[Federal Register Volume 65, Number 234 (Tuesday, December 5, 2000)]
[Rules and Regulations]
[Pages 76092-76114]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-30761]



[[Page 76091]]

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Part III





Department of Health and Human Services





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Food and Drug Administration



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21 CFR Parts 16, 101 and 115



Food Labeling, Safe Handling Statements, Labeling of Shell Eggs; 
Refrigeration of Shell Eggs Held for Retail Distribution; Final Rule

  Federal Register / Vol. 65, No. 234 / Tuesday, December 5, 2000 / 
Rules and Regulations  

[[Page 76092]]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Parts 16, 101, and 115

[Docket Nos. 98N-1230, 96P-0418, and 97P-0197]
RIN 0910-AB30


Food Labeling, Safe Handling Statements, Labeling of Shell Eggs; 
Refrigeration of Shell Eggs Held for Retail Distribution

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is revising its food 
labeling regulations to require a safe handling statement on cartons of 
shell eggs that have not been treated to destroy Salmonella 
microorganisms. The agency also is requiring that, when held at retail 
establishments, shell eggs be stored and displayed under refrigeration 
at a temperature of 7.2  deg.C (45  deg.F) or less. FDA is taking these 
actions because of the number of outbreaks of foodborne illnesses and 
deaths caused by Salmonella Enteritidis (SE) that are associated with 
the consumption of shell eggs. These actions also respond, in part, to 
petitions from Rose Acres Farm, Inc., and the Center for Science in the 
Public Interest (CSPI). Safe handling statements will help consumers 
take measures to protect themselves from illness or deaths associated 
with consumption of shell eggs that have not been treated to destroy 
Salmonella (all serotypes). Refrigeration of shell eggs that have not 
been treated to destroy Salmonella will help prevent the growth of SE 
in shell eggs.

DATES: This rule is effective September 4, 2001, except Sec. 115.50, 
which is effective June 4, 2001.

FOR FURTHER INFORMATION CONTACT: For the labeling provisions: Geraldine 
A. June, Center for Food Safety and Applied Nutrition (HFS-822), Food 
and Drug Administration, 200 C St. SW., Washington, DC 20204, 202-205-
4561. For refrigeration provisions: Nancy S. Bufano, Center for Food 
Safety and Applied Nutrition (HFS-306), Food and Drug Administration, 
200 C St. SW., Washington, DC 20204, 202-401-2022.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Shell Egg Labeling
    A. Rationale for the Safe Handling Statement
    B. Safe Handling Statement
    1. Comments on the Focus Group Research
    2. Description of the Hazard
    3. Description of At-Risk Consumers
    4. Cooking Instructions
    5. Other Comments on the Text of the Safe Handling Statement
    6. Alternatives to the Proposed Label Statement
    7. Placement and Prominence
    a. Placement and Type Size of the Safe Handling Statement
    b. Use of Graphics
    c. Labeling for Shell Eggs Not for Direct Sale to Consumers
    8. Other Labeling Issues
    C. Comments on Effective Date
III. Refrigeration of Shell Eggs in Retail Establishments
    A. Refrigeration Temperature Requirements
    B. Enforcement of the Refrigeration Requirement
    C. Changes to the Proposal
IV. Final Regulatory Impact Analysis
    A. Benefit-Cost Analysis
    1. Regulatory Options
    2. Benefits
    3. Costs
    a. Labeling
    b. Refrigeration
    c. Changes in Consumer Practices
    4. Summary of Costs and Benefits
    B. Small Entity Analysis
    1. Introduction
    2. Economic Effects on Small Entities
    a. Number of Small Entities Affected
    b. Costs for Small Entities.
    3. Regulatory Options
    a. Exemption for Small Establishments.
    b. Longer Compliance Periods.
    4. Recordkeeping and Recording Requirements
    5. Worst Case for a Small Establishment
    6. Summary of Small Entity Analysis
V. Federalism
VI. Environmental Impact
VII. Paperwork Reduction Act of 1995
VIII. References

I. Background

    FDA and the Food Safety and Inspection Service (FSIS) of the U.S. 
Department of Agriculture (USDA) share Federal authority to regulate 
eggs. The two agencies published in the Federal Register of May 19, 
1998 (63 FR 27502), an advanced notice of proposed rulemaking seeking 
information on how to identify farm-to-table actions that would 
decrease food safety risks associated with shell eggs. On July 1, 1999, 
FDA and FSIS, in testimony before the Subcommittee on Oversight of 
Government Management, Restructuring, and the District of Columbia of 
the Senate Committee on Governmental Affairs, committed to developing 
by November 1, 1999, an action plan to address the presence of SE in 
shell eggs using a farm-to-table approach. On August 26, 1999, FDA and 
FSIS jointly held a public meeting to gather stakeholders' input and to 
discuss the development of the action plan. On December 10, 1999, FDA 
and FSIS presented the Egg Safety Action Plan (Ref. 1) to the 
President. The plan identifies the systems and practices from 
production to consumption that must be implemented to reduce and, 
ultimately, eliminate eggs as a source of human SE illnesses. This plan 
includes requirements for refrigeration at retail and requirements for 
the safe handling statement being issued in this rulemaking. FDA, along 
with FSIS, intends to use information gathered by both agencies to 
develop and implement a comprehensive program to address the safety of 
shell eggs from farm to table.
    In the Federal Register of July 6, 1999 (64 FR 36492), FDA 
published a proposed rule (hereinafter referred to as ``the proposal'') 
to require safe handling label statements on shell eggs that have not 
been treated to destroy Salmonella microorganisms and refrigeration of 
these shell eggs while held by retail establishments. In a separate 
document in the same issue of the Federal Register (64 FR 36516), FDA 
published a Preliminary Regulatory Impact Analysis (PRIA) and Initial 
Regulatory Flexibility Analysis of the proposal. FDA proposed these 
regulations because of the number of outbreaks and deaths associated 
with the consumption of shell eggs that have not been treated to 
destroy Salmonella. Interested parties were given until September 20, 
1999, to comment on the proposal.
    FDA received approximately 790 responses, each containing one or 
more comments, to the proposal. These responses were received from the 
egg industry, egg packaging companies, trade associations, consumers, 
consumer interest groups, animal interest groups, academia, State 
Government agencies, members of Congress, and a foreign Government 
agency. More than 700 of these comments addressed forced molting, which 
is directed at the production of shell eggs, and, therefore, outside of 
the scope of this rulemaking, and will not be addressed in this 
document. Other comments also addressed issues that are outside the 
scope of this rule and will not be addressed in this document (e.g., 
implementation of national standards for quality assurance (QA) 
programs, implementation of Hazard Analysis and Critical Control Points 
(HACCP) programs, use of sanitary standard operating procedures, Good 
Agricultural Practices/Good Manufacturing Practices, and other 
intervention procedures such as manipulation of feeds and competitive 
exclusion to control SE, sell-by dates, uniform coding, repacking of 
shell eggs, refrigeration of nest run

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shell eggs, and creation of a single food safety agency responsible for 
eggs). These comments were considered by the agency in its action plan 
to address the presence of SE in shell eggs and will be considered in 
the development of subsequent proposed measures aimed at improving egg 
safety.
    Some of the remaining comments supported the proposal. Others 
opposed the proposal or suggested modifications to the proposal. The 
relevant comments and the agency's responses to the comments are 
discussed below.

II. Shell Egg Labeling

A. Rationale for the Safe Handling Statement

    In the proposal, FDA discussed the risk of foodborne illness 
associated with the consumption of shell eggs. In 1997, there were 
7,924 SE isolates reported to the Centers for Disease Control and 
Prevention (CDC). In 1998, 58 percent of the SE outbreaks reported to 
CDC where a food vehicle was identified implicated foods containing 
eggs. Although recent CDC data show a 44 percent decrease in the 
isolation rate of SE, FDA believes that the incidence of SE is still 
too high. As discussed in the proposal (64 FR 36492 at 36501), FDA 
believes that it could take considerable time to design and implement a 
complete program that would eliminate eggs as a source of human SE 
illnesses, and indeed the Egg Safety Action Plan has a 10-year 
timeframe to achieve that goal (Ref. 1). However, as part of this 
program, FDA determined that there are measures that can be put in 
place quickly that can reduce the risks to consumers: refrigeration, 
which lengthens the effectiveness of the eggs' natural defenses against 
SE and slows the growth rate of SE, and thorough cooking, which kills 
viable SE that may be present. The agency maintained in the proposal 
that, unless informed about the risks presented by eggs contaminated 
with SE and ways that they may reduce these risks, consumers could 
suffer serious illness or death from consumption of raw or undercooked 
eggs. Accordingly, FDA proposed to require safe handling statements on 
shell eggs to inform consumers that there may be a risk associated with 
consumption of eggs and ways that they can properly handle and prepare 
eggs in order to reduce such risks.
    (Comment 1) Several comments maintained that FDA overstated the 
magnitude of the risk associated with SE. One comment contended that 
the incidence of illness cited in the proposal was misleading. For 
example, the comment stated that information on all cases of 
salmonellosis was cited with the implication that it has a direct 
application to salmonellosis from SE. The comment stated that 
information on foodborne disease data from the years where 
salmonellosis associated with SE was increasing were included in the 
proposal, whereas, data from 1995 to 1998 showing a decrease in 
salmonellosis associated with SE were omitted. Some comments pointed 
out that recent data from CDC showing a 44 percent decrease in the 
isolation rate of SE from 1996 to 1998 do not support FDA's conclusion 
of a continued predominance of SE. Furthermore, one comment pointed out 
that there was only a 14 percent decrease in the isolation rate of all 
Salmonella serotypes in the same time period as the 44 percent decrease 
in the isolation rate of SE.
    FDA disagrees that it overstated the magnitude of the risk 
associated with SE. The comment misunderstood how the data were 
presented in the proposal. FDA did not present the data regarding the 
incidence of all cases of salmonellosis to imply that these cases were 
reflective of SE-associated cases of salmonellosis. Rather, FDA used 
this information to place SE-associated salmonellosis in context of the 
epidemiology of Salmonella overall. First, in the proposal, FDA 
discussed the severity of salmonellosis and the magnitude of the 
disease, i.e., numbers of reported illnesses. Next, the agency 
discussed the numbers of SE-associated cases of salmonellosis and the 
fact that shell eggs are the major source of SE-related cases of 
salmonellosis where a food vehicle is identified.
    The agency also disagrees with the comment stating that FDA did not 
include information on the decrease in the rate of infections caused by 
SE from 1996 to 1998. On the contrary, in the proposal (64 FR 36492 at 
36493), FDA stated that recent CDC data showed a 44 percent decrease in 
the isolation rate of SE. However, the agency concluded that, even with 
the decrease in the isolation rate of SE reported by CDC, the incidence 
of SE associated with eggs was still too high and additional measures 
could and should be put in place to reduce the incidence even further.

B. Safe Handling Statement

    In the proposal, FDA tentatively concluded that certain elements 
were essential to an effective safe handling statement, i.e., an 
informational statement that describes the hazard and the at-risk 
consumers, an instructional statement that describes measures that 
consumers can take to reduce or eliminate the risk, and a linking 
statement that relates the informational statement to the instructional 
statement. Applying the essential elements, FDA crafted several 
examples of label statements. FDA conducted focus group research to 
evaluate consumer understanding of the safe handling statements to test 
their effectiveness in informing consumers of the risks associated with 
shell eggs and of the safe handling practices that may be used to 
mitigate the risks.\1\ Based on information from the focus groups, FDA 
proposed to require the following safe handling statement on shell eggs 
that have not been treated to destroy Salmonella:
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    \1\ The moderator of the focus groups asked participants about 
their knowledge of the possible health effects associated with eggs 
as well as their personal experiences with handling eggs. After 
assessing the participants' knowledge and attitudes, the moderator 
gave the participants a series of safe handling statements for shell 
eggs on individual sheets of 8.5 x 11-inch white paper. The 
moderator engaged the participants in discussions on the impact of 
the statements and asked them to compare each statement with the 
other statements. The moderator also asked participants to comment 
on the format of the statements. The focus of the discussions was 
whether they understood the message.
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    SAFE HANDLING INSTRUCTIONS:
    Eggs may contain harmful bacteria known to cause serious illness, 
especially in children, the elderly, and persons with weakened immune 
systems. For your protection: keep eggs refrigerated; cook eggs until 
yolks are firm; and cook foods containing eggs thoroughly.
1. Comments on the Focus Group Research
    (Comment 2) Several comments questioned FDA's focus group research. 
One comment maintained that, although focus groups are helpful tools to 
obtain feedback on food safety messages, FDA tested four very similar 
versions of the same label statement and, therefore, could not judge 
whether its proposed statement provided consumers with information they 
thought was necessary. The comment concluded that the label statements 
tested by FDA did not adequately reflect how consumers perceived FDA's 
proposed safe handling statement versus any other statement.
    FDA disagrees with this comment. The comment misunderstood the 
intent of the focus group research. The intent of the research was for 
FDA to gauge how best to word the safe handling statement so that it is 
understood by consumers, not to determine what information is necessary 
in the statement. FDA developed several statements containing 
information

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judged by FDA subject matter experts to be most necessary to consumers. 
These subject matter experts arrived at their determination of 
necessary information content after considering suggestions for 
messages that were submitted by outside organizations (Ref. 2). FDA 
provided five different safe handling statements for discussion in the 
focus groups. During the focus groups, participants discussed specific 
phrasing or message elements within each statement to gauge the effect 
of both the specific elements of the message and the overall message. 
Participants also provided input on how formatting could make the 
statement more readable. Thus, while adhering to the content judged 
necessary by FDA subject matter experts, the agency assessed numerous 
variations in how to best word and format the statement to communicate 
effectively with consumers.
    (Comment 3) One comment stated that, although FDA did conduct some 
focus group testing, it should conduct direct testing such as mall-
intercept studies to further refine the statement. This comment 
maintained that considering the susceptibility of older persons to 
foodborne illness, FDA should direct its message testing to this group.
    FDA disagrees that it needs to conduct mall-intercept studies to 
fine tune the statement. If focus group results are not clear cut, then 
an experimental quantitative method such as mall-intercept studies 
could be used to fine tune the message. In this case, however, the 
focus group results were so consistent that FDA did not deem it 
necessary to conduct experimental testing. In addition, the focus group 
testing of the safe handling statements included consumers 60 years of 
age and older. These older consumers did not differ greatly from 
younger consumers in their responses to the safe handling statements 
that were tested. Consequently, FDA sees no need to conduct additional 
testing on older persons.
2. Description of the Hazard
    Most of the comments that responded to the proposed labeling 
supported the concept of safe handling instructions for shell eggs. 
However, some of these comments opposed the specific language in the 
proposed statement for the reasons discussed below.
    (Comment 4) Many of these comments asserted that including a 
description of the hazard, i.e., ``eggs may contain harmful bacteria 
known to cause serious illness, especially in children, the elderly, 
and persons with weakened immune systems,'' is unwarranted.
    Several comments contended that the hazard description will 
distract consumers from the safe handling instructions. To support this 
assertion, one comment presented consumer research from the American 
Egg Board (AEB) and concluded from it that most respondents saw FDA's 
proposed label statement as a warning that eggs are harmful rather than 
a message to promote safe handling. Some comments asserted that 
consumers have become weary of labels and warnings and no longer pay 
attention to them. Other comments expressed their concern that, because 
of the length of the hazard description, consumers may not read the 
entire statement and, thus, would not read the safe handling 
instructions.
    Several comments that opposed the inclusion of the hazard statement 
maintained that consumers are aware of risks associated with SE in eggs 
and, therefore, the description is unnecessary. One of these comments 
presented data from a survey conducted by the California Department of 
Public Health Services that showed that 84 percent of the respondents 
were aware that eggs contained bacteria that could cause illness. The 
comment also pointed out that a consumer survey in Iowa reported that 
93 percent of those surveyed were aware of Salmonella in eggs. Another 
survey in California showed that 86 percent of the English-language 
respondents were aware of Salmonella in eggs. The comment noted that a 
FDA survey in 1998 showed that \2/3\ of respondents had heard of 
Salmonella and knew that cooking would kill it. This represented a 60 
percent increase from a survey done in 1993. According to another 
comment, before FDA implements such a strongly worded safe handling 
instruction, it should determine whether consumers are really 
uninformed about the possibility of the presence of illness-causing 
bacteria in eggs.
    Several comments maintained that the proposed safe handling 
statement for eggs is more harsh than the safe handling statement on 
meat and poultry and, therefore, unfairly targets the egg industry. One 
comment pointed out that USDA's risk assessment estimated that the 
contamination rate for eggs is 1 egg in 20,000, which, according to the 
comment, is several orders of magnitude lower than most animal 
products. Thus, the comment maintained that because the risk of 
becoming ill can be eliminated completely with proper handling and 
cooking, such a harsh hazard description for a product with a small 
risk is not justified.
    In the proposal, FDA discussed its concern that unless consumers 
are advised of the risks presented by eggs contaminated with SE and 
ways that they could reduce these risks, consumers, especially those 
that are at greatest risk, could suffer serious illness or death from 
the consumption of raw or undercooked eggs. The agency's primary intent 
in proposing the label statement for eggs was to give consumers ways to 
reduce their risk, without having to avoid the product. In addition, 
consumer research available to the agency indicated that label messages 
generally are more credible when consumers know the reason for the 
message (Ref. 3). Therefore, the agency tentatively concluded that to 
adequately inform consumers there was a need to include information on 
why there was a risk associated with consumption of raw or improperly 
cooked shell eggs. However, in light of the comments that asserted that 
the hazard description: (1) Is not new information, (2) is not 
consistent with safe handling statements on other raw animal products, 
and (3) may distract consumers from the safe handling instructions, the 
agency is persuaded that it should reconsider the necessity of the 
hazard description as proposed.
    The agency is persuaded by information provided by FDA's consumer 
research and comments to the proposal that the risks associated with 
consumption of SE-contaminated eggs is not new information to 
consumers. FDA survey data indicate that the percentage of consumers 
eating raw eggs has declined in recent years, as appropriate food 
safety practices have received more publicity (Ref. 4). FDA's own focus 
group research indicated that many consumers were aware that Salmonella 
is the major cause of foodborne illness associated with egg 
consumption. Because many of the consumers stated that they knew of the 
risk associated with eggs, they considered the safe handling statement 
to be more of a reminder than to provide new information.
    FDA recognizes that the proposed label statement is different than 
that for meat and poultry. In crafting the label statement, the agency 
relied on previous focus group research that indicates consumers prefer 
messages that are more specific to the nature of the hazard and the 
appropriate action to take because of the hazard (Ref. 3). The agency 
points out, however, that there are differences in the labeling issues 
involved, which result in some differences in wording. For example, in 
the meat/poultry safe handling statement there is no specific mention 
of the food, rather the statement uses ``some products'' whereas, the 
proposed

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statement for eggs refers to ``eggs.'' The agency points out that the 
meat/poultry statement was designed to appear on a very wide range of 
products, therefore, it needed to be more general in the way that it 
identifies foods. The egg label statement will appear only on eggs and, 
therefore, can be more specific. However, FDA acknowledges that the 
proposed hazard description on the labels of eggs may appear more harsh 
than the hazard description on the packages of meat/poultry. The agency 
does not want consumers to be confused about the level of risk 
associated with the consumption of raw or undercooked eggs versus 
consumption of any other raw or undercooked animal product.
    FDA has decided to revise the safe handling statement by removing 
the proposed hazard description, i.e., ``eggs may contain harmful 
bacteria known to cause serious illness especially in children, the 
elderly, and persons with weakened immune systems'' and replace it with 
a shorter hazard description. FDA continues to believe that the safe 
handling statement would be more effective if consumers knew that the 
reason for following the safe handling instructions was to prevent 
illness from bacteria. Consequently, FDA has decided to minimize the 
potential for misunderstanding by shortening the introductory hazard 
description to ``to prevent illness from bacteria.'' As was the case 
with the proposed hazard statement, this statement alerts consumers to 
the reason why it is important to adhere to the safe handling 
instructions and does not have the same potential as the proposed 
statement to distract consumers from the safe handling message.
    Accordingly, based on the findings of the agency's consumer focus 
group research and comments to the proposal, FDA is revising the safe 
handling statement in proposed Sec. 101.17(h)(1) to read as follows:
    SAFE HANDLING INSTRUCTIONS:

    To prevent illness from bacteria: keep eggs refrigerated, cook 
eggs until yolks are firm, and cook foods containing eggs 
thoroughly.
3. Description of At-Risk Consumers
    (Comment 5) A few comments opposed the description of at-risk 
groups in the hazard statement. According to one comment, consumers 
would perceive that the safe handling instructions are targeted only at 
the groups listed in the statement. Another comment pointed out that 
the safe handling labels on meat and poultry do not list at-risk 
groups. This comment contended that because of the low probability of 
contamination of eggs, vulnerable populations are no more at risk from 
eggs, and probably at less risk, than they are from any other raw 
animal product. One comment requested removal of the at-risk groups 
from the proposed safe handling statement because the reference to at-
risk groups may heighten the misperception that eggs are a dangerous 
food.
    FDA points out that the new hazard description does not include the 
listing of at-risk consumers. While FDA survey data indicated that most 
consumers do not know that some people are at a higher risk of 
foodborne illness than others and that focus group participants thought 
that the information on at-risk groups was an important aspect of 
communicating the nature of the hazard, the agency has reconsidered 
whether, in this case, it is necessary to provide that information on 
the labels of eggs. The agency acknowledges that the labels of meat/
poultry do not include the listing of at-risk consumers. Because 
vulnerable populations are at greater risk of most foodborne illnesses, 
FDA believes that it would be better to provide this information to 
these consumers through educational channels rather than to tie the 
information to specific products. FDA does not want at-risk populations 
to be misled to believe that eggs present a greater risk to them than 
other raw animal products. Thus, the agency decided to remove the at-
risk consumers from the proposed safe handling statement on eggs to be 
consistent with label statements on other raw animal products.
    FDA believes that the information that eggs may be harmful to 
certain vulnerable populations is important information that must be 
conveyed to these consumers. Therefore, FDA will continue to provide 
information about food safety to consumers, including those at greater 
risk. In addition, FDA plans to develop an educational and outreach 
campaign after the publication of this final rule to bring attention to 
the new requirements for shell eggs and to disseminate information to 
consumers, particularly at-risk populations and those that prepare 
their meals.
4. Cooking Instructions
    (Comment 6) Most comments agreed that there should be an 
instruction on proper cooking. Although some of the comments supported 
the language in the cooking instruction, i.e., ``cook eggs until yolks 
are firm, and cook foods containing eggs thoroughly,'' a few comments 
objected to the cooking instruction. One comment stated that the phrase 
``cook thoroughly'' may be too vague, but offered no alternative 
language. Another comment contended that FDA should eliminate the 
phrase ``cook foods containing eggs thoroughly'' because it is 
impossible to cook some egg-containing foods thoroughly, e.g., meringue 
and Caesar salad. The comment asserted that these foods can be made 
safe by using pasteurized eggs or avoiding the food. Therefore, the 
comment concluded that because the proposed phrase cannot be followed 
in all cases, it should be removed.
    FDA disagrees with the elimination of the phrase ``cook foods 
containing eggs thoroughly.'' FDA believes that it is necessary to 
inform consumers that, when cooking or preparing a food that contains 
raw eggs, the food must be cooked thoroughly to reduce the risk of 
illness. The agency rejects the notion that the cooking instruction 
should be removed because it is not possible to cook all egg-containing 
foods thoroughly. The intent of the cooking instruction is to give 
consumers information generally on how to properly cook eggs and egg-
containing foods to reduce risks. The intent of the message is not to 
cover every possible scenario as it relates to eggs. The agency 
concludes that if consumers recognize that they are at risk of illness 
if they consume a food that is made with a raw or undercooked egg, they 
would avoid the food or use a substitute, e.g., pasteurized egg 
product, to reduce the risk. Thus, FDA is retaining the cooking 
instructions, as proposed, in the safe handling statement.
    In the proposal, FDA requested comment on whether it should require 
a statement that the product should not be used for certain purposes, 
e.g., ``use pasteurized eggs for recipes requiring raw or partially 
cooked eggs.'' The agency also requested comment on whether it should 
include on the label an explicit instruction to avoid the product for 
at-risk consumers or for individuals preparing food for at-risk 
consumers.
    (Comment 7) One comment stated that FDA should not use the phrase 
``use pasteurized eggs for recipes requiring raw or partially cooked 
eggs'' because consumers cannot readily purchase certain pasteurized 
egg products in retail stores, e.g., egg whites. However, the comment 
did not provide data on the availability of the product. There were no 
comments that supported use of the statement ``use pasteurized eggs for 
recipes requiring raw or partially cooked eggs.''
    Because there was no support for the subject statement, the agency 
is not requiring it in the safe handling statement. In addition, FDA 
did not receive any comments on whether it

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should include an explicit instruction for at-risk consumers to avoid 
the product, and therefore, is not requiring such a statement. However, 
as announced in the Egg Safety Action Plan, FDA plans to take 
additional steps to protect at-risk consumers by establishing safe egg 
handling and preparation practices consistent with provisions in the 
Food Code. (Refs. 1 and 5).
5. Other Comments on the Text of the Safe Handling Statement
    (Comment 8) Some comments maintained that the description of the 
hazard will frighten consumers and will discourage consumers from 
eating eggs. According to one comment, eggs have a history of consumer 
avoidance because of the fear of heart disease from dietary cholesterol 
provided by eggs. This comment asserted that, given the history and 
perception that eggs are a dangerous food, the proposed statement may 
likely lead to further avoidance of eggs. The comment suggested that 
additional language be placed on the carton to combat the negative 
connotation of the safe handling statement.
    It is not the agency's intent to frighten consumers or discourage 
consumption of eggs. Rather, the main purpose of the proposed label 
statement is to provide consumers with information on how to prepare 
eggs safely. FDA focus group research did not indicate that the 
proposed hazard description frightened consumers. Rather, the research 
indicated that consumers perceived the hazard statement as a helpful 
reminder about why they should handle eggs safely. Thus, FDA is not 
persuaded that additional language to combat a negative connotation of 
the safe handling statement is warranted. Nevertheless, the agency 
believes that it is less likely that the revised safe handling 
statement would frighten consumers.
    (Comment 9) A few comments asserted that the hazard description is 
unwarranted for eggs produced under a proven risk-reduction program. 
According to one of these comments, consumer perception of the 
frightening or negative nature of the message would negate the effort 
put forth by producers who use these food-safety programs. Another 
comment contended that the proposed label statement with the hazard 
description has the potential to increase foodborne illness because 
producers would be less likely to participate in risk reduction 
programs if their products would still be required to bear the hazard 
component of the safe handling statement. The comments suggested a two-
tiered label system, i.e., one label statement for eggs produced under 
QA systems and another for eggs that are not produced under QA systems. 
Another comment that supported the two-tiered concept contended that 
although the safe handling statement on eggs produced under on-farm QA 
programs could have a less stringent hazard description, it should not 
omit the reference to the potential hazard. The comment offered the 
following two tiered labeling scheme:
    For eggs not in QA programs:

    Caution: Eggs may contain illness-causing bacteria. Keep 
refrigerated. Do not eat raw.
    Cook until yolk is firm.

    For those in QA programs:
    SAFE HANDLING INSTRUCTIONS:

To prevent illness, keep refrigerated. Do not eat raw. Cook until 
yolk is firm.

    As an alternative to the proposed label statement, one comment 
suggested that FDA develop and adopt a ``positive'' label system that 
would recognize eggs produced under proven risk reduction programs.
    FDA recognizes and applauds the work being done by States and 
industry to address egg safety. However, FDA believes that two 
different label statements in the marketplace may be confusing to 
consumers. A different safe handling statement for eggs produced under 
QA programs could mislead consumers to believe that those eggs do not 
require safe handling when, in fact, both categories of eggs should be 
handled safely. However, in light of the agency's decision to revise 
the hazard description to ``to prevent illness from bacteria,'' the 
question of a two tiered labeling scheme with a less stringent hazard 
description for eggs produced under QA plans becomes moot. Finally, the 
agency is not persuaded to develop a ``positive'' labeling scheme for 
eggs produced under QA plans, since like the two-tiered approach, it 
could create confusion. However, FDA would not object to ``positive'' 
statements, or any other voluntary information on the labels of eggs, 
as long as the information is truthful and not misleading. This 
information may not appear inside of the box with the required safe 
handling statement. FDA points out that information may be considered 
misleading, for example, if it implies that a food is safer than other 
similar products that may not be labeled.
    (Comment 10) One comment from a foreign government stated that it 
uses QA programs and HACCP principles to ensure egg safety and that its 
eggs for export into the United States must be SE-free. Thus, the 
comment asserted that the proposed label statement is unnecessary for 
its products.
    The agency does not agree with the comment that a foreign 
government requirement that eggs for export into the United States be 
SE-free negates the necessity for safe handling instructions. Unless 
eggs have been specifically treated to destroy Salmonella, FDA believes 
that there still is a chance that the eggs contain transovarian-
transmitted SE. Further, FDA notes that it regulates both domestic and 
imported foods on an equal basis. As discussed above in this section, 
FDA is not permitting a different safe handling statement for eggs 
produced under QA plans. Thus, FDA is not establishing different 
labeling criteria for imported eggs based on the requirements of the 
country of origin.
    (Comment 11) A few comments stated that the safe handling statement 
should begin with the terms ``caution'' or ``notice.'' One of these 
comments stated that the word ``caution'' or ``notice'' would attract 
the consumer's attention. Another comment asserted that the serious 
public health threat posed by SE warrants a cautionary statement on 
labels that informs consumers that the way they are accustomed to 
eating eggs may no longer be safe. This comment contended that the term 
``safe handling instructions'' does not achieve the objective of 
communicating to consumers quickly and unambiguously that eggs may be 
unsafe. Further, according to the comment, the word ``caution'' unlike 
``warning'' or ``danger'' would not cause the consumer to avoid the 
product altogether.
    Consumer research indicates that the word ``caution'' has the same 
connotation to consumers as ``warning'' and is, therefore, 
inappropriate for a safe handling statement (Ref. 6). Because FDA's 
focus group research indicates that consumers believe that there are 
practical, simple things they can do to control the risk from eggs, a 
safe handling statement is more appropriate and, consequently, the most 
appropriate signal words are ``safe handling instructions.'' In 
addition, as discussed in the proposal (64 FR 36492 at 36505), FDA 
considered the term ``notice'' to introduce the safe handling statement 
and concluded that the term would not draw attention to the important 
fact that there are ways to reduce the risks of foodborne illness other 
than avoidance of the product. Therefore, FDA is not changing the 
phrase ``safe handling instructions'' to ``caution'' or ``notice.''
    (Comment 12) One comment expressed the concern that the safe 
handling statement would be difficult to

[[Page 76097]]

understand because it is above a fifth grade reading level.
    FDA points out that considerable effort was made to ensure that the 
language in the statement would be understandable to consumers. 
Specific phrases or message elements were tested for comprehensibility 
either in the egg focus groups or in previous consumer research on food 
safety issues. For example, results of the focus group research 
indicated that some participants were confused by the term ``shell 
eggs'' and found ``eggs'' more understandable. They also found the 
phrase ``cook eggs until yolks are firm'' more understandable than 
``cook thoroughly.'' These findings were used to craft the proposed 
statement. Although focus group participants had varying educational 
levels, those with high level of education, e.g., graduate degrees, 
were excluded from participation. None of the participants appeared to 
find the message difficult to understand. Thus, the agency is not 
persuaded by the comment that the safe handling statement would be 
difficult to understand.
    Other comments addressing the length of the safe handling statement 
and the specific wording of the hazard description in the safe handling 
statement have become moot because FDA has revised the statement. 
Therefore, those comments will not be addressed.
6. Alternatives to the Proposed Label Statement
    (Comment 13) A few comments stated that the label statement on eggs 
for household consumers should be different from that on eggs for food 
service. One of the comments offered the following suggested labeling 
in a two tiered labeling scheme:
    For household eggs:

    Keep refrigerated and cook thoroughly

    For eggs in food service:

    Handle Safely: refrigerate promptly; don't cross contaminate; 
clean hands and surfaces often; cook to proper temperature.

    FDA believes that the statement suggested by the comment for 
household consumers does not provide adequate information. For example, 
the statement required by Sec. 101.17(h)(1) uses the phrase ``cook eggs 
until yolks are firm'' which is more descriptive than ``cook 
thoroughly.'' Furthermore, FDA was not persuaded by these comments that 
food service establishments need additional information on cartons of 
eggs. Although the agency recognizes that many of the SE-associated 
outbreaks occur in food service establishments, it does not agree that 
additional labeling is the best way to address this issue. Thus, the 
agency is not persuaded to change the safe handling statement to those 
suggested by the comment.
    (Comment 14) One comment stated that a lengthy safe handling 
statement is unnecessary and, alternatively, supported the use of the 
following on shell eggs:

    IMPORTANT: Must Be Kept Refrigerated to Maintain Safety
    or
    IMPORTANT: Must Be Kept Refrigerated

According to this comment, if FDA determines that the labels of shell 
eggs need safe handling instructions, then those instructions should be 
in addition to the statement above.
    The agency is not persuaded that this suggested label statement is 
all that is needed on eggs to inform consumers of ways that they may 
protect themselves. As discussed in the proposal, two measures that 
would mitigate the risk of SE in shell eggs are refrigeration and 
proper cooking. The suggested message does not instruct consumers that 
proper cooking is a measure that they can take to protect themselves. 
The agency also rejects the comment's suggestion that the suggested 
statement appear on the label in addition to FDA's proposed safe 
handling instructions. Two statements on the label informing consumers 
to keep eggs refrigerated would be redundant. FDA believes that the 
phrase ``to prevent illness from bacteria'' informs consumers that 
refrigeration is one measure they can take to reduce or eliminate the 
risk of foodborne illness. Thus, FDA concludes that it is implicit in 
the safe handling statement that refrigeration helps maintain safety.
    (Comment 15) A few comments preferred statements that were very 
short, clear, and aimed at all consumers such as ``do not eat raw or 
undercooked eggs'' and ``keep refrigerated, cook thoroughly, and do not 
eat raw'' with each of the instructions preceded by bullets. Other 
comments supported the following label statement that incorporates the 
basics of the Fight Bac campaign:

    Safe Handling Instructions
    CLEAN: Wash hands and surfaces often. SEPARATE: Don't cross 
contaminate
    COOK: Cook to proper temperatures. CHILL: Refrigerate Promptly

    This statement, according to one comment is a simple and positive 
message and was designed based on consumer focus research. Furthermore, 
the comment maintained that it does not single out a specific food 
item.
    FDA is not persuaded to adopt the safe handling statements 
suggested by these comments. The agency believes that the suggested 
statements do not inform consumers why the safe handling instructions 
should be followed. Also, the agency notes that the statement 
incorporating the basics of the Fight Bac campaign educates consumers 
about food safety in general. However, FDA's proposal to require a safe 
handling instruction is being issued under 201(n) and 403(a) of the 
Federal Food, Drug, and Cosmetic (FD&C Act) (21 U.S.C. 321(n) and 
343(a)). Under section 201(n) of the FD&C Act, in determining whether 
labeling is misleading, it must be taken into account, among other 
things, the extent to which labeling fails to reveal material 
information with respect to consequences that may result from the usual 
use of the product. FDA believes that, although instructions to wash 
hands and not to cross contaminate products are useful pieces of 
information, such information is not specific to eggs. Therefore, FDA 
is not persuaded to adopt this suggested alternative phrasing.
7. Placement and Prominence
    a. Placement and type size of the safe handling statement. As 
discussed in the proposal, section 403(f) of the FD&C Act requires that 
mandatory label information be placed on the label with such 
conspicuousness as to render it likely to be read and understood by 
ordinary individuals under customary conditions of use. In the past, 
FDA has generally required label statements required by Sec. 101.17 (21 
CFR 101.17) to be placed on the information panel. The agency noted 
that the principal display panel (PDP) would provide even more 
prominence. Accordingly, the agency tentatively concluded to require 
the proposed safe handling statement either on the information panel or 
the PDP. The agency also noted in the proposal that Sec. 101.2(c) (21 
CFR 101.2(c)) requires that mandatory information appearing on the PDP 
and information panel, including information required by Sec. 101.17, 
appear prominently and conspicuously in type size no less than \1/16\ 
inch. Consequently, the agency concluded that it was not necessary to 
repeat the requirements in this rulemaking.
    (Comment 16) Some of the comments stated that there is not enough 
room on the egg carton to print such a lengthy safe handling statement 
with the other Federal and State mandated labeling requirements such as 
nutrition labeling, USDA grade and quality logos, product code, 
registration numbers to identify packers, date of pack, sell-by date, 
and count and weight. Some comments

[[Page 76098]]

maintained that the lack of space is greater for small (six or eight 
count) cartons and pulp/open view cartons. Further, one comment pointed 
out that some of the manufacturers of smaller egg cartons are incapable 
of printing on the side of the lid. For those who have space to print 
on the side of the lid, the comment pointed out that the cost to 
purchase equipment needed to print on the side of the lid would cost 
several million dollars. Some comments asserted that the space on the 
label is used by some firms for promotional material, which is a 
critical selling feature for the firm. Therefore, according to these 
comments, further regulation would limit a firm's ability to market its 
own products. While one comment stated that the safe handling statement 
should be on the outside of the lid, other comments requested some 
flexibility for placement of the label statement. Two comments 
maintained that FDA should conduct more research to see if the 
statement should appear on the information panel and whether consumers 
would notice the statement there. One comment requested that for small 
cartons the safe handling information be communicated with an 800 
telephone number printed on the carton, e.g., ``FOR SAFE HANDLING 
INSTRUCTIONS, PLEASE CALL 1-(800)____-____.''
    FDA recognizes that manufacturers may have to redesign their 
labels, but believes that, in many instances and, particularly in light 
of the fact that the safe handling statement that will be required is 
about one-half the length of the one proposed, simply reducing the type 
size of non-mandatory information will provide sufficient space to 
accommodate the safe handling statement in Sec. 101.17(h)(1). Further, 
FDA believes that there is enough space on the foam type cartons of 
shell eggs (both the small, i.e., 6 to 8 egg carton, and larger 
cartons) to bear all other Federal and State mandated information as 
well as FDA's safe handling statement. In fact, some of those cartons 
now contain safe handling information that is comparable in length or 
more lengthy than FDA's revised safe handling statement. Therefore, for 
these cartons, FDA concludes that, as revised, there is ample space for 
its safe handling statement.
    FDA also recognizes the limitation of label space on pulp style egg 
cartons. However, FDA believes that the pulp/open view cartons also 
have ample space for the shorter revised safe handling statement as 
evidenced by existing nonmandatory labeling. Thus, FDA is not revising 
the requirement in Sec. 101.17(h)(2) that the safe handling statement 
must appear either on the PDP or the information panel of the label. 
The agency concludes that because there is ample space for the safe 
handling statement on both large and small cartons of shell eggs, FDA 
is not providing a telephone referral for the safe handling 
instructions for these cartons. In addition, FDA rejects the comments 
suggesting that it should conduct more research to determine whether 
consumers would notice safe handling instructions on the information 
panel. The comments did not provide any information that consumers 
would not notice the safe handling statement on the information panel 
and, therefore, FDA is not changing the provision of allowing the safe 
handling statement on the information panel.
    (Comment 17) A few comments requested that FDA require a minimum 
type size. For example, one comment stated that 12-point type is best 
for older persons to read. The comment acknowledged that some egg 
cartons may not be able to accommodate 12-point type and stated that 
type size of less than 8-point would be difficult to read. One comment 
maintained that other formatting requirements would enhance the 
readability of the statement. For example, the comment suggested that 
FDA consider requirements for the use of simple type and use of ink and 
paper with sufficient contrast. Another comment suggested that FDA 
require that the statement appear in a hairline box with adequate space 
around the statement and appear in dark words on light background to 
enhance the visibility.
    FDA does not agree that it should require a minimum type size. The 
agency reiterates that Sec. 101.2(c) requires that mandatory 
information appearing on the PDP and the information panel, including 
information in Sec. 101.17, appear prominently and conspicuously in a 
type size of no less than \1/16\ inch. Although comments recommended 12 
point font for the safe handling statement to make it easier for older 
persons to read, one of these comments acknowledged that there may be 
insufficient space to accommodate the statement in that type size on 
the egg carton. Furthermore, the comments did not provide data to 
support the contention that older consumers are unable to read 
information on the information panel and PDP that appear in \1/16\ type 
size. Accordingly, FDA is not requiring a minimum type size for the 
safe handling statement that is different from the minimum type size 
requirements in Sec. 101.2(c). The agency also notes that 21 CFR 101.15 
describes conditions that would make a label statement lack the 
prominence and conspicuousness required by Sec. 101.2(c). Some of these 
include insufficient background contrast, and crowding with other 
written, printed, or graphic matter. Because these provisions are 
already in place for prominence and conspicuousness for information 
required by Sec. 101.17, the agency finds that it is not necessary to 
repeat these requirements in this rulemaking.
    b. Use of graphics. In the proposal, FDA recognized that safe 
handling instructions on meat and poultry utilized graphic 
illustrations. The agency tentatively concluded that its focus group 
research did not indicate that graphic illustrations were necessary to 
convey the safe handling instructions to consumers. However, the focus 
groups did respond favorably to bullets and the agency requested 
comment on whether graphics would enhance the visibility of the 
statement and whether it should require them.
    (Comment 18) Some comments maintained that icons depicting actions 
to be taken (e.g., a refrigerator to indicate that product should be 
refrigerated) make the safe handling statement easier to understand. 
Other comments supported the use of bullets to enhance the safe 
handling statement. One comment supported use of a graphic symbol to 
attract the consumer's attention to the label such as an exclamation 
point in a triangle. This symbol, the comment maintained, could become 
a universal symbol for foods that present a hazard.
    The agency is not requiring these suggested labeling options. None 
of the comments provided data that showed that consumers would be 
better informed with graphics and, thus, did not call into question 
FDA's testing that showed that consumers would be adequately informed 
of safe handling information without the use of graphics. However, the 
agency would not object to the use of bullets or graphic illustrations 
in addition to what is required. Accordingly, graphic illustrations and 
bullets may appear with the safe handling statement to draw greater 
attention to the statement. However, other wording may not appear in 
the box with the prescribed label statement. As stated in the proposal 
(64 FR 36492 at 36504), FDA believes that prescribing the specific 
language of the safe handling statement gives manufacturers a level 
playing field by requiring the same language for all products covered 
by the regulation, while giving consumers a message that is not 
confusing, misleading, or ineffective.

[[Page 76099]]

    c. Labeling for shell eggs not for direct sale to consumers. In the 
proposal, FDA stated that the safe handling statement on cartons of 
shell eggs that are not for direct sale to consumers, e.g., shell eggs 
that are to be repacked at a site other than originally processed or 
are to be shipped for use in food service establishments, would serve 
as a means to inform repackers and food preparers of the safe handling 
instructions. The agency tentatively concluded that the same goal of 
conveying the message could also be accomplished by customary practices 
of the trade. Thus, FDA proposed that the safe handling statement on 
shell eggs that are not for direct sale to consumers may be provided on 
cartons or in labeling, e.g., invoices or bills of lading in accordance 
with the practice of the trade.
    (Comment 19) Some comments opposed labeling in invoices and bills 
of lading because, they asserted, the labeling may be separated from 
the product and not read by food handlers. The comments maintained that 
the safe handling instructions must be read and understood by the food 
handler because they are the ones who must use the safe handling 
instructions when storing and preparing egg dishes. Moreover, according 
to one comment, the majority of eggs shipped to food service 
establishments are in 15 or 30 dozen cases that have ample room for 
labeling and, therefore, there is no need for the flexibility. One 
comment asserted that the proposed safe handling instructions should be 
on shipping containers and other food service packages because most 
incidents of SE-contamination in eggs occur in food service 
establishments.
    The agency agrees that the safe handling instructions must be 
conveyed and understood by the food handler. However, the agency is not 
persuaded by comments that the safe handling statement would not reach 
the food preparers if it is not on the label. FDA believes that it is 
the responsibility of the owner/operator of the establishment to make 
sure that food preparers receive the safe handling instructions as well 
as training on how to implement the instructions. Moreover, the agency 
points out that it intends to ensure that food preparers receive safe 
handling information for shell eggs by establishing safe egg handling 
and preparation practices at retail consistent with the Food Code 
(Refs. 1 and 5). Thus, FDA is not persuaded to prohibit the use of 
labeling such as invoices and bills of lading as a means for meeting 
the requirements of this rule when the eggs are to be repacked, 
relabeled, or further processed.
8. Other Labeling Issues
    (Comment 20) Some comments contended that the label statement will 
not significantly reduce the numbers of SE-associated illnesses.
    The agency disagrees that the label statement will not 
significantly reduce the numbers of SE-associated illnesses. In the 
PRIA, FDA used a Food Marketing Institute study (Ref. 7) of the effects 
of USDA's meat and poultry safe handling instructions to estimate the 
effect of the safe handling label statement for shell eggs. The agency 
estimated that the likelihood that shell eggs would be undercooked or 
consumed raw would decline by approximately 5 percent. FDA also 
estimated that the likelihood that consumers would fail to refrigerate 
shell eggs would decline by 2 percent. These percentages continue to be 
the agency's best estimate of the approximate effects of the safe 
handling label for shell eggs. In a separate simulation, FDA used its 
modification of USDA's SE risk assessment model \1\ and CDC's 
surveillance model to estimate the effect of the safe handling label. 
With the FDA-modified SE risk assessment baseline, FDA estimated the 
number of illnesses that would be prevented by labeling to be 4,948 to 
162,846 with a mean of 46,339. Using the CDC baseline, the estimate of 
the number of illnesses prevented by labeling was 2,813 to 42,892, with 
a mean of 14,775. As discussed below in section IV.A of this document, 
FDA used more recent data to adjust the CDC surveillance model used in 
the proposal. Thus, FDA's estimate of the number of illnesses prevented 
by labeling using the revised CDC baseline is 1,570 to 25,196 with a 
mean of 8,784. Comments did not provide FDA with other estimates of the 
prevention of salmonellosis. FDA maintains that its estimates represent 
a significant reduction in illness.
---------------------------------------------------------------------------

    \1\ The baseline for the cases of samonellosis was estimated in 
three different ways. The USDA risk assessment estimated the number 
of illnesses with a full farm-to-table model. The model included an 
estimate of the number of eggs infected, the number of infected eggs 
likely to be consumed, and an estimate of the number and severity of 
illnesses caused by SE. In the second model, FDA modified the USDA 
risk assessment model by using a 5 percent probability that shell 
eggs are refrigerated at 7.2  deg.C (45  deg.F) in retail 
establishments and institutions. FDA modified the original model 
based on more recent information on the numbers of establishments 
not refrigerating eggs at 7.2  deg.C (45  deg.F). The CDC model 
estimates the number of illnesses based on the number of confirmed 
cases as indicated by the number of SE isolates reported to CDC plus 
estimated unreported cases.
---------------------------------------------------------------------------

    (Comment 21) Some comments contended that most outbreaks occur in 
food service establishments and, therefore, FDA's focus should be on 
educating and providing safe handling instructions for food service 
workers, not household consumers. On the other hand, one comment 
maintained that label statements are not going to change the behavior 
of food service workers who take shortcuts.
    FDA disagrees with these comments. The agency believes that 
information about food safety should be given to both household 
consumers and food service workers. Previously in section II.A of this 
document, FDA discussed its rationale for providing safe handling 
instructions for consumers. The agency recognizes that food service is 
an additional component of the farm-to-table continuum and points out 
that, as part of FDA's and FSIS' Egg Safety Action Plan, FDA intends to 
initiate rulemaking to establish safe handling and preparation 
practices for food service establishments based on sections of the Food 
Code related to egg safety (Refs. 1 and 5). FDA also points out that 
the requirement for refrigeration of eggs at retail, including food 
service establishments (see discussion below in section III of this 
document) will be mandatory upon the effective date of this regulation.
    FDA agrees that education is an important factor in providing 
instructions on food safety. Thus, the agency intends to develop an 
educational and outreach campaign related to this final rule to inform 
the public, including both consumers and food service employees.
    (Comment 22) Several comments pointed out that many existing egg 
cartons already bear safe handling instructions. To eliminate costly 
relabeling, these comments requested that FDA permit existing safe 
handling label statements if they meet or exceed the statement required 
by the final rule. One comment requested that if a carton already has a 
``keep refrigerated'' label on the carton that it be allowed to delete 
the phrase from the safe handling statement.
    The agency is not persuaded to exempt eggs that have existing safe 
handling instructions from requirements in Sec. 101.17(h)(1). FDA has 
concluded that prescribing the language for a safe handling statement 
for shell eggs would give consumers a clear and consistent message and 
provide a ``level playing field'' for industry by requiring that all 
products covered by the regulation bear the same information. Further, 
FDA concludes that a prescribed safe handling statement would ensure a 
message that is not misleading or confusing.
    In addition, the agency is not persuaded to delete the phrase 
``keep

[[Page 76100]]

eggs refrigerated'' from the safe handling statement on cartons that 
already have a keep refrigerated statement. The agency recognizes that 
many cartons already have refrigeration instructions and notes that 
USDA requires in 9 CFR 590.50 that eggs packed for the ultimate 
consumer be labeled to indicate that refrigeration is required. 
However, FDA believes that the refrigeration instruction is an 
essential component of the safe handling statement and, as such, should 
not be taken out of the context of the rest of the statement. Further, 
FDA's safe handling statement permits manufacturers to uniformly comply 
with both FDA's safe handling statement and FSIS' refrigeration 
labeling requirement because FSIS' requirement is that cartons be 
labeled to indicate that refrigeration is required. Consequently, this 
safe handling statement can replace that required by FSIS. The agency 
recognizes the redundancy in having two refrigeration statements and 
points out that, while firms are revising labels to add the safe 
handling statement, they can delete the additional ``keep 
refrigerated'' statement that is not a part of the safe handling 
statement required in Sec. 101.17.
    Although FDA is not exempting eggs that have existing safe handling 
instructions from requirements in Sec. 101.17(h)(1), the agency does 
see merit in using enforcement discretion with firms that want to 
exhaust existing labels provided that the labeling meets or exceeds the 
requirement for the instructional element, which includes: (1) A 
refrigeration instruction and (2) a cooking instruction. FDA believes 
that this would reduce the costs for some firms while still providing 
consumers information on how to properly handle eggs. Firms with 
existing inventories as of the effective date of this final rule may 
exhaust those inventories as long as they contain the essential 
elements listed above. Upon their next printing, however, these firms 
must comply with the requirements in Sec. 101.17(h)(1).
    Lastly, the agency is revising proposed Sec. 101.17(h)(1) and 
deleting proposed Sec. 101.17(h)(6) to be consistent with the changes 
made in Sec. 115.50 (as discussed in section III.C of this document). 
The remainder of Sec. 101.17(h) is renumbered to reflect this change.

C. Comments on Effective Date

    (Comment 23) A few comments asserted that the implementation time 
for the proposed labeling requirement is insufficient. These comments 
maintained that given the logistics of redesigning cartons, replacing 
inventory, making necessary adjustments to distribution channels, and 
accommodating seasonal product demand fluctuations, the egg industry 
needs a 360-day implementation period. According to one comment, once 
the rule is finalized, new designs will need to be developed, then sent 
to customers for label approval. The comment stated that production of 
the label could not take place until the design is approved, which 
according to the comment, could take 60 to 90 days. The comment 
maintained that once production begins, it will involve label changes 
for thousands of stockkeeping units (SKU's) of hundreds of different 
customers, which would be a burden given only the approximately 90 days 
left to comply. The comment estimated that personnel would take 11,386 
to 19,880 hours to redesign the label; retool all carton labels, 
including artwork; communicate with customers; order plates; and 
complete other required activities.
    Further, the comment contended that it is not likely that egg 
producers will have begun to use the proposed statement before the 
compliance date in order to take advantage of FDA's willingness, as 
stated in the proposal (64 FR 36492 at 36510), to allow producers to 
use the safe handling statement as proposed and if printed before the 
publication of the final rule. The comment asserted that producers 
would not want to take the chance of changing labels twice. The comment 
explained that egg carton stock is prepared well in advance and 
customers' needs may be less than expected. Therefore, if cartons are 
not used prior to the effective date, they will need to be discarded. 
The comment stated that, on the other hand, a large inventory may be 
needed to accommodate peak periods, such as Christmas and Easter and if 
large stocks are not maintained, the inventory may run out. 
Additionally, the comment expressed concern that, depending on when the 
rule is published, the labeling requirement could be implemented during 
the time of peak production, and, therefore would make compliance with 
the requirement extremely difficult. Another comment disagreed with 
FDA's assessment that a longer compliance period would delay benefits 
of the rule because many cartons currently contain safe handling 
instructions and, therefore, benefits are being realized now.
    The agency notes that the purpose of the safe handling labeling 
requirement is to protect the public health by providing consumers with 
material information, i.e., instructions on how to safely handle and 
prepare eggs in order to reduce the risk of illness. Therefore, FDA 
believes that the safe handling statement should be placed on egg 
cartons as soon as possible. However, FDA is persuaded by the comments 
that it may be extremely burdensome for some producers to comply with 
the labeling requirements in 180 days. The agency acknowledges the 
difficulty in designing new labels, receiving label approval from 
customers, and building up inventories. The agency also recognizes the 
costliness of destroying inventories that do not comply with FDA's 
requirements. The agency is persuaded by the economic concerns raised 
in the comments that it should provide some flexibility to 
manufacturers. As discussed below in more detail in section IV.A of 
this document, the longer compliance period will generate savings in 
costs that would exceed the reduction in benefits thus still meeting 
the agency's need to address the public health concern. Therefore, FDA 
is providing an additional 90 days for firms to come into compliance 
with the requirements in Sec. 101.17(h).

III. Refrigeration of Shell Eggs in Retail Establishments

    As discussed in section II of this document, SE in eggs is a 
significant public health concern. As discussed in the proposal, FDA 
concluded that one practicable measure to limit the number of viable SE 
in shell eggs is refrigeration because it extends the effectiveness of 
the egg's natural defenses against SE and slows the growth rate of SE. 
USDA published a final rule (63 FR 45663, August 27, 1998) to require 
that shell eggs packed for consumer use be stored and transported at an 
ambient temperature not to exceed 7.2  deg.C (45  deg.F). This 
regulation, however, does not apply to eggs while held at all retail 
establishments. FDA is concerned that without continued refrigeration 
up until the time that the eggs are cooked, there would be an 
opportunity for the egg's defenses to degrade and growth of SE to 
occur. The agency reviewed research indicating that SE multiplies at 
temperatures of 10  deg.C (50  deg.F) and above but can be inhibited at 
lower temperatures, e.g., 8  deg.C (46  deg.F), 7.2  deg.C (45  deg.F) 
and 4  deg.C (39  deg.F). Based on this research and USDA's temperature 
requirement during transport, FDA proposed a maximum ambient 
temperature of 7.2  deg.C (45  deg.F) for eggs stored and displayed at 
retail establishments.

A. Refrigeration Temperature Requirements

    (Comment 24) Most comments regarding the proposal to require

[[Page 76101]]

refrigeration of shell eggs supported a requirement for refrigeration. 
Some of these comments supported the proposed maximum temperature 
requirement, i.e., 7.2  deg.C (45  deg.F), whereas other comments 
disagreed with this temperature requirement. Several comments suggested 
that the agency set the maximum ambient temperature for shell eggs held 
at retail at 5  deg.C (41  deg.F), instead of 7.2  deg.C (45  deg.F). 
Some of these comments suggested that this would provide a margin of 
safety, especially for eggs packed tightly together in large trays or 
in large retail coolers. Other comments noted that a requirement of 5 
deg.C (41  deg.F) would ensure consistency with the requirement in 
FDA's Food Code that potentially hazardous foods be refrigerated at 5 
deg.C (41  deg.F) (Ref. 5).
    The agency is not persuaded that the temperature requirement should 
be 5  deg.C (41  deg.F), rather than 7.2  deg.C (45  deg.F). As 
discussed in section I.F of the proposal, research indicates that SE 
multiplies at temperatures of 10  deg.C (50  deg.F) and above but that 
multiplication is inhibited at lower temperatures. Therefore, by 
requiring a refrigeration temperature lower than 10  deg.C (50  deg.F), 
the agency is already providing a margin of safety for shell eggs. FDA 
concludes that refrigeration at 7.2  deg.C (45  deg.F), i.e., the same 
temperature required by USDA under the Egg Products Inspection Act 
(EPIA) for the storage and transportation of shell eggs, is sufficient 
to protect the public health. Because eggs cool down only slightly 
faster when held at 5  deg.C (41  deg.F) as opposed to 7.2  deg.C (45 
deg.F), as discussed in the PRIA (64 FR 36516 at 36518), requiring eggs 
to be stored at the lower temperature would have a negligible effect on 
the SE risk. Requiring a temperature of 5  deg.C (41  deg.F) as the 
maximum ambient temperature would increase costs to the producer 
without producing significant additional food safety benefits.
    Furthermore, the agency notes that the storage temperature of shell 
eggs addresses growth of SE in shell eggs, whereas the refrigeration 
temperature required by the Food Code, i.e., 5  deg.C (41  deg.F), 
addresses growth of all pathogens that may be present in potentially 
hazardous foods. Thus, in addressing holding temperatures for 
potentially hazardous foods in general, the Food Code requires a 
temperature for retail storage that will prevent or slow the growth of 
most pathogens, including cold-tolerant pathogens such as Listeria 
monocytogenes that have been shown to grow at 5  deg.C (41  deg.F). The 
agency does not have data suggesting that L. monocytogenes or other 
pathogens are a potential concern in shell eggs. The agency concluded 
that a maximum storage temperature of 7.2  deg.C (45  deg.F) will be 
effective in inhibiting the growth of SE that may be present in shell 
eggs. Of course, this requirement does not preclude States or retailers 
from maintaining shell eggs at lower refrigeration temperatures.
    (Comment 25) One comment contended that FDA based the 7.2  deg.C 
(45  deg.F) ambient temperature requirement on studies that do not 
provide a sound scientific foundation for the requirement. The comment 
stated that none of the articles FDA cites in support of the proposed 
refrigeration requirement examined SE growth in eggs stored under 
conditions that simulate actual commercial storage conditions. The 
comment maintained that, because commercially stored egg cartons are 
often placed on pallets in large numbers and stacked to high levels in 
high-volume coolers, the eggs' internal temperature may be 
substantially higher than the coolers' ambient temperature, especially 
for centrally located eggs that are insulated by surrounding eggs and, 
therefore, exposed to warmer temperatures.
    FDA disagrees with the comment. The studies noted by the comment 
were not cited as evidence that eggs in commercial storage conditions 
would achieve a certain temperature when refrigerated. Rather, these 
studies provide evidence that SE growth is inhibited when eggs are at 
the temperature studied. While the agency agrees that eggs packed near 
the center of a large pallet may not cool as quickly as those near the 
perimeter, the temperature of eggs, when refrigerated, will progress 
towards the ambient temperature of the refrigeration unit. As discussed 
above in this section, FDA has provided its rationale for why an 
ambient temperature of 7.2  deg.C (45  deg.F) for storage of eggs is 
the best available option for protecting the public health.
    (Comment 26) One comment recommended that States be allowed to 
require ambient temperatures lower than 7.2  deg.C (45  deg.F) for 
shell eggs if they believe their citizens will be better protected by a 
lower temperature, such as 5  deg.C (41  deg.F), particularly if gaps 
exist in the scientific data on this issue.
    The agency recognizes that some States and localities may have 
temperature requirements lower than 7.2  deg.C (45  deg.F). As stated 
in the proposal (64 FR 36492 at 36499), the agency does not intend that 
this regulation would preempt recommendations of the Food Code or other 
State or local requirements that require a lower temperature. The 
regulation would, however, preempt any State or local requirements that 
allow a temperature greater than 7.2  deg.C (45  deg.F).
    (Comment 27) One comment supported the 7.2  deg.C (45  deg.F) 
ambient temperature requirement, but urged the agency and others to 
communicate effectively with retail establishments to minimize any 
confusion that may result from the temperature difference between this 
proposed requirement and the requirement in the Food Code.
    While the new temperature requirement may create some confusion 
initially, the Food Code will be revised to reflect this new 
temperature for storage of shell eggs in its next reprinting (currently 
anticipated to be 2001). The revision will include not only the new 
temperature requirement, but also the scientific references and public 
health reasons for the change in annexes 2 and 3, respectively, of the 
Code. In the meantime, FDA will rely, as it has in the past, on State 
and local authorities to assist retail establishments in complying with 
the agency's regulations. The agency holds annual training courses for 
State personnel and food service directors that focus on changes in the 
Food Code. FDA will work closely with the States to ensure that they 
communicate effectively with retail establishments to minimize any 
confusion that may result from the temperature difference between this 
requirement and the requirement in the 1999 Food Code and to ensure 
that compliance assistance is consistent nationwide.
    (Comment 28) One comment supported the refrigeration of shell eggs 
at 7.2  deg.C (45  deg.F) provided that minor variations in ambient 
temperature do not result in condemnation of eggs. The comment 
suggested that FDA make refrigeration mandatory, but make the 
temperature of 7.2  deg.C (45  deg.F) a voluntary standard, or 
establish a level of temperature variation (e.g., 5  deg.F) that would 
be tolerated before the eggs would be subject to regulatory action. 
Another comment objected to the fact that FDA made no provision in its 
proposal for eggs that are out of compliance for a limited amount of 
time, and suggested that the allowance of a reasonable amount of time 
to place eggs in a cooler after delivery would not compromise their 
safety.
    FDA disagrees with the comment that the temperature for 
refrigeration of eggs be a voluntary standard, rather than a mandatory 
requirement. The agency has proposed 7.2  deg.C (45  deg.F) as the 
maximum ambient temperature for storage and display of shell eggs at 
retail establishments. Realizing that minor variations in ambient 
temperature are unavoidable, retailers may choose to

[[Page 76102]]

maintain shell eggs at temperatures below the maximum established 
temperature to provide for a margin for variation. As with any 
regulation, the enforcement of this temperature requirement will depend 
on the particular circumstances regarding the situation (including the 
temperature of the eggs themselves) as well as the discretion of the 
agency. In Sec. 115.50(b)(1), FDA provided that ``shell eggs held for 
retail distribution shall promptly be placed under refrigeration * * * 
upon receipt at a retail establishment.'' The agency believes that 
retailers should make every effort to promptly place shell eggs under 
refrigeration upon receipt. In most cases, this can be done. However, 
FDA recognizes that there may be some circumstances in which short 
delays are unavoidable. For example, when eggs are delivered to a 
grocery store, the stock clerk responsible for moving the eggs into the 
cooler could be briefly delayed in the task because he is cleaning up 
after an accident in one of the aisles involving a glass breakage. To 
allow for a practical application of the refrigeration requirement in 
such situations, FDA is adding a provision to Sec. 115.50(b)(1) that 
provides that where short delays are unavoidable, the eggs should be 
placed under refrigeration as soon as reasonably possible.

B. Enforcement of the Refrigeration Requirement

    (Comment 29) One comment expressed concern that consequences for 
violation of FDA's refrigeration requirement are inconsistent with 
violation of FSIS' refrigeration requirement for shell eggs during 
transportation. The comment noted that FSIS issues a facility violation 
but does not retain the product if eggs are found to be held above 7.2 
deg.C (45  deg.F), whereas FDA would require diversion or destruction 
of the eggs.
    As set out in the final rule, FDA has the authority, under sections 
301 and 402(a)(4) of the FD&C act, to seize eggs that are held at 
retail at an ambient temperature above 7.2  deg.C (45  deg.F), on the 
grounds that those eggs have been held under insanitary conditions 
whereby they may be rendered injurious to health and are, therefore, 
adulterated. FDA may also use administrative procedures set out in this 
rule to order that the eggs that have been held in violation of the 7.2 
 deg.C (45  deg.F) requirement established in this rule, be destroyed 
or diverted. FSIS has the authority, under the EPIA, to detain eggs 
that are transported at an ambient temperature above 7.2  deg.C (45 
deg.F), pending judicial seizure. FSIS also has the option of seeking 
civil money penalties against violators of the transport temperature 
requirement. The two agencies will coordinate enforcement efforts as 
closely as the different statutes allow. Both agencies agree that 
enforcement of the temperature requirement will depend on the 
particular circumstances regarding the situation (including the 
temperature of the eggs themselves) as well as the discretion of each 
agency.
    (Comment 30) Two comments stated that they oppose complete 
preemption of State and local egg safety provisions. One of these 
comments from an association of State food and drug officials agreed 
that temperature requirements should be uniform, but also argued that 
the States should be free to enforce equivalent State requirements 
under State laws and regulations. This comment also stated that States 
should be permitted to require refrigeration temperatures lower than 
7.2  deg.C (45  deg.F).
    In the proposal, FDA tentatively concluded that the regulation 
should preempt less stringent State and local requirements because 
allowing them would interfere with the important public health 
objective of refrigerating eggs at 7.2  deg.C (45  deg.F). FDA does not 
intend that this regulation preempt State requirements that are the 
same as or more stringent, i.e., 7.2  deg.C (45  deg.F) or lower. The 
regulation does, however, preempt any State or local temperature 
requirements greater than 7.2  deg.C (45  deg.F). FDA would like to 
clarify that States will be permitted to enforce their own temperature 
requirements that are equivalent to or lower than FDA's proposed 
requirement. For example, if a State has a temperature requirement of 5 
 deg.C (41  deg.F) and eggs were found at a storage temperature of 6.7 
deg.C (44  deg.F), then the eggs would be in compliance with the 
Federal regulations, but not the State regulations and the State could 
take enforcement action to enforce its own regulations.
    (Comment 31) One comment also opposed preemption of State 
administrative procedures. The comment asserted that, the 
administrative procedures provided in the proposal would impose a 
lengthy process on States and localities. The comment maintained that 
it is doubtful that State or local jurisdictions would follow FDA's 
proposed procedures, e.g., they would not call FDA district or regional 
directors to remove adulterated eggs from establishments traditionally 
under their jurisdiction. Nevertheless, the comment asks for 
clarification on whether the proposed regulations preempt State 
administrative procedures.
    The agency is clarifying that the administrative procedures in 
proposed Sec. 115.50 do not preempt State or local administrative 
procedures. On the contrary, FDA explicitly provides in Sec. 115.50(d) 
that State and localities may follow the hearing procedures set out in 
Sec. 115.50(e) substituting, where necessary, appropriate State or 
local officials for FDA officials, or they may follow comparable State 
and local procedures as long as such procedures satisfy basic due 
process. Thus, FDA intends that States could use their own 
administrative procedures to enforce the regulation. FDA is removing 
the word ``comparable'' to make it clearer that State and local 
administrative procedures do not need to track FDA's procedures.
    (Comment 32) One comment raised concerns about the breadth of the 
preemptive effect of the proposed regulation. It questioned whether the 
proposed rule might preempt all State laws relating to egg safety and 
substitute FDA's regulation. This comment contended that States already 
have systems in place that expeditiously remove unsafe foods from 
commercial channels and that those should not be preempted.
    FDA agrees with the comment. States do have systems already in 
place that expeditiously remove adulterated food from the marketplace. 
In the proposal, FDA acknowledged that States and localities, more than 
FDA, currently enforce regulations in retail establishments. When 
examining options for the enforcement of refrigeration requirements, 
FDA tentatively concluded that a Federal-State cooperative approach 
would be the best approach to enforce the refrigeration requirements. 
Thus, FDA proposed to allow States and localities to enforce the 
Federal regulation, along with FDA, if the States and localities so 
desired.
    FDA wants to make it very clear that the intended preemptive effect 
of this regulation is very narrow. FDA does not intend to preempt 
general food safety laws that apply to eggs, such as State food and 
drug acts, or State or local laws, regulations, or ordinances applying 
to retail establishments, e.g., the Food Code. A State or local food 
safety agency can continue to enforce its own refrigeration 
requirements or other egg safety requirements under its own 
administrative or judicial enforcement procedures as long as the retail 
refrigeration requirements for eggs are (equal to or less than 7.2 
deg.C (45  deg.F). FDA is including State and local agencies in

[[Page 76103]]

the enforcement of this regulation to broaden their enforcement tools, 
not to narrow them. To ensure that the limited preemptive effect of 
these regulations is clear, FDA has added a statement on the preemptive 
effect of the regulations to the codified text.
    (Comment 33) A comment contended that the provisions in the 
proposal that allow States and localities to enforce the provisions 
``until FDA notifies the State or locality in writing that such 
assistance is no longer needed'' appear to place State regulatory 
actions subordinate to those of FDA. The comment maintained that it 
knew of no other situation where regulatory actions of State or 
localities constituted ``assistance'' to a Federal agency, especially 
when intrastate commerce is involved. The comment asked for 
clarification of this issue.
    The provision that allows State and local agencies to enforce FDA's 
regulations draws its terms from section 311 of the Public Health 
Service Act (PHS Act). FDA does not consider State and local food 
safety activities to be subordinate to Federal activities. In fact, FDA 
created this cooperative model to ensure that State and local officials 
continue to be the primary enforcement officials in retail 
establishments while being provided the ability to enforce this Federal 
requirement for egg refrigeration.
    (Comment 34) One comment also expressed concern regarding the 
precedent of using the PHS Act for enforcement of communicable disease 
regulations when there are other collaborative and integrated 
mechanisms available, e.g., the Food Code. The comment maintained that 
many States adopt the provisions of title 21 of the Code of Federal 
Regulations (CFR) and, therefore, the comment noted that it previously 
requested that FDA adopt relevant sections of the Food Code as 
regulations. The comment asserted that adopting relevant sections of 
the Food Code as a Federal regulation would lower the risk of illness, 
while promoting uniformity without preempting State and local 
authority.
    The agency notes that this regulation is not the first regulation 
issued by FDA that utilized the PHS Act to address prevention of 
communicable diseases. FDA used the PHS Act as its legal authority to 
issue: (1) Regulations to control the interstate shipment of molluscan 
shellfish (21 CFR 1240.60); (2) regulations to control the interstate 
and intrastate commerce of turtles (Sec. 1240.62 (21 CFR 1240.62)); (3) 
requirements for mandatory pasteurization of milk and milk products (21 
CFR 1240.61); and regulations to control blood and tissue products (21 
CFR 640 and 1270). However, the agency acknowledges that this 
regulation represents a new approach to food safety as it relates to 
matters traditionally addressed by the States. The agency believes that 
the Federal-State cooperative approach that it is adopting in this 
final rule for the regulation of eggs is the most effective and 
efficient use of Federal, State, and local food safety authorities.
    Further, FDA recognizes that many States adopt parts of 21 CFR by 
reference. However, the agency is not persuaded by the comment that it 
should adopt relevant sections of the Food Code in lieu of issuing this 
regulation. FDA notes that its policy on the refrigeration of eggs, 
i.e., that refrigeration at 7.2  deg.C (45  deg.F) is adequate to 
maintain the safety of shell eggs would be the same whether or not the 
agency issued rulemaking to codify in 21 CFR sections of the Food Code 
relevant to shell eggs. Nevertheless, as announced in the Egg Safety 
Action Plan, the agency plans to take additional steps to protect at-
risk consumers by establishing safe egg handling and preparation 
practices at retail, consistent with provisions in the Food Code.
    (Comment 35) One comment contended that FDA should evaluate each 
State and local program to ensure that they have the expertise and 
resources to enforce the regulations. This comment contended that if 
the States and local programs do not have the capability to enforce the 
rule, FDA should provide training or resources, or enforce the rule 
itself. Furthermore, the comment stated that FDA should perform 
comprehensive annual reviews and permit only those agencies that 
satisfy strict performance standards to continue to enforce the rule.
    FDA disagrees with this comment. As discussed in the proposal, the 
agency recognizes that the inspection of retail establishments 
traditionally has been the province of State and local food safety 
agencies. FDA expects that these agencies would continue to inspect 
these establishments and will be able to enforce the refrigeration 
requirement. FDA considered a requirement that the States report to FDA 
on their enforcement activities. However, the agency concluded that, 
because of the vast number of food safety agencies at the State and 
local level, reporting to FDA would be too resource intensive. Further, 
the agency concluded that requiring States and localities to report to 
FDA would remove valuable resources from egg safety enforcement and 
place them into administrative activities. Consequently, FDA decided to 
not require enforcement reports from State and local agencies. 
Moreover, FDA, in keeping with the principles of Executive Order 13132 
on federalism, thought it prudent to allow States the maximum 
administrative discretion possible in enforcing this rule. However, the 
agency intends to stay informed of the enforcement of State and local 
agencies. Where State or local coverage needs to be augmented, FDA 
intends to act.
    (Comment 36) One comment opposed the allowance of 10-working days 
after the order is given for the destruction of eggs that are not in 
compliance with the temperature requirement as proposed in 
Sec. 115.50(e)(1)(i). This comment maintained that FDA provided no 
rationale for the time period. Moreover, the comment contended that 10 
days was an unnecessarily long period of time and could allow for 
inadvertent repacking. The comment suggested that only 3 to 5 days be 
allowed.
    The agency disagrees with the comment. The time period of 10-
working days is consistent with other regulations that address the 
prevention of communicable disease, e.g., regulations in Sec. 1240.62 
that control the interstate and intrastate commerce of turtles. 
Moreover, the agency believes that 10-working days allows sufficient 
time for interested parties to appeal the detention order as provided 
in Sec. 115.50(e)(2)(i). In addition, the agency points out that the 
administrative procedures provide for sufficient safeguards against 
inadvertent repacking of shell eggs that were not held in compliance 
with the temperature requirement. Section 115.50(e)(1)(iv) provides 
that eggs that are detained be labeled with official tags stating that 
they not be sold, distributed, or otherwise disposed of except that 
they be diverted or destroyed, or moved pending appeal. The comment did 
not persuade FDA that there is sufficient cause to be concerned that 
eggs will be inadvertently repacked if they are held for 10-working 
days before they are destroyed or diverted. Thus, the agency is 
retaining the provision in Sec. 115.50(e)(1)(i) for 10-working days 
before eggs are diverted or destroyed.
    (Comment 37) One comment suggested that inspectors check the 
temperature of the shell eggs' environments at least twice a year. The 
comment also suggested that, to ensure that retail establishments are 
maintaining accurate temperatures, continuous temperature recording 
devices be required and records made available to inspectors.

[[Page 76104]]

    The agency agrees that the inspection of retail establishments 
twice a year is reasonable. In fact, the Food Code recommends that 
retail establishments be inspected once every 6 months. These 
inspections include checking the temperature at which potentially 
hazardous foods, including eggs, are being held. However, the agency 
does not find that it is necessary to make the inspection a requirement 
as part of this rulemaking. The agency expects that when State and 
local agencies routinely inspect retail establishments, they will check 
the temperature at which shell eggs are held. In addition, for any 
establishment that FDA inspects, it will also check the temperature at 
which shell eggs are held. Thus, FDA is not persuaded by the comment to 
require a specific interval for checking the temperature at which shell 
eggs are held.
    FDA disagrees that it should require that retail establishments 
maintain continuous recording devices. The agency notes that neither 
the Food Code nor FSIS, in its directive regarding the enforcement of 
refrigeration requirements for shell eggs (Ref. 8), recommends that 
such devices be used. Furthermore, FDA notes that requirement of such 
devices may be very costly, especially for small businesses. 
Consequently, the agency is not persuaded by the comment to require 
establishments to maintain continuous recording devices.

C. Other Changes to the Proposal

    FDA is revising proposed Sec. 115.50 by deleting paragraph (d) and 
revising paragraph (b) for clarification. The agency concludes that 
Sec. 115.50(d) stating that the requirements of this section apply to 
all eggs may be confusing in light of the fact that paragraph (b) 
states that all requirements of the section, except paragraph (c) apply 
to shell eggs. FDA is revising paragraph Sec. 115.50(b) to state 
``except as provided in paragraph (c) of this section; shell eggs held 
for retail distribution, whether in intrastate or interstate commerce, 
shall bear the following statement: '' With this revision, 
Sec. 115.50(d) becomes redundant. The rest of the section is renumbered 
to reflect this change.

IV. Final Regulatory Impact Analysis

A. Benefit-Cost Analysis

    FDA has examined the economic implications of this final rule as 
required by Executive Order 12866. Executive Order 12866 directs 
agencies to assess all costs and benefits of available regulatory 
alternatives and, when regulation is necessary, to select regulatory 
approaches that maximize net benefits (including potential economic, 
environmental, public health, safety, distributive, and equity 
effects). Executive Order 12866 classifies a rule as significant if it 
meets any one of a number of specified conditions, including having an 
annual effect on the economy of $100 million; adversely affecting some 
sector of the economy in a material way; or adversely affecting jobs or 
competition. A regulation is also considered a significant regulatory 
action under Executive Order 12866 if it raises novel legal or policy 
issues. Under the Unfunded Mandates Reform Act of 1995 (Public Law 104-
4) requiring cost-benefit and other analyses, a significant rule is 
defined in section 1531(a) 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, the Small Business 
Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121) 
defines a major rule for the purpose of congressional review as having 
caused or being likely to cause one or more of the following: An annual 
effect on the economy of $100 million; a major increase in costs or 
prices; significant effects on competition, employment, productivity, 
or innovation; or significant effects on the ability of U.S.-based 
enterprises to compete with foreign-based enterprises in domestic or 
export markets.
    FDA finds that this final rule is economically significant under 
Executive Order 12866. FDA determined that this final rule, based on 
the median estimate of cost contained in the economic analysis, does 
not constitute a significant rule under the Unfunded Mandates Reform 
Act of 1995 (Public Law 104-4). Furthermore, in accordance with the 
Small Business Regulatory Enforcement Fairness Act of 1995 (Public Law 
104-121) FDA determined that this final rule will be a major rule for 
the purpose of congressional review.
    This section contains the regulatory impact analysis of the final 
rule. A more complete analysis and a list of references is available in 
a separate document entitled ``Preliminary Regulatory Impact Analysis 
and Initial Regulatory Flexibility Analysis of the Proposed Rule to 
Require Refrigeration of Shell Eggs at Retail and Safe Handling 
Labels'' (64 FR 36516, July 6, 1999).
    FDA received no comments that directly addressed the cost-benefit 
analysis of the proposed rule. Several comments, however, discussed 
aspects of the rule that would affect the cost-benefit analysis. In 
this final regulatory impact analysis, FDA responds to those comments.
1. Regulatory Options
    FDA considered several regulatory options for dealing with SE in 
shell eggs. The options considered include: (1) No new regulatory 
action, (2) labeling only, (3) refrigeration at 7.2  deg.C (45  deg.F) 
only, (4) refrigeration at 5  deg.C (41  deg.F), (5) labeling and 
refrigeration as proposed, (6) HACCP for shell eggs, (7) in-shell 
pasteurization, (8) longer compliance periods, and (9) limited retail 
sell-by periods. FDA received comments on the proposal that directly or 
indirectly dealt with the economic analyses of some of these options.
    (Comment 38) Several comments discussed the costs of in-shell 
pasteurization (option 7). In the analysis of the proposal, FDA assumed 
that the annual cost of pasteurization was $0.30 per dozen eggs. If 47 
billion shell eggs were consumed per year, the annual cost of 
pasteurizing all of them would be about $1.2 billion. One comment 
estimated the cost to be $0.26 to $0.38 per dozen eggs, which implies 
that the annual cost of pasteurizing 47 billion shell eggs would be $1 
to $1.5 billion. Another comment estimated that pasteurization would 
increase the price of a dozen eggs by 35 to 40 percent. The comment 
listed no prices, but at an average price of $0.80, the additional cost 
of pasteurizing 47 billion eggs would be $0.28 to $0.32 per dozen, or 
$1.1 to $1.3 billion per year. FDA did not estimate the transition, or 
set-up costs, (e.g., costs of equipment, redesign of processing 
facilities, training) for processors switching to pasteurization, so 
these estimates understate the full cost of in-shell pasteurizing all 
shell eggs.
    Although in-shell pasteurization would greatly reduce SE, the 
agency concludes that other interventions between farm and table will 
reduce SE at lower cost. The egg safety action plan includes these 
other interventions, such as on-farm controls, controls at packer/
processor, and retail controls, in addition to in-shell pasteurization.
    (Comment 39) Several comments requested a longer compliance period 
for the new egg label.
    The main disadvantage of longer compliance periods for the labeling 
provision (option 8) is that the option would delay the realization of 
the benefits of the rule. In this final rule, the agency will allow 9 
months (instead of the proposed 6 months) for producers to comply with 
the labeling provision. The

[[Page 76105]]

longer compliance period will probably generate savings in costs that 
exceed the reduction in benefits (as measured with the revised CDC 
surveillance baseline). FDA discusses the effects of the longer 
compliance period in more detail in the sections on benefits and costs.
2. Benefits
    Benefits from the final rule to require a safe handling label and 
the refrigeration of shell eggs at 7.2  deg.C (45  deg.F) come from 
reducing egg-related illness. The formula FDA used for estimating 
benefits is:

    Marginal health benefits = baseline risk (number of SE illnesses 
related to shell eggs) x expected reduction in the number of 
illnesses brought about by the final rule x health cost per illness.

    (Comment 40) Although there were no comments directly on the 
estimated benefits, several comments argued that FDA used too high a 
baseline number of SE illnesses. In addition, some comments cited new 
data from CDC on SE. In the economic analysis in the proposal, FDA used 
the results of the USDA SE risk assessment for one estimate of the 
baseline risk and the CDC Salmonella surveillance data for another 
estimate of the baseline (64 FR 36516 at 36520). The CDC active 
surveillance data showed a 44 percent fall in SE between 1996 and 1998 
(Ref. 9). CDC also released a new estimate of the total number of 
illness associated with Salmonella (Ref. 10). The new estimate of the 
total number of illnesses from Salmonella is lower than previous 
estimates, which implies that the baseline number of SE-related 
illnesses is also lower. In response to the comments on FDA's baseline 
number of illnesses, FDA adjusted the CDC surveillance baseline to 
incorporate the recent CDC surveillance data and estimated number of 
SE-related illnesses.\2\ The SE risk assessment model baseline did not 
use CDC cases, so it does not change. Table 1 of this document shows 
the USDA SE risk assessment baseline, the FDA-modified USDA SE risk 
assessment baseline (for explanation of this modification, see footnote 
1 in section II.A.8 of this document), the CDC surveillance baseline, 
and the adjusted CDC surveillance baseline.
---------------------------------------------------------------------------

    \2\ In the analysis of the proposed rule, FDA estimated the 
number of SE illnesses from shell eggs with a Monte Carlo 
simulation. In one simulation, FDA used CDC surveillance data from 
1988 through 1997 to calculate that the annual average number of SE 
isolates was 8,400. FDA then applied the probability that an isolate 
would be reported that was used in the USDA SE risk assessment, 
i.e., 0.014, to estimate the total number of SE cases. FDA assumed, 
based on outbreak and other information, that 10 to 60 percent of 
all SE cases were associated with shell eggs. In the revised CDC 
surveillance model, FDA used CDC surveillance data from 1989 through 
1998 to calculate an average annual number of SE isolates of 8,300. 
The agency applied the probability of reporting used in the new CDC 
foodborne illness estimates, 0.026, to estimate the total number of 
SE cases (Ref. 10). As in the proposed rule, FDA assumed that 10 to 
60 percent of all SE cases were associated with shell eggs. Part d 
of table 1 shows the results of the simulation based on the revised 
CDC data.

          Table 1.--Four Annual Illnesses from Estimates of Salmonella Enteritidis (SE) in Shell Eggs
----------------------------------------------------------------------------------------------------------------
                                                                                                       95th
                                                  5th Percentile      Median           Mean         Percentile
----------------------------------------------------------------------------------------------------------------
a. USDA SE Risk Assessment
----------------------------------------------------------------------------------------------------------------
Illnesses                                                126,374         504,082         661,633       1,742,592
Arthritis                                                  3,631          14,864          19,994          55,915
Deaths                                                        68             301             391           1,050
----------------------------------------------------------------------------------------------------------------
b. USDA SE Risk Assessment as Modified by FDA
----------------------------------------------------------------------------------------------------------------
Illnesses                                                115,645         416,156         569,231       1,508,814
Arthritis                                                  3,372          12,548          17,175          48,594
Deaths                                                        66             250             354             985
----------------------------------------------------------------------------------------------------------------
c. CDC Surveillance Model
----------------------------------------------------------------------------------------------------------------
Illnesses                                                 63,884         189,599         191,511         319,275
Arthritis                                                  1,330           5,533           5,727          12,202
Deaths                                                        37             122             115             197
----------------------------------------------------------------------------------------------------------------
d. Revised CDC Surveillance Model
----------------------------------------------------------------------------------------------------------------
Illnesses                                                 36,523         112,138         114,271         194,796
Arthritis                                                    762           3,011           3,410           7,251
Deaths                                                        21              66              68             117
----------------------------------------------------------------------------------------------------------------

    FDA used the USDA SE risk assessment model to estimate the expected 
reduction in illnesses attributed to the rule. The design of the USDA 
SE risk assessment model allowed the agency to estimate the number of 
illnesses prevented by comparing the baseline number of illnesses with 
the number of illnesses under the rule.
    FDA calculated the health cost per illness prevented by classifying 
SE illnesses by the severity of outcome: Mild, moderate, and severe 
acute gastrointestinal illnesses; resolved and chronic reactive 
arthritis; and death. The agency then multiplied the estimated monetary 
health cost per type of illnesses by the number of illnesses prevented 
of each type. FDA calculated total health benefits from the final rule 
with the following formula:

    Total health benefits = (number of mild cases prevented x $ per 
case) + (number of moderate cases prevented x $ per case) + (number 
of severe-acute cases prevented x $ per case) + (number of resolved 
cases of arthritis prevented x $ per case) + (number of chronic 
cases of arthritis prevented x $ per case) + (number of deaths x $ 
per death).

    The baseline risk, the expected reduction in risk, and the health 
costs per illness are all uncertain. FDA, therefore, estimated a 
distribution of possible health benefits for the final rule, with the 
distribution based on the probability distributions associated with the 
main uncertainties. FDA estimated that this final rule would reduce the 
number of egg-related illnesses by 6 to

[[Page 76106]]

49 percent (5th to 95th percentile), with the median equal to 14.5 
percent and the mean equal to 19 percent. The ranges (5th to 95th 
percentile) of estimated annual benefits for the three baselines are 
shown in table 2 of this document.

  Table 2.--Total Annual Health Benefits from the Reduction in Salmonellosis Attributable to the Proposed Shell
      Egg Rules: USDA \1\ SE \2\ Risk Assessment Baseline, CDC \3\ Surveillance Baseline, and Adjusted CDC
                                              Surveillance Baseline
----------------------------------------------------------------------------------------------------------------
                Variable                   5th Percentile        Median             Mean         95th Percentile
----------------------------------------------------------------------------------------------------------------
a. Modified USDA SE Risk Assessment Baseline
----------------------------------------------------------------------------------------------------------------
Illnesses prevented                        12,369            65,801           115,848           407,064
Health benefits                               $86.7 million $703 million      $1,700 million    $6,610 million
----------------------------------------------------------------------------------------------------------------
b. CDC Surveillance Baseline
----------------------------------------------------------------------------------------------------------------
Illnesses prevented                         7,032            25,132            36,937           107,230
Health benefits                               $49.2 million $303 million      $501 million      $1,679 million
----------------------------------------------------------------------------------------------------------------
c. Revised CDC Surveillance Baseline
----------------------------------------------------------------------------------------------------------------
Illnesses prevented                         3,925            14,958            21,961            62,991
Health benefits                               $32.9 million    $259.5 million    $466.3 million $1,619 million
----------------------------------------------------------------------------------------------------------------
\1\ USDA means U.S. Department of Agriculture.
\2\ SE means Salmonella Enteritidis.
\3\ CDC means the Centers for Disease Control and Prevention.

    FDA estimated the benefits derived from extending the compliance 
period for the labeling regulation. With the longer compliance period 
for the labeling provision, some of the labeling benefits will be 
postponed for 3 months. In the analysis of the proposal, the agency 
estimated the median benefits attributable to labeling alone to be $261 
million using the USDA SE risk assessment baseline and $103 million 
using the CDC surveillance baseline. With the revised CDC surveillance 
baseline, median labeling benefits are $91 million. FDA used a 7 
percent rate of discount to estimate the reduction in benefits from 
increasing the compliance period for labeling by 3 months. The later 
effective date will reduce median health benefits by, at most, $5 
million under the USDA SE risk assessment baseline and $2 million under 
either version of the CDC surveillance baseline because some labels 
would be in place before the effective date. Because it is based on 
more recent information, the agency believes that $2 million is the 
best estimate of the reduction in benefits associated with the later 
effective date for the safe handling label.
    The benefit estimates above depend on a number of assumptions 
including assumptions about individual response to the egg labels. 
Modification of these assumptions would lead to changes (increases or 
decreases) in the estimate of the benefits of this rule.
3. Costs
    FDA received no comments on the estimated costs of this rule and, 
therefore, will use the same estimate reported in the analysis of the 
proposal. The costs of the final rule are the sum of the costs of 
changes in manufacturing practices--labeling and refrigeration--and 
changes in consumer practices--egg preparation and consumption.
    a. Labeling. The costs of labeling are the sum of inventory 
disposal, label redesign and administrative costs. FDA calculated 
labeling costs with the following model:

    Labeling cost = ($ administrative costs per firm x number of 
affected firms) + ($ value of cartons manufactured x disposal 
percentage of carton inventory) + (number of affected labels x $ 
redesign cost per label).

    In the analysis of the proposed rule, FDA estimated the total cost 
of labeling for a 6-month compliance period to be a one-time cost of 
approximately $18 million. The cost included administrative costs, 
inventory disposal costs, and label redesign costs. Several comments 
stated that inventory and redesign costs would be high, but did not 
state whether the cost estimates FDA presented were high. One comment 
from a carton manufacturer stated that redesign costs for its foam 
labels would be $2 million. Based on the market share cited in the 
comment, the cost per SKU would be about $500, which is the cost used 
in the proposal for a 6-month compliance period.
    Another comment stated that in order to print on the sides of 
cartons manufacturers of smaller egg cartons would have to purchase new 
equipment costing several million dollars. The agency disagrees that 
such purchases will be necessary. With redesign and reduced type size 
for non-mandatory material, sufficient free space will be available for 
the safe handling statement without the need to print on the sides of 
the cartons. The shorter safe handling statement in this final rule 
(compared to the statement in the proposal) increases the agency's 
confidence that smaller egg cartons will have sufficient space.
    In light of FDA's decision to extend the compliance period to 9 
months, labeling costs will decrease. In the analysis of the proposal, 
FDA compared a 6-month compliance period with a 12-month compliance 
period. FDA now assumes that the labeling costs for a 9-month 
compliance will be about halfway between the costs for 6- and 12-month 
periods. As table 3 of this document shows, this assumption leads to 
estimated costs of $15 million.

[[Page 76107]]



                    Table 3.--Estimated Total Costs to Incorporate Safe Handling Statements (Total Costs Rounded to Nearest Million)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                           Compliance Period                                      6 Months                   9 Months                  12 Months
--------------------------------------------------------------------------------------------------------------------------------------------------------
Total administrative costs                                                     $280,000                   $240,000                   $200,000
Total inventory disposal costs                                               $3,000,000                 $2,250,000                 $1,500,000
Total label redesign costs                                                  $15,000,000                $12,500,000                $10,000,000
Total labeling costs                                                        $18,000,000                $15,000,000                $12,000,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

    FDA believes that the 9-month compliance period combined with the 
shortening of the safe handling statement may reduce labeling costs by 
more than the $3 million difference shown in table 3. The shorter 
statement should eliminate many of the problems associated with fitting 
the statement on cartons with limited flat space. With 3 more months 
for compliance, many more establishments will be able to use up all of 
their carton inventories before the effective date.
    b. Refrigeration. FDA estimated the refrigeration costs to be the 
cost of the additional equipment required for all establishments to 
maintain an ambient temperature of 7.2  deg.C (45  deg.F). The agency 
calculated the cost by multiplying the estimate of the number of 
establishments that would require new (or upgraded) equipment by the 
cost of equipment. FDA estimated the number of establishments that 
would require new equipment by assuming that no establishments in 
States that have adopted the Food Code and some fraction--with one-
third the most likely--of establishments in States that have not 
adopted the Food Code would require new equipment. FDA used industry 
sources to obtain estimates of the range of costs of new or additional 
equipment necessary to meet the refrigeration provision of the final 
rule. The estimated costs per establishment ranged from close to zero 
for small equipment upgrades to $6,000 for a large new refrigerator.
    FDA estimated a distribution of the total possible refrigeration 
costs for the final rule. The range (5th to 95th percentile) of 
estimated one-time refrigeration costs was $7 million to $228 million, 
with a median of $31 million.
    c. Changes in consumer practices. FDA estimated the annual costs to 
consumers of changing the way eggs are prepared and consumed as:

    Cost of changes in consumer practices = annual number of eggs 
consumed x baseline fraction of eggs consumed undercooked x 
fractional reduction in undercooked eggs in response to safe 
handling label x $ value of undercooking one egg.

This cost to consumers is uncertain. The range (5th to 95th percentile) 
of annual costs was $2 million to $20 million, with a median of $10 
million. The cost of changes in consumer practices is an annual 
recurring cost of the final rule.
4. Summary of Costs and Benefits
    Table 4 of this document shows the median estimated benefits and 
costs of the final rule.

        Table 4.--Median Annual Estimated Benefits and Costs of the Final Rule (in Millions of Dollars)
----------------------------------------------------------------------------------------------------------------
                         Benefits/Costs                                 First Year            All Other Years
----------------------------------------------------------------------------------------------------------------
Median estimated benefits (USDA\1\ SE\2\ risk assessment                 $700                    $700
 baseline)
Median estimated benefits (original CDC\3\ surveillance                  $300                    $300
 baseline)
Median estimated benefits (revised CDC surveillance baseline,            $260                    $260
 final rule)
Median estimated costs (proposed rule)                                    $60                     $10
Median estimated cost (final rule)                                        $56                    $10
----------------------------------------------------------------------------------------------------------------
\1\ U.S. Department of Agriculture
\2\ Salmonella Enteritidis
\3\ Centers for Disease Control and Prevention

B. Small Entity Analysis

1. Introduction
    FDA has examined the economic implications of this final rule as 
required by the Regulatory Flexibility Act (5 U.S.C. 601-612). If a 
rule has a significant economic impact on a substantial number of small 
entities, the Regulatory Flexibility Act requires agencies to analyze 
regulatory options that would lessen the economic effect of the rule on 
small entities. FDA finds that, under the Regulatory Flexibility Act, 
this final rule will have a significant economic impact on a 
substantial number of small entities.
2. Economic Effects on Small Entities
    a. Number of small entities affected. The final rule will affect 
many small entities, including egg processors, grocery stores and other 
stores including roadside stands, restaurants, and other food service 
establishments. FDA has not been able to determine how many of the 669 
egg processors registered with the USDA are small businesses (Ref. 11). 
Egg processors generally fall into two industrial classifications: 
Poultry slaughtering and processing (standard industrial classification 
(SIC) code 2015) and whole poultry and poultry products (SIC code 
5144). The two classifications roughly correspond to in-line and off-
line processors. In-line processors package the eggs at the egg laying 
facility. Off-line processors ship the eggs to packers.
    The Small Business Administration (SBA) defines in-line egg 
processors (SIC code 2015-03) to be small businesses if they employ 500 
or fewer people. According to a search in Dun's Market Identifiers 
(Ref. 12) 25 in-line egg-processing firms would be defined as small. 
SBA defines off-line processors (SIC code 5144) to be small if they 
employ 100 or fewer people. Dun's Market Identifiers did not have a 
subcategory for egg processors. For the entire category of poultry and 
poultry products (SIC code 5144), 80 percent of establishments employ 
fewer than 100 workers. If the same proportion holds for the 
subcategory composed of egg processors, then 470 firms would be 
classified as small.\3\ FDA, therefore,

[[Page 76108]]

estimated the total number of small egg processors to be 495 (= 25 + 
470).
---------------------------------------------------------------------------

    \3\ The estimated total number of in-line establishments is 134, 
but 52 are branches of firms. If the total number of in-line firms 
is 82(=134-52), and the number of processors is 669, then 587 firms 
are off-line processors. If 80 percent are small, then 470 off-
line(=0.8  x  587) processors are small.
---------------------------------------------------------------------------

    The refrigeration provision will affect small establishments that 
are not currently refrigerating at 7.2  deg.C (45  deg.F). SBA defines 
grocery stores (SIC code 5411) to be small if annual gross revenue is 
less than $20 million. Other food stores (SIC codes 5431, 5451, and 
5499), which include fruit and vegetable markets, dairy product stores, 
and miscellaneous food stores, are small if annual sales are less than 
$5 million. Restaurants are small if annual sales are less than $5 
million and institutions are small if sales are less than $15 million.
    As shown in table 5 of this document, FDA estimated that the number 
of small establishments affected by the final refrigeration provision 
will be 25,400. One comment questioned how FDA derived this estimate. 
The agency derived this estimate of small businesses affected from the 
estimate for all establishments affected. FDA estimated the number of 
establishments (small and large) currently not keeping eggs at an 
ambient temperature of 7.2  deg.C (45  deg.F) by assuming that some 
fraction of establishments in States without temperature requirements 
were holding eggs at temperatures greater than 7.2  deg.C (45  deg.F). 
FDA does not know the fraction of establishments holding shell eggs at 
temperatures greater than 7.2  deg.C (45  deg.F), so the agency used a 
Monte Carlo simulation to estimate a distribution for the number of 
establishments affected. In the simulation, FDA assumed that in each 
State without a 7.2  deg.C (45  deg.F) requirement, between 0 and 100 
percent (with 33 percent the most likely proportion) of the 
establishments held shell eggs at a higher temperature. The mean result 
of the 1,000 iterations of the simulation was a total of approximately 
44,400 large and small establishments, which included 10,700 grocery 
and other food stores, 24,000 restaurants, and 9,700 institutions 
(including schools, hospitals, nursing homes, prisons, military 
establishments, and universities) (64 FR 36516 at 36536, July, 9 1999). 
FDA reported only the mean of the distribution of simulation results. 
The results for the simulated number of establishments ranged from a 
5th percentile of 12,320 to a 95th percentile of 81,700.
    To estimate the number of small establishments holding eggs at 
temperatures above 7.2  deg.C (45  deg.F), FDA assumed that the 
proportion of small establishments affected by the refrigeration 
provision would be the same as the fraction of institutions for the 
entire category. According to SBA size standards for small entities, 71 
percent of grocery and other food stores and 54 percent of restaurants 
are small. Institutions are more complicated, because they cut across 
SIC codes. FDA assumed that 50 percent of institutions serving eggs are 
small. FDA then estimated the number of small establishments affected 
by the refrigeration provision by multiplying the fraction assumed to 
be small by the total number of establishments affected. Table 5 of 
this document shows the mean number of small establishments likely to 
be affected by the refrigeration provision of the final rule. The 
agency also has included the 5th and 95th percentiles to show the 
uncertainty associated with the mean estimates. FDA emphasizes that 
these are estimates, not a count of the actual firms affected. The 
agency uses them to demonstrate that this final rule will affect a 
substantial number of small establishments.

    Table 5.--Number of Small Entities Likely to be Affected by the Refrigeration Provision of the Final Rule
                                  (Simulation Results; Rounded to Nearest 100)
----------------------------------------------------------------------------------------------------------------
            Category                   5th Percentile                  Mean                 95th Percentile
----------------------------------------------------------------------------------------------------------------
Grocery and Other Stores                  2,100                      7,600                     14,000
Restaurants                               3,600                     13,000                     23,900
Institutions                              1,300                      4,800                      8,900
Total                                     7,000                     25,400                     46,800
----------------------------------------------------------------------------------------------------------------

    b. Costs for small entities. For the 9-month compliance period in 
the final rule, redesign costs per SKU will be about $875 for pulp 
cartons and $375 for foam cartons.\4\ The cost of the labeling 
provision borne by small processors will vary with the number of SKU's 
and the fraction of the costs passed to the processors from carton 
manufacturers. The average number of SKU's per processor for the 
industry is 30; FDA assumed small processors will market somewhere 
between 2 and 20 SKU's. Additional redesign costs could, therefore, be 
as high as $17,500 for a small processor (= 20 x $875), although it is 
unlikely that the processor would bear all redesign costs.
---------------------------------------------------------------------------

    \4\ In the analysis of the proposal, FDA estimated that the 
average redesign cost for foam cartons would be $500 for a 6-month 
compliance period and $250 for a 12-month compliance period. In the 
analysis of the final rule, FDA assumed that the redesign cost for a 
9-month compliance period will by $375, midway between the two. 
Similarly, the agency assumed that the redesign costs for a pulp 
carton will be $875 for a 9-month compliance period, midway between 
the $1,000 and $750 estimated for 6-month and 12-month compliance 
periods.
---------------------------------------------------------------------------

    Refrigeration costs vary across establishments, depending on the 
age of current refrigerators, the planned replacement cycle, and 
whether the small establishments are currently keeping eggs at or below 
7.2  deg.C (45  deg.F). FDA assumed that additional refrigeration costs 
for small retailers will average $633, with $700 the most likely value. 
The agency also assumed that the proportion of additional refrigeration 
costs borne by small entities will be the same as the proportion of 
small entities in each category of establishment. The cost of the 
refrigeration provision to small entities is shown in table 6.

               Table 6.--Costs to Small Entities of the Refrigeration Provision of the Final Rule
----------------------------------------------------------------------------------------------------------------
                                                           Total Costs for Small
                       Category                                   Entities                 Percent of Total
----------------------------------------------------------------------------------------------------------------
Grocery and Other Stores                                            $4.8 million                 30
Restaurants                                                         $8.2 million                 51
Institutions                                                        $3.1 million                 19
Total                                                              $16.1 million                100
----------------------------------------------------------------------------------------------------------------


[[Page 76109]]

3. Regulatory Options
    a. Exemption for small establishments. The burden on small 
establishments would be lifted if they were exempt from the provisions 
of the final rule. Most of the establishments affected by this final 
rule, however, are small. Exempting small establishments from its 
provisions would largely negate the rule. No comments requested 
exemptions from the proposed rule for small establishments.
    b. Longer compliance periods. Lengthening the labeling compliance 
periods for the labeling and refrigeration provisions would provide 
regulatory relief (cost reduction) for small entities. Lengthening the 
refrigeration compliance period from the final rule's effective date to 
12 months after the effective date would reduce costs by allowing 
establishments to postpone upgrading their equipment. To estimate the 
regulatory relief from lengthening the refrigeration compliance period, 
FDA assumed that the reduction in cost would equal the interest 
(discounted at 7 percent per year) on the cost of refrigeration 
equipment over the extension of the compliance period. If the 
compliance period were extended by 12 months, the interest on the cost 
of equipment would be over $1 million (= $16.1 x 0.07). For the most 
likely equipment cost of $700 per small establishment, the interest 
saving would be about $50 (= 0.07 x $700). FDA received no comments 
requesting longer compliance periods for the refrigeration provision.
    (Comment 41) Some comments requested a 12-month compliance period 
for the labeling provision. The agency has responded by increasing the 
compliance period to 9 months. In the cost analysis of this final rule, 
FDA estimated that total industry costs would fall by at least $3 
million if the compliance period for the labeling provisions were 
extended from 6 months to 9 months. Most of the relief will come from 
the reduced costs of redesigning the carton label and reduced inventory 
disposal costs. For pulp cartons, extending the compliance period to 9 
months will reduce redesign costs from $1,000 (for a 6-month compliance 
period) to $875 per SKU. For foam cartons, extending the compliance 
period to 9 months will reduce redesign costs from $500 (for a 6-month 
compliance period) to $375 per SKU. The comments stressed the 
difficulty of redesign caused by the length of the statement in the 
proposal. Because the safe handling statement in the final rule has 
been shortened, FDA expects that redesign costs will not be as large a 
burden as many comments on the proposed rule implied. Furthermore, 
redesign costs are not necessarily passed on to small processors.
    Small processors will, however, bear inventory disposal costs. In 
the cost analysis of the proposal, FDA estimated disposal costs for 
label inventories to be $3 million for a 6-month compliance period. The 
agency believes that the principal relief for small egg packers and 
processors will come from the reduction in inventory costs. For a 9-
month compliance period, the disposal costs for label inventories will 
be $2,250,000. FDA does not know what fraction of those costs will be 
borne by small processors. If the agency assumes that small processors 
bear half of the disposal costs, then the average inventory cost per 
small processor would be $3,000 (= ($3,000,000 x 0.5) / 495) for a 6-
month compliance period and $2,250 (= ($2,250,000 x 0.5) / 495) for a 
9-month compliance period. Changing the effective date to 9 months 
after publication will, therefore, save $750 per small processor. For 
processors holding large inventories, the saving will be larger. The 
longer compliance period will also increase the likelihood that small 
processors will use up their carton inventories and bear no disposal 
costs.
4. Recordkeeping and Recording Requirements
    The Regulatory Flexibility Act requires a description of the 
recordkeeping and recording required for compliance with this rule. 
This rule does not require the preparation of a report or a record.
5. Worst Case for a Small Establishment
    The greatest impact to a small retail establishment as a 
consequence of the refrigeration provision would be the purchase of a 
new refrigerator. In the analysis of the proposal, FDA estimated the 
cost of a new refrigerator to be between $2,500 and $6,000. In order to 
estimate the worst possible outcome for a small entity, FDA assumed 
that some small retail establishment would purchase a new refrigerator 
at the maximum estimated cost of $6,000. If this cost were amortized 
over a 10-year period (using a discount rate of 7 percent) then the 
approximate annual expense would be $850 per year for 10 years. 
According to Dun and Bradstreet, 85 percent of all grocery stores have 
annual sales of less than $20 million, and 71 percent of all 
restaurants have annual sales of less than $5 million (Ref. 12). Among 
the smallest 10 percent of these establishments, the average sales 
volume is $100,000 per year for a grocery store and $50,000 per year 
for a restaurant. Therefore, an additional expense of $850 per year 
amounts to approximately 1 to 2 percent of average sales per year for 
the smallest stores. Grocery stores and restaurants typically have 
profit margins on sales of 1 to 5 percent, so a reduction of the profit 
margin by 40 to 100 percent would be the worst-case outcome for the 
smallest retailers.
    Because the comments on the proposed rule emphasized the importance 
of inventories, FDA concludes that the worst outcome from the labeling 
provision would occur if a small packer held large inventories of 
cartons that could not be used. If average inventory costs per small 
processor (for a 9-month compliance period) are $2,250, some 
establishments could bear much higher inventory costs.
6. Summary of Small Entity Analysis
    FDA estimated that the labeling provisions could impose average 
inventory costs of $2,250 on 495 small processing establishments. The 
refrigeration provision would impose estimated average costs of $633 on 
approximately 25,400 small establishments. The agency concludes that 
this final rule will have a significant economic impact on a 
substantial number of small entities.

V. Federalism

    These rules establish national safe handling labeling and retail 
refrigeration requirements for shell eggs under the FD&C Act and the 
PHS Act. FDA has determined that these egg safety final rules have 
federalism implications under Executive Order 13132 because they will 
preempt State and local labeling and retail refrigeration requirements 
that are not as stringent as Federal requirements. Although FDA 
proposed this rule before Executive Order 13132 was issued or became 
effective, FDA believes that these final rules satisfy the requirements 
of Executive Order 13132.
    The constitutional basis for FDA's authority to regulate the safety 
and labeling of foods is the statutes created by Congress to regulate 
food safety. As set out in the preamble to the proposed and final 
rules, foodborne illness resulting from SE contaminated eggs is a 
public health problem nationwide. However, only 37 States and the 
District of Columbia require refrigeration at 7.2  deg.C (45  deg.F) or 
lower in retail establishments, the temperature that FDA has determined 
is necessary to prevent growth of SE. No State has a requirement for 
complete safe handling instructions. Accordingly, there is a

[[Page 76110]]

clear need for Federal action to establish national standards that will 
ensure the safety of eggs for all consumers in this country.
    To ensure the safety of eggs for all consumers in this country, not 
only must there be national standards, but enforcement of these 
standards must be uniform across the country. However, because State 
and local public health officials are the primary enforcement officials 
in retail establishments, FDA has recognized that it must rely on these 
officials to provide the bulk of the enforcement of these regulations. 
FDA thus believes that it is critical for these regulations to 
establish uniform minimum standards. If less stringent State or local 
refrigeration and labeling requirements are not preempted, enforcement 
of those less stringent requirements--which are not sufficient to 
protect the public health--will interfere with the cooperative 
enforcement of the Federal egg refrigeration and labeling requirements. 
FDA believes that the cooperative enforcement approach utilized in 
these rules is critical to effective implementation of these important 
food safety requirements.
    Thus, although Congress did not expressly preempt State law in this 
area, FDA finds preemption is needed because State and local laws that 
are less stringent than the Federal requirements will significantly 
interfere with the important public health goals of these regulations.
    FDA does not believe that preemption of State and local 
refrigeration and labeling requirements that are the same as or more 
stringent than the requirements of these regulations is necessary, as 
enforcement of such State and local requirements will not interfere 
with the food safety goals of these regulations. Accordingly, the 
preemptive effect of this rule is limited to State or local 
requirements that are not as stringent as the requirements of these 
regulations; requirements that are the same as or more stringent than 
FDA's requirements remain in effect.
    Although the proposed rule was published before Executive Order 
13132, FDA gave States and localities notice of the intended preemptive 
effect of these rules in the notice of proposed rulemaking. In 
addition, FDA consulted with representatives of State and local 
governments before issuing the proposal. FDA received one comment from 
a State Department of Agriculture, which did not discuss preemption and 
one comment from an organization representing State and local food 
safety officials, which raised questions about the scope of preemption. 
These questions are answered in the body of the preamble. As set out in 
the preamble and this discussion on federalism, the preemptive effect 
of these regulations is very narrow.

VI. Environmental Impact

    The agency has previously considered the environmental effects of 
this rule as announced in the proposal (64 FR 36492, July 6, 1999). No 
new information or comments have been received that would affect the 
agency's previous determination that there is no significant impact on 
the human environment and that environmental impact statement is not 
required.

VII. Paperwork Reduction Act of 1995

    FDA concludes that the labeling requirements in this document are 
not subject to review by the Office of Management and Budget because 
they do not constitute a ``collection of information'' under the 
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Rather, the safe 
handling statement is ``public disclosure of information originally 
supplied by the Federal government to the recipient for the purpose of 
disclosure to the public'' (5 CFR 1320.3(c)(2)).

VIII. References

    The following references have been placed on display at the Dockets 
Management Branch (HFA-305), Food and Drug Administration, 5630 Fishers 
Lane, rm. 1061, Rockville, MD 20852, and may be seen by interested 
persons between 9 a.m. and 4 p.m., Monday through Friday.

    1. President's Council on Food Safety, ``Egg Safety from 
Production to Consumption: an Action Plan to Eliminate Salmonella 
Enteritidis Illnesses due to Eggs,'' December 10, 1999.
    2. Summary Report on Focus Group Testing of Safe Handling 
Statements on Shell Eggs. Levy, A. S. and A. W. Heaton, Consumer 
Studies Team, Office of Scientific Analysis and Support, Center for 
Food Safety and Applied Nutrition, Food and Drug Administration, 
March 13, 1998.
    3. FDA memorandum, Alan S. Levy to Kenneth Falci, June 26, 1999.
    4. ``FDA: Consumers are Changing,'' Food Safety Educator, vol. 
3(4), p. 2, 1998.
    5. U.S. Public Health Service, ``Food Code: 1999, 
Recommendations of the United States Public Health Service, Food and 
Drug Administration,'' Ch. 3.
    6. Review of Research Communicating Warning Information. 
Consumer Studies Team, Office of Scientific Analysis and Support, 
Center for Food Safety and Applied Nutrition, Food and Drug 
Administration, p. 54, July 1998.
    7. Food Marketing Institute (conducted by Abt Associates, Inc.), 
``Trends in the United States: Consumer Attitudes & the 
Supermarket,'' Washington, DC, Food Marketing Institute, 1996.
    8. United States Department of Agriculture, Food Safety and 
Inspection Service, FSIS Directive 8840.1, ``Enforcement of 
Refrigeration and Labeling Requirements for Shell Eggs Packed for 
Consumer Use,'' June 18, 1999.
    9. Centers for Disease Control and Prevention, ``Incidence of 
Foodborne Illnesses: Preliminary Data from the Foodborne Diseases 
Active Surveillance Network (FoodNet)--United States, 1998,'' 
Morbidity and Mortality Weekly Report, vol. 48, pp. 189-194, March 
12, 1999.
    10. Mead, P. S., L. Slutsker, V. Dietz, L. F. McCaig, J. S. 
Bresee, C. Shapiro, P. M. Griffin, and R. V. Tauxe, ``Food-Related 
Illness and Death in the United States,'' Emerging Infectious 
Diseases, vol. 5, pp. 607-625, September to October 1999.
    11. FDA memorandum, Peter Vardon to the record, October 7, 1998.
    12. The Dialog Corp., Dun's Market Identifiers, Mountain View, 
CA, March 19, 1998.

List of Subjects

21 CFR Part 16

    Administrative practice and procedure.

21 CFR Part 101

    Food labeling, Nutrition, Reporting and recordkeeping requirements.

21 CFR Part 115

    Eggs, Refrigeration.


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

PART 16--REGULATORY HEARING BEFORE THE FOOD AND DRUG ADMINISTRATION

    1. The authority citation for 21 CFR part 16 continues to read as 
follows:

    Authority: 15 U.S.C. 1451-1461; 21 U.S.C. 141-149, 321-394, 
467f, 679, 821, 1034; 28 U.S.C. 2112; 42 U.S.C. 201-262, 263b, 364.


    2. Section 16.5 is amended by adding paragraph (a)(4) to read as 
follows:


Sec. 16.5  Inapplicability and limited applicability.

    (a) * * *
    (4) A hearing on an order for relabeling, diversion, or destruction 
of shell eggs under section 361 of the Public Health Service Act (42 
U.S.C. 264) and Secs. 101.17(h) and 115.50 of this chapter.
* * * * *

PART 101--FOOD LABELING

    3. The authority citation for 21 CFR part 101 is revised to read as 
follows:


[[Page 76111]]


    Authority: 15 U.S.C. 1453, 1454, 1455; 21 U.S.C. 321, 331, 342, 
343, 348, 371; 42 U.S.C. 243, 264, 271.


    4. Section 101.17 is amended by revising the section heading and by 
adding paragraph (h) to read as follows:


Sec. 101.17  Food labeling warning, notice, and safe handling 
statements.

* * * * *
    (h) Shell eggs. (1) The label of all shell eggs, whether in 
intrastate or interstate commerce, shall bear the following statement:
    SAFE HANDLING INSTRUCTIONS: To prevent illness from bacteria: keep 
eggs refrigerated, cook eggs until yolks are firm, and cook foods 
containing eggs thoroughly.
    (2) The label statement required by paragraph (h)(1) of this 
section shall appear prominently and conspicuously, with the words 
``SAFE HANDLING INSTRUCTIONS'' in bold type, on the information panel 
or principal display panel of the container.
    (3) The label statement required by paragraph (h)(1) of this 
section shall be set off in a box by use of hairlines.
    (4) Shell eggs that have been, before distribution to consumers, 
specifically processed to destroy all viable Salmonella shall be exempt 
from the requirements of paragraph (h) of this section.
    (5) The safe handling statement for shell eggs that are not for 
direct sale to consumers, e.g., those that are to be repacked or 
labeled at a site other than where originally processed, or are sold 
for use in food service establishments, may be provided on cartons or 
in labeling, e.g., invoices or bills of lading in accordance with the 
practice of the trade.
    (6) Under sections 311 and 361 of the Public Health Service Act 
(PHS Act), any State or locality that is willing and able to assist the 
agency in the enforcement of paragraphs (h)(1) through (h)(5) of this 
section, and is authorized to inspect or regulate establishments 
handling packed shell eggs, may in its own jurisdiction, enforce 
paragraphs (h)(1) through (h)(5) of this section through inspections 
under paragraph (h)(8) of this section and through administrative 
enforcement remedies identified in paragraph (h)(7) of this section 
until FDA notifies the State or locality in writing that such 
assistance is no longer needed. When providing such assistance, a State 
or locality may follow the hearing procedures set out in paragraphs 
(h)(7)(ii)(C) through (h)(7)(ii)(D) of this section, substituting, 
where necessary, appropriate State or local officials for designated 
FDA officials or may utilize State or local hearing procedures if such 
procedures satisfy due process.
    (7) This paragraph (h) is established under authority of both the 
Federal Food, Drug, and Cosmetic Act (the act) and the PHS Act. Under 
the act, the agency can enforce the food misbranding provisions under 
21 U.S.C. 331, 332, 333, and 334. However, 42 U.S.C. 264 provides for 
the issuance of implementing enforcement regulations; therefore, FDA 
has established the following administrative enforcement procedures for 
the relabeling, diversion, or destruction of shell eggs and informal 
hearings under the PHS Act:
    (i) Upon finding that any shell eggs are in violation of this 
section an authorized FDA representative or State or local 
representative in accordance with paragraph (h)(6) of this section may 
order such eggs to be relabeled under the supervision of said 
representative, diverted, under the supervision of said representative 
for processing in accordance with the Egg Products Inspection Act 
(EPIA) (21 U.S.C. 1031 et seq.), or destroyed by or under the 
supervision of an officer or employee of the FDA, or, if applicable, of 
the State or locality, in accordance with the following procedures:
    (A) Order for relabeling, diversion, or destruction under the PHS 
Act. Any district office of the FDA or any State or locality acting 
under paragraph (h)(6) of this section, upon finding shell eggs held in 
violation of this regulation, may serve upon the person in whose 
possession such eggs are found a written order that such eggs be 
relabeled with the required statement in paragraph (h)(1) of this 
section before further distribution. If the person chooses not to 
relabel, the district office of the FDA or, if applicable, the 
appropriate State or local agency may serve upon the person a written 
order that such eggs be diverted (from direct consumer sale, e.g., to 
food service) under the supervision of an officer or employee of the 
issuing entity, for processing in accordance with the EPIA (21 U.S.C. 
1031 et seq.) or destroyed by or under the supervision of the issuing 
entity, within 10-working days from the date of receipt of the order.
    (B) Issuance of order. The order shall include the following 
information:
    (1) A statement that the shell eggs identified in the order are 
subject to relabeling, diversion for processing in accordance with the 
EPIA, or destruction;
    (2) A detailed description of the facts that justify the issuance 
of the order;
    (3) The location of the eggs;
    (4) A statement that these eggs shall not be sold, distributed, or 
otherwise disposed of or moved except as provided in paragraph 
(h)(7)(i)(E) of this section;
    (5) Identification or description of the eggs;
    (6) The order number;
    (7) The date of the order;
    (8) The text of this entire section;
    (9) A statement that the order may be appealed by written appeal or 
by requesting an informal hearing;
    (10) The name and phone number of the person issuing the order; and
    (11) The location and telephone number of the responsible office or 
agency and the name of its director.
    (C) Approval of director. An order, before issuance, shall be 
approved by the director of the office or agency issuing the order. If 
prior written approval is not feasible, prior oral approval shall be 
obtained and confirmed by written memorandum as soon as possible.
    (D) Labeling or marking of shell eggs under order. An FDA, State, 
or local representative issuing an order under paragraph (h)(7)(i)(A) 
of this section shall label or mark the shell eggs with official tags 
that include the following information:
    (1) A statement that the shell eggs are detained in accordance with 
regulations issued under section 361(a) of the PHS Act (42 U.S.C. 
264(a)).
    (2) A statement that the shell eggs shall not be sold, distributed 
or otherwise disposed of or moved except, after notifying the issuing 
entity in writing, to:
    (i) Relabel, divert them for processing in accordance with the 
EPIA, or destroy them, or
    (ii) Move them to another location for holding pending appeal.
    (3) A statement that the violation of the order or the removal or 
alteration of the tag is punishable by fine or imprisonment or both 
(section 368 of the PHS Act, 42 U.S.C. 271).
    (4) The order number and the date of the order, and the name of the 
government representative who issued the order.
    (E) Sale or other disposition of shell eggs under order. After 
service of the order, the person in possession of the shell eggs that 
are the subject of the order shall not sell, distribute, or otherwise 
dispose of or move any eggs subject to the order unless and until the 
notice is withdrawn after an appeal except, after notifying FDA's 
district office or, if applicable, the State or local agency in 
writing, to:
    (1) Relabel, divert, or destroy them as specified in paragraph 
(h)(7)(i) of this section, or
    (2) Move them to another location for holding pending appeal.

[[Page 76112]]

    (ii) The person on whom the order for relabeling, diversion, or 
destruction is served may either comply with the order or appeal the 
order to the FDA Regional Food and Drug Director.
    (A) Appeal of a detention order. Any appeal shall be submitted in 
writing to the FDA District Director in whose district the shell eggs 
are located within 5-working days of the issuance of the order. If the 
appeal includes a request for an informal hearing, the hearing shall be 
held within 5-working days after the appeal is filed or, if requested 
by the appellant, at a later date, which shall not be later than 20-
calendar days after the issuance of the order. The order may also be 
appealed within the same period of 5-working days by any other person 
having an ownership or proprietary interest in such shell eggs. The 
appellant of an order shall state the ownership or proprietary interest 
the appellant has in the shell eggs.
    (B) Summary decision. A request for a hearing may be denied, in 
whole or in part and at any time after a request for a hearing has been 
submitted, if the FDA Regional Food and Drug Director or his or her 
designee determines that no genuine and substantial issue of fact has 
been raised by the material submitted in connection with the hearing or 
from matters officially noticed. If the FDA Regional Food and Drug 
Director determines that a hearing is not justified, written notice of 
the determination will be given to the parties explaining the reason 
for denial.
    (C) Informal hearing. Appearance by any appellant at the hearing 
may be by mail or in person, with or without counsel. The informal 
hearing shall be conducted by the FDA Regional Food and Drug Director 
or his designee, and a written summary of the proceedings shall be 
prepared by the FDA Regional Food and Drug Director.
    (1) The FDA Regional Food and Drug Director may direct that the 
hearing be conducted in any suitable manner permitted by law and this 
section. The FDA Regional Food and Drug Director has the power to take 
such actions and make such rulings as are necessary or appropriate to 
maintain order and to conduct an informal fair, expeditious, and 
impartial hearing, and to enforce the requirements concerning the 
conduct of hearings.
    (2) Employees of FDA will first give a full and complete statement 
of the action which is the subject of the hearing, together with the 
information and reasons supporting it, and may present oral or written 
information relevant to the hearing. The party requesting the hearing 
may then present oral or written information relevant to the hearing. 
All parties may conduct reasonable examination of any person (except 
for the presiding officer and counsel for the parties) who makes any 
statement on the matter at the hearing.
    (3) The hearing shall be informal in nature, and the rules of 
evidence do not apply. No motions or objections relating to the 
admissibility of information and views will be made or considered, but 
any party may comment upon or rebut any information and views presented 
by another party.
    (4) The party requesting the hearing may have the hearing 
transcribed, at the party's expense, in which case a copy of the 
transcript is to be furnished to FDA. Any transcript of the hearing 
will be included with the FDA Regional Food and Drug Director's report 
of the hearing.
    (5) The FDA Regional Food and Drug Director shall prepare a written 
report of the hearing. All written material presented at the hearing 
will be attached to the report. Whenever time permits, the FDA Regional 
Food and Drug Director may give the parties the opportunity to review 
and comment on the report of the hearing.
    (6) The FDA Regional Food and Drug Director shall include as part 
of the report of the hearing a finding on the credibility of witnesses 
(other than expert witnesses) whenever credibility is a material issue, 
and shall include a recommended decision, with a statement of reasons.
    (D) Written appeal. If the appellant appeals the detention order 
but does not request a hearing, the FDA Regional Food and Drug Director 
shall render a decision on the appeal affirming or revoking the 
detention within 5-working days after the receipt of the appeal.
    (E) Regional Food and Drug Director decision. If, based on the 
evidence presented at the hearing or by the appellant in a written 
appeal, the FDA Regional Food and Drug Director finds that the shell 
eggs were held in violation of this section, he shall affirm the order 
that they be relabeled, diverted under the supervision of an officer or 
employee of the FDA for processing under the EPIA, or destroyed by or 
under the supervision of an officer or employee of the FDA; otherwise, 
the FDA Regional Food and Drug Director shall issue a written notice 
that the prior order is withdrawn. If the FDA Regional Food and Drug 
Director affirms the order he shall order that the relabeling, 
diversion, or destruction be accomplished within 10-working days from 
the date of the issuance of his decision. The FDA Regional Food and 
Drug Director's decision shall be accompanied by a statement of the 
reasons for the decision. The decision of the FDA Regional Food and 
Drug Director shall constitute final agency action, reviewable in the 
courts.
    (F) No appeal. If there is no appeal of the order and the person in 
possession of the shell eggs that are subject to the order fails to 
relabel, divert, or destroy them within 10-working days, or if the 
demand is affirmed by the FDA Regional Food and Drug Director after an 
appeal and the person in possession of such eggs fails to relabel, 
divert, or destroy them within 10-working days, the FDA district 
office, or, if applicable, the State or local agency may designate an 
officer or employee to divert or destroy such eggs. It shall be 
unlawful to prevent or to attempt to prevent such diversion or 
destruction of the shell eggs by the designated officer or employee.
    (8) Persons engaged in handling or storing packed shell eggs for 
retail distribution shall permit authorized representatives of FDA to 
make at any reasonable time such inspection of the establishment in 
which shell eggs are being held, including inspection and sampling of 
the labeling of such eggs as may be necessary in the judgment of such 
representatives to determine compliance with the provisions of this 
section. Inspections may be made with or without notice and will 
ordinarily be made during regular business hours.
    (9) No State or local governing entity shall establish or continue 
in effect any law, rule, regulation, or other requirement requiring 
safe handling instructions on unpasteurized shell eggs that are less 
stringent than those required in paragraphs (h)(1) through (h)(5) of 
this section.

    5. New part 115 is added to read as follows:

PART 115--SHELL EGGS

    Authority: 21 U.S.C. 342, 371; 42 U.S.C. 243, 264, 271.


Sec. 115.50  Refrigeration of shell eggs held for retail distribution.

    (a) For purposes of this section a ``retail establishment'' is an 
operation that stores, prepares, packages, serves, vends, or otherwise 
provides food for human consumption directly to consumers.
    (b) Except as provided in paragraph (c) of this section, all shell 
eggs, whether in intrastate or interstate commerce, held for retail 
distribution:
    (1) Shall promptly be placed under refrigeration as specified in 
paragraph (b)(2) of this section upon receipt at a retail 
establishment, except that, when short delays are unavoidable, the eggs

[[Page 76113]]

shall be placed under refrigeration, as soon as reasonably possible; 
and
    (2) Shall be stored and displayed under refrigeration at an ambient 
temperature not greater than 7.2  deg.C (45  deg.F) while held at a 
retail establishment.
    (c) Shell eggs that have been specifically processed to destroy all 
viable Salmonella shall be exempt from the requirements of paragraph 
(b) of this section.
    (d) Under sections 311 and 361 of the Public Health Service Act 
(PHS Act), any State or locality that is willing and able to assist the 
agency in the enforcement of paragraph (b) of this section, and is 
authorized to inspect or regulate retail establishments, may, in its 
own jurisdiction, enforce paragraph (b) of this section through 
inspections under paragraph (f) of this section and through 
administrative enforcement remedies identified in paragraph (e) of this 
section until FDA notifies the State or locality in writing that such 
assistance is no longer needed. When providing assistance under 
paragraph (e) of this section, a State or locality may follow the 
hearing procedures set out in paragraphs (e)(2)(iii) through (e)(2)(iv) 
of this section, substituting, where necessary, appropriate State or 
local officials for designated FDA officials or may utilize State or 
local hearing procedures if such procedures satisfy due process.
    (e) This section is established under authority of both the Federal 
Food, Drug, and Cosmetic Act (the act) and the PHS Act. Under the act, 
the agency can enforce the food adulteration provisions under 21 U.S.C. 
331, 332, 333, and 334. However, 42 U.S.C. 264 provides for the 
issuance of implementing enforcement regulations; therefore, FDA has 
established the following administrative enforcement procedures for the 
diversion or destruction of shell eggs and for informal hearings under 
the PHS Act:
    (1) Upon finding that any shell eggs have been held in violation of 
this section, an authorized FDA representative or a State or local 
representative in accordance with paragraph (d) of this section may 
order such eggs to be diverted, under the supervision of said 
representative, for processing in accordance with the Egg Products 
Inspection Act (EPIA) (21 U.S.C. 1031 et seq.) or destroyed by or under 
the supervision of an officer or employee of the FDA, or, if 
applicable, of the State or locality in accordance with the following 
procedures:
    (i) Order for diversion or destruction. Any district office of FDA 
or any State or local agency acting under paragraph (d) of this 
section, upon finding shell eggs held in violation of this section, may 
serve upon the person in whose possession such eggs are found a written 
order that such eggs be diverted, under the supervision of an officer 
or employee of the issuing entity, for processing in accordance with 
the EPIA (21 U.S.C. 1031 et seq.) or destroyed by or under the 
supervision of said district office, within 10-working days from the 
date of receipt of the order.
    (ii) Issuance of order. The order shall include the following 
information:
    (A) A statement that the shell eggs identified in the order are 
subject to diversion for processing in accordance with the EPIA or 
destruction;
    (B) A detailed description of the facts that justify the issuance 
of the order;
    (C) The location of the eggs;
    (D) A statement that these eggs shall not be sold, distributed, or 
otherwise disposed of or moved except as provided in paragraph 
(e)(1)(v) of this section;
    (E) Identification or description of the eggs;
    (F) The order number;
    (G) The date of the order;
    (H) The text of this entire section;
    (I) A statement that the order may be appealed by written appeal or 
by requesting an informal hearing;
    (J) The name and phone number of the person issuing the order; and
    (K) The location and telephone number of the office or agency and 
the name of its director.
    (iii) Approval of District Director. An order, before issuance, 
shall be approved by the Food and Drug Administration (FDA) District 
Director in whose district the shell eggs are located. If prior written 
approval is not feasible, prior oral approval shall be obtained and 
confirmed by written memorandum as soon as possible.
    (iv) Labeling or marking of shell eggs under order. An FDA, State, 
or local agency representative issuing an order under paragraph (e)(1) 
of this section shall label or mark the shell eggs with official tags 
that include the following information:
    (A) A statement that the shell eggs are detained in accordance with 
regulations issued under section 361(a) of the PHS Act (42 U.S.C. 
264(a)).
    (B) A statement that the shell eggs shall not be sold, distributed 
or otherwise disposed of or moved except, after notifying the issuing 
entity in writing, to:
    (1) Divert them for processing in accordance with the EPIA or 
destroy them; or
    (2) Move them to an another location for holding pending appeal.
    (C) A statement that the violation of the order or the removal or 
alteration of the tag is punishable by fine or imprisonment or both 
(section 368 of the PHS Act, 42 U.S.C. 271).
    (D) The order number and the date of the order, and the name of the 
government representative who issued the order.
    (v) Sale or other disposition of shell eggs under order. After 
service of the order, the person in possession of the shell eggs that 
are the subject of the order shall not sell, distribute, or otherwise 
dispose of or move any eggs subject to the order unless and until the 
notice is withdrawn after an appeal except, after notifying FDA's 
district office or, if applicable, the State or local agency in 
writing, to:
    (A) Divert or destroy them as specified in paragraph (e)(1)(i) of 
this section; or
    (B) Move them to another location for holding pending appeal.
    (2) The person on whom the order for diversion or destruction is 
served may either comply with the order or appeal the order to the FDA 
Regional Food and Drug Director in accordance with the following 
procedures:
    (i) Appeal of a detention order. Any appeal shall be submitted in 
writing to FDA's District Director in whose district the shell eggs are 
located within 5-working days of the issuance of the order. If the 
appeal includes a request for an informal hearing, the hearing shall be 
held within 5-working days after the appeal is filed or, if requested 
by the appellant, at a later date, which shall not be later than 20-
calendar days after the issuance of the order. The order may also be 
appealed within the same period of 5-working days by any other person 
having an ownership or proprietary interest in such shell eggs. The 
appellant of an order shall state the ownership or proprietary interest 
the appellant has in the shell eggs.
    (ii) Summary decision. A request for a hearing may be denied, in 
whole or in part and at any time after a request for a hearing has been 
submitted, if the FDA Regional Food and Drug Director or his or her 
designee determines that no genuine and substantial issue of fact has 
been raised by the material submitted in connection with the hearing or 
from matters officially noticed. If the FDA Regional Food and Drug 
Director determines that a hearing is not justified, written notice of 
the determination will be given to the parties explaining the reason 
for denial.
    (iii) Informal hearing. Appearance by any appellant at the hearing 
may be by mail or in person, with or without counsel. The informal 
hearing shall be conducted by the FDA Regional Food and Drug Director 
or his designee, and

[[Page 76114]]

a written summary of the proceedings shall be prepared by the FDA 
Regional Food and Drug Director.
    (A) The FDA Regional Food and Drug Director may direct that the 
hearing be conducted in any suitable manner permitted by law and this 
section. The FDA Regional Food and Drug Director has the power to take 
such actions and make such rulings as are necessary or appropriate to 
maintain order and to conduct an informal fair, expeditious, and 
impartial hearing, and to enforce the requirements concerning the 
conduct of hearings.
    (B) Employees of FDA will first give a full and complete statement 
of the action which is the subject of the hearing, together with the 
information and reasons supporting it, and may present oral or written 
information relevant to the hearing. The party requesting the hearing 
may then present oral or written information relevant to the hearing. 
All parties may conduct reasonable examination of any person (except 
for the presiding officer and counsel for the parties) who makes any 
statement on the matter at the hearing.
    (C) The hearing shall be informal in nature, and the rules of 
evidence do not apply. No motions or objections relating to the 
admissibility of information and views will be made or considered, but 
any party may comment upon or rebut any information and views presented 
by another party.
    (D) The party requesting the hearing may have the hearing 
transcribed, at the party's expense, in which case a copy of the 
transcript is to be furnished to FDA. Any transcript of the hearing 
will be included with the FDA Regional Food and Drug Director's report 
of the hearing.
    (E) The FDA Regional Food and Drug Director shall prepare a written 
report of the hearing. All written material presented at the hearing 
will be attached to the report. Whenever time permits, the FDA Regional 
Food and Drug Director may give the parties the opportunity to review 
and comment on the report of the hearing.
    (F) The FDA Regional Food and Drug Director shall include as part 
of the report of the hearing a finding on the credibility of witnesses 
(other than expert witnesses) whenever credibility is a material issue, 
and shall include a recommended decision, with a statement of reasons.
    (iv) Written appeal. If the appellant appeals the detention order 
but does not request a hearing, the FDA Regional Food and Drug Director 
shall render a decision on the appeal affirming or revoking the 
detention within 5-working days after the receipt of the appeal.
    (v) Regional Food and Drug Director decision. If, based on the 
evidence presented at the hearing or by the appellant in a written 
appeal, the Regional Food and Drug Director finds that the shell eggs 
were held in violation of this section, he shall affirm the order that 
they be diverted, under the supervision of an officer or employee of 
the FDA for processing under the EPIA or destroyed by or under the 
supervision of an officer or employee of the FDA; otherwise, the 
Regional Food and Drug Director shall issue a written notice that the 
prior order is withdrawn. If the Regional Food and Drug Director 
affirms the order he shall order that the diversion or destruction be 
accomplished within 10-working days from the date of the issuance of 
his decision. The Regional Food and Drug Director's decision shall be 
accompanied by a statement of the reasons for the decision. The 
decision of the Regional Food and Drug Director shall constitute final 
agency action, reviewable in the courts.
    (vi) No appeal. If there is no appeal of the order and the person 
in possession of the shell eggs that are subject to the order fails to 
divert or destroy them within 10-working days, or if the demand is 
affirmed by the Regional Food and Drug Director after an appeal and the 
person in possession of such eggs fails to divert or destroy them 
within 10-working days, FDA's district office or appropriate State or 
local agency may designate an officer or employee to divert or destroy 
such eggs. It shall be unlawful to prevent or to attempt to prevent 
such diversion or destruction of the shell eggs by the designated 
officer or employee.
    (f) Inspection. Persons engaged in retail distribution of shell 
eggs shall permit authorized representatives of FDA to make at any 
reasonable time such inspection of the retail establishment in which 
shell eggs are being held, including inspection and sampling of such 
eggs and the equipment in which shell eggs are held and any records 
relating to such equipment or eggs, as may be necessary in the 
judgement of such representatives to determine compliance with the 
provisions of this section. Inspections may be made with or without 
notice and will ordinarily be made during regular business hours.
    (g) Preemption. No State or local governing entity shall establish 
or continue in effect any law, rule, regulation, or other requirement 
allowing refrigeration of unpasteurized shell eggs at retail 
establishments at any temperature greater than 7.2  deg.C (45  deg.F).

    Dated: June 2, 2000.
Jane E. Henney,
Commissioner of Food and Drugs.
Donna E. Shalala,
Secretary of Health and Human Services.
[FR Doc. 00-30761 Filed 11-30-00; 10:20 am]
BILLING CODE 4160-01-F