the resources invested in recalling the product, the 
recalling firm may invest real resources in advertising to recapture 
lost goodwill, a social cost. FDA cannot quantify this cost.

B. Health Benefits

    This section presents quantitative estimates of health benefits 
from this rule. This is accomplished by the following steps:
    1. The most significant hazards in juice are described in terms of 
severity and duration;
    2. The hazards are described in terms of resulting health effects 
and symptoms when they cause illness;
    3. The health effects and symptoms are translated into consumer 
utility losses;
    4. The utility losses are translated into values in terms of lost 
dollars (this gives the cost per case for every combination of level of 
severity and for the specified duration for each hazard);
    5. The average annual number of reported cases associated with 
juice are distributed according to the percentages associated with each 
level of severity;
    6. The factors used to account for under reporting of foodborne 
illness are estimated;
    7. The reported cases are multiplied by the under reporting factors 
to get the estimated average annual number of cases;
    8. The percentages of each type of hazard expected to be prevented 
by the proposal are listed; and
    9. The total health benefits of the proposal are derived by 
multiplying numbers 4, 7, and 8.
That is, TB = RC x CF x CR x V, where
TB = total health benefits in dollars,
RC = number of reported cases,
CF = under reporting correction factor,
CR = percent of cases reduced,
V = dollar value per case averted (medical costs + value of pain and 
lost function).
1. Description of Microbial Hazards in Juice
    Most of the significant health risks associated with juice products 
are microbial. In the last 5 years the hazards associated with 
commercially processed, packaged juice produced by nonretail 
establishments include Bacillus cereus, Escherichia coli O157:H7, and 
Salmonella non typhi.\5\ Table 2 lists these hazards with associated 
severities and duration of severities. These hazards have been directly 
linked to orange and apple juice products. However, all juices take 
farm produce as an input; all use similar types of processing steps; 
and all are distributed in similar ways. Therefore, although other 
types of juices are less likely to be associated with foodborne disease 
outbreaks primarily because consumption of orange and apple juice 
greatly exceeds consumption of all other types of juice combined, all 
juices are similarly vulnerable to microbial contamination. All juices 
are sensitive to potential contamination by pathogenic microorganisms 
due to the way fruits and vegetables are grown and harvested.
---------------------------------------------------------------------------

    \5\ Most of the information in section V of this document 
(Benefits) is taken from Ref. 9. It includes hazards other than 
those for which benefits have been estimated in this analysis. The 
hazards considered in section V of this document are those for which 
the risk is highest. That is to say they are the most significant in 
terms of probability of occurrence and severity.
---------------------------------------------------------------------------

    Based on current scientific understanding, potential vehicles or 
mechanisms for pathogenic cross contamination common to most fruit and 
vegetable harvesting and juicing operations include water; manure 
fertilizer; worker, field, and facility sanitation and transportation, 
handling and processing. While most of the potential for contamination 
would appear on the surface of the fruit or vegetable, the process of 
juicing this

[[Page 24259]]

fruit or vegetable would potentially incorporate the pathogenic 
microorganisms into the final juice product. Ref. 10, page 31, lists 
the pH of some fruit and vegetable juices.

           Table 2.--Description of Microbial Hazards in Juice          
------------------------------------------------------------------------
                                                          Duration of   
      Hazard          Severity         Percent3         Illness (days)  
------------------------------------------------------------------------
E. coli O157:H7                                                         
                    Mild                   50                   5       
                    Moderate               32                   9       
                    Severe-acute           18                  32       
                    Severe-                 2           26,645\1\       
                     chronic                                            
                    Death                   1                           
Salmonella (non                                                         
 typhi)                                                                 
                    Mild                   65                   2       
                    Moderate               30                   5       
                    Severe                  5                  17       
                    Reactive                2                  25       
                     arthritis-                                         
                     short term                                         
                    Reactive                5             18,2502       
                     arthritis-                                         
                     long term                                          
                    Death                    .1                         
B. cereus                                                               
                    Mild                   99                    .75    
                    Moderate                1                   1       
                    Severe                  0                  NA       
                    Death                   0                  NA       
------------------------------------------------------------------------
\1\ Symptoms lasting 26,645 days, or 73 years, implies that it is       
  generally very young children who experience these severe chronic     
  effects (Ref. 2-3).                                                   
\2\Symptoms lasting 18,250 days, or 50 years. This estimate and other   
  information in section V of this document (Benefits) relating to      
  reactive arthritis are taken from Ref. 10.                            
\3\Percentages are taken from Ref. 10.                                  

    Symptoms of illness that results from exposure to each hazard may 
be classified as mild, moderate, or severe. In general, mild cases are 
not brought to the attention of a medical professional. Moderate cases 
receive medical attention but do not require hospitalization. Severe 
cases involve hospitalization and some of these result in death. The 
``Percent'' column in Table 2 gives an estimate of the percentage of 
the total number of cases that are classified in these four categories 
of severity for each hazard. Note that the categories are not 
necessarily mutually exclusive, for example, severe-chronic cases of E. 
coli O157:H7 follow only after severe-acute cases of E. coli O157:H7, 
and deaths follow only after severe cases. However, the ``Percent'' 
column reports each category of severity as a percentage of total cases 
so that there is no double counting. Another factor that tends to 
distinguish the categories of severity is the duration of time that 
symptoms are experienced. The ``Duration'' column gives the general 
duration of symptoms (in days) that are associated with the categories 
of severity for each hazard.
2. Description of Health Effects and Symptoms of Microbial Hazards in 
Juice
    In order to quantify the loss (disutility) that individuals 
experience from becoming ill, the pain, suffering, and mobility loss 
must be scaled. Tables 3, 4, and 5 represent the outcome of one type of 
scaling of these effects. Individuals who become ill experience 
different levels of functional status in terms of mobility, ability to 
do other physical activity, and ability to engage in social activities. 
The ``Functional Status Code'' column in Table 3 represents the status 
code which correlates with the categories of severity for each hazard. 
Individuals who become ill also experience additional disutility due to 
the symptoms of the illness. The ``Symptom/Problem Complex Code'' 
column represents the symptom/problem complex codes which correlate 
with the categories of severity for each hazard. Descriptions of the 
functional status and symptom/problem complex codes are given in Tables 
4 and 5. FDA requests comment on this scaling model.

         Table 3.--Description of Health Effects and Symptoms of Microbially Related Illnesses in Juice         
----------------------------------------------------------------------------------------------------------------
                                                                                         Symptom/Problem Complex
              Hazard                         Severity           Functional Status Code1           Code2         
----------------------------------------------------------------------------------------------------------------
E. coli O157:H7                                                                                                 
                                   Mild                                             L20            8, 12, 13, 29
                                   Moderate                                         L19   8, 12, 13, 16, 19, 29,
                                                                                                              32
                                   Severe-acute                       (L1 x .2) + (L6 x   8, 12, 13, 16, 19, 29,
                                                                                 .8)\3\                       32
                                   Severe-chronic                                   L31                        9
Salmonella (non typhi)                                                                                          
                                   Mild                                             L20               12, 13, 29
                                   Moderate                                         L20               12, 13, 29
                                   Severe                                            L6           12, 13, 16, 29
                                   Reactive arthritis               L35, L41, L42, L434                       19
B. cereus                                                                                                       
                                   Mild                                             L19               12, 13, 29
                                   Moderate                                         L19               12, 13, 29

[[Page 24260]]

                                                                                                                
                                   Severe                                            NA                       NA
----------------------------------------------------------------------------------------------------------------
\1\ Functional Status Codes are described in Table 4.                                                           
\2\ Symptom/Problem Complex Codes are described in Table 5.                                                     
\3\ The disutilities for two functional status codes were taken for severe cases of E. coli O157:H7 because     
  functional status varies among severe cases of this hazard.                                                   
\4\ Functional Status Code varies, Ref. 10.                                                                     

    In Table 4, the last column, ``Level of Disutility,'' represents 
the degree of departure from perfect functionality. Thus, a person 
would be functioning at about half capacity if the level was .5 and 
would be even more diminished at .75. Code L42 is used whenever the 
mobility, physical activity, and social activity conditions apply and a 
person is experiencing a symptom described in Table 5. Code L43 is used 
whenever the mobility, physical activity, and social activity 
conditions apply and a person is experiencing no symptoms. In Table 5, 
``Level of Disutility'' refers to the amount of pain and suffering such 
that .03 would be minor pain and suffering relative to .3.

            Table 4.--Description of Functional Status Codes1           
------------------------------------------------------------------------
  Function Status                Physical    Social        Level of     
      Levels         Mobility    Activity   Activity      Disutility    
------------------------------------------------------------------------
L1................  In special  In bed or  Had help              .5626  
                     care unit   chair      with                        
                                            self-                       
                                            care                        
L6................  In          In bed or  Had help              .5301  
                     hospital    chair      with                        
                                            self-                       
                                            care                        
L19...............  In house    Walked     Performed             .4176  
                                 with       self-                       
                                 physical   care but                    
                                 limitati   not                         
                                 ons        work,                       
                                            school,                     
                                            or                          
                                            housewor                    
                                            k                           
L20...............  In house    Walked     Limited               .4448  
                                 with       in work,                    
                                 physical   school,                     
                                 limitati   or                          
                                 ons        housewor                    
                                            k                           
L23...............  In house    Walked     Performed             .3512  
                                 without    self-                       
                                 physical   care,                       
                                 limitati   but not                     
                                 ons        work,                       
                                            school,                     
                                            or                          
                                            housewor                    
                                            k                           
L31...............  Did not     Walked     Limited               .4087  
                     drive,      without    in work,                    
                     needed      physical   school,                     
                     help with   limitati   or                          
                     transport   ons        housewor                    
                     ation                  k                           
L35...............  Drove car   Walked     Limited               .3980  
                     and used    with       in work,                    
                     transport   physical   school,                     
                     ation       limitati   or                          
                     without     ons        housewor                    
                     help                   k                           
L41...............  Drove car   Walked     Did work,             .3145  
                     and used    without    school,                     
                     transport   physical   or                          
                     ation       limitati   housewor                    
                     without     ons        k, but                      
                     help                   other                       
                                            activiti                    
                                            es                          
                                            limited                     
L42...............  Drove car   Walked     Did work,             .2567  
                     and used    without    school,                     
                     transport   physical   or                          
                     ation       limitati   househol                    
                     without     ons        d, and                      
                     help                   other                       
                                            activiti                    
                                            es                          
L43...............  Drove car   Walked     Did work,             .0000  
                     and used    without    school,                     
                     transport   physical   or                          
                     ation       limitati   househol                    
                     without     ons        d, and                      
                     help                   other                       
                                            activiti                    
                                            es                          
------------------------------------------------------------------------
\1\ Ref. 4.                                                             


         Table 5.--Description of Symptom/Problem Complex Codes1        
------------------------------------------------------------------------
  Symptom/Problem                                          Level of     
      Complex                  Description                Disutility    
------------------------------------------------------------------------
8.................  Itching, bleeding or pain in                        
                     rectum                                      .0379  
9.................  Pain in chest, stomach, side,                       
                     back, or hips                               .0382  
12................  Sick or upset stomach, vomiting,                    
                     or diarrhea (watery bowel                          
                     movements)                                  .0065  
13................  Fever chills with aching all                        
                     over and vomiting or diarrhea               .0722  
16................  Headache, dizziness, or ringing                     
                     in ears                                     .0131  
19................  Pain, stiffness, numbness, or                       
                     discomfort of neck, hands,                         
                     feet, arms, legs ankles, or                        
                     several joints together                     .0344  
29................  General tiredness, weakness, or                     
                     weight loss                                 .0027  
32................  Loss of consciousness such as                       
                     seizures (fits), fainting, or                      
                     coma (out cold or knocked out)              .1507  
------------------------------------------------------------------------
\1\ Ref. 4, p. D-14.                                                    

3. Utility Losses From Microbial Hazards in Juice
    The ``Functional Status Code'' translates into values of disutility 
given in the ``Functional Disutility'' column in Table 6. The symptom/
problem complex code translates into values of
  
disutility given in the ``Symptom/Problem Disutility'' column in Table 
6. The ``Total Disutility'' column is the sum of the ``Functional 
Disutility'' and the ``Symptom/Problem Disutility'' columns. The 
``Utility Losses for Survivors'' column is derived by multiplying the 
total disutility per day by the number of days that symptoms of the 
illness persists. This gives the utility loss for survivors in terms of 
the number of quality adjusted life days (QALD's) for each case of the 
categories of severity for each hazard.\6\ FDA requests comment on this 
estimation of utility loss.
---------------------------------------------------------------------------

    \6\ A QALD is a day of perfect health.

[[Page 24261]]



                            Table 6.--Utility Losses From Microbial Hazards in Juice                            
----------------------------------------------------------------------------------------------------------------
                                                                     Symptom/                                   
                                                    Functional        Problem          Total      Utility Losses
          Hazard                  Severity          Disutility      Disutility      Disutility     for Survivors
                                                     (per day)       (per day)       (per day)       (QALD's)   
----------------------------------------------------------------------------------------------------------------
E. coli O157:H7                                                                                                 
                            Mild                         .4448           .1193           .5641          2.8     
                            Moderate                     .4176           .1668           .5844          5.3     
                            Severe-acute                 .5464           .3175           .8639         27.8     
                            Severe-chronic               .4087           .0382           .4469     11,907.7     
Salmonella (non typhi)                                                                                          
                            Mild                         .4448           .0814           .5262          1.1     
                            Moderate                     .4448           .0814           .5262          2.6     
                            Severe                       .5301           .0945           .6246         10.6     
                            Reactive arthritis-          .3980           .0344           .4324         10.8     
                             short term                                                                         
                            Reactive arthritis-          .2582           .0280           .2862      5,223.2     
                             long term                                                                          
B. cereus                                                                                                       
                            Mild                         .4176           .0814           .4990           .4     
                            Moderate                     .4176           .0814           .4990           .5     
                            Severe                      0               0               0               0       
----------------------------------------------------------------------------------------------------------------

4. Value of Losses From Microbial Hazards in Juice
    FDA values a QALD at $630. This value derives from the statistical 
estimate of a unit-risk reduction (commonly referred to as the value of 
a statistical life (VSL)) which the Department of Health and Human 
Services assigns the value of $5 million. Using $5 million for a full 
lifetime yields a value for a quality adjusted life year (QALY) of 
approximately $230,000, when discounted at 7 percent. (A QALY is the 
estimated value of a year spent in perfect health. These values are 
discounted to reflect time preferences for investments in health. That 
is, as with any other commodity, people have a stronger preference for 
good health now than they have for good health in the future. Costs or 
benefits realized in the future are ``discounted'' to make them 
comparable to today. Essentially, discounting is the inverse of the 
interest rate. Thus, if a benefit of $1.10 were to be realized 1 year 
in the future, this would be equivalent, at approximately a 10 percent 
discount rate, to a benefit of $1 realized today. This is the reverse 
of saying that $1 invested today at a 10 percent annual interest rate 
is worth $1.10 1 year from now.) Dividing this value by 365 days per 
year yields a value for a QALD of approximately $630. The ``Value of 
Utility Losses for Survivors'' column in Table 7 comes from multiplying 
the number of QALD's lost due to the illness (see ``Utility Losses for 
Survivors'' in Table 6) by the value of a QALD, $630. This represents 
the value of pain and mobility losses that individuals experience. 
Additionally, there are the societal costs of medical treatment. These 
costs are shared generally between insurance companies and individuals. 
They include all aspects of medical expenses (e.g., physician visits, 
laboratory tests, prescriptions and therapies, hospital stays). These 
are estimated in the ``Medical Costs'' column in Table 7 (Ref. 2-3, pp. 
19 and 40 and Ref. 10). The ``Value of Losses per Case'' column in 
Table 7 is the sum of the ``Value of Utility Losses for Survivors'' 
column and the ``Medical Costs'' column for the categories of severity 
for each hazard. FDA requests comment on these valuations.

                            Table 7.--Value of Losses From Microbial Hazards in Juice                           
----------------------------------------------------------------------------------------------------------------
                                                    Value of Utility                                            
                                                       Losses for                           Value of Losses per 
          Hazard                   Severity             Survivors         Medical Costs    Case (VSL=$5,000,000)
                                                       (QALD=$630)                              (QALD=$630)     
----------------------------------------------------------------------------------------------------------------
E. coli O157:H7                                                                                                 
                            Mild                        $1,800               $0\1\                 $2,000       
                            Moderate                    $3,300             $200\1\                 $4,000       
                            Severe-acute               $17,200          $16,000\2\                $33,000       
                            Severe-chronic            $995,700         $225,000\3\             $1,221,000       
                            Death                           NA                  NA             $5,000,000       
Salmonella (non typhi)                                                                                          
                            Mild                          $700             $200\4\                 $1,000       
                            Moderate                    $1,600             $800\4\                 $2,000       
                            Severe                      $6,700           $9,100\4\                $16,000       
                            Reactive arthritis-         $6,800               $1005                 $7,000       
                             short term                                                                         
                            Reactive arthritis-      $970,0005             $5,8605               $976,000       
                             long term                                                                          
                            Death                           NA                  NA             $5,000,000       
B. cereus                                                                                                       
                            Mild                          $300               $0\6\                   $300       
                            Moderate                      $300             $100\6\                   $400       
                            Severe                          $0                  $0                     $0       

[[Page 24262]]

                                                                                                                
                            Death                           NA                  NA             $5,000,000       
----------------------------------------------------------------------------------------------------------------
\1\ Ref. 2-3, p. 40.                                                                                            
\2\ Explained in Table 8.                                                                                       
\3\ Recalculated from data in Buzby et al., pp. 41-45 in order to arrive at the present value of the cost per   
  case using a 7 percent discount rate.                                                                         
\4\ Buzby et al., pp. 18-19. Mild Salmonella medical costs are recalculated from data in Cohen, M. L. et al. so 
  as not to include productivity in medical costs.                                                              
\5\ Ref. 10.                                                                                                    
\6\ The medical cost estimates for B. cereus were made by FDA for this analysis. The extremely brief duration of
  mild cases suggests that there would be no medical costs for this level of severity. For moderate cases one   
  visit to a doctor with medical tests are estimated to cost approximately $100.                                


                 Table 8.--Medical Costs for Severe-Acute Cases Associated With E. coli O157:H71                
----------------------------------------------------------------------------------------------------------------
                                                       Acute Hemorrhagic                        Average Severe- 
                       Factors                              Colitis            Acute HUS          Acute Case    
----------------------------------------------------------------------------------------------------------------
Percent of Severe Cases                                       80%                 20%                           
Present Value per Case                                    $11,000             $36,000                           
Weighted Present Value per Case                            $8,800              $7,200             $16,000       
----------------------------------------------------------------------------------------------------------------
\1\ Ref. 2-3, p. 40.                                                                                            

5. Distribution of the Reported Cases per Year for Microbial Hazards in 
Juice
    Table 9 estimates the number of cases associated with each hazard 
by severity. The ``Average Total No. of Cases Reported per Year'' 
column represents the average number of reported cases for each hazard 
from 1992 through 1996. Cases for each hazard are divided among the 
four categories of severity according to the percentages described in 
Table 8. Only those reported cases associated with commercially-
produced juices sold in interstate commerce as beverages or used as 
ingredients in beverages are included in the averages presented.

   Table 9.--Distribution of the Reported Cases per Year for Microbial  
                            Hazards in Juice                            
------------------------------------------------------------------------
                                                        Average No. of  
      Hazard          Severity          Percent       Cases Reported per
                                                             Year       
------------------------------------------------------------------------
                    Mild                   50                   8       
                    Moderate               32                   5       
                    Severe-acute           18                   3       
                    Severe-                 2                    .3     
                     chronic                                            
                    Death                   1                    .2     
E. coli O157:H7     Total cases                             16\1\       
                                                                        
                    Mild                   65                   8       
                    Moderate               30                   4       
                    Severe                  5                   1       
                    Reactive                2                    .2     
                     arthritis-                                         
                     short term                                         
                    Reactive                5                   1       
                     arthritis-                                         
                     long term                                          
                    Death                    .1                  .01    
Salmonella (non     Total cases                                12       
 typhi)                                                                 
                                                                        
                    Mild                   99                  17       
                    Moderate                1                    .2     
                    Severe                  0                   0       
                    Death                   0                   0       
B. cereus           Total cases                                17       
------------------------------------------------------------------------
\1\ Total cases per pathogen are accurate. The sum of the number of     
  cases for all levels of severity per pathogen may not equal the total 
  number of cases per pathogen due to rounding.                         

6. Estimates of Factors Needed to Offset Underreporting of Foodborne 
Illness
    The cases reported in column 4 in Table 10 are the lower bound of 
the likely total number of these cases. The total number of foodborne 
illness is much greater than those numbers reported to the Centers for 
Disease Control and Prevention (CDC) for several reasons. First, 
individuals who become ill do not always go to doctors. This is 
particularly true for milder cases of foodborne disease. Obviously, if 
people do not go to health care professionals, the illnesses will not 
be captured in any data base and will not be picked up by CDC. Second, 
even when people go to health care professionals, they are not 
necessarily diagnosed as having foodborne disease as the symptoms for 
many types of

[[Page 24263]]

foodborne disease are common to influenza and other diseases. There is 
often little incentive to culture stools to definitively identify a 
pathogen if the disease is thought to be of short duration and not 
requiring treatment. Even where a pathogen is identified, there is even 
less incentive to identify the food or other vehicle which carried it. 
Third, even when a correct diagnosis is made, State and local health 
professionals do not always report these cases upwards, particularly 
going as far as CDC. Again, milder cases are less likely to be reported 
than more severe cases.\7\ To complicate matters, the rate of under 
reporting is not observable, and, even if it were known in any 1 year, 
it may fluctuate dramatically from year to year. Nevertheless, in order 
to compensate for the rate of under reporting, the number of known 
cases associated with a hazard (i.e., reported to CDC) is multiplied by 
factors which are estimated to account for underreporting.
---------------------------------------------------------------------------

    \7\ The CAST Report expands these three categories of reasons 
that a case of illness may not be recognized as foodborne into six 
reasons (Ref. 6).
---------------------------------------------------------------------------

    In Foodborne Pathogens: Risks and Consequences (the CAST Report) 
there are two estimates given of the actual number of foodborne 
illnesses: One estimate made by Bennett et al., and one made by Todd 
(Ref. 6, p. 46). Both Bennett et al. and Todd estimate the total number 
of cases and the total number of deaths for each hazard. By dividing 
Bennett's et al. and Todd's estimates of the actual number of cases and 
deaths by the number of reported cases and deaths (Ref. 6, p. 42), the 
respective implicit factors needed to correct for underreporting of 
these categories for each hazard are derived. Based on these correction 
factors, FDA has estimated correction factors for each category of 
severity. The agency has taken the correction factor for the number of 
cases as the correction factor for mild cases and the correction factor 
for the number of deaths as the correction factor for severe cases. For 
moderate cases, the agency has interpolated between the factors for 
mild and severe cases. E. coli O157:H7 was not a recognized food-safety 
hazard at the time that Bennett's et al. work was done. For a more 
complete description of how these estimates were derived see the 
Appendix attached to this document (Ref. 9).
    In Table 10, the third column, ``Estimate of Underreporting 
Correction Factor (Bennett),'' and the fifth column, ``Estimate of 
Underreporting Correction Factor (FDA based on Todd),'' give the exact 
implicit correction factors that can be derived from the work of 
Bennett and Todd et al. The fourth column, ``Estimate of Underreporting 
Correction Factor (FDA based on Bennett),'' and the sixth column, 
``Estimate of Underreporting Correction Factor (FDA based on Todd),'' 
give FDA's interpolations of the work of Bennett and Todd et al. for 
each of the identified categories of severity. In general, each 
researcher's estimate of the underreporting correction factor for total 
cases was used as the estimate for mild cases, and each researcher's 
estimate of the underreporting correction factor for deaths was used as 
the estimate for deaths and severe cases. FDA interpolated between each 
researcher's estimates of underreporting for total cases and deaths to 
derive under reporting rates for moderate cases. FDA requests comment 
on these estimates of underreporting.

              Table 10.--Estimates of Factors Needed to Offset Underreporting of Foodborne Illness              
----------------------------------------------------------------------------------------------------------------
                                                                    Estimate of                                 
                                                    Estimate of   Underreporting    Estimate of     Estimate of 
                                                  Underreporting    Correction    Underreporting  Underreporting
         Hazard                  Severity           Correction      Factor (FDA     Correction      Correction  
                                                      Factor         based on      Factor (Todd)    Factor (FDA 
                                                     (Bennett)       Bennett)                     based on Todd)
----------------------------------------------------------------------------------------------------------------
                         Mild                                                                           195     
                         Moderate                                                                        20     
                         Severe                                                                           7     
                         Death                                                            7               7     
E. coli O157:H7          Total cases                  ND\1\                             195                     
                                                                                                                
                         Mild                                           307                             474     
                         Moderate                                       307                              45     
                         Severe                                         246                               4     
                         Reactive arthritis-                            307                             474     
                          short term                                                                            
                         Reactive arthritis-long                        307                             474     
                          term                                                                                  
                         Death                          246             246               4               4     
Salmonella (non typhi)   Total cases                    307                             474                     
                                                                                                                
                         Mild                                            96                           1,615     
                         Moderate                                        96                           1,615     
                         Severe                          NA              NA              NA              NA     
                         Death                           NA              NA              NA              NA     
B. cereus                Total cases                     96                           1,615                     
----------------------------------------------------------------------------------------------------------------

7. Estimates of Juice-Associated Cases per Year
    In Table 11, FDA has estimated ranges of the likely annual number 
of cases that occur for each of the four pathogens studied. The column 
``Estimate of Actual No. of Juice Associated Cases per Year (FDA based 
on Bennett)'' in Table 11 is derived by multiplying the ``Average Total 
No. of Reported Cases per Year'' column in Table 9 by the ``Estimate of 
Underreporting Correction Factor (FDA based on Bennett)'' column in 
Table 11. The column ``Estimate of Actual No. of Juice Associated Cases 
per Year (FDA based on Todd)'' in Table 11 is calculated in a similar 
manner.

[[Page 24264]]



                             Table 11.--Estimates of Juice-Associated Cases per Year                            
----------------------------------------------------------------------------------------------------------------
                                      Estimate of         Estimate of     Estimate of Actual  Estimate of Actual
                                    Underreporting      Underreporting       No. of Juice-       No. of Juice-  
     Hazard          Severity      Correction Factor   Correction Factor   Associated Cases    Associated Cases 
                                     (FDA based on       (FDA based on       per Year (FDA       per Year (FDA  
                                       Bennett)              Todd)         based on Bennett)    based on Todd)  
----------------------------------------------------------------------------------------------------------------
                 Mild                      ND                 195                  ND               1,560       
                 Moderate                  ND                  20                  ND                 100       
                 Severe-acute              ND                   7                  ND                  20       
                 Severe-chronic            ND                   7                  ND                   2       
                 Death                     ND                   7                  ND                   1       
E. coli O157:H7  Total cases                                                       ND               1,700       
                                                                                                                
                 Mild                     307                 474               2,460               3,790       
                 Moderate                 307                  45               1,230                 180       
                 Severe                   246                   4                 150                   2       
                 Reactive                 307                 474                  60                 100       
                  arthritis-                                                                                    
                  short term                                                                                    
                 Reactive                 307                 474                 180                 280       
                  arthritis-long                                                                                
                  term                                                                                          
                 Death                    246                   4                   2                    .04    
Salmonella       Total cases                                                    3,800               4,000       
 (non typhi)                                                                                                    
                                                                                                                
                 Mild                      96               1,615                 160               2,750       
                 Moderate                  96               1,615                   2                  30       
                 Severe                     0                   0                   0                   0       
                 Death                      0                   0                   0                   0       
B. cereus        Total cases                                                      200               2,800       
----------------------------------------------------------------------------------------------------------------

8. Percent of Cases Preventable by HACCP Proposal
    In general, most pathogens will be eliminated when juice is heat-
treated. For example, E. coli O157:H7, and Salmonella should all be 
completely eliminated from juice by standard methods of flash 
pasteurization (absent extraordinarily high counts, detrimental human 
intervention, or equipment failure). However, hazards associated with 
B. cereus will not necessarily be eliminated by heat treatment. This 
bacterium forms spores which are more difficult to kill by heat. After 
heat treatment, if the spores survive, they may grow out and produce a 
toxin which causes illness. Ideally, the best way to reduce illness 
associated with B. cereus is by killing the bacterium in its nonspore 
state before any toxin has been produced. For most types of heat-
treated juice, there is a small probability that the heat treatment 
will take place when B. cereus is in its nonspore state. To the extent 
that processors adopt controls for these hazards other than flash 
pasteurization which are less effective, the percentage of cases 
prevented may be smaller than those estimated here. FDA requests 
comment on these estimates. Based on information from USAA, FDA 
estimates that the exemption from the HACCP rule for retailers and 
small retail processors will affect 14 percent of the volume of 
unpasteurized juice. Therefore, the agency estimates that though 
pathogen controls may be 100 percent effective in controlling some 
hazards, such controls will only prevent 86 percent of the cases of 
illness from these hazards.

        Table 12.--Percent of Cases Preventable by HACCP Proposal       
------------------------------------------------------------------------
                                                       Percent of Cases 
                       Hazard                           Preventable by  
                                                        HACCP Proposal  
------------------------------------------------------------------------
E. coli O157:H7                                                86       
Salmonella (non typhi)                                         86       
B. cereus                                                       9       
------------------------------------------------------------------------

9. Estimates of Annual Benefits for HACCP Proposal
    The total benefits for the categories of severity for each hazard 
are derived by multiplying the percentage of cases preventable by the 
HACCP proposal by the estimates of the number of actual cases. The sum 
of those benefits for each hazard is the total benefits of the HACCP 
proposal for pathogen control. Table 13 gives the estimate of benefits 
for each hazard using each source of information on the appropriate 
correction factor for underreporting.

       Table 13.--Estimates of Annual Benefits for HACCP Proposal       
------------------------------------------------------------------------
                               FDA Estimate of        FDA Estimate of   
     Hazard       Severity  Annual Benefits Based  Annual Benefits Based
                                  on Bennett              on Todd       
------------------------------------------------------------------------
                 Mild                                  $2,680,000       
                 Moderate                                $360,000       
                 Severe-                                 $660,000       
                  acute                                                 
                 Severe-                               $2,442,000       
                  chronic                                               
                 Death                                 $5,000,000       
E. coli O157:H7  Total                                $11,142,000       
                                                                        
                 Mild           $2,120,000             $3,260,000       

[[Page 24265]]

                                                                        
                 Moderate       $2,120,000               $300,000       
                 Severe         $2,080,000                $32,000       
                 Reactive         $350,000               $630,000       
                  arthriti                                              
                  s-short                                               
                  term                                                  
                 Reactive     $146,400,000           $234,240,000       
                  arthriti                                              
                  s-long                                                
                  term                                                  
                 Death         $10,000,000               $200,000       
Salmonella (non  Total        $163,070,000           $238,662,000       
 typhi)                                                                 
                                                                        
                                                                        
                 Mild              $42,000               $711,000       
                 Moderate           $1,000                $12,000       
                 Severe                  0                      0       
                 Death                   0                      0       
B. cereus        Total             $43,000               $725,000       
------------------------------------------------------------------------

    Table 14 presents a range of estimates of annual benefits based on 
the estimates in Table 13. The low and high estimates do not represent 
lower and upper bounds of benefits, but only a range of potentially 
likely estimates.

  Table 14.--Range Estimates of Annual Microbially Related Benefits for 
                             HACCP Proposal                             
------------------------------------------------------------------------
                       Low Estimate of Annual    High Estimate of Annual
       Hazard                 Benefits                  Benefits        
------------------------------------------------------------------------
E. coli O157:H7             $11,142,000               $11,142,000       
Salmonella (non                                                         
 typhi)\1\                 $163,070,000              $238,662,000       
B. cereus\1\                    $43,000                  $725,000       
Totals                     $174,000,000              $251,000,000       
------------------------------------------------------------------------
\1\ Ranges for these two pathogens are taken from two different         
  estimates that exist in the public health literature. The estimates   
  for the other pathogen was made by FDA, alone.                        

10. Percent of Cases Preventable by Labeling Proposal
    FDA does not have direct estimates of the effects of a warning 
label on the incidence of illness from juice consumption. FDA 
indirectly estimates the effects by estimating how warning labels will 
change consumption, assuming that changes in the number of illnesses 
are proportional to changes in consumption. FDA believes that the 
labeling rule will cause a reduction in the consumption of 
unpasteurized juice, but the size of the reduction is uncertain. As a 
likely value, FDA estimates that consumption and illnesses will decline 
by 5 percent in response to the warning label. The 5 percent reduction 
is the estimated effect on cooking practices of the USDA meat safe 
handling label, as found in a recent survey (Ref. 11). However, there 
are some dissimilarities between the meat and juice labels, most 
particularly that the juice label is targeted at sensitive consumers. 
If, for example, parents redirect children away from nonheat-treated 
juice, then consumption and illness will decline by 16 percent, which 
is the proportion of apple cider consumed by children under the age of 
6 (Ref. 12). This estimate embodies the assumptions that cider 
consumption is a good proxy for unpasteurized juice consumption, and 
that parents will not let their children consume unpasteurized juices.
11. Estimates of Annual Benefits for Labeling Proposal
    Table 11 shows FDA's estimate that there are approximately 5,600 
cases of foodborne illness associated with commercially processed, 
package juice produced by nonretail establishments. In addition to 
these cases, an average of 6 cases annually of Cryptosporidium parvum 
have been associated with commercially processed, packaged juice 
produced by retail establishments exempted from the HACCP rule. Table 
15 shows the agency's estimate of the actual number of cases per year 
by severity.

[[Page 24266]]



    Table 15.--Estimates of Juice-Associated C. parvum Cases per Year   
------------------------------------------------------------------------
               Average No.                                              
                 of Cases      FDA Estimate of        FDA Estimate of   
   Severity      Reported       Underreporting      Actual No. of Juice-
                 per Year    Correction Factor\1\   Associated Cases per
               (1992-1996)                                  Year        
------------------------------------------------------------------------
Mild           5                       100                    500       
Moderate       1                        10                     10       
Severe         .06                       5                       .3     
Death          .001                      5                       .005   
Total          6                                              500       
------------------------------------------------------------------------
\1\Because C. parvum was not a recognized food safety hazard at the time
  that Bennett et al. and Todd's work was done, FDA has made its own    
  estimates of the factors needed to correct for underreporting of this 
  hazard.                                                               

    Table 16 gives the agency's estimate of the value of the loss per 
case of C. parvum.

[[Page 24267]]



                                        Table 16.--Estimate of Value of Losses Associated with Case of  C. parvum                                       
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Symptom/                                        Value of                                          
                     Duration of      Function         Problem          Total      Utility Losses  Utility Losses                   Value of Losses per 
Severity  Percent    Illness (in   Status Code\1\      Complex       Disutility     for Survivors   for Survivors   Medical Costs  Case (VSL=$5,000,000)
                        days)                          Code\2\        (per day)       (QALD's)       (QALD=$630)                        (QALD=$630)     
--------------------------------------------------------------------------------------------------------------------------------------------------------
Mild      90             9             L41         12, 13, 29             .3959          3.6         2,300           $0\3\                 $2,000       
Moderate  9             17             L41         12, 13, 29             .3959          6.7        $4,200         $400\3\                 $5,000       
Severe    1             24              L6         12, 13, 29             .6115         14.7        $9,300         $8,300\4\              $18,000       
Death     .02                                                                                           NA              NA             $5,000,000       
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Functional Status Codes are described in Table 4.                                                                                                    
\2\Symptom/Problem Complex Codes are described in Table 5.                                                                                              
\3\Medical Costs for mild and moderate cases of C. parvum were calculated by multiplying the per day medical costs for E. coli 0157:H7 for these levels 
  of severity by the duration of illness of C. parvum. The symptoms of C. parvum for these levels of severity are similar to those of E. coli 0157:H7.  
\4\Medical Costs for severe cases of C. parvum were calculated by multiplying the per day medical costs for severe cases of acute hemorrhagic colitis by
  the duration of illness of C. parvum. The implicit assumption is that the medical costs for acute hemorrhagic colitis (bloody diarrhea) are equivalent
  to the medical costs for watery diarrhea associated with C. parvum.                                                                                   


[[Page 24268]]

    The labeling rule is expected to prevent some cases of foodborne 
illness as people avoid juice that is labeled. Because B. cereus is, in 
general, not disproportionately associated with minimally processed 
juice, cases of B. cereus are not expected to be prevented by the 
labeling. However, to the extent that the label is effective and to the 
extent of the volume of juice that is labeled, the labeling rule will 
reduce the number of cases associated with E. coli 0157:H7, Salmonella 
and C. parvum.
     Combining the estimates of the number of illnesses in Tables 11 
and 15, the total number of estimated cases associated with minimally 
processed juice for these 3 hazards is 6,100 per year associated with 
consumption of the 70 million gallons of minimally processed juice 
produced annually. FDA has estimated that 14 percent of minimally 
processed juice (10 million gallons) will be exempt from the HACCP rule 
but will be covered by the labeling rule. Therefore, the number of 
illnesses that may be associated with this volume of juice (10 million 
gallons) will be exempt from the HACCP rule but will be covered by the 
labeling rule. Therefore, the number of illnesses which may be 
associated with this volume of juice (10 million gallons) is 
approximately 900 and 5,200 illnesses are associated with minimally 
processed juice covered by the HACCP rule.
    As stated earlier, FDA estimates that consumption of labeled, 
minimally processed juice will decline by 5 percent in response to the 
warning label. This leads to the conclusion that the labeling rule is 
expected to prevent approximately 50 illnesses annually (900 x .05). If 
juice consumption decreases by as much as 16 percent in response to the 
warning label, then the labeling rule may prevent as many as 140 
illnesses per year.
    The value of this reduction in illness depends on the type of cases 
prevented. FDA assumes that these cases will be distributed according 
to the share of illnesses associated with each of these hazards. Table 
17 shows the expected distribution of cases prevented by labeling 
across the hazards and severities.

[[Page 24269]]



                                                                 Table 17.--Distribution of Cases Prevented by Labeling Proposal                                                                
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Low Estimate of        High Estimate of     Low Estimate of No.    High Estimate of No.   Low Estimate of No.    High Estimate of No.
                                                         Actual No. of Juice-   Actual No. of Juice-  of Cases Prevented by  of Cases Prevented by  of Cases Prevented by  of Cases Prevented by
         Hazard                     Severity             Associated Cases per   Associated Cases per      a 5% Consumer          a 5% Consumer          a 16% Consumer         a 16% Consumer   
                                                                 Year                   Year           Response to Labeling   Response to Labeling   Response to Labeling   Response to Labeling
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                         Mild                                    1,560                  1,560                     13                     13                     36                     35       
                         Moderate                                  100                    100                      1                      1                      2                      2       
                         Severe-acute                               20                     20                       .2                     .2                     .5                     .5     
                         Severe-chronic                              2                      2                       .02                    .02                    .05                    .05    
                         Death                                       1                      1                       .008                   .008                   .02                    .02    
E. coli 0157:H7          Total                                   1,700                  1,700                     14                     14                     39                     38       
                                                                                                                                                                                                
                         Mild                                    2,460                  3,790                     20                     31                     58                     87       
                         Moderate                                1,230                    180                     10                      1                     29                      4       
                         Severe                                    150                      2                      1                       .02                   4                       .05    
                         Reactive arthritis-short term              60                    100                       .5                     .8                    1                      2       
                         Reactive arthritis-long term              180                    280                      1                      2                      4                      6       
                         Death                                       2                       .04                    .02                    .0003                  .05                    .0009  
Salmonella (non typhi)   Total                                   3,800                  4,000                     32                     32                     90                     91       
                                                                                                                                                                                                
                         Mild                                      500                    500                      4                      4                     11                     11       
                         Moderate                                   10                     10                       .08                    .08                    .2                     .2     
                         Severe                                       .3                     .3                     .002                   .002                   .006                   .006   
                         Death                                        .005                   .005                   .00004                 .00004                 .0001                  .0001  
C. parvum                Total                                     500                    500                      4                      4                     11                     11       
                                                                                                                                                                                                
Total                                                            6,000                  6,200                     50                     50                    140                    140       
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 24270]]


                                              Table 18.--Value of Losses Prevented by the Labeling Proposal                                             
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                        High Estimate of                              High Estimate of  
                                                              Low Estimate of Value     Value of Losses     Low Estimate of Value     Value of Losses   
          Hazard                        Severity               of Losses Prevented     Prevented by a 5%     of Losses Prevented     Prevented by a 16% 
                                                                 by a 5% Consumer     Consumer Response to    by a 16% Consumer     Consumer Response to
                                                               Response to Labeling         Labeling         Response to Labeling         Labeling      
--------------------------------------------------------------------------------------------------------------------------------------------------------
                            Mild                                      26,000                 26,000                 72,000                 70,000       
                            Moderate                                   4,000                  4,000                  8,000                  8,000       
                            Severe-acute                               7,000                  7,000                 17,000                 17,000       
                            Severe-chronic                            24,000                 24,000                 61,000                 61,000       
                            Death                                     40,000                 40,000                100,000                100,000       
E. coli 0157:H7             Total                                    101,000                101,000                258,000                258,000       
                                                                                                                                                        
                            Mild                                      20,000                 31,000                 58,000                 87,000       
                            Moderate                                  20,000                  2,000                 58,000                  8,000       
                            Severe                                    16,000                    300                 64,000                  1,000       
                            Reactive arthritis-short term              4,000                  6,000                  7,000                 14,000       
                            Reactive arthritis-long term             976,000              1,952,000              3,904,000              5,856,000       
                            Death                                    100,000                  2,000                250,000                  5,000       
Salmonella (non typhi)      Total                                  1,136,000              1,993,000              4,341,000              5,971,000       
                                                                                                                                                        
                            Mild                                       8,000                  8,000                 22,000                 22,000       
                            Moderate                                     400                    400                  1,000                  1,000       
                            Severe                                         0                      0                    100                    100       
                            Death                                        200                    200                    500                    500       
C. parvum                   Total                                      9,000                  9,000                 24,000                 24,000       
                                                                                                                                                        
Total                                                              1,000,000              2,000,000              5,000,000              6,000,000       
--------------------------------------------------------------------------------------------------------------------------------------------------------

12. Pesticide Residues
    Tolerances for pesticides in foods are established by the 
Environmental Protection Agency (EPA) and enforced by FDA. FDA collects 
samples for both surveillance and compliance purposes. Since the 
incidence of violative pesticide residues in fruit and vegetable juices 
is relatively low, few compliance samples are taken.
    This discussion pertains to surveillance samples of fruit and 
vegetable juices from 1991 through 1997 (see Table 15). The lab 
classification scheme used for pesticide residues is:
1 = in compliance;
2 = not in compliance, but not of regulatory concern; and
3 = not in compliance, and of regulatory concern.
    The class 2 and 3 violative sample data are summarized in Table 15. 
Of the 1,196 surveillance samples of juice taken and analyzed during 
this period, only three (approximately one quarter of one percent) were 
class 3 violative. One was apple cider and the other two were apple 
juice, and the violative pesticide residue was acephate in each case. 
There were also five class 2 violations, in which trace quantities of a 
pesticide with no tolerance (i.e., the pesticide was not approved for 
use in the commodity) were found. The products with class 2 violations 
were grape juice, watermelon juice concentrate, strawberry/nectarine 
juice (2 samples), and apple juice concentrate; the pesticides were 
chlorpyrifos, acephate, and methamidophos.
    Pesticides present some potential chronic risks to humans at very 
low levels of exposure. There is a small background risk associated 
even with nonviolative pesticide residues and, in the case of products 
with violative levels, an added risk from the violative residues. 
(Violative residues are residues above tolerance or residues of 
pesticides with no tolerance.)

            Table 19.--Violative Pesticide Residues in Fruit and Vegetable Juices, 1991 through 1997            
----------------------------------------------------------------------------------------------------------------
     Commodity           Fiscal Year        Pesticide     Amount Found, ppm   Tolerance, ppm    Class Violation 
----------------------------------------------------------------------------------------------------------------
Grape juice                 1993         Chlorpyrifos          Trace         None                       2       
Apple cider                 1995         Acephate                  0.075     None                       3       
Apple juice                 1995         Acephate                  0.052     None                       3       
Apple juice                 1995         Acephate                  0.040     None                       3       
Watermelon juice,           1995         Acephate              Trace         None                       2       
 concentrate                                                                                                    
Strawberry/                 1996         Methamidophos         Trace         None                       2       
 nectarine juice                                                                                                
Strawberry/                 1996         Methamidophos         Trace         None                       2       
 nectarine juice                                                                                                
Apple juice,                1997         Methamidophos         Trace         None                       2       
 concentrate                                                                                                    
----------------------------------------------------------------------------------------------------------------

    There are two potential benefits associated with the regulation of 
pesticides: (1) Decreases in cancer and other illness caused by chronic 
consumption of pesticide residues and, (2) social benefits associated 
with reductions in the costs of recapturing firm goodwill. The U.S. EPA 
is responsible for determining the benefits of reducing exposure to 
pesticide residues and, it is assumed, that the health benefits of the 
enforcement actions proposed here are already accounted for when 
regulatory tolerances are established. As to the

[[Page 24271]]

latter benefit, when firms have products with violative residues either 
over tolerance for legal pesticides or any residue of an illegal 
pesticide and a recall of the violative product becomes publicly known, 
the sales of those firms are reduced, at least temporarily. Because 
other firms will step in to supply the product, that loss of sales 
alone does not constitute a social cost. However, it is likely that 
real resources will be expended to recapture the lost ``goodwill'' that 
would be in addition to the real expenditures made to actually recall 
the product. FDA cannot quantify the cost savings that will occur 
because of more vigilant monitoring of pesticide residues by firms 
under a HACCP rule.

C. Other, Nonquantified Benefits

1. Firm Efficiency
    The principle benefits from HACCP reported by the pilot firms are 
more effective and efficient operations, a higher level of confidence 
in the safety of the product, and greater customer satisfaction. The 
pilot firms attributed these benefits to HACCP because of the following 
results.
    (1) Training makes the employees more aware of safety and needed 
control measures, and empowers employees to prevent problems and 
respond properly when deviations occur. Improvement in employee 
performance was perhaps the most significant benefit from HACCP 
expressed to FDA by the pilot firms. One firm reported that ``due to 
increased HACCP awareness, employees have been instrumental in 
designing new processes/procedures for monitoring and control.'' The 
firm gave an example of a processing step that was changed to reduce 
the likelihood of occurrence of a physical hazard. FDA is unable to 
estimate the societal cost savings in terms of reduced product costs 
which will, ultimately, affect the cost of implementing HACCP.
    (2) SOP's and other documented procedures enable employees to 
implement their tasks more consistently and effectively, and result in 
smoother operations.
    (3) Prerequisite programs and incoming ingredient controls prevent 
hazards from being introduced into the process; continuous monitoring 
reveals problems quickly and enables prompt correction and continuation 
of production with less waste.
    (4) Recordkeeping and review makes employees more accountable and 
conscientious about safety.
    (5) Validation and verification activities provide management with 
greater control over their operations and documentation of the safety 
of their product.
    Perhaps the most significant benefit in terms of firm efficiency 
will be cost savings from greater awareness by firms of violative 
product runs, and the resulting increase in response to such violative 
runs. Although the benefits of formal recalls have already been 
accounted for, many pilot plant managers suggested that the continuous 
monitoring required by HACCP enabled them to decrease the amount of 
waste associated with production-line problems. For example, one 
manufacturer noted that glass breakage was a constant problem on the 
line and that, prior to HACCP, almost an entire lot would have to be 
discarded because the manager could not be sure exactly when a problem 
had started. With continuous HACCP monitoring, problems were caught 
more quickly and the problem corrected more promptly, thereby 
minimizing the amount of lost product.
    The cost savings may be substantial from this source of benefits 
but FDA is unable to quantify them. FDA requests comments on these and 
other potential benefits.
2. Increased Shelf Life
    Nonheat-treated juices have a limited shelf life. Heat-treated 
juices have longer shelf lives. Depending upon temperature used, 
increases of 7 days or more have been reported. Longer shelf life 
allows more flexibility in the conditions of distribution and sale of 
products. The agency requests comments on how this potential benefit 
may be quantified.

D. Summary of Benefits

    Table 20 summarizes the benefits of these two rules.

                 Table 20.--Benefits of Juice Proposals                 
------------------------------------------------------------------------
 Type of Benefit               Description                Annual Value  
------------------------------------------------------------------------
Enforcement:      Reduced waste and Federal activity    $175,000        
 Import            from detaining violative juice                       
 Detentions        imports                                              
Enforcement:Prod  Reduced numbers of domestic recalls   $1,500,000      
 uct Recalls       of violative juice products                          
Health Benefits:  Reduced illness and death from        $174 to 251     
 HACCP             controlling pathogens in juice        million        
Health Benefits:  Reduced illness and death from        $1 to $6 million
 Labeling          avoidance of minimally processed                     
                   juice                                                
Health Benefits:  Reduction of consumption of           Not quantified  
 Pesticides        violative pesticide residues in       but small      
                   juice and social losses from lost                    
                   goodwill                                             
Other Benefits:   Some offsetting reductions in         Not quantified  
 Firm Efficiency   manufacturing costs due to            but potentially
                   increased worker productivity and     large          
                   less product waste                                   
Other Benefits:   Product Shelf life may be increased   Not quantified  
 Increased Shelf   for products achieving a 5-log        but potentially
 Life              reduction of pathogens                large          
Total Quantified  ....................................  $180 to 260     
 Benefits                                                million        
------------------------------------------------------------------------

VI. Costs

A. General Industry Information Used Throughout This Analysis

    The costs of these rules have been estimated by analyzing the costs 
for each proposed requirement on a per-plant basis and multiplying 
these costs by the number of plants affected by each requirement. Cost 
per plant will vary by current practice, product, and size. In order to 
determine the number of plants covered, the analysis will first analyze 
coverage qualitatively.
1. Types of Plants Covered
    The labeling rule and the HACCP rule do not equally affect an 
identical subset of the food industry.
2. HACCP Rule Coverage
    For the purpose of this rule, FDA has tentatively decided that 
retailers will include processors who are very small businesses and who 
make juice on their premises and directly sell juice or juice products 
to consumers and other retailers provided that retail sales of juice 
and juice products do not exceed 40,000 gallons per year. The HACCP 
rule covers all processors of juice except those who are retailers. 
Retailers may include grocery stores, supermarkets, farms, roadside 
stands, restaurants and eating places.

[[Page 24272]]

3. Labeling Rule Coverage
    The labeling rule covers processors and retailers of packaged 
minimally processed juice. The labeling rule is also applicable to 
packaged beverages that have not received further processing to control 
microbial hazards and that contain minimally processed juice. Such 
beverages include diluted juice beverages, ``smoothies,'' sports 
drinks, flavored bottled waters, and carbonated beverages that contain 
juice that was not processed to control pathogens.
    Table 21 provides examples of the types of products and processors 
covered and not covered by the two rules.

                 Table 21.--Coverage of Juice Proposals                 
------------------------------------------------------------------------
                                             Covered by      Covered by 
             Processor Type                Labeling Rule   HACCP Rule\3\
------------------------------------------------------------------------
Processors of packaged beverages sold as  Yes              Yes          
 juice\1\                                                               
Processors of packaged purees sold as     Yes              Yes          
 juice                                                                  
Processors of juice used as an            Yes              Yes          
 ingredient in a beverage (e.g., the                                    
 cranberry juice in cranberry juice                                     
 cocktail)                                                              
Processors of juice which retail the      Yes              Yes          
 juice at a different location from                                     
 which it is produced                                                   
Processors of beverage concentrates sold  Yes              Yes          
 as juice                                                               
Processors of beverage bases of a fruit   Yes              Yes          
 origin or other beverage bases                                         
 including dried or powdered juice                                      
 mixes\2\                                                               
Processors of packaged baby (infant and   Yes              Yes          
 junior) fruit juices and drinks                                        
Processors of juice that ship to a        Yes              Yes          
 different location (e.g., the juice                                    
 processing plant owned by a supermarket                                
 chain that then ships the juice to the                                 
 chain's stores or very small processors                                
 that sell juice from their own roadside                                
 stand and to other retailers)                                          
Retailers of packaged juice processed by  Yes              No           
 other establishments (e.g.,                                            
 supermarkets, restaurants and roadside                                 
 stands that sell juice produced by                                     
 another processor) Note: the juice sold                                
 by these retailers is covered by the                                   
 HACCP rule but the retailer is not                                     
 covered by the HACCP rule.                                             
Processors of packaged juice that do not  Yes              No           
 ship juice to different locations but                                  
 retail the entire production on the                                    
 premises (e.g., supermarkets, and                                      
 roadside stands that produce juice at                                  
 the point of sale)                                                     
Processors of beverages that include      Yes              No           
 juice as an ingredient but which do not                                
 produce the juice itself                                               
Retailers of juice processed for          No               No           
 immediate consumption                                                  
Processors of non-beverage products that  No               No           
 include juice as an ingredient                                         
Processors of hard cider or other         No               No           
 alcoholic beverages                                                    
Processors of oils                        No               No           
Processors of purees not sold as          No               No           
 beverages (e.g., tomato puree)                                         
Processors of juices not sold as          No               No           
 beverages (e.g., vinegar or borscht)                                   
Processors of imitation juice flavorings  No               No           
Processors of coffees, teas, or cocoa     No               No           
 products                                                               
------------------------------------------------------------------------
\1\ Juice types are berry; citrus; core fruit; mixed fruit; pit fruit;  
  subtropical and tropical fruit; vine fruit; other fruit; beans, peas  
  and corn; fruits used as vegetables; leaf and stem vegetables; mixed  
  vegetables; root and tuber vegetables; and other vegetables.          
\2\ Beverage bases of fruit origin are berry, citrus, core fruit, mixed 
  fruit, pit fruit, subtropical and tropical fruit, vine fruit, and     
  other fruit.                                                          
\3\ A ``yes'' in this column applies only to processors producing in    
  excess of 40,000 gallons of packaged juice per year. Very small       
  businesses processing packaged juice, producing 40,000 gallons of     
  juice or less annually are classified as retailers for the purpose of 
  the HACCP rule and are therefore exempt from it.                      

4. Number of Establishments Covered
    FDA's own Official Establishment Inventory (OEI, FDA's list of food 
establishments under its jurisdication) lists approximately 900 juice 
manufacturers. However, recent information from the U.S. Apple 
Association (USAA) indicates that there are about 1,800 apple juice 
plants, most of which are very small processors. A typical description 
of these very small processors is an apple grower who operates a small 
apple press and bottling operation on the same property. In general 
these processors market their products in more than one way. The 
channels of distribution include: Roadside stands owned by the 
processors and stands owned by others, farmers' markets, grocery 
stores, and restaurants. FDA has proposed to exempt retail 
establishments from the HACCP rule. For the purposes of this rule, the 
agency has tentatively decided that retailers will include very small 
businesses that make juice on their premises and whose total sales of 
juice and juice products do not exceed 40,000 gallons per year and who 
sell directly to consumers or directly to consumers and other 
retailers. Based on data supplied by the USAA, this exemption would 
exempt from the HACCP rule 80 percent of apple juice processors. (Ref. 
13). Such an exemption would leave approximately 360 apple juice 
processors covered by both of these regulations, and all 1,800 would be 
covered by the labeling rule.
    The OEI lists about 200 plants in the United States that produce 
core fruit (apple, crab apple, pear, quince, etc.) juice. If all of the 
200 core fruit plants in the OEI are included in the USAA list and are 
not exempt, then there would still be an excess of 160 apple juice 
processing plants in the USAA list not exempt from the HACCP rule and 
an excess of 1,600 (1,800-2000) plants in the USAA list not exempt from 
the labeling rule. (Information from FDA's field inspections indicates 
that very few of these 160 plants will be exempted from the HACCP rule 
under the exemption for retailers of juice for immediate consumption. 
Almost none of the very small apple juice processing plants recently 
inspected by FDA retailed all of the juice that they produced at the 
same location that it was processed. See Table 21 for a description of 
the types of products and processors not covered.)
    The agency is aware that there are also many very small orange 
juice processors who grow oranges and who also operate a juicing and 
bottling operation on the same property. However, the agency has no 
direct information on the number of such orange juice processors. The 
OEI lists about 300 plants in the United States that produce citrus 
fruit juice. In this analysis, the agency has assumed that there is an 
equivalent number (300) of very small processors who are not listed in 
the OEI. It is likely that the proportion of very small orange juice

[[Page 24273]]

processors to OEI citrus juice makers is lower than the proportion of 
very small apple juice processors to OEI apple juice makers because the 
growing region for oranges in the United States is far smaller than the 
region for growing apples.
    FDA assumes for the purpose of this analysis, that 80 percent of 
these very small orange juice processors will be exempt from the HACCP 
rule based on their classification as retail establishments. This would 
leave 60 very small orange juice processors covered by both of these
regulations, and all 300 covered by the labeling rule. FDA has assumed 
that there are no vegetable juice processors which are not in the OEI 
or which are not also very small processors of apple or orange juice as 
estimated above. FDA requests comments on these assumptions.
    FDA has assumed that 5 percent (about 50 plants (900 x .05)) of all 
juice plants in the OEI would have implemented HACCP substantially in 
the form required by this regulation by the time that this proposed 
HACCP rule is finalized regardless of this regulatory action. 
Therefore, approximately a total of 1,070 plants (850 plants in the OEI 
plus 60 very small orange and 160 apple juice retailers) will be 
affected by the HACCP rule.
    The labeling rule will cover retailers (roadside stands and grocery 
stores) of packaged minimally processed juice.
    The agency does not have direct information on the number of 
supermarkets and grocery stores that produce and package at the point 
of sale and sell minimally processed juice. The agency believes that 
only a portion of chain supermarkets and grocery stores do so. Duns 
Market Identifier (DMI) lists approximately 9,400 chain supermarkets 
(SIC 54110101) and approximately 3,800 chain grocery stores (SIC 
54119904) making a total of approximately 13,000 chain supermarkets and 
grocery stores. If 10 percent of these stores produce at the point of 
sale and sell packaged minimally processed juice, then approximately 
1,300 chain grocery stores and supermarkets will be affected by the 
labeling rule. (In addition to these processors, there are other 
retailers that do not process juice but which offer for sale the juice 
produced by other processors, which should be labeled by the 
manufacturer.)
    Due to publicity about the hazards associated with minimally 
processed juice, the agency believes that relatively few retailers are 
offering such products for sale. DMI lists approximately 3,100 
independent supermarkets (SIC 54110103) and approximately 31,000 
independent grocery stores (SIC 54119905) making a total of 
approximately 34,100 chain supermarkets and grocery stores. If 5 
percent of these stores sell minimally processed packaged juice, then 
approximately 1,700 independent grocery stores and supermarkets will be 
affected by the labeling rule. The labeling rule will also affect 
roadside markets and stands that retail packaged minimally processed 
juice. For the purpose of this analysis, the agency assumes that there 
are 1,000 such roadside markets and stands. However, the assumptions 
that go into these calculations may be incorrect, and the agency 
specifically requests comments on them.
    Table 22 shows the estimated number of establishments affected by 
each rule.

  Table 22.--Number of Plants Affected by the HACCP and Labeling Rules  
------------------------------------------------------------------------
                                        No. of              No. of      
                                    Establishments      Establishments  
           Plant Type              Affected by HACCP      Affected by   
                                         Rule            Labeling Rule  
------------------------------------------------------------------------
Juice manufacturers in the OEI            850                 201       
Very small apple juice makers             160               1,600       
Very small orange juice makers             60                 300       
Roadside retailers                                          1,000       
Grocery stores and supermarkets                                         
 processing and packaging at the                                        
 point of sale                                              1,300       
Total                                   1,070               4,220       
------------------------------------------------------------------------
\1\ The number of juice manufacturers listed in the OEI affected by the 
  labeling rule is small (20) because most of these manufacturers are   
  already achieving a 5-log reduction. See Table 24.                    

5. Hourly Price of Labor
    Throughout this analysis the hourly price of labor is taken to be 
approximately $13. This is estimated by taking the 1996 average hourly 
rural wage of $9.20 (Ref. 7) and increasing it by 40 percent (the 
average amount for benefit costs paid by employers) (Ref. 8), or $3.70 
to account for such costs in addition to wages, such as Social 
Security, workers' compensation, unemployment insurance, paid leave, 
retirement and savings, health insurance, and supplemental pay.
6. Length of Production Period
    The agency is aware that many juice processors operate on a 
seasonal basis. Information supplied by USAA indicates that 94 percent 
of the apple cider producers process only seasonally. The season for 
apple cider production runs primarily from September through December. 
The other 6 percent operate year round. Many other processors covered 
by the proposed HACCP rule (e.g., makers of beverage bases) may process 
year round. The agency has assumed that 50 percent of the 850 plants in 
the OEI plus all of the 220 very small juice makers affected by the 
HACCP rule produce seasonally. Table 23 shows the length of the 
production period for plants producing seasonally and year round.

                                      Table 23.--Plants' Production Period                                      
----------------------------------------------------------------------------------------------------------------
                                                      Weeks of Operation  Hours of Operation                    
                     Production                            per Year             per Day          No. of Plants  
----------------------------------------------------------------------------------------------------------------
Seasonal                                                       16                  12                 645       
Year Round                                                     52                  24                 425       
Total                                                                                               1,070       
----------------------------------------------------------------------------------------------------------------


[[Page 24274]]

B. Cost Estimates by Requirement

    1. Costs have been estimated for the following sections of the 
labeling regulation:
    (1) Signs or Placards (Sec. 101.17(f)(3)(i) (part 101 (21 CFR part 
101))
    (2) Container Labels (Sec. 101.17(f)(3)(ii))
    2. Costs have been estimated for the following sections of the 
HACCP regulation:
    (1) CGMP's (Sec. 120.5 (part 120 (21 CFR part 120))
    (2) Prerequisite Program SOP's (Sec. 120.6)
    (3) Hazard Analysis and HACCP Plan (Secs. 120.7 and 120.8)
    (4) Corrective Actions (Sec. 120.10)
    (5) Validation and Verification (Sec. 120.11)
    (6) Records (Sec. 120.12)
    (7) Training (Sec. 120.13)
    (8) Imports and Foreign Processors (Sec. 120.14)
1. Labeling Costs
    This cost depends strongly upon producers' responses to the 
labeling requirements. Some producers may elect to comply early with 
the HACCP rule and avoid the warning labels or labeling. Others may 
choose to label until they are required to implement HACCP. Finally, 
some firms may choose not to produce juice products because they 
believe that either the cost of HACCP implementation or the negative 
effect on revenue generated by consumer response to labels may depress 
profits below a normal return for a substantial time period. Such 
producers will be better served by reinvesting their capital into more 
profitable ventures.
    a. Signs or placards (Sec. 101.17(f)(3)(i)). The costs of signs and 
placards may be estimated by multiplying the number of establishments 
that must post placards by the cost per placard. As shown in Table 22 
the agency estimates that the labeling rule covers approximately 4,220 
plants. However, for the purpose of this analysis, the agency has 
assumed that all those processors that will at some point be required 
to implement HACCP will do so at the earliest possible date to avoid 
the warning labeling, or delay operation until they implement a 5-log 
pathogen reduction process.
    The following analysis underlies this assumption. If displaying the 
warning can be avoided by beginning pasteurization (or an equivalent 5-
log pathogen reduction process) sooner, some firms may marshal the 
resources to do so. FDA does not have data, however, that will allow it 
to predict how many firms will respond to this labeling regulation in 
this fashion. However, one way to examine this choice is examine the 
additional discounted costs of pasteurizing sooner. For example, if a 
small firm's cost of initiating pasteurization is about $18,000, with 
recurring costs of about $8,000, and the firm has an annual juice 
revenue of $200,000, then a total sales decline caused by the warning 
of 8 percent (a loss of approximately $16,000 discounted at a rate of 7 
percent) or more spread over the course of 2 years (or approximately 4 
percent for 2 years) would cause the firm to attempt to borrow the 
funds needed to initiate pasteurization 2 years early or to delay 
operation until it implements a 5-log pathogen reduction process. FDA's 
predictions of consumer reactions to the labeling (for the purposes of 
benefit estimations) are an expected loss of revenue of about 5 
percent. Thus, there is a tentative conclusion that most firms that are 
not exempt from the HACCP rule will choose to implement a 5 log 
reduction in pathogens immediately rather than label and to delay 
operation until such processes have been implemented.
    However, there are many uncertainties contained in this simple 
example. Because of the short time frame for labeling to begin, 60 days 
from publication of the final rule, many firms may not be able to 
purchase and install pasteurization equipment or find other means of 
validating a 5 log reduction in the target organism. It is unclear how 
manufacturers think that consumers will react to the warning signs, 
they may believe that their customers will not reduce their purchases 
of juice. Also, firms with larger sales or smaller pathogen reduction 
costs will need a smaller percentage sales decline from labeling in 
order to be induced to initiate 5 log pathogen controls early. Finally, 
it is unclear how many firms will have immediate access to the capital 
requirements imposed by this rule.
    If, therefore, all processors which will eventually be covered by 
the HACCP rule do not label, then they have no direct labeling cost. 
The cost of the labeling rule to these processors is the extra expense 
that results from implementing HACCP 2 years earlier than would be 
required by the HACCP rule alone. This cost, as stated above, is 
$16,000 (discounted for 2 years at 7 percent). Of the 1,070 
establishments covered by the HACCP rule, all of the 20 firms in the 
OEI which are also affected by the labeling rule (those estimated to be 
producing minimally processed juice) plus all of the 220 very small 
orange and apple juice processors covered by the HACCP rule are 
affected in this way (240 plants in all). The agency assumes, based on 
information from industry sources, that 30 percent of this set of 
processors (72 plants) have already initiated or are in the process of 
initiating pasteurization. Therefore, the total cost of the labeling 
rule for this set of processors is $2,688,000 ($16,000 x 168 plants).
    The establishments that will need to display warning labeling are 
those 3,980 establishments covered by the labeling rule but not by the 
HACCP rule. Based on information learned from FDA's nutrition labeling 
rules, the average cost per placard (and periodic replacement) is 
estimated to be $100. This estimate will encompass the possibility that 
some firms may have to supply multiple signs to meet the requirement 
that it will be available at the point of purchase. Therefore, the 
total one-time cost for this set of processors is $398,000.
    b. Container labels (Sec. 101.17(f)(3)(ii)). The cost of labeling 
is estimated by multiplying the number of affected separable labels on 
packaged products, normally referred to as stock keeping units (SKU's), 
by the cost of changing the label to add the warning. Table 24 shows 
FDA's estimate of the cost per SKU of placing a warning label on the 
information panel for different lengths of the compliance period. These 
costs decrease over time for several reasons. The primary reason is 
that manufacturers change labels or, at least, reorder them at regular 
intervals and a larger length of compliance period allows manufacturers 
to incorporate regulatory changes into planned changes.

                                  Table 24.--Label Change Costs per SKU for Different Lengths of the Compliance Period                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           2 months            6 Months             1 Year              2 Years             3 Years     
--------------------------------------------------------------------------------------------------------------------------------------------------------
Administrative costs                                       $6,000              $1,800                $900                $450                $350       
Redesign costs                                             $1,500                $450                $450                 $50                 $50       
Inventory loss                                               $800                $250                  $0                  $0                  $0       

[[Page 24275]]

                                                                                                                                                        
Totals                                                     $8,300              $2,500              $1,350                $500                $400       
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Processors of minimally processed packaged juice which are not 
covered by HACCP will need to add the warning to their package labels 
at the end of the 2-year compliance period. FDA estimates that 2,980 
processors will be subject to this provision (1,440 very small apple 
juice retailers and 240 very small orange juice retailers exempted from 
the HACCP rule plus 1,300 grocery stores producing packaged juice). The 
total cost for this provision is $1,490,000 (2,980 x $500) at the end 
of the 2-year compliance period. For simplicity of reporting and 
calculation with the other labeling costs, this cost will be added as 
$1,301,000 (the present value of $1,490,000 discounted 2 years at 7 
percent).
    c. Summary of likely labeling costs. The agency estimates that the 
likely total cost of the labeling rule is a one-time cost of $4,387,000 
($2,688,000 + $398,000 + $1,301,000).
2. HACCP Costs
    a. CGMP's (Sec. 120.5). This section of the proposal reaffirms the 
applicability of the CGMP's in part 110 in determining whether facility 
design, materials, personnel practices, and cleaning and sanitation 
procedures are safe.
    No costs are attributed to this section for this rulemaking. The 
overwhelming majority of juice plants are in compliance with the 
CGMP's. In 1996 only 6 percent of the plants inspected were cited for 
official action. Therefore it is assumed that these rules will not have 
any effect on the enforcement of the CGMP's for juice products.
    b. Prerequisite program SOP's (Sec. 120.6). FDA is proposing to 
require that processors control and document specific SOP's that 
provide a foundation for the HACCP system and to have and implement 
SOP's for prerequisite programs. In general, there are three activities 
that are part of prerequisite program SOP's: (1) Developing SOP's, (2) 
implementing sanitation controls with corrections of deviations from 
SOP's, and (3) monitoring and documenting for SOP's.
    i. Developing SOP's. Each processor must have a sanitation SOP. FDA 
estimates that SOP's for juice plants could be developed with 20 hours 
of labor. At the rural hourly cost of labor ($13), the cost per plant 
of developing SOP's is approximately $260. If one half of the 900 
domestic plants in the OEI and all of the 220 very small juice 
processors do not currently have SOP's, then they will have to develop 
them to comply with this regulation, if it is adopted. Under those 
assumptions, the total cost for the industry to develop SOP's would be 
approximately $174,200 ($260 x 670 plants).
    ii. Implementing sanitation controls with corrections of deviations 
from SOP's. Each processor must implement a sanitation SOP and correct 
deviations from the prerequisite program SOP's in a timely fashion.
    In 1996, 39 percent of the juice plants inspected were cited as VAI 
(voluntary action indicated). This citation usually indicates that an 
investigator noted deficiencies that were not significant enough to 
warrant an administrative or regulatory action but which should be 
corrected on a voluntary basis. Information from the inspection reports 
indicates that approximately 30 percent of the juice plants inspected 
had sanitation and food safety related deficiencies, 4 percent had 
deficiencies which were related to low-acid canned food regulations, 
and 4 percent had deficiencies for misbranding or mislabeling. Also in 
1996, 6 percent of the juice plants inspected were cited as OAI 
(official action indicated). This citation indicates that an 
investigator noted deficiencies significant enough to recommend 
regulatory or administrative sanctions. Information from the inspection 
reports indicates that 3 percent of the juice plants had significant 
deficiencies that could be related to food safety or low-acid canned 
food regulations, 2 percent had significant deficiencies for 
misbranding or mislabeling.
    On a few of the VAI inspection reports, FDA investigators indicated 
an estimate of the cost of correcting sanitation and food safety 
related deficiencies indicated. Two-thirds of the reports estimated 
costs of corrections at $0 to $99, and one-third of the reports 
estimated costs of corrections at $1,000 to $4,999.\8\ Taking the 
middle of these ranges gives an average estimated cost of corrections 
of approximately $1,000 (($50 x 67 percent) + ($3,000 x 33 percent)) 
per plant for correcting sanitation and food safety related 
deficiencies.
---------------------------------------------------------------------------

    \8\ No reports estimated costs of $100 to $999.
---------------------------------------------------------------------------

    The HACCP rule will mandate the implementation of daily monitoring 
of sanitation controls. This should make the correction of sanitation 
and food safety related deficiencies happen on the day that they occur 
rather than months later. Regulatory inspections of juice plants are 
made approximately once every 5 years. If food safety and sanitation 
related deficiencies occur on average approximately once every 5 years 
midway between inspections (to facilitate calculation), then the HACCP 
rule should cause corrections to be taken an average of 2.5 years 
earlier than would be the case without the rule. The cost of the rule, 
then, is not the full cost of taking the corrections. Those corrections 
would be taken even without the HACCP rule after the plant was 
inspected and the deficiencies noted. The cost of the HACCP rule is the 
present value of making the expenditures to correct the deficiencies at 
an earlier date than would take place otherwise. The present value of 
making an infinite series of $1,000 expenditures once every 5 years and 
2.5 years earlier than they would otherwise occur is $500 when 
discounted at 7 percent.
    Based on information from inspection reports, FDA assumes that 
about 30 percent of all 1,070 covered juice plants (about 320 plants) 
are not likely to have sanitation controls that are sufficiently 
implemented, but which do not warrant administrative or regulatory 
action. If it costs each of these 320 plants $500 to implement 
sanitation controls and to correct deviations from SOP's, then the 
total cost borne by the industry for this requirement is $160,000, 
which, because it is discounted, will be added as a one-time 
expenditure in the total costs.
    iii. Monitoring and documenting of SOP's. All procedures in the 
prerequisite program SOP's are required to be conducted at the 
frequencies specified and implementation of these procedures will have 
to be monitored and documented.
    FDA estimates that monitoring and documenting of SOP's will require 
one-half hour of labor per operating week. The cost per plant of SOP 
monitoring and documenting is given in Table 25.

[[Page 24276]]



                       Table 25.--Annual Per Plant Cost of SOP Monitoring and Documenting                       
----------------------------------------------------------------------------------------------------------------
                                                       Estimate Hrs. per                        Estimate Annual 
                                  Weeks of Operation     Week for SOP                         SOP Monitoring and
           Production                  per Year         Monitoring and       Wage ($/hour)     Documenting Cost 
                                                          Documenting                              per Plant    
----------------------------------------------------------------------------------------------------------------
Seasonal                                   16                    .5               $13                $100       
Year round                                 52                    .5               $13                $340       
----------------------------------------------------------------------------------------------------------------

    Table 26 shows the distribution of per plant and total industry 
costs based on the estimate in Table 25 for SOP monitoring and 
documenting needed to comply with this rule, if it is adopted. These 
estimates assume that no plants are currently in compliance with these 
particular requirements.

                         Table 26.--Total Annual Cost of SOP Monitoring and Documenting                         
----------------------------------------------------------------------------------------------------------------
                                                        Estimate Annual                                         
                                                      SOP Monitoring and                        Estimate Annual 
                     Production                        Documenting Cost      No. of Plants    SOP Monitoring and
                                                           per Plant                              Documenting   
----------------------------------------------------------------------------------------------------------------
Seasonal                                                     $100                 645             $64,500       
Year round                                                   $340                 450            $153,000       
Totals                                                                          1,095            $218,000       
----------------------------------------------------------------------------------------------------------------

    c. Hazard Analysis and HACCP Plan (Secs. 120.7 and 120.8). Under 
the proposal, processors are required to have a written hazard analysis 
and to have and implement a written HACCP plan whenever a hazard 
analysis reveals a food hazard that is reasonably likely to occur. 
Requirements are set forth for the minimum contents of the plan and for 
the signing and dating of the HACCP plan by specified personnel. 
Failure of a processor to have and implement a HACCP system in 
compliance with this rule, if adopted, will render the food products of 
that processor adulterated.
    i. Hazard analysis and HACCP plan development. Under the proposal, 
each plant is responsible for developing a written hazard analysis of 
hazards that are reasonably likely to occur in the product that a 
processor can control. The hazards to be considered are any chemical, 
physical, and biological hazards that may cause illness, injury, or 
death in humans. Plant management must determine the likelihood of 
occurrence of these hazards, either due to their introduction through 
material inputs or processing or a possible failure to eliminate them 
or to reduce them to acceptable levels in processing. Some Federal 
Government sampling and illness outbreak data are available to provide 
firms with a set of possible hazards that may affect a particular 
product and process. In addition, section V of this document, the 
accompanying appendix, and the preambles to these proposed rules 
contain information on most of the hazards that have caused problems in 
juice products in the past. Additional information may be forthcoming 
in the HACCP final rule (after FDA evaluates the comments). Experience 
from the HACCP pilot suggests that the hazard analysis for products 
similar to juice took 16 to 24 hours. FDA's preliminary estimate is 
that it will take approximately four individuals, including a plant 
manager; 5 hours each to complete the hazard analysis; and another 15 
hours each to formulate the HACCP plan. The HACCP plan requires that 
the plant manager, quality control official and others establish 
critical control points (CCP's) for every hazard identified in the 
hazard analysis and critical limits at each CCP; establish a plan to 
monitor those CCP's; determine how deviations from critical limits will 
be handled; and establish procedures for verification and validation 
that the plan is being followed and that it is properly controlling the 
identified hazards. FDA assumes that part of this process will be to 
determine the most cost-effective means to comply with this regulation 
when developing the plan. Thus, the total number of person hours per 
plant to develop both documents is 80 hours. At $13 per hour the total 
cost per plant is about $1,000 per plant.
    FDA has assumed that about 5 percent (50 plants) of all juice 
plants in the OEI will have implemented HACCP substantially in the form 
required by this regulation by the time that this regulation is 
finalized regardless of this regulatory action. This assumption is 
based on conversations with pilot plant firms who have indicated to FDA 
that many large firms have begun both to do HACCP and require HACCP of 
their suppliers. It is estimated that approximately 1,070 plants will 
need to do hazard analyses and develop HACCP plans to comply with this 
rule, if it is adopted. Therefore, the total cost of 1,070 plants at 
$1,000 each to develop a hazard analysis and a HACCP plan is 
approximately $1,070,000 million.
    ii. Pesticide HACCP controls. Pesticides may be a component of 
material inputs that must be controlled. If a processor has direct 
knowledge of the amount of pesticide applied, either because the 
produce is from the processor's own farm or because records showing the 
application of pesticides accompanies the incoming produce, then the 
processor may control pesticide hazards by means of a supplier 
certificate. Under such an arrangement a supplier would only need to 
provide the processor with a certification that any pesticides had been 
properly applied to the produce so as not to exceed applicable 
tolerances. As each arrives at the processing plant, a worker will need 
to verify that the supplier for that shipment has supplied the 
processor with a proper and up-to-date certification. FDA assumes that 
verification of supplier certification requires 1 minute per shipment 
which, at $13 per hour, represents a cost per shipment of approximately 
$0.25.
    FDA has estimated the number of shipments that will be verified in 
this manner by working backward from the amount of juice consumed. 
Annual juice consumption in the United States is 2.3 billion gallons 
(gal). The agency assumes that 80 percent of this total (1.84 billion 
gal) is produced by approximately 75 large firms (operating 225 
plants). FDA believes that all large firms are currently doing a 
sufficient

[[Page 24277]]

amount of sampling and monitoring (or receiving supplier certificates) 
for pesticides. Therefore it is assumed that there are no costs for 
large firms to comply with this requirement. That leaves 20 percent of 
the total (460 million gal) produced by approximately 2,575 small and 
very small firms. FDA assumes that all small and very small firms use 
domestic produce only. If 15 pounds (lb) of produce are required to 
make 1 gal of juice, then small firms use 6.9 billion lb of domestic 
produce (460 million gal x 15 lb/gal). If 45,000 lb of produce (the 
amount carried by a typical tractor trailer) constitutes 1 shipment of 
produce, then small and very small firms use 153,000 shipments of 
produce (6.9 billion lb  45,000 lb/shipment).
    However, for the purposes of this proposed regulation FDA is 
including as retailers very small businesses that make juice on their 
premises, whose total sales of juice and juice products do not exceed 
40,000 gallons per year and who sell directly to consumers or directly 
to consumers and other retailers. This exemption decreases the 
percentage of juice processed under pesticide controls by approximately 
14 percent thereby reducing the number of shipments of produce to 
132,000 (153,000 x 86 percent).
    FDA assumes that 80 percent of small and very small firms covered 
by the rule (676) will process shipments of produce that will be 
accompanied by supplier certifications of pesticide application after 
the HACCP rule is in place. Therefore, the number of shipments to be 
handled under prerequisite program controls is 106,000 (132,000 
shipments x 80 percent) per year. Thus, this analysis assumes that the 
average small and very small plant receives approximately 160 (106,000 
shipments  676 small plants) shipments per year. The total per 
plant cost is about $40 (60 shipments x $0.25/shipment) for the 676 
small and very small plants that can control this issue in this way. 
Based on these calculations, the total marginal cost of this type of 
control for pesticides is approximately $27,000 ($40 x 676 plants).
    If such records cannot be obtained, different types of controls 
need to be implemented. In this case, the processor must run pesticide 
residue tests to ensure that there are no pesticides either over 
tolerance or used on products for which there is no tolerance. To 
determine the frequency of such testing, processors may avail 
themselves of Government test results which indicate the likely 
variance of illegal residues over a particular crop or region.
    Current records indicate that, for domestic crops, only about .25 
percent (one-quarter of 1 percent) are out of compliance. Furthermore, 
as HACCP is adopted by more of the food industry, it is expected that 
records, for some types of produce, will routinely accompany produce 
intended for interstate commerce. However, many types of produce are 
currently commingled at different stages in the distribution network. 
This creates a problem for backtracking when there are either pesticide 
or pathogen problems.
    There are two potential costs associated with ensuring that 
pesticide residues are legal: (1) Matching and shipping pesticide spray 
records with crops and (2) costs of multiresidue testing. If records 
are to accompany produce, fruits and vegetables may only be commingled 
if all of the commingled produce has records showing it is under 
tolerance. Otherwise, produce with paperwork must be kept separate from 
produce without such paperwork. In the latter case, if it is to be used 
to produce juice, multiresidue tests must be performed costing about 
$150 per test. Just as was calculated for supplier certificates, FDA 
calculates that there are 132,000 shipments which use 5,865 million 
pounds of produce that must be covered by pesticide controls. As 80 
percent has been considered to be handled by supplier certificates, 20 
percent of the remaining shipments must be covered by a sampling plan. 
Thus, of the 845 small plants total, 169 will cover an average of 160 
shipments with a pesticide sampling plan. The number of shipments that 
must be tested is about 26,000 (132,000 x 20 percent) per year.
    Because of the likelihood of a very low violation rate, 
approximately one-quarter of 1 percent, which is coupled with a maximum 
upper bound added risk of about 1 in a million lifetime cancer cases 
(see section V of this document), those processors who are unable to 
obtain supplier certificates should need to only sample lots 
periodically to ensure that such lots are in compliance. If the average 
number of shipments per plant per year is 160, processors could 
randomly sample 10 shipments per year and, assuming all were negative, 
could be assured with 80 percent confidence that there are no more than 
14 percent violative lots in the entire season's produce input. 
Furthermore, if processors are turning up violative shipments, they are 
expected to take corrective action to prevent future shipments from 
being violative so that the rate of violative juice that reaches 
consumers is expected to stay extremely low. Thus, costs will be 
estimated for these processors based on 10 random samples per year at a 
cost of $150 per sample. Based on these calculations, the total 
marginal cost of pesticide testing is approximately $254,000 (10 tests 
x $150/test x 169 firms). Costs per plant are estimated to be an 
average of $1,500. Therefore, the total annual cost of pesticide 
control for the HACCP rule is $281,000 ($254,000 for pesticide testing 
+ $27,000 for supplier certificate verification).
    iii. Pathogen HACCP controls. Processors will need to include 
controls for microbial hazards in their HACCP plans and to implement 
these controls in their operations. Potential microbial hazards include 
both heat sensitive and heat resistant pathogens (and heat resistant 
toxins produced by pathogens), including viruses. However, FDA is 
interested in the safety of products as they are consumed, and any 
combination of controls that successfully controls pathogens will 
satisfy the requirements of this regulation. This regulation will allow 
each processor to choose the combination of control measures that cost-
effectively controls microbial hazards. In addition, because of this 
``performance'' nature of HACCP, manufacturers will be encouraged to 
continue to seek out and implement less costly and more effective 
methods.
    Processors may attempt to control pathogens through other means, 
using a combination of several steps that are less effective 
separately, but which when used together will achieve adequate log 
reductions of pathogens. These methods may include control of 
contamination at the growing level, including use of potable water for 
irrigation, use of safe fertilizers, rejection of fruits dropped from 
trees onto the ground, and application of good sanitation practices 
during harvesting. Other controls that can be applied at the receiving, 
sorting, and processing levels include washing, brushing and sanitizing 
the product before extraction, acidifying the product, and using 
preservatives. FDA requests comments on potential costs and use of 
these or any other methods.
    At present, pasteurization is the primary effective, commercially 
implemented method for controlling pathogens in juice. However, the 
agency is not proposing to require pasteurization in the proposed HACCP 
rule since other methods, either singularly or combined, may be as 
effective in achieving the 5-log reduction. However, the effectiveness 
and commercial feasibility of these other methods have not been 
established over a significant period of

[[Page 24278]]

time. It is possible that the effectiveness and feasibility of other 
methods will be established prior to the finalization of the HACCP 
rule, thus affording processors a less expensive means of pathogen 
control. To the extent that processors adopt other, less expensive 
pathogen controls, the costs for pasteurization estimated in this 
analysis will be an overestimate of the actual cost of the rule. The 
agency has estimated an option for carrying out pasteurization that it 
believes minimizes the cost of pasteurization. That is, the agency has 
estimated the costs of purchasing special, low cost pasteurizers 
designed for low-volume applications that are suited to small 
businesses. It is also worth mentioning that pasteurized juice products 
can be made using drops and culled produce, which significantly lowers 
the cost of the material inputs. Processes other than pasteurization 
may not be able to reduce pathogens sufficiently to accept this type of 
produce.
    Another possibility, for which FDA has not estimated costs, is that 
processors that do not have pasteurizing equipment on site will ship 
their juice to a facility that can provide them with pasteurization and 
bottling service and then ship the bottled juice back for distribution. 
Juice and dairy plants are the facilities most likely to be able to 
provide this service. Purchasing the service of pasteurization may be a 
more cost-effective option for some juice processors.
    In fact, some juice companies do contract out their juice making 
process. They blend the different varieties of raw produce for their 
product and then ship it to a processor. There the produce is washed 
and culled, pressed, pasteurized, bottled, and labeled. The juice is 
then picked up by the owner and distributed. Other juice companies have 
contracted out the pasteurization-bottling processes. They press the 
produce themselves, then ship the juice to a pasteurization-bottling 
facility to be pasteurized and bottled. Still other companies have 
contracted out the pasteurization process only. They press the produce 
themselves, then ship the juice to a pasteurization facility to be 
pasteurized, and then ship the pasteurized juice back in bulk for 
bottling and distribution. If some juice companies decide to take 
approaches similar to these in response to this rule, their operations 
will change fundamentally. Juice processors will choose the option 
which will result in the lowest marginal cost to produce juice. The 
agency has not included the estimate of the cost of contracting out 
pasteurizing because of: (1) The increased complexity of the HACCP plan 
to control for recontamination, (2) the problem of estimating 
processors' access to pasteurization equipment owned by other 
processors, and (3) the extra expense involved in transporting the 
products. All these cast serious doubt on the feasibility of this 
option for many very small processors. However, this analysis is 
uncertain and FDA would expect each manufacturer to examine the option 
of contracting their product to be pasteurized and taking advantage of 
this where it is less costly than purchasing their own equipment.
    Another aspect of pathogen control which some processors may adopt, 
and for which FDA has not estimated costs, is juice refrigeration. 
Pasteurized juice which has not been heated to the degree so as to make 
it shelf stable must be refrigerated. This cost has not been 
investigated because the agency has assumed that producers of nonshelf 
stable juice are already refrigerating their products. The agency 
requests comment on this assumption and on the cost of refrigeration, 
if any, over and above that which is already being done.
    The costs of pasteurization vary depending on numerous factors, 
such as the capacity of the facility, and the amount of labor. In 
addition, there is uncertainty in the estimates of the number and size 
of the processors who will need to install pasteurization equipment, 
among other factors. Some makers of cider processing equipment are 
marketing pasteurization units for small processors. Medium sized 
pasteurization/heater/chiller units are reported to cost about $17,000 
plus about $1,500 for installation. These units have the capacity 
necessary to meet the needs of a small processor producing about 
400,000 gal of juice in a 4-month season.
    Additionally, initial startup of pasteurization would require 
alterations in plant construction, design or layout to accommodate the 
additional processing step and equipment operator training. Also, there 
are operating expenses related to pasteurization including utilities, 
cleaning, maintenance and repair, and depreciation. Table 27 lists the 
parameter values that have been used in a Monte Carlo analysis to model 
the potential costs of installing and using pasteurization equipment by 
juice processors.

               Table 27.--Inputs and Results of Monte Carlo Analysis of Initiating Pasteurization               
----------------------------------------------------------------------------------------------------------------
                      Parameter                         10th Percentile          Mean           90th Percentile 
----------------------------------------------------------------------------------------------------------------
Wage rates                                                    $11.30              $13                 $14.70    
No. of operating months                                         2                   6                   9       
Plant capacity (in gal)                                    34,000              74,000             124,000       
Installation costs                                         $1,300              $1,500              $1,700       
Cleaning hours (monthly)                                       52                  60                  68       
Costs of the pasteurizer                                  $10,000             $17,000              25,000       
Hours to operate (monthly)                                     26                  30                  34       
Total Pasteurization Cost (per plant)                     $18,200             $26,200             $34,800       
----------------------------------------------------------------------------------------------------------------

    The key variables that affect this analysis are shown in the 
``tornado'' diagram, Figure 1.


[[Page 24279]]

[GRAPHIC] [TIFF OMITTED] TP01MY98.000



    For the purpose of this benefit-cost analysis, FDA has 
preliminarily concluded that it is unlikely that fresh orange (and 
possibly other citrus) juice processors will have to pasteurize their 
products to achieve a 5-log reduction when a HACCP program is adopted 
because of the nature of the fruits and the methods of juice extraction 
commonly used by industry. Therefore, costs for these processors are 
limited to the costs of creating and operating a HACCP system, not to 
purchasing pasteurizing equipment.
    Of the 1,070 processors covered by the HACCP rule only a portion of 
these will need to initiate pasteurization. Table 28 shows FDA's 
assumption about the number of processors in the OEI of various types 
of juice that are not pasteurizing.

       Table 28.--Types of Plants Currently Without Pasteurization      
------------------------------------------------------------------------
                                    No. Plants with    Best Estimate of 
              Type                  Type as Primary    Plants Minimally 
                                        Product           Processing    
------------------------------------------------------------------------
Berry                                      77                   1       
Citrus                                    211                  10       
Core                                      133                   3       
Mixed Fruit                                36                   1       
Pit                                        31                   1       
Sub-tropical/tropical                      29                   1       
Vine                                        2                   0       
Other                                       8                   0       
Beans/peas/corn                             5                   0       
Fruits used as vegetables                  41                   1       
Leaf/stem                                   8                   0       
Mixed vegetable                            10                   1       
Root/tuber                                  8                   1       
Fruit beverage bases                       37                   0       
Liquid fruit beverage bases               124                   0       
Combination true flavored and                                           
 imitation flavored beverages              19                   0       
Liquid combination true flavored                                        
 and imitation flavored                                                 
 beverages                                 55                   0       
Other beverage bases                       28                   0       
Baby (infant and junior) fruits,                                        
 juices and drinks                          6                   0       
Totals                                    868                  20       
------------------------------------------------------------------------

    Of the 20 processors in the OEI assumed not to be pasteurizing, 10 
of these are citrus juice processors and may not need to initiate 
additional controls beyond those already in place for controlling 
pathogens. That leaves 10 processors in the OEI assumed to need to 
initiate pasteurization. FDA's preliminary determination is that the 60 
very small orange juice processors will not need to implement 
additional controls for pathogens than those already in place. Of the 
160 very small apple juice processors the agency assumes, based on 
industry sources, that 30 percent (50) have already initiated or are in 
the process of initiating pasteurization because of both demand and 
supply effects.
    The assumption that 30 percent of apple juice processors have 
already initiated pasteurization follows from the adverse publicity 
concerning unpasteurized juice. On the demand side, both consumers and 
retailers have become more aware of the hazards associated with 
unpasteurized juice over the last 5 years. From 1992 to 1997, in two 
national newspapers, the number of articles concerning the safety of 
apple juice doubled. On the supply side, producers have certainly 
become aware of the problems associated with their

[[Page 24280]]

unpasteurized juice both due to the efforts of FDA and from the news 
media. For example, in the five states with the largest number of apple 
juice processors (New York, Ohio, Michigan, Illinois, and 
Pennsylvania), articles in major newspapers about the safety of juice 
increased 13 percent between 1992 and 1997. This awareness constitutes 
action on the supply side as producers contemplate the potential 
liability and loss in sales (from a loss of goodwill) associated with 
producing a potentially unsafe product. That leaves 110 very small 
apple juice processors to implement pasteurization in order to control 
pathogens as required in the HACCP rule. Table 29 shows the first year 
total cost of pathogen control attributable to the HACCP rule.

                  Table 29.--First Year Cost of Pathogen Control Attributable to HACCP Proposal                 
----------------------------------------------------------------------------------------------------------------
                  Processor Type                     Cost per Plant       No. of Plants            Total        
----------------------------------------------------------------------------------------------------------------
Very small apple juice processors                      $18,200                 110             $2,002,000       
Juice processors in the OEI                            $34,800                  10               $348,000       
Total                                                                                          $2,350,000       
----------------------------------------------------------------------------------------------------------------

    Pasteurization will require ongoing costs for operation and 
maintenance. FDA estimates these annual costs for labor, utilities, and 
materials subsequent to the first year to be $7,000 per year for very 
small processors and $8,000 per year for processors in the OEI. These 
estimates can be derived from Table 27 by subtracting the cost of the 
pasteurizer and installation from the total pasteurization cost for the 
10th and 90th percentile estimates. The total cost of pathogen control 
in subsequent years is given in Table 30.

                 Table 30.--Subsequent Year Cost of Pathogen Control Attributable to HACCP Rule                 
----------------------------------------------------------------------------------------------------------------
                  Processor Type                     Cost per Plant       No. of Plants            Total        
----------------------------------------------------------------------------------------------------------------
Very small apple juice processors                       $7,000                 110               $770,000       
Juice processors in the OEI                             $8,000                  10                $80,000       
Total                                                                                            $850,000       
----------------------------------------------------------------------------------------------------------------

    There are other costs that are related to processing for pathogen 
control. The pasteurization of juice causes changes in the 
characteristics of the products, primarily in terms of texture and 
taste. Some current consumers of nonheat-treated juice will bear the 
costs of losing a particular product as well as costs of searching for 
products with the characteristics that they prefer the most. Thus, one 
cost of these regulations is the loss of ``fresh'' juice, that is, 
juice that is not heat (or otherwise) processed. The appropriate 
measure of the loss of a product is the sum of producer and consumer 
surplus. Consumer surplus is a measure of the value that consumers 
obtain from a product. It is measured by what consumers would be 
willing to pay for a product over and above what they actually must 
pay. Producer surplus is a measure of the amount of rent producers 
receive, the price minus the cost of production. Measurement of 
consumer surplus depends on several factors that influence the shape of 
the demand curve; the most important one in this case being the 
substitutability of other juice products. If a product has close 
substitutes in the minds of consumers, the amount of both producer and 
consumers surplus is smaller. In addition, if there are attributes that 
consumers do not perceive or are not informed about, such as additional 
nutritional benefits associated with the lost product, there may be 
additional costs of losing that product. FDA has no information on how 
readily consumers will accept pasteurized juice in the place of fresh 
juice nor any other information that could be used to estimate that 
cost.
    iv. Glass and direct food additive HACCP controls. FDA has not 
attributed any costs for control of glass or direct food additives even 
though these potential hazards are among those that are likely to be 
relevant for juice. There have been some recalls in recent years for 
each of these two hazards. However, glass is a food safety hazard that 
is readily recognized by consumers who can hold producers accountable 
for its presence in food. Thus, the agency believes that processors 
packing juice in glass are already currently implementing every 
feasible control for this potential hazard in order to limit their 
liability and to provide consumer protection. Additionally, although 
approximately 25 percent of the processing plants pack juice in glass 
containers, this number is diminishing rapidly for economic and safety 
reasons.
    Regarding food additives, many juice products contain food or color 
additives for the purpose of coloring or extending product shelf life. 
However, the agency believes that processors using direct food 
additives in juice are already currently implementing sufficient 
controls for these potential hazards as they are strictly regulated by 
FDA.
    Even though processors may need to institute some additional 
monitoring and recordkeeping for these hazards after implementing 
HACCP, the agency believes that the additional cost will be negligible. 
Therefore, there is zero marginal cost associated with control for 
direct food additives, and there is zero marginal cost (and zero 
marginal benefits) associated with HACCP controls for glass.
    v. Natural toxin controls. Processors of juice using imported apple 
juice will need to implement controls for the natural toxin, patulin. 
Patulin is a natural toxin that is found in apple juice made from moldy 
apples and is a hazard that is more likely to occur in imported apple 
juice products. Processors of juice using imported apple juice will 
need to implement controls by testing for this toxin.
    FDA has estimated the number of shipments that will be tested for 
patulin by working backward from the amount of apple juice imported. 
About 200 million gallons of apple juice are imported into the United 
States by 7 large firms (operating 23 plants) annually. FDA assumes 
that all small firms use domestic produce only. Therefore, there are no 
costs accruing to small firms from this requirement.
    If 15 lb of produce are required to make 1 gallon of juice, then 
large firms use 3 billion lb of foreign apples imported in the form of 
apple juice (200

[[Page 24281]]

million gal x 15 lb/gal). If 45,000 lb of apples (the amount carried by 
a typical tractor trailer) constitute 1 shipment of apples, then large 
firms use 66,667 shipments of imported apples (3 billion lb  
45,000 lb/shipment). Thus, this analysis assumes that the average 
number of imported apple shipments per year to each large plant (which 
are the likely importers) is approximately 2,900 (66,667 shipments 
 23 plants).
    The agency does not know the current frequency of shipments of 
apples containing patulin at violative levels. However, the agency 
assumes that the 23 large plants will randomly sample 30 shipments per 
year at a cost of $150 per sample. The total marginal cost of patulin 
testing is approximately $104,000 (30 tests x $150/test x 23 firms). 
Costs per plant are $4,500. If any lots are found positive, costs will 
be incurred that are estimated in section VI.B.1.d.i of this document.
    d. Corrective actions (Sec. 120.10).--i. Corrective action plan. 
Most processors will have a corrective action plan that specifies the 
appropriate action to be taken for the violation of each critical 
limit. If a processor does not have a corrective action plan then the 
processor must revalidate the HACCP plan whenever a deviation occurs.
    The development of a corrective action plan for juice products is 
less expensive than revalidation after each deviation from a critical 
limit. FDA estimates that a corrective action plan for juice products 
can be developed in 4 hours with a cost per plant of approximately $50 
(about 4 hours of management time).
    Approximately 1,070 plants will develop corrective action plans to 
comply with this rule, if adopted. Therefore, the total cost of 1,070 
plants at $50 each to develop corrective action plans is approximately 
$54,000.
    ii. Corrective actions. The implementation of HACCP requires that 
corrective actions be taken when critical limits are violated although 
deviations should be infrequent. The agency is expecting that those 
juice plants that pasteurize will establish a minimum of two CCP's: One 
for pathogens and one for pesticides. Firms may already have 
established CCP's for metal or glass for which no marginal costs or 
benefits are counted in this analysis. In addition, processors using 
imported apple juice may need to establish a CCP for patulin. Citrus 
juice producers may establish three CCP's, culling, washing and 
brushing, and pesticides. This analysis has assumed that pathogens will 
be controlled by pasteurization for noncitrus juices. Pasteurizers are 
designed to sense the temperature at which the product comes out of the 
pasteurizer and automatically recirculate the product if it has not 
been heated sufficiently. Therefore, corrective actions for 
pasteurization should be so rare as to be negligible for this analysis. 
FDA believe that virtually all citrus processors are currently 
monitoring the culling, and washing and brushing steps. Based on data 
from FDA pesticide sampling, violations of critical limits for 
pesticide should also be rare.
    Some plants may choose to have multiple critical limits for 
pesticides because of the nature of the hazard they present (i.e., 
chronic). The stringency of the corrective action could vary directly 
with the critical limits. For example, if the first (lowest) critical 
limit were exceeded, the corrective action could be to investigate the 
problem. A violation of a higher limit, possibly one that could present 
an acute problem, would cause the product to be destroyed. As an upper-
bound estimate, this analysis will assume that: (1) Deviations of 
pesticide and natural toxin critical limits occur once per month in 
each plant in the first year and once per quarter in subsequent years, 
(2) each corrective action requires 1 hour of labor to resolve, and (3) 
the cost of reconditioning is $100 per corrective action. The cost per 
plant is highly dependent upon the number of months that the plant is 
in operation.
    Assuming that seasonal plants operate 4 months per year and all 
other plants operate 12 months per year, Tables 31 and 32 show the 
estimated first year and subsequent year costs of corrective actions 
per plant as well as the distribution of costs and total industry cost 
for the corrective actions needed to comply with this rule, if adopted.

                                                    Table 31.--Cost of First Year Corrective Actions                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                      Months of      No. of     No. of Labor                    Cost of       Cost per                                  
            Production                Operation    Deviations     Hours per    Wage ($/h)   Reconditioning   Plant First     No. of          Totals     
                                      per Year      per Month     Deviation                  per Deviation      Year         Plants                     
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seasonal                                  4             1             1           $13           $100           $150           645           $97,000     
Year Round                               12             1             1           $13           $100           $260           425          $111,000     
Totals                                                                                                                      1,070          $208,000     
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                  Table 32.--Cost of Subsequent Year Corrective Actions                                                 
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                              Cost per                                  
                                      Months of      No. of     No. of Labor                    Cost of         Plant        No. of                     
            Production                Operation    Deviations     Hours per    Wage ($/h)   Reconditioning   Subsequent      Plants          Totals     
                                      per Year      per Year      Deviation                  per Deviation      Year                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seasonal                                  4              .25          1           $13           $100            $40           645           $26,000     
Year Round                               12              .25          1           $13           $100            $70           425           $30,000     
Totals                                                                                                                      1,070           $56,000     
--------------------------------------------------------------------------------------------------------------------------------------------------------

    e. Validation and verification (Sec. 120.11).--i. Verification. 
HACCP coordinators need to verify at least weekly by record review that 
the HACCP plan is being followed, and calibrate process-monitoring 
instruments weekly.
    If record review for verification requires 1 hour per operating 
week and the calibration of instruments used for monitoring critical 
limits requires 1 hour per week, then the verification cost per plant 
per production cycle is given in Table 33.

[[Page 24282]]



                                                             Table 33.--Cost of Verification                                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                      Weeks of                                                                                          
                    Production                      Operation per  H per Week for    Wage ($/h)     Verification    No. of Plants          Totals       
                                                        Year        Verification                   Cost per Plant                                       
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seasonal                                                16               2             $13            $420             645               $271,000       
Year round                                              52               2             $13          $1,350             425               $574,000       
Totals                                                                                                               1,070               $845,000       
--------------------------------------------------------------------------------------------------------------------------------------------------------

    ii. Validation. Processors will need to validate their HACCP plans 
during the first year after implementation and at least annually, or 
whenever any changes occur that could affect or alter the hazard 
analysis, or HACCP plan. Further, if the processor does not have a 
HACCP plan because there are no hazards that are reasonably likely to 
occur, the processor must reassess their hazard analysis when any 
significant changes occur. Examples of things that may change include: 
(1) Raw material specifications or sources of raw materials, (2) 
product formulation, (3) processing methods or systems, (4) packaging, 
(5) finished product distribution systems, or (6) intended consumers or 
use by consumers. The purpose of validation is to determine that the 
HACCP plan is adequate to control food-safety hazards.
    Validation is intended to answer several specific questions. These 
include: (1) Have all hazards been identified, (2) have the most 
appropriate control measures been identified, (3) are the critical 
limits appropriate, (4) does the monitoring measure what is needed to 
determine that the critical limits are being met, (5) are the right 
records being collected to tell whether the system is working properly, 
(6) are the right corrective measures being taken to ensure that any 
defective product is controlled properly, and (7) are the verification 
procedures adequate to provide assurance that the plan is being 
followed? If the processor addresses each of these several questions 
and the response to each is positive, then the processor can say that 
his plan has been validated and is working.
    Each processor's operation will be unique and will require a 
validation approach adapted to the specific operation. Each approach 
may need to involve multiple activities since there is no one 
measurement or indicator to use to validate the hazard analysis and the 
HACCP plan. There are several factors that have been considered to 
determine the potential costs associated with these activities.
    Validation may only be performed by an individual who has received 
training in an FDA-approved course. However, no additional costs are 
assigned to this requirement because the same training that is needed 
to perform the hazard analysis and prepare the HACCP plan will meet 
this need and is estimated in section VI.B.2.f.g.i of this document.
    No one type of validation will work for all processors of fruit and 
vegetable juices for all types of hazards. For example, validation that 
a pasteurizer is attaining the desired ``kill'' level for a particular 
type of product and volume will be considerably different from 
validating that illegal pesticide residues are not present in the 
product. Three potential types of validation activities are: (1) 
Reviewing HACCP documents and scientific literature, (2) challenge 
studies, and (3) product testing.
    The trained individual may periodically review all plant HACCP 
documents, including the HACCP plan and the hazard analysis, to 
determine if they are consistent with scientific literature. It is 
expected that industry trade publications will serve as a ready source 
of this information. Challenge studies, such as for pasteurizing units, 
determine the limits of the processing equipment and the unique 
parameters that need to be set to achieve the desired results. However, 
in some cases, simply relying on manufacturers specifications will be 
sufficient. Finally, it is expected that at least some end-product 
testing will take place. If, for example, processors are unsure of 
residue levels because of pooled raw inputs, they will need to test 
some finished product. In addition, some processors may find it useful 
to perform periodic microbial testing of wash water or incoming raw 
product. However, because of the sporadic nature of many of the hazards 
that must be considered in these products, testing alone may not be 
sufficient validation.
    FDA estimates that validation is likely to take place twice per 
year for the 425 plants that operate year round and once per year for 
the 645 plants that operate seasonally. Validation of the SOP's and 
HACCP plan is likely to require hiring a food science and technology 
consultant (presumably, the same person hired to perform other HACCP-
related services) for the approximately 845 plants that are small 
businesses. The costs estimated are assumed to cover both human and 
capital costs to accomplish the mix of likely validation activities 
(literature review, challenge testing, and product or water testing). 
FDA estimates that such consultant services cost approximately $1,000 
per validation in the first year (assuming that consultant's services 
cost $1,000 per day and that the validation process takes a single day 
of the consultant's time). The agency estimates that in subsequent 
years a consultant will be able to validate the system in one-half of a 
day. There are approximately 75 large firms operating 225 plants who 
are likely to have the resources available to perform the validation 
functions inhouse. For large firms, FDA estimates that validating SOP's 
and HACCP plans will require 25 percent of the level of effort taken 
for the original SOP and HACCP plan development ($600). Because FDA has 
assumed that about 5 percent (50 plants) of all juice plants in the OEI 
would have voluntarily implemented HACCP substantially in the form 
required by this regulation by the time this regulation is finalized, 
only 175 large plants are affected. Tables 35 and 36 give the estimated 
cost for validation in the first and subsequent years.

[[Page 24283]]



                                                        Table 34.--Cost of First Year Validation                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Ratio of                                                                 
                                                                              Validation                                                                
                                                  Cost of SOP     Cost of         to        Validation      No. of        No. of                        
                   Plant Type                     Development   HACCP Plan    Development    Cost per     Validations     Plants            Total       
                                                                Development    Level of        Plant       per Year      Affected                       
                                                                                Effort                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seasonal small businesses                                                                   $1,000             1           645             $645,000     
Year round small businesses                                                                 $1,000             2           250             $500,000     
Year round large businesses                         $260        $2,100              .25       $600             2           175             $210,000     
Total                                                                                                                                    $1,355,000     
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                      Table 35.--Cost of Subsequent Year Validation                                                     
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               Ratio of                                                                 
                                                                              Validation                                                                
                                                  Cost of SOP     Cost of         to        Validation      No. of        No. of                        
                   Plant Type                     Development   HACCP Plan    Development    Cost per     Validations     Plants            Total       
                                                                Development    Level of        Plant       per Year      Affected                       
                                                                                Effort                                                                  
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seasonal small businesses                                                                     $500             1           645             $323,000     
Year round small businesses                                                                   $500             2           250             $250,000     
Year round large businesses                         $260        $2,100              .13       $300             2           175             $105,000     
Total                                                                                                                                      $678,000     
--------------------------------------------------------------------------------------------------------------------------------------------------------

    f. HACCP records (Sec. 120.12).--i. Monitoring and recordkeeping. 
Processors will need to monitor CCP's and keep HACCP system records of 
observations at the CCP's. Even for those plants that have necessary 
controls in place, plants without HACCP are not likely to be doing the 
amount of monitoring and recordkeeping that HACCP requires. Therefore, 
all processors that have not already implemented HACCP will need to 
increase monitoring and recordkeeping activities.
    If the additional monitoring and recordkeeping that needs to be 
done throughout the entire plant is equivalent to 5 percent of one 
worker's time (3 minutes per hour of operation per plant), then the 
cost is dependent on the number of days that the plant is in operation 
and the number of hours that it operates per day.
    Assuming seasonal plants operate 12 hours per day for 120 days per 
year and year round plants operate 24 hours per day for 360 days per 
year, then Table 36 shows the annual cost of additional monitoring and 
recordkeeping per plant. It also shows the distribution of per plant 
costs and total industry costs for the additional monitoring and 
recordkeeping needed to comply with this proposed rule.

                                                    Table 36.--Cost of Monitoring and Record keeping                                                    
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Hours of       Days of                     Percent      Cost per                                     
                   Production                      Operation     Operation    Wage ($/h)    Additional     Plant per      No. of            Totals      
                                                    per Day      per Year                      Time          Year         Plants                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
Seasonal                                              12           120           $13            5%          $900           645             $581,000     
Year round                                            24           360           $13            5%        $5,600           425           $2,380,000     
Totals                                                                                                                   1,070           $2,961,000     
--------------------------------------------------------------------------------------------------------------------------------------------------------

    ii. Record maintenance. The records produced for this regulation 
will need to be maintained for use by both the processor and 
regulators.
    Assuming record maintenance requires 1 h per week while the plant 
is being operated then the annual cost of record maintenance per plant 
is described in Table 37.

                                      Table 37.--Cost of Record Maintenance                                     
----------------------------------------------------------------------------------------------------------------
                 Weeks of     Hours per Week                                                                    
 Production    Operation per    Maintaining     Wage ($/h)    Cost per Plant   No. of Plants        Totals      
                   Year           Records                                                                       
----------------------------------------------------------------------------------------------------------------
Seasonal           16               1             $13            $210             645            $135,000       
Year round         52               1             $13            $680             425            $289,000       
Totals                                                                          1,070            $424,000       
----------------------------------------------------------------------------------------------------------------


[[Page 24284]]

    iii. Record storage. Records produced for this regulation will need 
to be stored for use by both the processor and regulators. A single 
standard office file drawer should be sufficient to store the proposed 
records for the proposed duration. If for storage of the additional 
records each plant needs to purchase one standard office file cabinet 
at approximately $150 each, then the total cost of record storage for 
the 1,070 plants is approximately $161,000.
    g. Training (Sec. 120.13).--i. HACCP coordinator training. 
Processors may need to employ a HACCP coordinator to carry out the 
duties specified for such a person. In order to train one employee at a 
3-day course that has a curriculum consistent with FDA's standards, a 
processor will need to pay course tuition, travel and lodging (assuming 
that there is not a course in the immediate area), and replacement of 
the labor that the employee would have provided at the processing plant 
if the employee had not attended the course. Table 38 shows the 
estimated costs for each of these items and the estimated total cost 
per plant for training a HACCP coordinator.

                                  Table 38.-Cost of HACCP Coordinator Training                                  
----------------------------------------------------------------------------------------------------------------
       Tuition           Travel and Lodging    Foregone Labor Hours        Wage ($/h)       Total Cost per Plant
----------------------------------------------------------------------------------------------------------------
$500.................         $500                     24                    $13                $1,300          
----------------------------------------------------------------------------------------------------------------

    FDA estimates that if each of the 1,070 processing plants that are 
not currently estimated to have HACCP have a single employee trained by 
a course that is acceptable to the agency, then the total industry cost 
is $1,391,000 million.
    ii. Employee training in HACCP. Each processor will need to train 
employees in their HACCP-related activities and may need to provide 
training for some employees to enable them to read and write English.
    Each processor will need to train some of their employees as to how 
to perform their HACCP-related activities. From the OEI and the 
American Business Listing data, FDA has information on the distribution 
of employment for juice plants in the OEI. FDA has assumed that all of 
the 220 very small orange and apple juice processors employ three 
people on average. FDA has also assumed that the 50 plants that have 
implemented HACCP are the 50 plants with the largest number of 
employees. This analysis assumes that each plant must train 5 employees 
or 10 percent of their employees in HACCP-related responsibilities, 
whichever is greater. Table 39 describes the cost of training each 
employee for 8 hours annually, total employment in the affected plants 
and the total cost of this level of training.

[[Page 24285]]



                                                          Table 39.--Cost of Employee Training                                                          
--------------------------------------------------------------------------------------------------------------------------------------------------------
 No. of Annual                                                           No. of                                                                         
    Hours of                      Annual Cost per   Average Plant      Employees                      No. Plants With    Total No. of                   
  Training per      Wage ($/h)        Employee        Employment      Trained per     No. of Plants        HACCP          Employees           Total     
    Employee                                                             Plant                          Implemented        Trained                      
--------------------------------------------------------------------------------------------------------------------------------------------------------
8..............        $13             $100                3                3              252                0              756            75,600      
8..............        $13             $100                7                5               35                0              175            17,500      
8..............        $13             $100               15                5               68                0              340            34,000      
8..............        $13             $100               35                5              100                0              500            50,000      
8..............        $13             $100               75                8              103                0              824            82,400      
8..............        $13             $100              175               18              161                0            2,898           289,800      
8..............        $13             $100              375               38               59                0            2,242           224,200      
8..............        $13             $100              750               75               25               16              675            67,500      
8..............        $13             $100            3,000              300               14               14                0                $0      
8..............        $13             $100                                                                                8,910          $841,000      
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 24286]]

    h. Imports and foreign processors (Sec. 120.14).--i. Importers. 
Information from the U.S. Customs Service indicates that approximately 
120 importers import juice into the United States. The import 
provisions of the HACCP proposal will, in practice, cause importers to 
implement written procedures to ensure that the juice is produced under 
HACCP or equivalent safeguards. The importer may keep file copies of 
the foreign processor's HACCP plan, written guarantees that the product 
was produced in accordance with the HACCP plan, or certificates of 
inspection from foreign Governments. The importer may also have to 
inspect the foreign plant or test the imported product. Written records 
of all HACCP actions must be maintained by the importer. Some 
combination of records from the foreign processor and safeguards 
provided by the importer will become necessary to meet the requirements 
of this proposed rule. The agency estimates that the cost of these 
activities will be $10,000 per importer in early years, decreasing as 
memorandum of understandings with exporting countries are established.
    ii. Foreign juice processors. The agency does not have any direct 
information on the number of foreign juice plants that export to the 
United States. However, approximately 75 percent of U.S. juice 
consumption is supplied by 900 plants in the OEI. Approximately 25 
percent of U.S. juice consumption is supplied by foreign firms. This 
analysis assumes that the ratio of the number of domestic plants in the 
OEI to domestic production is equivalent to the ratio of the number of 
foreign exporters to foreign juice imports. The result of this 
assumption is an estimate of 300 foreign plants exporting to the United 
States that will need HACCP. FDA requests information from foreign 
governments and importers on the number of exporting juice plants in 
their respective countries.
    Using this estimate for the number of juice exporting plants, if 
the cost per plant for initiating HACCP is same as for a large U.S. 
plant which is already pasteurizing juice (since all juice exported to 
the United States is pasteurized), then the first year cost per foreign 
juice exporter is approximately $26,000, and the cost in subsequent 
years is $22,000. Therefore the total cost in the first year for 300 
foreign processors is approximately $8 million and approximately $7 
million in subsequent years.
    Table 45 in the Initial Regulatory Flexibility Analysis, which 
follows, shows typical costs for a large plant which has not already 
implemented HACCP. The agency assumes that these costs are 
representative of foreign plants exporting to the United States. The 
largest point of uncertainty in this estimation relates to the cost of 
employee training. The average domestic juice plant which employs 500 
or more people has approximately 830 employees. This analysis assumes 
that 10 percent of these employees will need to be trained in HACCP-
related duties. If training costs $100 per employee then the cost of 
employee training alone in a large plant is $8,300. Some plants employ 
more than 3,000 employees. For such a plant the cost of employee 
training would be $30,000. The agency request comment on the cost to 
foreign processors.
    Table 40 lists types of juice exported to the United States and the 
various countries producing the juice. This is not a complete list of 
countries exporting juice to the United States, nor is it a 
comprehensive list of juice products.

                  Table 40.--Sources of Imported Juice                  
------------------------------------------------------------------------
  Apple      Grape      Citrus      Prune      Pineapple      Vegetable 
  Juice      Juice       Juice      Juice        Juice          Juice   
------------------------------------------------------------------------
Argentina  Argentina  Argentina                                         
Australia             Australia                                         
Austria    Austria    Austria                                           
Belgium-   Belgium-   Belgium-    Belgium-                              
 Luxembou   Luxembou   Luxembour   Luxembou                             
 rg         rg         g           rg                                   
                      Belize                                            
           Brazil     Brazil                 Brazil                     
Canada     Canada     Canada      Canada                    Canada      
Chile      Chile                                                        
Denmark                                                                 
                      Dominican                                         
                       Republic                                         
France     France     France      France                                
                      Honduras               Honduras                   
Hungary                                                                 
Israel     Israel     Israel                                Israel      
Italy      Italy      Italy                                             
                      Jamaica                                           
                      Japan                                 Japan       
                      Leeward/                                          
                       Windward                                         
                       Islands                                          
Mexico                Mexico                 Mexico                     
Netherlan                                                               
 ds                                                                     
New                                                                     
 Zealand                                                                
                                             Philippines                
Germany    Germany    Germany     Germany                               
                      South                                             
                       Korea                                            
                                             Singapore                  
Spain                                                                   
Switzerla                                                   Switzerland 
 nd                                                                     
                                             Taiwan         Taiwan      
                                             Thailand                   
Turkey                                                                  
Yugoslavi                                                               
 a                                                                      
------------------------------------------------------------------------


[[Page 24287]]

    Table 40 is provided to give information about the scope of 
countries and products covered by these rules. The agency believes that 
a high estimate of the number of firms exporting juice to the United 
States is 300. Because the quality of the juice must be maintained 
during transport, all juice exported to the United States is currently 
processed in such a way so as to appropriately address potential 
pathogens. However, the agency has no information to suggest that any 
foreign juice processors have implemented HACCP in their operations.

C. Summary of Costs for Labeling and HACCP Rules

    The total quantified costs are approximately $26 million in the 
first year and $15 million in all subsequent years. There will be a 
substantial impact on those processors who are producing minimally 
processed juice in that some will stop making the product, some will 
implement HACCP, and some will label. Table 41 summarizes costs of the 
rules by provision.

       Table 41.--Total First Year and Recurring Cost Per Activity      
------------------------------------------------------------------------
         Activity              First Year Costs       Recurring Costs   
------------------------------------------------------------------------
Labeling Costs                  $4,387,000                              
Develop SOP's                     $174,000                              
Sanitation SOP's                  $160,000                              
Monitoring and documenting                                              
 for SOP's                        $218,000               $218,000       
Hazard analysis and HACCP                                               
 plan                           $1,070,000                              
Pesticide controls                $281,000               $281,000       
Pathogen controls               $2,350,000               $850,000       
Natural toxin controls            $104,000                104,000       
Corrective action plan             $54,000                              
Corrective actions                $208,000                $56,000       
Verification                      $845,000               $845,000       
Validation                      $1,355,000               $678,000       
HACCP monitoring and                                                    
 recordkeeping                  $2,961,000             $2,961,000       
Record maintenance                $424,000               $424,000       
Record storage                    $161,000                              
HACCP coordinator training      $1,391,000                              
Employee training                 $841,000               $841,000       
Importers                        1,200,000                600,000       
Foreign processors               8,000,000              7,000,000       
Totals                         $26,184,000            $14,858,000       
------------------------------------------------------------------------

VII. Summary of Benefits and Costs

    FDA has examined the costs and benefits of the proposed rules as 
required under Executive Order 12866. FDA finds that the costs and 
benefits of these rules have different values in subsequent years such 
that, to compare them properly, they must be discounted to the present 
year (the point at which a decision must be made). The quantified 
benefits (discounted annually at 7 percent) are expected to range from 
$3 billion to $ 4 billion and the quantified costs (discounted annually 
at 7 percent) are expected to be $240 million.

VIII. Initial Regulatory Flexibility Analysis

    FDA has examined the impact of the two proposed rules as required 
by the RFA (5 U.S.C. 601-612). If a rule has a significant impact on a 
substantial number of small entities, the RFA requires agencies to 
analyze options that would minimize the economic impact of that rule on 
small entities. The agency acknowledges that these proposed rules are 
likely to have a significant impact on a substantial number of small 
entities.

A. Objectives

    The RFA requires a succinct statement of the purpose and objectives 
of any rule that will have a significant impact on a substantial number 
of small entities.
    The warning label proposal responds to the need to alert consumers 
to the potential risk of foodborne illness from consumption of juice 
products not pasteurized or otherwise processed to destroy pathogens 
that may be present. FDA is proposing to require warning labels on such 
juice products to inform consumers of the potential hazard of pathogens 
in such products; such labeling will not be required for juice that is 
processed to achieve a 5-log reduction. Once HACCP is implemented, the 
warning labeling will no longer be required for those products covered 
by the HACCP rule. The HACCP rule is being proposed to ensure that 
juice manufacturers control all physical, chemical, and microbial 
hazards in their products.

B. Definition of Small Business and Number of Small Businesses Affected

    The RFA requires a statement of the definition of small business 
used in the analysis and a description of the number of small entities 
affected.
    Table 42 shows the definition of small business for each type of 
establishment affected and a description of the number of small 
entities affected by each of the rules. The agency has accepted the 
Small Business Administration (SBA) definitions of small business for 
this analysis.

                      Table 42.--Approximate Number of Small Plants Covered by These Rules                      
----------------------------------------------------------------------------------------------------------------
                                                                   Percentage of   No. of Small    No. of Small 
                         Standard Industry     SBA Definition of     Category     Establishments  Establishments
Type of Establishment   Classification Codes   Small by Category    Defined as      Covered by      Covered by  
                                                                   Small by SBA     HACCP Rule     Labeling Rule
----------------------------------------------------------------------------------------------------------------
Juice manufacturers        2033, 2037         Less than 500           75%             675              20       
 in the OEI                                    employees                                                        

[[Page 24288]]

                                                                                                                
Roadside-type apple        2033, 2037         Less than 500          100%             160           1,600       
 juice makers                                  employees                                                        
Roadside-type orange       2033, 2037         Less than 500          100%              60             300       
 juice makers                                  employees                                                        
Grocery stores and               5411         Less than               85%                           1,100       
 supermarkets                                  $20,000,000 per                                                  
 processing at the                             yr.                                                              
 point of sale                                                                                                  
Grocery stores and               5411         Less than               85%                           1,450       
 supermarkets                                  $20,000,000 per                                                  
                                               yr.                                                              
Totals                                                                                895           4,470       
----------------------------------------------------------------------------------------------------------------

C. Description of the Impact on Small Entities

1. Costs to Small Entities
    Because there is a broad distribution of products covered, firm 
types, current processing practices and sizes, it would be misleading 
to report average per firm costs. However, some idea of the costs can 
be gained from the following examples. The impacts that the costs will 
have on a firm will vary depending on the total revenue derived from 
juice by a firm and the profit (return on sales) associated with juice 
production. Data on food manufacturing firms indicates that 75 percent 
of firms have return on sales of less than 5 percent.
    The first example (Table 43) is of a small apple cider plant that 
is now producing nonheat-treated juice, buying commingled fruit, and 
has not developed or implemented sanitation SOP's. This plant will need 
to buy a pasteurizer (or find and validate a different process that 
achieves a 5-log reduction) and do some pesticide testing. The next 
example (Table 44) is a small plant that is producing pasteurized 
orange juice year round with fruit from a known source, and that has 
already developed and implemented sanitation SOP's (except that records 
have not been kept on SOP's). These two plants can be compared to a 
very large apple juice plant (Table 45) that imports some apples and 
therefore must test for patulin, and has not developed or implemented 
sanitation SOP's.

      Table 43.--Costs for Illustrative Small Apple Cider Processor     
------------------------------------------------------------------------
                                                      Cost in Subsequent
          Type of Cost            Cost in First Year         Years      
------------------------------------------------------------------------
Develop SOP's                            $260                           
Sanitation SOP's                         $500                           
Monitoring and documenting of                                           
 SOP's                                   $100                $100       
Hazard analysis and HACCP plan         $1,000                           
Pesticide testing controls             $1,500              $1,500       
Pathogen controls                     $18,200              $7,900       
Corrective action plan                    $50                           
Corrective actions                       $150                 $40       
Verification                             $420                $420       
Validation                             $1,000                $500       
HACCP monitoring and                                                    
 recordkeeping                           $900                $900       
Record maintenance                       $210                $210       
Record storage                           $150                           
Training of coordinator                $1,300                           
Employee training                        $300                $300       
Totals                                $26,000             $11,900       
------------------------------------------------------------------------


      Table 44.--Cost for Illustrative Small Orange Juice Processor     
------------------------------------------------------------------------
                                                      Cost in Subsequent
          Type of Cost            Cost in First Year         Years      
------------------------------------------------------------------------
Monitoring and documenting of                                           
 SOP's year round                        $340                $340       
Hazard analysis and HACCP plan         $1,000                           
Pesticide controls                        $60                 $60       
Corrective action plan                    $50                           
Corrective actions                       $260                 $70       
Verification                           $1,350              $1,350       
Validation                             $2,000              $1,000       
HACCP monitoring and                                                    
 recordkeeping                         $5,600              $5,600       
Record maintenance                       $680                $680       
Record storage                           $150                           
Training of coordinator                $1,300                           
Employee training                        $300                $300       

[[Page 24289]]

                                                                        
Totals                                $13,100              $9,400       
------------------------------------------------------------------------


   Table 45.--Costs for Illustrative Very Large Apple Juice Processor   
------------------------------------------------------------------------
                                                      Cost in Subsequent
          Type of Cost            Cost in First Year         Years      
------------------------------------------------------------------------
Develop SOP's                            $260                           
Sanitation SOP's                         $500                           
Monitoring and documenting of                                           
 SOP's                                   $340                $340       
Hazard analysis and HACCP plan         $1,000                           
Natural toxin control                  $4,500              $4,500       
Corrective action plan                    $50                           
Corrective actions                       $260                 $70       
Verification                           $1,350              $1,350       
Validation                             $1,200              $1,200       
HACCP monitoring and                                                    
 recordkeeping                         $5,600              $5,600       
Record maintenance                       $680                $680       
Record storage                           $150                           
Training of coordinator                $1,300                           
Employee training                      $8,300              $8,300       
Totals                                $26,000             $22,000       
------------------------------------------------------------------------

2. Professional Skills Required for Compliance
    The RFA requires a description of the professional skills required 
for compliance with this rule. Table 46 describes the professional 
skills required for compliance with the various activities required by 
this rule.

         Table 46.--Professional Skills Required for Compliance         
------------------------------------------------------------------------
                                                   Professional Skills  
   Required Activity      Section of Proposal    Required for Compliance
------------------------------------------------------------------------
Developing                          Sec.  120.6  Managers familiar with 
 prerequisite program                             incoming materials and
 SOP's                                            plant sanitation      
Implementing                        Sec.  120.6  Production workers who 
 sanitation controls                              are able to maintain  
 with corrections of                              the sanitation        
 deviations from                                  controls as described 
 prerequisite program                             in the sanitation     
 SOP's                                            SOP's and supervisors 
                                                  or managers who can   
                                                  determine what        
                                                  corrective actions are
                                                  necessary for         
                                                  deviations from SOP's 
Monitoring and                      Sec.  120.6  Production workers who 
 documenting of                                   are appropriately     
 prerequisite program                             trained to monitor and
 SOP's                                            keep records on       
                                                  observations and      
                                                  measurements for      
                                                  prerequisite program  
                                                  SOP's                 
Developing hazard        Secs.  120.7 and 120.8  Supervisors or managers
 analysis and HACCP                               who fulfill the role  
 plan                                             of HACCP coordinator  
                                                  as well as            
                                                  microbiologists,      
                                                  chemists, and         
                                                  attorneys             
Implementing pesticide   Secs.  120.7 and 120.8  Production workers who 
 controls                                         are appropriately     
                                                  trained to carry out  
                                                  tests, to monitor, and
                                                  to keep records on    
                                                  observations and      
                                                  measurements at       
                                                  critical control      
                                                  points                
Implementing pathogen    Secs.  120.7 and 120.8  Production workers who 
 controls                                         are appropriately     
                                                  trained to monitor and
                                                  keep records on       
                                                  observations and      
                                                  measurements at       
                                                  critical control      
                                                  points                
Taking corrective                  Sec.  120.10  Production workers who 
 actions                                          are trained to take   
                                                  corrective actions    
                                                  described in          
                                                  corrective action     
                                                  plans and supervisors 
                                                  or managers who can   
                                                  determine what        
                                                  corrective actions are
                                                  necessary for         
                                                  deviations from       
                                                  critical limits       
Verification                       Sec.  120.11  Supervisors or managers
                                                  who fulfill the role  
                                                  of HACCP coordinator  
Validation                         Sec.  120.11  Food scientists or food
                                                  technologists who can 
                                                  perform a scientific  
                                                  review of the process 
Monitoring and                     Sec.  120.12  Production workers who 
 recordkeeping                                    are appropriately     
                                                  trained to monitor and
                                                  keep records on       
                                                  observations and      
                                                  measurements at       
                                                  critical control      
                                                  points                
Record maintenance                 Sec.  120.12  Clerical or production 
                                                  workers               
HACCP coordinator                  Sec.  120.13  Supervisors or managers
 training                                         who fulfill the role  
                                                  of HACCP coordinator  
HACCP employee                     Sec.  120.13  Clerical and production
 training                                         workers               

[[Page 24290]]

                                                                        
Imports                            Sec.  120.14  Clerical workers as    
                                                  well as supervisors or
                                                  managers who fulfill  
                                                  the role of HACCP     
                                                  coordinator           
------------------------------------------------------------------------

3. Recordkeeping requirements
    The RFA requires a description of the recordkeeping requirements of 
the proposed rule. Table 47 shows the provisions for which records need 
to be made and kept by small businesses, the number of small businesses 
affected, the annual frequency that the records need to be made, the 
amount of time needed for making each record, and the total number of 
hours for each provision in the first year and then in subsequent 
years.

                              Table 47.--Small Business Recordkeeping Requirements                              
----------------------------------------------------------------------------------------------------------------
                            No. of Small                                                                        
                              Entities         Annual         Hours per Record     Total Hours,    Total Hours, 
        Provision              Keeping        Frequency         Small Entity        First Year      Subsequent  
                               Records                                                                 Years    
----------------------------------------------------------------------------------------------------------------
120.6 Monitoring and           670              16         .5                       5,400           5,400       
 recordkeeping of SOP's        225              52                                  5,900           5,900       
120.7 and 8 Hazard             895               1         80                      71,600               0       
 analysis and HACCP plan                                                                                        
120.8 Pesticide controls       676             227         .02                      3,100           3,100       
 by supplier certificate                                                                                        
120.11 Verification            670              16         2                       21,400          21,400       
                               250              52                                 26,000          26,000       
120.11 Validation              670               1         8 (first yr)             5,400           2,700       
                               250               2         4 (subsequent yr)        4,000           2,000       
120.12 HACCP records           670           1,440         .05                     48,200          48,200       
                               250           8,640                                108,000         108,000       
120.12 Record maintenance      670              16         1                       10,700          10,700       
                               250              52                                 13,000          13,000       
Totals                                                                            323,000         246,000       
----------------------------------------------------------------------------------------------------------------

D. Minimizing the Burden on Small Entities

    The RFA requires an evaluation of any regulatory overlaps and 
regulatory alternatives that would minimize the costs to small 
entities.
    There are two alternatives that the agency has considered to 
provide regulatory relief for small entities. First, FDA considered and 
is proposing the option of exempting some small entities from the 
requirements of these rules. Second, FDA considered and is proposing 
the option of lengthening the compliance period for small entities.
1. Exempt Small Entities
    One alternative for alleviating the burden for small entities would 
be to exempt them from the provisions of these rules. FDA is proposing 
to exempt retailers who, for the purposes of this rule, the agency has 
tentatively decided will include very small businesses that make juice 
on their premises and whose total sales of juice and juice products do 
not exceed 40,000 gallons per year and who sell directly to consumers 
or directly to consumers and other retailers.
    Revenue from sales of 40,000 gallons of nonheat treated juice may 
be approximately $160,000 with annual profits ranging from $1,600 to 
$16,000 per year (1 percent to 10 percent). This exemption covers most 
of the very small businesses, although less than 15 percent of the 
volume of unpasteurized juice. However, packaged products sold by these 
types of retailers are covered under the labeling rule. FDA requests 
comments on this exemption.
2. Extend Compliance Period
    FDA has also proposed a tiered, extended compliance period giving 
the smallest firms the most time to comply with the HACCP rule, if such 
rule is adopted. The proposed labeling rule, however, requires either 
label changes on the product or labeling 60 days after publication of 
the final rule. It is proposed that small businesses be allowed to use 
signs and placards for an extended period before changing the labels on 
their products. Small and very small firms that produce packaged juices 
may continue to use signs and placards to display the warning instead 
of placing the warning on the label of the product until January 1, 
2001. On that date all firms producing packaged juice that is not 
processed with a 5-log reduction must display the warning on the 
product label. A longer compliance period allows firms to finance large 
fixed costs out of retained earnings. For a regulation of general 
applicability across a sector of the economy, it is difficult for firms 
obtain loans to finance regulatory costs, partially because no 
increases in profits are expected that could be used to repay the loan. 
This may be particularly troublesome for small firms that must finance 
the costs of HACCP controls. FDA is unable to quantify the cost savings 
of the extended compliance period although one effect of the cost 
savings will be to reduce small firm failure.

E. Summary

    FDA has examined the impact of these proposed rules on small 
businesses in accordance with the RFA. This analysis, together with the 
rest of the preamble and the Preliminary Regulatory Impact Analysis, 
constitutes the preliminary RFA. FDA has determined that these rules 
are likely to have a significant impact on a substantial number of 
small entities.

IX. References

    The following references have been placed on display in the Dockets 
Management Branch (address above) and may be seen by interested persons 
between 9 a.m. and 4 p.m., Monday through Friday.
    1. Bean, Nancy H., and Patricia M. Griffin, ``Foodborne Disease 
Outbreaks in the United States, 1973-1987: Pathogens, Vehicles, and 
Trends,'' Journal of Food Protection, vol. 53 (September), p. 805.

[[Page 24291]]

    2-3. Buzby, J., et al., Bacterial Foodborne Disease: Medical 
Costs and Productivity Losses (AER-741), U.S. Department of 
Agriculture, 1996, p. 42.
    4. Estimating the Value of Consumers' Loss from Foods Violating 
the FD&C Act, vol. II, Final Report, September 1988, FDA Contract 
No. 233-86-2097, p. D-12-13.
    5. Cohen, M. L., R. E. Fountaine, R. A. Pollard, S. D. Von 
Allmen, T. M. Vernon, and E. J. Gangarosa, ``An Assessment of 
Patient-Related Economic Costs in an Outbreak of Salmonellosis,'' 
New England Journal of Medicine, vol. 299, no. 9, 1978, pp. 459-460.
    6. Council for Agricultural Science and Technology, Foodborne 
Pathogens: Risks and Consequences, Task Force Report No. 122, 
September 1994, p. 51.
    7. Personal communication of Gibbs, R., ERS/USDA to David Zorn, 
Rural Wage for '96, April 22, 1997.
    8. Bureau of Labor Statistics, U.S. Department of Labor, 
``Employer Costs for Employee Compensation--March 1996,'' U.S. 
Department of Labor: 96-424, p. 1.
    9. Food and Drug Administration, Williams, R., et al., 
``Appendix: Preliminary Investigation into the Morbidity and 
Mortality Associated with the Consumption of Fruit and Vegetable 
Juices,'' October, 31, 1997.
    10. Food and Drug Administration, Zorn, D., and K. Klontz, 
``Appendix: The Value of Consumer Loss Relating to Foodborne 
Reactive Arthritis,'' February 2, 1998.
    11. Food Marketing Institute, Trends in the United States: 
Consumer Attitudes & the Supermarket, 1996. Washington, DC: Food 
Marketing Institute.
    12. U.S. Department of Agriculture, Food and Nutrition Intakes 
by Individuals in the United States, 3 Days, Continuing Survey of 
Food Intakes by Individuals, 1989-1991).
    13. Letter from Julia Stewart Daly, U.S. Apple Association to 
Dr. John E. Kvenberg, FDA, August 14, 1997.

X. Requests for Comments

    Interested persons may, on or before May 26, 1998, submit to the 
Dockets Management Branch (address above) written comments regarding 
this preliminary regulatory impact analysis on aspects related to 
labeling for juice and juice products and by July 8, 1998, on aspects 
of this analysis related to HACCP for juice and juice products. Two 
copies of any comments are to be submitted, except that individuals may 
submit one copy. Comments are to be identified with the docket numbers 
found in brackets in the heading of this document. Received comments 
may be seen in the office above between 9 a.m. and 4 p.m., Monday 
through Friday.

    Dated: April 24, 1998.
Michael A. Friedman,
Lead Deputy Commissioner for the Food and Drug Administration.
Donna E. Shalala,
Secretary of Health and Human Services.
The following are the appendices to the Preliminary Regulatory Impact 
Analysis and Initial Regulatory Flexibility Analysis of the Proposed 
Rules to Ensure the Safety of Juice and Juice Products.

BILLING CODE 4160-01-F

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[FR Doc. 98-11530 Filed 4-27-98; 4:19 pm]
BILLING CODE 4160-01-C