[Federal Register Volume 67, Number 193 (Friday, October 4, 2002)]
[Rules and Regulations]
[Pages 62171-62178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-25252]


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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

21 CFR Part 163

[Docket Nos. 86P-0297 and 93P-0091]


White Chocolate; Establishment of a Standard of Identity

AGENCY: Food and Drug Administration, HHS.

ACTION: Final rule.

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SUMMARY: The Food and Drug Administration (FDA) is establishing a 
standard of identity for white chocolate. This standard will provide 
for the use of the term ``white chocolate'' as the common or usual name 
of products made from cacao fat (i.e., cocoa butter), milk solids, 
nutritive carbohydrate sweeteners, and other safe and suitable 
ingredients, but containing no nonfat cacao solids. The standard for 
white chocolate will promote honesty and fair dealing in the interest 
of consumers and, to the extent practicable, will achieve consistency 
with existing international standards of identity for white chocolate. 
This standard is established in response to citizen petitions submitted 
separately by the Hershey Foods Corp. (Hershey) and by the Chocolate 
Manufacturers Association of the United States of America (CMA).

DATES: This rule is effective January 1, 2004. This rule is applicable 
to all affected products initially introduced or initially delivered 
for introduction into interstate commerce on or after January 1, 2004. 
Voluntary compliance may begin immediately.

FOR FURTHER INFORMATION CONTACT: Geraldine A. June, Center for Food 
Safety and Applied Nutrition (HFS-822), Food and Drug Administration, 
5100 Paint Branch Pkwy., College Park, MD 20740, 301-436-2371.

[[Page 62172]]


SUPPLEMENTARY INFORMATION:

I. Background

    In the Federal Register of March 10, 1997 (62 FR 10781), FDA 
published a proposal to establish a standard of identity for white 
chocolate. The proposal responded to petitions submitted separately by 
Hershey and by CMA. The petitions requested that FDA establish a 
standard of identity for ``white chocolate.'' Both Hershey and CMA 
described ``white chocolate'' as a food that deviates from the 
standardized cacao products in part 163 (21 CFR part 163) in that: (1) 
It is prepared without the nonfat components of the ground cacao nibs 
but contains the fat (cocoa butter) expressed from the ground cacao 
nibs; and (2) it may contain safe and suitable antioxidants. The 
petitioners further described ``white chocolate'' as the solid or 
semiplastic food prepared by mixing and grinding cocoa butter with one 
or more nutritive sweeteners and one or more of the optional dairy 
ingredients provided in part 163. The petitioners stated that ``white 
chocolate'' contains not less than 20 percent cocoa butter, not less 
than 14 percent of total milk solids, not less than 3.5 percent 
milkfat, and not more than 55 percent nutritive carbohydrate 
sweeteners.
    The petitioners maintained that a standard of identity for ``white 
chocolate'' would provide several benefits: (1) Reducing economic 
deception and promoting honesty and fair dealing in the interest of 
consumers, (2) increasing the availability of products containing white 
chocolate by eliminating the requirement that firms receive temporary 
marketing permits (TMPs), and (3) enhancing the international 
marketability of white chocolate by establishing a standard consistent 
with international standards for white chocolate.
    Based on FDA's review of the information provided in the petitions, 
we (FDA) tentatively concluded that it would be reasonable to establish 
a standard of identity for ``white chocolate.'' We tentatively 
concluded that use of the term would aid consumer recognition of the 
food and would promote honesty and fair dealing in the interest of 
consumers by eliminating the potential for economic fraud and consumer 
deception through the substitution of cheaper ingredients for cacao-
derived ingredients. Furthermore, the agency tentatively concluded 
that: (1) Consumer confusion created by the use of alternative names 
for white chocolate-type confections would also be eliminated and (2) 
use of the standardized term ``white chocolate'' would enhance the 
international marketability of such products. Based on these tentative 
conclusions, FDA published a proposed rule to establish a standard of 
identity for ``white chocolate,'' consistent with the product described 
in the petitions (62 FR 10781 at 10786).
    FDA received seven responses to the proposal, each containing one 
or more comments. Six responses were from companies that manufacture or 
market chocolate products, and the other was from a trade association. 
Most of the comments supported the establishment of a standard of 
identity for white chocolate. Other comments either opposed the 
establishment of a standard of identity for white chocolate or 
suggested modifications or revisions to various provisions of the 
proposed standard.
    After considering the comments, FDA concludes that issuing a food 
standard for white chocolate will promote honesty and fair dealing in 
the interest of consumers. Specifically, a food standard for white 
chocolate will permit the sale of a product labeled ``white chocolate'' 
without TMPs and ensure that such products contain cacao-derived 
ingredients. The standard will distinguish white chocolate from the 
other standardized chocolate products, which contain chocolate liquor. 
Also, by eliminating requirements for TMPs, the standard will benefit 
consumers by allowing manufacturers to introduce white chocolate more 
quickly. Finally, the white chocolate food standard, which is 
consistent with the standards of Canada, the European Union (EU), and 
Codex Alimentarius Commission (Codex), will promote international 
harmonization.

II. Comments and the Agency's Response

    (Comment 1) One comment opposed creating a standard of identity for 
white chocolate. The comment contended that a TMP is not required to 
sell white chocolate in the United States because the name ``white 
chocolate'' is sufficiently different from the names of standardized 
chocolate products. Thus, the comment contended, elimination of the TMP 
process is not a valid justification for the establishment of a 
standard of identity. The comment maintained that FDA is promoting the 
use of TMPs for all new products that may be perceived as variations of 
existing standardized products, no matter how easily distinguishable 
they may be, and even though there is no consumer confusion or 
deception. The comment further maintained that FDA could conserve 
agency resources by giving guidance that the TMP process will no longer 
be required for white chocolate products.
    We disagree with the assertion that TMPs are not needed to market 
white chocolate products in the absence of a standard of identity. A 
product labeled as ``white chocolate'' contains the term ``chocolate,'' 
an alternative nomenclature for chocolate liquor that indicates the 
presence of cacao-derived ingredients. All existing chocolate standards 
include the cacao-derived ingredient chocolate liquor, which contains 
both the nonfat and the fat components of the cacao nibs. In contrast, 
the cacao-derived ingredient contained in products that consumers have 
come to know as ``white chocolate'' is cacao fat (i.e., cocoa butter), 
not chocolate liquor. Because the term ``chocolate'' implies that the 
product contains cacao-derived ingredients similar to those in 
standardized chocolate products, in the absence of a standard of 
identity or TMP, the product described in the proposed standard could 
not use the term ``chocolate'' on its labeling. Specifically, a product 
labeled ``white chocolate'' would purport to be chocolate, but it would 
not comply with the current food standards for cacao products in part 
163. Therefore, the product would be misbranded under section 403(g) of 
the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 343 (g)).
    (Comment 2) The one comment that objected to the establishment of a 
standard of identity for white chocolate suggested that FDA should 
reconsider the need for a standard of identity and should regulate 
white chocolate like other nonstandardized products. The comment 
maintained that: (1) Only a few foods are currently governed by 
standards of identity; (2) most existing standards were adopted more 
than 25 years ago; (3) thousands of newly introduced foods have been 
regulated successfully under common or usual name regulations part 102 
(21 CFR part 102) and under general misbranding provisions (section 403 
of the act); and (4) standards do not play the same role in the 
regulatory scheme as they did many years ago when product names were 
the primary source of product information for consumers. The comment 
credited the success of using common or usual name regulations and 
general misbranding provisions to regulate nonstandardized foods to the 
additional ingredient and nutrition information now required on food 
labels. The comment pointed out that even though there is a standard 
for French dressing, there is no standard for ranch dressing. 
Analogously, the

[[Page 62173]]

comment asserted that white chocolate is not inherently different from 
the thousands of other nonstandardized foods and, therefore, there is 
no need for a standard of identity for white chocolate.
    FDA does not agree that a common or usual name regulation for white 
chocolate is sufficient to ensure honesty and fair dealing in the 
interest of consumers. First, FDA disagrees with the assertion that 
there are only a few standards of identity and that many more foods are 
regulated under common or usual name regulations. There are over 280 
standards of identity, but there are only 16 common or usual name 
regulations.
    When deciding whether it is appropriate to establish a standard of 
identity or a common or usual name regulation, FDA must consider which 
is more likely to ensure that consumers are not deceived or misled. 
Food standards are appropriate and necessary when there is a need to 
prescribe the entire compositional requirement for a food, in addition 
to the name of the food. In contrast, common or usual name regulations 
are appropriate if there is a need simply to establish a uniform and 
informative name for the food.
    Because products bearing the name ``chocolate'' would be expected 
to contain some cacao-derived ingredients, we believe that it is 
necessary to ensure that ``white chocolate'' contains cacao-derived 
ingredients. If FDA establishes a common or usual name regulation for 
``white chocolate,'' rather than a standard of identity, it would be 
necessary to include in the common or usual name a statement of the 
percentage of the characterizing ingredient, cacao fat, as provided in 
Sec.  102.5(b). We disagree that establishing a common or usual name in 
this manner is the appropriate way to protect consumers' interests. The 
required additional labeling regarding the name and percentage of the 
characterizing ingredient, cacao fat, in the common or usual name might 
be confusing to consumers, especially because the amount of cacao fat 
would be disclosed differently than the amount of total fat in the 
nutrition label. A food standard eliminates the need for additional 
labeling. Therefore, FDA concludes that the appropriate way to ensure 
the composition of ``white chocolate'' and to protect consumers' 
interests is by establishing a standard of identity and not a common or 
usual name.
    Moreover, at the time that they were established, one of the 
benefits of common or usual name provisions in part 102 was that names 
of new products could be established by regulation using ``informal'' 
notice and comment rulemaking, rather than the lengthy formal 
rulemaking procedures required for food standards. Since passage of the 
Nutrition Labeling and Education Act of 1990 (Public Law 101-35), which 
amended the act, FDA can establish new standards of identity for most 
foods by ``informal'' notice and comment rulemaking proceedings. In 
view of this change, FDA does not see any benefit to establishing a 
common or usual name regulation instead of a food standard to ensure 
that the product known as ``white chocolate'' contains cacao-derived 
ingredients.
    Finally, FDA agrees that there are many products on the market that 
are regulated without standards of identity. However, we disagree with 
the comment's suggestion that requirements imposed after most of the 
food standards were created have rendered food standards unnecessary. 
The nutrition information that is required on the labels of 
standardized and nonstandardized foods gives consumers information on 
the levels of nutrients in products to assist them in making purchasing 
choices related to nutrient content. Nutrition information does not 
inform consumers of a product's formulation. In addition, ingredient 
labeling alone may be insufficient to differentiate two standardized 
products. For example, the ingredient lists for both milk chocolate and 
sweet chocolate may be identical (containing chocolate, nutritive 
carbohydrate sweeteners, and dairy products).
    (Comment 3) The comment that opposed creation of a food standard 
further stated that, from a legal perspective, a standard of identity 
is not needed to authorize the sale of white chocolate in this country 
because: (1) White chocolate is an appropriately descriptive statement 
of identity, independent of existing standards; (2) the name ``white 
chocolate'' is sufficiently different from the names of other chocolate 
products; (3) white chocolate does not purport to be a standardized 
food; (4) the identity and fundamental positioning of white chocolate 
are predicated on the difference between white chocolate and chocolate; 
and (5) the appearance of white chocolate is in such stark contrast to 
traditional chocolate, which is brown in color, as to guarantee that no 
``passing-off'' issue exists. The comment contended that FDA cited no 
evidence of consumer confusion with white chocolate, no evidence that 
consumer confusion would exist in the absence of a standard of identity 
for white chocolate, and no evidence of consumer confusion regarding 
the thousands of other nonstandardized foods on the market. The comment 
asserted that, in the absence of such evidence, FDA has no grounds for 
creating a standard of identity for white chocolate because the 
statutory threshold for regulation is not satisfied, i.e., that a 
standard of identity for white chocolate would promote honesty and fair 
dealing in the interest of consumers. The comment contended that FDA is 
maintaining and extending food standards without consideration of their 
actual utility or consumer benefit, and without regard to the labeling 
requirements now in effect. Therefore, the comment urged FDA to 
regulate white chocolate as a nonstandardized food and not to establish 
a standard of identity for white chocolate.
    FDA disagrees with the comment's assertion that a standard of 
identity is not needed to sell a product bearing the name ``white 
chocolate.'' Our reasoning as to why a food standard or TMP is required 
to label a product as ``white chocolate'' is set forth in response to 
comment 1, section II of this document. In short, absent a food 
standard or TMP, a food labeled ``white chocolate'' purports to be 
chocolate, which is the subject of a food standard under Sec.  
163.111(c) requiring that the product be prepared by finely grinding 
cacao nibs (contains both the nonfat and fat components). The product 
is misbranded in violation of section 403(g) of the act because it does 
not conform to the definition and standard for chocolate in that it 
does not contain the nonfat portion of the cacao nibs.
    Furthermore, we disagree with the comment that there is no legal 
basis on which to establish a food standard for white chocolate. The 
term ``chocolate'' has traditionally been used for standardized foods 
that contain cacao-derived ingredients, specifically chocolate liquor 
(Sec.  163.111). These standardized foods include sweet chocolate 
(Sec.  163.123), milk chocolate (Sec.  163.130), buttermilk chocolate 
(Sec.  163.135), skim milk chocolate (Sec.  163.140), mixed dairy 
product chocolate (Sec.  163.145), sweet chocolate and vegetable fat 
coating (Sec.  163.153), and milk chocolate and vegetable fat coating 
(Sec.  163.155). Because of this longstanding practice, consumers 
expect that products bearing names that include the term ``chocolate'' 
contain certain cacao-derived ingredients. While the product described 
in the proposed standard deviates from the other standardized chocolate 
products in that it contains only the cacao fat (i.e., cocoa butter) 
component of chocolate liquor, consumers' expectations that the food's 
basic component is derived from cacao

[[Page 62174]]

are met by establishing a standard with that requirement.
    Moreover, use of the term ``white chocolate,'' without an 
accompanying food standard, does not provide consumers with sufficient 
information as to the ingredients of the product. Historically, FDA has 
created separate standards of identity for different kinds of chocolate 
(e.g., milk chocolate, sweet chocolate). These standards ensure that 
consumers who purchase products labeled as ``chocolate'' receive a 
familiar product with a certain basic nature and composition. Neither 
the term ``white'' nor the white appearance of the product itself is 
sufficient to distinguish a white chocolate-type product that does not 
contain cacao-derived ingredients from a product that does contain 
cacao-derived ingredients. Use of the term ``chocolate'' in the name 
``white chocolate'' implies that the product is cacao-derived. Thus, 
without a standard of identity prescribing that white chocolate be made 
from cocoa butter, manufacturers may produce products not containing 
cacao-derived ingredients and use the term ``white chocolate'' in a 
misleading manner.
    (Comment 4) The one comment that objected to establishing a 
standard of identity for white chocolate stated that a standard of 
identity for white chocolate is not needed because white chocolate-type 
products made with ingredients not derived from cacao could be 
identified as ``white chocolate-flavored'' or ``artificially flavored'' 
to sufficiently distinguish them from white chocolate products derived 
from cacao. The comment further stated that consumers could look at the 
ingredient list to discover the substitution of less expensive 
ingredients not derived from cacao; thus, current regulations are 
sufficient to prevent economic deception.
    FDA does not agree that identifying white chocolate products made 
from cheaper noncacao ingredients as ``artificially flavored'' or 
``white chocolate-flavored'' would be sufficiently descriptive with 
regard to the composition of white chocolate. These terms refer to the 
characterizing flavor of a food, not its composition. The terms suggest 
products that are flavored to taste like white chocolate, but they do 
not provide guidance as to white chocolate's composition. Thus, use of 
such terms does not negate the need for a standard of identity, but 
rather further supports its need because, without a definition and 
standard for ``white chocolate,'' there is no way to define ``white 
chocolate-flavored.'' Moreover, FDA regulations governing use of the 
term ``flavored'' Sec.  101.22(i)(1)(i) (21 CFR 101.22(i)(1)(i)) 
provide that a product that is expected to contain an ingredient, e.g., 
``white chocolate,'' must bear the term ``flavored'' in the name of the 
food if the food contains natural flavor derived from that ingredient 
and either an amount of the ingredient insufficient to independently 
characterize the food or none of the ingredient. Therefore, unless a 
food contains the flavoring constituents derived from white chocolate, 
it cannot be named ``white chocolate-flavored.''
    Once a standard for white chocolate has been established, the term 
``white chocolate-flavored'' could be used to describe a food that is 
commonly expected to contain the characterizing food ingredient, white 
chocolate, and which contains natural flavor derived from such an 
ingredient (i.e., cocoa butter or cacao fat) (Sec.  101.22(i)(1)(i)). 
The term ``artificially-flavored white chocolate'' could be used in 
cases where the food contains an artificial flavor that simulates, 
resembles, or reinforces the characterizing flavor (Sec.  
101.22(i)(2)).
    The only constituent in white chocolate that is derived from the 
cacao bean is cacao fat (i.e., cocoa butter); therefore, the agency 
assumes that if a cheaper ingredient that was not derived from cacao 
were used to replace the cacao-derived ingredient, the substitute 
ingredient would be some type of fat or oil used to replace the cacao 
fat. In this case, the agency would treat such products as substitute 
or imitation white chocolate products (21 CFR 101.3(e)) and would not 
regulate them by requiring that they be labeled ``white chocolate-
flavored.''
    (Comment 5) The one comment that opposed issuing a standard of 
identity for white chocolate argued that food standards should be 
reformed. The comment stated that, in the advance notice of proposed 
rulemaking (ANPRM) (60 FR 67492, December 29, 1995) that responded to 
the Regulatory Reinvention Initiative, FDA acknowledged that existing 
food standards of identity are the types of regulations that need 
reform. The comment stated that there is no special circumstance that 
justifies a reversal of regulatory direction for white chocolate.
    A few comments addressed the nature of the proposed standard of 
identity for white chocolate, objecting to its being prescriptive, 
recipe-based, and rigid. One of these comments, while supporting 
establishment of a standard of identity for white chocolate, made 
broader general statements about reforming food standards. In addition, 
several comments from manufacturers who support creating a standard for 
white chocolate supported FDA's intention to address all standards, 
including any new standard of identity for white chocolate, as a 
separate subject in accordance with the Regulatory Reinvention 
Initiative.
    FDA stated in the ANPRM that standards of identity may need reform, 
and we are reviewing existing food standards in response to the 
Regulatory Reinvention Initiative. After deciding to establish a 
standard of identity for white chocolate, FDA considered whether to: 
(1) Continue the TMP process until all standards are reviewed in 
response to the Regulatory Reinvention Initiative and then establish a 
standard for white chocolate, (2) use different guiding principles to 
issue a standard, or (3) issue a standard consistent with the 
petitioners' requests and with existing standards. We concluded that 
the third approach was the most reasonable and efficient, considering 
our limited resources, industry's desire to establish a standard, and 
recognized consumer demand for the product. This approach avoids the 
time consuming task of reviewing and revising standards for a group of 
foods, e.g., chocolate products, in a piecemeal fashion, especially 
when no guiding principles have been published, and relieves industry 
and the agency from the burdensome TMP process. Therefore, FDA 
concludes that a standard for white chocolate should be issued that is 
generally consistent with current standards for U.S. chocolate 
products. FDA will address comments concerning the revision of the 
standard for white chocolate at such time as we consider revision of 
all chocolate standards.
    FDA recognizes that the proposed standard of identity is 
prescriptive in nature. However, we believe that until all standards of 
identity are reviewed and decisions are made regarding whether to 
retain, revoke, or revise them, it is in the interest of consumers to 
establish a standard of identity for white chocolate that is generally 
consistent with other chocolate products in part 163. We also note that 
standards of identity for white chocolate established by Canada, Codex, 
and the EU are also prescriptive. Therefore, FDA finds that, at this 
time, it is appropriate to retain the recipe-like nature of the 
standard for white chocolate because it is consistent with current U.S. 
standards for other chocolates and with international standards of 
identity for white chocolate.
    (Comment 6) Two comments suggested changes to the proposed standard 
to make the U.S. standard for white chocolate more consistent with 
international standards. One comment

[[Page 62175]]

noted that the maximum level for emulsifiers in the proposed standard 
for white chocolate is adequate, but suggested that in the interest of 
international harmonization, FDA consider raising this level from 1 
percent to 1.5 percent. The comment stated that if this were done, the 
proposed standard would then be consistent with those of Canada and 
Codex. The comment emphasized that it raised the issue solely in the 
interest of international harmonization, but did not want the issue to 
delay a prompt promulgation of the standard.
    We agree that international harmonization should be taken into 
consideration in establishing standards and should be supported when 
such support promotes honesty and fair dealing in the interest of 
consumers, does not endanger the public health, and does not reduce the 
integrity of the standard. FDA believes that raising the level of 
permitted emulsifiers to 1.5 percent will not result in an inferior 
product, and the standard for white chocolate will still promote 
honesty and fair dealing in the interest of consumers. Therefore, the 
agency agrees that, to reduce barriers to trade, the level of 
emulsifiers should be changed to 1.5 percent.
    The other comment recommended that FDA revise the proposed standard 
to permit the use of whey as an optional ingredient up to a level of 5 
percent. The comment stated that whey should be listed in Sec.  
163.124(b)(6) as an optional ingredient so that it would not count 
toward the minimum milk solids content otherwise specified in the 
standard (Sec.  163.124(b)(2)). The comment contended that whey is a 
safe and suitable ingredient for use in chocolate and confectionery 
products.
    The comment further stated that if the U.S. standard were adopted 
without permitting whey, it would be the only major white chocolate 
standard in the world that did not permit its use. According to the 
comment, Canada plans to issue a standard that expressly permits the 
addition of whey up to 5 percent. The comment stated that both the 
Codex and the EU standards permit the addition of whey in chocolate 
products. The comment asserted that the United States should include 
whey in its standard for white chocolate in the interest of 
international harmonization. Finally, the comment noted that delaying 
consideration of the use of whey until the generalized review of 
chocolate standards takes place would likely result in a delay of 
several years.
    FDA agrees with the comment that whey should be permitted as an 
optional ingredient up to a level of 5 percent but should not count 
toward the minimum milk solids content otherwise specified in the 
standard. Listing whey as a separate ingredient, as suggested by the 
comment, permits the inclusion of whey in addition to, not in place of, 
the total milk solids specified in Sec.  163.124(b)(2). FDA notes that 
since publication of our proposed rule to establish a standard for 
white chocolate, Canada has established a standard for white chocolate 
that permits as an optional ingredient less than 5 percent whey or whey 
products. Codex permits no more than 5 percent milk solids in its white 
chocolate standard, whereas the EU permits edible substances that do 
not exceed 40 percent of the total weight of the finished white 
chocolate product. Thus, FDA believes that the change to the proposed 
standard to permit whey as an optional ingredient would maintain the 
core ingredients required in the U.S. standard while promoting 
international harmonization and trade. Accordingly, FDA is modifying 
the proposed standard to include whey up to a level of 5 percent as a 
separate, optional ingredient in Sec.  163.124(b)(6).
    (Comment 7) One comment recommended deleting the requirement that 
white chocolate contain a minimum of 23.5 percent fat (20 percent cacao 
fat + 3.5 percent milkfat). The comment asserted that this high level 
of fat is inconsistent with current dietary guidelines and with FDA's 
stated goal to encourage the creation of products lower in fat and 
calories. The comment stated that it recognized that in order for the 
product to be designated as ``chocolate,'' it should contain some 
cacao-derived ingredients. However, the comment contended that the 
requirement to contain some minimum amount of cacao-derived ingredients 
could be met by having a minimum amount of cocoa solids. The comment 
argued that since milk chocolate must contain a minimum of 10 percent 
cocoa solids in the form of chocolate liquor, it would be consistent 
for white chocolate to contain a minimum of 10 percent cocoa solids, 
albeit in the form of cocoa butter. The resulting product, according to 
the comment, would contain a total of 13.5 percent fat (3.5 percent 
milkfat and 10 percent cacao fat).
    FDA disagrees with changing the minimum level of fat required in 
white chocolate. The purpose of a standard of identity is to promote 
honesty and fair dealing in the interest of consumers. The product 
labeled ``white chocolate'' that has been marketed under TMPs for more 
than 10 years contains a minimum of 23.5 percent fat. We believe that 
consumers have come to know the product with this composition. This 
level is the same as that suggested by the petitioners and required by 
international standards for white chocolate. Accordingly, FDA has not 
been persuaded to change the minimum level of fat required.
    We appreciate the comment's concern regarding dietary guidelines 
and note that manufacturers who wish to market products that are lower 
in fat relative to the standard product may develop lower fat white 
chocolate products in accordance with the provisions in 21 CFR 130.10.

III. Effective Date

    In the proposed rule, FDA proposed that the effective date for a 
final rule for white chocolate be January 1, 1998 (62 FR 10781 and 
10784). The only comment that addressed the proposed compliance date of 
January 1, 1998, stated that if FDA acted quickly in finalizing the 
proposal, the proposed compliance date would allow sufficient time for 
manufacturers to make label and formula changes. Further, the comment 
encouraged the FDA to state that compliance with the regulation could 
begin immediately after publication of the final rule issuing the 
standard.
    Due to other agency priorities and to limited resources and staff, 
FDA is publishing this final rule later than it intended and after the 
proposed effective date. Consequently, we are revising the effective 
date of this regulation to the next uniform compliance date, i.e., 
January 1, 2004, to minimize costs associated with any necessary label 
changes. However, compliance with this final regulation may begin 
immediately. All affected products initially introduced or initially 
delivered for introduction into interstate commerce on or after January 
1, 2004, shall fully comply.
    There are many firms using TMPs to market products in the United 
States that are labeled ``white chocolate'' and that comply with the 
proposed standard. These products will not have to be relabeled. Other 
products that are labeled with descriptive names (e.g., ``white 
confection'') will have to relabel their products in compliance with 
the new standard by the effective date of this rule.

IV. 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

[[Page 62176]]

regulatory approaches that maximize net benefits (including potential 
economic, environmental, public health and safety, and other 
advantages; distributive effects; and equity). 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 a sector of the economy in a 
material way, adversely affecting competition, or adversely affecting 
jobs. A regulation also is considered a significant regulatory action 
under Executive Order 12866 if it raises novel legal or policy issues. 
FDA finds that this final rule is neither an economically significant 
rule nor a significant regulatory action as defined by Executive Order 
12866.
    The Unfunded Mandates Reform Act of 1995 (Public Law 104-4), 
requiring cost-benefit and other analyses, in section 1531(a) defines a 
significant rule 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 million (adjusted annually for 
inflation) in any one year.'' FDA has determined that this rule does 
not constitute a significant rule under the Unfunded Mandates Reform 
Act.

A. Regulatory Options

    FDA is establishing a standard of identity for white chocolate. 
This standard will provide for the use of the term ``white chocolate'' 
as the common or usual name of products made from cacao fat, milk 
solids, nutritive carbohydrate sweeteners, and other safe and suitable 
ingredients, but containing no nonfat cacao solids. In the benefit-cost 
analysis of the proposed rule, FDA considered three options:
    1. Do not establish a standard and allow manufacturers to market 
products bearing the name ``white chocolate'' only with TMPs.
    2. Establish a standard for white chocolate that is consistent with 
the standard described in the petitions where the levels of the 
ingredients are prescribed.
    3. Establish a standard of identity for white chocolate with 
different criteria than those proposed in the petitions.
    FDA received no comments that directly addressed the economic 
analysis of the proposed rule. Results of benefit-cost analysis suggest 
that the best choice for this proposed rule is the second option: 
Establish a standard for white chocolate consistent with the standard 
in the petitions where the levels of ingredients are prescribed. This 
option is the best choice for several reasons.
    First, as stated in the comments that we received, the second 
option eliminates the time-consuming and burdensome task to 
manufacturers of applying for TMPs. By establishing a standard of 
identity for white chocolate and eliminating the need for TMPs, the 
proposed rule furthers a goal of the Paperwork Reduction Act by 
eliminating paperwork burden.
    Second, while the standard of identity of white chocolate in the 
second option is somewhat prescriptive, the comments indicated that, at 
this time, the manufacturers favor a minimum of 23.5 percent total fat 
in white chocolate. This ``prescriptive'' standard of identity for 
white chocolate is similar to other published standards for chocolate 
and will prevent fraudulent or deceptive confections from being offered 
for sale as ``white chocolate.''
    Finally, the standard of identity for white chocolate proposed in 
the second option is in harmony with the white chocolate standards in 
use by Canada, Codex, and the EU. Comments on this rule supported the 
globalization of the white chocolate standard as an important market 
share-increasing tool.

 B. Benefits

    We do not estimate benefits and costs for option 1, because it is 
the baseline. Although the benefits of options 2 and 3 are similar, we 
expect option 2 to generate higher benefits because it will lead to 
harmonization with international standards. The other benefits 
associated with option 2 would also be realized with option 3.
    Currently, manufacturers must obtain TMPs if they want to use the 
term ``chocolate'' to market white chocolate products that meet the 
proposed standard. The TMPs are required because white chocolate 
products are considered to deviate from the existing standards of 
identity for chocolate products. In a recent year, FDA received more 
than one dozen requests for TMPs for white chocolate. Thus, one benefit 
of issuing a standard of identity for white chocolate is that it will 
eliminate a manufacturer's need to prepare and submit requests for TMPs 
in order to market products bearing the name ``white chocolate.'' This 
will reduce the paperwork burden to white chocolate manufacturers and 
reduce the burden to FDA of processing the TMPs.
    Establishment of standards of identity for a product is thought to 
reduce consumer confusion and deception. Well-defined standards of 
identity, which establish consistent product names, can assist 
consumers in finding and comparing products by the name of the food. 
The standard of identity for white chocolate will establish a new 
product name that, according to the petitions, is consistent with the 
name that a majority of consumers are already using to describe this 
product. Comments to this rule indicated that the proposed standard of 
identity is compatible with not only the perception of United States 
consumers, but also aligns with the standard of identity for white 
chocolate as set by Canada, Codex, and the EU. This international 
harmonization of the white chocolate standard should make U.S.-produced 
white chocolate more competitive with internationally produced white 
chocolate, both at home and abroad.

C. Costs

    Although we cannot estimate the total costs of this final rule, we 
expect that the costs of options 2 and 3 will be approximately the 
same.
    The establishment of a standard of identity requires that all 
products that meet the standard bear the standardized name. If there 
are products that are formulated in accordance with the standard of 
identity but are not currently labeled as ``white chocolate,'' then 
those products will have to be relabeled.
    Because ``white chocolate'' will need to appear on each product's 
principal display panel, the cost for label changes will depend on the 
number of products that must be relabeled and the amount of time 
manufacturers are given to complete the label changes. Many of the 
large chocolate manufacturers are already marketing their white 
chocolate products under TMPs and will not need to relabel their 
products.
    There are approximately 250 firms that produce chocolate products 
in the United States, but the number of products whose formulation 
satisfies this new white chocolate standard of identity is unknown. To 
estimate the labeling change costs to chocolate producers as a result 
of the new white chocolate standard of identity, the ``FDA Labeling 
Cost Model'' (Ref. 1) is used. This model replaces the 1990 version of 
the model used in the white chocolate proposed rule estimates.
    There are 9558 stock keeping units (SKUs) for products represented 
by the North American Industry Classification System (NAICS) code for 
Chocolate & Confectionery Products made from cacao beans. Using this 
SKU information, the ``FDA Labeling Cost Model, Final Report'' 
estimates the costs per product for a chocolate manufacturer to change 
the standard of

[[Page 62177]]

identity on their principal display panel.
    The actual cost of relabeling will be determined largely by the 
length of time between the date that the rule becomes final and date it 
becomes effective (the compliance period). Given that January 1, 2004, 
is the uniform compliance date for food labeling regulations that are 
issued between January 1, 2001, and December 31, 2002, the cost of 
relabeling per product for firms averages $4,300 for a minimum-allowed 
12-month compliance period, $2,000 for a 24-month compliance period, 
and $120 for the maximum-allowed 36-month compliance period. Relabeling 
costs are comprised of administrative costs, printing costs, and costs 
of lost label inventory.
    This final rule will not affect products that do not meet the 
standard, because they may continue to be produced and marketed as they 
currently are. FDA is not able to estimate the total cost of this final 
rule because we received no comments that supplied the additional 
information necessary.

V. Small Entity Analysis

    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 this final rule will have a significant 
economic impact on a substantial number of small businesses.
    This final rule will establish a standard of identity for white 
chocolate. Although the amount of the costs depend on the length of the 
compliance period, this final rule may impose significant compliance 
costs on industry, and there may be a significant impact of these 
provisions on a substantial number of small businesses.
    FDA believes that the provision of this final rule most likely to 
have a significant impact on a substantial number of small businesses 
is the labeling requirement. There are approximately 250 firms that 
produce chocolate products (NAICS code 311320) in the United States. 
Almost all of these businesses have fewer than 500 employees, and thus 
are small businesses, as defined by the Small Business Administration, 
FDA has no data on the number of products that will meet the proposed 
standard and that, therefore, may need to be relabeled.
    As discussed in section IV.C of this document, FDA has estimated 
the average relabeling costs per product for firms to be $4,300, 
$2,000, and $120, for a 12-month, 24-month, and 36-month compliance 
period, respectively. Using these average relabeling costs and the 
``Model for Estimating the Impacts of Regulatory Costs on the Survival 
of Small Businesses'' (Ref. 2), the possibility of a small firm closing 
due to this standard of identity regulation can be estimated. If the 
compliance period is 12 months in length, the model predicts that 
approximately 6 firms with less than 500 employees are likely to go out 
of business. For the 24-month compliance period and the 36-month 
compliance period, it is expected that no firms are likely to go out of 
business.
    FDA received no comments on the effects of the proposed rule on 
small businesses or on the length of the compliance period. Because so 
many small entities are in the industry, we believe that the final rule 
establishing a standard of identity will have a significant economic 
impact on a substantial number of small businesses.

VI. Federalism

    FDA has analyzed this final rule in accordance with the principles 
set forth in Executive Order 13132. FDA has determined that the rule 
does not contain policies that have substantial direct effects on the 
States, on the relationship between the National Government and the 
States, or on the distribution of power and responsibilities among the 
various levels of government. Accordingly, we have concluded that the 
rule does not contain policies that have federalism implications as 
defined in the Executive order and, consequently, a federalism impact 
statement is not required.

VII. Environmental Impact

    FDA has previously considered the environmental effects of this 
rule, as announced in the proposed rule (62 FR 10781 at 10785, March 
10, 1997). No new information or comments have been received that would 
affect our previous determination that there is no significant impact 
on the human environment and that an environmental impact statement is 
not required.

VIII. The Paperwork Reduction Act of 1995

    In the proposal, FDA stated its tentative conclusion that the 
proposed rule contains no reporting, recordkeeping, labeling, or third 
party disclosure requirements and asked for comments on whether the 
proposed rule imposed any paperwork burden. No comments were received 
addressing the question of paperwork burden. 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 et seq.). Rather, the labeling statements are a 
``public disclosure of information originally supplied by the Federal 
Government to the recipient for the purpose of disclosure to the 
public'' (5 CFR 1320(c)(2)).

IX. 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. ``FDA Labeling Cost Model, Final Report;'' M. K. Muth, E. C. 
Gledhill, and S. A. Karns; RTI, Health, Social, and Economics 
Research, Research Triangle, NC; April 2002.
    2. ``Model for Estimating the Impacts for Regulatory Costs on 
the Survival of Small Businesses and its Application to Four FDA-
Regulated Industries,'' final report, Eastern Research Group, July, 
2002.

List of Subjects in 21 CFR Part 163

    Cacao products, Food grades and standards.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under 
authority delegated to the Commissioner of Food and Drugs, 21 CFR part 
163 is amended as follows:

PART 163--CACAO PRODUCTS

    1. The authority citation for 21 CFR part 163 continues to read as 
follows:

    Authority: 21 U.S.C. 321, 331, 341, 343, 348, 371, and 379(e).
    2. Section 163.124 is added to subpart B to read as follows:


Sec.  163.124  White chocolate.

    (a) Description. (1) White chocolate is the solid or semiplastic 
food prepared by intimately mixing and grinding cacao fat with one or 
more of the optional dairy ingredients specified in paragraph (b)(2) of 
this section and one or more optional nutritive carbohydrate sweeteners 
and may contain one or more of the other optional ingredients specified 
in paragraph (b) of this section. White chocolate shall be free of 
coloring material.
    (2) White chocolate contains not less than 20 percent by weight of 
cacao fat as calculated by subtracting from the weight of the total fat 
the weight of the milkfat, dividing the result by the weight of the 
finished white chocolate,

[[Page 62178]]

and multiplying the quotient by 100. The finished white chocolate 
contains not less than 3.5 percent by weight of milkfat and not less 
than 14 percent by weight of total milk solids, calculated by using 
only those dairy ingredients specified in paragraph (b)(2) of this 
section, and not more than 55 percent by weight nutritive carbohydrate 
sweetener.
    (b) Optional ingredients. The following safe and suitable 
ingredients may be used:
    (1) Nutritive carbohydrate sweeteners;
    (2) Dairy ingredients:
    (i) Cream, milkfat, butter;
    (ii) Milk, dry whole milk, concentrated milk, evaporated milk, 
sweetened condensed milk;
    (iii) Skim milk, concentrated skim milk, evaporated skim milk, 
sweetened condensed skim milk, nonfat dry milk;
    (iv) Concentrated buttermilk, dried buttermilk; and
    (v) Malted milk;
    (3) Emulsifying agents, used singly or in combination, the total 
amount of which does not exceed 1.5 percent by weight;
    (4) Spices, natural and artificial flavorings, ground whole nut 
meats, ground coffee, dried malted cereal extract, salt, and other 
seasonings that do not either singly or in combination impart a flavor 
that imitates the flavor of chocolate, milk, or butter;
    (5) Antioxidants; and
    (6) Whey or whey products, the total amount of which does not 
exceed 5 percent by weight.
    (c) Nomenclature. The name of the food is ``white chocolate'' or 
``white chocolate coating.'' When one or more of the spices, 
flavorings, or seasonings specified in paragraph (b)(4) of this section 
are used, the label shall bear an appropriate statement, e.g., ``Spice 
added'', ``Flavored with ------ '', or ``With ------ added'', the blank 
being filled in with the common or usual name of the spice, flavoring, 
or seasoning used, in accordance with Sec.  101.22 of this chapter.
    (d) Label declaration. Each of the ingredients used in the food 
shall be declared on the label as required by the applicable sections 
of parts 101 and 130 of this chapter.

    Dated: September 27, 2002.
Margaret M. Dotzel,
Associate Commissioner for Policy.
[FR Doc. 02-25252 Filed 10-3-02; 8:45 am]
BILLING CODE 4160-01-S